CATCHWORDS Bankruptcy Act 1966 - application by Official Trustee that bankrupt not be discharged - conduct of bankrupt - dishonesty before and after sequestration - public interest as criterion, BANKRUPTCY ACT 1966 Section 149(12) Rule 51A S.A. 142 of 1973 THE OFFICIAT TRUSTEE v. TENNYSON TURNER st, JOHN, J, SYDNEY MONDAY 31 OCTOBER 1983 f IN_THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA No. 142 of 1973 BETWEEN: THE OFFICIAL TRUSTEE Applicant AND: TENNYSON TURNER Respondent ORDERS | JUDGE MAKING ORDERS: ST. JOHN, J. DATE OF ORDERS: MONDAY 31 OCTOBER 1983 WHERE MADE: AT SYDNEY THE COURT ORDERS THAT: (1) The bankrupt, Tennyson Turner shall not be discharged pursuant to section 149 of the Bankruptcy Act 1966, (2) The applicant is at liberty to make application for an order for costs pursuant to rule 160 of the Bankruptcy Rules. IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA No. 142 of 1973 BETWEEN: THE OFFICIAL TRUSTEE Applicant AND: TENNYSON TURNER Respondent \ REASONS FOR JUDGMENT ST. JOHN, J. MONDAY 31 OCTOBER 1983 AT SYDNEY This is an application pursuant to sub-section 12, section 149 of the Bankruptcy Act 1966 ("the Act") by Francis James Pearce, who is the Official Trustee for the Bankruptcy District of the State of South Australla and the Trustee of the property of Tennyson Turner, the bankrupt in these proceedings. The order sought is that the bankrupt shall not be discharged from bankruptcy by virtue of the provisions of that section which otherwise provide for automatic discharge at the expiration of a 222 /2 particular period. The sequestration order against the bankrupt's estate was made on 30th March, 1973. Sub-section 13 of section 149 of the Act provides that, in deciding whether to make an order under sub-section 12 of the section, the court shall take into account such matters as are prescribed for the purposes of the sub-section. By rule 51A of the Bankruptcy Rules, the following relevant matters are, inter alia, prescribed:- "(c) whether the bankrupt has co-operated in the administration of his estate; (d) the conduct of the bankrupt in respect of the period both before and after the date of bankruptcy; (£) the age and state of health of the bankrupt." The bankrupt was enrolled to practise as a barrister, attorney and proctor of the Supreme Court of South Australia on 17th December, 1951 and struck off the roll on 16th February, 1976. The conduct relied upon by the applicant can be conveniently divided 1n accordance with the rule 51A(d), 1nto conduct before the sequestration order and conduct thereafter. oe e/3 Conduct Prior to Bankruptcy The transcript of the public examination of the bankrupt reveals failure by the bankrupt to keep proper books of account in relation to his law practice, his dealings in real estate, his stocks and shares and with a company, Peninsula Finance Proprietary Limited. On 29th September, 1975, the bankrupt was convicted of the following fourteen offences at the Criminal Sessions of the Supreme Court of South Australia:- "1. About the 8th July 1965, at Port Lincoln being entrusted jointly with Patrick Joseph Kelly with money in the amount of 4 3,000 in order that they might apply, pay or deliver it for purposes proper to the use, according to law, of moneys held in their trust account as solicitors fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). 2. About the 19th August 1965 at Port Lincoln being entrusted jointly with Patrick Joseph Kelly with money in the amount of 3,000 in order that they might apply, pay or deliver it for purposes proper to the use, according to law, of moneys held in their trust account as solicitors fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). 00 fA "3, About the 10th March, 1966, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $10,000 in order that they might apply, pay or deliver it for purposes proper to the use, according to law, of moneys held in their trust account as solicitors fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). About the 30th June 1969, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $1,500.00 in order that they might apply 1t for the purpose of winding up the estate of Robert John Hammond deceased, fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). About the 18th April 1968, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money 1n the amount of $16,000 in order that they might apply it for the purpose of winding up the estate of Harold Colin Proude deceased, fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935~1974, Section 184). About the 2nd May 1968, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $10,000 in order that they might apply it for the purpose of winding up the estate of Harold Colin Proude deceased, fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). 22/5 "7. 10. About the lst August 1968, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $18,000 in order that they might apply, pay or deliver it for purposes proper to the use, according to law, of moneys held in their trust account as solicitors fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). About the 8th August 1968, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $20,000 in order that they might apply, pay or deliver it for purposes proper to the use, according to law, of moneys held in their trust account as solicitors fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). About the 30th June 1969, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $8,000 in order that they might apply it for the purpose of winding up the estate of Harold Colin Proude deceased, fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). About the 16th January 1969, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $20,000 in order that they might apply, pay or deliver it for purposes proper to the use, according to law, of moneys held in their trust account as solicitors fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). 22/6 "lil. About the 17th April 1969, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $15,000 in order that they might apply it for the purpose of winding up the estate of Robert James Buddle deceased, fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). 12. About the 7th August 1969, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $6,000 in order that they might apply, pay or deliver it for purposes proper to the use, according to law, of moneys held in their trust account as solicitors fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). 13. About the 21st August 1969, at Port Lincoln be1ng entrusted jointly with Kieren Carmichael Kelly with money in the amount of $16,000 in order 'that they might apply, pay or deliver it for purposes proper to the use, according to law, of moneys held in their trust account as solicitors fraudulently converted that money to the use or benefit of Peninsula Finance Proprietary Limited. (Criminal Law Consolidation Act, 1935-1974, Section 184). 14. About the llth July 1969, at Port Lincoln being entrusted jointly with Kieren Carmichael Kelly with money in the amount of $2,800 in order that they might apply, pay or deliver it for purposes proper to the use, according to law, of moneys held in their trust account as solicitors fraudulently converted that money to his own use or benefit. (Criminal Law Consolidation Act, 1935-1974, Section 184) ." «2/7 The bankrupt was sentenced to two years six months imprisonment on each a count to be served concurrently. On the 14th March, 1971, the bankrupt agreed in writing to sell to one Shirley Jean Biddell certain real estate on which was erected a motel, together with all improvements and "all the fixtures, fittings, stock and goods on the said land save and except the original paintings". At the time of sale, certain electrical goods, such as air conditioners and television sets, were not the property of the bankrupt, but were leased from a firm or corporation described as Mercantile Credits. On complaint by the purchaser, the bankrupt entered into an agreement whereby he recognised that there was owing on the goods one thousand three hundred and ninety dollars ($1,390.00) plus interest, and he therein agreed to pay the sum of one thousand six hundred dollars ($1,600.00) by thirty-two calendar monthly payments of fifty dollars' ($50.00). The purchaser, Biddell, gave evidence, which I accept, that the bankrupt said that everything in the motel was paid for, when the agreement for sale was presented to her by the bankrupt. The bankrupt, who appeared in person, attempted by cross-examination to establish that, at «+ 2/8 the time of sale, the purchaser knew that some of the equipment was under lease and further, a chord organ given by the bankrupt's wife to the purchaser, was 1n discharge of the bankrupt's obligations under the agreement to pay the one thousand six hundred dollars ($1,600.00). These attempts were unsuccessful and I accept the submission of counsel for the Official Trustee that his dishonesty in relation to the electrical goods tells against him. I also accept the purchaser's evidence that she did not prove in bankruptcy the one thousand six hundred dollars ($1,600.00) which remained unpaid because the purchaser was unaware of her right so to do. Conduct After Bankruptcy The Official Trustee gave evidence that proofs of debt in the estate which had been admitted approximated one hundred thousand dollars ($100,000.00) and that there was a further claim for approximately one hundred and seventy-two thousand dollars ($172,000.00) which was subject to adjustment after the liquidator of the company proving had finished his duties and the Official Trustee completed his ae e/D administration. The amount available to the estate for payment was approximately three thousand five hundred dollars ($3,500.00) and a dividend thereout has been paid to some priority creditors. The bankrupt has contributed one hundred and sixty dollars ($160.00) since bankruptcy. The bankrupt made a number of annual returns to the Official Trustee setting out his income, assets and expenses and those documents were tendered in evidence. For the year ended 30th June, 1979, the bankrupt stated that he had a gross weekly wage/ salary of one hundred and fifty dollars ($150.00) per week, that he paid rent of forty-five dollars ($45.00) per week and that his assets and those of his wife were nil. For the year ended 30th June, 1980, he stated that he had no gross weekly wage/salary and that his total income for the year was nil, but that he had sold "one item at $250". He again said that he had nil assets and those of his wife were not known. For the year ended 30th June, 1981, he stated that his total income was nil, that his income came from social security payments only, that his expenses were rent of forty dollars ($40.00) per week, that he had nil assets and those of his wife were not known. For the year ended 30th June, 1982, he stated that his yearly ++-/10 income was eight hundred and ninety-five dollars ($895.00), which included unemployment benefits of five hundred and thirty-four dollars forty cents ($534.40). He stated that his gross weekly wage/ salary was nil and other income was "irregular and averaged $50 per week". Again, his assets were nil and he did not know of his wife's assets, except that she had "a moiety in her late mother's estate". Counsel for the applicant has submitted that these returns are patently false and, in order to test that submission, I will later examine the bankrupt's business and other activities since bankruptcy. On 3lst May, 1977, the bankrupt was found guilty at the Criminal Sessions of the Supreme Court of South Australia of an indictible misdemeanour that:- ° "between the months of April, 1975, and October, 1975, both inclusive, having received moneys in the amount of $23,799.14 for or on account of Bridget O'Hara fraudulently converted part of those moneys, namely the amount of $17,882.88, to his own use or benefit. (Section 184 of the Criminal Law Consolidation Act, 1935-1975.)" and was sentenced to imprisonment with hard labour for twelve calendar months. 2 -/1l On 27th March, 1981, the bankrupt was convicted of an indictible misdemeanour that:- "together with Iain George STEWART-CROMPTON and Barry Dean TURNER, between about the 16th May, 1974 and about the 31st July, 1975 at Adelaide and other places, conspired together to defraud such persons as might be induced to part with money on account, or under and in pursuance, of certain agreements with respect to the purported purchase by them from Holidayland Pty. Ltd. of motel units situated at Port Lincoln in the said State on land comprised in Certificate of Title Register Book Volume 3684 Folio 133 by falsely pretending that the said motel units were owned by Holidayland Pty. Ltd. and that the said Holidayland' Pty, Ltd. could pass clear title in the said motel units to such persons. (Common Law.)" and was sentenced to imprisonment with hard labour for fourteen calendar months, It is not clear from the evidence as to how long the bankrupt served of these two last mentioned sentences, The bankrupt has given evidence that, during such periods as he was not in gaol, and occasionally while in gaol, he carried on the business of consultant in tax, bankruptcy and other matters. Jeffrey John Lucy, a chartered accountant, gave evidence that, during discussions with the bankrupt about the "sale" of companies by Mr. Prinse (hereinafter referred to) that the bankrupt told him that he, the bankrupt, was advising "in the areas of insolvency and assisting people who had oe -/12 insolvency difficulties and that he was expert in assisting people in not paying debts and to delay the payment of debts", This evidence was neither challenged in cross-examination nor contradicted in the evidence of the bankrupt. It is clear that he used office premises in two addresses in Adelaide and was associated and concerned with three business firm names and one proprietary company. Between 7th January, 1980 and 30th November, 1980, there was registered a business name "Cottage Industries" ("C.I.") with an address, lst floor, 11 Bagot Street, North Adelaide, The bankrupt and two other persons, namely Lomax and Warrener, were registered as joint proprietors. On 30th November, 1981, a company, Penley Building Supplies Pty. Limited, changed its name to "Cottage Industries Pty, Limited ("C.I. Pty. Ltd."), the directors of which became Pamela Anne Turner (the wife of the Bankrupt) and one Godleman. The secretary was returned as Pamela Anne Turner, During 1980, the bankrupt signed letters on a printed letterhead of "Corporate and Professional Advisory Services, Management Consultants" ("C,. & P.A.S.") ++ +/13 and on which the head office in print was stated to be 11 Bagot Street, North Adelaide. Certain other documents indicate that a firm name of "Professional Advisory Services ("P.A.S.") was used and that the bankrupt had dealings on behalf of such firms. Peter Prinse gave evidence that, during 1978 and 1979, he "sold" four companies after agreement in that behalf with the bankrupt in Currie Street, Adelaide and, in respect of one, was paid by the bankrupt the sale price of two hundred dollars ($200.00) by cheque drawn on P.A.S. and that later, his co-director received two cheques, each for three hundred dollars ($300.00), the sale price of the remaining companies. 'The first payment of two hundred dollars ($200.00) was made on 23rd December, 1977, the second sum of three hundred dollars ($300.00) for two companies on 28th January, 1978 and the next for three hundred dollars ($300.00), a cheque drawn by P.A.S. on 10th February, 1978. At no time did the bankrupt reveal to Mr. Prinse his status as an undischarged bankrupt. There was no cross-examination by the bankrupt, suggesting that any of Mr. Prinse's evidence was incorrect. In August, 1978, notification under the Companies Act was given indicating that the address of the four companies was C/- P.A.S., 92 Currie Street, 22/14 Adelaide. No further evidence was given relating to these companies. Neither Mr. Prinse nor Mr. Lucy dealt with anyone other than the bankrupt in these transactions. Christopher Wallace Siddons, general manager of Siddons Insulation, gave evidence that, in the early part of 1980, he met the bankrupt at 11 Bagot Street, North Adelaide as a result of a telephone call from the latter. A discussion took place in which the bankrupt stated that he was interested in distributing a product made by Siddons Insulation, then known as Celcraft, which was a substance used in making papier mache articles. The name on the door of the office in which the discussion took place was P.A.S. and subsequently, Mr. Siddons received a letter on the letterhead of C. & P.A.S. signed by the bankrupt. That letter set out the terms upon which that firm proposed a national distributorship of the product Celcraft, and the proposal included a term that C. & P.A.S. would have the sole rights af sale and distribution in each and every State in Australia. Mr. Siddons replied by letter offering sole rights of sale and distribution in all States except Victor1a where, he said, Siddons were making 22/15 sales in certain specified areas. That letter also contained a general acceptance of the proposal for national distributorship. On 13th June, 1980, by letter bearing the letterhead of C. & P.A.S., the previous letter referred to was acknowledged, and the Siddons company was asked to note that "we are using the trade name Cottage Industries to promote and distribute Celcraft". This letter further stated that "this name is held by us". The letter was signed by the bankrupt and, after the signature, appeared the words "for Cottage Industries". On 13th June, 1980, a Mr. Godleman apparently signed an application for credit addressed to Siddons Insulation for C. & P.A.S. and, in that application, stated that "the proprietor's full name and address was "William Webb Thomas, 11 Bagot Street, North Adelaide" and the signature purporting to be that of Mr. Thomas was witnessed by a person who signed "V. T. Godleman". In his dealings with Mr. Siddons, the bankrupt negotiated and obtained credit for C. & P.A.S. or C.I. with the Siddons company of an amount far in excess of the limit of five hundred dollars ($500.00) prescribed by section 269 of the Act for the supply of the product Celcraft. 22 -/16 Kenneth Andrew Stephen Of Dingley, Victoria, a director of K. & K. Stephen Pty. Limited entered into a written agreement expressed to be between C.I. Pty. Ltd. "a company duly incorporated and having its registered office at 11 Bagot Street, North Adelaide" and the company of which he was a director, and it was a term of that agreement that the supplier (C.I. Pty. Ltd.) "grants to the distributor (K. & K. Stephen Pty. Limited) the sole right and licence to sell and market the product" Celcraft (now termed Instantwood) in the State of Victoria. Therein, K. & K. Stephen Pty. Limited agreed to pay the sum of one hundred thousand dollars ($100,000.00) for the sole distributorship by a deposit of five thousand dollars ($5,000.00), twenty-five thousand dollars ($25,000.00) on the 6th November, 1980, twenty thousand dollars ($20,00.00) on the 17th November, 1980 and the remaining fifty thousand dollars ($50,000.00) at the end of January, 1981. The negotiations in relation to this agreement took place at 11 Bagot Street, North Adelaide between Mr. Stephen and the bankrupt. Pursuant to the agreement, Mr. Stephen paid by cheque five thousand dollars ($5,000.00) on 3lst October, 1980, twenty-five thousand dollars ($25,000.00) on 6th November, 1980 and twenty thousand dollars ($20,000.00) on 17th November, 1980. «2/17 The first cheque for five thousand dollars ($5,000.00) was presented at the Commonwealth Trading Bank, Currie Street, Adelaide, and on the back thereof was an endorsement "Pay Corporate and Professional Advisory Services Cottage Industries Pty. Limited per T. Turner" (the signature of the bankrupt). The cheque for twenty-five thousand dollars ($25,000.00), on the face of it, bears the stamp "National Bank, Canning Bridge, Western Australia". During discussions with Mr. Stephen, the bankrupt did not reveal that he was an undischarged bankrupt, nor that the Siddons company was marketing the product Celcraft in Victoria. It is to be noted at this stage, C.I. Pty. Ltd. was not registered as a company in South Australia, and the letter dated 30th May, 1980 from the Siddons company to the bankrupt made it clear that Victoria was not available for sole distributorship. The agreement referred to was signed by the bankrupt above the words in type "by Tennyson Turner, Managing Director". The bankrupt contends that the word "for" appears between the words "Turner" and "Managing Director" and, although the "for" is not legible, I am prepared to accept that that is so. However, the agreement, as typed and presented to Mr. Stephen, was a misrepre- sentation that the bankrupt was the managing director of C.I. Pty. Ltd. The bankrupt swore that he was not »- 2/18 a director, but that there were two directors, his wife and Godleman. Gordon Leonard Gillett of Epping, New South Wales, after meeting a Mr. McGill in reply to a newspaper advertisement for distributorship of the same product in New South Wales and signing an agreement on behalf of G. & H. Gillett trading in Sydney, proceeded to Adelaide and met the bankrupt at the office of P.A.S. at 11 Bagot Street, North Adelaide. After discussion and a demonstration of the use of the product, an agreement, in the same terms as the one he previously signed in Sydney, was signed by the bankrupt beneath the typed words "signed for and on behalf of Cottage Industries Pty. Limited by TENNYSON TURNER". The bankrupt told Mr. Gillett that Mr. McGill was the Australasian Marketing Manager for C.I. Previously, McGill had told Mr. Gillett that the agreement signed in Sydney would be taken to Adelaide for signature by the bankrupt. In general terms, the agreement was the same as that entered into by Mr. Stephen, except that it related to New South Wales and provided for a deposit of three thousand dollars ($3,000.00) and the balance of one hundred and seventeen thousand dollars ($117,000.00) was to be paid subject to finance, by +++/19 the 15th January, 1980. It would appear that the year 1980 was a mistake and what was intended was 1981. A cheque for three thousand dollars ($3,000.00) drawn by Mr. Gillett on the Rural Bank of New South Wales, dated 19th December, 1980 was paid over and the copy produced bears a stamp "National Bank, Canning Bridge, Western Australia". A further sum of fifty-seven thousand dollars ($57,000.00) was paid pursuant to the agreement; the balance of sixty thousand dollars ($60,000.00) was not paid because of difficulties in obtaining supplies. Mr. Gillett said that, when introduced to the bankrupt in Adelaide, the bankrupt was described as the "head" of C.I. and the reason the second agreement came into existence was that he wished to have the agreement signed by the bankrupt, The fifty-seven thousand dollars ($57,000.00) referred to was paid by bank cheque of the Rural Bank of New South Wales in favour of C.I. and was endorsed "pay to the order W. G. McGill & Ass." with what is apparently Mr. McGill's signature thereunder, Letters on the letterhead of C.I. to Mr..and Mrs, Gillett were signed by the bankrupt and those letters concerned distribution of the product. During 1982, the bankrupt advertised on a number of occasions in a newspaper, the Port Lincoln Times, oe -/20 describing himself as "B.A., LL.B., F.F.C.A." giving an Adelaide telephone number and box number, as a consultant "specialising in tax savings". Those advertisements continued into 1983. On 6th November, 1982, the bankrupt advertised himself as a consultant in taxation and commercial problems and therein stated that he was a "disbarred lawyer with thirty years experience", The bankrupt gave evidence as to his returns of'income. He said he thought that substantially what he had shown to the Official Trustee was the truth. He said "I have made no money", With regard to his participation in marketing of the product Celcraft, he said that he produced the formula, an improvement on the original product, that he "was responsible for enthusing everybody with the idea", and that it was he who had the expertise in demonstrating its use, he having had some experience in making props for the theatre whilst in gaol. He denied ever having applied to get credit from Siddons Insulation and tendered the copy document previously referred to in which Mr, Thomas was stated to be the proprietor of C. & P,A.S, He states that, in his consultancy work, he always told clients that he had been in gaol 22/21 and that he was bankrupt. He conceded that he did not tell Mr. Gillett that he was bankrupt, but says that he never represented to either Mr, Stephen or Mr. Gillett that he was a director of C.I. Pty. Ltd. nor that he was anything other than an employee of that company. In relation to his activities with the product Celcraft, he said "I was paid virtually nothing for my part in it", Under cross-examination in relation to his return of income for the year ended 30th June, 1981, he said that his nett income was nil. Later he said "I did receive a few hundred dollars" for consulting as gross income. Asked whom he had advised, he said "one or two people", When asked whether he conducted business under the name of P.A.S., he said he did not, but he "was working for two people «eeeefirst of all my wife took over Professional and Advisory Services from a couple of Greek gentlemen «ee.ethen a man called Bill Thomas took it from her", He denied he was ever the proprietor of that business name, but he did advise people in premises where that name was displayed and he did not tell anyone that he was not the proprietor of C. & P.A.S. When asked whether he had any interest in C.I., the bankrupt replied that he was registered with two 000/22 other men, Lomax and Warrener. When questioned as to what had happened to the cheque for fifty- seven thousand dollars ($57,000.00), he replied that he did not know what had become of the money, but he imagined 1t would be recorded in C.I, Pty. Ltd.'s books. He was not sure where that company had a bank account, He explained the use of the words "Managing Director" on the agreements between C.I. Pty. Ltd. and Gillett by saying that he under- stood that a copy was required for some purpose "because I was the person who had the particular skill at putting the product together", He stated that he had made no money out of the product Instant- wood (which Celcraft was later named), and he thought he lost money out of it. He further stated that he still demonstrated the product and that he did so "for the love of it". As to his consulting activities, he stated that there were no records of it and that he did not have any business worthwhile speaking of. The foregoing examples of the bankrupt's evidence are sufficient to demonstrate what I regard as evasiveness and dishonesty in his evidence, There are further passages of the same nature, The general policy of the Act towards discharge was expounded in relation to the English equivalent 020/23 as far back as 1904, In Re Gaskell (1904) 2 K.B. 478 at 482, Vaughan-Williams, L.J. said:- "After all, the overriding intention of the Legislature in all Bankruptcy Acts is that the debtor on giving up the whole of his property shall be a free man again, able to earn his livelihood, and having the ordinary inducements to industry. Sometimes it is not right that the bankrupt should be free immediately; he must pass through a period of probation; and theoretically there may be cases in which he ought not to be free at all, but prima facie he is to give up everything he has, and on doing that he is to be made a free man." This statement has been adopted most recently by Lockhart, J. in Re Harding (1983) 57 F.L.R. 320 at 332. The provisions for automatic discharge would tend to emphasise the first sentence of that statement. It does not appear that there is any authority dealing with such an application as this one except in Re Cleary reported in The Australian Bankruptcy Bulletin Mo. 2 Vol. 49 April, 1983. However, in that case, Ellicott, J, was concerned with paragraph (a) of Rule 51A relating to capacity of the bankrupt to make a contribution, The criteria to be applied on making or refusing the orders sought are not explicitly defined, but counsel for the applicant submits, and I accept, 00/24 that the general consideration is whether or not in the public interest, the bankrupt should remain subject to the restrictions on his business activities which are imposed as a result of his bankrupt status. Apart from State law relating to, for example, company directorships and trusteeships, there are the restrictions in the Act itself, for example, obtaining credit without disclosing his status. In addition, the bankrupt status is one in which there is still some capacity for supervision by the Official Trustee and the possibility of an order for payment by the bankrupt pursuant to section 131 of the Act. The bankrupt has submitted that criminal onus of proof rests on the applicant. The case of Van Reesema unreported, Full Court of the Federal Court of Australia, 26th August, 1983, cited in support, contains no such suggestion. However, the relevant civil onus is subject to the rider that allegations of moral delinquency should receive a degree of scrutiny commensurate with their gravity; Helton v. Allen (1940) 63 C.L.R. 691; Hornel v. Newberger Products Limited (1957) 1 Q.B. 247. In evaluating the evidence, it 1s also pertinent to bear in mind that the bankrupt had the benefit of 002/25 legal professional training with its emphasis on honesty and integrity in all his business dealings, whether professional or private. The bankrupt appeared in person, but his ability to present his own case was not greatly diminished by that circumstance because of that training. Dealing with the evidence as a whole, and bearing zn mind that I should not assume that dishonest conduct would continue after bankruptcy because it had occurred before, I am well satisfied that dishonesty by the bankrupt was manifested in his dealings with both Mr. Stephen and Mr. Gillett. Further, I am satisfied that his returns of income to the Official Trustee were false, in that he received income which was not disclosed, and that, in his activities in P.A.S., Cc. & P.A.S., C.l. and C.I. Pty. Ltd., he was in the role of principal on his own or jointly with another person or persons and not in the role of employee, and that he received at least part of the proceeds of such business as those firms and that company conducted. His performance in the witness box displayed a glib facility for avoiding a truthful account of such facts as would be detrimental to his case, Taking his professional legal capacity at a minimum, he would have 20 0/26 known of his ability to call witnesses; indeed he was reminded of it. Not one witness was called to substantiate anything he said when his own evidence revealed that there were persons who would be capable of doing so had there been truth in his account. Mr. Godleman was present throughout the hearing. The bankrupt gave evidence that he is in his sixtieth year and suffers from an arthritic condition in one hip, his other hip having been replaced previously. He further stated that he was only capable of a desk job, but this is in contrast to his evidence that he recently attended a school for the purpose of demonstrating the product Celcraft. He also stated that he was eligible for a repatriation pension in November of this year. Having regard to the fact that he wishes to continue in business activities and to borrow money for the purpose of putting his consulting activities on a better basis, I think that such problems as are presented to him by his age and health have little or no importance in deciding this application. If they have, the other considerations far outweigh them, It is rare that one is compelled to the con- clusion that a person is an incorrigible rogue, o0e/27 but no more generous assessment of the bankrupt can be made. He is a potential menace to any person who shall have the misfortune to deal with him, To my mind, it is absolutely clear that he should not be discharged from bankruptcy. The formal orders of the Court are:- (1) The bankrupt, Tennyson Turner shall not be discharged pursuant to section 149 of the Bankruptcy Act 1966, (2) The applicant is at liberty to make application for an order for costs pursuant to rule 160 of the Bankruptcy Rules, 1 Dassur Ass to, 23 Bok PET OT I A EIA re me a ee