Re Taylor, Justin George

I N THE FEDERAL COURT OF AUSTRALIA	)
)
GENERAL DIVISION	)
1

BANKRUPTCY DISTRICT THE STATE

) )

NEW SOUTH	P7ALES	ANn THE AUSTRALIAN	)	N o . W551 of 1977
)

CAPITAL

TERRITORY

No.

1 2 3 of

1 9 6 1

RE:	JUSTIN GEORGE TAYLOR

Judge making order:

Beaumont, J.

Date of order :

2 1 J u l y ,

1983.

Where made :

Sydney

ORDERS

THE COURT ORDERS:

The p u b l i c exammation

t h e

b a n k r u p t

s h a l l

b e

deemed

t o have been concluded

2 0

February, 1978.

o r d e r

t h e

d l s c h a r g e

the

bankrupt

m r e s p e c t of

t h e

1961

bankruptcy

and

the

1977 bankruptcy.

3 .

The

ope ra t ion of

t h e

o r d e r s

d l s c h a r g e

s h a l l

b e

suspended for

a per lod of

six months

from

t h l s d a t e .

4 .

Order

t ha t

t he

bankrup t

pay

t h e

c o s t s

of Mudgee

Co-operative Meat Supply Limited.

IN THE FEDERAL COURT OF AUSTRALIA 1

)

DIVISION

GENERAL

1 1

BANKRUPTCY DISTRICT THE STATE OF

1	No. W551 of 1977

NEW SOUTH WALES AND

THE AUSTFGLIAN 1

and

CAPITAL

TERRITORY

)

No. 123 of

961

JUSTIN GEORGE

TAYLOR

CORAM:

BEAUMONT,

DATED :

21 July, 1983.

REASONS FOR JUDGMENT

This is an application

by Justin George Taylor

("the bankrupt") for two separate orders

of dlscharge from

bankruptcy.

A sequestration order was made against the

bankrupt on 1 March,

1961, upon the petition of a credltor,

Gearin & O'Riordan Pty. Ltd. On 7 September, 1977, the

estate of the bankrupt was sequestrated upon the petltion

of B. & T. Meats Pty. Ltd., a creditor. The bankrupt remains

undischarged from the previous bankruptcy made

on 1 March,

1961 and thus seeks

two orders of dlscharge under s.150 of

the Bankruptcy Act 1966 (Cth.)

("the Act"), In respect of the

1961 bankruptcy and the 1977 bankruptcy.

- 2 -

It appears that the bankrupt remains undlscharged from the 1961 bankruptcy by vlrtue

of an ob~ectlon

to hls dlscharge

by force of

s.149 of the Act lodged by the Official Recelver

as trustee on 16 February, 1970. The oblectlon, whlch has

not been wlthdrawn, was on the

followmg grounds:

“1.

the

deflclency

$23,000;

contrlbutions

made

the

bankrupt

are

not reasonable.

”

1961 Bankruptcy

It is convenlent to first deal with the facts relating to the 1961 bankruptcy. In his statement of affairs, the bank- rupt disclosed the following assets:

House property- at

Lot 7,

Jonathon Street, Warners

Bay

$3,700.00

Less owing under	1st
mortgage to A.E.	&

M.M. Russ	1,932.00
Less owing under 2nd

mortgage

J. Mansin1

1,370.00

3,302.00

398.00

Trucks

400.00

Less owing under

a bill of sale

to A.L. Peate & E.B.

Tandy

1,370.00

970.00

Deflclency

------

Cash deposited with sollcltor

50.00

Elachmery

1,500.00

2,500 $2.00 shares in County ) Chemical Co. Pty. Ltd. 1 1 $2.00 share ln Justln Taylor)

No amounts

Ltd.

Pty.

)

shown

$1,948.00

-t

- 3 -

The Offlclal Recelver stated ln

hls report that the

bankrupt has to date not supplied details of sundry debtors but the bankrupt claims such detalls were In fact provlded.

The property at Lot

7, Jonathon Street, Warners Bay, was

sold by the first mortgagees exerclslng thelr power of sale. pay the costs of sale. The second mortgage debt was not ex-

tinguished and the second mortgagee, Mr. J. Mansini, has

smce

lodged a clalm in the estate for the balance

owmg under his

mortgage and for a personal loan of

$1,852.00.

The shares In

County Chemlcal Co. Pty. Llmlted and the machinery proved to be valueless.

An amount of $14,000.70

was brought to the credit

of the

estate as follows:

Deposit on petition	$20.00
Balance of bank account at Westpac

Bankinq Corporatlon, Pyrmont	43.77
Cash on hand	58.00

Interest in deceased estate of

H.E.

Taylor and B.I. Taylor	11,450.66
Proceeds from sale of stock and

plant of butchery business at Pyrmont	2,271.27
Contributions

1 9 6 4 $12.00

1 9 6 6 44 .00

1 9 6 7

101 .00

157.00

$ 14,000.70

- 4 -

The proceeds from the sale of stock and plant relate

to assets of a butchery

busmess operated by the bankrupt from

rented premlses at 186 Harrls Street, Pyrmonc, after the date

of sequestratlon. The Interest in the deceased estate of

H.E. Taylor and B.I. Taylor relates to the bankrupt's	entitle-
ments under the will of his parents.

In his statement

of affalrs, the bankrupt disclosed

forty five creditors for llabllltles totalling $25,017.49 and

-- ,

the securedcr&tors

detalled earller. The Deputy Commissioner

of Taxation was also dlsclosed as a contlngent creditor for

income tax for the years ended

30 June, 1959 to 30 June, 1961,

inclusive. Thlrty one clalms against the estate have been

admitted to rank

for a dlvldend

as follows:

Subject to priority under s.221P(1)

and ( 2 ) of the Income Tax Assessment

Act	304.00
Ordinary	21,650.00

$21,954.00

After payment of the priority claim, the petitlonlng creditor's costs and the fees and costs

of he admlnlstration,

a divldend of 49.8506 cents in the dollar on ordinary claims

has been paid.

The bankrupt's publlc

exammation was held on 14

December, 1961 and again on

20 February, 1978 ln relatlon to

the 1977 bankrupty when

It was adjourned to a date to be flxed.

The bankrupt

1s a marrled man aged

51 years wlth no

dependants. He 1 s employed as a prolect manager by Austec Internatlonal Pty. Llmited on a net weekly wage of approx-

imately $428.00.	He pays rent of $85.00	for hls present
residence.

Details of the bankrupt's taxable income,

ascertamed

from coples of income tax returns lodged with the Official

Recelver, were as follows:

1978

3,468.00

1979 10,187.00

1980 15,727.00

1981 26,978.00

1982 30,830.00

The only asset disclosed

by the bankrupt

to the Official

Receiver as at

4 August, 1982 was cash at bank of

$660.00 which

the bankrupt clalms

is held in an account operated solely

his wife,

to which he is not a slgnatory.

In October, 1956, the bankrupt commenced

to operate a

boiling down works on leasehold land at

Wmdale. Loans from

S.H. Wansey Pty. Limited and James Mansinl, each

for $1,000.00

respectively, were used

to erect a bullding and to purchase a

motor vehicle and equipment for the business. The land was

leased on an annual basls. The business employed flve employees,

with average weekly wages of $130.00. The business

was sald

to be successful untll the end

of 1956 when sales were affected

by a drought In the area. The bankrupt contmued the business

until Aprll, 1958 when complaints from the local Council forced

- 6 -

hlm to move hls buslness premlses to Young Wallsend.

The bankrupt purchased land at Young Wallsend for $600.00 and obtalned new premises and more modern plant. The

bankrupt advlsed he contlnued the same type

of business but

produced a different product. He clalmed the business was

successful untll the end of 1958.

In August, 1958, a company, Justin Taylor Pty. Llmlted,

was formed by the bankrupt, with the bankrupt and hls wlfe, Jeune Marie Taylor, the only shareholders. Each held one

$2.00 share.

The company's ob~ect

was to take over the boll-

lng down works and operate it. The bankrupt advised that the

company was registered but that the transfer of the business

was not completed. The Offlcial Recelver's lnvestlgatlons

revealed that the company was never registered. Trade began

to decline after January, 1959 due to overseas and local

competition. The bankrupt had dlfflculty

In meeting hls

current obligations as they fell due and according to

hlm,

he ceased tradlng In April, 1959. The bankrupt unsuccessfully

attempted to sell his business as a golng concern. His assets

at that stage comprised:

Land and bulldlngs

$ 8,000.00

Plant

12,000.00

Lorrles

4,000.00

Goodwlll

10,000.00

$34,000.00

- 7 -

The bankrupt dlsputes the report

of the Offlclal Recelver

dated 20 Nay, 1 9 8 0 which states that he eventually sold the

land and bulldlnqs to Gearin

&O'Rlordan Pty. Llmlted

f o r

$6 ,000 .00

and part of the plant to

U.K.I. Meat C o . for $5,200.00.

The

bankrupt clalms that the agreement for sale wlth the sald Gearin & O'Riordan Pty. Llmlted was not honoured and that the

company in fact owed him

54,500.00.

In November,

1959 , a company, County Chemical

Co. Pty.

Llmited was formed wlth the bankrupt and

Mr. Harry 0. James as

shareholders and directors. The bankrupt disclosed that he held

2,500 shares in the company. The buslness of the company was

the recovery of waste materials from local lndustries and the

supply of refined chemicals from these wastes

to Courtaulds

(Aust.) Limited. The Officlal Recelver

In hls report says

that the company did not trade successfully and

b the year

ended 1 9 6 3 had incurred substantial losses. However, the

bankrupt claims that in

1 9 6 2 the company made a profit of

approximately $16,000.00.

The company's plant and operations

were sold to another company in late 1 9 6 8 and on 2 1 February,

1975 , the company was struck off as a defunct company.

The bankrupt was employed on a salary

or wage from the

date of hls

1 9 6 1 bankrupty until July,

1 9 7 5 , when he commenced

a butchery buslness in partnershlp with Davld Robert Barrett.

Throughout most of thls perlod, he had

four dependent chlldren.

The bankrupt's partnershlp and subsequent deallnqs from

1 9 7 5 onwards wlll be dealt wlth when considering the applicatlon

for discharge from the

1 9 7 7

bankruptcy.

- 8 -

The debt due to the petitionlng credltor, Gearin

O'Rlordian Pty. Llmlted was one incurred In respect of an agreement made between the bankrupt and the pecltlonlng cred-

ltor for the takeover of the	bankrupt's buslness as Young
Wallsend.

The Offlcial Recelver says that he

1s not in a position

to comment further on the bankrupt's trading actlvlties or as

to the adequacy of records kept since such records were not

produced by the bankrupt. The bankrupt, on the other hand,

claims that all records relating to the business were ln fact

produced to the Offlcial Receiver.

The bankrupt belleves that the main causes for the 1961

bankruptcy were the competition within the industry and an was the lack of working capital.

unsatisfactory settlement on the sale of his business. The

The Officral Receiver reports that the conduct of the bankrupt during his 1961 bankruptcy has been unsatisfactory

that during the period

25 July, 1975 to 7 September, 1977,

whilst an undischarged bankrupt and carrying on

busmess as

a butcher either

in partnership or as

a sole trader, he

111-

curred debts in respect of which creditors have proved In hls

1977 bankruptcy for $30,928.00. It is also reported that the

bankrupt failed to notify the trustee in wrlting between

28 July, 1971

to 28 June, 1977 that he had changed hls address.

No matters pursuant to s.150(6) of the Act were reported.

- 9 -

...

answer to these charges, the bankrupt says that

he was under the mistaken lmpresslon he had automatlcally been

discharged as a bankrupt

by the tlme he commenced carrylng on

buslness as a butcher In partnershlp or on hls own account.

based thls bellef

on reports

In a newspaper In the late 1960's

and

as a result of this mlstaken bellef, he falled

to notlfy the

trustee of his change of address. The bankrupt in

h l s affldavlt

In reply to the Offlcial Recelver's report states that he did

not

realise that he was an undlscharged bankrupt until March, 1976

when he was advised of thls

by the Bank of New South Wales at

Pyrmont

1977 Bankruptcy

As I have said, a sequestratlon order was made against the bankrupt on 7 September, 1977 upon the petltion of a creditor,	.
E. & T; Meats Pty. Limited. An objectlon to the dlscharge of
I.

the bankrupt from this 1977 bankruptcy,

by force of

s.149 of the

Act, was lodged on

2 3 June, 1980

by the Offlclal Recelver on

the following grounds :

(1)	The bankrupt has a deficlency ln excess	of
$40,000.00.
( 2 )	The bankrupt is undischarged from a previous

bankruptcy made on

1 March, 1961.

The ob~ection

has not been wlthdrawn.

- 10 -

A notlce of lntentlon to oppose the appllcatlon

f o r

order 05 discharge In relatlon to the 1977 bankruptcy has been filed by a credltor ln the sum of $6,129.79, Mudgee CO-Operatlve Meat Supply Llmited.

In his statement

of affalrs, the bankrupt dlsclosed the

following assets

hand	in	Cash	$	15.00
Household furnlture and

effects

200.00

$215.00

A sum of $11,421.56 was brought to the credit of the

estate as follows:

Deposit on petition	$20.00
Refund of bankrupt's half share of
purchase price of Manti Investments
Pty. Limited	120.00

Payment of account	of llabllltles	1,141.56
Contributions:

1977 160.00

1978 320.00

1979 1,560.00

1980 1,800.00 1981 2,700.00

1982 2,480.00

1983

1,120.00

10,140.00

$11,421.56

The payment on account

of llablllties represents tax

refunds due to the bankrupt, for the years ended 30 June, 1972

- 11 -

to 30 June, 1981 lncluslve.

The bankrupt dlsclosed thlrty unsecured credltors for llabllitles totalllng $43,289.91.

Twelve proofs of debt have

been lodged agalnst the estate and admltted to rank for a

dividend as follows

Subject to priority under s.221P(1)

and ( 2 ) of the Income Tax Assessment

Act

3,249.00

Ordinary

27,679.00

$30,928.00

After payment of

100 cents in the dollar on the priority

claims, the petltioning creditor's costs and fees and costs of

adminlstration, a dividend of

19.5 cents in the dollar on ordlnary

claims was paid. Sufficlent funds are at present held to pay a

further dlvidend

of .06 cents In the dollar.

The public examination of the bankrupt was held

20 February, 1978 when it was adjourned to a date to be fixed.

On 25 July, 1975, the bankrupt and David Robert Barrett commenced business in partnership as butchers under the name of

Meatwlse. It was agreed that profits and losses were to be shared equally. Mr. Barrett was already operatlng

an exlstlng

butchery business at Chlsrvick and It was agreed that the lease

of these premlses should be retained

I his own name.

- 12 -

Premlses at Darllng Street, Rozelle were also leased

the partnershlp using the trade name of Tlger Butchery.

Fittlngs and refrigerators for the shops were purchased at

cost of $4000 ,

whlch amount was requlred to be repald In

four equal instalments. Overdraft facilltles of Mr. Barrett's

existing account at the Bank of New South Wales, Drummoyne

were used to flnance the partnershlp's operatlons. The part-

nership had three employees, two at the Rozelle shop and one

at Chiswick. Each partner drew $150.00 per week from the

busmess.

After some months, the partnershlp extended Lts

business to two additional

shops, one at Drummoyne

and the other

at Pyrmont. More staff were employed.

In November, 1975, the bankrupt and Mr. Barrett bought

the company structure of Manti Investments Pty. Limited for

$240.00 with the intention

of changlng the company name to

Meatwise Pty. Limited. The company was to take over the part-

nership business. However, the partnershlp was dlssolved before

the change of name was effected and the company, Mantl Investments

Pty. Limited, did not operate prlor to the date of the second

bankruptcy. It appears from lnvestigations that the bankrupt

and Mr. Barrett were only reglstered as directors of the company

on 10 October,

1975 and never as shareholders. The bankrupt's

wife, Jeune Marie Taylor and his daughter Fleur Irene Taylor,

became registered as dlrectors on

31 December, 1975.

The bankrupt became a co-signatory to the partnershlp

account at the Bank of New South Wales, Drummoyne, wlth Mr.

Barrett about three or four weeks after the commencement of the

- 13 -

partnership. It appears that Mr. Barrett was malnly concerned

with the running of the Rozelle shopivhereas

the bankrupt vas

concerned wlth the processlng of neat for sale. The bankrupt

kept most of the flnancial records

of the partnershlp. He

says that, overall, the shops were lnitially profitable.

Friction developed between the partners because of a

dispute over the retall prices of meat whlch the bankrupt maln-

talned were too low and the leasing of the shop at Drummoyne by

Mr. Barrett wlthout consent. In December, 1 9 7 5 ,

the partners

agreed to dissolve the Partnership after the bankrupt dlscovered

discrepancies in the records

kept by Mr. Barrett. Partnershlp

creditors at this stage were approximately

$28,000.00.

The partners agreed that

Mr. Barrett should sell the shops

at Drummoyne and ChLswick and utilize the proceeds in paying out

partnership credltors. The bankrupt advised that he received

no funds from the sale

of the shops and that Mr.

Barrett kept

the proceeds for his own

use, wlthout paying the partnership

creditors. The bankrupt claimed that he was never supplied with

any accountmg of how the proceeds were utlllzed. The partner-

ship ceased business

on 30 December, 1975 .

On 21 January, 1 9 7 6 , the Bank of New South Wales,

Drummoyne, granted an overdraft on an account in the name of

D.R. Barrett and J.G. Taylor for approximately

$14,886.00.

This overdraft was for payment of partnership credltors and

both the bankrupt and Mr. Barrett were required to make payments

- 1 4 -

of $135.00 to $270.00 per iieek to the speclal account until

the debt was llquldated. The bankrupt disclosed that he was

still Indebted to t i u s credlcor for $4,792.04.

Mr. Barrett

executed a deed under Part

X of the Act wlth hls credltors

on 7 June, 1 9 7 7 .

The bankrupt clalmed that all books and

relevant partnershlp records were glven to

Mr. Barrett in

March, 1 9 7 6 and were never returned to

him.

The only details known of the partnershlp's financlal affalrs are taken from a copy of an

mcome tax return for the

year ended

30 June, 1 9 7 6 as follows:

1.7.75 to On

salary

w ges

and

420.00

11.7.15

Add lump

sum payment on retlrement

(1/20th)

D 00

7.75

25.

Gross

profit

$22,916.00

30.12.75

from

partnership

business

Less expenses

19,479.00

3,437.00

$3,879.00

NO accounting as to wmding up was supplled to the

Official Receiver.

The bankrupt contlnued to operate the butchers shop at

Pyrmont in his

own account wlth three employees. Transactions

were mainly on a dally cash basls, though lt appears that some

credlt was extended

to the bankrupt by

some credltors. The

bankrupt paid hlmself wages

of $150.00 per week from the buslness.

- 15 -

Turnover of the

busmess in early 1976

was said to be In

excess of $4,000.00 on a weekly period. The buslness whllst the

bankrupt vas runnlng

lt solely was sald

by hlm to be tradlng

successfully but

It had to servlce the debts arlslng from the

prevlous partnership.

The bankrupt said that in March, 1976 when he applled to

the Bank of New South Wales, Pyrmont for overdraft facllitles

expand hls business, he was informed that he was an andlscharged

bankrupt.

He claimed that he curtailed his operatlons after thls

discovery and ceased deallngs wlth boarding schools and Government

departments who were hls maln customers. Staff was reduced to one

employee and he endeavoured to operate on a cash only basis. As

a result, his turnover dropped and hls business became

unprofitable.

In July, 1977, the Official Trustee in Bankriptcy

sold

the business at Pyrmont as an after acqulred asset of the 1961

bankrupty to the bankrupt's wife, Jeune Marie Taylor. When

the business ceased the bankrupt took up employment as a butcher

with Mantl Investments Pty. Limlted and at the date of bankruptcy

was stlll employed by the company.

The claim of the petltlonlng credltor, B.

& T. Meats

Pty. Limlted, relates to a Dlstrlct Court ludgment obtained on 14 December, 1976 for $2,014.37. This creditor has not lodged a claim in the bankrupt's estate.

Although the bankrupt says that books of account and other

records for his Pyrmont buslness were handed to the Offlcial

- 16 -

Receiver, the Offlclal Recelver stated In hls report that such records have not been produced.

Mention should be made of the bankrupt‘s

commercial

dealings with the opposing creditor

thls appllcatlon, Mudgee

Co-operative Meat Supply Limited. The bankrupt says that

after the partnership buslness ceased trading in late December,

1975, he sought a separate supply

of meat. He approached Mudgee

CO-operatlve Meat Supply Limited for a supply of meat on 26 March,	-
1976, when he ordered meat to the value of $65.80.

After commencing deallngs, the bankrupt began to order

meat on a regular basis

to the stage where meat was being

delivered to his butcher shop premises at

186 Harris Street,

Pyrmont every second

or third day. A representative of Mudgee

Co-operative Meat Supply Limited, Mr. Arthur Charles Brackenrlg,

has provided affidavit evidence relating to conversatlons he

had with the bankrupt during thelr course of dealings.

Mr. Brackenrlg was

not examlned, but the following are extracts

from his affldavit of

15 June, 1983:

“The bankrupt pald

for the flrst dellverles received

him but thereafter

I became concerned by

the fact that

the bankrupt was placlng regular orders for meat whllst

current invoices

remamed unpaid.

I have several conversatlons with the bankrupt in re-

lation to his outstanding account. In particular in

June, 1976 I remember speakmg to the Bankrupt ln

person at Mudgee. He said to me.	‘My business 1 s
doing well. I have come to Mudgee	In a hire car to

see you.

’

I said.

‘What about the money you owe?

’

- 17 -

He sald. 'It will be okay. It's

a plty I forgot to

brlng my cheque book. I could have written out	a
cheque on the spot.'

On another occasion I telephoned the bankrupt and during the conversation I said. 'When are you qomq

to pay the money

you owe?'

He sald.

' A cheque is ln the post.'

No cheque arrlved as promlsed.

By the end of

June, 1976 I Was becoming mcreasingly

concerned by the fact that the bankrupt was behlnd in

his payments particularly as he had promised

on many

occasions to bring his account up to date.

On another occaslon I spoke to the bankrupt by

telephone. Durmq the conversatlon I said.

'What about

the money

you owe? When are we going

to get paid?'

He said.

'I am supplying meat to the Universities. You

accounts are 7 days but their accounts are 30 days. I'll

pay you as soon as the universities pay me.'

At a later stage

I was so concerned that payments were

not bemg made that I telephoned the bankrupt and said.

'You've promised to send payments but we've got nothing.

I want you to give	a cheque to the driver when you get
the delivery.'

He said.

'Yes, Okay.'

At no time however dld he comply wlth hls arrangement.

On 30th August, 1976 a cheque was recelved from the

bankrupt in the

sum of $500.00.

This cheque was sub-

sequently returned after presentation to

h1.s bank havlng

been dishonoured.

I telephoned the bankrupt. He sald.

'They must have presented the cheque to the wrong

account. Don't worry, I'll draw a personal cheque	to
look after it.'

No personal cheques were ever received from the

bankrupt.

On the 3rd September, 1976 the bankrupt received meat

to the value of $731.01. On the 17th September, 1976

the bankrupt recelved meat to the value of $717.80.

Following this last delivery I attempted to telephone

the bankrupt at 186 Harris Street, Pyrmont wlthout

success.

During the 6 months that the bankrupt traded wlth Mudqee	_ .
Co-operative Meat Supply Llmlted he ran up an outstand-

lng account in the

sum of $6,129.79."

- l8 -

In answer to the evidence of Mr. Brackenrlg, the bank- rupt conflrmed that he had numerous conversatlons wlth

Mr. Brackenrig concernlng meat and about his belng prompter

hls payments to the

company, but had dlfflculty

recallmg the

details. The bankrupt sald that the normal terms

In the meat

lndustry were 7 days and that these were the terms in

h i s

dealings wlth Mudgee Co-operative Meat Supply Limited. opposmg creditor, wholesale customers were not paying him and

that he was

In fact buylng meat on a 7 day account wlth Mudgee

Co-operative Meat Supply Limited but supplylng

it on a 30 day

account to wholesale customers. Nonetheless, he clalmed that

it was his belief at the tlme that he could trade out of his

difficulties.

The bankrupt commenced

to run his

busmess on a cash

basis from about July, 1976.

He ceased tradmg with certaln

large wholesale customers which relled on

30 day credit

and commenced to run the business on a retail

basis. The

retall basls was not enough to support the busmess and in May, 1977, the bankrupt contacted the Official Receiver's offlce.

The busmess was stlll operating

6 days a week up to July, 1977

when the Offlclal Receiver sold the

busmess.

On 9 September,

1977, the bankrupt was found gullty of

four offences under the Companies Act and

fmed a total of

$490.00. These charges

mvolved the fallure

to hold an annual genera

meeting, fallure

to keep a proflt and

loss account and a

failure

- 19 -

to keep records correctly ln relatlon to

a company Drum

& Tank Pty. Limited whlch

1s In llquldatlon.

The bankrupt attrlbuted the cause of hls bankruptcy

to the fallure of hls ex-partner, Mr. Barrett, to use the

proceeds of sale of the partnershlp assets to repay partner-

ship credltors. The Official Recelver expressed the view

that the failure

of the respective buslnesses In whlch the

bankrupt had an interest was also a contributing factor.

The Official Recelver reports that the conduct of the

bankrupt during the term of hls second bankruptcy has been

satisfactory. Moreover, he does not report any matters

pursuant to sub-sectlon (6) of s.150 of the Act.

The bankrupt

has made contrlbutlons

amountmg to $10,140.00 to hls estate

between

1 9 7 7 and

1983.

The bankrupt commenced employment with Austec

International Pty. Limited as a project and development

manager after being

ad~udged

bankrupt on 7 September, 1977 .

He now holds the positlon of general manager wlth that company and claims that his future advancement in the company

is restricted by his fallure to be discharged from the

bankruptc1es.A director of the said company, Kelth Wallace outcome of these proceedings In order to ensure that the posltlon of director In some of Its local operatlons can be taken up by the bankrupt.

- 2 0 -

The opposlng credltor, Mudgee CO-operatlve Meat Supply Llmited, has based its opposltlon on two grounds. On the

evldence before me, ulth some hesltatlon,

I hold that I cannot

be satlsfled that the bankrupt has, after

knowmg himself to be

insolvent, contlnued to trade or obtaln credlt to the amount

of $100.00 or upwards. In thls regard, the absence of contem-

porary financlal records means that

findmg of actual

insolvency, let alone knowledge of that fact, makes it

dlfficult in the extreme to make such a finding.

Moreover, I am not satisfled that the bankrupt has con- txacted a debt provable

In the bankruptcy wlthout having at the

time of contracting

it any reasonable or proper grounds of

expectation of being able to pay it after taklng

m t o consider-

ation hls other liabilities at the time (see Re Todd

(No.

2 )

(1910) 10 S.R.

(N.S.W..)

490 at 504).

In this connection also,

the absence of any detalled financlal material speaklng

of the

bankrupt's positlon at the tlme, makes it difflcult to make a

finding adverse to the bankrupt, given his assertions of

optimlsm. However, whllst I am prepared to give the bankrupt

the benefit of my doubts on the

makmg out of the two speclfic

grounds of opposition,

I nonetheless find that the general

conduct of the bankrupt in his dealings with the opposing

creditor was quite unsatisfactory and reflects poorly on him.

I propose to take thls matter	m t o account In the exerclse of
my discretion.

- 21 -

As no matrers pursuant to

s . 1 5 0 ( 6 )

of the Act have been

reported in either of the two appllcatlons for dlscharge, the

court's powers as defined under sub-sectlon

( 9 ) of s.150 are

either to make the order of discharge or refuse the order or make

an order of dlscharge but suspend the operatlon of the order

either unconditlonally or subject

to condltlons. The court's

discretion is to be exerclsed with regard to the publlc lnterest

as well as the interests of the bankrupt and his credltor (see

Re Haines

( 1 9 3 7 )

10 A.B.C.

8 3 ) .

In Re Todd(No.2) (1910) 10 S.R.

( N . S . W . )

490, Street, J.

at p.504 sald:

"The function of the court is not merely to relleve un-

fortunate debtors. It is an equally lmportant part

of Its duty to protect and unhold commercial morallty,

and to protect

the trading communlty and the publlc

generally agalnst persons who have shovm themselves

in the past to be unfit to trade

o to be indifferent

to or Ignorant of

those principles of

commercial

morality by which

all honest traders hould be guided."

The discreditable record of a bankrupt in commercial

proceedings is also relevant in an appllcatlon for dlscharge; see

Re Kolomy (1981) 56

F.L.R. 157.

In my opinion, In the exercise of my discretlon, it

proper to order the discharge of the bankrupt from each

bankruptcy but, In each case, to suspend the operatlon of the

1 s

order for a period of

s1x months. In so decidlng, I have

taken into account the dlscredltable conduct of the bankrupt ln

h l s dealings wlth the

opposmg credltor but I have weighed

- 2 2 -

agalnst thls the amount of the contributlons made by the

bankrupt and hls apparently satisfactory employment relation-

ship at the present tlme.

I propose to order that the bankrupt pay the costs

of the opposlng credltor.

I order that the publlc examlnatlon

of the bankrupt

shall be deemed

to have been concluded on

20 February, 1978.

_--

I cert:<y - -	3 and the
prece.' - * - I . .: :	-e a true copy of the

Reasc :

S ?c.r 3uc:ment herein of his Honour t

Er.

Justice

&QDJJJY@,< *

Associate

[1983] FCA 152

21 Jul 1983