Ryan, R.J. & M.M. v The Bankrupt

[1990] FCA 191

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) QLD PET B 1230 of 1987
BANKRUPTCY DISTRICT OF THE STATE OF )
QUEENSLAND	1

RE:  ROBERT JOSEPH RYAN and MARTHA MARIA RYAN

EX PARTE: THE BANKRUPT

MINUTE OF ORDER

JUDGE MAKING ORDER:  SPENDER J .

DATE OF ORDER:	30 MARCH 1990
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.   .Robert Joseph Ryan be discharged from his bankruptcy.

2. Martha Maria Ryan be discharged from her -

bankruptcy.

3.    Costs fixed in the sum of $100.00 to be paid to the Registrar, who will then

3orward it to ~ r s . Ryan.

NOTE :  Settlement and entry of orders is dealt with by
Bankruptcy Rule 124.

I

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	1 QLD PET B 1230 of 1987
BANKRUPTCY DISTRICT OF THE STATE OF )
QUEENSLAND	)

RE:  ROBERT JOSEPH RYAN and MARTHA MARIA RYAN

EX PARTE: THE BANKRUPT

EX TEMPORE REASONS FOR JUDGMENT

This is an application by Robert Joseph Ryan and Martha Maria Ryan that each of them be discharged from bankruptcy. Their bankruptcies came about as a consequence of their presentation of a debtors1 petition on 15 October 1987.

The application if successful would have the effect that they would be discharged from their bankruptcy approximately six months before the expiry of the three year period spoken of in

S. 149 of the Bankruptcy Act 1966. Both of the applicants are

pensioners receiving age pensions of $111.35 weekly, which is their sole source of income.	Mr. Ryan is aged 66 and Mrs. Ryan is 61. The reasons for their application primarily concern their medical condition and the type of'accommodation which they are able to obtain given their status of bankruptcy.
I am satisfied from the medical evidence that both Mr. and Mrs. Ryan have medical conditions which make it highly desirable, to put it no higher, that they live in accommodation at ground level. I am also satisfied that their present arrangements with Housing Commission accommodation are unsuitable from a medical point of view and that, as a result of their status of bankruptcy, they have difficulty in acquiring alternative rental premises and that it was not possible to relocate to another more suitable Commission dwelling without considerable difficulty and delay. l
Unless there are disqualifying circumstances surrounding the applications I would grant the applications for discharge on the basis of those circumstances to which I have referred.

A creditor of Mr. and Mrs. Ryan, a mr. Maxwell George

McLachlan, objects to the grant of the discharge. It is clear that there has been an extensive degree of acrimonious litigation between Mr. McLachlan on the one hand and Mr. and Mrs. Ryan on the other. The animosity generated by the circumstances leading to that litigation is behind these present proceedings and the

opposition to the discharge.

Mr. and Mrs. Ryan attribute their bankruptcy to failed litigation commenced by Mr. McLachlan, who was the builder of a home for Mr. and Mrs. Ryan. This dispute wa6 heard in the District Court and then went on appeal to the Full Court of the Supreme Court of Queensland.

The grounds of opposition by Mr. Mc~aLhlan, pressed by

Mr. Cuppaidge of counsel for him, were essentially those referred to in ss. 150(6)(f)(i) and 150(6)(g). These are as follows:

"150(6) The matters upon the establishment of which the Court may exercise the powers specified in subsection (5) are as follows:-

. . .

(f) (i) put any of his creditors to unnecessary expense by a frivolous or vexatious defence to an action brought against him;

. . .

(g) that the bankrupt has, within the period of 6 months immediately preceding the presentation of the petition on which, or by virtue of the presentation of which, he became a bankrupt, when unable to pay his debts as they became due, given an undue preference to any of his creditors;"

The primary basis of opposition was S. 150(6)(f)(i).

In relation to this it is said for Mr. McLachlan that there was no genuine defence but that it was for the ulterior purpose of depriving him of his entitlements to be paid for the building work he had done for Mr. and Mrs. Ryan that they engaged first in defending the action in the District Court and then appealing to the Full Court of the Supreme Court.

It is not 'necessary, or indeed appropriate, to relitigate those issues. But I am not satisfied that the defence and the appeal were either frivolous or vexatious. In the reasons for judgment from his Honour Judge C.F. McLoughlin, it is plain that there were serious defects in the foundations of the home built by Mr. McLachlan for Mr. and M r . Ryan, and that necessary corrections had to be done to those foundations before a satisfactory dwelling could be built.

l

The central question on the appeal sdems to have been whether the rdctifications to the foundations were sufficient or not, and on that issue, for reasons which it is unnecessary to explore, Mr. and Mrs. Ryan were ultimately unsuccessful. In my view, the evidence does not support the suggestion that the bankrupt engaged in putting Mr. McLachlan to unnecessary expense by a frivolous or vexatious defence to an action brought against them.

The second ground relates to the provision of finance by the National Australia Bank in return for a mortgage over Mr. and Mrs. Ryanfs home and land. The finance was primarily utilized in the completion of the dwelling. It was said on behalf of Mr. McLachlan that this constituted an undue preference, and that pursuant to S. 150(6)(g) the court ought to take that matter into consideration. I am of the view that there is no material to suggest that at the time of the advance by the National Australia Bank of $40,000 and the related mortgage, either Mr. or Mrs. Ryan was unable to pay their debts as they fell due, which is an essential ingredient of a preference pursuant to S. 122.

Finally, it was submitted that S. 150(6)(d) had been satisfied in that there had been some non-disclosure or a failure to account satisfactorily in respect of the assets of the bankrupts. This complaint arises out of what is said to be deficiencies in an oral examination obtained by Mr. McLachlan from the District Court as to the assets available to Mr. and Mrs. Ryan to meet a judgment debt obtained by Mr. McLachlan against them.

It is to be noted that S. 150(6)(d) rhquires a failure of the bankrupt to account satisfactorily to the trustee for any loss of or any depreciation of assets, or for a deficiency of assets. The failure to account is in respect of any loss of, or depreciation of, assets, or deficiency of assets, not in respect of assets themselves, and the requirement is to account satisfactorily to the trustee.

l

The documentary material is overwhelming in the conclusion that there is nothing arising out of the sales of the various lots of land in the Pine River Shire that have in any way been applied to the detriment of the creditors of Mr. and Mrs. Ryan. The contracts and the banking records inevitably lead, in my opinion, to the conclusion that there has been no misallocation of the assets of the bankrupts arising out of those transactions.

Moreover, in a report by Michael Johnston, the acting Official Receiver, which was filed on 8 February 1990 for and on behalf of the official trustee, he did not report any matters pursuant to S. 150(6) which, of course, includes S. 150(6)(d).

I have paid attention to the legitimate complaint from Mr. McLachlan as to the moneys the courts have found owing to him, and the fact that, notwithstanding the passage of many years now, he has little prospect - or, indeed, no prospect - of recovering any amounts from the judgment.
But having regard to the provisions of S. 150 and to the factual circumstances applying to Mr. and Mrs. Ryan. I am satisfied that I ought to make an order for discharge. the orders that I make are:	l

. That Robert Joseph Ryan be discharged from his bankruptcy
. That Martha Maria Ryan be discharged from her bankruptcy.

I fix costs in the sum of $100.00 to be paid to the Registrar, who will then forward it to Mrs. Ryan.

I certify that tl~,.; 2nd ihc	G	preceding
pages are a truc copy of the rcasms	for:	J

judgment herc~n of 1-11s Honour 1

, .---

Mr. Justice Spender

KssogaB 1

~ % - , -- - ... .-

gj&,d A~-..-GC, i 4 q o