Re Barton

[1980] FCA 67

Re: THOMAS BARTON (1980) 43 FLR 245
No. 310 of 1974
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Lockhart J.(1)

CATCHWORDS

Bankruptcy - discharge - application for leave to intervene in discharge - applicant seeking to intervene not necessarily creditor whose debt has been admitted by trustee or who has lodged proofs of debt or who could prove in the bankrupt's estate - applicant seeking to demonstrate that the bankrupt has been guilty of gross commercial immorality - whether para. 30 (1) (b) empowers the Court to grant the applications - application of Bankruptcy Rules - Court's implied and inherent powers to grant leave to intervene

Bankruptcy Act 1966 - (Cth.) ss. 30 (1) (b), 149, 150;

Companies Act 1961 (N.S.W.) ss. 178 (9), 367 B

Bankruptcy Rules 52-55, 105, 113 (1) (b)

Bankruptcy - Discharge - Application for leave to intervene in application for discharge - Applicant seeking to intervene not a creditor whose debt had been admitted by trustee nor one who had lodged proof of debt nor necessarily one who could prove in bankrupt's estate - Applicant seeking to demonstrate that bankrupt had been guilty of gross commercial immorality - Power of court to grant application for leave to intervene - Implied and inherent power - Bankruptcy Act 1966 (Cth), ss. 30 (1) (b), 149, 150 - Bankruptcy Rules, rr. 52-55, 105, 113 (1) (b) - Companies Act, 1961 (N.S.W.), ss. 178 (9), 367B.

HEADNOTE

On a bankrupt's application for discharge from his bankruptcy the New South Wales Corporate Affairs Commission, eight companies in liquidation and a bank sought leave to intervene.

In proceedings in the New South Wales Supreme Court brought by each of the companies in liquidation and the Commission, it was alleged that the bankrupt had been guilty of improper conduct as a director of each of those companies, and claims were made for damages and orders for repayment or restoration of money exceeding $15,000,000. In other proceedings commenced against the bank, the bank had cross-claimed against the official receiver as trustee of the estate of the bankrupt, and these proceedings involved claims in excess of $3,600,000.

The bank had lodged a proof of debt against the bankrupt's estate, claiming $8,100,000, although its claim had not been admitted. The eight companies in liquidation had not lodged proofs of debt.

The applicants sought leave to intervene on the grounds that (1) their claims against the bankrupt, whether or not they were provable in the estate, should be taken into account by the court in determining whether an order of discharge should be granted; (2) the applicants (other than the bank) wished to adduce evidence that the bankrupt had been guilty of gross commercial immorality on a large scale; and (3) that since the Attorney-General had ordered that the Supreme Court proceedings be instituted in the public interest, the court should, as a matter of discretion, hear the applicants.

Held: (1) While normally it is sufficient if the right of appearance on the hearing of an application for discharge is confined to the official receiver, the petitioning creditor, and creditors whose debts have been admitted to proof, s. 30(1)(b) of the Bankruptcy Act, which gives the court power to make orders necessary for carrying out or giving effect to the Act, empowers the court to grant leave to other parties to intervene where they may be able to assist the court in bankruptcy proceedings, including applications for discharge, notwithstanding that they may be creditors whose debts have not been admitted, creditors who have not lodged proofs of debt, or creditors whose debts are not provable in the estate.

Re Barker; Ex parte Constable (1890), 25 QBD 285; Re Stainton; Ex parte Board of Trade (1887), 19 QBD 182; Re Haines (1937), 13 ABC 83; Re Gray (1960), 19 ABC 29; Re Prince; Ex parte The Bankrupt (1961), 19 ABC 39, referred to.

(2) Had s. 30 (1) (b) of the Bankruptcy Act not empowered the court to grant leave to the applicants to intervene, then r. 113 (1) (b) of the Bankruptcy Rules would have given that power.

(3) Whether power to grant leave to intervene arose from the court's inherent jurisdiction, or from s. 150 (4) of the Bankruptcy Act, discussed.

Corporate Affairs Commission v. Bradley (1974), 24 FLR 44; Re Great Eastern Cleaning Services Pty. Ltd., (1978) 2 NSWLR 278, referred to.

HEARING

Sydney, 1980, April 28; May 2, 13. #DATE 13:5:1980

APPLICATIONS.

Applications for leave to intervene in an application by the bankrupt for an order of discharge from bankruptcy.

J. Stowe, for the Corporate Affairs Commission and the companies.

J. R. Dunford, for the bank.

G. Segal, for the bankrupt.

Cur. adv. vult.

Solicitor for the Corporate Affairs Commission: John M. Swan.

Solicitors for the bank: Henry Davis York & Co.

Solicitors for the bankrupt: Segal & Stern.

R. R. BOADEN

ORDER

1. The date previously fixed for the hearing of the application for discharge namely 2 June 1980, be vacated.

2. The conditions upon which leave to intervene was granted on 2 May be vacated, with liberty to impose other conditions, if any, in substitution.

3. The application for discharge stand over generally with liberty to restore on seven days' notice.

4. Costs be reserved of all parties to the applications for intervention and of the application for discharge.

5. Liberty be reserved to any party to apply on two days' notice on any matter arising out of the application for intervention.

JUDGE1

A sequestration order was made against Thomas Barton ("the bankrupt") on 23 August 1974. He seeks an order of discharge from his bankruptcy. The hearing of this application was specially fixed for 2 June 1980.

Application is made by nine companies and by Corporate Affairs Commission of New South Wales ("the Commission") for leave to intervene in the application for discharge. When I refer to all applicants together I shall call them "the applicants". By consent all applications for leave to intervene were heard together. The applications were heard by me at this stage so that the applicants and the bankrupt would know the result in sufficient time to enable them to prepare for the hearing of the application for discharge, only one month hence.

The hearing of the applications for leave to intervene concluded on the morning of Friday 2 May when I granted the applications on certain conditions. The orders made by me were as follows:-
"1. I give leave to the applicants to intervene in the application by the bankrupt for discharge pursuant to s. 150 of the Bankruptcy Act 1976 upon the following conditions:-

(a) that the applicants file and serve on the bankrupt and the Official Receiver on or before 19 May 1980 particulars of the matters on which they propose to rely on the hearing of the application for discharge; and

(b) that, so far as practicable, the evidence to be relied on by the applicants be by affidavit, subject to cross examination, and that all affidavits be filed and served on the bankrupt and the Official Receiver on or before 19 May 1980;

2. I direct the bankrupt to file and serve on the Official Receiver, the petitioning creditor and the applicants all affidavits in reply to the affidavits filed and served by the applicants on or before 29 May 1980;

3. Costs of all parties of these applications reserved;

4. The application for discharge is stood over to 29 May 1980 at 9.30 a.m. for mention;

5. I reserve liberty to the applicants and the bankrupt to apply on 2 days' notice as to any matter that may arise from these orders."

I said that I would give my reasons for judgment as soon as possible after Friday 2 May.

Later in the afternoon of that Friday at the request of counsel for the bankrupt, I saw him and counsel for the applicants and the solicitor for the Official Receiver and for the petitioning creditor in chambers. I was told that the bankrupt wished to have his application for discharge stood over generally and that no-one opposed that course, subject to the question of costs of the applications for leave to intervene being determined at some appropriate time. I told counsel and the solicitor present that in those circumstances I had no objection to the course proposed; but that the matter must be listed before me when I next sat in Sydney, i.e. on Monday 12 May 1980. On 12 May I vacated the date previously fixed for the hearing of the application for discharge namely, 2 June 1980; vacated the conditions upon which leave to intervene was granted on 2 May with a view to conditions, if any, for substitution being imposed at a later date; stood the application for discharge over generally with liberty to restore on seven days' notice; reserved costs of all parties to the applications for intervention and of the application for discharge; and reserved liberty to any party to apply on two days' notice on any matter arising out of the application for intervention.

What follows are my reasons for the orders made by me on 2 May 1980.

The Commission and eight of the nine companies are represented by the same solicitor and counsel. Those eight companies are all in liquidation. Their names are as follows:-
Murumba Oil N.L. (In Liquidation) ("Murumba")
Mulkana Corporation N.L. (In Liquidation) ("Mulkana")
Corporate Mining Investments of Australia Limited (In Liquidation) (C.M.I.")
Intercontinental Properties Pty. Limited (In Liquidation) ("Intercontinental").
County Oil Limited (In Liquidation) ("Bounty Oil")
Beecee Group Limited (formerly Brins General Insurance Co. Limited) (In Liquidation) ("Beecee Group").
Westmoreland Minerals Limited (In Liquidation) ("Westmoreland")
Harbourside Oil N.L. (In Liquidation) ("Harbourside").

The ninth applicant, Bank of New South Wales ("the bank") is separately represented.

To understand the basis on which the applicants put their respective cases for intervention, it is necessary to refer to some facts relating to proceedings instituted in the Supreme Court of New South Wales Equity Division to which the applicants are parties.

Each of the applicants, Murumba, Mulkana, C.M.I. and Intercontinental, instituted separate proceedings in 1977. Beecee Group, Westmoreland and Harbourside instituted a proceeding as co-plaintiffs in 1978. Bounty Oil instituted a proceeding in 1979. All proceedings are against the bankrupt and others as defendants. The Commission is a co-plaintiff in each proceeding.

The Attorney-General for the State of New South Wales had caused each of the proceedings to be instituted in the name of the particular company as plaintiff pursuant to sub-s. 178 (9) of the Companies Act 1961 (N.S.W.) which provides:-
"(9) If from a report of an inspector made under this section, or from the notes of an examination under this Part, the Minister is of the opinion that proceedings ought in the public interest to be brought by a company, affairs of which were investigated by the inspector, for the recovery of damages in respect of fraud, misfeasance or other misconduct in connection with affairs of the company or for the recovery of property of the company the Minister may cause proceedings to be instituted accordingly in the name of the company."

Each of the proceedings was instituted by the Commission pursuant to s. 367B of the Companies Act 1961 (N.S.W.) which, so far as relevant, provides:-
"367B. (1) Where it appears to the Commission or a prescribed person that any other person who has taken part in the formation, promotion, administration, management or winding up of a company to which this section applies -

(a) has misapplied or retained or become liable or accountable for any money or property of the company; or

(b) has been guilty of any negligence, default, breach of duty or breach of trust in relation to the company,

the Commission, or prescribed person, may apply to the Court to examine the conduct of that other person or for an order that that other person --

(c) repay or restore the money or property or such part thereof as the Court thinks fit together with interest at such rate as the Court thinks just; or

(d) pay to the company such sum by way of damages in respect of the misapplication, retainer, negligence, default, breach of duty or breach of trust, as the Court thinks just, or may apply for both such an examination and such an order."

It is not necessary to state the nature of the proceedings in any detail. It is sufficient to say that in each proceeding the companies and the Commission as plaintiffs allege that the bankrupt has been guilty of improper conduct, generally as a director of the company concerned, which constitutes fraud, breach of trust, breach of fiduciary duty, negligence, misfeasance, misconduct or conspiracy to defraud. The relief claimed against the bankrupt includes damages and orders for repayment or restoration of moneys.

The total amount claimed by the eight companies and the Commission from the bankrupt is about fifteen million dollars ($15,000,000.00).

In 1971, Intercontinental commenced proceedings in the Supreme Court of New South Wales, Equity Division against the bank. The bank filed a cross-claim in those proceedings against the Official Receiver as trustee of the estate of the bankrupt and others. In 1977, C.M.I. commenced proceedings in the Supreme Court of New South Wales Equity Division against the bank. The bank filed a cross-claim in those proceedings also against the Official Receiver and others.

In 1977 C.M.I. and the Commission commenced proceedings in the Supreme Court of New South Wales, Equity Division and by cross-claim, filed also in 1977, the bank was joined as a party to those proceedings. On the same day as the cross-claim was filed the bank filed a second cross-claim in the proceedings also against the Official Receiver and others.

None of the proceedings involving the bank have yet been heard. The amounts involved in those proceedings, apart from claims for unliquidated damages, amount to three million six hundred and sixty-four thousand seven hundred and thirty-six dollars and forty cents ($3,664,736.40).

The proceedings against the bank are in respect of cheques drawn on the accounts of C.M.I., Mulkana and Intercontinental. They arise out of various transactions which took place in 1971 involving the sale and purchase of shares and other property and the making and repayment of various alleged loans. The bank denies any liability to the plaintiffs in those proceedings and by its cross-claims against the bankrupt it seeks indemnity or contribution from him as a trustee of the funds of the various companies on the basis that, if there was any breach of trust by the bank, the bankrupt knowingly participated in those breaches and that as a director of the relevant companies he was himself a trustee of the funds of those companies.

None of the applicants have lodged proofs of debt against the bankrupt's estate except the bank which claims in its proof of debt eight million one hundred and seventy-four thousand seven hundred and thirty-six dollars ($8,740,736.00). Its claim has not been admitted to rank for dividend.

In addition to the applications for leave to intervene in the application of the bankrupt for discharge, the applicants Murumba, Mulkana, C.M.I., Intercontinental and Bounty Oil apply to the court for leave nunc pro tunc, to the extent that such leave may be necessary, to commence the proceedings in the Supreme Court of New South Wales, Equity Division to which I have referred and to take all such steps as have been taken to date, and as it may hereafter be reasonable for the applicants to take in the future conduct of those proceedings, up to the entry of judgment therein.

Beecee Group, Westmoreland, Harbourside and the Commission obtained leave from this court to commence the proceedings in which they are plaintiffs against the bankrupt in 1978.

The bank's cross-claims in the various proceedings to which it is a party were filed pursuant to leave granted by this court in 1977.

The applications for leave to commence proceedings are made under sub-s. 58 (3) of the Bankruptcy Act 1966 ("the Act"). These applications have not yet been heard by me.

I shall consider the applications for leave to intervene in the application for discharge.

The bankrupt opposes all the applications.

The eight applicants, other than the bank, do not assert that their debts or claims are necessarily provable against the bankrupt's estate. Rather they assert that a difficult question may exist as to whether their debts or claims against the bankrupt are provable in his estate; and that the claims should be taken into account by the court in determining whether an order of discharge should be granted and that their rights would be directly affected by such an order. Hence they ought to be heard and given leave to intervene.

The bank adopts much the same position as the other applicants except that it asserts it has a provable claim against the bankrupt's estate as to some of the moneys claimed from the bankrupt.

The applicants other than the bank contend that an additional ground for their being given leave to intervene is that they wish to adduce evidence that will demonstrate that the bankrupt has been guilty of gross commercial immorality on a large scale.

It was said that the proceedings in the Supreme Court have been instituted by the Commission as a statutory authority charged with the administration of the Companies Act of New South Wales; and by the first law officer of that State, following his consideration of reports by inspectors of the companies concerned and his conclusion that the proceedings ought to be instituted in the public interest. It was submitted that, if the court were to be deprived of the opportunity of hearing the applicants, it would be destructive of its role as guardian of the public interest. It was not asserted that the applicants have any legal right of intervention; but that leave to intervene should be given as a matter of discretion.

Counsel for the bank did not advance this ground as being in the forefront of the bank's claim to intervene; but nevertheless relied upon it.

The applicants relied on four separate grounds in support of their applications for leave to intervene.

First, it was contended that paragraph 30 (1) (b) of the Act empowered the court to grant the applications. It was common ground that none of the provisions of the Bankruptcy Amendment Act 1980 apply to any of these applications.

Sub-section 30 (1) provides:-
"The Court -

(a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part X or Part XI coming within the cognizance of the Court; and

(b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter."

Pursuant to s. 149 of the Act, the Official Receiver lodged an objection to the discharge on the following grounds:-
"1. The bankrupt's estate has a deficiency in excess of fifty thousand dollars ($50,000.00).

2. The amount of the deficiency cannot be determined as legal proceedings in respect of certain claims against the bankrupt estate have to be concluded before a decision may be made as to their admissibility and therefore determine more fully the actual deficiency.

3. The public examination of the bankrupt has not yet been completed."

In his statement of affairs the bankrupt disclosed assets said to have a total value of four hundred and forty-five thousand six hundred and seventy-four dollars ($445,674.00) and he disclosed a liability to the Deputy Commissioner of Taxation in the sum of seventy-seven thousand three hundred and ninety-two dollars and fourteen cents ($77,392.14).

The sum of one thousand five hundred and seventy-eight dollars and forty-five cents ($1,578.45) has been brought to the credit of the estate account representing, in the main, proceeds from the sale of furniture and effects left by the bankrupt when he departed from Australia.

Seven proofs of debt have been lodged against the bankrupt's estate totalling eight million, six hundred and thirty-three thousand five hundred and eighty-three dollars ($8,633,583.00) of which the bank's claim represents eight million one hundred and seventy-four thousand seven hundred and thirty-six dollars ($8,174,736.00).

Of those claims only the claim of the Deputy Commissioner of Taxation has been admitted to rank for dividend.

No dividend has been paid to creditors.

It is contended by counsel for the applicants that the court's power to make such orders as it considers necessary for the purpose of carrying out or giving effect to the Act in any case of bankruptcy includes the power to make the orders sought in these applications.

On the hearing of an application for discharge under s. 150 the court may consider conduct of the bankrupt which has anything to do with the bankruptcy either before or after its commencement. There must be some nexus with the bankruptcy.

The court may not take into account everything which had been done by the bankrupt during his life, whether connected with the bankruptcy or not; but the court is not confined to a consideration of the matters specified in paragraphs (a) to (i) of sub-s. (6) of s. 150.

If none of the matters specified in sub-s. (6) is established the court may make an unconditional order of discharge. If any of the matters specified in sub-s. (6) is established, the court must either refuse to make an order of discharge or make an order of discharge but suspend its operation unconditionally or subject to such conditions as the court thinks proper: Re Barker; Ex parte Constable (1890) 25 Q.B.D. 285.

In considering an application for discharge the court must have regard not only to the interests of the bankrupt and of his creditors but also to the public interest and to commercial morality: see Re Stainton; Ex parte Board of Trade (1887) 19 Q.B.D. 187; per Cave J. at p. 185; Re Haines (1937) 10 A.B.C. 83 at pp. 87 and 88; Re Gray (1960) 19 A.B.C. 29 at p. 31; and Re Prince; Ex parte The Bankrupt (1961) 19 A.B.C. 39 at pp. 41 and 42.

The applicants seek to adduce evidence with a view to establishing that the behaviour of the bankrupt in matters relevant to his bankruptcy fell far short of accepted standards of commercial morality.

It is common ground that the Official Receiver, the petitioning creditor and creditors whose claims have been admitted have sufficient locus standi to appear on the hearing of an application for discharge.

The Official Receiver has certain specific statutory duties to perform: see s. 19. It is his responsibility, subject to the control of the court, to safeguard the interests of creditors of the bankrupt and the public interest, including the observance of accepted standards of commercial morality.

The applicants recognise that in most cases the interests of justice will be served if the right of appearance before the court on hearing an application for discharge is confined to the Official Receiver, the petitioning creditor and creditors whose debts have been admitted to proof. They contend that in the unusual circumstances of this case, unless intervention is allowed, not only will the court be deprived of assistance from those best able to give it on matters relating to alleged breaches of commercial morality and other matters relevant to the public interest; but the applicants themselves will be seriously prejudiced because an order of discharge could be made that would release the bankrupt from such of their debts, if any, as were provable in the bankruptcy.

Arguments were advanced by counsel for the bankrupt against the granting of leave sought. I shall not deal with all of them as some were disposed of in the course of argument.

First, it was submitted that the Official Receiver and the petitioning creditor, the Deputy Commissioner of Taxation who is the only proved creditor, would be in a position to put all matters relevant to the application for discharge.

Although I have no doubt that the Official Receiver and the petitioning creditor will give all assistance to the court which they are able to give, it is clear from the evidence in this application for leave to intervene that there are many complicated transactions involving the bankrupt over the years preceding his bankruptcy that may have a bearing on his application for discharge. Proceedings have been on foot for some time involving the bankrupt and the applicants including those to which I have referred earlier. In a case with such far reaching ramifications as the present, and involving such complex questions of fact and law, it is unreal to expect that the Official Receiver and the petitioning creditor would be able to adequately deal with all matters that may be relevant.

On the other hand, if the applications are granted it will be important to ensure that the application for discharge is not used as a fishing expedition for the purposes of the current litigation in the Supreme Court of New South Wales or any other litigation that may be on foot or in contemplation. This is a matter that can be controlled by the court by keeping a watchful eye on the proceedings and by the observance of proper restraint by the applicants.

I entirely agree that the hearing of the application for discharge ought not to be unduly protracted; but on the other hand all matters relevant to the application for discharge must be before the court.

Next it was submitted by counsel for the bankrupt that none of the claims propounded by any of the applicants could conceivably be provable against the estate of the bankrupt even if they succeeded in full.

This is obviously a question of such complexity that to resolve it would necessarily involve a lengthy consideration of facts and submissions going to the heart of the very proceedings themselves that have been instituted in the Supreme Court of New South Wales, an exercise that cannot properly be undertaken in the course of hearing these applications for leave to intervene or for that matter on the actual hearing of the application for discharge. It may or may not be that some of the claims of the applicants, if successful, will be provable against the estate of the bankrupt.

I do not regard this objection of the bankrupt as being sufficient in itself to cause the applications for leave to intervene to fail; but it is a matter which I shall take into account.

It was submitted by counsel for the bankrupt that the only source of any entitlement of the applicants to intervene could be the Bankruptcy Rules, that the only relevant rules are rules 52 to 55 inclusive, and that they provide an exclusive code manifesting an intention that only the bankrupt, the Official Receiver, the petitioning creditor and creditors whose debts have been proved may appear on the hearing of an application for discharge. Counsel pointed to r. 55, which requires that a creditor whose debt has been proved and who intends to oppose an application for discharge shall, within the specified time, file and serve a notice of opposition to the application in the requisite form. Counsel submitted that it would be manifestly absurd for a creditor whose debt has been proved to be required to comply with rule 55; but a creditor whose debt has not been proved to be immune from the requirement.

Finally he submitted that r. 105 is expressly excluded by sub-r. 52 (4) from applications for discharge. Rule 105 provides, so far as relevant, that where, on the hearing of an application to the court the court is of the opinion that the application should be served on a person on whom it has not been served, it may direct the applicant to serve the application on that person and give consequential directions. It was submitted that this points to the conclusion that only the bankrupt, the Official Receiver, the petitioning creditor and creditors whose debts have been proved are entitled to be heard on the hearing of the application for discharge.

A bankrupt seeking a discharge from bankruptcy under s. 150 is required to attach to his application a list, certified by the trustee, setting out the names and addresses "of the bankrupt's creditors.": sub-r. 52 (1).

The Registrar is required to serve notice of the date, time and place fixed for the hearing of the application on each creditor specified in the list attached to the application: sub-r. 52 (2).

There are sound reasons why all the bankrupt's creditors, not only those whose debts have been proved, should be given notice of the prospective hearing of an application for discharge. For instance there may be secured creditors of the bankrupt who, although standing outside the bankruptcy, may have an interest in the application for discharge.

In my opinion one cannot construe r. 55, which in terms merely requires a creditor whose debt has been proved and who intends to oppose an application for discharge, to give the requisite notice of his intention to oppose, as impliedly recognising that no creditors other than those whose debts have been proved have the right to appear on the hearing of the application.

The exclusion of r. 105 from the rules relating to application for discharge does not assist the bankrupt's argument. All r. 105 does is to empower the court to direct service of an application to the Court upon a person on whom it has not been served. Its exclusion from the rules relating to applications for discharge says nothing relevant to the questions I have to decide. I see no warrant for construing r. 52 so as to be read down only to creditors whose debts have been proved.

A bankrupt may apply for a discharge, say three months after the making of the sequestration order against him, assuming the requirements as to public examination have been complied with or dispensed with. Generally the Official Receiver would not have had sufficient time to enable him to deal with proofs of debt that may have been lodged. Probably most proofs would not have been lodged. Is it to be said that a creditor, merely because his debt has not been admitted to proof, is to be shut out from seeking to appear on the hearing of the application for discharge? Surely not. This is but one of the many instances that may be found of unjust or odd consequences that would flow from the acceptance of the bankrupt's submissions.

Rules 52 to 55 themselves variously use the expressions "the bankrupt's creditors" (rule 52), "a creditor whose debt has been proved" (rule 55) or "creditor of the bankrupt whose debt had been proved before the order was made" (rule 56).

It is as well to remember that an objection to the discharge of the bankrupt by force of s. 149 may be entered by the Registrar, the trustee or "a creditor": see paragraph 149 (3) (b). Rule 49 of the Bankruptcy Rules provides that "a person" may enter an objection to the discharge by filing the prescribed notice of objection. I see no warrant for construing "a creditor" where appearing in s. 149 as if it meant a creditor whose debt has been admitted to proof.

There are good reasons why a creditor should have the right to object to the automatic discharge of a bankrupt under s. 149 whether his debt has been proved or not. The example I have given already in relation to the early application for discharge is but one of many.

Section 30 and its counterpart in the English Bankruptcy Act 1914, and in earlier bankruptcy legislation, have been construed so as to invest courts, dealing with bankruptcy matters, with wide powers. I need not refer to the numerous decisions to this effect.

In my opinion s. 30 empowers the court to give leave to persons to intervene in bankruptcy proceedings, including applications for discharge pursuant to s. 150, notwithstanding that they may be creditors whose debts have not been admitted, creditors who have not lodged proofs of debt or creditors whose debts are not provable in the estate. Whether the power should be exercised depends upon the court's assessment of all the relevant matters in a particular case.

I must approach these applications to intervene in a practical way. Counsel for the applicants informed me that the applicants seek to adduce evidence relevant to the application for discharge and bearing, inter alia, on the question of the commercial morality of the bankrupt in relation to a number of business transactions in which he is said to have been involved. The relevance of this evidence can be tested on the hearing of the application for discharge.

I do not intend to deprive the court of assistance from sources best able to give it. I would add that counsel for the applicants assured me that the applicants do not intend to endeavour to use the application for discharge for the ulterior purpose of fishing for evidence to support their claims in the Supreme Court.

I considered during argument the possibility of adjourning these applications for leave to intervene until the hearing of the application for discharge itself, and not to allow intervention at this stage; but to abide the progress of the application for discharge and then deal with any renewed application that may be made by any of the applicants for leave to intervene in the light of the evidence as it unfolds. On reflection, I have come to the conclusion that this would not be the appropriate course to take. Where complicated commercial transactions are involved, it is right that persons seeking to adduce evidence in relation to them should not be put to the trouble and expense of preparing material that may render their efforts futile without knowing whether they will have the right to present it. Also, in fairness to the bankrupt, it is only right that he should have ample notice, in advance of the hearing of his application for discharge, of the evidence proposed to be adduced by the applicants.

I turn to the second basis on which the applicants put their case for leave to intervene namely, paragraph 113 (1) (b) of the Bankruptcy Rules which provides:-
"113. (1) Where the Court is satisfied that -- . . . .

(b) difficulty arises or doubt exists as to the practice or procedure applicable in the circumstances of a particular case,

the Court may give such directions with respect to the practice and procedure to be followed in the case as the Court considers necessary."

As I am satisfied that paragraph 30 (1) (b) of the Act empowers the court to give leave to the applicants to intervene, in my opinion there is no room for the application of paragraph 113 (1) (b) of the Bankruptcy Rules. If I had reached a different conclusion as to paragraph 30 (1) (b) of the Act, in my opinion this would be a case for the application of paragraph 113(1) (b); and in that event I would have acceded to the applications for leave to intervene.

The third basis on which the applicants put their case is that sub-s. 150 (4) of the Act is said to confer an implied power on the court to hear evidence from persons other than the trustee, the Official Receiver or creditors whose debts have been proved.

Sub-section 150 (4) provides:
"(4) The Court may, in addition, hear, and put such questions as it thinks fit to the trustee, an Official Receiver, a creditor whose debt has been proved or the bankrupt and receive such other evidence as it thinks fit."

Counsel for the applicants submitted that the power vested in the court "to receive such other evidence as it thinks fit" was the source of this implied power.

I do not think it necessary to reach a conclusion on this question as I have held that the requisite power is to be found in another source.

The final basis on which it was submitted by counsel for the applicants that the court had power to give leave to intervene arose from the court's inherent jurisdiction.

Counsel for the bankrupt submitted that this court had no inherent jurisdiction to order that an intervener be joined as a party. He submitted that the question was fully dealt with by the Court of Appeal of New South Wales in Corporate Affairs Commission v. Bradley; Commonwealth of Australia (Intervener) 1974 1 N.S.W.L.R. 391 and followed by Needham J. in Re Great Eastern Cleaning Services Pty. Limited and The Companies Act 1978 2 N.S.W.L.R. 278.

I do not find it necessary to decide this question, having reached the conclusion by a different path that the applications ought to be granted. In Corporate Affairs Commission v. Bradley (supra) Hutley J.A., whose reasons for judgment were agreed in by Reynolds J.A. and Glass J.A., held that there is no inherent power in the Supreme Court of New South Wales to order that an intervener be joined as a party, although his Honour said at p. 398:-
"This does not exclude the possibility that the inherent privileges of the Attorney-General of the Commonwealth permit it, in which case procedure must accommodate his privilege."

I do not find it necessary to decide whether the reasons for judgment of Hutley J.A. apply to this court either at all or when exercising its jurisdiction in bankruptcy matters.

For these reasons I gave leave to the applicants to intervene in the bankrupt's application for discharge.