Re McKean, David Andrew Page, Sandra Anita & Anor v Official Trustee in Bankruptcy

[1996] FCA 412

CATCHWORDS

BANKRUPTCY - application to transfer proceedings to Family Court - relevant considerations - Federal Court's specialised knowledge in bankruptcy and responsibility to exercise bankruptcy jurisdiction - comity between the courts and courtesy in dealings by the Court - specific considerations arising in individual cases.

BANKRUPTCY - application to annul a bankruptcy - debtor's petition - intention to stultify effectiveness of Family Court proceedings - improper purpose - abuse of process.

Re Anwaya Sabri; Ex parte Diana Sabri v Richard Campbell Brien
  unreported, Davies J., 25 October 1995
Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589
Deputy Commissioner of Taxation v Edelsten unreported,
  Burchett J., 10 March 1988

RE: DAVID ANDREW McKEAN; SANDRA ANITA PAGE & ANOR v OFFICIAL TRUSTEE IN BANKRUPTCY
NB 499 of 1996

Burchett J.
Sydney
16 April 1996

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    NB 499 of 1996
  )
GENERAL DIVISION                 )

RE:DAVID ANDREW McKEAN

BETWEEN:SANDRA ANITA PAGE

Applicant

AND:DAVID ANDREW McKEAN

First Respondent

OFFICIAL TRUSTEE IN BANKRUPTCY

Second Respondent

CORAM:    Burchett J.
PLACE:    Sydney
DATE:     16 April 1996

REASONS FOR JUDGMENT

BURCHETT J.:

In this matter, I am asked to annul a bankruptcy arising out of the filing of a debtor's petition, or alternatively to transfer the application for annulment to the Family Court to enable it to be dealt with at the same time as quite complex proceedings being heard in that Court.  Those proceedings concern, amongst other things, rights to property and maintenance in respect of a former de facto wife, as well as certain children of more than one relationship.  The questions in the Family Court are plainly quite involved, and will probably require somewhat detailed consideration at the hearing.
     The bankrupt was on parole at the time that he filed his debtor's petition, but action was afterwards taken by the Parole Board against him, and he was within a very short time - in fact, I think the next day - ordered back to prison.  His present term of imprisonment apparently has some two years and eight months to go.  His punishment relates to assaults and wounding which involved the applicant, who was his de facto wife, and also involved an assault on a child of hers.  The debtor's petition was filed barely a week before the hearing of the proceedings in the Family Court, as they were then intended to be heard, and apparently led to their adjournment.  They are now due to be heard in about a month's time. 

The first question raised by the application is whether I should transfer these proceedings to the Family Court or should deal with the matter myself.  It seems to me that an application for transfer of such a matter to the Family Court requires consideration of several fairly fundamental principles, but the Court, having considered them, and taken them into account, giving them their appropriate weight in the light of the particular circumstances of the case, must finally exercise a discretion.  The first principle, I think, is that the Parliament committed jurisdiction over questions in bankruptcy to this Court, and did so by a deliberate policy which led to the discontinuance of the exercise of jurisdiction by the previous Federal Court in Bankruptcy.

As the Court which, if only by virtue of practical experience, has specialised knowledge in bankruptcy, and also as the Court which has been given the responsibility of exercising that particular jurisdiction, this Court should normally accept the obligation that the conferral of jurisdiction involves, and exercise that jurisdiction itself.  But it is also important to bear in mind, where it is applicable, the consideration to which Davies J. referred in his decision in Re Anwaya Sabri; Ex parte Diana Sabri v Richard Campbell Brien (unreported, 25 October 1995), which was cited to me.  That is to say, where the exercise of jurisdiction is likely to involve a question whether an order of another superior court should be contradicted, or should be so dealt with that the result appears to be a contradiction of it, then considerations of comity between the courts, and indeed of the ordinary exercise of courtesy in dealings by this court, necessarily involve that this court should consider whether it is better to transfer the matter to the other court so as to give it the opportunity of considering whether its order ought to be insisted upon, or whether it should be contradicted.

There are other considerations of a more specific character which are bound to arise in individual cases, and, indeed, in Sabri itself there was another and significant consideration that affected the actual decision to which Davies J. came.  Neither of the two general propositions to which I have adverted will necessarily require a particular decision in a particular case, as factors may exist that call for the exercise of the judicial discretion in a different direction.

In the present case, the consideration of a general nature to which I have adverted, that affected the exercise of discretion in Sabri, does not arise.  The order I am asked to make, far from contradicting anything done by the Family Court, would rather support the ability of that Court to exercise an unfetted discretion.

Accordingly, I turn to consider myself the question whether the order of annulment ought to be made.  At the time when the debtor's petition was presented for acceptance, as I have said, the proceeding in the Family Court was about to be heard, and it must have been perfectly apparent to the bankrupt, who was a solicitor until 1992, that the effect of his bankruptcy would be to stultify the ability of the Family Court to exercise a large measure of its discretion.  It is substantially on the basis of the time nexus, and the obviousness of this consequence, that the application was supported by the principal affidavit filed on behalf of the applicant.  The bankrupt wrote a lengthy letter to the applicant's solicitor, in response to the application, in which, far from contesting this point, he attempted to explain on a particular basis why he thought it was justifiable for him to take a step that would have that inevitable
consequence.  And in argument to me today he did not resile from this approach.

As Miss Nash, who appeared for the applicant, pointed out in her brief address in reply, the bankrupt has not, in this case, attempted to put on any evidence explaining, on a basis that would answer the inference of an improper purpose, why the debtor's petition was filed at just the time when it was filed.

In both Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589 and Deputy Commissioner of Taxation v Edelsten (unreported, Burchett J., 10 March 1988) the High Court, in the one case, and this Court, in the other, made it clear that the presentation of a debtor's petition may result in a bankruptcy which can be annulled, where the presentation is an abuse of process by reason of the improper purpose which it served.  In the present case, a strong inference did arise of an intention to stultify the effectiveness of the Family Court proceedings, and that inference has not been answered.  It was, in addition, pointed out that the statement of affairs contains some startling inaccuracies; and that the report of the trustee shows that in fact 100 cents in the dollar will be paid in respect of all debts which any creditor has sought to prove.  The latter two aspects of the situation could, of course, be taken into account, but I am content to act upon my finding that the filing of the debtor's petition was an abuse of process; and on that ground, to make an order that it be set aside.  I am satisfied that the debtor's petition ought not to have been presented; accordingly, I make an order annulling the bankruptcy.  I order that the costs be paid by the former bankrupt.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:

Date: 24 April 1996

Solicitor for the Applicant:     Miss S. Nash as agent for Walsh & Blair

Mr D.A. McKean (the Bankrupt and First Respondent) appeared in person

Solicitor for the Second         Mr M.K. Hayter of

Respondent:  Gordon & Johnstone

Mr Bowles appeared on behalf of the Child Support Agency

Date of hearing:                 16 April 1996