Sim v CBFC Limited
[2006] FCA 1074
•16 AUGUST 2006
FEDERAL COURT OF AUSTRALIA
Sim v CBFC Limited [2006] FCA 1074
BANKRUPTCY – Bankruptcy Act 1966 (Cth) s 60(1) – discharge of orders made under laws relating to the imprisonment of fraudulent debtors – Absconding Debtors Act (NT) – whether power to discharge orders – discretionary considerations
Absconding Debtors Act (NT)
Bankruptcy Act 1966 (Cth)Road Maintenance (Contribution) Act1958-1969 (NSW)
CBFC Ltd v Sim [2006] NTSC 57 considered
Storey v Lane (1981) 147 CLR 549 referred to
Commissioner for Motor Transport v Train (1972) 127 CLR 396 considered
Re Hollis (1968) 15 FLR 386 discussed
Re Caddies; Ex parte Stapleton (1962) 19 ABC 155 referred to
Pitt, Son & Badgery Ltd v Municipal Council of Sydney (1907) 24 WN (NSW) 203 cited
Clunies-Ross v Commonwealth (1984) 155 CLR 193 cited
Northern Suburbs General Cemetery Reserve Trust v Commonwealth (1993) 176 CLR 555 cited
Malouf v Prentice [1998] FCA 1427 referred to
Re Tyndall (1977) 17 ALR 182 referred to
Commonwealth v Verwayen (1990) 170 CLR 394 citedDANIEL JOHN SIM v CBFC LIMITED AND COMMONWEALTH BANK OF AUSTRALIA
NTD 10 OF 2006
MANSFIELD J
16 AUGUST 2006
ADELAIDE
IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY
NTD 10 OF 2006
BETWEEN:
DANIEL JOHN SIM
ApplicantAND:
CBFC LIMITED
First RespondentCOMMONWEALTH BANK OF AUSTRALIA
Second Respondent
JUDGE:
MANSFIELD J
DATE OF ORDER:
16 AUGUST 2006
WHERE MADE:
ADELAIDE
THE COURT ORDERS THAT:
1.Upon the written undertaking of Daniel John Sim to the Court to be filed in a form approved by the District Registrar that, in the event that a sequestration order is made against his estate, he will return to Australia within three calendar months of the making of the sequestration order and will cooperate with his trustee in respect of all inquiries and procedures which his trustee requires in relation to his bankruptcy, and upon Thomas Harry Edward Winter providing to and filing in the Court a surety in the sum of $15,000 in a form approved by the District Registrar to the effect that, in the event that Mr Sim does not fully comply in every respect with his undertaking, Mr Winter will forfeit to the Crown the sum of $15,000, and that process may be executed against his property for the said sum of $15,000:
Under s 60(1)(a) of the Bankruptcy Act 1966 (Cth) the orders of the Supreme Court of the Northern Territory made on 10 July 2006 and extended on 4 August 2006 under the Absconding Debtors Act (NT) in respect of Mr Sim be discharged.
2.Liberty to any party to apply on short notice.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY
NTD 10 OF 2006
BETWEEN:
DANIEL JOHN SIM
ApplicantAND:
CBFC LIMITED
First RespondentCOMMONWEALTH BANK OF AUSTRALIA
Second Respondent
JUDGE:
MANSFIELD J
DATE:
16 AUGUST 2006
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
INTRODUCTION
Mr Sim is an Australian citizen. For many years he lived in Darwin, but in early 2006 he moved to Jakarta, Indonesia. He returned to Australia to oppose a creditor’s petition for his bankruptcy, which was heard on 28 and 29 June 2006. Judgment is reserved on the sequestration order application. He was, and presently remains, unable to return to his home in Jakarta because a warrant for his arrest was issued under the Absconding Debtors Act (NT), and to avoid imprisonment he has surrendered his passport.
This application is to discharge the warrant for his arrest.
BACKGROUND
Mr Sim is a journalist, television producer and camera operator. Presently, through the company Television News Agency (NT) Pty Ltd he provides services to Network Ten Pty Ltd and Seven Network (Operations) Ltd for an annual fee, due to expire on 31 August 2006 but renewable. Under that agreement, he is required to provide television camera shooting, television news production, news gathering and editing of news stories in Indonesia. He has a 12 month work visa issued by the Republic of Indonesia which is renewable every 12 months.
Mr Sim also has an Indonesian fiancé who he proposes shortly to marry. His fiancé came to Australia with him, but has returned to Indonesia as her visa was about to expire.
For the purposes of the company, Mr Sim procured through CBFC Limited (CBFC) in his own name certain camera and television production equipment under three hire purchase agreements in 2000 and 2001. He defaulted in payments under those agreements, and there is now outstanding the sum of about $90,000. Mr Sim and his former partner, who still resides in Darwin, also obtained funds under a Better Business Loan from the Commonwealth Bank of Australia (CBA), secured by an equitable mortgage on a unit which he and his former partner, Ms Lestari Sim owned. That property has since been sold by the CBA as mortgagee, but there is still money owed to the CBA under the Better Business Loan. Judgment was entered in favour of CBA against Mr Sim on 6 July 2006 for $41,269.
On 10 November 2005 the CBA filed a creditor’s petition in the Federal Magistrates Court (FMC) in respect of a debt of some $25,000 owing to it from Mr Sim. He paid that out. On 3 April 2006, CBFC was substituted as the petitioning creditor in respect of the debt under the hire purchase agreements. It is unclear the extent to which the property the subject of the hire purchase agreements remains in Australia, and for how much it might be realised.
On 29 June 2006, CBFC applied in the Supreme Court of the Northern Territory (NTSC) for a warrant for the arrest of Mr Sim under the Absconding Debtors Act. He had pre-booked a return flight to Jakarta for 29 June 2006, to follow the hearing of the sequestration order application. To avoid a warrant being issued for his arrest before the Supreme Court application had been fully heard, Mr Sim surrendered his passport. That application was then heard over a period of part days. During the hearing, the CBA also became a party. On 10 July 2006 a judge of the NTSC ordered under ss 6 and 16 of the Absconding Debtors Act that a warrant issue for the arrest of Mr Sim for the purpose of preventing him from leaving the Northern Territory. Execution of the warrant was stayed upon Mr Sim surrendering his passport (which he had already surrendered on an interim basis) and undertaking in writing not to leave the Northern Territory for 28 days from that date. That order was varied on 4 August 2006 to require Mr Sim to surrender his passport until 21 August 2006 and to undertake not to leave the Northern Territory until 21 August 2006. I understand the extension of that order was to await judgment in the sequestration order application. If Mr Sim is declared bankrupt, he will be obliged to surrender his passport to the trustee of his estate under s 77(1)(a)(ii) of the Bankruptcy Act 1966 (Cth).
On 3 August 2006, reasons for the orders made on 10 July 2006 were published: CBFC Ltd v Sim [2006] NTSC 57.
This application under s 60(1) of the Bankruptcy Act was made immediately following the learned Supreme Court judge delivering reasons for the orders made on 10 July 2006. It seeks a stay of the proceedings in the NTSC, and a discharge of the orders made on 10 July 2006 including the warrant for Mr Sim’s arrest.
Section 60 of the Bankruptcy Act relevantly provides:
‘60(1)The Court may, at any time after the presentation of a petition, upon such terms and conditions as it thinks fit:
(a)discharge an order made, whether before or after the commencement of this subsection, against the person or property of the debtor under any law relating to the imprisonment of fraudulent debtors and, in a case where the debtor is imprisoned or otherwise held in custody under such a law, discharge the debtor out of custody; or
(b)stay any legal process, whether civil or criminal and whether instituted before or after the commencement of this subsection, against the person or property of the debtor:
(i) in respect of the non-payment of a provable debt or of a pecuniary penalty payable in consequence of the non-payment of a provable debt;
…’Because there is extant a creditor’s petition for the making of a sequestration order against the estate of Mr Sim, there is no doubt that the Court has jurisdiction under s 60 of the Bankruptcy Act: see Storey v Lane (1981) 147 CLR 549.
A LAW RELATING TO THE IMPRISONMENT OF FRAUDULENT DEBTORS?
Section 60(1)(a) empowers the Court to discharge an order made against Mr Sim only if the order of 10 July 2006 is made ‘under any law relating to the imprisonment of fraudulent debtors’. Counsel for CBFC and CBA contends that the Absconding Debtors Act does not have that character.
In my view the Absconding Debtors Act is a law to which s 60(1)(a) of the Bankruptcy Act refers.
Section 60 was amended following the decision of the High Court in Commissioner for Motor Transport v Train (1972) 127 CLR 396. The amendment made the circumstances addressed in subs (1)(a) and (b) clear alternatives, and extended its operation to criminal as well as civil legal process. Hence, the foundation for the decision in Train was statutorily altered: see per Barwick CJ at 401-402; per Walsh J at 414-415; and per Stephen J at 416. Nevertheless, that decision may inform the meaning of the expression ‘law relating to the imprisonment of fraudulent debtors’. In the legislative context of the time of that decision, the Road Maintenance (Contribution) Act 1958-1969 (NSW) (the Road Act) was found not to come within that description.
Neither Barwick CJ nor Stephen J explored the boundaries of the expression: see per Barwick CJ at 402 and per Stephen J at 416. Walsh J at 405-412 addressed at some length the question whether s 60 of the Bankruptcy Act as then in force could apply to the Road Act as a law falling within that description. His Honour rejected that proposition (at 412), and in doing so appears to have taken a different view to that of the other judges on that particular point.
His Honour reviewed the ‘background of State laws’ to which the expression may have been directed, both at the time and in the light of the legislative history of the expression (first in Australia as s 63 of the Bankruptcy Act 1924 (Cth)). From that analysis, his Honour concluded that laws relating to the imprisonment of fraudulent debtors are those which –
‘… provide for the committal to prison of certain debtors whose conduct was considered to be reprehensible and deserving of punishment …’ (at 410)
A feature of the legislation which his Honour reviewed was that, in general, imprisonment for debt had been abolished in Australia. The excepted cases were those where the debtor was being punished for some form of delictual conduct, including those whose conduct was ‘no different from fraudulent debtors’.
One consequence of that decision was that the decision of Gibbs J (as a judge of the Court of Bankruptcy) in Re Hollis (1968) 15 FLR 386 was overruled. That decision concerned the Road Act. That it was overruled is not immediately significant. What is significant in that decision, in my view, are comments of Gibbs J about the operation of the then form of s 60(1) of the Bankruptcy Act. His Honour at 388-389 regarded s 60(1) as being directed to legislation which, by imprisonment and other orders, was a means of enforcing the payment of the debt. See also per Gibbs J in Re Caddies; Ex parte Stapleton (1962) 19 ABC 155 at 158. I do not think that either Barwick CJ or Stephen J in Train necessarily disagreed with those comments. They provide a different focus for determining whether the Absconding Debtors Act is a law relating to the imprisonment of fraudulent debtors.
The Absconding Debtors Act has the long title ‘An Act to make Provision for and in respect of the Apprehension of Certain Debtors’. In my view, that is a factor to which regard may be had in determining whether it is legislation which has the character attracted by s 60(1)(a) of the Bankruptcy Act: see Pitt, Son & Badgery Ltd v Municipal Council of Sydney (1907) 24 WN (NSW) 203 at 204 per Street J; Clunies-Ross v Commonwealth (1984) 155 CLR 193 at 199; Northern Suburbs General Cemetery Reserve Trust v Commonwealth (1993) 176 CLR 555 at 563.
Part 2 of the Absconding Debtors Act empowers the issue of a warrant by the NTSC for the purpose of preventing the debtor from leaving the Territory. A warrant may not issue unless the Court is satisfied after reasonable inquiry ‘as to all material matters’. The expression ‘all material matters’ is explained in s 4(3) in the following terms:
‘For the purposes of this Act, a person is satisfied as to all material matters in relation to a debtor if he is satisfied that there are reasonable grounds for believing that –
(a) the debtor owes a debt to the applicant;
(b)the debtor is about to leave the Territory;
(c)failure to arrest the debtor would defeat, endanger or materially prejudice an applicant’s prospects of recovering a debt; and
(d)the debt –
(i) is for wages due by the debtor to the applicant; or
(ii)is for an amount not less than the prescribed amount.’
As a matter of interest, I was informed that the prescribed amount presently is only $500.
The learned judge expressed his order as being under ss 6 and 16 of that Act. Section 16 empowers the Court to make an order releasing a debtor, after the execution of a warrant, upon terms in the case of a debtor brought before the Court under s 11(2)(b) or s 14(2). Section 11(2) concerns a person who has been taken into custody by the execution of a warrant, and who is then brought before the Court by the officer in charge of the relevant police station. Section 14 concerns an application to restrain the transfer or removal of property. It appears the learned judge treated the issue of the warrant, and the process of Mr Sim being arrested and being brought before the Court under s 11(2)(b), as occurring simultaneously so as to enliven his powers under s 16. It is section 16 which would enable the release of Mr Sim upon the conditions on which he has been released. No point was taken about that approach.
In the NTSC, Southwood J determined that s 4(3)(b) does not require CBFC or CBA to prove that Mr Sim intended to abscond or to avoid his creditors by leaving the Territory. All it required was proof of the objective (and uncontested) fact that he was about to do so. I do not need to revisit that issue, although senior counsel for Mr Sim contended that his Honour’s decision was erroneous. It is not necessary for me to revisit that issue because the question at issue at present is simply to determine whether the Absconding Debtors Act is, for the purposes of s 60 of the Bankruptcy Act, a law relating to the imprisonment of fraudulent debtors.
The Second Reading Speech when the Absconding Debtors Act was introduced into the Northern Territory Parliament included the following (see Northern Territory, Parliamentary Debates, 20 September 1978, p249):
‘The purpose of this Bill is to introduce comprehensive new legislation dealing with persons who seek to abscond from the Northern Territory to defeat their creditors or who seek to transfer property out of the Territory for the same purpose.’
In my view, s 60 is directed to legislation which is intended to protect a creditor or creditors within a particular jurisdiction from adverse consequences of a debtor leaving the jurisdiction prior, or after, to the making of a sequestration order. Section 4(3)(c) of the Absconding Debtors Act indicates that the Absconding Debtors Act falls within that description. Those consequences may be the result of deliberate wrongful conduct by the debtor, or (as here) by innocent conduct of the debtor. The purpose of the law under which imprisonment may be imposed is the important feature, because s 60 is intended to provide relief in certain circumstances against the means of enforcement of a debt which is not consistent with the Bankruptcy Act: see Storey v Lane.
The Absconding Debtors Act is clearly directed to the enforcement, or the better enforcement, of the payment of a debt. It is perhaps surprising that legislation permits the issue of a warrant to arrest a debtor, to better secure the enforcement of a debt in the light of the trend evident even in the nineteenth century to abolish the practice of enforcement of payment of debt by imprisonment. The review of Australian legislation by Walsh J in Train indicates that trend. See also per Barwick CJ in Train at 402. The general approach of Gibbs J in Re Hollis to the scope of operation of s 60(1) of the Bankruptcy Act seems more consonant with its purposes, and with the role of the Bankruptcy Act as regulating the relations between a creditor and a debtor once the processes for which it provides are invoked.
That view is consistent with the context of s 60 of the Bankruptcy Act. Section 78 of the Bankruptcy Act provides, inter alia, that a debtor against whom bankruptcy proceedings are issued may be arrested if the debtor has absconded, or is about to abscond, with a view to avoiding payment of his or her debts or with a view to preventing or delaying proceedings against him or her. It is unlikely that s 60 would have been intended to have effect only in respect of legislation which is fully parallel with s 78. One might rhetorically ask why the reach of s 60 should extend to circumstances where a person against whom bankruptcy proceedings are extant proposes to abscond with a view to avoiding payment of his or her debts, and so is vulnerable to arrest, but should not apply if that person proposes to leave a particular jurisdiction for legitimate purposes, but with the same adverse consequences that departure may cause, namely that payment of his or her debts will be more difficult or the course of proceedings more difficult and prolonged. I do not see any reason why s 60 would be intended to be limited in its operation to the first type of circumstances only. It is intended to be a vehicle for relief, where bankruptcy proceedings are extant, against the imprisonment of debtors and there is no apparent policy reason why it should provide the vehicle for relief only if the debtor is (in a conventional sense) fraudulent but not where the debtor is (in a conventional sense) innocent.
THE EXERCISE OF THE DISCRETION
Clearly the power in s 60(1) is discretionary.
In my view, this is a matter in which I should exercise the discretion in favour of discharging the orders made in the NTSC on 10 July 2006 and 4 August 2006, although I do so upon certain conditions.
In the first place, Mr Sim was found in that proceeding to have intended to return to Indonesia to go back to work until the end of his current contract and until he has married his current partner in September 2006. The learned judge so found at [74]. That finding recognised Mr Sim’s personal circumstances. Mr Sim has no employment or source of income in Australia. He has no residence in Darwin, and is staying at the home of a friend. There is no evidence that he has any means of support in Darwin, or that either CBFC or the CBA have taken any steps since 29 June 2006 to provide him with any such support.
More importantly, I consider his initial imprisonment in Australia, and then his forced residence in the Territory, are not consistent with the policy of the Bankruptcy Act. Its policy in relation to such matters is indicated by s 78 (referred to above), and the learned judge found that Mr Sim’s desire to return to Indonesia was not with a view to avoiding payment of his debts but for legitimate purposes. See also s 272 of the Bankruptcy Act. I note that, if a sequestration order is made, a bankrupt must then surrender his or her passport to the trustee: s 77. Permission to travel overseas from the trustee then becomes necessary. A decision of the trustee on such a matter is reviewable. In Malouf v Prentice [1998] FCA 1427 Sackville J said the withholding of permission to travel for apparently legitimate purposes should not be lightly exercised. In Re Tyndall (1977) 17 ALR 182, Deane J at 187 and 190 referred to the ‘fundamental importance’ of such applications for permission to travel overseas to pursue legitimate commercial or personal desires; and also in some cases to the financial rewards to be derived by the bankrupt’s estate.
Section 78 provides for circumstances in which, as a matter of policy, the Bankruptcy Act considers that orders to ensure the effectiveness of a sequestration order, if made, may be secured before the making of such an order. Clearly, the Absconding Debtors Act operates beyond those circumstances, but once bankruptcy proceedings are initiated (by bankruptcy notice or petition) those extended circumstances may impose burdens on the debtor beyond the policy of the Bankruptcy Act. This case provides an example.
The debts of both CBFC and of the CBA are clearly provable debts in Mr Sim’s bankruptcy, if a sequestration order is made. Those creditors will be able to rank equally with other creditors. The trustee will be able to exercise the powers available, including procuring information under s 77 and conducting an examination under s 81. Those matters clearly would require Mr Sim to be within Australia to be fully effective, but it does not follow that the policy of the Bankruptcy Act is that he should not be permitted to return to his home and his occupation in the present circumstances in anticipation of a sequestration order being made. Moreover, his trustee may communicate with Mr Sim in Indonesia.
I note also, as counsel for CBFC and the CBA indicated, there are other inquiries a trustee of Mr Sim’s bankrupt estate would be likely to pursue and which could be undertaken in any event. Those inquiries may include examining Mr Sim’s former partner who still resides in Darwin, and procuring the production of records of entities with which Mr Sim is said to be associated and if necessary examining the officers of those entities, and locating and realising the property within Australia which was the subject of the hire purchase agreements.
It must be recognised, as the learned judge in the NTSC found, that there are reasonable grounds to believe that Mr Sim’s departure to his home would ‘materially prejudice’ the prospects of the creditors recovering their debts. His Honour’s focus was on the capacity of his trustee to administer Mr Sim’s estate while Mr Sim is in Indonesia. I agree with those views, although it is a matter of judgment as to how difficult that process would be in the circumstances. I also have regard to the detriment, or likely detriment, to the creditors by Mr Sim being permitted to return to Indonesia in terms of outcome – that is, how much greater or less the recovery of debts will be – compared to his presence in Australia either in prison or under a regime such as that now imposed under s 16 of the Absconding Debtors Act. Whilst the process of recovery may be impaired, it is by no means so clear that the ultimate recovery of the debts will be lesser by him now returning to his home. It is there that, at present, he has his capacity to earn. Moreover, the impairment of the recovery process is on the assumption that he will not be prepared to assist his trustee in the administration of his bankrupt estate. I think that steps may be taken, as set out below, to better secure his cooperation and I do not assume that his desire to return to his home means that he will not in the future cooperate with his trustee in any event. Similar considerations apply to the enforcement and recovery process available in the event that the petition is dismissed.
I have also taken into account that Mr Sim is entitled to seek review of the orders of 10 July 2006 and 4 August 2006 under the Absconding Debtors Act. I do not, however, think that matter is of great significance where it is apparent (as I have found) that the basis upon which the orders are presently made does not equate to those specified in s 78 of the Bankruptcy Act.
Counsel for CBFC and the CBA referred to several other matters relevant to the exercise of my discretion. I do not accept that this proceeding is a collateral attack upon the orders of the NTSC. It is the exercise of an entitlement under s 60 of the Bankruptcy Act to have those orders discharged. Nor do I accept that, by resisting the orders sought under the Absconding Debtors Act, Mr Sim is prevented by some form of estoppel from maintaining this application. There is no relevant res judicata or issue estoppel. He was brought into those proceedings as a defendant, and was entitled to resist them. He may have brought this application at an earlier point, but that does not lead to the conclusion that his failure to do so now precludes him from making the present application. He was faced with an immediate problem by those proceedings, and responded by defending them over the next several days after having been obliged to surrender his passport to avoid his immediate arrest. As I have noted, this application was made immediately the reasons for judgment became available on 3 August 2006.
The exercise of the discretion under s 60(1)(a) of the Bankruptcy Act does not involve any challenge to the factual conclusions made by the learned judge, but proceeds from the foundation which they provide.
I have not overlooked the expense which CBFC and the CBA have clearly incurred in the proceedings under the Absconding Debtors Act. It was their choice to bring those proceedings. They did so to take advantage of the different, and lower, threshold for a warrant for arrest under the Absconding Debtors Act. They did so in the light of the risk of Mr Sim applying for an order under s 60 of the Bankruptcy Act. That he did not bring this application earlier no doubt has increased the costs they have incurred, and that is a factor I have put into the balance. But I do not consider his defence of the proceedings in the NTSC involved him acting in a manner consistent only with Mr Sim having chosen not to exercise his right to apply under s 60 of the Bankruptcy Act, either generally or in the light of the reasons for judgment: cf Commonwealth v Verwayen (1990) 170 CLR 394. There is also no evidence from CBFC or from the CBA that they continued to conduct the proceedings under the Absconding Debtors act relying upon any assumption of fact induced by Mr Sim’s continued defence of those proceedings.
One matter which counsel for CBFC and the CBA raised, which I reject, is that there was insufficient opportunity to make an application to this Court or to the FMC for an order under s 78 of the Bankruptcy Act at or immediately after the hearing of the petition, and so the application was made under the Absconding Debtors Act. The Registry of this court is open during normal hours and has an after-hours number. It is well known that a judge of the Court can be available at very short notice, if necessary, to hear any urgent application. That is not to say that it was inappropriate to have instituted the proceedings in the NTSC under the Absconding Debtors Act – that was a matter for CBFC and the CBA – but simply to reject one explanation for having done so. The reason for having done so, as appears from the transcript of the hearing in the SCNT and in his Honour’s reasons at [63], is the judicial advantage under the Absconding Debtors Act compared to s 78 of the Bankruptcy Act that, as his Honour accepted, the Absconding Debtors Act does not require proof that Mr Sim was about to abscond with a view to avoiding payment of his debts. However, as I have sought to point out, that judicial advantage also illustrates a difference from the policy of the Bankruptcy Act in circumstances such as the present.
Another matter raised by counsel for CBFC and the CBA which I reject is that Mr Sim has improperly delayed in making this application. In fact, he did so within a day of the reasons for judgment of the SCNT being published. As the factual issues before his Honour included whether Mr Sim did intend to abscond so as to avoid paying his debts, it was sensible for Mr Sim to await the reasons to see what factual finding was made on the issue.
I have also had regard to Mr Sim’s preparedness to undertake to the Court to return to Australia (by inference within a reasonable time) to assist his trustee in the event that he is made bankrupt. He is prepared to offer a surety for his return, Thomas Winter, in the sum of $15,000 and Mr Winter too has deposed to his preparedness to offer that surety and to his having assets sufficient to meet it. I propose to accept that undertaking, but to impose upon Mr Sim the time limit of three calendar months from this date, or such later date as may be agreed in writing by his trustee. He will, upon his return to Australia, have to surrender his passport to his trustee. His trustee, assuming Mr Sim is made bankrupt, will then have sufficient time to investigate Mr Sim’s affairs in such manner as the trustee may consider appropriate, and to arrange for Mr Sim to be examined under s 81 of the Bankruptcy Act. The trustee will control Mr Sim’s capacity to travel overseas so as to allow an adequate time to complete with Mr Sim such inquiries as he wishes. I am more disposed to accept that undertaking, supported by the surety, as Mr Sim has extensive family in Australia: an elderly parent, three children and seven grandchildren.
Finally, I note (largely by way of an aside) that the Chief Minister on 22 November 1978 said of the Absconding Debtors Bill:
‘[I]t is really only a power that is exercised when the person will not comply with the order of the court. It is virtually imprisonment for contempt of the court’s orders, not imprisonment for debt.’
(Northern Territory, Parliamentary Debates, 22 November 1978, p 428-432).
As the decision in the NTSC indicates, the power is exercisable in much wider circumstances, but for that reason its exercise may be vulnerable to an order under s 60 of the Bankruptcy Act.
CONCLUSION
For those reasons, I order under s 60(1)(a) of the Bankruptcy Act that upon the written undertaking of Mr Sim to the Court to be filed in a form approved by the District Registrar that, in the event that a sequestration order is made against his estate, he will return to Australia within three calendar months of the making of the sequestration order and will cooperate with his trustee in respect of all inquiries and procedures which his trustee requires in relation to his bankruptcy, and upon Thomas Harry Edward winter providing to and filing in the Court a surety in the sum of $15,000 in a form approved by the District Registrar to the effect that, in the event that Mr Sim does not fully comply in every respect with his undertaking, Mr Winter will forfeit to the Crown the sum of $15,000, and that process may be executed against his property for the said sum of $15,000, the orders of the NTSC made on 10 July 2006 and extended on 4 August 2006 under the Absconding Debtors Act in respect of Mr Sim be discharged.
I do not propose to make the separate order sought under s 60(1)(b) at present. I understand that judgment on the petition is imminent. Apart from the orders I have made, I see no need to stay other legal processes to recover debts by CBFC or the CBA over the next several days. If there is some other legal process which immediately affects Mr Sim in a way which does not reflect the policy of the Bankruptcy Act, he may apply on short notice for a further order.
I indicate however that, if all else remains the same, and Mr Sim now refused to continue to comply with the directions for the provision of an undertaking and for the surrender of his passport so that the order that he be imprisoned were about to be enlivened, I would stay that process of imprisonment under s 60(1)(b) of the Bankruptcy Act.
Apart from the orders I have now made, I will adjourn the application to a date to be fixed with liberty to any party to apply on short notice, including as to costs. It may be that the issue of costs can be dealt with on written submissions.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice MANSFIELD. Associate:
Dated: 16 August 2006
Counsel for the Applicant: C McDonald QC with A Young Solicitor for the Applicant: Vincent Close Counsel for the Respondent: C Ford Solicitor for the Respondent: Cridlands Lawyers Date of Hearing: 9 & 10 August 2006 Date of Judgment: 16 August 2006
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