IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION OF NEW SOUTH WALES AND THE AUSTRALIAN ) ) ) BANKRUPTCY DISTRICT OF THE STATE ) ) ) CAPITAL TERRITORY No. W600 of 1976 RE: KENNETH JAMES PITT 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 6 September, 1977. 2. I order the discharge of the bankrupt. IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY No. W.600 of 1976 RE: KENNETH JAMES PITT CORUM: BEAUMONT, J. DATED; 21 July, 1983. REASONS FOR JUDGMENT A sequestration order was made against the estate of Kenneth James Pitt ("the bankrupt") on 2 December, 1976 upon the petition of a creditor, Yorkstar Motors Pty. Limited. He now applies for an order of discharge from bankruptcy pursuant to s.150 of the Bankruptcy Act, 1966 (Cth.}) ("the Act"). The application is not opposed by any creditors or by the Official Receiver. On 18 September, 1978, an objection to discharge from bankruptcy by force of s.149 of the Act was lodged by the Official Trustee on the ground that "the claims lodged against the bankrupt estate exceed $40,000.00". The objection has not been withdrawn and hence has prevented an "automatic" discharge from bankruptcy under s.149 at the expiration of the statutory period. In his statement of affairs, the bankrupt disclosed the the following assets: House »roperty at 135-137 Maybe Street, Bombala Less amount owing under lst mortgage to Esanda Ltd. Less one half share of wife Mercedes Benz Truck Less amount owing under lease agreement to Esanda Ltd. Deficiency Mercedes Benz truck Less amount owing under hire purchase agreement to Esanda Ltd. Hallmark Trailer Less amount owing under hire purchase agreement to Esanda Ltd. Deficiency Cash in hand Machinery and fork lift truck Trade fittings, fixtures, utensils 1962 Datsun Utility Book debts Household furniture Leasehold property at Bombala $24,000.00 9,000.00 $15,000.00 7,500.00 12,000.00 15,000.00 $ 3,000.00 8,000.00 6,000.00 1,500.00 2,000.00 : $ 500.00 $7,500.00 2,000.00 100.00 1,000.00 100.00 50.00 3,000.00 500.00 100.00 $14,350.00 The above assets, with the exception of the house property, cash in hand, household furniture and leasehold property, were assets of a partnership road haulege business conducted by the bankrupt and his wife. The house property, registered in the joint names of the bankrupt and his wife, was sold by the mortgagee. The surplus on sale of $7,301.46 in respect of the bankrupt's interest therein was received on settlement. It appears forfeiture action was taken by the Department of Lands in respect of the leasehold property at Bombala for the non-payment of Crown dues. A total of $7,431.26 was brought to the credit of the estate as follows: Deposit on petition $20.00 Contributions paid - 1982 100.00 Book debts : 9.80 Sale proceeds of house property at 135-137 Maybe Street, Bombala Sale price $45,000.00 Less adjustment for rates $744.22 Legal fees 346.45 Mortgage debt to Esanda Ltd. 29,306.41 30,397.08 $14,602.92 Less one half share of Mrs. Pitt 7,301.46 7,301.46 $7,431.26 - 4-~ The bankrupt has made contributions of $100.00 up to 1982. The bankrupt's equity in the house property at Bombala 1s his only real contribution to the estate. The bankrupt disclosed sixty one unsecured creditors for amounts totalling $46,471.96 and the secured, hire ourchase and leasehold creditors detailed earlier. Forty four proofs of debt have been lodged in the estate which have been admitted to rank for dividend as follows: Priority - Section 221P(1) and (2) $12,723.00 Ordinary 40,080.00 Deferred 5.00 $52,808.00 After payment of fees, remuneration and petitioning creditor's costs, the Deputy Commissioner of Taxation was paid one hundred cents in the dollar in respect of the priority claim of $5,447.00 for taxation instalment deductions lodged on 17 July, 1978. He was also paid a further dividend of 5.4 cents in the dollar in respect of a prior1ty claim of $7,276.00 for taxation instalment deductions lodged on 28 November, 1980. The public examination of the bankrupt was held on 6 September, 1977 when it was adjourned to a date to be fixed. The bankrupt is a married man aged 41 years, with a wife and five children aged from 7 to 16 years dependent upon him for support. His usual occupation has been that of a transport ry ao driver but during the last seven years, since his bankruptcy, he has only worked on a casual basis at times. He gave evid- ence that he has never at any stage received unemployment benefits and that he has been living off the earnings derived from a dry cleaning business owned by his wife. Some mention should be made of the history of the bankrupt's commercial dealings prior to his bankruptcy. In December, 1972, the bankrupt and his wife formed a partnership to conduct a road transport business. The bankrupt leased the vehicle used in the conduct of the business from Automative Acceptance Co. Pty. Ltd. at a monthly rental of $479.19. The buiness, comprising largely of the transport of wood pulp, comenced trading during January, 1973 and continued trading until November, 1976. In June, 1973, the bankrupt and his wife acquired a property described as 135-137 Maybe Street, Bombala for a price of $20,000.00. A deposit of $6,000.00 was paid from the proceeds of sale of their Bibbenluke property and from drawings from their business. Mortgage finance of $14,000.00 was provided by Esanda Limited, with a guarantee provided by the bankrupt's father-in-law, John William Legge. The mortgage was to secure all other present and future liabilities, obligations and indebtedness of the mortgagor. The partnership continued to operate from this address. In August, 1980, the house property was sold by Esanda Limited in exercise of its power of sale. In June 1974, the vehicle leased from Automotive Acceptance Co. Pty. Ltd. was damaged. The vehicle could not be repaired for some time because of a dispute over liability for the costs of repairs. In order to continue trading, the bankrupt and his wife acquired on hire purchase from Esanda Limited a Mercedes Prime Mover costing $17,000.00. A cash deposit of $5,664.70 was paid and monthly instalments of $404.87 were payable over a period of three years. The vehicle was repossessed in 1979. On 20 June, 1974, the bankrupt took over the terms of a lease agreement from A.B. & R.L. Walker on an International truck. Monthly instalments of $338.53 were payable to International Harvester Credit Corporation. The bankrupt also leased a Mercedes 1418 truck from the same company, with monthly instalments of $375.00 involved. As turnover increased, ad- ditional vehicles were required and the partnership engaged two drivers for these vehicles. These employees were paid a set rate per journey. Both these vehicles were surrendered on 5 December, 1974, with the instalments having been paid under either agreement. On 12 July, 1974, the bankrupt and his wife acquired a Hallmark truck on hire purchase from Esanda Ltd. A cash deposit of $1,335.30 was paid, with monthly instalments of $95.17 payable to the finance company. The vehicle was repossessed in January 1979. In December, 1974, a Mercedes truck was leased from Esanda . Ltd. for a period of three years at a monthly rental of $680.55. This was at the time when the two vehicles which had been leased from International Harvestor Credit Cpro. had been surrendered to q of the Bedford truck was settJed and the vehicle was sold. The proceeds of sale were used to satisfy the debt to Automotive Acceptance Co. Pty. Ltd. The Mercedes truck was subsequently sold by the finance company to the bankrupt's wife for the amount outstanding under the lease agreement. In January, 1976, the bankrupt borrowed $2,000.00 from the Commonwealth Trading Bank, Bombala to provide additional working capital. The bankrupt's father-in-law, John William Legge, provided a guarantee and in 1977 was called upon by the Bank to pay the debt pursuant to that guarantee. The partnership ceased trading 1n November, 1976 and all employees were dismissed. At the time, it had the following assets and liabilities: Assets Mercedes Prime Mover on hire purchase from Esanda Ltd. Hallmark trailer on hire purchase from Esanda Ltd. Mercedes truck on lease from Esanda Ltd. Machinery and forklift truck. Trade fittings, fixtures and utensils. 1962 Datsun utility. Book debts - approximately $3,000. Trade Creditors Approximately $65,000.00 Although the bankrupt's wife failed to provide the Official Receiver with any accounting for the winding up of the partnership, he does not press the matter. The bankrupt's father-in-law, John William Legge, sub- sequently took over the business using the partnership vehicles and equipment. The bankrupt was the sole employee and he stated in evidence that he received no wages or salary at that time. The business continued until approximately December, 1978. In January, 1979, the Mercedes Prime Mover and the Hallmark trailer were repossessed by Esanda Ltd. as instalments were in arrears. The bankrupt has been either unemployed or engaged in casual employment as a truck driver since December, 1978. The Official Receiver in his report dated 3 June, 1983 advises that no books of account or records have been produced for the partnership. However, financial statements prepared by the accountant for the partnership, from information supplied by the bankrupt and his wife, revealed the following: Year Ended Less Profit/Loss Total Drawings 30 June, 1974 Loss $1,966.00 $4,662.00 30 June, 1975 Profit $11,392.00 $11,998.00 30 June, 1976 Loss $5,741.00 $16,674.00 The bankrupt has attributed his bankruptcy to a loss of income following continual breakdowns with trucks used in the partnership business. The Official Receiver believes that a contributing cause was the lack of working capital and excessive drawings from the business by the partners. The applicant has been a bankrupt for a period of over six years. The Official Receiver reports that the conduct of the bankrupt has been satisfactory since his bankruptcy. Moreover no matters specified in sub-section (6) of s.150 of the Act have been reported. The bankrupt has stated he desires a discharge so that he can take steps towards the betterment of himself. wolfe Ls at PL USL lte Tt wee elle wooRT Ok. a8 (Litt. lp cet tet te tts . i La 2.2. D 0 Let ow 22 2 im) oe "a -- 7 -wad -2 Lt, -t. te 272 NaSonbevs vreasonabloa ine -ai 7" an such a wu res7 or tt td - Bhs unfortunate. Where none of the matters specsltieu it subcsestion io) _ established, toed court ray: {a} refuse to make an orcer cr discnarge; (b) make an order of discharge; or (c) make an order of discharge but susrend the operation of the order as the court thinks proper, either unconditionaliy or subject to conditicens." ' I have the power under sub-section (9) to exercise ny discretion in the bankrupt's favour. In all the circumstances, having considered the bankrupt's conduct previous to ana during his bankruptcy, an unconditional order for discharge ougnt £9 be made. I order that the public examination of the bankrupt Ta Or Q roy Qa ) fo} snail be deemed to nave been cen Sencember, 1977. a i order tle discharse 32f tne da.nbrure To eee ee te - - ° ao eiishe % ™ "8 3 trve ct ur -f the