Re Lewis, H.N. & anor

[1992] FCA 349

JUDGMENT No. .34.q.../ . . 92,

IN THE FEDERAL COURT OF AUSTRALIA	1	NO. QB 1504 of 1991
GENERAL DIVISION	1
BANKRUPTCY DISTRICT OF	1
THE STATE OF OUEENSLAND	1

RE:  HAROLD NORRIS LEWIS and
MARCIA ANNE LEWIS

Bankrupts

EX PARTE: HAROLD NORRIS LEWIS and

MARCIA ANNE LEWIS

MINUTES ORDER

JUDGE MAKING ORDER:	Drummond J
DATE OF ORDER:	25 May, 1992
WHERE MADE:	Brisbane
THE COURT DIRECTS THAT:
NOTE :	Settlement and entry of orders is dealt with in Rule
124 of the Bankruptcy Rules.

1.        The application is adjourned to 1 June, 1992 at 9.15 a.m..

IN THE FEDERAL COURT OF AUSTRALIA	1	No. QB 1504 of 1991
GENERAL DIVISION	1
BANKRUPTCY DISTRICT OF THE STATE OF OUEENSLAND

RE :  HAROLD NORRIS LEWIS and
MARCIA ANNE LEWIS

Bankrupts

EX PARTE: HAROLD NORRIS LEWIS and

MARCIA ANNE LEWIS

Applicants

-:  Drummond J

PLACE: Brisbane

W: 25 May, 1992

EX TEMPORE REASONS ACCOMPANYING ADJOURNMENT ORDER

This is an application for discharge from bankruptcy by Mr. and Mrs. Lewis. Each was adjudicated bankrupt by the sequestration order made on 9 July, 1991.

The circumstances in which the orders were made are

unusual. They arise out of the sale of the shareholding of the bankrupts in an apparently prosperous company established by them in the early 1980s, Lewis Timber Limited ("Lewis Timber"). The consideration they received was shares in another company, Caxdan Limited ("Caxdan"). Instead of maklng it a condition of the sale that Caxdan would procure the release of all guarantees given by Mr. and Mrs. Lewis personally in xespect of txading debts incurred by Lewis Timber prior to the sale of the shares and while it was under their control, Mr. and Mrs. Lewis took an indemnity from Caxdan in respect of their liability as guarantors of Lewis Timber.

According to the material before me, the chairman of Caxdan embezzled a very large sum of money from Caxdan. That ,

company failed. It could not meet Lewis Timber's debts. The

creditors of Lewis Timber then looked to the guarantees

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initially given by Mr. and Mrs. Lewis, which, of course, were still in existence. Ultimately one of those creditors obtained a sequestration order. All this occurred about three years after the original sale of Mr. and Mrs. Lewis' shares in Lewis Timber.

It would appear that no fault can really be attributed to either Mr. or Mrs. Lewis in respect of their ultimately being declared bankrupt in the, as I say, unusual circumstances obtaining. The evidence indicates that, as at

other than those arising in respect of the guarantees that I	the time of bankruptcy, they had no debts of any significance,
have referred to.

In the decision of Re Maher (1985) 7 F.C.R. 240 at

246, Woodward J said:

"An application for discharge from bankruptcy is

never treated lightly by the court. As with the granting of a sequestration order, an application for discharge involves looking beyond the interests of the applicant and his or her creditors to considering both the interests of the public and commercial morality, (see Re Mallan (1975) 25 F.L.R. 20, Re Hardinq (1981) 57 F.L.R. 320 and Re Reillv, at 278). In making a decision under S. 150(9), the court has a wide unfettered discretion ..."

Woodward J rejected the proposition that the
applicant bankrupts for discharge had to show special reasons,
but nebertheless, it is clear that there is an onus on the

- applicant bankrupts to point to evidence identifying reasons why they shouId be granted early discharge.

I am not prepared, on the material presently before

me, to grant the application for discharge, for the following

reasons :

Firstly, I have taken into account the Official Receiver's report and I note that in paragraph 8, he says:

"The bankrupts have advised that they incorporated a

was the corporate trustee of the 'Lewis Family	company styled "Lewis Corporation Pty. Ltd." which	Trust'. I am continuing my investigation into the
Lewis Family Trust. "

The Official Receiver appeared on the application and did not object to the order for discharge. However, there is no information before me as to what has happened to the investigation which the Official Receiver says was under way in his report dated as recently as 13 May, 1992, which report

I would infer was prepared in response to notice that the

applicdnl; bankrupts were applyiilg to the court ior an order
for discharge

Secondly, I note that Mr. Lewis in his second affidavit, which identifies in a little more detail than in his first affidavit reasons why his application for early discharge should be granted, says:

"4. I have found it difficult to obtain employment because of the bankruptcy. My training and experience has equipped me to work in

' managerial positions and I found employers will

not employ me as a bankrupt in those positions, especially when the timber industry has been in an economic downturn. The employment market in this industry is extremely competitive.

5.    Having been well known in the timber industry, prospective employers in this industry will not consider me for non- managerial positions."

Mr. Lewis also says that his bankruptcy has hindered him from obtaining a senior managerial position. But there are no details before me of any particular attempts made by Mr. Lewis to seek employment. There are no details of any

timber industry if the application for discharge is granted.	prospects that he may have of obtaining employment in the
There is no evidence from any source which confirms his general opinion that he is unlikely to be, in effect, employable in the timber industry for the duration of his bankruptcy. His unsupported opinion expressed in general terms is not one on which I am prepared to grant a discharge within 11 months of the commencement of his bankruptcy.
Thirdly, I note that in paragraph 13 of his first affidavit Mr. Lewis, in dealing with his present financial position, says:

"My income per week as a consultant is approximately

$220.00 gross."

I also refer to paragraph 6 of his second affidavit,

where h.	Lewis says:
"I 'have been effectively unemployed, except for
consulting, since Lewis Timbers Ltd. was placed in liquidation approximately two and a half years ago."

What Mr. Lewis has to say about the level of his weekly remuneration, i.e., the sum of $220.00 gross, is inconsistent with what appears in paragraph 14 of the Official Receiver's report, which states that:

"The male bankrupt is employed as a timber consultant for Damview Pty. Ltd., receiving a weekly wage of $356.60."

It is not a major point, but those sort of inconsistencies, against a background of only very generalised opinions and assertions as to the impact of the bankruptcy on

Mr. Lewis's employability, do nothing to aid in discharging

the onus that Mr. Lewis has in pressing this application.

So far as Mrs. Lewis is concerned, little is put forward on her behalf which could justify early discharge. Again, I refer in particular to what she has to say in paragraphs 3 and 6 of her affidavit. She says that she is presently employed one day a week as a sales representative and guide by a company engaged in the travel industry. At paragraph 6 she goes on to say:

"I state that if I remain in bankruptcy then I will

be left in a position from which I would be unable

, Part of my work entails leading familiarisation	to advance my career in the travel industry. . . .
tours for Australian travel agents to overseas destinations."

I interpolate that I am not told whether she has in fact engaged in that activity so far. If she has, quite obviously she would have needed to have obtained her passport back from the Official Receiver.

In any event, she continues by saying:

"To continue as a bankrupt will severely disadvantage me in this work as I must be able to hold a passport to visit overseas destinations."

Again, there is nothing more than a very generalised opinion as to her own perception of the impediments that tlie continuation of her bankruptcy impose upon her, so far as her

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career in the travel industry is concerned. There are no details of particular problems. There is no confirmatory

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evidence from her employer or from anyone else and there is no evidence of any difficulty in obtaining her passport back from the Official Receiver if she needs it in the course of her employment. Indeed, the inference appears to be that she has not experienced any difficulty in obtaining her passport.

In all those circumstances, the material before me is, in my view, inadequate to justify early discharge.

Because of the unusual circumstances in which the bankruptcies occurred and after taking into account the fact , that there is no objection by any creditor, I am prepared to adjourn rather than dismiss this application to Monday, 1 June, 1992 at 9.15 a.m..

I certify that this and the preceding
six pages is a true copy of the
reasons herein of the Honourable Mr.
Justice Drummond.

Associate:
Date:	25 May, 1992