Re Tin Maung Than (The Bankrupt) Ex Parte Tin Maung Than (The Bankrupt)

[1990] FCA 681

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JUDGMENT No. .. """"..." /."-""&".

C A T C H W O R D S

BAUKRWTCY - application for annulment - whether bankruptcy

ehould be annulled when debts fully repaid - effect of unusually diehoneet conduct of bankrupt - order for diecharge sought in alternative - intereete of commercial morality taken into account.

1966, ee.149 and 154

per Tin Mauna Than (The Bankru~tl

Am en Ahmed IVictorI Bhaml e

U Parter Tin Mauna Than (The Bankru~tl

US J.

BRISBANE 5 DECEMBER 1990

THE FEDERAL COURT OF AUSTRAL14 )

-	)
BANKRUPTCY DJSZlEGT OF THE	1 1

RE I	m N MAUNG THAN (THE BANKRUPT1
jAKA V D (VICTOR) B W w l
EX PARTEI TIN HAUNG T w	(THE BANKRUPT1

jAKA - D (VICTOR) (Applicant)

and

(Respondent)

U U T E S OF ORDER

JUDGE MAKING ORDER:	PINCUS J. 5 DECEMBER 1990
WHERg:	BRISBANE
TtIg COURT ORDERS THAT:

1.    The application be dismissed.

2.   The applicant pay the respondent's costs of and incidental to these proceedings.

m ! E I Settlement and entry of orders is dealt with in Rule
124 of the Bankruptcy Rules.

JN THE FEDERAL Q 2 Q U S T R A L I A
-

MKRUPTCY DISTRICT OF THE

STATE OF OUEENSLANQ

TIN MAUNG THAN [THE BANKRUPU

AMEEN AHMED IVI- BHAML

EX PARTE:  TIN MAUNG THAN (THE BANKRUPT1

AHMED i VZTOR) BHAML (Applicant)

and

-ND WILLIAM KNIGHT (TRUSTEEL (Respondent)

m: PINCUS J.

m:	BRISBANE
m:	5 DECEMBER 1990

REASONS FOR JUDG-

This is an application for annulment of a bankruptcy.

The bankrupt attained that statue on 7 January 1987. On

16 February, 1987, he signed a statement of affairs showing hie

assets to be $1,800 in cash and chattels and $2,000 in debts due to

the estate: in addition, there was said to be a surplus of $95,000 estimated to arise in relation to property over which security was held. It emerged that there were other assets which were not disclosed in that statement. These included a number of motor vehicles, bank accounts (including one of $270,000) and a penthouse unit which was eold for over $800,000. One of the motor vehicles (which was under lease) was subsequently eold and realised $72,500 for the benefit of the estate. These matters are contained in the trustee's report and are not disputed by the bankrupt.

When the penthouse unit was sold (in April 1 9 8 7 ) , the bankrupt deposited over $260,000 to a bank account, paid $26,000 to a company in which he was interested and paid $120,000 to the trust account of a firm of solicitors. ~ l l this was, of course, done quite unlawfully.

Further, the bankrupt's conduct has been unsatisfactory in other ways. He was made bankrupt as Tin Maung Than but he also had assets under the name Ameen Ahmed (or Victor) Bham, an identity he concealed. This alias was ascertained by a search of premises occupied by the bankrupt under a warrant issued by the Court. The obtaining of the warrant was necessary because of the bankrupt's failure to deliver to the trustee, or disclose the whereabouts of, his books and records.

The trustee makes other complaints about the bankrupt's conduct whose factual accuracy is, again, not disputed. He had not kept proper records of his business activities and this has increased the difficulty of the trustee's task. On one occasion at

the bankrupt. He has failed to deliver up his passport and failed	a meeting with the trustee, he claimed to be one Bham, a nephew of	to notify the trustee of a change of address.
The bankrupt, who is a pathologist, in oral evidence before me gave an account of his dealings since bankruptcy which (in view of the other circumstances) I would not be inclined to accept as the literal truth without some substantiation. He has sworn in effect that since his bankruptcy he has continued to work as a pathologist and the practice has realised about $3 million per annum gross, leaving a net profit of well over $1 million per annum. He has said that the practice has been run by a Melbourne pathologist, Dr. Roman Khoosal, who has recently been arrested as (allegedly) a party to a conspiracy to import a large quantity of heroin into this country. Supposedly, the bankrupt has been working merely as an employee of Dr. Khoosal, although the circumstances are such as to suggest that Khoosal was merely a front whose role was to fill in for the bankrupt during his period of bankruptcy. I do not think the bankrupt made much attempt to tell me the truth, in his oral evidence. One instance of this was that he attributed his bankruptcy to what might be described as a
minor administrative error - a failure to pay a relatively small
debt which was overlooked; he had recently sworn that the bankruptcy had quite another cause, namely real estate speculation. In evidence before me, he seemed to deny that the latter cause was the true one.
The money has been found to pay the debts due, mainly Counsel for the bankrupt says that I should accept that, but I am income tax, and the bankrupt says that money is his wife's.
not inclined to; it appears to me that the bankrupt is a thoroughly discredited witness.
As an alternative to annulment, the bankrupt also seeks an order of discharge. It appears to me that it would not be a proper exercise of discretion to grant an annulment, in view of the unusually dishonest conduct of which the bankrupt has been shown to
be guilty; it extended, as I have pointed out, so far as impersonation. It is my opinion that if an annulment can reasonably be granted (under s.l54(l)(b)) where the debts have been paid in full, that should be done; to do so encourages bankrupts who have, for example, concealed assets to uncover them. However, reflection on the circumstances of this case has convinced me that to grant this bankrupt an annulment would be to extend that notion too far.
The question then becomes whether he should have an order of discharge. The necessity to obtain one is due to the trustee's having entered an objection to discharge under s.l49(3)(c): the validity of the objection is not contested. The result of its having been entered is that the automatic discharge under s.149(1) will not take place, but the Court may make an order producing a discharge: S. 149(9), R.51A. If no such order ie made, there will be a discharge under s.149(7).
The argument put forward for the bankrupt relied on the payment of the debts, the fact that there is no occasion for further examination of the bankrupt and the pointlessness of
continuing the bankruptcy. The very large income tax debt (over $2,000,000) which was allegedly due has, after negotiation, been reduced to a much more modest sum.

It is a matter of concern that bankruptcy offences are seldom prosecuted. Because of the failure to apply criminal sanctions, even to the most blatant infringements of bankruptcy law, the power to withhold a discharge has bekome a more important power than it would otherwise be.

In Re John Maxwell Grav (1960) 19 A.B.C. 29, Clyne J.

remarked r

"Whether a bankrupt should receive a discharge is a question which affects the interest of the public and regard must be had to those interests and to what has repeatedly been described as the interests of commercial morality". (31)

The same considerations have been treated as relevant in many other cases: see for example the decision of the Full Court in Tgtterdell v. Nelson (unreported, 6 November 1990, pages 3,4)

It is necessary to refer further to the bankrupk's evidence. He says, as I have mentioned, that Dr. Khoosal, who has been running the practice, has recently been arrested. He also says that one cannot viably practise pathology unless Medicare benefits are available and such benefits can only be

Khoosal is such a person and that is why, during his	paid to an "approved pathology practitioner". Apparently Dr.
bankruptcy, the bankrupt has occupied (at least formally) the position of an employee of Dr. Khoosal. The latter can hardly continue to run the practice.
Dr. Khoosal is said to be in arrears, as to the rent on the premiees on which the pathology practice which produces the sums I have mentioned above is located. The owner has

!

instructed its solicitor (so the solicitor says) to terminate the lease to Dr. Khoosal and to grant a lease to the bankrupt when and if his bankruptcy is terminated. There is a similar promise held out, in relation to chattels used in the practice.

The bankrupt also says that if he is discharged, the relevant authorities may still not be satisfied that he is a fit and proper peraon to be an "approved pathology authority".

I note that under ~.23DF(7)(h) of the Health Jneurance Act 1973, the relevant Minister may take into account (in addition to a list of specific considerations) "such other matters as the Minister considers relevant", in determining whether a peraon is a fit and proper person to be an approved pathology authority.

It seems that the bankrupt wants a discharge (he

would have preferred an annulment) to support a contention to

purposes of the legislation in question. One would have hoped	the relevant Minister that he is fit to be trusted, for the
that before making such a decision, the responsible authorities would have taken the trouble to bespeak a copy of the trustee's report on the bankruptcy, a perusal of which might assist them. However, it appears that the bankrupt, whether rightly or wrongly, may have a hope or expectation that that will not occur.
The prospect of this Court's order being used, as the bankrupt contemplates, as evidence that he is a fit and proper person to participate in a governmental system which involves an expenditure of large sums of public money is rather alarming. In these circumstances, it seems to me plain that the public interest is in favour of refusing the application and that will be done, with costs.

I certify that this and the

six preceding pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Pincus.

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Associafe

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Counsel for the applicant:	Mr. G.W. O'Grady
Solicitors for the applicant:	Kenny & Loel, Town Agents for Smits Naple Barwick
Counsel for the respondent:	Mr. P.E. Hack
Solicitors for the respondent:	Johnsons
Dates of Hearing:	9 July 1990 and 29 November 1990