McQuiston, Re I.H. McQuiston, Ex Parte I.H

[1988] FCA 629

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I	I	3UDGMENT No ..Q.	?..?...&	i
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NOT FOR DISTRIBUTION ,.

C A T C H W O R D S

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BANKRUPTCY - application for discharge - realisation of assets -	I ,
dividend to all proven creditors	- no reason of public interest or

commercial morality to refuse or suspend - discharge granted.

Bankruptcy Act 1966 s.150

24 OCTOBER 1988

FRENCH J.
PERTH

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I I	IN THE FEDERAL COURT	)
OF AUSTRALIA	1

GENERAL	DIVISION	)
BANKRUPTCY	DISTRICT	1

OF THE	STATE	OF	1
WESTERN	AUSTRALIA	)	No. 523 of 1986 RE: IAN HUGH McQUISTON

Bankrupt

EX PARTE: IAN HUGH McQUISTON

Applicant

MINUTE OF ORDER

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JUDGE MAKING ORDER:	FRENCH J.
DATE OF ORDER:	2 4 OCTOBER 1988
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1. The bankrupt be discharged.

Note: Settlement and entry of orders is dealt with in

Rule 124 of the Bankruptcy Rules.

NOT FDR DISTRIBUTION

IN THE FEDERAL COURT

OF AUSTRALIA
GENERAL DIVISION

BANKRUPTCY DISTRICT
OF THE STATE OF

WESTERN AUSTRALIA No. 523 of 1986

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RE: IAN HUGH McQUISTON

Bankrupt

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EX PARTE: IAN HUGH McQUISTON	i
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Applicant v -

CORAM:	FRENCH J.
-	24 OCTOBER 1988

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EX TEMPORE REASONS FOR JUDGMENT

This is an application by Ian Hugh McQuiston for

discharge from bankruptcy pursuant to 5.150 of the Bankruptcy Act

1966. Mr McQuiston became bankrupt on 29 August 1986, pursuant to

a debtor’s petition which he lodged on that day. The report of

the Trustee, Mr Robson, on the application for discharge,

indicates that the statutory statement of affairs disclosed assets

totalling some $75,735, including various items of property,

shares, a 20 foot motor launch, cash and certain other assets.

Liabilities on the statement of affairs disclosed ten unsecured

debts, totalling $91,346. There 1”as also one partly secured

creditor shown on the statutory statement of affairs in the amount

of $208,590. Proofs of debt admitted to rank for dividend w re 13

in all and totalled $104,763. Realisations in the estate totalled

$132,676. There is evidently an unrealised asset by way of a

possible balance standing to the credit of the bankrupt, per

medium of his loan account with a company styled “Citizen

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Accept ance Nominees Pty Ltd", but the assets re alised have been

sufficient to discharge all proved debts and costs and	on	that
basis the trustee reports that	he	has not moved in the matter of

the realisation of the asset in question. All fees and costs have

been paid from the proceeds of the realisation as mentioned above.

The trustee has provided an amount of $7,022 by way of

surplus in respect of a possible liability for income tax and

reports that he has taken the appropriate action relevant	to
income tax returns.

The report indicates, and is generally supported by the

bankrupt's affidavit, that at the time of his bankruptcy he was a

divorcee, 51 years of age, without dependent children and was a

company director and financier. He had been involved primarily in

the commercial finance industry as a director of a company called

"Citizen Finance Limited" and prior to that as manager of a

partnership trading under the name "Citizen Finance Services". He

also had a 22.2% interest in a partnership styled "Citi-Directa

Australia". There were other business activities that he had been

involved in, including a ladies retail clothing outlet in

Claremont and a vehicle for investment in the Horseshoe Lights

Goldmine known as "Beltop Unit Trust". The cause of bankruptcy

was said to be numerous underwriting agreements entered into and

involving investors within Citizen Finance Limited and the failure

in some areas of investment made by that company with

consequential personal exposure. That is the explanation advanced

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by the bankrupt and evidently accepted by the trustee, who also

saw as a further significant cause substantial losses in the order

of $80,000 incurred through the Horseshoe Lights Goldmine

investment. The trustee's report says that he knows of no reason

why the conduct of the bankrupt subsequent to the date of

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bankruptcy should be considered unsatisfactory and indicates that

there are no matters specified under sub-s.150(6) which would

provide sufficient grounds for the refusal or suspension of an !.>

order of discharge in respect of the bankruptcy.	!
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In	that	latter	egard,	Iquestioned	the	trustee	!
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concerning his s.19	report, filed on 30	April 1987, in which he
said:

"In my opinion the conduct of the bankrupt prior to the

date of bankruptcy was not satisfactory in that he

i	engaged in various business ventures without due regard
to prudent business administration and in the absence of
his own acumen failed to take adequate professional
advice. It is noted however that the majority of Mr. i
McQuistons debts arose through uarantees and
underwriting agreements given by the bankrupt for the
debts and investments of others."

That report went on to say that the conduct of the bankrupt since

the date of bankruptcy had been satisfactory in that he had
complied with all instructions	and assisted where possible in the
realisation of assets.

I questioned the trustee on the issue whether or not the

misconduct referred to in the report of 19 April could amount to I'

rash or hazardous speculation or culpable neglect of his business

affairs. In response, Mr Robson resiled somewhat from the

severity of the comment made in that report, but in any event took

the view that it did not amount to conduct of the character !

contemplated by sub-s.51(6). Looking to the statement in the i. original report, on the face of it it would not necessarily amount to an allegation of misconduct under sub-s.lSO(6). If it did,

then there weould be very few bankrupts who would escape the net

of that section.

The other matter of concern was the reference in minutes

of a meeting of creditors held on 21 December 1987 to a statement

by the trustee of a serious complication relating to ownership of

Citizen Finance Limited shares and options. It appears that the

bankrupt had asserted ownership of certain shares which turned out

not to be his. This seems, however, to have arisen from a

misunderstanding as to the nature of his rights and I understand

from the trustee that here is no suggestion that hat

misunderstanding was the result of any attempt to mislead him	or
the creditors in the administratlon of the estate.

Mr McQuiston, in his affidavit in support of the

application, said that prior to his bankruptcy he had been

involved in financing and money-lending as managing director of

Citizen Finance Limited, that the causes of his bankruptcy were the failure of the Gold Stream Mining Venture at meekatharra and the entry by him into various guarantees of obligations of other

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parties to Citizen Finance Limited. Because of the breach	of
their obligations by some of those persons, he	was required to
meet liabilities and	as a number of those defaults occurred within

a short space of time he had significant liabilities which he

could not therefore meet. He did evidently seek advice on the

question of entering into a Deed of Composition under Part	X of	i
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the Act, but because of the contingent nature	of some of the debts
to which he might be exposed, this was	not a solution which would

necessarily resolve all the difficulties to which he was then

exposed. Since his bankruptcy, he says that the debts he had

guaranteed have been repaid by persons primarily obliged and his

liabilities to his debtors have been significantly reduced. AS he

points out, the realisation of his assets has resulted in moneys

being available to pay all proven creditors 100 cents in the

dollar.	He	has not previously been bankrupt nor has he entered
into a deed	of composition pursuant to Part	X of the Act.

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In the ordinary course MC	14cQuiston would be entitled to	l
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statutory discharge by 29 August 1989. The Court does not lightly

grant early discharge, but given that the creditors have been paid

in full, that the costs of the administration have been met and

that there is no objection from any creditor, and having regard to

the absence of any reason of public interest or commercial

morality which would require me to refuse or suspend the operation

of any discharge, I am of the view that the order sought can be
granted and will therefore order that the bankrupt be discharged.

I certify that the preceding

five (5) pages are a true

copy of the Ex Tempore Reasons

for Judgment of his Honour

Justice French.	I '
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Associate:
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Date :  aq. (0. W ,.

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Counsel for the Applicant:  Mr R.G.S. Harrison

Solicitors for the Applicant: Warren Harrison

Hr S.F. Robson appeared on behalf of the Official Trustee

Date of Hearing: 2 4 October 1988 Date of Judgment: 24 October 1988