National Westminster Finance Australia Ltd v Official Trustee in Bankruptcy

[1989] FCA 630

IN THE FEDERAL COURT	)	LIMITED DISTRIBUTION
OF AUSTRALIA	)
GENERAL DIVISION	)
BANKRUPTCY DISTRICT	)
OF THE STATE OF	1
WESTERN AUSTRALIA	)	NO. 376 OF 1989
B E T W E E N :	NATIONAL WESTMINSTER FINANCE AUSTRALIA LIMITED

Applicant

and

THE OFFICIAL TRUSTEE IN BANKRUPTCY

First Respondent

and

DOUGLAS WILLMOTT KITTS

Second Respondent

CORAM: LEE J.

DATE : 7 SEPTEMBER 1989

EX TEMPORE REASONS FOR JUDGMENT

I will give my reasons now for what I propose to do. This is an application by a creditor under s.178 of the Bankruptcy Act 1966 ("the Act") seeking to review the declsion of the trustee to relinquish the bankrupt's Australian passport to the bankrupt to allow the bankrupt to travel overseas, namely to Thailand with intent to return on or about 25 September 1989. The provisions of s.178 of the Act permlt, inter alia, a credltor affected by any decision of the trustee to make an application for

such order as the Court thinks just and equitable.

In its terms, s.178 provides the Court with a discretion and the process of an application is neither a review of, nor an appeal from, the decision of the trustee. It is an application to the Court for such order as the Court thinks just and equitable to alleviate the effect that a creditor may otherwise suffer as a result of a decision of the trustee. What the creditor has to show is that in some way its position is prejudiced or affected by the decision of the trustee. That may be a slightly different position from that of a bankrupt applying under the same section seeking an order from the Court that alleviates a decision of the trustee, for example, to refuse to relinquish a passport to allow a bankrupt to travel abroad. But I think s.178 has to be read with para.30(l)(b) which gives the Court a general power to control a bankruptcy to give effect to the Act and to see that the spirit of the Act is maintained and applied. The latter power will not be limited by a requirement that the Court be satisfied that a creditor's interests are directly affected, or likely to be affected.

As Mr Justice Deane said in Re Tyndall (1977) 30 F.L.R.

6 at pp.9-10: 

"In my view, the wording of 5.178 of the Act is such as to confer upon the court the widest possible discretion as to the appropriate order which should be made in the particular case..."

In exercising that discretion the Court would take into account the powers it already has under para.30(1) (b) to see that there is proper administration of the Act.

The creditor's application has not detailed any speciflc matter that could be taken to be a strong indication of there having been some breach of the Act on the part of the bankrupt. This matter is unlike, for example, in Weiss v. Official Trustee in Bankruptcy (1984) 1 F.C.R. 40 where the application was made after a public examination had displayed matters that were likely to be breaches of the Act by the bankrupt and requlred further explanation by the bankrupt.

However, having sald that it is to be borne in mind that in respect of the affairs of this bankrupt it has been determined to be necessary both in the trustee's opinion and in the view of the creditor who made the request for such an examination, that there be a public examination of the bankrupt under the terms of s.69 of the Act. The requirement that the bankrupt participate in a public examination bespeaks that there are matters of Inquiry to be explored and that explanations are required from the bankrupt.

as a result of matters revealed by the examination.	It may result in other explanations being required of the bankrupt
Notification to the debtor that he or she is required to be examined may provide a bankrupt who has the abillty to stay abroad with a reason to stay abroad. He or she may not leave wlth that view and may have an intent to comply with his or her obligations as of the day of his or her departure, but what has to be borne in mind is the fact that once beyond the reach of the inquisitor a bankrupt may yield to the temptation to stay beyond reach. Having been freed from the shackles of direct control applied by the bankruptcy, a bankrupt may find himself or herself in a position abroad where he or she takes another view of his or her problems - one slightly more elastic than he or she had here - and may yield to the temptation not to submit himself or herself to the rigors of detailed examination.
It is a circumstance to be put in the balance when looking at the merit of the application. As has been stated in - Re Tyndall, the combined provisions of sub-ss.77(a) and 272(c) of the Act indicate that the Act starts with the position that there is a limitation on the ability of a bankrupt to undertake any travel. The Act itself imposes a restriction on the bankrupt's movements.
The Act imposes a limitation upon a bankrupt's movements whether there is an intention to return or otherwise. To that extent there must be some residual onus on a bankrupt to provide
good grounds for any relief from the Act's intended control. In this case, the bankrupt has submitted to the trustee that he
wishes to marry, and to bring back hls intended wife to Australia, apparently from Thailand.
There is no reason to doubt that that is the case, but it would not necessarily remove the prospect of the bankrupt yielding to temptation to remain away, as has been referred to above. Perhaps the perceived propsect of a better start elsewhere possibly inspired by the encouragement of a new spouse who may not be an Australian citizen or resident and who is not subject to the restrictions of the bankrupt, may give a bankrupt cause to consider his future.
For these reasons I am of the vlew that as the matters stand at the moment there should be an interim hold on the bankrupt's movements whilst the bankrupt is glven an opportunity to respond and if necessary be cross-examined in ielation to his response before there is any further order made in the matter. I am satisfied that there should be a decision by this Court that there be an lnterim order restraining the trustee from relinquishing the Australian passport of the bankrupt to the bankrupt at this time.
It may be that, in his response, the bankrupt will display adequate reasons why he should be able to leave Australia
before the conduct of his public examination. But at thls point rt 1s a significant matter as far as the Court is concerned, that
the pending examination should be without risk of being frustrated. There may be a risk of it being frustrated if the bankrupt is permitted to leave Australia before that examination 'is carried out. It is now only six weeks away and tlme is becomlng short. These are the orders that I propose:

1.   The trustee be restrained from delivering the bankrupt's passport to the bankrupt until 4 p.m. Tuesday 12 September 1989 or until further order.

2.   The applicant is to serve its application and supporting affidavit and a copy of this Order on the bankrupt by 7 September 1989.

3.   The bankrupt is to be joined as a party to the application.

4.    The bankrupt is to file any affidavit in opposition to the application by 11 September 1989.

5.    The applicant and respondent trustee to flle any affidavits in reply by 12 noon on 12 September 1989.

6.    The application to be relisted for hearing at 2.15 p.m. on 12 September 1989.

7.	Costs of today reserved. I certify that the preceding six (6) pages are a true copy of the Reasons for Judgment of his Honour Mr Justice Lee.
Associate:  L~,~LL?O~
Date :  7 L v

Counsel for the Applicant:  MS K. Levinge

Solicitor for the Applicant: Corser & Corser

Counsel for the Respondent:  Mr P. Macliver

Solicitor for the Respondent: Australian Government Solicitor

Date of Hearing: 7 September 1989 Date of Judgment: 7 September 1989