Re Wan, R.K.C Ex Parte Hennessy, P.A

[1992] FCA 997

997 \99a

JUDGMENT No. ........ ......,... I ., ..,,.. ,.,.

IN THE FEDERAL COURT OF AUSTRALIA )	NO. QB 2404 of 1992
GENERAL DIVISION	1
BANKRUPTCY DISTRICT OF THE	1
STATE OF OUEENSLAND	1

RE :  RICHARD KC WAN

Debtor

I EX PARTE: PHILIP ARTHUR HENNESSY

Applicant

R c ? ~ / v &

Coram:	Drummond J
Place:	Brisbane  "'p -1 AUSTRALIA COURT QF
a:	18 December, 1992

PRINCIPAL

RQGISTRV	, .
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EX TEMPORE REASONS FOR JUDGMENT

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This is an application for the issue of four warrants under s . 130 of the Bankru~tcv Act 1966 ICthl . The warrants are designed to authorise the obtaining, on behalf of the trustee, of documents connected with the bankrupt, including documents of associated entities.

people the quite draconic powers it confers, yet I am told blandly there is no evidence to support the issue of a

I decline to issue a warrant in respect of the premises at Illawong Way, Karana Downs. When I inquired what was the relevance of those particular premises I was told by the solicitor appearing for the trustee that there was no evidence to indicate what the significance of those premises was. I find it an astonishing situation where an application is made for a warrant under S. 130, which will confer on

particular warrant. I was told that there was no evidence in relation to the Illawong Way address. That is wrong. It appears to be the address of Mr. Huston, the bankrupt's

brother-in-law: see paragraphs 22 to 24 of Mr. Hennessy's
affidavit, the notice to Mr. Huston incorporated in exhibit
"PAH-18" and, more importantly, the response that Mr. Hennessy
swears that notice elicited from Mr. Huston.

As I have said, I am not prepared to issue a warrant in relation to the Illawong Way property, since under S. 130 of the Act a warrant can only be issued if the trustee has reasonable grounds for suspecting that there is on or in any premises property of the kind designated in S. 130(1). The documents that M r . Hennessy says he is concerned with are those in paragraph 2 of the notice directed to Mr. Huston. However, there is plainly no ground for him having the necessary suspicion under S. 130(1), which is the foundation of the power vested in this Court to issue a warrant, when one has regard to what he had to say in his lettex to Mr. Huston (exhibit "PAH-20") and, in particular, the last paragraph. He

said: 

"I assume that you also do not have in your possession books and records of the type mentioned in point 2 of my notice."

It is not possible, in my view, for him at the same time, to entertain a suspicion of the kind referred to in S. 130(1).

There is no evidence that I find in any way acceptable to justify the warrant sought in respect of 12 Moorak Street, Taringa.

I am prepared to issue a warrant in relation to 585

Grandview Road, Pullenvale and 516 Milton Road, although I will not issue it in respect of four of the entities originally said to be associated persons, namely, Talgold Pty. Ltd., BMP Unit Trust, Luxworth Pty. Ltd. and B.H. Wan & Associates.

The draft warrant that has been handed up to me shows all the signs, and this is confined from the bar table, of just having been spat out of a precedent file on a word processor. If people wish to obtain warrants to give them the powers obtainable on proper application under S. 130 of the Bankruptcy Act, the least they can do is pay some regard to that provision and draft their warrants accordingly.

One solution is to simply dismiss this application, trustee has duties to perform and, in recognition of that, I	having regard to the deficiencies that disfigure it. But the
will, on this occasion, issue the two warrants in respect of the properties at 585 Grandview Road, Pullenvale and 516 Milton Road, provided they are suitably redrafted and are brought back to me for signature later today.
I have included in the changes I have made to the draft warrant presented to me a stipulation in relation to client files of the bankrupt, in the event that any such material is taken into possession in the course of executing the warrants. The reason I have done that is reflected in what Ms. Dare says in paragraph 3 of her affidavit. She says that in a conversation she had with the bankrupt he said that he had a moral responsibility to maintain his clients' confidentiality and he made other comments in that regard. The fact that Mr. Wan, the bankrupt, may have a lien over client files is not, pursuant to S. 130 (6), any impediment to a warrant being issued to justify the taking into possession of that sort of material.
However, the matters that Mr. Wan raised in his conversation with Ms. Dare go to an entirely different issue. It is apparent from the material that it is intended to sell the bankrupt's accountancy practice and, in the course of that sale, to pass over to the purchaser the client files of the bankrupt, without apparently seeking or obtaining any
clearance from the individual clients. It may well be, and I have not received any submissions on the matter from the bar
table, that there is a duty of confidentiality that the bankrupt owes certain of his clients in respect of whom there are client files in existence, which duty of confidentiality may be enforceable at the suit of those clients. Because I have not been satisfied that no such situation can arise, and because I have not been satisfied that such a claim is not recognised by or may not be recognised by the law at the suit of individual clients of the bankrupt, and having regard to what I have said about it being the intention of the trustee to hand over those files to a nominated purchaser in the course of selling the practice of the bankrupt to that purchaser, I am not prepared, without hearing further argument, simply to authorise the taking into possession by the trustee of the relevant files without any restriction on what he can do with them.
For those reasons I am prepared to issue the two warrants appropriately amended.
I certify that this and the preceding
four pages is a true copy of the
reasons for judgment herein of the Honourable Mr. Justice Drummond.
Associate:
Date :  December, 1992