THE BANKRUPTCY ACT 1966 IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT'THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN eS SS CAPITAL TERRITORY' No. wo04 of 1978 RE: BOZIN TRAJKOSKI - ORDER Judge making order: Beaumont, J. Date of order: 21 July, 1983. Where made: Sydney. THE COURT ORDERS: 1. The public examination of the bankrupt shall be deemed to have been concluded on 31 October, 1979. 2. I order the discharge of the bankrupt. 3. The operation of the order of discharge shall be suspended for a period of twelve months from this date. THE BANKRUPTCY ACT 1966 IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT 'THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY' No. W904 of 1978 RE: BOZIN TRAJKOSKI CORAM: BEAUMONT, J. DATED: 21 July, 1983. REASONS FOR JUDGMENT Bozin Trajkoski ("the bankrupt") sometimes known as Brosko Trajkoski and as Bob Tray has made an application for discharge from bankruptcy pursuant to s.150 of the Bankruptcy Act 1966 (Cth.) ("the Act"). The applicant became bankrupt on 23 November, 1978 on his own petition. In his statement of affairs, the bankruptcy revealed the following assets: Motor vehicle $3,000.00 Less amount owing under hire purchase agreement to Australian Guarantee Corp. Ltd. 3,628.00 Deficiency $ 628.00 Cash in hand $85.00 Stock in trade situated at Shop 8 Canberra Arcade and 177 Belconnen Mall (at cost) $9,000.00 $9,085.00 This stock was subject to a bill of sale to The Bank of Adelaide and pursuant to the bill of sale, the Bank took possession of the stock. A total of $233.06 has been brought to the credit of the estate as follows: Proceeds from Commonwealth Savings Bank of Australia account $6.97 Proceeds from sale of stock situated at 177 Belconnen Mall $121.70 Less expenses of sale 81.29 40.41 Refund of income tax assess-— ment for the years ending 30 June, 1975 to 30 June, 1979 185.68 $233.06 In his statement or afzairs the bankrupt dis- closed forty seven unsecured creditors for amounts total- ling $47,596.00. 'Twenty nine proofs of debt have been lodged against the estate, twenty seven of which have been admitted to rank for dividend as ordinary claims for amounts totalling $25,617.00. The remaining claims lodged by the Bank of Adelaide in the amount of $10,961.47 and Mutual Acceptance Limited for $727.64 are subgect to further enquiry. No dividend will be paid to the creditors and an amount of $1,065.00 is still required to pay the balance of fees and costs of administration. The public examination of the bankrupt was held on 31 October, 1979 and was adjourned to a date to be fixed. The bankrupt 1s a divorced man aged 41 years. He is unemployed and is in receipt of social service benefits of $160.00 per week out of which he is required to support his de facto wife and three children. He has been unem- ployed since 1978. He gave evidence that in the event of his discharge he would 11ke to engage in a one man operation doing repair work on an hourly rate basis, so that he would not have to depend on unemployment benefits. The bankrupt migrated to Australia from Yugoslavia in May, 1963 and settled in the Wollongong district. In 1965, he moved to Canberra and became involved in laboratory research work with the C.S.I.R.O. unt1l 1970-71. He is a qualified biologist with a Diploma of Biology concerning tobacco from Macedonie. In September, 1975, a company called Tray Constructions Pty. Limited was incorporated in the Australian Capital Territory. The bankrupt was one of its directors and shareholders. The company carried on the business of gen- eral commercial construction. Its business operations were not successful and it was wound up by order of the Supreme Court of the Territory on 26 March, 1976. The company's statement of affairs disclosed an estimated deficiency of $226,683.75 as at 24 May, 1978. The liquidators' report to creditors advised that an unexplained trading loss of $84,311.96 was incurred during the period 1 July, 1975 to 26 March, 1976. Another company, Tray Formwork Pty. Limited was incorporated on 5 February, 1976. The bankrupt was again one of its directors and shareholders. The company was formed to operate in conjunction with Tray Constructions Pty. Limited to carry out construction formwork. This com- pany also ceased its operations about the same time as did its associate company. Another director, Adrian Hayley paid out an amount of $10,000 to the Bank of New South Wales in respect of an overdraft account and obtained an attachment order from the Court in 1977 in the sum of $5,283.55 against the bankrupt for an amount held in a security deposit at the Dickson branch of the Commonwealth Bank. The bankrupt says that the company is now dormant with no debts outstanding. Tray Concrete Pty. Limited was also incorporated on 5 February, 1976 with the bankrupt and Adrian Hayley as directors and shareholders. This company was formed to carry out small scale construction: shortly afterwards, the other two Tray companies ceased trading. The bankrupt claims that he transferred his interest in Tray Concrete Pty. Lamited to Mr. Hayley for a nominal consideration of $1.00. A search made of the company register in the Australian Capital Territory failed to locate any records with regard to this company. On 5 June, 1976, the bankrupt became the registered sole proprietor of the business name Dune Constructions. On 26 June, 1976 the bankrupt and TlijLatkoski formed a partnership and commenced business as concrete formers trad- ing under the business name of Dune Constructions. Profits and losses were to be shared equally. Each partner introduced capital of $60.00 and both made drawings of approximately $200.00 per week. The bankrupt said that the partnership was successful, but it ceased its operations in December, 1976 after an argument between the partners. It appears that when the partnership dissolved, the business possessed only a few hand tools and a liability of approximately $6,000.00 to $7,000.00 owing to Accord Concrete for the supply of concrete. The debt was not disclosed in the bank- rupt's statement of affairs. In July, 1975 the bankrupt commenced business on his own account under the business name of "Zodiac Art Gallery". The name was registered in the name of Bob Trajkoski on 6 November, 1975 but was transferred to the bankrupt's parents, Peter and Maria Trajkoski forthe period 1 February, 1976 to 16 November, 1977. It was then trans- ferred back to Bob Trajkoski. The bankrupt claimed that this was because an offer made by the bankrupt's parents to purchase the bankrupt's interest in this business for an amount of $15,000.00 did not eventuate. During the period July 1975 to November 1978, the bankrupt carried on business at a number of premises in Canberra. On 9 January, 1976, the bankrupt was granted a lease of the premises being Shop 8, Canberra Arcade, Canberra City for a term of five years at a rent of $10,400.00 per annum. He obtained a personal loan from Mutual Acceptance Limited to outfit the shop. The business was apparently successful between mid 1976 to early 1977 but then began to decline because of increased competition. On 18 December 1978, the Bank of Adelaide, pursuant to its bill of sale, entered the premises and took possession of the remaining stock. In June, 1977 the bankrupt acquired the business carried on at premises being Shop 5, Cinema Centre Building, Canberra City, as a going concern for $14,000.00. A deposit of $7,000.00 was paid with moneys advanced by means of overdraft accommodation granted by the Bank of Adelaide. The balance of $7,000.00 was to be paid in instalments of $1,000.00 per month to the vendors. The bankrupt advised that the vendors were paid from trading receipts. Due to a temporary closure of the car park and subsequent decline in patronage, the business became unprofitable. In July 1978 the bankrupt sold the business as a going concern for $5,000.00, resulting in a capital loss of $9,000.00. In August, 1978 the bankrupt obtained a lease of recently constructed premises being Shop 143, Belconnen Mall, Canberra. The bankrupt furnished the shop with the funds being provided from the sale of the previous business. On 18 October, 1978 the bankrupt executed a bill of sale over the trade fixtures, fittings, equipment and stock situated in the premises at Shop 8, Canberra Arcade and Shop 143, Belconnen Mall to the Bank of Adelaide. This secured an overdrawn account with the bank in the sum of $9,985.96 which was collaterally secured on 30 May, 1978 by a registered mortgage over the bankrupt's house property at 52 Nicholas Street, Higgins, A.C.T. Shop 143 was closed by the Canberra Commercial Development Authority for arrears in rent. On 9 June, 1972 the bankrupt and his former wife, Silvana Trajkoski, became the registered proprietors of a house property situated at 52 Nicholas Street, Higgins. The purchase price was $10,750.00. A deposit of $500.00 was paid. The balance of funds were provided by an advance from the Department of Capital Territory which was secured by a registered first mortgage over the subject property. Pursuant to an order of the Supreme Court of the Australian Capital Territory made on 4 November, 1974 the subject property was transferred to the bankrupt as sole proprietor on 1 October, 1975 in accordance with the terms of a divorce settlement. MThe bankrupt's former wife was given an amount of $8,000.00 for her interest 1n the house property. The funds were raised out of a loan from Mutual Acceptance Limited in the sum of $14,000.00, secured by a registered second mortgage on 7 May, 1976. The balance of loan moneys were used to meet the . - bankrupt's current business debts. - On 30 May, 1978 a third mortgage was registered in favour of the Bank of Adelaide as colateral security for an overdrawn account styled "Zodiac Art Gallery". The subject property was sold at auction on 23 September, 1978 for a sale price of $26,500.00. The mortgage to the Department of Capital Territory was discharged in full on settlement with Mutual Acceptance Limited receiving a dis- bursement of $12,882.79. This creditor has lodged a claim in the bankrupt estate for an amount of $727.64 being the defic~ iency on sale. The third mortgagee, Bank of Adelaide, received no money. On 29 February, 1980 in the Australian Capital Territory Court of Petty Sessions the bankrupt was convicted and fined $100.00 each in respect of four charges under s.269{(b) of the Bankruptcy Act 1966. An objection to the discharge of the bankrupt from his bankruptcy by force of s.149 of the Bankruptcy Act 1966 was lodged on 19 November, 1980 by the Official Receiver as trustee on the following grounds: "The bankrupt has been convicted of offences under the Bankruptcy Act. The bankrupt failed to comply with the provisions of Section 80(1) in that he failed to notify the Registrar and the trustee in writing of a change in his name that occurred during the bankruptcy." The Official Receiver in his report on this application expressed the view that the conduct of the bankrupt during his bankruptcy had been unsatisfactory in that: 1. He left Australia without the written consent of the trustee of his estate. 2. He had been convicted in respect of four charges under s.269(b) of the Bankruptcy Act, 1966. The bankrupt departed from Australia on 4 May, 1982 for Belgrade, Europe and returned on 18 June, 1982. It would appear that the bankrupt did write to the Official Receiver about per- mission to leave Australia but he anticipated such permission. The trip was paid for by the parents of his de facto wife. The Official Receiver's report also stated that the bankrupt failed to produce sales docket books, invoices, bank cheque books and bank statements posted to 21 November, 1978. He was also of the view that the bankrupt should have kept a columnar cash book for each of his business dealings to record income and - 10 - expenditure, and a ledger to record his dealings with debtors and creditors. The bankrupt claimed that his bankruptcy was due to ex- cessive competition and a general declining market situation. This application for discharge from bankruptcy must be considered in the light of s.150(5), (6) and (7) of the Act which provide as follows: ., "(5) The Court shall, if any of the matters specified in subsection (6) 1s established: {a) refuse to make an order of discharge; or (b) make an order of discharge but suspend the operation of the order as the Court thinks proper, either unconditionally or subject to conditions. (6) The matters upon the establishment of which the Court may exercise the powers specified in sub- section (5) are as follows: (i) that the bankrupt has been convicted of an offence against this Act or the re- pealed Act or of any other offence related to the bankruptcy. (7) The Court shall not, under subsection (5) sus- pend the operation of an order of discharge subject to conditions that require, or have the effect of requiring, the bankrupt to make pay- ments from his income at any time after the expir- ation of the period of 5 years commencing on the date of the bankruptcy." It is well established that in considering the question of a bankrupt's discharge, the court is bound to have regard fe -ll- not merely to the interests of the bankrupt and of the cred- ators, but also to the interests of the public and of commercial morality (see, for example, Re Haines (1937) 10 A.B.C. 83). Further, the discreditable record of a bankrupt in commercial transactions has been held to be relevant to the granting or withholding of a discharge from bankrupcy (see Re Kolomy (1981) 56 F.L.R. 157). In the present case, the bankrupt has been engaged in a number of unsuccessful business operations. Further, he has been convicted on a number of charges under s.269(b) of the Act presumably for failure to disclose his true name and the fact that he 1s an undischarged bankrupt. In Re Martyn (1936) 9 A.B.C. 239, Luken, J. considered an application for discharge by a bankrupt who had served a sentence of imprisonment for a criminaloffence under the Bankruptcy Act and had been a bankrupt for six years. The court took into account the fact that the bankrupt was "struggling towards the betterment of his family and himself". Luken, J. there expressed the view that the bankrupt had committed a criminal offence against the Act for which he had been duly convicted and for which he had duly suffered his punishment. The court granted a discharge but suspended its operation for six months. The applicant has been a bankrupt for nearly five years, since 23 November, 1978. He has been unemployed for some time and it 1s quite unlikely that any further contributions to his estate wili pc made by the carnkrepe or by any person sn *2 penailt. There are no creditors oprcsing this apovlica-icn. Cine: one of the adverse macters listed =n s.150(6), namely g.4 .0(uteL 1s established in the present case, my powers in this aprlicetern for d.scharge are confined by s.150(5). hat section gives ne 7 discretion only to refuse the dischasge or to grant 1c = bject to a suspension which may be either with or without cenditicns. Having considered the barkrupt's conduct his unsacis- factory dealings before and afcer his bankruptcy and tke offences against the Act fer which he was duly convicted, I propose to make an order of discharge, but to suspend its opezr- ation for a period of twelve months. order that the public examination of the bankrupt shall be deemed to have been concluded on 31 October, 1979. I oré@:r the discharge of the bankrupt. I further order that the oper~ ation of the order of discharge bé suspended for a period of twelve months from this date. ac t Tt certify thet thisandthe |i | | preceding pages are a true copy of the ' | Reasons for Judgment herein of his Honour Mr. Justice Beawmimr fal be un wa Oo Qo Pe) pp ct @ & Dated: Ri Auy 19> nae ee ee