Taylor, K.D. v Natwest Australia Bank Ltd

[1992] FCA 767

Re: KENNETH DUDLEY TAYLOR
And: NATWEST AUSTRALIA BANK LIMITED
No. N G474 of 1992
FED No. 767
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Wilcox(1), Burchett(1) and Foster(1) JJ.

CATCHWORDS

Bankruptcy - Failure to comply with a bankruptcy notice - Whether debtor "ordinarily resident in Australia" - Debtor outside Australia when act of bankruptcy committed - Paucity of evidence regarding debtor's residence - Statements on immigration arrival and departure cards that debtor is resident of Australia - Effect of these statements - Effect of evidence that debtor was to "move to Ghana" in connection with mining operations.

Bankruptcy Act 1966, s.43(1)(b).

HEARING

SYDNEY

#DATE 16:10:1992

Counsel for the Appellant: L. Harrison QC

Solicitors for the Appellant: Gillis Delaney Brown

Counsel for the Respondent: M.R. Aldridge

Solicitors for the Respondent: Tress Cocks Maddox

ORDER

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay to the respondent its costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is an appeal against a sequestration order made by a Judge of the Court (Lockhart J) whereby the appellant, Kenneth Dudley Taylor, was made bankrupt on the petition of the respondent, Natwest Australia Bank Limited. The petition relied on several acts of bankruptcy but only one was established: failure to comply with the requirements of a bankruptcy notice. There was no question about the service of the bankruptcy notice or the appellant's failure to comply with its requirements. The contest in connection with this act of bankruptcy turned entirely upon the question whether the appellant was ordinarily resident in Australia at the date when it occurred. This issue arose because of the terms of s.43(1) of the Bankruptcy Act 1966. That subsection reads:

"43.(1) Subject to this Act, where -

(a) a debtor has committed an act of bankruptcy; and

(b) at the time when the act of bankruptcy was committed, the debtor -

(i) was personally present or ordinarily resident in Australia;

(ii) had a dwelling-house or place of business in

Australia;

(iii) was carrying on business in Australia, either

personally or by means of an agent or manager; or

(iv) was a member of a firm or partnership carrying on business in Australia by means of a partner or

partners or of an agent or manager.

the Court may, on a petition presented by a creditor, make a

sequestration order against the estate of the debtor."

1. The respondent, the petitioning creditor, did not contend that the appellant was personally present in Australia at the time when the act of bankruptcy was committed (14 June 1991) or that sub-para (ii), (iii) or (iv) applied. It did contend that the appellant was then ordinarily resident in Australia. This was disputed by counsel for the appellant. The learned primary Judge found against the appellant on this question. His decision on that matter is the only issue in this appeal.

2. In his reasons for decision, Lockhart J dealt with the authorities, both Australian and English, concerning the words "ordinarily resident" and "resident". No criticism was made to us of his Honour's analysis of these authorities or his conclusions of law. Consequently, it is not necessary to retrace this ground. It is enough to note that the authorities demonstrate that it is possible for a person to be "ordinarily resident" at a particular time in more than one place: see Levene v Commissioner of Inland Revenue (1928) AC 217 at 222, 232; Commissioner of Inland Revenue v Lysaght (1928) AC 234 at 243-244; Robertson v Federal Commissioner of Taxation (1937) 57 CLR 147 at 163-164; Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 524-525. In the last mentioned case, Burchett J pointed to the juxtaposition in s.43(1)(b)(i) of the Bankruptcy Act of the phrase "ordinarily resident in Australia" and "personally present ... in Australia". He said that, in such a context, the phrase "ordinarily resident in Australia" refers to a situation where the person's settled and usual place of abode is in Australia. His Honour observed: "it is a question of fact and degree at what point a temporary absence might, if sufficiently prolonged, prevent it being proper to continue to regard him as ordinarily resident in Australia".

3. As we have said, there was no attack upon Lockhart J's interpretation of the relevant law. The appellant's complaint concerned his Honour's application of that law, it being said that he erred in his factual finding that the appellant was at the relevant time ordinarily resident in Australia. The appellant also submitted that his Honour erred in rejecting certain evidence adduced on behalf of the appellant. It is convenient to deal with the latter point first.

4. The most significant evidence rejected by Lockhart J was two affidavits sworn by the appellant. When counsel for the appellant sought to read these affidavits, counsel for the respondent objected on the ground that the appellant was not available for cross-examination. He was apparently not then in Australia. It was agreed between counsel that timely notice had been given by the present respondent, the petitioning creditor, that the appellant was required to attend for cross-examination. His Honour held that "there was no cogent evidence before me as to why he had not attended" and that, under the circumstances, it would be inappropriate to exercise the discretion provided by r.135(2) of the Bankruptcy Rules and grant special leave to use the affidavits.

5. Submissions were put to us regarding matters which his Honour should have taken into account in determining whether to grant special leave to use the affidavits. These matters included the cost and inconvenience of the appellant returning to Australia from overseas and the effect upon his right to depart Australia after the hearing if, contrary to his submission, the Court held that he was at the relevant time "ordinarily resident" in Australia and made a sequestration order. No reference was made to the possibility of avoiding these difficulties by the appellant being cross-examined overseas by video-link. Given presently available technology, this possibility ought constantly to be in the minds of counsel and solicitors conducting litigation involving overseas witnesses. But it is not necessary to pursue the point or the appellant's submissions. The matter of cost and inconvenience would have been obvious to Lockhart J. We do not doubt that he took it into account. Obviously he thought this an insufficient reason to exercise his discretion in the appellant's favour. As to the second matter, this was not put to Lockhart J. It is not possible to say that his Honour's discretion miscarried because he failed to take into account a matter not raised with him.

6. In our opinion his Honour's decision to reject the appellant's affidavits was amply justified. The issue of ordinary residence was central to the case. Nobody knew the facts concerning that matter better than the appellant. His evidence was potentially important. But his credibility was in issue, so it was vital that his evidence be tested.

7. We turn to the primary issue in the appeal: the proper conclusion as to ordinary residence on the evidence that was admitted by the Court.

8. A feature of the case is the paucity of evidence concerning the appellant's place of ordinary residence. The main information on the subject comes from a bundle of arrival and departure cards which were completed by the appellant and produced on subpoena by the Department of Immigration, Local Government and Ethnic Affairs. The cards span the period 17 November 1987 to 6 July 1991. They reveal that the appellant claimed, on each occasion he entered or departed Australia within that period, to have been born in Australia and to be an Australian citizen. He showed his occupation as "mining executive" or "accountant". The arrival cards, as printed, divide persons entering Australia into three categories: "migrating to Australia", "visitor or temporary entrant" and "resident returning to Australia". With one exception, on each arrival card the appellant identified himself as "resident returning to Australia". He showed the period during which he had been absent from Australia (expressed in years, months or days) and he gave an address in Australia, usually 1A Ayres Road, St Ives. The exception was an arrival card dated 3 July 1991. The appellant there identified himself as "visitor or temporary entrant" and showed his "country of residence" as Ghana. On each of the departure cards (including that of 6 July 1991, concerning the departure immediately after the entry just referred to) the appellant identified himself as "resident departing temporarily".

9. His Honour admitted into evidence all but a small portion of an affidavit sworn on behalf of the appellant by Gary Thomas Down. Mr Down and the appellant are directors of a listed public company called The Northern Queensland Company Limited ("TNQC"). This company is involved in the gold mining industry. In about 1984 the company entered into negotiations with the Republic of Ghana in relation to a proposed mining operation at Konongo, about 100 miles east of the capital, Accra. An operating company, Southern Cross Mining Limited ("SCML"), was formed. Through a Canadian subsidiary, TNQC held a controlling interest in SCML. The mine commenced operations in 1988. Finance was obtained from various sources including Elders Resources Finance Limited and Elders Finance and Investment Limited (collectively "Elders").

10. Mr Down's affidavit sets out a detailed account of the problems which befell SCML (and therefore TNQC) because of demands by Elders for early repayment of their loans. The directors of TNQC were concerned to prevent a sale by Elders, at what they considered an undervalue, of TNQC's interest in SCML to a company called Billiton International Metals BV. According to Mr Down, in early August 1990 the directors decided to take legal action. They also decided, to quote Mr Down, that the appellant "should remain in Ghana as executive director of SCML for as long as necessary to ensure the continued smooth operations of SCML and that SCML was isolated, as far as was possible, from the actions of Elders and the Receivers". In his affidavit Mr Down reports himself as saying to the appellant: "Ken this will not work unless you and Peter (Dr Peter Henry, a metallurgist and TNQC director) move to Ghana to live and work at the mine. It will be necessary for Peter to supervise the technical side of the operations and you the financial side". According to Mr Down, Dr Henry agreed to live in Ghana and supervise the technical operations, but only if the appellant was prepared to do likewise. Mr Down said the appellant responded: "I realise that our legal measures will not work unless I am prepared to move to Ghana until these matters are resolved which I am prepared to do". Mr Down says that, at another meeting a few days later, there was further talk of Dr Henry and the appellant moving to Ghana.

11. Mr Down's affidavit reveals that TNQC was placed in receivership in September 1990. Shortly after that date, the appellant returned to Australia and assisted Mr Down in preparing a report regarding the company's affairs. Mr Down says that the appellant's wife is English and her mother lives in England. According to Mr Down, when the appellant left Australia on 29 March 1991 he travelled with his wife and infant daughter.

12. The information set out above comprises the whole of the admitted evidence bearing upon the appellant's place of ordinary residence at 14 June 1991. Surprisingly, there is no evidence as to any house owned or leased by the appellant. It seems that the appellant resided at 1A Ayres Road, St Ives for a considerable period. But there is no information as to what interest he had in that property or what happened to it. Nor was there any evidence concerning household furniture, goods and chattels, or motor vehicles. Although Mr Down's affidavit suggests that the appellant has recently spent time in Ghana there is no direct evidence of that fact. Mr Down attended a meeting in the Ivory Coast at which the appellant was present. But Mr Down has apparently not visited Ghana. Although some of the immigration cards show Ghana as the country in which the appellant had spent, or proposed to spend, most time during a particular overseas trip, most of them identify that country as the United Kingdom.

13. Because of the sparseness of the available evidence, it is not possible to reach a satisfying conclusion concerning the appellant's place of ordinary residence at the date of the act of bankruptcy. However, on the available evidence, we think that the better view is that the appellant was ordinarily resident in Australia at that time. The appellant was born in Australia. He apparently resided in Australia continuously until at least late 1990, albeit that he made many overseas business trips. The appellant's wife and child resided in Australia. He was a director of an Australian public company. Upon the basis of Mr Down's evidence, it appears that the appellant agreed to go to Ghana for a period in order to safeguard SCML's interests in that country. The evidence about the board discussions leaves unanswered questions as to when the appellant was to go to Ghana, how long he would stay there and whether or not his sojourn in that country would be continuous. Although the relevant board meetings took place in August 1990, the appellant's wife and child apparently did not depart Australia until 29 March 1991. In the meantime, according to the immigration cards, the appellant had been overseas; according to his arrival card of 15 March 1991, mainly in Ghana. On the occasion of his 29 March departure the appellant identified himself as a "resident departing temporarily" in the course of business who intended to spend four months outside Australia. He stated that, in Australia, he lived in New South Wales. It is true that the appellant then indicated that the country in which he would spend most time during the course of his overseas trip was Ghana. But it is significant that he did not then describe himself as a resident departing permanently. This departure not only took place some eight months after the relevant board discussions, it occurred at a time when the appellant was accompanied by his wife and child. Despite those matters, the appellant described himself as a resident departing temporarily.

14. The 29 March departure is important for another reason. It was the departure immediately preceding the act of bankruptcy, which occurred before the appellant's next return to Australia. When the appellant did return on 3 July 1991, as we said, he identified himself as a "visitor or temporary entrant". But three days later, on his departure, he reverted to his previous categorisation of "resident departing temporarily".

15. We agree with counsel for the appellant that his client's self-descriptions on the immigration cards should not be treated as necessarily conclusive. Theoretically, it may be possible to outweigh such evidence by material showing that a person was not in fact ordinarily resident in Australia. However, the descriptions on the cards of 29 March and 6 July constitute admissions by the appellant that he was an Australian resident at those dates. They are some evidence of his place of ordinary residence. They lie near to, and on either side of, the relevant date - the date of the act of bankruptcy. Whilst it is open to a person in the position of the appellant to show that admissions of this type are erroneous, the appellant has not done so. The only material put against the immigration cards is the evidence of Mr Down. That evidence is inconclusive. The discussions recounted by Mr Down occurred some ten months before the act of bankruptcy. More importantly, they are ambiguous in their reference to "moving" to Ghana, without further elaboration.

16. In our opinion the primary Judge was correct in holding that Mr Down's evidence did not outweigh the effect of the appellant's admissions. It follows that the appeal should be dismissed with costs.