Re Hepburn, N.W. Ex parte James, G.R. & anor

Re: NORMAN WINSTON HEPBURN
Ex parte: GEOFFREY RALPH JAMES
And: DEPUTY COMMISSIONER OF TAXATION
No. N B511 of 1988
FED No. 132
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
GENERAL DIVISION
Einfeld J.(1)

CATCHWORDS

Bankrupty - application that trustee's objection to discharge from bankruptcy lapse - application for review of trustee's refusal to return passport and to permit departure from Australia - application of section 149(9) and rule 51A - considerations to be taken into account in exercise of discretion - public interest and commercial morality

Bankruptcy Act 1966 - sections 19, 69, 149(9), (1)

Bankruptcy Rules - rule 51A

Corporations Law - section 229(1)

Vanguard Service Print v Mercovich (1985) 10 FCR 32

Totterdell v Nelson (1990) 97 ALR 341

HEARING

SYDNEY

#DATE 19:3:1992

Counsel and solicitor
for the applicant: Mr M.R. Aldridge

instructed by Price Bent Solicitors

Counsel and solicitor
for the first respondent: Mr C.R.C. Newlinds

instructed by Kemp Strang and Chippindall Solicitor

Solicitor for the
second respondent: Mr P. Swinton of the

Australian Government Solicitor

ORDER

1. The applications of the bankrupt dated 7 May 1991 and 25 November 1991 are refused.

2. The bankrupt is to deliver any and all passports to the Trustee within 24 hours of today.

3. No order as to costs.
Note: Settlement and entry of orders are dealt with in accordance with Order 36 of the Federal Court Rules.

JUDGE1

Norman Winston Hepburn became a bankrupt on 29 March 1988 following a meeting of his creditors on 23 March 1988 pursuant to Part X of the Bankruptcy Act 1966, at which it was resolved that he present his own petition within 7 days. Geoffrey Ralph James was appointed trustee of his estate. The excess of his liabilities over his assets amounted to more than $12 million including a debt to the Deputy Commissioner of Taxation (the Deputy Commissioner) of $2.2 million. The debts arose from failed business ventures, mostly relating to property developments.

The bankrupt provided his trustee with two statements of affairs, respectively dated 29 March 1988 and 7 July 1988 and was examined under section 69 of the Bankruptcy Act on 3-4 November 1988. He did not reveal any interest in certain companies. On 5 April 1989 Justice Morling granted, on the ex parte application of the Deputy Commissioner, injunctions relating to the assets of these companies which the Deputy Commissioner alleged to be controlled by the bankrupt (the companies). However, after a two day hearing, the injunctions were dissolved by Justice Hill on 10 July 1989 on the application of the companies. His Honour found that there was a serious issue to be tried but held that the balance of convenience was against the injunctions.
In those proceedings the Deputy Commissioner filed an enormous volume of evidence covering his investigations over some two years. The companies presented evidence that their liabilities substantially exceeded their assets, but did not produce all their books of account and other records or reveal any interest of the bankrupt. The bankrupt took no part in the proceedings, apparently trying to continue the image that he had nothing to do with the companies. This turned out to be completely untrue. The cost to the public of proving this fraud was considerable.
On 11 September 1989, an associate of the bankrupt, John Nemcich, was examined under section 81 of the Act. The bankrupt had at this stage not disclosed that any of his moneys were held by Nemcich and had still disclosed nothing about his interest in the companies and other matters. Nor did he disclose an alleged debt to his wife of $23.5 million which has subsequently been the subject of a proof of debt rejected by the trustee.
On 11 April 1990, the bankrupt met a representative of the trustee together with their respective lawyers. At this meeting, for the first time, the bankrupt acknowledged his control of the companies. He also revealed that Nemcich had in fact "held" between $500,000 and $750,000 on his behalf. On 30 April at another such meeting, the bankrupt provided further information concerning his involvement with the companies and other matters. In sum, these revelations supported the allegations previously made by the Deputy Commissioner in the proceedings before Justice Hill that the bankrupt actively participated in the affairs of the companies in the following ways:

. the shares in the various companies were held by their respective shareholders on trust for the bankrupt . the bankrupt gave directions directly to the staff and directors of the companies

. the staff reported to the bankrupt and signed the companies' documents at his direction without questioning him as to what the documents were

. certain of the companies were used for the bankrupt's own personal benefit

. the bankrupt was the person behind a number of loan transactions which interweaved some or all of the companies

Although nothing has been recovered by the trustee from these companies for the estate, an amount of $300,000 was paid to the estate by Mr Nemcich on 22 June 1990 following lengthy investigations and negotiations.
On 28 May 1990, following further investigations and many meetings with the bankrupt and his lawyers, the trustee lodged a report with the Registrar in Bankruptcy pursuant to section 19 of the Act suggesting a number of offences by the bankrupt (s.19 report). These included false affidavits, material omissions from the statements of affairs, failure to disclose property and dispositions, and fraudulent dealing with property.
On 20 March 1991 the trustee lodged an objection to the bankrupt's discharge, pursuant to sections 149 and 150 of the Act. On 7 May 1991 the bankrupt applied for an order under section 149(9) that the objection lapse forthwith (the discharge application). There was no affidavit supporting the application until a direction was given by the Registrar. The affidavit was sworn on 6 August 1991. In October 1991, the trustee filed a significant volume of material in the form of two affidavits by the trustee and his officer dealing with the case. On 22 October 1991, the bankrupt was directed to file and serve by not later than 1 November 1991:

...an Affidavit in response to the trustee's Affidavits setting out with particularity the basis upon which the Applicant intends to found his case for an order under Section 149(9) of the Bankruptcy Acts (sic) identifying the statements in the objection by the Trustee that he intends to deny or dispute and the basis in fact or document that such dispute is intended to be advanced.

The bankrupt responded with an affidavit of 31 October 1991 in substance admitting the matters contained in the s.19 report and the trustee's affidavits. The trustee replied with three further affidavits including one each by Christopher Glen Fellas and Paul Sanders Pattinson sworn on 18 November 1991. Mr Fellas was cross examined on his affidavit but Mr Pattinson's affidavit was not read because he was not able to be present for cross-examination.
At the hearing of the discharge application on 25 November 1991, the bankrupt filed an application (the passport application) seeking orders and directions that:

1. the decision of the trustee that he not be allowed to depart from Australia be reviewed

2. his passport be returned to him

3. he be allowed to depart from Australia upon such terms as the Court deems fit

These proceedings concern both the discharge and the passport applications.
The discharge application is brought under section 149(9) of the Act which states:

The Court may, at any time before the expiration of 5 years from the date of the bankruptcy, on the application of the bankrupt, order that the period at the expiration of which an objection entered under paragraph (3)(c) will lapse be such period, being a period exceeding 3 years but not exceeding 5 years, commencing on the date of the bankruptcy as is specified in the order.

By the operation of section 149(10) and rule 51A, the Court is required to take certain matters into account on an application under section 149(9). Ultimately the decision is discretionary in that the weight to be given to the matters prescribed in rule 51A is for the Court to determine. Rule 51A provides.
The following matters are prescribed for the purposes of sub-sections 149(10) and (13) of the Act:

(a) whether 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) whether the discharge of the bankrupt would prejudice the administration of his estate;

(c) whether the bankrupt has co-operated in the administration of his estate;

(d) the conduct of the bankrupt, in respect of the period both before and after the date of the bankruptcy;

(e) any matters arising out of the conduct of the bankrupt as a bankrupt, being matters that are the subject of an investigation that is not completed;

(f) the age and state of health of the bankrupt;

(g) any evidence adduced by the bankrupt, the Inspector-General, the trustee, the Official Receiver or a creditor relating to -

(i) the circumstances in which the debts of the bankrupt were incurred, including the bankrupt's experience in, and understanding of, financial matters and of the obligations imposed on the bankrupt as a result of incurring the debts; and

(ii) the conduct of the bankrupt's creditors, including the nature and extent of any inquiries made by the creditors into the bankrupt's ability to pay his debts and whether the bankrupt was induced to incur debts by conduct on the part of the creditors that departed from the standards of normal and reasonable commercial practice.

In exercising its discretion, the Court is not limited to a consideration of the matters which fall into one of the grounds in rule 51A: see Vanguard Service Print v Mercovich (1985) 10 FCR 32. Indeed, in Totterdell v Nelson (1990) 97 ALR 341 a Full Court of this Court (Morling, Burchett and Lee JJ.) said at 345:

The points enumerated in r 51A must be taken into account. That does not mean that if evidence is lacking or, being called, is not believed, on some one or more of these points, the court cannot make any order...The court's duty is to decide the application before it. In doing so, it must examine the evidence so as to have regard to the enumerated matters. However, a conclusion that the evidence says nothing about one of these matters does not deny, but rather affirms, that the consideration of the whole of the material before the court has taken that matter into account.

On the question of what the Court should take into account in exercising its discretion, the comments of the Full Court in Totterdell are again instructive. Their Honours said at 343:

...the discretion exercised by the court upon such an application may have grave consequences, which ought not to be entertained lightly. The discretion should be exercised on broad grounds, and should not overlook that, ultimately, the public interest and the demands of commercial morality underpinning the bankruptcy laws must be weighed together with the interests of the bankrupt and his creditors, in order to determine whether it would be right to require the bankrupt to seek his discharge from the court.

The Full Court continued at 344:

As in relation to applications for discharge and in relation to the exercise of other discretions reposed in it in respect of matters of bankruptcy, the court will generally have regard to the interests of commercial morality and the public interest. This is a principle of primary importance. As Fry L.J. said in Re Hester; Ex parte Hester (1889) 22 QBD 632 at 641: "We are bound in the exercise of our discretion in such a matter, and I think I might almost say in all matters under this Act, to take a wider view. We are not only bound to regard the interests of the creditors themselves, who are sometimes careless of their best interests, but we have a duty with regard to the commercial morality of the country." This passage was applied by a Full Court of this court in Boral Johns Perry Industries Pty Ltd v Piccardi (Wilcox, Burchett and Hill JJ., 23 June 1989, unreported).

The provisions of rule 51A thus obviously raise major questions of public interest and commercial morality. They are to be determined on the evidence and the usual matters which govern the exercise of a broad discretion such as applies here.
The evidence before the Court is extensive and covers the matters investigated by the trustee (and previously by the Deputy Commissioner). It includes the evidence presented to Justice Hill and his Honour's judgment, and a detailed account of the bankrupt's business and personal activities. The evidence, as well as the passport application, establishes that the bankrupt wishes to go overseas to live, at least for an extended period. New Zealand has been suggested but another country is quite possible.
It should be said at once that so far as concerns paragraph (a) of rule 51A, the evidence raises no prospect that the bankrupt will, by remaining a bankrupt, be likely to make a significant contribution to his estate. This paragraph would not provide a reason to dismiss the discharge application.
The question raised by paragraph (b) of rule 51A is in a different category. The bankrupt has always insisted on being consulted on the admission or rejection of proofs of debt. The evidence suggests that the rejection of Mrs Hepburn's proof of debt for $23.5 million is likely to be challenged. There can be little doubt that his assistance will be required upon any such challenge. At the present time, his position on this supposed debt is quite confused and unsatisfactory. He stated in cross-examination that his wife's claim is based on a half equity of the house in Bayview, a number of unencumbered properties and loss of profits in several companies. The bankrupt said, however, that he did not understand the totality of the claim for loss of profits against the estate in Mrs Hepburn's own name if they relate to loss of profits to a company. This claim was not quantified in the statements of affairs. The only mention of it appeared in Part VII under the heading "Contingent Liabilities as "R.L. Hepburn - Amount unknown".
Since it surfaced, the bankrupt has taken many positions on this debt. These are enough to establish that the trustee will need the bankrupt's specific assistance in dealing with the precise elements of any attempt by Mrs Hepburn to have the Court reverse the trustee's position in relation to her proof of debt. If the bankrupt is discharged, he can travel at will. If this occurs, he will not be readily available, in which case the administration of the estate will be prejudiced.
The second matter arising under paragraph (b) concerns an antique train said to be worth up to $15,000. Again the bankrupt has given many accounts of the train's history and ownership, including lately that his son is its rightful owner. This is potentially a significant asset and its ownership needs to be determined. The bankrupt's past vacillation and unreliability in the matter suggest that the trustee will need further assistance from him in order to finalise his investigations and actions in this matter.
A third matter still outstanding in the administration of the estate is the "title" to a Holden utility. The bankrupt is presently the registered owner of this vehicle. His evidence was that the vehicle is in fact owned by a Mr John Angelo Diacopoulos, a solicitor whom he has known since 1985. The bankrupt's evidence in this connection is briefly as follows:
1. The vehicle was provided to him in October 1991 by Mr

Diacopoulos.

2. The vehicle was to enable the bankrupt to assist Mr Diacopoulos in

a "fishing venture". Mr Diacopoulos is involved with a major fish supplier, Manetta's Seafoods, and the bankrupt's task is to find "other alternative opportunities for fish suppliers". The bankrupt has no involvement with Manetta's. His involvement with Mr Diacopoulos is purely to look for opportunities for Mr Diacopoulos and Manetta's in the fishing industry.

3. The vehicle is registered in the bankrupt's name but leased by Mr

Diacopoulos. Despite the lease, it is noted at the Register of Unencumbered Vehicles as being unencumbered.

4. The lease on the vehicle is for one year. Mr Diacopoulos is

making repayments to Nissan Finance Corporation and at the end of the year the vehicle is to revert to Mr Diacopoulos unless some other arrangement is reached.

5. Without the knowledge or permission of Mr Diacopoulos, the

bankrupt recently changed the number plates on the vehicle to his own former number plates which had been on hold. He is sure that Mr Diacopoulos would not mind but does not give any reason for changing the number plates.

Mr Diacopoulos has informed the trustee that he has no knowledge of any "fishing venture" involving the bankrupt in Australia. In evidence Mr Diacopoulos said that as far as he is aware, the bankrupt does not have any direct expertise in the fishing industry. He said that he has not asked, or provided the vehicle to enable, the bankrupt to assist him in relation to any fishing venture. Rather, he agreed to provide the vehicle to the bankrupt to "run around in" to look for particular property investments or deals. Mr Diacopoulos said that the vehicle was registered in the bankrupt's name because he did not want anything to do with its actual day-to-day running. It was more convenient for him "not to have to worry about things such as parking fines and anything of that ilk".
There is a suggestion that Mr Diacopoulos owed the bankrupt some money, perhaps $42,000, at the time of the bankruptcy. Given that this whole matter only recently came to the attention of the trustee, these most peculiar circumstances demand further investigation. This would not be possible if the bankrupt were discharged or allowed to leave Australia.
I am quite satisfied that the bankrupt's discharge would prejudice the administration of his estate.
The next question, raised by rule 51A(c), is whether the bankrupt has co-operated in the administration of his estate. In this regard, the conduct of the bankrupt has been deplorable. The evidence establishes that far from co-operating with the trustee, he has been a positive obstruction and hindrance. Many of his assets, including some that could not possibly have been forgotten, were simply not disclosed for long periods and after many opportunities. Other matters that were disclosed were misleading or false, some in circumstances where it is impossible to find that it could have been otherwise than deliberate. His involvement with the companies and the truth of the Deputy Commissioner's allegations in this regard represent one example. The fact that Nemcich was or acted as his "banker" to the tune of large sums of cash is another. A pretence that Nemcich held a mortgage over property at Avalon when the mortgage was later admitted to be a sham is a further example. An elaborate ruse by which he obtained back his home at Bayview from a mortgagee in possession, involving the connivance of Nemcich and another friend or colleague named Williams supposedly acting for one of the bankrupt's own companies, is yet another instance of the bankrupt's duplicity.

For a long period he failed to supply books and records demanded of him by the trustee and required by the Act, to disclose the whereabouts of a Jaguar car, some farm machinery and office equipment, and to reveal business activities, until confronted over and over again.
One of the business ventures not revealed involved Christopher Fellas who was at one time a boyfriend of the bankrupt's daughter. According to Fellas, it involved his lending $15,000 in June 1990 to the bankrupt for the purpose of getting an office started for a paper recycling business. By way of repayment the bankrupt was to give Fellas $20,000 by December 1990 or January 1991. Presumably the extra $5,000 was interest.
On 4 June 1990, upon instruction from the bankrupt, Fellas made out a cheque for $15,000 to Pattinson. Fellas said in his affidavit that he did not know Pattinson but he did not question why the cheque was to be made payable to a person other than the bankrupt because he "trusted" the bankrupt. However, in cross-examination Fellas said that he queried that the cheque was to be made payable to someone that he had never heard of.
That evening Fellas handed the cheque to the bankrupt who placed it in his pocket. Despite asking on 4 June 1990 and on numerous occasions thereafter for a letter of confirmation of the agreement, Fellas has received no confirmation of any sort. On 8 March 1991 Fellas was repaid $2,000. The cheque was drawn on the account of Scott Hepburn, the son of the bankrupt. Fellas has not received any other repayments.
The bankrupt's version of events was that his daughter Simone Hepburn brought the $15,000 cheque home and said "Dad, Chris asked me to give you this". This was corroborated by Simone's evidence. She stated in cross-examination that Fellas gave her the cheque in an envelope when he dropped her home from work and that she took it inside and gave it to her father. No reason was given and she apparently did not ask for one, either from Fellas or her father.
Fellas stated that at the time of making the loan he did not know that Mr Hepburn was a bankrupt and that he did not learn of that fact until August 1991 when he was told by Pattinson. However, Simone Hepburn said in evidence that she had told Fellas on a number of occasions that her father was a bankrupt and that they discussed it together at the time of the move from the Bayview home to their new place at Newport.
The bankrupt also says that Fellas knew of his bankruptcy. He gave several instances when he referred to the fact that he was a bankrupt in Fellas' presence. In particular he stated that on one occasion he and Fellas together watched a video recording of a television interview with Mr Hepburn in which Mr Hepburn said "Yes, I am a bankrupt". In cross-examination Fellas acknowledged that he had watched one short television interview with Mr Hepburn concerning the collapse of the Estate Mortgage Property Trust but he did not recall whether Mr Hepburn was asked whether he was a bankrupt.
The bankrupt also alleges that Fellas did know Pattinson at the time of making the loan. He said that Fellas had met Pattinson at the Hepburn home in early 1990, although he could not recall the circumstances of the meeting.
The facts of this matter do not have to be finally determined here. None of the protagonists was a particularly persuasive or impressive witness and some of the evidence of all of them was to say the least questionable. However, I should not make definitive findings on matters which may have a criminal consequence without clear evidence. The main relevance of this affair to this application is the bankrupt's claim that while he was not frank with the trustee before April 1990, he has been since. I am quite satisfied that he was not telling the whole truth of this matter to the Court, let alone the trustee. I therefore seriously doubt his claim that the bad days are in the past.
In fact, his claim that he "came clean" in April 1990 because he had "fallen out" with Williams appears preposterous. No serious explanation was proffered as to the connection between Williams, the bankrupt's previous deceptions and his supposed return to the ways of righteousness. This claim, together with the Fellas transaction, the Diacopoulos joint "venture", and other matters, leads me to conclude that he is still not co-operating with the trustee in the administration of the estate. Even if this were not so, the enormous costs and inconvenience caused to the Deputy Commissioner and the trustee by his previous disgraceful behaviour, all of his own avoidable making, has left a legacy of extra financial loss to creditors and the public which can never be made up. It would be quite monstrous that while they continue to suffer financial loss and deprivation, a finding could be made that the bankrupt had "co-operated" in the administration of his estate.
The questions raised by paragraph (d)'s concern with the bankrupt's conduct before and after bankruptcy are similar. Prior to bankruptcy, the evidence establishes that he paid no income tax from 1983 despite having very significant if artificially inflated income and assets. The evidence reveals at best questionable property dealings in the form of the cash transactions with Nemcich and others, and in his use of the companies to conduct hopeless commercial ventures, many of which gave an illusion of success which the bankrupt must have known was not real. It apparently enabled him, for a time, to live a sumptuous and indulgent lifestyle. As it happens, and as he obviously knew at the time, this was achieved with other people's money which the bankrupt had no hope of repaying.
The bankrupt's post-bankruptcy conduct has already been referred to. It seems likely that Justice Hill was seriously misled in an action which was fraudulently based. If his Honour had been told the truth and supplied with all the relevant documents, it seems unlikely that the injunctions pronounced by Justice Morling would have been dissolved. It is at least possible that some losses to others could have been avoided or reduced if the injunctions had remained in place.
So far as concerns the supposed transaction with Fellas, the bankrupt's own account of this dealing suggests that he engaged in a financial transaction involving a commitment he could not possibly have honoured and probably had no intention of honouring. It is quite possible that he extracted money from Fellas, as if it was a loan, without disclosing his bankruptcy. More importantly under this heading of rule 51A, having taken advantage of Fellas' relationship with his daughter at the time, he then launched, through his counsel in these proceedings, an attack on Fellas' credit at a low and basically irrelevant level. All this adds to the belief that he is willing to use and abuse people to suit his own purposes, that he is still intent on trying to bluff or force his way through, and that he is not telling anything like the whole truth.
The bankrupt's own evidence of his dealings with Pattinson also provides evidence that he is still carrying on business activities without disclosing this fact to his trustee, and possibly without disclosing to his counterpart that he is a bankrupt. In this case what was involved was a proposed venture to import environmentally sound paper from India and wholesale it in Australia, involving a property marketing service and the proposed acquisition of certain paper manufacturing companies. There is also evidence that he is still conducting the affairs of companies which he owns and controls through nominee directors, including his wife, contrary to the Corporations Law section 229(1).
The Deputy Commissioner points to evidence in the proceedings before Justice Hill which established, and which the bankrupt eventually admitted some time after the case, that as a result of his activities, the companies became insolvent after the commencement of the proceedings, with millions of dollars of debts, often to tradesmen, suppliers, sub-contractors and other ordinary working people. Some of them, including the tame directors who the bankrupt had installed in these companies, face insolvency from personal guarantees which the bankrupt arranged for them to give. Not only has the bankrupt not helped any of these people, he has not shown the slightest contrition for what he has done to them. The evidence shows that his actions, deceptions and disdain for their plight have actually worsened their position.
All this conduct points to the inappropriateness of discharge at this time.
Paragraph (e) of rule 51A requires a consideration of whether there are incomplete investigations of the bankrupt's conduct. I have already mentioned Mrs Hepburn's supposed debt, the problem of the antique train and the doubts about the Holden utility. There is also evidence that the Fellas and Pattinson transactions, as well as other matters, are under investigation by the Australian Federal Police. Ordinarily criminal investigations per se would not be reasons why the Bankruptcy Court would deny a passport to a citizen, but the same evidence here provides support for possible bankruptcy offences simpliciter as well as broader criminal offences. This is another factor in favour of continuing the bankruptcy for the time being.
There is little arising under paragraph (f) of rule 51 (age and state of health) that is persuasive either way. The bankrupt is a diabetic. While resistant to insulin, the condition does not appear to be life-threatening. It is no doubt worsened by stress but it is difficult to avoid the conclusion that the bankrupt has substantially contributed to his own position in this regard.
No evidence was led by the bankrupt to assist his case on either the discharge or the passport application arising from the matters referred to in paragraph (g) of rule 51A. The passport application is in any case strange. The bankrupt has apparently refused to give his passport to the trustee and presumably still holds it. The trustee seeks an order that it be delivered up. The bankrupt has in any case provided no reason or need to go overseas nor has he disclosed particulars of where he wants to go, for how long, with whom, and how he proposes to pay for his trip and support himself while away.
Overall, I found the bankrupt an unpersuasive witness. I thought he was arrogant, dismissive of the seriousness of bankruptcy, even in these proceedings initiated by him, and of his past and continuing behaviour and conduct in relation to financial matters, and still far from forthcoming about his affairs. I am sure that his claim that he has "revealed all" is quite untrue.
It was bravely submitted on his behalf that the problem with the books and records he failed to deliver arose from a misunderstanding about what was being required. I am unable to accept this explanation. For a number of years, according to the evidence, the bankrupt conducted and managed a substantial commercial empire with shrewdness, coolness under pressure, and an eye and mind for detail. He must have known books and records well. When he became a bankrupt, the trustee no doubt made clear to the bankrupt his responsibilities. He was examined under section 69. He said in evidence that he had purchased a copy of the Bankruptcy Act. No doubt he read it. Anyone who had a genuine doubt about whether something was or was not required would have enquired, or provided everything and waited for the return of anything not needed. This was the antithesis of the bankrupt's approach.
The trustee is criticised for not challenging the bankrupt at an earlier stage over a number of his obstructive or unco-operative activities. When money is spent by a trustee, it must first be available, it must have regard to priorities, and it must be shown to be a worthwhile expenditure. The bankrupt could not establish these requirements here at the relevant time to make good his complaint. An effort was made on his behalf to suggest that he should be discharged from bankruptcy and allowed to travel overseas so as to permit him to resume a new business life. On what I have read and heard in these proceedings, it would be irresponsible of me to entertain and facilitate any such prospect at this time.
It is of course true, as counsel for the bankrupt correctly reminded me, that bankruptcy should not be maintained as a penalty or out of vindictiveness for the very real horror engendered by his behaviour over the last several years. But on the evidence in these proceedings, the interests of the creditors and of the public, including the sector with whom the bankrupt seeks to do more business if he is discharged, demand that more investigations be allowed to be conducted, more time pass, and something more on the part of the bankrupt occur before either of his applications is granted. His offer to return to Australia on request if the passport application is granted fails to come to grips with the additional expense which this will cause and where and at whose cost it will be found. I think that the public would entertain a serious doubt about trusting the bankrupt's word in this respect.
Both applications will be dismissed. The bankrupt will deliver up to the trustee any and all passports within 24 hours of today.
In his written submissions the trustee says that in this event there should be no order as to costs. In writing after the trustee's submissions, the bankrupt asked to be heard on costs. As the bankrupt knew what the trustee was submitting in this regard, and written submissions were ordered, it is now too late and too costly to order another hearing. The exercise would be futile in any event as there is no possibility that my findings and conclusions could lead to any better order for the bankrupt than if I accede to the trustee's application. This is what I intend to do.

[1992] FCA 132

19 MARCH 1992