Re Tyndall

[1977] FCA 72

Bankruptcy - Appl i ca t ion fo r pe rnuss2on t o leave Australia -

S . 1 7 8 - whcn Cour t will i n t e r f e r e w i t h t r u s t e e ' s s e c i s i o n -

s s . 7 7 (a), 272 - when b a n k r u p t ' s deslres t o be subord ina ted

t o p r o p e r a d m i n i s t r a t i o n of e s t a t e . -

Theodore Valent ine DC Vere Tyndal l Ex parte the Bankrup t

No. 150 of 1 9 7 6

Coram: Deane J.

Sydney, Monday 17th October , 1977.

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WALES AKD AUSTRALIAN CAPITAL	)
1
T E R R I T O R Y	1

.

REASONS FOR J'iDCMEHT

DEXIE J: The appl icant , Theodore Valentine D e Vere Tyndal l ,

is a bankrupt . Pursuant t o t h e p r o v i s i o n s of the Bankruptcy

A c t 1 9 6 6 ( " t h e A c t " ) , a s e q u e s t r a t i o n o r d e r was made i n r e s p e c t

of h i s estate o n t h e 1 3 t h A p r i l , 1 9 7 6 . The O f f i c i a l R e c e l v e r

became, by v i r t u e of t h e p r o v i s i o n s of s.160 of t h e A c t , and

has r c m a i n s d , t h e t r u s t e e of t h e a p p l i c z n t ' s b a n k r u p t estate.

n

Subsequent t o the making of t h e s e q u e s t r a t i o n order,

I

t h e a p p l i c a n t , as r e q u i r e d by t h e p r o v i s i o n s of s . 7 7 ( a ) of t h e

A c t , d e l l v e r c d h i s c u r r e n t p a s s p o r t t o t h e O f f l c i a l Rccelver'.

A s a a p p l i c a n t was, r e s u l t of the making of t h e s e q u e s t r a t i o n o r d e r t h e

by r eason of t h e p r o v i s j ons of S . 272 of t h e A c t ,

cons t r a ined , unde r a maximum pena l ty o f ~mpr l sonmen t fo r twe lve

I ,

l 1

months, from l e a n n g A u s t r a l i a i r i t h o u t the c o n s e n t i n v r l t i n c j

of t h e O f f i c l a l R e c e i v e r as trustee of h i s Ix tnk rup t e s t a t e .

On the 2 1 s t July, 1977, t h e a p p l i c a n t w r o t e a l e t t e r

t o t h e O f f i c i a l R c c e l v e r in ~ r h i c h h e s t a t e d , i n t e r a l i a , t h a t

he had p rospec t s o f improvmg h i s ea rn lng r a t e ”by accep t ing

b r i e f ove r seas a s s ignmen t s“ and tha t he “wou ldmnoi r w i sh t o t ake

a d v a n t a g e o f s u c h o f f e r s i f a v a i l a b l e “ . The let ter r e f e r r e d

t o an a t t a c h e d letter from “Olympic Flnance“ and concluded

with a n a p p l i c a t i o n “ f o r p e r m i s s i o n t o r e n e w my p a s s p o r t “ ( s i c ) .

Enclosed 171th t h e le t ter f rom the applicant vas a l e t t e r from

a company, Olympic Finance & Insurance Corpora t lon Llmi ted ,

whlch was da t ed 2 0 t h J u l y , 1977 a n d , o m l t t i n g fOrn7al p a r t s ,

r e a d a s follows:

l

P m t h c r t o my r e c e n t instructions p l e a s e n o t e t h c t : !

L. I t is p o s s i b l e a s t h e P e s u l t of our d i s c u s s i o n s

w i t h b i r . Maramis of Indonesi.a and w i t h Kr.

Read r e l a t i v e t o t h e t la lays iara borrowings tha t

we w i l l be r e q u i r e d t o v i s i t b o t h t h o s e

c o u n t r i e s in t h e f o r e s e e a b l e n e a r f u t u m .

2 .    A s yoz w i l l appreciate yox will accompaizy t he

w r i t e r i i z a C O X S I < ~ ~ . ~ I ~ ~ roZe where the inc tr l !c t io;zs
al’e r e c e i v e d avd w i l l be requ i red t o be c b s e n t
f o r OhaLever number of weeks w i l l be necessary
t o complete t h e s e a s s i g n m e x t s .
3 .	I t w i l l be incumbent oil t h e c o r p o r a t i o n t o
p r o v i d e c o s t s of y o u r t r a v e l l i , r g e x p e n s e s b u t
we wozrld rejilind y o u t h a t we w i l l sseki izg (sl-c!
a d d i t i o n a l f e e s f o r c o n s u l t i n g t i m e ozrts ide t h e
country which i n due c o w s e w i l l be o f added
i x c o m e b e n e f i t t o y o u all< y o u r f a r r i l y and , we

‘ I

u n d e r s t a n d , y o u r e s t a t e .

111 v i e w 05 t h e s e devclopmewts we would t h e r e f o m

I comwend yozi t o make y o x r t r a v e l l i n g papers in o r d e r ,

complc ta t h e appropriate arrangcnlants and be prc-

pared l o r e c e i v e our i n s t l . n c t i o n s when t h e s e a r e

r e c e i v e d , ix turn , from ou13 c l i e n t .

’ Please c o n f i r m t h a t y o u a r e .taking a c t i o n in t h i s

m a t t e r > l o t l a t e r t h m 1 1 4 dugs from t h e d a i e o f t h i s

l e t t e r ” .

2 .

i

i

The le t te r was s igned on beha l f of Olyidpc Plnance & InsUrsilCc?

Corpora t ion Limi ted by 1 4 ~ . Dean Vientworth who was d e s c r l b e d

as the "Res iden t Pa r tne r " .

The Of f i c i a l R e c e l v e r a p p a r e n t l y t r e a t e d t h e a p p l l c a n t ' s

r e q u e s t fo r "permlsslon to renew' ' 111s p a s s p o r t as b e m g , i n

t h e c o n t e x t o f t h e e n c l o s e d l e t t e r from Olympic Finance &

Insurance Corporat ion Lzmited, an a p p l l c a t l o n for h i s wr i t ten

consen t t o t h e a p p l i c a n t ' s l e a v i n g A u s t r a l i a . 131s r e sponse

was b r i e f w r o t e t o t h e a p p l i c a n t a n d t o t h e p o l n t . On t h e 2 7 t h J u l y , 1977, he

a l e t t e r wh ich , aga in omi t t i ng fo rma l

p a r t s , r e a d a s f o l l o w s :

I1

I rcfeer to your Z e t t e r of t h e 2nd JuZy,

1977 a i d a d v i s e t h a t I w i z 2 n o t g i v e you p e r m i s s z o n

t o Zecve Aust?7aZia".

On t h e 1 2 t h September, 1 9 7 7 t h e a p p l i c a n t l o d g e d t h l s

a p p l i c a t i o n t o t h e C o u r t . The a p p l l c a t i o n s e e k s a n o r d e r ,

f r o m t h e C o u r t , t h a t t h e a p p l i c a n t "be p e r m i t t e d t o leave

Australia a n d t h a t a c c o r d i n g l y h i s p a s s p o r t b e r e t u r n e d t o

hlm" . Upon the h e a r i n g of t h e a p p l i c a t l o n , It became a p p a r e n t

t h a t t h e q u e s t i o n of t h e r e t u r n of t h e p a s s p o r t was a s u b s i d l a r y

quest ion depending upon w h e t h e r , i n f a c t , i t was a p p r o p r l a t e

t h a t a n o r d e r b e made p e r m i t t i n g t h e a p p l i c a n t t o l e a v e

Aus t ra l ia . Mr. Urquhart who a p p e a r e d f o r t h e Off ic ia l Rece lver

e x p r e s s l y s t a t e d t h a t , I n t h e e v e n t t h a t a n o r d e r was made

by t h e C o u r t p e r m i t t l n g t h e a p p l l c a n t t o l e a v e A u s t r a l i a , t h e

P

O f f i c i a l R e c e i v e r would r e t u r n h i s p a s s p o r t w i t h o u t t h e n e e d

f o r t h e making of a n y o r d e r i n t h a t r e g a r d .

It was common g r o u n d b e t w e e n t h e p a r t i e s t h a t t h e

a p p l i c a t i o n t o t h e C o u r t was a n a p p l i c a t i o n p u r s u a n t t o t h e

The p rov i s ions o f s . 178 of t h e A c t d i f f e r , i n a

"

number of r m p o r t a n t r e s p e c t s , fro17 t h e p r o v i s i o n s of S . l 4 8 of

t h e Bankruptcy A c t 1 9 2 4 . Sect ion 1 4 8 of the Bankruptcy A c t

1 9 2 4 provided:

" I f t h e bazkrtcpt or any o f t he c red i - cors o r any otlzcrd

p e r s o n is aggr ieved by a,zy act 019 decision 07 t h e

t r u s t e e , he may appl;! t o t h e C o u r t , and t h e Coz,ri

may C O i Z f t P t r l , r e v e r s e , o r m o d i f y t h e a c t o r d e c i s i o n

cornpZained of, alrd make szreh order i n Lhe m a t t e r a s

i t t h i n k s j u s t " .

The p r o v i s i o n s of t h e o ld s .148 cor responded c lose ly

w i t h c o m p a r a b l e p r o v i s l o n s o f E n g l i s h b a n k r u p t c y l e g i s l a t i o n .

It was established t h a t , u n d e r t h e s e E n g l i s h p r o v i s i o n s , t h e

c o u r t s would o n l y i n t e r f e r e w i t h the d e c i s i o n of a t r u s t e e j f

it a p p e a r e d t h a t t h e t r u s t e e was ac t ing un reasonab ly o r in bad

f a i t h (see, e . g . , I n re Peters, Ex p a r t e L l o y d - (1882) 47

L.T. G 4 a t G5; I n re a Debtor , Ex parte the Debtor v. Dodwell,

L . R . ( 1 9 4 9 ) Ch. 23; a t 2 4 1 and Leon v. York-0-Matic Ltd.

( 1 9 6 6 ) 1 W.L.R. l 450 a t 1454-5). The p r i n c i p l e s l a l d dovn i n

such dec i s ions were s t a t e d , i n a t least two Aus t r a l i an cases,

t o b e a p p l i c a b l e t o t h e p r o v i s i o n s of s . 1 4 8 of the Bankruptcy

A c t 1 9 2 4 (see per Clyne J . , i n R e Carsm, Ex pa r t e Ca r son

(19GO) 1 9 A.B.C. 108 a t 1 2 2 a n d i n Re H a l l , (1957) 2 0 A.B.C.

_ .

2 1 a t 2 9 ) . The d i f f e rences be tween t he word ing o f S . ] 48 of

! the Bankruptcy Act 1.924 and the wording of s . 1 7 8 of t h e p r e s e n t

A c t c l e a r l y makes it impossible , however , t o regard what was

s a i d i n a n y of those Eng l i sh or A u s t r a l l a n cases as be ing

4.

I

I

The c r i t i c a l d i f f e r e n c e s 111 wording l~etv?ecn S .l48 of

t h e 1 9 2 4 A c t and s .178 of t h e p r e s e n t A c t are t h a t t h e p r e s c n t

Act	d o e s n o t r e q u i r e t h a t t h e a p p l i c a n t	be	a	pe r son “aggr i eved“
n

as d i d t h e p r e v i o u s Act and the Engl i sh bankruptcy legislation

a n d t h a t t h e p r e s e n t Act d o e s n o t make t h e f o c a l p o i n t of t h e

j u r i s d l c t i o n t h e c o n f i r m i n g , r e v e r s i n g o r m o d i f y i n g of “ t h e

a c t o r d e c i s i o n c o m p l a i n e d o f “ . Under S . 1 7 8 , t h e b a n k r u p t , a

c r e d i t o r o r a n y o t h e r p e r s o n a f f e c t e d by an ac t , o m i s s l o n o r

d e c i s j o n of t h e t r u s t e e 1s empowered t o apply t o t h e C o u r t .

The e x p r e s s r e q u i r e m e n t t h a t t h e a p p l i c a n t 1x2 a per son “aggr i eved“

n o l o n g e r t o a p p r o a c h t h e m a t t e r e x i s t s . Xor is t h e C o u r t , i n e x p r e s s terms, r e q u i r e d

!

‘ l on t h e b a s i s t h a t t h e a p p r o p r l a t e

q u e s t ~ . o n i s w h e t h e r “ t h e act or dec i s ion compla ined o f“ shou ld

be confirmed, r e v e r s e d or modiEiec1. Once t h e matter i s p r o p e r l y

b e f o r e t h e C o u r t , t h e C o u r t i s empowered - and ob l lged - t o

make s u c h o r d e r I n t h e matter “as it t h i n k s j u s t a n d e q u l t a b l c ” .

I t was s t r o n g l y s u b m l t t e d by M r . Urquhart fo r t h e

O f f i c i a l R e c e i v e r t h a t , n o t w i t h s t a n d i n g t h e v a r i a t i o n i n

wording, the a u t h o r i t l e s on t h e E n g l i s h l e g i s l a t i o n a n d t h e

s t a t e m e n t s by Clyne J . , t o t h e effect t h a t t h o s e a u t h o r l t l e s

were a p p l i c a b l e t o t h e p r o v i s l o n s o f s.148 of the Bankruptcy

Act 1 9 2 4 , s h o u l d l e a d me t o conc lude t hae , i n a n a p p l i c a t i o n

under S .178, - t h e C o u r t s h o u l d o n l y l n t e r f e r c w i t h the r e l e v a n t

ac t , omission or d e c i s i o n o f t h e t r u s t e e i f i t appeared t h a t

t h e t r u s t e e h a d a c t e d a b s u r d l y or unreasonably or i n bad f a l t h .

I have r eached t he conc lu5 ion t ha t this submission cannot be

accep ted . In my view, the wording of s . 1 7 8 o f t h e Act 1s such

5. I

as to confe r upon the Cour t t he x r i c l e s t possT.ble d i s c r e t i o n LS

t o t h e a p p r o p r i a t e o r d c r w h i c h s h o u l d be made i n t h e p a r t i c u l a r

case and 1 s q u i t e i n c o n s l s t e n t x i t l l . t h e a p p r o a c h t h a t , upon

a n a p p l i c a t i o n made p u r s u a n t t o t h e s e c t l o n b y a ba.nl:rupt,

c r e d i t o r o r o t h e r p e r s o n a f f e c t e d by an ac t , omission or d e c l s l o n

of t h e t r u s t e e , t h e C o u r t i s o n l y empowered t o l n t e r f e c e wlLh

t h e t r u s t e e ' s act , o m i s s i o n o r d e c l s i o n 1.f lt ,IS of t h e view

t h a t t h e t r u s t e e h a s a c t e d a b s u r d l y o r unreasonably or i n b a d

f a l t h . Once t h e matter i s p r o p e r l y beEore t h e C o u r t , t h e

Court is, by the express words of s.178, empowered (and, as I

have said, t h i n k s l u s t a n d e q u l t a b l e . o b l i g e d ) t o malce s u c h o r d e r In t h c matter a s it

Th i s i s n o t , o f c o u r s e , t o s a y t h a t t h e C o u r t s h o u l d

e i t h e r d i s r e g a r d t h e r e l e v a n t d e c i s i o n of t h e t r u s t e e or i g n o r e

the well t h e C o u r t s h o u l d n o t u n d u l y l n t e r f e r e w i t h t h e d a y e s t a b l l s h e c l p o l i c y u n d e r b a n k r u p t c y l e g i s l a t i o n t h a t

l

t o day admln-

i s t r a t i o n o f a b a n k r u p t ' s es ta te by a t r u s t e e . The t r u s t e e 1s

made r e s p o n s i b l e for t h e a d m i n i s t r a t i o n of t h e b a n k r u p t e s t a t e

u n d e r t h e o f t h a t a d m m i s t r a t l o n , g e n e r a l p r o v l s l o n s o f t h e Act. He must, i n t h e c o u r s e

make a v a r i e t y o f d e c i s l o n s a i m e d a t

e n a b l i n g t h e a d m l n i 5 t r a t i o n t o b e c a r r i e d o u t w i t h p r o m p t n e s s

a n d e f f i c i e n c y . commerc ia l Some o f t h e s e d e c i s i o n s will be b u s i n e s s o r

dec is ions in which the b u s l n e s s or c o m l e r c i a l

expe r i ence of t h e t r u s t e e would I t se l f p rov ide a basis f o r

a r g u i n g t h a t , u n l e s s i t were shown t h a t t h e t r u s t e e ' s d e c i s i o n

0

was p e r v e r s e o r c l e a r l y w r o n g , it would be inappropr ia te and

u n j u s t for the Cour t t o i n t e r f e r e . A q a i n , u n d e r t h e

p r e s e n t l e g i s l a t i o n , t h e t r u s t e e will o r d i n a r i l y b e t h e O f f i c i a l

R e c e i v e r a n d t h c C o u r t m u s t b e c o n s c i o u s o f t h e f a c t t h a t t h e

6.

' .

I

4 Ofricial Rece ivcr will be made r e s p o n s l h l e f o r t h e a d m i n l s t r a t l o n

I I

of a n s t a n c e s , t h e a d m i n l s t r a t l o n e x t r n o r d l n a r l l y l a r g e number of estates. In such c i r cun-

of the Bankruptcy A c t demands t ha t

t h e C o u r t take I n t o a c c o u n t , I n exerclslng i t s f u n c t i o n s u n d e r

t h e p r o v i s i o n s of s.178 of the A c t , t h e o p i n i o n of t h e O f f i c m l

Recelver, as t r u s t e e , as t o what i s e x p e d l e n t i n t h e interests

of the bankrupt es ta te .	prompt	and	e f f i c i e n t a d m i n i s t r a t l o n o f	a.	par t icu lar
n

That is, however, a colnpletely d i f f e r e n t

t h i n g t o s a y i n g t h a t t h e C o u r t c a n only i n t e r f e r c wlth a n a c t ,

omission or d e c l s i o n of t h e O f r l c i a l R e c e i v e r , as s u c h t r u s t e e ,

when it is of the v i ew t k t h e O f f l c i a l R e c e l v e r h a s a c t e d

unreasonably , absurd ly or In bad fa i twLn so a c t i n g or f a i l u l g

t o act o r in r e a c h i n g t h a t d e c i s i o n .

I pass now t o t h e c o n s i d e r a t i o n o f t h e p a r t i c u l a r

mat ters which x e r e l e v a n t t o t h e d e t e r m l n a t i o n o f t h e

1 a p p l i c a t i o n b e f o r e m e . I t can be s a id a t o n c e t h a t I do n o t

r e g a r d a d e c i s i o n by t h e trustee on an app l i ca t ion by a

I

!

bankrup t fo r pe rmis s ion t o t r a v e l o v e r s e a s as coming w i t h i n

the ca t egory o f dec i s ion WhlCh s h o u l d b e t r e a t e d as b e i n g

I '

wi th in t he o rd lna . ry day t o day admin i s t r a t ion of a bankrupt

, I

estate. Even t h o u g h a p p l i c a t i o n s f o r s u c h leave a r e n o t

uncommon, they must a lways be treated as be ing of fundamental

i m p o r t a n c e r e q u i r i n g c a r e f u l c o n s i d e r a t i o n of all r e l e v a n t

c i r c u m s t a n c e s f o r t h e r e a s o n t h a t t h e y are o r d i n a r i l y r e l a t e c i

t o the f reedom of a s u b j e c t , who i s n e i t h e r a criminal nor under

?

c r i m i n a l r e s t r a i n t , t o t r a v e l t o p u r s u e h i s legitimate commercial

or p e r s o n a l d e s i r e s .

As has been sald, t h e s e q u e s t r a t i o n o r d e r I n r e s p e c t

of t h e es ta te of t h e a p p l i c a n t was made o n t h e 13th A p r i l ,

1 9 7 6 . A f t c r t h e scques t ra t> .on order vas made, t h e a p p l i c a n t

f a i l e d i n h i s s t a t u t o r y d u t y t o f i l e a Sta tement of A i f a l r s .

On t h e 1 7 t h J u n e , 1 3 7 6 a n a p p l i c a t i o n v a s made f o r a n o r d e r

t h a t t h e applicant be committed t o p r i s o n f o r f a l l u r c t o

I

p e r f o r m t h a t s t a t u t o r y d u t y . The a p p l l c a t i o n f o r committal

was se t down f o r h e a r i n g f o r 1 0 t h A u g u s t , 1 9 7 6 . On t h e 5 t h

August, 1 9 7 6 , t h e a p p l i c a n t f i n a l l y f i l e d a SGatement of

A f f a i r s w l t h t h e Registrar i n Banlcruptcy. On the 10 th Augus t ,

1 9 7 6 , l e a v e was g i v e n t o t h e O f f i c i a l Receiver t o withdraw the

a p p l i c a t i o n for commit ta l . The d e f i c i e n c y i n t h e a p p l i c a n t ' s

b a n k r u p t e s t a t e was i n t h e v i c l n l t y o f $120,000. Apar t frcm

t h e sum of $40.00 r e f e r r e d t o s u b s e q u e n t l y a n d t h e d e p o s i t

on t h e p e t i t i o n , t h e only amount received by t h e O f f l c l a l

Receiver, as t r u s t e e , h a s b e e n an amount of $1730.15 represent-

I

i n g the p roceeds o f sale o f c e r t a i n f u r n i t u r e .

Af t e r the making of t h e s e q u e s t r a t i o n o r d e r , t h e

a p p l i c a n t was c o n c e r n e d i n two t r a n s a c t i o n s w h i c h , on t h e f a c e

of them, could warrant some i n v e s t i g a t l o n .

According t o t h e a f f i d a v i t o f t h e O f f i c i a l R e c e i v e r

f i l e d i n t h e s e p r o b e e d i n g s , a proof of deb t o f a WC. A l l a n

Gordon Gre ig d i sc losed t ha t $5000 .00 was l odged t o t h e c r e d i t

o f t he bankrup t ' s bank accoun t on 15 th Apr i l , 1 9 7 6 , t h a t is t o

s a y , t w o d a y s a f t e r t h e s e q u e s t r a t i o n o r d e r was made. The

a p p l i c a n t ' s e v l d c n c e , b e f o r e m e , a s r e g z r d s t h l s p a r t i c u l a r

t r a n s a c t i o n was vague and somewhat unsatisfactory. Assuming

t h e amount v a s so lodged, it i s clear t h a t it never came t o t h e

hands o f the OfTiclal. Receiver as t h e a p p l . i c a n t ' s t r u s t e e i n

bankruptcy.

8.

! _.- The s e c o n d t r a n s a c t i o n was I n r e l a t i o n t o a n a m o u a l

- - of $0000.00 which was lodged by a company ca l led Kuranga P ty .

L i m i t e d on a n i n t e r e s t - b e a r ~ n g deposi t on 1st J u l y , 1Y76, t h a t

is t o say , ove r two months after t h e a p p l l c a n t was made bankrupt .

An agreement vas s i g n e d b y t h e a p p l l c a n t a n d h i s son, Jonathan

B a l c h i n T y n d a l l , i n r e s p e c t of t h i s deposl t . That document

s t a t e d t h a t t h e a p p l i c a n t a n d 111s son acknowledged rece ip t o f

D

the cheque for the sum of $8000.00 and t ha t such funds were

r e c e i v e d as a t h i r t y d a y d e p o s i t b e a r i n g l n t e r e s t a t 9 3/4%

per annum. b a s i s t h a t t h e I t a l so s t a t e d t h a t t h e a g r e e m e n t was nade "on the

commitment will be t r a r s f e r r e d t o a n d caken up

by Tyndal l b e i n g i n c o r p o r a t e d i n V i c t o r i a " Sons Balchin D e Vere G Company L i m l t e d p r e s e n t l y

of which company it vas s t a t e d

t h a t t h e h i s e v i d e n c e b e f o r e a p p l i c a n t a n d h i s s o n were t o b e t h e d i r e c t o r s . In

me, t h e a p p l i c a n t d e n l e d t h a t h e e v e r

r e c e i v e d t h e sum o f $8000.00 r e f e r r e d t o i n t h e document and

s a i d t h a t t h e amount was r e c e i v e d by h l s son. H i s explanation

of t h e terms of t h e document which he had signed was, i n

e f f e c t , t h a t h e h a d never r ead it. Aga in , h i s ev idence was,

t o p u t t h e matter m i l d l y , somewhat u n s a t i s f a c t o r y .

The s e q u e 5 t r a t i o n o r d e r made i n r e s p e c t o f t h e

cstate of t h e a p p l l c a n t In April., 1 9 7 6 was n o t t h e f i rs t such

order vinich had been made. A s e q u e s t - a t i o n o r d e r h a d been

made i n r e s p e c t o f t h e estate of t h e a p p l i c a n t i n F e b r u a r y ,

19GG. His bankruptcy , on tha t occas ion , , was a n n u l l e d o n t h e

15th Augus t , 1363 a f te r an o f ie r of composi t ion vas accep ted

by c r e d i t o r s .a:ld approved by the Cour t . The r e l evance of t h e

p r e v i o u s s e q u e s t r a t i o n o r d e r t o t h e p r e s e n t matter 1s 'chat lt

wouid t e n d t o i n d i c a t e e i t h e r t h a t t h e a p p l i c a n t was aware of

t h e g e n e r a l o b l i g a t i o n s a n d r e s t r i c t i o n s a r i s i n g u p o n t h e

9 .

making of a s e q u e s t r a t i o n o r d e r o r t h a t he was l n d i f i e r c n t , i n

*-

a situation t o a s c e r t a i n i n q p r e c i s e l y w h a t t h o s e o b l l g a t j vhere two s u c h o r d e r s hac1 1~ec.n made a q a i n s t h l m ,

011s and restrict-

l

i o n s wcre. Assumlng l n l t l a l i n d i f f e r e n c e t o t h e a s c e r t a i n m e n t

o f t h e n a t u r e o f s u c h r e s t r l c t i o n s a n d o b l i g a t l o n s , n o t h m g

in t h e e v i d e n c e b e f o r e m e would l u s t l f y t h e c o n c l u s i o n t h a t

t h e a p p l i c a n t ' s a p p r o a c h h a s , i n a n y way, chanqed. . Assuming a w a r e n e s s o f s u c h r e s t r l c t i o n s a n d o b l i g a t i o n s , t h e a p p l i c a n t ' s

c o n d u c t s i n c e the making of t h e s e q u e s t r a t i o n o r d e r is such as

I

t o i n d i c a t e	a	c e r t a i n l a c k o f e n t h u s i a s m i n t h e o b s e r v a n c e	of
them.

S i n c e s h o r t l y a f t e r t h e s e q u e s t r a t i o n o r d e r was made,

t h e applicant has been assoc la ted wi th Olympic F lnance &

Insu rance Corpora t ion L imi t ed i n wha t has been descr ibed as

"merchant banking actlvit ies". The p r e c i s e n a t u r e of t h e

a r rangement be tveen h imsel f and tha t Company h a s n o t b e e n d l s -

c l o s e d . I t would seem t h a t he is not an employee smce no

t ax i n s t a lmen t deduc t lons have been made from h i s e a r n i n g s .

It would e v i d e n c e i n d i c a t e s t h a t t h e " c o n t a c t s " u s e d i n h i s m e r c h a n t seem t h a t h e i s no t mere ly a c o n s u l t a n t s i n c e t h e

banking actirTltles are h i s own r a t h e r t h a n t h o s e of t h a t Company.

Whatever be t h e f o r m a l r e l a t i o n s h i p I l e t w e e n t h e a p p l i c a n t a n d

t h a t Company, h i s activities h a v e , a p p a r e n t l y , c o n s i s t e d of

a r r a n g i n g l o a n s f o r " c l i e n t s " o f t h a t Company th rough "con tac t s "

of e i t h e r t h a t Company or h i m s e l f . C

The a f f i d a v i t o f t h e O f f i c i a l Receiver i n d i c a t e s

t h a t a pub l l c examina t ion of t h e a p p l i c a n t was h e l d o n t h e

I

1 4 t h J u l y , 1 9 7 7 . In t h e c o u r s e of t h a t exam] n a t i o n , t h e

a p p l i c a n t i n d i c a t e d t h a t s i n c e 23rd August, 1976 he had rece ived

_ - $13,871.16 "subjec t t o audi t" f rom Olympic Finance h Insu rance

Corporat lon Limited. The evldencc befoire me i n d i c a t e d t h z t 111

the p r e c e d i n g f l f t y s i x veeks to t h e d a t e oT h e a r l n g he.had

earned approxlmately $16,000.00. These earn ings were, hovever ,

l a r g e l y n o t p a d t o the app l i can t . Accord ing to t h e a p p l i c a n t ,

a large p a r t of them was p a i d t o h l s wife and fami ly a t h i s

r e q u e s t t o c o v e r living expenses . I I e s a l d , h o r r e v e r , t h a t it

n

was " t o t a l l y i n c o r r e c t " t o s a y t h a t t h e moneys had been paid

t o t h e a p p l i c a n t ' s wife r a t h e r t h a n t o himself because of t h e

p o s s i b i l i t y t h a t t h e Off ic ia l Receiver might make a claim i f

the app l i can t r ece ived t hem. Mr. Wentv:orth, t h e " r e s i d e n t

p a r t n e r " of Olymplc Finance & Insu rance Corpora t lon L imi t ed ,

gave ev idence before m e t h a t a l a r g e p a r t of t h e a p p l i c a n t ' s

earn ings had been pa ld , a t h i s r e q u e s t , t o a company. Again,

t h e d e t a i l s of what occurred are u n c l e a r . The o n e t h i n g t h a t

i s clear i s t h a t , a t t h e time o f h e a r i n g o f t h i s a p p l i c a t i o n ,

I t he on ly con t r lbu t ion wh ich has been made f rom these ea rn ings

t o t h e O f f i c i a l Receiver as t r u s t e e o f h i s es ta te was an amount

of $40.00 which was p a i d l a s t J u l y . A s Mr. Urquhart mentioned

in t h e c o u r s e of 111s f i n a l s u l ~ m i s s i o n s b e f o r e me, the c l rcum-

stances are such as t o w a r r a n t c a r e f u l c o n s i d e r a t i o n b e i n g

g iven by t h e O f f l c i a l R e c e l v e r t o t h e m a k l n g o f a n a p p l i c a t l o n

t o t h e C o u r t p u r s u a n t t o t h e p r o v l s l o n s of s.131 of t h e A c t .

The a p p l i c a n t ' s wi€e has appa ren t ly been t he bene -

f i c i a r y o f a m o u n t s o t h e r t h a n a m o u n t s e a p e d by t h e a p p l i c a n t

from h i s a c t i v i t i e s w i t h Olympic Flnance & Insurance Corporn t lon

Limited. The a f f i d a v i t of M r . B l u e t t d i s c l o s e s t h a t , i n t h e

course of h i s p u b l l c e x a m i n a t i o n , t h e a p p l i c a n t i n d l c a t e d t h a t

when he h e , o n o c c a s i o n s , d i r e c t e d h i s c l ~ e n t s - t o p a y c o m m i s s i o n s was movlng o u t of the business premises he had occupied

v!llch

L'.

i

verc Lhen due t o him t o h i s wife. Again, th1.s i s a matter ~ 1 1 1 ~ 1 1

t h e O f f i c l a l Rece3 vsr, as t r u s t e e , lnay l e g 1 t m a t e l y des11:e EO

i n v e s t i g a t e f u r t h e r .

The ev idence as t o t h e precise reasan why t h e a p p l i c a n t

!

n e e d s p e r n l s s l o n t o t r a v e l o v e r s e a s is, upon analysis, as vague

a n d u n s a t i s f a c t o r y as 1s t h e e v i d e n c e i n r e l a t i o n t o so many

n

o t h e r matters. The o r i g i n a l a p p l l c a t l o n t o t h e Off ic ia l

Rece iver \:as on t h e b a s i s t h a t " t h e r e are p r o s p e c t s of improvinq

my e a r n j n g r a t e by accep t ing b r l e f ove r seas a s s ignmen t s" . The re

was no s u g g e s t i o n t h a t p e r m i s s i o n t o t ravel o v e r s e a s was

necessa ry ~f t h e a p p l i c a n t was t o r e t a i n h i s p r e s e n t a s s o c i a t l o n

v i t h Olympic Finance h Insurance Corpora t ion L l m l t e d . The

b a s i s upon v h l c h t h e a p p l l c a t l o n v7as p r e s s e d b e f o r e m e was

t h a t it vas e s s e n t i a l , i f t h e a p p l i c a n t were to re ta in t h a t

association, t h a t h e be p e r m i t t e d t o t r ave l overseas f rom time

t o time "contac ts" in connec t ion w i th a r r ang ing l oans t h rough ove r seas

(which were main ly t he applicant's) t o c l i e n b of

Olympic Flnance & Insurance Corpora t lon Limi ted . There was

o n e s u c h r e l a t i o n t o p r o p o s e d t r i p p r e s e n t l y i n m m d . The e v i d e n c e i n

it had a d e g r e e o f i n t e r n a l v a r i e t y b o t h as t o t h e

number oT c l i e n t s whom It was proposed t he app l i can t wou ld be

represent ing , the payment which he would be e n t i t l e d to r e c e l v e

and t h e b a s i s upon whxch he would be engaged to act. The

r e s i d e n t p a r t n c r of Olympic Finance h. Insurance Corpora t ion

Limited (Mr. Dean Wenh7or th)	having	g	iven	ev	ldencc	tha t	the
r

proposed trip \!as on b e h a l f o f t h r e e d e f m i t e c l i e n t s t7as first

r e l u c t a n t a n d t h e n u n a b l e t o g ive ev ldence as to t h e i d e n t i t y

of t h e s e c l i e n t s .

Unsa t i s f ac to ry t hough t he ev idence a s a whole i s ,

12.

1 am persuaded that Loth thc appl . icant and Olymplc Finance L

-- Insurance Corpora t ion Llmlted d e s i r e tine a p p l i c a n t t o t r a v e l

o v e r s e a s i n c o n n e c t i o n w i t h t h e f u n c t i o n s w h i c h t h e a p p l l c s n t

is c u r r e n t l y p e r f o r m l n g f o r t h a t company. I a m al.so persuaded

t h a t b o t h t h e a p p l i c a n t a n d Mr. Wentworth of Olymplc Finance

6. I n s u r a n c e C o r p o r a t i o n L i m i t e d b e l i e v e t h a t s u c h o v e r s e a s

t r a v e l l i n g h17 t h e a p p l i c a n t 1:ould be t o t h e f i n a n c i a l a d v a n t a g e .,

o f b o t h t h e a p p l i c a n t a n d t h a t Company. W?leLher t h e y are

correct i n t h i s view i s , of c o u r s e , a matter of s p e c u l a t i o n .

I a m n o t p e r s u a d e d t h a t , as m a t t e r s a t p r e s e n t s t a n d , t h e

c r e d i t o r s 111 t h e b a n k r u p t es ta te o f t h e a p p l l c a n t c o u l d e x p e c t

t o b e n e f i t f r o m s u c h f i n a n c l a l a d v a n t a a e s a c c r u l n g t o the

a p p l i c a n t i n excess of t h e $ 4 0 . 0 0 per month which t h e a p p l i c a n t

has a t p re sen t unde r t aken t o pay t o t h e O f f i c i a l Receiver. If

t h e a p p l i c a t i o n vere f o r leave t o make b u t o n e p a r t i c u l a r cvcr-

seas t r i p of two t o t h r e e w e e k s ' d u r a t i o n , i t may well be t h a t

it is b a n k r u p t e s t a t e w o u l d b e a d v e r s e l y a f f e c t e d d i f i ' l c u l t t o see how t h e a d i n i n i s t r a t i o n of t h e a p p l i c z n t ' s

by such a t r i p .

The a p p l i c a t i o n is n o t however i n r e s p e c t o f a s i n g l e p r o j e c t e d

journey; it i s , in e f f e c t , a n a p p l i c a t i o n t o t rave l overseas

w h e n e v e r t h e a p p l i c a n t ' S a s s o c i a t l o n w i t h Olympic Flnance h

Insurance Corporatkon Limited requires him so t o t r a v e l .

Mr. Urquhart for t h e O f f i c i a l Receiver has infors led

me t h a t t h e a p p l i c a n t ' s p u b l i c e x a m i n a t i o n h a s n o t b e e n

I comple ted and tha t it i s proposed, befoxe complet ing the

a p p l i c a n t ' S pub l l c examlna t ion , t o examine o the r w i tnes ses .

The ev idence be fo re me f u l l y j u s t i f i e s t h i s a p p r o a c h . Mr.

Urquhart a l so informed me t h a t c o n s i d e r a t i o n is be iag g iven

to a n a p p l i c a t i o n b c i n g made pu r suan t t o t h e p r o v i s i o n s of

S . 131 o f t h e Ban1;ruptcy A c t . Again, the evidence before ne

I

13.

i

L

f u l l y j u s t i I i c s c a r e f u l c o n s 3 d e r a t l o n b e i n g g i v e n t o the I ~ ! Z I J I J I : ~

- -

of s u c h a n a p p l i c a t i o n . The O f f l c l a l R e c e i v e r t a k e s t h e v l e w

t h a t to g r m t t o thc appl lcan 'c permlss ion t o leave Austra11.a

when eve^: d c s l r a b l e i n t h e p e r f o r r r z n c e of 1 1 2 s activities wlth

Oljmpic Finance & I n s u ~ a n c e C o r p o r a t i o n L i m i t e d c o u l d s e r i o u s l y

h l n d e r t h e p r o m p t a n d p r o p e r a d m i n i s t r a t i o n of h i s b a n k r u p t

estate. On t h e e v l d e n c e b e f o r e m e , I am s a t i s - f i e d t h a t t h e

, I

Off ic ia l Receiver is f u l l y justified i n t a k i n g t h a t a p p r o a c h .

I

No:withst.=nding t h e c o n s i d e r a t i o n s w e i g h i n g a g a i n s t

t h e a p p l i c a n t t o w h i c h r e f e r e n c e h a s b e e n made above , t he

q u e s t i o n v h e t h e r , i n a l l t h e c i r c u m s t a n c e s , t h e a p p l i c a n t s h o u l d

be g lven permiss ion t o l e a v e Pxstralia she lmer the per formance

of 111s funct ions with Olympic Finance & Insurance Corpora t ion

L imi t ed r equ i r e s h im so t o d o i s n o t free o f d l f f i c u l t y . I t

is o n l y i n r e c e n t y e a r s t h a t the Cormnonwealth Bankruptcy

l e g i s l a t i o n has made it a n o f f e n c e for a banlcrupt t o t r a v e l

o v e r s e a s v i t h o u t t h e c o n s e n t of h i s t r u s t e e a n d h a s r e q u l r e d

a banlcrupt s e q u e s t r a t i o n t o s u r r e n d e r h i s p a s s p o r t t o h i s t r u s t e e o n c e a

o r d e r is made. Bankruptcy does not, of i t s e l f ,

I

i n v o l v e a n y c r i n i n a l o f f e n c e . A c i t i z e n s h o u l d b e free t o

t r a v e l i f a n d when h i s commercial a c t i v i t i e s o r p e r s o n a l d e s i r e s

prompt him so t o d o . R e s t r i c t i o n s u p o n s u c h t r a v e l u n d e r t h e

bankruptcy 1egis laEion must be seen as being a imed at i n s u r i n g

t h e p r o p e r a d m i n i s t r a t l o n o f t h e b a n k r u p t c y l a w and of bankrupt

e s t a t e s u n d e r s u c h laws and no t as a penalty Imposed upon a

P

c i t i z e n as a consequence of i n a b i l i t y t o p a y d e b t s l e a d i n g t o

t h e making of a s e q u e s t r a t i o n o r d e r . I n some cases, t h e

p o s s i l n l i t y t h a t t h e b a n k r u p t has commjt ted offences under the

A c t and is s e e k i n g t o a b s c o n d f rom poss ib l e p rosecu t jon will

be extremely re1 e v a n t . There has not, however, i n t h i s case

14. l

Lecn any sugges t ion tha t t h e ban1:rupt 1s endeavouring to abscond

I

to a v o i d p o s ~ i b 1 . e p r o s e c u t i o n . I n S O ~ E cclses t h e financial

r c v a r d s t o be cler ivccl Ly the bankrupt' S cstatc from such over-

seas t r a v c l v n l l c l ea r ly ou twe igh any i nconven ience i n t he

a d m i n i s t r a t i o n o f t h a t es ta te r e s u l t i n g f r o m t h e b a n k r u p t ' S

d e p a r t u r e f r o m t h e j u r i s d l c t i o n . T h i s i s n@t, however , such

a	case	for t h e r e a s o n t h a t ,	as	I	have s a id ,	I	am	unconvinced
.,

t h a t t h e ban1;rupt e s t a t e o f t h e a p p l i c a n t c o u l d Le expec ted

t o bene i i t ove r and beyond t he $40.00 p e r month which t h e

Ixmkrup t has cu r ren t ly ucde r t aken t o pay t o t h e t r u s t e e . In

some cases, the r equ i r emen t s o f t he p rompt and e f f i c i e n t

a d m i n i s t r a t i o n o f t h e e s t a t e of t h e b a n k r u p t a n d t h e a d m i n l s t r a t -

i o n of t h e A c t will ~ u s t l f y t h e r e f u s a l t o g r a n t leave t o

t r a v e l o v e r s e a s . T h i s i s , i n my view, such a case.

' ,

Taking i n t o a c c o u n t a l l t h e c i r c u m s t a n c e s of t h e

p r e s e n t m a t t e r , I have reached t h e c o n c l u s i o n t h a t , 111 t h e

I

p r e s e n t s t a g e of a d n l n i s t r a t i o n of the a p p l i c a n t ' s b a n k r u p t

estate, I s h o u l d n o t g r a n t t h e l e a v e w h i c h h e s e e k s . The

p r o v i s i o n s of s . 7 7 (a) and s.272 of t h e A c t * recognize that a

b a n k r u p t ' s l e g i t i m a t e d e s l r e s t o t r a v e l o v e r s e a s m u s t , i n a n

a p p r o p r i a t e case, b e s u b o r d i n a t e d t o w h a t is n e c e s s a r y for t h c

p r o p e r a n d e f f i c i e n t a d m i n i s t r a t i o n of h i s estate i n b a n k r u p t c y

a n d t h e a d m i n i s t r a t i o n of the bankruptcy law. A l l i n a l l , t h e

! c i rcumstancss of the p r e s e n t case are such as t o make t h a t

I subord ina t ion necessa ry .

C

N o t h i n g i n what I have s a id shou ld be t a k e n a s

i n d i c a t i n g a n y view as t o t h e a t t i t u d e which should be adopted

by the O f f i c i a l R e c e i v e r , as t r u s t e e of t h e b a n k r u p t ' s e s t a t c ,

I

i n	r e l a t i o n	t o a n y	f u t u r c	a p p l i c a t i o n	w h l c h	t h e	han1:rupt	~ n ~ . g h t	i
l

1 5 .

. . ..

sce f l t t o make t o him f o r leave t o t r ave l ove r seas . Tn

particular, i n t h e e v e n t t h a t zn a p p r o p r i a t e l y s p e c i f i c

applicdtlun f o r l e a v e t o make a p a r t i c u l a r o v e r s e a s v i s c t 1s

made t o h im, t he Off lc la l Rece iver may well d e c i d e t h a t ,

s u b j e c t to any safeguards which he mjgh t cons ide r necessa ry

t o e n s u r e b a n k r u p t ' a b s t a t e t h e b a n k r u p t ' s r e t u r n , the a d n m i s t r a t i o n o f t h e

and of t h e A c t would n o t he a d v e r s e l y a f f e c t e d

n

by the making of the p roposed t r lp . A g a i n , t h e O f f l c i a l

Receiver may well d e c i d e t h a t , a t some s t a g e i n the f u t u r e ,

leave i n q e n e r a l terms t o t r a v e l o v e r s e a s i f and when he

d e s i r d s o t o do cou ld be g ran ted t o t h e b a n k r u p t v l t h o u t any

p r e j u d i c e t o e i t h e r the a d m i n i s t r a t i o n of t h e b a n k r u p t ' s

estate or of t h e A c t . I n t h e one case t h e Off ic la l Rece lver

would be j u s t l z l e d i n g r a n t i n g , s u b j e c t t o s u c h s a f e g u a r d s

as h e g o n s l d e r e d n e c e s s a r y , l e a v e t o t ravel o v e r s e a s i n an

n p p r o p r i a t e l l m i t e d f o r m . I n t h e o t h e r h e v o u l d b e j u s t i f i e d

i n g r a n t i n g , s u b l e c t t o a n y s a f e g u a r d s w h i c h h e m i g h t c o n s l c k r

s t l l l	t o	be necessary ,	such	leave	i n	a	g e n e r a l a n d u n r e s t r i c t e d
form .

I d i s m i s s t h e A p p l i c a t l o n a n d o r d e r t h a t the a p p l l c a n t

pay t h e O f f i c i a l R e c e i v e r ' s c o s t s .

16.