Re Chapple, G.L. Ex parte Queensland Law Society Inc.

[1992] FCA 280

JUDGMENT NO. . ........ ... ........ -...- 2%0192 ..

C A T C H W O R D S

BANKRUPTCY - application by creditor for leave to object to discharge - application made ex parte - statutory period of bankruptcy about to expire - objection entered by Registrar - conduct of the bankrupt in respect of the period before the date of bankruptcy unsatisfactory - exercise of power to proceed ex parte warranted.

Bankruutcv Act 1966 (Cth) S. 149.

Queensland Law Societv Act 1952 (Qld) S. 27.

Re Brown: Ex uarte Dai-Ichi Kanavo Australia Ltd (1986) 66 A.L.R.

519.

16 MARCH 1992

RE GREGG LEWIS CHAPPLE: EX PARTE OUEENSLAND LAW SOCIETY
INCORPORATED

No. QLD E220 of 1989

SPENDER S.
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) No. OLD E220 of 1989
BANKRUPTCY DISTRICT OF THE STATE OF OUEENSLAND

RE:  GREGG LEWIS CHAPPLE

Debtor

EX PARTE: QUEENSLAND LAW SOCIETY INCORPORATED

Creditor

MINUTES OF ORDER

JUDGE MAKING ORDER:	Spender J
DATE OF ORDER:	16 March 1992
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:

1.    The Queensland Law Society Incorporated have leave to enter an objection to the discharge of the bankrupt Gregg Lewis Chapple.

2.    The notice of objection be entered on 16 March 1992.

3.    The costs of the application be reserved.

4.    There be liberty to apply on two working days' notice.

Settlement and entry of orders is dealt with in Rule 124 of the Bankruutcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	1 No. QLD E220 of 1989
BANKRUPTCY DISTRICT OF THE STATE OF OUEENSLAND

RE:  GREGG LEWIS CHAPPLE

Debtor

EX PARTE: QUEENSLAND LAW SOCIETY INCORPORATED

Creditor

L R A M : Spender J.

PLACE :	Brisbane
M:	16 March 1992

EX TEMPORE REASONS FOR JUDGMENT

is an application pursuant to S. 149 of the Bankru~tcv Act 1966 ( 'the Act'), for leave to the Queensland Law Society Incorporated ('Queensland Law Society') to enter an objection pursuant to S. 149(3)(c) of the Bankru~tcv Act to the

T h ~ s

discharge of the bankrupt, Gregg Lewis Chapple.	The application
is made ex parte.
On 16 March 1989, Mr Chapple presented his debtor's petition, which was accepted. As at the date of his bankruptcy the Queensland Law Society was a party to certain actions which had been commenced against Mr Chapple. Prior to his bankruptcy he was a solicitor practising in Queensland and before 16 March 1989, various actions had been commenced in the Queensland Supreme Court which arose out of his practice as a solicitor. The actions were brought by persons who were clients of M r Chapple. They included a Mr Baptiste Romano.

The plaintiffs in those actions were also claimants against the Fidelity Fund of the Queensland Law Society. The fund exists to reimburse persons who may suffer pecuniary loss through fraudulent misappropriation by a practising solicitor of any money or property entrusted to that solicitor. It is created by the Queensland Law Societv Act, 1952.

On 8 March 1991, Moynihan J gave reasons in those proceedings in the Supreme Court. I t is clear from those reasons which are before me that Moynihan J was in no doubt as to the serious misconduct of Mr Chapple in connection with those actions. He was dealing with actions number 2521 to 2524

inclusive and 2534 of 1988. At 4-5 of the reasons, Moynihan J

said:

"

. . . there does not seem to me to be the slightest

occasion to doubt that Chapple fraudulently misappropriated Romano money as well as money belonging to Joan Besh a longstanding friend of his mother in particular and of the Chapple family and to his brother in-law, Dr John Goldstone. "

At 8 he said: 

" It seems to me that this exploitation of a personal relationship is one of the more despicable aspects of Chapple's activities revealed by the evidence. He also exploited a personal relationship with Mrs Besh and Dr Goldstone in a similar way. "

On the following page, he said:

" Another example of despicable activity by Chapple was his extorting from the Romanos an agreement to lend him $300,000.00 for one month from September, 1986. 'l

At 10 he said:

" As I have already indicated I am satisfied that in respect of the transactions the subject of the various actions with which I am concerned Chapple shamelessly exploited the professional and personal relationship he developed with the Romanos to systematically fraudulently misappropriate Roman0 money. "

" Having misappropriated Ronlanos ' (and others)

money Chapple persistently lied to conceal his
misappropriation. These lies included lying OJ?
oath on the occasion, for example, to resist an
application for sumnary judgment in proceedings
brought against him. "

His Honour's judgment at 13 stated of Chapple:

" He is exposed by these proceedings to be a liar, probably a perjurer, a thief and a disgrace to the legal profession. I commend to the relevant authorities a consideration of the question of whether Chapple ought to be afforded the benefit of an automatic discharge from his bankruptcy. No doubt my findings will be borne in mind in the event of any attempt by Chapple to regain adnlission as a solicitor or to attain any other professional standing. I commend to the relevant authorities consideration of prosecution of Chapple for criminal offences, perjury and	associated with his n~isappropriation	of property
disclosed in the proceedings. "

The evidence shows that the Queensland Law Society has

paid out of its Fidelity Fund the sum of $3,244,751.60 relating

to claims in respect of Mr Chapple's conduct as a soli.citor.

Sub-sections 27(1) and (2)(a) of the Queensland Law Society Act

1952 provide:

" (1) Upon payment out of the Fund of moneys in

settlement, in whole or in part, of a claim under this Part arising from the act or

omission o f a practitioner or a clerk or servant employed i n relation t o a practitioner's practice, the Society shall be subrogated, t o the extent o f that payment, t o

a l l the r ights and remedies o f the claimant
against the practitioner or clerk or servant (including any person entit led t o administer the estate o f any such practitioner or clerk or servant who dies or i s bankrupt or under a d isabi l i ty) or any other person i n respect o f the act or omission.

( 2 ) Where the Society i s subrogated under

subsection	( 1 ) -
(a)	the Society may exercise those rights and remedies i n i t s own name or i n the name o f the claimant; "

I am satisfied in the events that have occurred that the Queensland Law Society is a creditor of Mr Chapple in a considerable amount. I am also satisfied that the conduct of the bankrupt in respect to the period before the date of his bankruptcy is, to put it mildly, unsatisfactory.

Section 149(3)(c) of the Bankru~tcv	Act provides:
" A bankrupt i s not discharged from bankruptcy by virtue o f t h i s section i f -
.	. .
(c)	the Registrar, the Inspector-General or the

trustee has entered, or a creditor has, with the leave o f the Court, entered, an objection, i n accordance w i t h the prescribed form and i n the prescribed manner, to the discharge o f the bankrupt by force o f th i s section and the objection has not been withdrawn or lapsed before the time when the bankrupt would have been so discharged but

for t h i s subsection; "

Subsection 149(4) provides:

" An objection shall not be entered under paragraph

(3)(c) otherwise than on one or more of the

following grounds:

(a)	that the bankrupt is able, or is likely within 5 years from the date of the bankruptcy to be able, to make a significant contribution to his estate;
(b)	that the discharge of the bankrupt by force of this section would prejudice the administration of his estate;
(c)	that the bankrupt has failed to co-operate in the administration of his estate;
(d)	that the conduct of the bankrupt, either in respect of the period before or the period after the date of the bankruptcy, has been unsatisfactory. "

The application by the Queensland Law Society is based on S. 149(4)(d), namely, the conduct of the bankrupt in respect of the period before the date of the bankruptcy has been unsatisfactory. I am satisfied that that ground is made out and am prepared to grant leave to the Queensland Law Society to enter an objection in accordance with the prescribed form and in the prescribed manner

I should note, however, three further matters. The

first is that the Registrar on 13 March 1992 pursuant to
S. 149(3)(c)	lodged an objection on the same ground as contended

for by the Queensland Law Society.

I note, also, that on 10 March 1992 a report by the trustee of Mr Chapple's estate, Mr D.W. Knight, was filed. That report makes no reference to any of the disturbing matters previously set out in these reasons, but routinely notes:

' l I t i s a n t i c i p a t e d t h e Bankrupt w i l l be d i scharged

on 16 March	1992, pursuant	t o S e c t i o n 149 o f t h e
B a n k r u ~ t c v	A c t 1966.	"

The third matter concerns the fact that this application is made ex parte on the day on which the bankruptcy would be discharged, but for the entering of an objection by the Registrar or anybody else competent to enter an objection.

In Re Brown: Ex parte Dai-Ichi Kanqvo Australia Ltd

(1986) 66 A.L.R. 519 Toohey J granted leave on an ex parte

application to Dai-Ichi Kangyo Australia Ltd to enter an

objection to the discharge o f the bankrupt from bankruptcy.

In the course of his reasons hls Honour said, at 521,

in a comment that has a present relevance:

" I t seems t o me t h a t once t h e t r u s t e e e n t e r e d an

o b j e c t i o n and	s o l o n g a s	t h a t o b j e c t i o n remained
i n force,	i t was open t o a c r e d i t o r t o seek	the

l e a v e o f the c o u r t t o e n t e r i t s own o b j e c t i o n .

There i s n o t h i n g i n para ( c ) o f S . 1 4 9 ( 3 ) t h a t

p rec ludes	more	than	one	o b j e c t i o n	o r	t h a t
r e q u i r e s a	second	o b j e c t i o n	t o be	lodged	b e f o r e
t h e	e x p i r a t i o n	o f	t h r e e	y e a r s	from	the

bankrup t cy , so l o n g o f cour se , a s there h a s been

n o d i s c h a r g e .

N e v e r t h e l e s s , t h e p o s i t i o n i s n o t free from doubt

and i n the c i rcums tances I acceded t o t h e

a p p l i c a n t ' s r e q u e s t t o make an o r d e r on 9 May

b e f o r e the per iod o f three y e a r s had e x p i r e d .

I	d i d s o on	t h e b a s i s t h a t ,	i n o t h e r r e s p e c t s ,	i l :
was	a p p r o p r i a t e	t o make	an o r d e r ex p a r t e .	"

In respect of that ex parte aspect of the matter his
Honour, having referred to Re Moore: Ex parte Nominal Defendant

(1985) 61 A.L.R. 217 and Re Palenkas: Ex parte Ravmor (Brisbane1
Pty Ltd (1982) 66 FLR 115 at 118, said at 523:

" In my opinion, neither of these decisions is in conflict with the view I have taken that the court may hear and determine ex parte an application by a creditor for leave to enter an objection pursuant to para (c) of S. 149(3) of the Bankruptcy Act. Although I am of that view, it does not follow that, as a matter of practice, such application should always be heard ex parte. Indeed it is preferable that the bankrupt be served with the application. That puts the court in a better posltion to determine whether leave should be granted. And it is likely to avoid applications under S. 37 of the Act to "rescind, vary or discharge" an order grant.ing leave. This decision simply recognises that power to proceed ex parte exists and that exercise of the power was warranted in the present case. "

In the circumstances of this case I am similarly satisfied that the material, while it is put before the Court on an ex parte application, is very strong, and I accept that the lateness of the application was brought about simply by the fact that the Queensland Law Society was alerted to the expiry of the bankruptcy of Mr Chapple pursuant to S. 149 of the Act, only on

whereabouts. Friday last, and it is uncertain as to Mr Chapple's present In the circumstances, I make the following orders:-

.	that the Queensland Law Society Incorporated have leave to enter an objection to the discharge of the bankrupt Gregg Lewis Chapple;
.	the notice of objection be entered on 16 March 1992;
.	the costs of the application be reserved; and
.	there be liberty to apply on two working days' notice.

It will be necessary to serve those orders on

Mr Chapple.

I c e r t i f y t h a t t h i s and the

preceding seven ( 7 ) pages a re a

t r u e c o p y o f the reasons f o r

judgment h e r e i n o f t h e Honourable

Mr J u s t i c e Svender.

S o l i c i t o r s f o r the app l icant : Corrs Chambers Westgarth

Date o f Hearing:  16 March 1992