Re Official Trustee in Bankruptcy v Ex parte Hadotone Pty Ltd
[1987] FCA 332
•25 JUNE 1987
Re: PETER JOHN BAYLISS
Ex parte: HADOTONE PTY. LTD.; BEK PTY. LTD.; MATHOURA PLANT HIRE PTY. LTD.;
NICHEVO NOMINEES PTY. LTD.; NILAC PTY. LTD.; BASSOON PTY. LTD.; RONPET
NOMINEES PTY. LTD.; USED QUIP PTY. LTD.; JOCHRISAM PTY. LTD.; CHRISTOPHER JOHN
BAYLISS; PETER JOHN BAYLISS and MORRIS FLETCHER AND CROSS (A FIRM)
And: THE OFFICIAL TRUSTEE IN BANKRUPTCY (as Trustee of Peter John Bayliss a
bankrupt)
No. E(VIC) 302 of 1987
Bankruptcy
COURT
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Spender J.(1)
CATCHWORDS
Bankruptcy - search warrant - whether Court has power to issue warrants - Bankruptcy Act ss.30(1)(b) and 130 - power to issue warrant directed to property of parties other than the bankrupt in aid of investigative functions of Trustee.
Bankruptcy Act 1966, ss. 19, 30, 37, 77, 129, 130.
HEARING
BRISBANE
#DATE 25:6:1987
Counsel for the applicant: Mr J.H. Byrne Q.C. and Mr D.J.S. Jackson instructed by Thomson Mann.
Counsel for the respondent: Mr R.N. Chesterman and Mr T.J. O'Donnell instructed by Breens
ORDER
The order of Mr Justice Pincus of 27 May 1987 authorising the issue of search warrants be set aside.
The Official Trustee in Bankruptcy pay the costs of the applicants to be taxed; those costs to be paid out of the administration of the Estate.
NOTE: Settlement and Entry of Orders is dealt with in Rule 124 of the Bankruptcy Rules.
JUDGE1
Peter John Bayliss is a well known Brisbane medical practitioner. He became a bankrupt on the making of a sequestration order in Melbourne on 23 March 1987. The Official Receiver in Bankruptcy is the trustee of the bankrupt's estate. According to the statement of affairs lodged by the bankrupt, his bankruptcy is a spectacular one. It shows his debts at about $4.8M and contingent liabilities of the order of $2M. His assets are shown as mainly unquantified and contingent on settlements of the sale of property in 1993 or thereabouts. On the other hand, an application for finance by the bankrupt in May 1983, signed by him contains a statement of assets of $1.1M and liabilities of $.42M, and an application in 1984 asserts an income of $300,000 p.a., and one statement of assets and liabilities furnished to Alliance Acceptance Co. Limited shows assets of $611,000 and liabilities of $20,000.
The Official Trustee asserts that in recent years the bankrupt has earned a very large income, and that his lifestyle is one of wealth and luxury. There is evidence that the bankrupt has set up a number of companies and trusts and that, while his children are shareholders and directors of these companies, the material shows that the bankrupt is a co-signatory of at least a number of those companies' accounts and, further, that cheques have been pre-signed by another signatory so as to give the bankrupt access to and de facto control of large sums of moneys.
On an ex parte application made by the Official Trustee to the Court, with material indicating a basis for the Official Trustee's suspicions, Pincus J. on Wednesday, 27 May 1987, ordered that warrants of search and seizure be issued in the form of warrants in the schedule to his order and that each of the warrants remain in force up to and including 5 June 1987; that any person executing any such warrants to discuss the matter with senior counsel for the Official Trustee prior to the execution of the warrant and that execution was to occur in the presence of an officer of the Director of Legal Services or the Official Trustee in Bankruptcy. He further ordered the costs of the application for the warrants to be taxed and paid out of the estate of the bankrupt.
Mr Patrick Allport, who is employed in the office of the Official Receiver in the Bankruptcy District of the Southern District of the State of Queensland, and who is most involved in the management of the estate of the bankrupt, makes it clear in one of his affidavits the purpose for the application for search warrants. He says:-
"21. So far as documentation which may appear to be the property of the various companies is concerned, it is my opinion that it is necessary for such documentation to be obtained by my office for the following purposes: -
(a) to establish what property belongs to the bankrupt, and what property belongs to various companies and trusts;
(b) to establish whether there were any transactions between the bankrupt and those companies or trusts that the trustee may be able to avoid under s. 120 or s. 121;
(c) to see if the entire corporate structure is a sham;
(d) so that the Official Trustee's Office can trace moneys which it appears the bankrupt received, such as the sum of FOUR HUNDRED AND FOUR THOUSAND DOLLARS ($404,000.00) he is said to have received for his half interest in the property at Woolloongabba, the amount he is said to have received in respect of the sale of the Sunshine Coast property, and the proceeds of sale of the property at Ivanhoe in Victoria."
It is plain that the purpose of the warrants was to secure information to assist in the investigation and realisation of the bankrupt's property.
There was a total of 11 warrants. All of them authorise entry and search between 8.30 a.m. and 6.00 p.m. Two of the warrants are issued to Brisbane firms of solicitors, one to a Victorian firm of accountants, three to three branches of the National Australia Bank, one to the residential address of the bankrupt, another to his business address, and the remainder to other addresses in Brisbane and at Tweed Heads.
Each of the warrants is in similar form. Omitting formal parts, they read:-
"YOU ARE HEREBY AUTHORIZED at any time of the day between 8.30 a.m. and 6.00 p.m. Eastern Australian standard time, to enter and search the premises of (then specifying the premises) and seize any property or documents relating to the affairs of Peter John Bayliss of 39 Griffith Street New Farm Brisbane in the State of Queensland, and any documents of the companies, which companies are referred to in the schedule hereto, including documents of those companies relating to trusts of which any of the said companies may be a trustee and documents of those companies relating to the affairs of the bankrupt, excluding cash less than $500.00, the said Peter John Bayliss having become a bankrupt by virtue of the presentation of a Creditor's Petition of the Bankruptcy District of the State of Victoria on the 23rd day of March 1987 whether in the custody or possession of the bankrupt or of any other person and any books of account, bank books including bank statements, pass books, pay-in books and the like, receipts, business correspondence, diaries, files and address books the property of Peter John Bayliss or any of the companies referred to in the schedule of companies annexed hereto and other business or financial records of him or any of the said companies, whether in the custody or possession of Peter John Bayliss or any other person, and for the purposes of the exercise of the foregoing powers, to break open at the aforesaid address any house, building, room or receptacle of the bankrupt or of any company referred to in the schedule hereto relating to companies or any other person where the bankrupt or any of his property is or where you have reasonable cause to believe the bankrupt or any of his property may be found
AND for so doing, this shall be your sufficient warrant."
The Schedule reads:-
"SCHEDULE OF COMPANIES
HADOTONE PTY. LTD.
BEK PTY. LTD.
MATHOURA PLANT HIRE PTY. LTD. NICHEVO NOMINEES PTY. LTD. NILAC PTY. LTD.
RIDGEGREEN PTY. LTD.
BASSOON PTY. LTD.
RONPET PTY. LTD.
USED QUIP PTY. LTD.
JOCHRISAM PTY. LTD."
On 3 June 1987, each of the companies named in the schedule to the warrants and Christopher John Bayliss, a son of the bankrupt, applied to the Court for an order that the order of Mr Justice Pincus be discharged and set aside and, pending the determination of that application, that the Official Trustee by its officers, servants or agents be restrained from executing or further executing the warrants the subject of the application.
The bankrupt, on 9 June 1987, filed an application seeking an order that the eleven warrants of search and seizure issued pursuant to the order of Pincus J. on 27 May 1987 be set aside. Messrs. Morris Fletcher & Cross applied by an application filed on 9 June 1987 for an order that the warrant issued pursuant to the order of Pincus J. on 27 May 1987 and directed to the premises of Morris Fletcher & Cross be set aside.
The application to set aside the orders authorising the issue of the warrants originally came before Pincus J., who arranged for the applications to set aside the order authorising the warrants to come before me. I have had the benefit of full and considered argument from all sides and I am grateful to all Counsel for the assistance they have provided.
The point at issue, while important, is quite a short one. It is, however, necessary to refer to a number of provisions of the Bankruptcy Act 1966.
Division 4 of Part VI of the Act deals with realisation of property. Section 129 obliges the trustee forthwith to take possession of all the property of the bankrupt capable of manual delivery, including all deeds, books and documents of the bankrupt. Section 129(2) provides that the Court may, on the application of the trustee enforce possession accordingly. Section 129(3) is relevant to persons such as solicitors and accountants. It provides:-
"A person is not entitled, as against the trustee, to withhold possession of the books of account or any papers or documents of the bankrupt relating to the accounts or to the trade dealings or affairs of the bankrupt or to claim any lien on any such papers or documents."
Section 129(5) and (6) provides that failure by persons or corporations to comply with some of the obligations of that section constitutes contempt of court.
Section 130 is directly relevant to these proceedings:-
"A person acting under warrant of the Court may search for and seize property of a bankrupt in the custody or possession of the bankrupt or of any other person, and, for that purpose, may break open any house, building, room or receptacle of the bankrupt or any other person where the bankrupt or any of his property is or is supposed to be."
Rule 177 provides: "For the purposes of s.130 of the Act, a warrant shall be in accordance with Form 56". That Form, in turn, provides:-
"You are hereby authorized, at any time of the day (or night), to enter and search (description of the building or premises) and seize any property of (full name, address and occupation of bankrupt), a person against whose estate a sequestration order was made by the (name of court) on the day of 19 (or who has become a bankrupt by virtue of the presentation of a debtor's petition to the (name of court) on the day of ,19 ), whether in the custody or possession of the bankrupt or of any other person, and, for the purposes of the exercise of the foregoing powers, to break open any house, building, room or receptacle of the bankrupt or any other person where the bankrupt or any of his property is or where you have reasonable cause to believe the bankrupt or any of his property may be found. And for so doing, this shall be your sufficient Warrant."
It is to be noted that Rule 176 also deals with contempt of court.
Section 77 of the Act outlines the duties of a bankrupt concerning discovery of property. It provides, in part:-
"A bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause -
(a) forthwith after he becomes a bankrupt, deliver to the trustee all the books, documents, papers and writings in his possession relating to his trade dealings, property or affairs and, if he has a passport, his passport."
A bankrupt who has concealed or, without the permission of the Trustee, removed any of his property, is liable to be arrested and dealt with by the Court and committed to gaol until the Court otherwise orders.
The trustee, too, has duties. Section 19 provides:-
"Where a person becomes a bankrupt, it is the duty of the trustee -
. . .
(b) to ascertain the assets and liabilities of the bankrupt;
(c) if the trustee, having regard to all the circumstances of the case, considers it desirable to do so, to investigate -
(i) the conduct, dealings, and transactions of the bankrupt;
(ii) the cause of bankruptcy; and
(iii) the books, accounts and records kept by the bankrupt,
and, if he conducts such an investigation, to file with the Registrar a report showing the result of the investigation;
. . ."
Section 58, in the circumstances of this case, vests the property of the debtor on his becoming a bankrupt forthwith in the Official Trustee.
As will be apparent from a comparison of the forms of the eleven warrants of search and seizure, authorised to be issued in this case in the statutory Form 56, the warrants related to documents other than the documents of the bankrupt. While a detailed analysis of the textural differences was embarked upon, senior counsel for the Official Trustee conceded that the warrants are more extensive than as authorised by s.130 of the Act. It was, however, sought to justify the issue of the warrants as being necessary for the purposes of the Bankruptcy Act 1966 and, in particular, necessary as an aid to the fulfilment by the trustee of the duties imposed on him by s.19(b) and (c).
The short question therefore is whether, pursuant to the powers given to the Court under s.30(1)(b), the Court has power to issue search warrants in the form that was authorised in this case.
Section 30(1) is in these terms:-
"The Court -
(a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part X or Part XI coming within the cognizance of the Court; and
(b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court
considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter."
Is such a general power sufficient to justify the order for the issue of the warrants in this case?
Of s.30(1)(b), Neaves J. said in Re Bilen; ex parte Sistrom (unreported, 11 April 1985):-
"In my opinion sub-section 30(1) of the Bankruptcy Act 1966 is not a provision limiting the Court's jurisdiction. It is a facultative provision giving the Court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not words of limitation but of extension."
Section 130 of the Act specifically makes provision for warrants for the search for and seizure of property of the bankrupt and permits the search of premises of strangers, for property of the bankrupt. Section 69 provides for the compulsory examination of the bankrupt relating to his conduct, trade dealings, property and affairs. The bankrupt is obliged to answer all questions as the Court, the Registrar or the magistrate puts or allows to be put to him and, unless there is a direction otherwise, the bankrupt is not excused from answering any question by reason only of the fact that it might tend to incriminate him.
There is power under s.81 of the Act for the bankrupt, the spouse of the bankrupt, or a person who is known or suspected to have in his possession any of the property of the bankrupt, or is supposed to be indebted to the bankrupt or to be able to give information concerning the bankrupt or his trade dealings, property or affairs, to be summoned to attend to give evidence and produce any books (whether or not in existence at the time the bankrupt became a bankrupt) in his custody or power relating to the bankrupt or his trade dealings, property or affairs.
In the light of the provisions to which I have referred, it is submitted that the search warrants in the form authorised by Pincus J. on 27 May 1987 were not "necessary for the purposes of the Act". It is further submitted that there is no power in the Court to authorise the issue of warrants for the stated purposes, and in the form ordered, concerning the material specified, which includes property other than the property of the bankrupt.
The applications to set aside the warrants are based on s.37 of the Bankruptcy Act 1966 and on the inherent jurisdiction of the Court. Section 37(1) provides that, subject to circumstances which are not presently relevant, the Court may rescind, vary or discharge an order made by it under this Act or suspend the operation of such an order.
The Owners of the S.S. Kalibia v. Wilson (1910-11) 11 CLR 689, was an appeal from an order of Gordon J. refusing to discharge an order which had been made ex parte by Street J.. Griffith C.J. at p. 694 said of the proceedings that had occurred before Gordon J. :-
"A preliminary objection was taken before him by the respondent that he had no jurisdiction to entertain the application to discharge the ex parte order. He held, and I entirely agree with him, that when a judicial order has been obtained ex parte the party affected by it may apply for its discharge. This is an elementary rule of justice, of the application of which familiar instances are afforded by writs of ca.re. and ex parte injunctions."
Each of the applicants for discharge of the order for the issue of the warrants is a person affected by that order and is therefore, in my opinion, competent to bring this application.
It is clear that there is no common law power to issue search warrants except for stolen goods. In the celebrated case of Entick v. Carrington 2 Wils.K.B. 275; 95 ER 807, decided in 1765, the Court said at p 291; p 817:-
". . . our law holds the property of every man so sacred, that no man can set his foot upon his neighbour's close without his leave; if he does he is a trespasser, though he does no damage at all; if he will tread upon his neighbour's ground, he must justify it by law. The defendants have no right to avail themselves of the usage of these warrants since the Revolution, and if that would have justified them, they have not averred it in their plea, so it could not be put, nor was in issue at the trial; we can safely say there is no law in this country to justify the defendants in what they have done; if there was, it would destroy all the comforts of society; for papers are often the dearest property a man can have. This case was compared to that of stolen goods; Lord Coke denied the lawfulness of granting warrants to search for stolen goods, for inst. 176,177, though now it prevails to be law; but in that case the justice and the informer must proceed with great caution; there must be an oath that the party has had his goods stolen, and his strong reason to believe they are concealed in such a place; but if the goods are not found there, he is a trespasser . . ."
In Baker v. Campbell (1983) 153 CLR 52, where the issue was whether s.10 of the Crimes Act 1914 excluded the application of legal professional privilege, Wilson J. said at p 96:-
"It is now necessary to decide whether resort to the privilege has been abrogated by s. 10(b) of the Crimes Act. The principle is clear. A statute will not be construed to take away a common law right unless a legislative intent to do so clearly emerges whether by express words or necessary implication: Sorby v. The Commonwealth
(1983) 152 CLR 281, at pp 309-310, and the authorities there cited. Here we have a perfectly general law empowering a justice of the peace to authorize the entry of premises named in the warrant and the seizure of things described in the warrant, being things relating to the commission of offences against laws of the Commonwealth or of a Territory. In R. v. Bishop of Salisbury (1901) 1 KB 573, at p 579, Channell J. said:
'A general Act must not be read as repealing the common law relating to a special and particular matter unless there is something in the general Act to indicate an intention to deal with that special and particular matter.'
I do not think there can be any doubt about the matter. The statute does not evince any intention to oust the privilege. Indeed, I do not think that a contrary view was advanced by counsel for the defendant. The whole thrust of the argument was directed to a determination of the scope of the privilege at common law."
Deane J. at p. 111 said:-
"A person is obliged to disclose or yield his information or property only to the extent that he is compelled so to do by some applicable common law principle or statutory provision. Where no such compulsion exists, there is no need for any special privilege protecting particular types of information or property from disclosure or seizure. The ordinary entitlement to remain silent and to retain one's information or property only constitutes a special privilege where it is preserved as an exception in circumstances where disclosure or cession would otherwise be compelled. In the absence of any such general compulsion, that entitlement represents no more than the ordinary position of the ordinary citizen under the common law."
Dawson J. at p. 123 said:-
"At common law there was no compulsory search and seizure; search warrants were only issued to search for stolen goods. Section 10 of the Crimes Act extends the ambit of search warrants but the general words of the section take no account of any specific immunity, such as that conferred by legal professional privilege. If that privilege has an application outside judicial or quasi-judicial proceedings, there can be no real doubt that the general words of s. 10 are not sufficient to curtail the privilege. Of course, if the legislature were to see the need to achieve that result it could do so by express words, but the Court should not assist that result by reading that intention into the general words of the statute."
In Inland Revenue Commissioners v. Rossminster Ltd. (1980) AC 952, Lord Diplock, referring to Entick v. Carrington (supra) said of the warrants in that case, at p 1009:-
"Their invalidity was more fundamental; a Secretary of State, it was held, did not have any power at common law or under the prerogative to order the arrest of any citizen or the seizure of any of his property for the purpose of discovering whether he was guilty of publishing a seditious libel."
The reference to the purpose of the search warrant is apposite to the present matter.
Lord Scarman, at p. 1021, said:-
"If power exists for officers of the Board of Inland Revenue to enter premises, if necessary by force, at any time of the day or night and then seize and remove any things whatsoever found there which they have reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of any offence or offences involving any form of fraud in connection with, or in relation to, tax, it is the duty of the courts to see that it is not abused: for it is a breath-taking inroad upon the individual's right of privacy and right of property. Important as is the public interest in the detection and punishment of tax frauds, it is not to be compared with the public interest in the right of men and women to be secure in the privacy of their homes, their offices, and their papers."
In Crowley v. Murphy (1981) 52 FLR 123, Lockhart J., with whom Northrop J. agreed, said at p 141:-
"Notwithstanding that Commonwealth and State legislation governs the law of entry, search and seizure in Australia today, it is necessary to bear in mind the fundamental legal conception of the freedom of the individual in his home or premises. It is the cardinal principle in the light of which the statutory authority for the issue and execution of search warrants is read. Even today, there is no right at common law to enter a person's home or premises for the purposes of search or seizure without the permission of the owner or occupier, except in the case of a search for stolen goods. Entry without such permission or the authority of a valid warrant is to commit a trespass and to render the trespasser liable to damages. Statutes authorizing the issue of search warrants must be expressed in clear and unambiguous language."
While there is express provision for a search warrant in respect of the property of a bankrupt, there is no express provision in the Act for any search warrant in respect of the property of persons other than the bankrupt. Section 130, it is accepted by counsel for the Official Trustee, is confined in its operation to the property of a bankrupt and, indeed, the statutory form, Form 56, reinforces that conclusion.
The sole basis of justification for the order authorising the issue of the warrants therefore is said to be s.30(1)(b).
As Deane J. noted in Baker v. Campbell (supra) at p 116:-
"It is a settled rule of construction that general provisions of a statute should only be read as abrogating common law principles or rights to the extent made necessary by express words or necessary intendment. As has been seen, the underlying principle that a person should be entitled to preserve the confidentiality of relevant communications between himself and his attorney is regarded as of such importance by the common law that the courts themselves do not require disclosure of the content of such communications even if it appears that such disclosure would be conducive to justice in a particular case and even if the proceedings be between parties neither of whom is entitled to claim the protection of the privilege as regards the relevant documents or information. Both logic and authority support the present-day acceptance of the preservation of that confidentiality as a fundamental and general principle of the common law. It is to be presumed that if the Parliament intended to authorize the impairment or destruction of that confidentiality by administrative action it would frame the relevant statutory mandate in express and unambiguous terms."
Similar considerations apply to the rights of a person in respect of his premises and property.
Dawson J. stated in a similar vein at p. 131:-
"The legislature may, of course, if it sees fit to do so, cut across the doctrine of legal professional privilege on occasions when it considers that it is more important to obtain information than to preserve the privilege and no doubt the inclination to do so will be greater in administrative proceedings where the principle has not been seen to operate as it has in judicial proceedings. The legislative imposition of an obligation to disclose professional confidences to the executive is relatively recent, although of increasingly frequent occurrence. But it does not seem to me that the law should ease the way for the legislature to expand the practice nor should it disguise the fact that a principle which the law regards as fundamental is involved."
Murphy J., at p. 90, said:-
"The appropriate common law rule is one that attaches legal privilege to the statutory powers of search and seizure so as to protect those documents or other material created solely and innocently for the purpose of legal advice or for use in existing or anticipated litigation. Contrary to what was held in O'Reilly (1983) 153 CLR 1 the privilege should apply to any form of compulsory seizure or production of documents, unless Parliament unmistakably excludes or confines it. There is not the slightest indication that Parliament intended to do so."
There is no express provision in s.30(1)(b) abrogating the common law right of a person to his premises and his property. The question then becomes whether it is a necessary intendment of that section that such rights be abrogated.
In my opinion, the answer must be "no".
Deane J. had earlier observed in Thompson v. Mastertouch T.V. Service Pty. Ltd. (No.3) (1978) 38 FLR 397 at p 408:-
"It is a well-established principle of construction that a statute is not to be taken as effecting a fundamental alteration in the general law or as abolishing or modifying fundamental common law rights unless it uses words that point clearly and unambiguously to that conclusion. This principle has been recognized in many cases including cases in the High Court of Australia (see, for example, Potter v. Minahan (1908) 7 CLR 277, at p 304; Bishop v. Chung Bros. (1907) 4 CLR 1262, at pp 1273-1274; Commonwealth and the Postmaster-General v. Progress Advertising & Press Agency Co. Pty. Ltd. (1910) 10 CLR 457, at p 464; Wall v. The King; Ex parte King Won and Wah On (1927) 39 CLR 245, at pp 250, 253; Melbourne Corporation v. Barry (1922) 31 CLR 174, at p 206; and see generally Maxwell on Interpretation of Statutes, 12th ed., p 116ff., and the cases there cited).
In Melbourne Corporation v. Barry (supra), where the right of freedom of assembly was in issue, Higgins J. said at p 206:-
"It must be borne in mind that there is this common law right; and that any interference with a common law right cannot be justified except by statute - by express words or necessary implication. If a statute is capable of being interpreted without supposing that it interferes with the common law right, it should be so interpreted."
In my respectful opinion, s.30(1)(b) can be so interpreted.
Moynihan J., in Hedges v. Grundmann, ex parte Grundmann (1985) 2 Qd R 263, at p 268, with whom D.M. Campbell and Connolly JJ. agreed, said:-
"A warrant issued pursuant to s. 679 (of the Criminal Code of Queensland) is authority to the police officers to whom it is directed to do what is otherwise unlawful - to enter peacefully occupied premises and seize and take away the property of people who in either case may have no connexion with any criminal activity. Consideration of the kind I have mentioned, and not any concern for technicalities, found the well established insistence of the courts that the issue of the warrant and the warrants which are issued authorizing such activities conform to the conditions the Parliament has expressed in the words of the statute providing for the issue of the warrants."
In In re Burnand. Ex parte Baker, Sutton & Co. (1904) 2 KB 68, it was held that property in which a bankrupt had an interest jointly with another or other persons was not property to which the trustee of the bankruptcy was entitled to have delivery up to him. Similarly, when a partner assigned all his interest in a partnership to a bona fide purchaser for value, the books of account which passed by assignment were not the property of the bankrupt within the Bankruptcy Act 1966: In re West. Ex parte Good (1882) 21 ChD 868. These cases and Chapman v. Carolin (1894) 20 VLR 71 at p 73, suggest that property in which a bankrupt has a joint interest is not "the property of the bankrupt"; cf. R. v. Edwards (1948) QWN 26, noted in 22 ALJ at 427.
Clyne v. Deputy Commissioner of Taxation (1984) 154 CLR 589 was a case concerned with whether the power conferred by s.30(1)(b) of the Bankruptcy Act 1966 permitted the court to backdate a sequestration order notwithstanding that s.43(2) and s.55(3)(b) made express provision for when a debtor becomes a bankrupt. In the joint judgment of Gibbs C.J., Murphy, Brennan, and Dawson JJ., their Honours said at p. 597:-
"Apart from the power of an appellate court to put right what was wrongly done in the first instance, no court has power to cause a debtor to become a bankrupt on a date earlier than that for which the Act provides. Neither the general power conferred by s.30(1)(b) of the Act to make such orders as the court considers necessary for the purpose of carrying out or giving effect to the Act, nor the power given to the Federal Court by its rules to antedate its orders (O.35, r.3) extends to permit the court to make an order which would bring about a result different from that prescribed by the express provisions of the Act and so serious in its possible consequences."
Here, there are express provisions dealing with the coercive powers of the court to get in the property of the bankrupt and coercive powers to compel other persons to provide information concerning the bankrupt, his trade dealings, property or affairs.
In Leon Fink Holdings Pty. Ltd. v. Australian Film Commission (1979) 141 CLR 672, Mason J., as he was then, with whom Barwick C.J. and Aickin J. agreed, said at p 678:-
"It is accepted that when a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do that which is the subject of the special power. In Anthony Hordern and Sons Ltd. v. Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1, at p 7, Gavan Duffy C.J. and Dixon J. said:
'Extensive and unfettered as the authority of the Court of Conciliation and Arbitration to award preference in settlement of a dispute might have been in virtue of its general power, yet, when s. 40 expressly gives a special power, subject to limitations and qualifications, surely it must be understood to mean that the Court shall not exercise an unqualified power to do the same thing. When the Legislature explicitly gives a power by a particular provision which pescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power.'
See also R. v. Wallis; Ex parte Employers Association of Wool Selling Brokers (1949) 78 CLR 529, at pp 550-551."
In my opinion, there is no latent power in the Act to authorise the issue of warrants of search and seizure of the property of strangers in aid of the investigative function of a trustee in bankruptcy to identify and realise the property of the bankrupt. This is particularly so since the power to authorise search and seizure is a drastic power, and the legislature has in s.130 of the Act specifically provided the circumstances in which such a power might be exercised in relation to the property of the bankrupt.
There is a further consideration. If there is a power to issue warrants of the kind in this case, it was submitted that it cannot extend to a power to entitle the seizure of all the documents of a company and the warrants were therefore too wide. I accept the correctness of this submission.
In the Commissioner of Taxation of the Commonwealth of Australia v. The Australia and New Zealand Banking Group Limited (1977-79) 143 CLR 499, Gibbs J., as he was then, said at p 525:-
"To be valid a notice to produce documents under s. 264(1)(b) must of necessity identify with sufficient clarity the documents which are required to be produced. However the notice must in my opinion go further: it must show the person to whom it is addressed that any document which he is required to produce is one whose production the Commissioner is entitled to require. Where a notice is addressed to a taxpayer who is required to produce documents which relate to his own income or assessment, the very description of the documents (for example, 'your books of account') may be enough to show that the notice is within the power conferred by the section. Where however the notice is addressed to one person, requiring him to produce the documents of another, the notice must show that those documents relate to the income or assessment of a particular person, who must be identified. The power is confined to giving a requirement of a particular kind - a requirement to produce documents relating to the income or assessment of some person - and a notice requiring the production of documents not so related is beyond the scope of the power."
Mason J., as he then was, said at p. 535:-
"Except in one respect the powers given by s. 264 should be circumscribed only by reference to the limitations which are expressed in that section. Thus, in s. 264(1)(b) the power to compel evidence is restricted to evidence 'concerning his or any other person's income or assessment' and the power to require production is confined to documentary records 'relating thereto', that is, to 'his or any other person's income or assessment'. However, the power to require information contained in par.(1)(a) is not similarly limited. As it is a power given to the Commissioner for the purpose of enabling him to perform his functions under the Act it must be circumcribed by reference to this purpose."
There is no such circumscription in the warrants presently in issue. And later, at p. 537, his Honour said:-
"As the Commissioner's coercive power to require production is limited, any notice given in exercise of the power must in terms conform to the statutory limitations if it is to be valid. It will in my view conform to those limitations only if it clearly confines the documents to be produced to the class of which the Commissioner is authorized to require production, though it may go on to include particular documents on the footing that they fall within that class. If not so limited, the notice fails on its face to express the limitation which the section places on the Commissioner's authority. Because the exercise of the power casts onerous obligations on the recipient of a notice, and because the recipient (not being the taxpayer) is only justified, vis-a-vis the taxpayer, in producing the taxpayer's documents without his consent in response to a valid demand, it is for the Commissioner so to formulate his notice that this limitation on his authority is drawn to the attention of the recipient."
For the reasons I have given, my opinion is that the warrants should be set aside. I will hear the parties on the orders I should make and on costs.
84
12
0