Re McGregor, D.K. v Ex parte Hans Sens P/L

[1994] FCA 841

Re: DAVID KEITH McGREGOR
Ex Parte: HANS SENS PTY LTD
No. QB1106 of 1994
FED No. 841/94
Number of pages - 3
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND
KIEFEL J

CATCHWORDS

Bankruptcy - travel outside Australia - likelihood of debtor not returning to Australia - benefits of debtor returning to employment - undertakings and security.

Bankruptcy Act - section 178

HEARING

BRISBANE, 25, 26 and 27 October, 1994
#DATE 28:10:1994

Counsel for the Applicant: Mr J Drysdale

Solicitors for the Applicant: Carter Green and Company

Counsel for the Respondent: Mr L Boccabella

Solicitors for the Respondent: Forgione and Company

ORDER

Upon the debtor or persons on his behalf providing a bond, guarantee or other security to the satisfaction of the Official Receiver in the sum of $10,000 and further upon the debtor's undertaking to return to Australia on or before 23 January, 1995,
THE COURT ORDERS THAT:
1. The Official Receiver return the debtor's passport to him

for the purpose of a trip to the United States to conclude upon the debtor's return to Australia on 23 January, 1995;

2. Upon his return to Australia as aforesaid, the debtor

forthwith return the passport to the Official Receiver.

THE COURT DIRECTS THAT: the Official Receiver forthwith

return the airline ticket which was produced to him.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the

Federal Court Rules.

JUDGE1

KIEFEL J On 11 July, 1994, the estate of Mr. McGregor was ordered to be sequestrated. On 14 October, 1994 an order was made directing the District Registrar to give the debtor's passport to the Official Receiver. By letter dated the same date, a Mr. Schneble of Grapevine Travel wrote to the Trustee advising that Mr. McGregor had been appointed a business or conference travel consultant to that firm and that he had an urgent need for his passport as he was required to travel for the firm overseas as part of his employment and on 26 October.

1. The trip was, the letter advised, to be to Los Angeles for approximately two weeks to finalise "a large group booking" and then travel to other parts of the USA and Europe to meet other agents and promote tours to Australia. Mr. Schneble advised that Mr. McGregor's travel and accommodation expenses would be met by the agency through an arrangement with Mr. Ford of another agency. On this basis, the Official Receiver returned Mr. McGregor's passport and he was due to leave Australia when the matter came before me.

2. The applicant is a creditor of the respondent and no issue is taken with its standing as a person affected by the trustee's decision to bring an appeal from it pursuant to section 178 of the Bankruptcy Act. The appeal was based, initially, on the discovery that Mr. McGregor had himself paid for the airline ticket and had, it was said, organised his engagement with the agency for the purpose only of securing his passport. There was some evidence from a Mr. Mullins which cast doubt upon Mr. McGregor's intention to return to Australia, but it would seem to me that the evidence of Mr. Mullins, who has recently fallen out with Mr. McGregor, was one of his understanding or belief now as to what was said and could not be relied upon.

3. Mr. McGregor as a witness was himself a cause for concern. The impression I gained was of a person who lives on his imagination, and were a level of satisfaction as to the bona fides of the overseas trip dependent entirely upon his account, I would be inclined to grant the injunction. Since then other affidavit material has been provided and which largely addresses my concerns. The group in the United States is organised by a Mr. Foss and whilst his association with Mr. McGregor is somewhat nebulous, he was the person who, in fact, paid Mr. McGregor's air fare and will pay his accommodation.

4. I do not find this arrangement inconsistent with an engagement of Mr. McGregor by Mr. Schneble and, indeed, it would seem to be consistent with good business. Mr. Schneble has now sworn an affidavit confirming the arrangements. Mr. Schneble has also received the sum of $5000 from Mr Foss towards the booking. Whilst Mr. McGregor knew little, it seemed, of the itinerary and no documents were produced, Mr. Schneble, whose agency is in existence so far as the Official Receiver is aware, has, as I have said, confirmed the arrangements and it is Mr. Schneble who is presently organising them.

5. I was earlier concerned that Mr. McGregor's remaining in the United States after the group had travelled to Australia with no apparent funding from Mr. Schneble told against real employment with Mr. Schneble's agency. Mr. Foss has advised now that he will be funding his stay and meeting prospective tour groups at the cities shown on the air ticket produced in evidence. Reference was also made to moneys said at an earlier time by the debtor to be due to him in the United States as showing in some way that the possibility of his remaining overseas should be taken more seriously. The Official Receiver is, however, of the view that Mr. McGregor is unlikely to receive these funds and, given my comments about his statements generally, I do not have difficulty accepting this. As to Mr. Foss, I have entertained some doubt about his business connection and his place in these arrangements and these have been fuelled by the very general references to arrangements and by the timing of his affidavits. He has, however, sworn an affidavit before a notary public and I am not prepared to conclude, on the material before me, that he does not conduct business, that his corporation is not in existence and that, as was submitted for the applicant, that he is not bona fide intending to organise business tour groups in association with Mr. McGregor.

6. Mr. Schneble, on the other hand, is amenable to the jurisdiction and importantly for my purposes has confirmed that the trip is one to enable Mr. McGregor to obtain tours for his agency and in respect of which Mr. McGregor will receive commissions. An important consideration is that the purpose of the Bankruptcy Act is not to punish bankrupts nor to prevent them from earning an income. Indeed, insofar as it may result in some contribution to the creditors, there are obvious potential benefits in the debtor returning to employment as soon as possible.

7. Mr. McGregor at present is not required to contribute for the reason that he has earned nothing and the permission of the court is not necessary on that basis. The withholding of a passport would however be proper if one were satisfied that what is asserted as bona fide employment is not. An inference might then be drawn as to the likelihood that the debtor might not return to Australia. Given, however, the impact upon a debtor's ability to earn income, where, as here, the employment is as a travel agent, I do not consider that orders ought to be made preventing travel on the basis only of speculative or unproven doubts.

8. I do however consider that Mr. McGregor ought at the conclusion of his journey return his passport to the custody of the Official Receiver and that if further trips overseas are necessary that he reapply with proper documentation to the Official Receiver for its return. I have taken into account, and it has affected these considerations to some though not a large extent, that the debtor has offered undertakings and his family has, apparently, said they are willing to provide security to the Official Receiver in the sum of $10,000.

9. The orders I then propose but upon which I will hear further submissions are:
   

Upon the debtor or persons on his behalf providing a bond,

guarantee or other security to the satisfaction of the Official

Receiver in the sum of $10,000 and further upon the debtor's

undertaking to return to Australia on or before 23 January,

1995,

THE COURT ORDERS THAT:

1. The Official Receiver return the debtor's passport to him

for the purpose of a trip to the United States to conclude upon the debtor's return to Australia on 23 January, 1995;

1. Upon his return to Australia as aforesaid, the debtor

forthwith return the passport to the Official Receiver.

THE COURT DIRECTS THAT: the Official Receiver forthwith return the airline ticket which was produced to him.