R v Warren Victor Owen-Pearse No. SCCRM 95/512 Judgment No. 5420 Number of Pages 9 Bankruptcy Offences (1996) 66 Sasr 344
[1996] SASC 5420
•20 February 1996
COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA COURT OF CRIMINAL APPEAL MATHESON(2), MILLHOUSE(3) AND LANDER(1) JJ
CWDS
Bankruptcy offences - particular offences - failure to make full disclosure - Appellant charged with failure of bankrupt to disclose property under s265(1)(a) of the Bankruptcy Act, 1966 (Cwlth) - s265(1)(a) does not oblige the bankrupt to identify a right to possession - a bankrupt cannot be guilty of an offence under s265(1)(a) for falsely denying that he or she had possession of property. Bankruptcy Act, 1966 (Cwlth), referred to.
HRNG ADELAIDE, 11 December 1995 #DATE 20:2:1996 #ADD 28:3:1996
Counsel for appellant: Mr C J Kourakis
Solicitors for appellant: Alf Strappazon
Counsel for respondent: Mr M Gray QC with him
Mr R N Mayne
Solicitors for respondent: DPP (Cwlth)
ORDER
Appeal allowed.
JUDGE1 LANDER J The appellant was charged upon the information of the Commonwealth Director of Public Prosecutions with four counts of breaches of the BankruptcyAct 1966 (Cth).
"STATEMENT OF OFFENCE
Count 1. FAILURE OF BANKRUPT TO DISCLOSE PROPERTY
(Section 265(1)(a) Bankruptcy Act 1966)
PARTICULARS OF OFFENCE
WARREN VICTOR OWEN-PEARSE who was declared bankrupt on the
19th day of February 1990, did on about the 5th day of March
1990 at Adelaide in the said State in an Affidavit verifying
Statement of Affairs fail to the best of his knowledge and
belief to fully and truly disclose to the trustee property,
namely a Lithgow .303 rifle Serial No. A59542, a Lithgow .22
rifle Serial No. 125363, and a Sportco Model 44 7.62 mm/.38
Serial No. DG783.
STATEMENT OF OFFENCE
Count 2. FAILURE OF BANKRUPT TO DISCLOSE PROPERTY
(Section 265(1)(a) Bankruptcy Act 1966)
PARTICULARS OF OFFENCE
WARREN VICTOR OWEN-PEARSE who was declared bankrupt on the
19th day of February 1990 did on about the 9th day of August
1990 at Adelaide in the said State at a Section 69 Public
Examination fail to the best of his knowledge and belief to
fully and truly disclose to the trustee property, namely a
Lithgow .303 file Serial No. A59542, a Lithgow .22 rifle
serial No. 125363, and a Sportco Model 44 7.62 mm/.38 Serial
No. DG783.
STATEMENT OF OFFENCE
Count 3. FAILURE OF BANKRUPT TO DISCLOSE PROPERTY
(Section 265(1)(a) Bankruptcy Act 1966)
PARTICULARS OF OFFENCE
WARREN VICTOR OWEN-PEARSE who was declared bankrupt on the
19th day of February 1990 did on about the 29th day of
January 1991 at Adelaide in the said State at a Section 69
Public Examination fail to be the of his knowledge and
belief to fully and truly disclose to the trustee property
namely a Lithgow .303 rifle Serial No. A59542, a Lithgow .22
rifle Serial No. 125363, and a Sportco Model 44 7.62 mm/.38
Serial No. DG783.
STATEMENT OF OFFENCE
Count 4. FAILURE OF BANKRUPT TO COMPLY WITH DIRECTION OF
THE TRUSTEE
(Section 265(1)(c) Bankruptcy Act 1966)
PARTICULARS OF OFFENCE
WARREN VICTOR OWEN-PEARSE who was declared bankrupt on the
19th day of February 1990 did on about the 29th day of
September 1992 at Adelaide in the said State fail to comply
with a direction contained in a letter dated 29 September
1992 from the Insolvency and Trustee Service Australia
requiring him to surrender to the trustee property namely a
Lithgow .303 rifle Serial No. A59542, a Lithgow .22 rifle
Serial No. 125363, and a Sportco Model 44 7.62 mm/.38 Serial
No. DG783."
2. He pleaded not guilty to all of the charges. In relation to the first count he was acquitted by verdict of the jury. In relation to the second count his Honour found that there was no case to answer and directed an acquittal. He was found guilty by verdict of the jury of counts three and four.
3. He now appeals to this Court against his conviction only in relation to Count 3.
4. The grounds of appeal are:
"The Learned Trial Judge erred in finding a 'case to answer'
on a charge of Failure of a bankrupt to disclose property
(being certain guns) to the trustee contrary to Section
265(1)(a) of the Bankruptcy Act 1966 when:
(a) the existence of property (ownership) in the guns had
been disclosed by the bankrupt to and was well known to the
trustee before the date of the alleged offence;
(b) property in the guns vested in the trustee from the
date of bankruptcy; and
(c) the Prosecutor relied on a false statement made
subsequently to the trustee that the guns had been 'sold' at
auction when they were not in fact sold in that it followed
as a matter of law that the appellant's statement could be
no more than a false representation about the disposal or
possession of the guns themselves and could not amount to a
failure to disclose his legal or equitable interest in them
which he had already acknowledged."
5. Section 265(1) in so far as it is relevant, provides:
"(1) A bankrupt:
(a) shall, to the best of his knowledge and belief, fully
and truly disclose to the trustee all of the property of the
bankrupt, and its value;
(b) shall, to the best of his knowledge and belief, fully
and truly disclose to the trustee particulars of any
disposition of property made by him within the period of 2
years immediately preceding the date on which he became a
bankrupt;
(c) shall not refuse or fail to comply with a direction by
the trustee to deliver to the trustee property in the
possession of the bankrupt, being all or part of the
property of the bankrupt;
(ca) shall, to the best of his or her knowledge and belief,
fully and truly disclose to the trustee such information
about any of the bankrupt's conduct and examinable affairs
as the trustee requires;
...
(2) A bankrupt shall be deemed to have complied with
paragraph (1)(b) in respect of any property if he shows that
that property has been disposed of in the ordinary way of
his business or in meeting the ordinary expenses of his
family."
6. The appellant became bankrupt on 19 February 1990 on the petition of the Deputy Commissioner of Taxation, and as at July 1994 was still undischarged. The Official Receiver was appointed to be his trustee in bankruptcy.
7. Pursuant to his obligations under s54 of the Bankruptcy Act, on 5 March 1990 he swore an affidavit verifying his statement of affairs, but that affidavit failed to disclose the existence of the property, namely the three rifles mentioned in the particulars to Count 3.
8. At the time of his bankruptcy s69 of the Bankruptcy Act allowed for an examination to take place before a Registrar in Bankruptcy in the Federal Court, and in the case of the appellant, the first of those examinations took place on 9 August 1990.
9. His second public examination took place on 29 January 1991. It is in relation to his answers given in the second public examination that Count 3 arises.
10. At his first public examination, which is the subject of Count 2, upon which the learned trial Judge found no case to answer, he was examined under oath about his affairs by Mr Lanham, who was then Assistant Official Receiver at the Insolvency and Trustee Service of Australia.
11. In about April 1990, and prior to the date of his first examination, as a result of information given by the police, Mr Lanham had become aware that Mr Owen-Pearse had previously owned some firearms, and had written a number of letters to Mr Owen-Pearse, seeking information in relation to those firearms.
12. The first examination records these questions and answers:
"Q. Under Part V, which is property, you list household
furniture and effects, valued at $2 000. Can you tell me
briefly what that consists of.
A. Not specifically. Personal items, clothing, stuff like
that, and including a couple of firearms.
Q. You have included the value of the firearms in that
$2 000.
A. Yes."
13. He was then asked what the couple of firearms were and he described three firearms. It was put to him that the Official Receiver had been advised that there were nine firearms registered in the appellant's name and his attention was directed to each of them for the purpose, as the examiner put it, of determining "whether you still have them in your possession".
14. He was examined in particular about the three firearms, the subject of the particulars in Count 3.
15. He was then asked:
"Q. The ones that you have, or that you acknowledge that
you still have, whereabouts are they located at the moment.
A. A friend of mind has those because I borrowed money from
him at Christmas and I - there is also another rifle on
there that is not - there is another rifle I owned that is
not on that list. I sold that to him years ago and I have
consistently used the firearms as a means of borrowing
temporary moneys from him."
16. He said that he gave the rifles to a Mr Ed McCaul at Christmas time in 1989, because he was not in a position to store the rifles.
17. He later said, in answer to further questions, that Mr McCaul had loaned him a sum in excess of $10 000 since the date of his bankruptcy.
18. As a result of his answers, enquiries were made of Mr McCaul, requesting the firearms, as a result of which the trustee received a letter from Mr McCaul, the contents of which led to the second examination on 29 January 1991.
19. At that second examination the contents of that letter were read to the appellant, and in particular this was read:
"A number of goods including firearms and furniture were
stored by our client for Mr Pearse in late 1989, in storage
premises owned by our client. Our client was not told by Mr
Pearse whether he was the owner of those goods or not. The
goods were removed from our client's premises by Mr Pearse
in or about April of this year. Our client does not have
the firearms which you have requested to be surrendered to
you."
20. After reading that extract to the appellant, Mr Lanham asked the appellant:
"Q. Can you tell me whether what Mr McCaul's solicitor says
is true, did you remove those items from storage in or about
April 1990.
A. Possibly yes.
Q. Why did you give contrary evidence at your public
examination.
A. Well I do not agree that I did give contrary evidence."
21. When asked about the whereabouts of the rifles now, he said that his wife had sold them to recover moneys owed to her. Whilst he admitted he had owned the firearms, he could not remember specifically giving her permission to sell the rifles. He said that she sold them by auction, but he was unable to say what moneys she had received.
22. He later said that he had not corresponded with the Police Department in giving information in relation to the present owners of the firearms.
23. The appellant, in his evidence at his trial, upon the charges, agreed that in answer to the question as to the whereabouts of the firearms, he did say that his wife had sold them.
24. In his evidence, the appellant was then asked:
"Q. So your wife had, in fact, sold the firearms as at the
29th of the 1st '91.
A. They had been handed over to the auctioneer prior to
that point.
HIS HONOUR
Q. That's not quite the question. The question is whether
your wife had sold them.
A. She'd taken all the steps to sell them, yes.
Q. I think the question still remains to be answered. What
is the position: did your wife sell them, or not.
A. At that stage I thought they had been sold.
Q. That's at the time you were being questioned.
A. Yes, because it was after that date that Downer returned
the three of them." Later he was asked this:
"Q. So the position was then that you had put the firearms
Into (sic) auction; the firearms had been put into auction,
and you were aware that they hadn't been sold, but that you
were negotiating their price, or the auctioneer was.
A. I knew some had been sold, but I didn't know which stage
the other ones were at."
25. The appellant was then cross-examined in relation to the sale at auction and he said that he did not know, or could not remember, whether he gave the firearms to his wife for the purpose of sale, but that they were taken to the auction and sold through her account and with her knowledge.
26. He was asked how it was that his wife received the money when the guns were his, and he said that it was because she had the account with the auctioneer. He was cross-examined in particular in relation to the reasons for allowing his wife to put the firearms up for sale. His evidence was unsatisfactory in that he was evasive and obviously prevaricating.
27. The Crown in due course called Mr McCaul to prove that although he had loaned money to the accused and the appellant had signed a document purporting to give him security over the firearms, the firearms had never been in his possession. Specifically in relation to Count 3, the Crown called the appellant's ex-wife, who said that she had never taken possession of the rifles, nor given them to an auctioneer to sell, nor sold any of the rifles.
28. Further, evidence was led from a police officer that on 30 July 1992 a bailiff brought the three firearms into the Unley Police Station, and that she took possession of them and entered their receipt in the property book. On 3 August 1992 the appellant attended the Police Station and claimed the rifles as owner.
29. The Crown case was, in those circumstances, that the answers given at the second examination were false and known by the appellant to be so.
30. The Crown case was that the accused attempted to lead the bankruptcy administration to believe all the firearms had been sold by his wife. Specifically it was put to the jury that the falsity of the answers was his failure to fully and truly disclose who had possession of the firearms. The case was not left to the jury upon the basis that the accused had not fully and truly disclosed ownership. Mr Malcolm Gray QC, who led for the respondent, acknowledged that the Crown had not put its case upon a failure to disclose ownership, and that a failure to disclose ownership was not left to the jury.
31. I think the appeal ought to be considered in light of the Crown case at trial and in light of what was left to the jury, that is that the offence was to be considered upon the basis that the accused had not truthfully disclosed possession of the firearms in his answers at the second examination.
32. Section 58 operates to vest all of the property of the bankrupt, subject to the exceptions in s116(2) of the Act, in the bankrupt's trustee in bankruptcy as at the date of his bankruptcy. All interests in property, legal or equitable, immediately vest in the trustee, and all after-acquired property vests in the trustee as soon as it is acquired by, or devolves on, the bankrupt. Therefore s265(1)(a) requires the disclosure of any legal or equitable interest in property existing at the time of bankruptcy and the disclosure of any legal or equitable interest which is subsequently acquired.
33. It was argued, therefore, that the statement that the rifles had been sold does not carry with it the implication that the appellant had sold the rifles at auction because it was known to the trustee that all of the bankrupt's property had vested in the trustee and therefore the appellant did not have an interest capable of being conveyed. Therefore the statement could only mean that he wrongfully parted with possession. Because he had disclosed the proprietary rights that he did on 9 August 1990, he could not after that time fail to disclose the proprietary interest he had immediately before his bankruptcy.
34. Section 265(1)(a) assumes that the property has vested in the trustee because all property vests upon the bankruptcy order. Therefore it acknowledges that a bankrupt has no right to deal with the property after his or her bankruptcy. This section and other sections have been enacted because it is recognized that without a power of compulsion, in some cases, the trustee will not be able to ascertain the existence or whereabouts of property, and that unless the trustee can so ascertain, a bankrupt may wrongly deal with the property.
35. Property is defined in s5 of the Act:
"... means real or personal property of every description,
whether situate in Australia or elsewhere, and includes any
estate, interest or profit, whether present or future,
vested or contingent, arising out of or incident to any such
real or personal property."
36. "The property of the bankrupt" is also defined in s5. It means:
"(a) except in subsections 58(3) and (4):
(i) the property divisible among the bankrupt's
creditors; and
(ii) any rights and powers in relation to that property
that would have been exercisable by the bankrupt if he or
she had not become a bankrupt; and
(b) in subsections 58(3) and (4):
(i) the property, rights and powers referred to in
paragraph (a) of this definition; and
(ii) any other property of the bankrupt."
37. For the purposes of s265(1)(a) the obligation upon a bankrupt is to fully and truly disclose to the trustee the property divisible among the bankrupt's creditors and any rights and powers in relation to that property that would have been exercisable by the bankrupt if the bankrupt had not become a bankrupt. The question in this case is whether the right to possession of property is within that definition or not.
38. Section 116 defines the property of a bankrupt which is divisible amongst the creditors of the bankrupt:
"(1) Subject to this Act -
(a) all property that belonged to, or was vested in, a
bankrupt at the commencement of the bankruptcy, or has been
acquired or is acquired by him, or has devolved or devolves
on him, after the commencement of the bankruptcy and before
his discharge;
(b) the capacity to exercise, and to take proceedings for
exercising, all such powers in, over or in respect of
property as might have been exercised by the bankrupt for
his own benefit at the commencement of the bankruptcy or at
any time after the commencement of the bankruptcy and before
his discharge;
(c) ...
(d) ...
is property divisible amongst the creditors of the
bankrupt."
39. Some property, of course, is excluded and that is the property set out in s116(2). That property is not important for the present purposes.
40. Section 265(1) therefore requires, when the obligation and opportunity to make discovery of property arises, as it did on this occasion on 29 January 1991, that the bankrupt fully and truly disclose to the trustee all of the property as defined in section 5 and section 116.
41. I do not understand either of the sections to identify a right to possession separate from a right of ownership of the property of the bankrupt.
42. Clearly enough the sections identify legal and equitable rights howsoever arising but I do not understand the sections to recognise a right to possession separate from either legal or equitable rights.
43. In these circumstances s265(1)(a) did not oblige the bankrupt to identify a right to possession and he therefore could not be guilty of an offence for falsely denying that he had possession.
44. The construction at which I have arrived does not give rise to a possibility that bankrupts could avoid advising a trustee, truthfully, of the whereabouts of property which forms part of the bankrupt's estate.
45. There are other sections of the Act which can be invoked for the purpose of ascertaining the whereabouts of property which forms part of the bankrupt's estate or property which has been disposed of before bankruptcy. As to the former, the trustee could invoke s265(1)(c) and s265(ca), and as to the latter s265(1)(b) and s265(2) apply.
46. The trustee's right to possession is provided for in s129 and the failure to deliver up possession may be punishable by contempt proceedings (s129(5)).
47. The bankrupt's obligations to assist the trustee are spelt out in s77B. Section 78 gives wide powers to the trustee to issue a warrant of arrest for a debtor bankrupt in the circumstances envisaged in the section.
48. Section 263 provides for criminal offences punishable by imprisonment if a person with intent to defraud the creditors of a bankrupt, conceals property of the bankrupt. So also to receive property from a bankrupt with intent to defraud or to assist the bankrupt to defraud the creditors of the estate of the bankrupt is punishable by imprisonment (s263(1)(b)).
49. The Act has sufficient powers to allow a trustee to ascertain the whereabouts of property which forms part of the bankrupt's estate and to get that property in.
50. However the appellant was charged with an offence under s265(1)(a) only and in my opinion, for the reasons I have already mentioned, the case that the Crown relied upon and which was put to the jury did not disclose any offence.
51. In my opinion the appeal against his conviction on Count 3 ought to be allowed and the conviction quashed.
JUDGE2 MATHESON J I agree with the judgment of Lander J.
JUDGE3 MILLHOUSE J I agree with the judgment of Lander J.
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