Pearce (Trustee) v Mulhern (Bankrupt) (No 3)

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FEDERAL COURT OF AUSTRALIA

Pearce (Trustee) v Mulhern (Bankrupt) (No 3) [2012] FCA 16

Citation: Pearce (Trustee) v Mulhern (Bankrupt) (No 3) [2012] FCA 16
Parties: MARK WILLIAM PEARCE AND ANDREW JOHN HEERS AS TRUSTEES OF THE PROPERTY OF MICHAEL RICHARD MULHERN ALSO KNOWN AS DEREK O'MALLEY (A BANKRUPT) v MICHAEL RICHARD MULHERN ALSO KNOWN AS DEREK O'MALLEY (A BANKRUPT)
File number: QUD 176 of 2011
Judge: FLICK J
Date of judgment: 16 January 2012
Catchwords: BANKRUPTCY – warrant for arrest – warrant executed – order for release from custody after public examination
Legislation: Bankruptcy Act1966 (Cth) ss 30(1), 34A, 78(1), 81
Federal Court of Australia Act1976 (Cth) s 23
Cases cited: CBFC Ltd v Sim [2006] NTSC 57, 202 FLR 183, cited
Pearce (Trustee) v Mulhern (Bankrupt) [2011] FCA 930, cited
Pearce (Trustee) v Mulhern (Bankrupt) (No 2) [2012] FCA 7, cited
Talacko v Talacko [2010] FCAFC 54, 183 FCR 311, cited
Wong, Re; Ex parte Wong v Boardwalk Regency Corporation (Unreported, Federal Court of Australia, Cooper J, 27 February 1996), cited
Date of hearing: 16 January 2012
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 20
Solicitor for the Applicant: Mr P Lynch (Lynch Morgan Lawyers)
Solicitor for the Respondent: The Respondent appeared in person

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

QUD 176 of 2011
BETWEEN:

MARK WILLIAM PEARCE AND ANDREW JOHN HEERS AS TRUSTEES OF THE PROPERTY OF MICHAEL RICHARD MULHERN ALSO KNOWN AS DEREK O'MALLEY (A BANKRUPT)
Applicant
AND:

MICHAEL RICHARD MULHERN ALSO KNOWN AS DEREK O'MALLEY (A BANKRUPT)
Respondent

JUDGE:

FLICK J

DATE OF ORDER:

16 JANUARY 2012

WHERE MADE:

SYDNEY

Upon MICHAEL RICHARD MULHERN undertaking to this Honourable Court that:

1.He will not seek to obtain another Passport.

2.He will meet with his Trustees and their Solicitors for an interview at their office at Level 9, 26 Wharf Street, Brisbane on Wednesday, 18 January 2012 commencing at 10.00 a.m.

3.He will provide his Australian residential address, mobile telephone number, e-mail address to the Trustees forthwith and contact details for an alternate person whom the Trustees may contact to ascertain his whereabouts and contact details.

4.He will comply with his duties and obligations under the Bankruptcy Act 1966 and in particular will provide his Trustees with information and records requested by them within 7 days of any such request.

5.He will personally attend any further interviews with his Trustees as requested by them upon reasonable notice to him.

6.He will not leave Australia without first obtaining his Trustees’ written consent to such departure.

7.He will attend any adjourned hearing of the Public Examination being conducted by his Trustees on such adjourned dates and at such times and places as his Trustees advise him. 

THE COURT ORDERS THAT:

1.At the conclusion of this hearing Officers of the Australian Federal Police take the Respondent Bankrupt, MICHAEL RICHARD MULHERN, also known as DEREK O'MALLEY, to the Brisbane Watch-house and that such Officers bring…

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Details
Case
[2012] FCA 16
Decision Date

CaseChat Overview and Summary

This case involved a dispute between a Trustee and a bankrupt individual, Mr Mulhern. The Trustee sought an order for Mr Mulhern's arrest and detention pending a public examination, which is a process under the Bankruptcy Act to investigate a bankrupt's affairs. The matter was heard in the Federal Court of Australia. The key issue before the court was whether Mr Mulhern should be released from custody before his scheduled public examination, despite his history of non-compliance with court orders and bankruptcy obligations.

The court considered several factors in reaching its decision. Firstly, Mr Mulhern had previously failed to attend a scheduled public examination in August 2011, despite being served with a summons. Secondly, the court emphasised the importance of public examinations in the administration of the Bankruptcy Act. Thirdly, Mr Mulhern had a history of not complying with his obligations, including failing to provide necessary documents to the Trustee. Additionally, the court noted Mr Mulhern's possession of multiple birth certificates and passports, as well as his use of aliases, which raised concerns about his identity and potential attempts to evade his obligations.

Despite Mr Mulhern's claim that he had voluntarily returned to Australia to resolve his issues with the Trustee, the court found that his previous failures to comply with court orders outweighed this assertion. The court concluded that it was appropriate to detain Mr Mulhern in custody pending his public examination, as his release could risk further non-compliance. The court also noted reservations about the form of the Trustee's undertakings but found them acceptable for the purpose of facilitating the public examination.

The court ordered that Mr Mulhern be taken to the Brisbane Watch-house and brought before the court for his public examination. He was to be released from custody at the end of the first day of the examination. The costs of the application, including those of the hearing, were to be paid from Mr Mulhern's estate.

Orders

Orders of the court

1. At the conclusion of this hearing Officers of the Australian Federal Police take the Respondent Bankrupt, MICHAEL RICHARD MULHERN, also known as DEREK O'MALLEY, to the Brisbane Watch-house and that such Officers bring the Respondent Bankrupt, MICHAEL RICHARD MULHERN, also known as DEREK O'MALLEY, before the Court at Level 6, of the Commonwealth Law Courts at Brisbane at 10.00 a.m. on 17 January 2012.

2. The Respondent Bankrupt, MICHAEL RICHARD MULHERN, also known as DEREK O'MALLEY, attend before the Court at Level 6, of the Commonwealth Law Courts at Brisbane at 10.00 a.m. on 17 January 2012 for the purpose of his Public Examination.

3. The Respondent Bankrupt, MICHAEL RICHARD MULHERN, also known as DEREK O'MALLEY, be released from custody at the conclusion of the first day of the hearing of his Public Examination to be held on 17 January 2012.

4. The costs of this application including the costs of this day be payable from the estate of the respondent bankrupt with priority in accordance with section 109 of the Act.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The orders as ultimately sought by the Trustee, it is concluded, should be made. In rejecting the claim that Mr Mulhern should be immediately released from custody and in advance of his public examination tomorrow, it is considered that the following factors dictate that he should remain in custody pending that public examination, namely:·the fact that Mr Mulhern failed to attend on 9 August 2011 for the purpose of a public examination to be held on that date. A summons requiring his attendance on that date had been issued on 19 July 2011 and had been personally served on Mr Mulhern; ·the importance that a public examination take place as an aid to the administration of the Bankruptcy Act;·the failure on the part of Mr Mulhern to previously comply with the obligations imposed upon him, including a failure “in terms of giving to the trustee various books of account and disclosing to the trustee items of property and otherwise aiding the trustee in the administration of his bankrupt estate”: [2011] FCA 930 at [5]; ·the fact that Mr Mulhern apparently has in his possession two original Irish birth certificates – one in the name of Michael Richard Mulhern and another in the name of Michael Oliver Mulhern. He has an Australian and an Irish passport. There is also a prospect that he may recently have applied for yet a further Irish passport; and·the fact that Mr Mulhern has apparently assumed at least one alias.Such factors, it is respectfully considered, are not outweighed by the assertions of Mr Mulhern this afternoon that:·he voluntarily returned to Australia on 8 January 2012 with a view to resolving all issues with his Trustee; and·the fact that an explanation can readily be provided as to his possession (for example) of two birth certificates.Although detaining a person in custody (even for a short period of time) is self-evidently a serious deprivation of liberty, it is respectfully considered that it was manifestly appropriate for the power conferred by s 78(1) to have been exercised on both 9 August 2011 and 12 January 2012. It is further concluded on balance that no order should be made releasing Mr Mulhern from custody in advance of his attendance tomorrow at a public examination. To now order his release has the very real prospect that Mr Mulhern will again seek to avoid compliance with an order of the Court that he attend a public examination and will again seek to avoid the obligations imposed upon him by the Bankruptcy Act. To permit his release upon undertakings being given to comply with obligations and to attend a public examination tomorrow only invites reservation as to why such undertakings now given would be honoured given Mr Mulhern’s previous failures. CONCLUSIONS Mr Mulhern should be detained in custody pending the public examination to be conducted tomorrow. The orders as otherwise sought by the Trustee should be made. Reservation is expressed as to the form in which the undertakings have been drafted on behalf of the Trustee. But the form of those orders at least facilitates the public examination originally scheduled to take place on 9 August 2011 and are otherwise acceptable to the Trustee.

Ratio Decidendi

Legal Principle Established

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