Re Smith, N.K. v Ex parte Kern Corporation Ltd

[1985] FCA 265

Re: NEIL KEITH SMITH
Ex Parte: KERN CORPORATION LTD
No. QLD PET 373 of 1985
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Pincus J.

CATCHWORDS

Bankruptcy - whether debtor was absenting himself with intent to defeat or delay creditors within the meaning of s.40(1)(c)(iii) of the Bankruptcy Act 1966 - whether this act of bankruptcy is a continuous act for the purposes of s.44(1)(c) of the Bankruptcy Act 1966 - whether the debtor can have the Official Trustee rather than the petitioning creditor's consenting registered trustee appointed as his trustee in bankruptcy - sequestration order made and petitioning creditor's consenting registered trustee appointed.

Bankruptcy Act 1966 (Com) ss.40(1)(c), 44(1)(c), 156A(3)

Barton v. Deputy Commissioner of Taxation 131 CLR 370 at p 375

Re Cohen (1952) All. ER 36 at pp 39-40

Re Alderson; ex parte Jackson (1895) 1 QB 183

HEARING

BRISBANE
#DATE 19:6:1985

ORDER

1. I find that the debtor has committed the act of bankruptcy specified in s.40(1)(c)(iii) of the Act, in that he has absented himself with intent to defeat or delay his creditors.

2. I am satisfied of proof of the other matters of which the Act requires proof.

3. I notice that Mr R.J.F. Burns, a registered trustee, has consented to act as trustee of the estate of the debtor.

4. I make a sequestration order against the estate of the debtor and order that the petitioning creditor's costs of and incidental to this petition be taxed and paid in accordance with the Act.
   
   NOTE: Settlement and entry of orders is dealt with in Order 36
   

of the Federal Court Rules.

JUDGE1

This is a petition for a sequestration order on various grounds, being some of those set out in s.40(1)(c) of the Bankruptcy Act 1966. Because of the six-month time limit in s.44(1)(c), the matters relied on occurred too early to found the petition, with one exception: the petitioner says that with the requisite intent the debtor has absented himself within the meaning of s.40(1)(c)(iii). When the case was heard, I thought the evidence somewhat thin and was doubtful whether such of it as was admissible was enough to prove the case.

1. Having considered the matter further, I am of opinion that the ground has been made out. It is established that the debtor ran up substantial debts. Beverley Kerlin, on behalf of the petitioning creditor, attempted to telephone the debtor a number of times in late 1984. She spoke to him twice in October and was made promises of payment, which were not fulfilled. Clifford Lipke, on behalf of another creditor, attempted to serve process in October 1984 and was told the debtor had gone to New Guinea and a request for his address was refused. After that the creditor in question obtained an order for substituted service of the plaint. In February, an attempt to serve a bankruptcy notice by that creditor was unsuccessful and a person at what had been the address of the debtor said "Send me a letter addressed to Neil and I will pass it on." Terrence Byrne, on behalf of the same creditor, had tried to recover the debt in August and September 1984 without success. He noticed that the debtor, in October, left the Caloundra premises at which he had formerly been staying. In early November 1984, Mr Byrne received a letter from the debtor dated 29 October 1984 querying charges made against him and saying among other things: "Could you send any correspondence down to my father's place and I can pick it up from there." An address said to be that of the debtor's father was given.

2. It appears to me that, in the absence of any contradiction from the debtor, the inference that he absents himself, and has done so for some time, with the intention of delaying his creditors is reasonably open and should be drawn. There may have been other reasons for his departure, but it has certainly had the effect of delaying the creditors and that was probably an intended outcome.

3. I am strengthened in my conclusion by the apparent approval, given in Barton v. Deputy Commissioner of Taxation 131 CLR 370 at p 375, to the discussion by Evershed M.R in Re Cohen 1952 All. ER 36 at pp 39-40. That case evinces a readiness to draw the inference that the intention to defeat or delay has been proved, on the basis that the debtor must have known that the likely result of his absenting himself would be to delay creditors. It has to be admitted that, once all the hearsay is excluded, the present case may be thought fairly close to a line but on the whole I am, as I have said, satisfied of the existence of the ground.

4. The next question is whether the six-month time limit mentioned in s.44(1)(c) of the Bankruptcy Act has been exceeded. Counsel for the petitioner argued that the act of absenting oneself is continuous and that although the absence commenced outside the six-month period, its persistence into the six-month period takes the case outside s.44(1)(c). He relied upon Re Alderson; ex parte Jackson (1895) 1 QB 183 and I agree that that decision supports the proposition.

5. Lastly, it was argued on behalf of the debtor that I had a discretion not to appoint the registered trustee who had consented to act, Mr Burns. That appears not to be correct: see s.156A(3). The effect of that provision is that once the trustee has consented to act the sequestration order has the effect of making him the trustee of the estate; it is for that reason that the usual form of order merely notes that the registered trustee has consented to act and does not appoint him. I will make a sequestration order.
   
   

1. I find that the debtor has committed the act of bankruptcy specified in s.40(1)(c)(iii) of the Act, in that he has absented himself with intent to defeat or delay his

creditors.

2. I am satisfied of proof of the other matters of which the Act requires proof.

3. I notice that Mr R.J.F. Burns, a registered trustee, has consented to act as trustee of the estate of the debtor.

4. I make a sequestration order against the

estate of the debtor and order that the

petitioning creditor's costs of and

incidental to this petition be taxed and

paid in accordance with the Act.