CATCHWICRDS BANKPUrT®Y - Applicaticn for direction that bankrusc act be discharged from harkruptcy bv operation of law - Sectuestration order made in 1974 - Conduct of Dankrupt leading us to and during his bankruptcy - Matters relevant to exercise of Court's discretion. Bankruptcy Act 1966, 5.149 Bankruptcy Amendment Act 1980, $.72 ~ |." Re: LESLIE ANGUS FURNESS at ".No. W 286 of 1974 oy ' . i - ": 0°" "Neaves J. ~ - = ~ 10 January 1986 wo! Ft ° as " _ Canberra cee Fa yo oO st' ak alll IN THE FEDERAL COURT OF AUSTRALIA GENERSL LIVISION No. W 286 of 1974. EANKPCETCY DISTRICT OF THE STATE CF NEW SOUTH WALES AND THE wy vyr ewe ew ew AUSTRALIAN CAPITAL TEPRITORY Re: LESLIE ANGUS FURNESS A Bankcupt JUDGE MAKING ORDER: Neaves J. DATE OF ORDER : 10 January 1986 WHERE MADE : Canberra 2 MINUTE OF ORDER THE COURT ORDERS THAT the application by the Official Trustee in "Bankruptcy for a direction pursuant to sub-s.{(12) of s.149 of the Bankruptcy Act 1966 (Cth) that Leslie Angus Furness, a bankrupt, be not discharged from bankruptcy by virtue of that section be :.< dismissed. ' NOTE: The settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules. IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION woe BANSRUPTCY DISTRICT OF THE 2TATE OF NEW SCUTH WALES AND OVE ) rt AUSTRALTAN CAPITAL TEFRITIRY } LESLIE ANGUS FURNESS uw iD A Bankrupt CORAM: Neaves J. DATE: 10 January 1986 REASONS FOR JUDGMENT This isan application by the Official Trustee in Bankruptcy, the trustee of the estate of Leslie Angus Furness, a bankrupt, for a direction pursuant to sub-s.(12) of 5.149 of the Bankruptcy Act 1966 (Cth) ("the Act") that the bankrupt be not discharged from bankruptcy by virtue of that section. "A séquestration order was made against the estate of the bankrupt on @ August 1974, The bankrupt was publicly ' i, examined on 18 February 1975, 28 April 1975 and 10 and 1l July a "- 1975. on 9 January 1979 the Official Receiver for the Bankruptcy District of the State of New South Wales and the Australian Capital Territory, who was then the trustee of the estate. entered an objection, in the prescribed manner, to the discharge WN ef the bankrupt by force of 93.149 of the Act In the form in which it then stood. 5.149 celevantly provided that, subject to the section, a person who became & oankrupr after the commencement of the Act 'that ais. after 4+ Mascn 1968) was, by force of the section. unless sooner discharged in accordance with 3.159, dischacqged from banxruptcy upon the expiration of five years from the date of the bankruptcy. Tue ebjection hat not been withdrawn and, by virtue of the operation of s.72 of the Bankruptcy Amendment Act 198¢, the bankrupt will. in the absence of a direction in the terms which the teuatee now seeks. be discharged from bankruptcy by operation of law onl February 1986, that ius, five years after the dat2 upon which the last-mentioned provision came into operation : see Re Dugac (Lockhart J. - 9 November 1984 - unreported). On the hearing of the application the trustee was represented by counsel. The bankrupt appeared in person and made submissions to the Court but did not adduce any evidence. There is evidence before the Court that the creditors of the estate were notified of the date of hearing of the application. There was, however, no appearance on behalf of any creditor. In his statement of affairs the bankrupt disclosed assets of $785 and creditors with debts totalling $266,100. In addition to the assets disclased the bankrupt claimed to be the owner of certain poker machines to the value of $20,000 which were, he said, the subject of litigation. The trustee has " uw reported that the bankrupt has not informed him of the location of the machines noc produced evidence in support of his claim thereca. The sum or $832.52 has been brought to the credit of the estate account. 'Thirty-three proofs of debt have been lodaed against the estate for amounts totalling $176,552.37. The clains lodged include claims by a number of creditors who were not disclosed by the bankrupt in his statement of affairs. those claims totalling $39,945.09, Ten claims have been admitted to rank for dividend as follows - $ claims to rank for dividend as ordinary unsecured creditors $70,765.00 1 claim to rank as a preference claim pursuant to s.221P of the Income Tax Assessment Act 1936 8,752.00 4 79,517.00 t " The remainder of the claims have not been dealt with. presumably because no dividend has been paid to creditors and there is no "likelihood of any dividend being paid in the future. The funds at' present held in the estate are not sufficient to pay fees and the costs of 'administration. The petitioning creditor's costs have been taxed and allowed at $1,383 but have not been paid. Contributions by the bankrupt to his estate total $125, the last payment having been received by the trustee on 30 September 1974. in an affidavit sworn by the bankrupt on 22 November 1972 and filed in connection with proceedings upon a creditor's petition then eending against him, the bankrupt disclosed assets of net l23s than 325,00 consisting of elant. machinery, s3toc,. mater1als on hand ana casa. Ey the dace of his bankruptcy those + The trustee's reoort ain yvelation toa the present application, prepared by Mr G. L. Caddy, Assistant Official Receiver, and dated 24 January 1962, contains the following information concerning the bankrust's activities prior to the date of his bankruptcy - "16. The bankrupt had been engaged on his own account, in partnership or in association with various companies, in the design and furnishing of registered clubs and motels. He stated that during the 10 years before the date of bankruptcy, he designed in excess of 100 clubs and motels and that he received fees ranging ' "from between $5,000.00 and $10,000.00 for each design. 17. Investigations reveal that the bankrupt was associated with the following companies:- wi ; -.' 5°} Project Interiors Pty. Ltd. '", owe L.K.H. Pty. Ltd. m4 Associated Mariners Club Ltd. Club Development & Finance Corporation Pty. Ltd. 53° Brookvale Woodworkers Pty. Ltd. 'Sr. "CDF Management Consultants Pty. Ltd. " Club Facilities (Aust.) Pty. Ltd. .' * Narellan Golf & Country Club Pty. Ltd. ~ South Redfern Parking Properties Pty. Ltd. . Furness Holdings Pty. Limited *, Club Development Pty. Limited ¥v "The bankrupt was a director or shareholder in the companies and guaranteed company debts. It appears that he managed the affairs of the companies which have now ceased operation or have been placed into liquidation. ar wt 18. Me R.L. Pecier 'ias apooirted ofFs:e1al liquidator of Brookvale Wocdvoerkess Pty. Liartes. 6 ftn February 1972. The lidwidatsys, ain a ssecet Ts cretitcrs. made the following statemenr: - 'There ace wid@icaticr been leet an ceectain ve The second reazon is ac ow feansaction? with The js lie Records of ® compan B.ociva Woodwortees Fey Ltd. were ot With ceccods cf cthec cambarieo L. A. Fucneis conktrosl and 1b 1: possible to determine the rear: necessities for che transfers of assets, be 1t bank transfers or sales of soos feom one company to another. One has only to observe the vari1atior in the inter-company iLoan account balances as at the 30th Tune 1970 and 1971 to witness the movement of agsets between the companies, and arisind out of & movements Brookvale Woodworkers is left with monies owang from c which we are informed are valuel 19. The bankrupt has advised that there were numerous transactions between the companies involved as it became necessary to make loans and borrow funds toa provide sufficient capital for the companies to operate. In trying to finance the operations of the companies, the bankrupt gave personal guarantees for company debts and approved interlocking liens and floating charges. ' 20. In the course of the inter-company transactions as one company failed, its assets were transterzed to another compary. The books and records and financial statements of the companies did not veflect the true financial position, and in some instances, manufacturing carried out in one company's plant was undertaken and financed by one or more of the -bankrupt's associated compares. 21. In general, it appears that the businesses and companies in which the bankrupt was involved were commenced without sufficient working capital and that operations were financed from borrowed funds and by goods purchased on credit. Delays in completing work were experienced when it became difficult to purchase qoods and raw materials. Payment for completed work was needed to finance further operations and delays in completion increased the financial difficulties already affecting the business." ' a ' ' 3. During cvimindi cvoveeskangs RYaLNSt the Lanksougr serore the District Court of New Seutnm Wales My Caddy was asked questions by course) fer the Dankeus in o:elation to. the ackivities of the ccmvuanies the rames of «hich ascesr ino rar..? of M: Caddy's cepoet dated 24 Carnuacy 212 and "oon 2.5 70 OMe above. The follewirgd yuestrons B areas lm tne transeriet of those oroceedings - "@. Althougi vou say the er.isoner was a director or ghazeholder in all those companie:. 72 cannot say that with any ce: tainty, can you, I suggest that, althoush he was ted sith those companies, ne WRe not a director or sharehoider of the vast of them? Or pernaps to remind vou etching that nas been said befcre., his wifé and daughter were directors andl sharcholder3s in 3 mumbes of them: 1s 'that your vecolliection? -* A. Yes, that is correct. I think when IT said 7 ' os that the bankrupt was a director and pant 'a > shareholder in those companies 1t was taken . an '" as a general statement, not to include ail . cen the companies: that it appears he managed 4 + 7. , the affairs of the companies is what I was oe "v.o+ l getting at. ? nt o . mos "Q. I think Mr Baden was personally handling this op Stee estate? A. That is correct, at one stage. ~ 6 Ut, Qe But you are reasonably familiar with it? mt A. . I am. yy » QQ. And one of the great problems, of course, in the administration of the estate in your ' otfice has been the intermingling of company - an and personal financial dealings? 'A, That 1s correct, yes. Q. And it is virtually impossible to tell from ' the very complicated situation which developed with the companies just where the , assets had virtually gone? . ' A. That is right. yes." The bankcupt also ca:ried on business 33 a designer and manufacturer of furniture undec the business name "Interior Design Centres" from July 1972 until about October 1972. At the time ef his banxcustcy he was employed as the manager of 4a motel known as the Narelian Golf and Country Lodze Al Ris public examination the bankrupt acknowledqaed that ne had been in tu business for apout 25 years. Ab the date sf his bankruptcy he was 58 years of age. In October 1973 a property situate at Edinburgh Road, Castlecrag, which was owned jointly by the bankrupt and his then wife, Emily Viola Furness, was sold for 668,000. The bankrupt and his wife received the sum of $33,370 on gettlement of the gale after the discharge of mortgages on the property and the payment of rates, expenses of sale and legal costs. Paragraph 25 of Mr Caddy's report states - "25. Investigations Yeveal that $2,500.00 of the proceeds from the sale of the property at 239 Edinburgh Road, Castlecrag, was paid to the Bank ned of New South Wales for credit of the account of Furness Holdings Pty Limited, a company in 7s essence, owned and controlled by the bankrupt's ne, ex-wife and daughter. On 26th October 1973, a on ei (at + deposit of $30,870.00 was received to the credit ef the account of Furness Holdings Pty Limited ae made up of two cheques, one drawn on the Australia and New Zealand Banking Group, Castlereagh Street, Sydney for $26,090.00 and another drawn on the Commercial Banking Company of Sydney Limited, Young Street, Sydney for $4,780,00. The bankrupt cannot advise whether the amount paid to Furness Holdings Pty Limited was paid in payment of a debt owed by him and his ex-wife. He believes the payment may relate to inter-company disbursements." It appears that the settlement of the saie took place on 24 October 1973, some few days after service on the bankrupt of a bankruptcy notice issued on behalf of the Bank of New South Wales. Notwithstanding the service of that notice, substantially the whole of the net proceeds of the sale. inciuding the bankrupt's share therein, were used to pay debts of companies owned and controlled by his wife, Emily Viola Furness. The bankrupt pleaded guilty before the District Court of New South Wales in its Criminal Jurisdiction on 20 WNevember 1981 to an offence against sub-s.265(7) of the Act, in that, within twelve months before the presentation of the perition on which he became a bankrupt, he removed part of his property, to wit $16,685 being his share in the proceeds from the sale of the above mentioned property. Mr Caddy gave evidence in those proceedings. In - " cross-examination by counsel "for the bankrupt, Mr Caddy was © aad asked: tas "Anyway, so far as your office could find out, ! both at the public investigation and during your 7 own investigation, are you reasonably satisfied wrt that the proceeds of the sale of that house went to paying off debts of the various companies in " what appeared to be an attempt to stave off the collapse of this whole organisation?" ' Mr Caddy replied: "Yes, I am reasonably satisfied that would be the situation". "Oo The bankrupt alsc pleaded quilty before that Court on 20 November 19381 to a number of other off Pina @ w cA a rs ct = Lai) ty nm ctr ponyfar to an offence agains: 5.2958 of tre Cyrima: Act 1914 (Cth. One of the offences, that adainsnt sub-3.270(1) of the Act. related to charged a farluce to preserve the Douscs. actounts and records of Interior Design Centre, a business carrzed on by the bankrupt within the period of five years immediately preceding the date on which he became a bankrupt. The other offences, which relate to the bankrupt's conduct since the date of his bankruptcy, may be summarised as follows, the date of the commission of each offence being shown in brackets - (a) an offence against sub-s.265(4) of the Act of 'concealing, after the presentation of the vy petition on which he became a bankrupt, a debt due to him, to wit a debt of $15,000 due from Narellan Golf and Country Lodge Pty. Limited (13 August 1974); (b) an offence against sub-s.265(1) of the Act of omitting a material particular from a statement relating to his affairs, namely the debt of $15,000 referred to above (13 August 1974); re oe - " o- Ho Pgh MisweeMiawete Po og gh tee ow oe - . 10. (c)} an offence against sub-s.90(1) cf the Act of failing tc notify the trustee in writing of a change in his address (February 1979°; {d) three offences against s.272 of the Act of leaving Australia without the consent in writing of the trustee of hi3 estate (24 December 1978, when he travelled to New Zealand and 23 January 1979 and 15 February 1979 when he travelled to Fiji); (e) maine offences against s.269 of the Act of obtaining credit to the extent of $200 or More from a person without informing that Jes : person that he was an undischarged bankrupt, particulars of which are as follows - " 544) $1,500 from John Ivor Coby (June , , a "Gls 8 1976); (it) $958.50 from Kieran O''Shannessy . (June-September 1976); men 4 OU NYedye bon . "'(iii) $604.30 from Warren George Osborne wt (August-October 1978); me > (iv) $371.53 from Concord Golf Club Limited Se - °* (December 1978); ' ' (v) $487 from Richard Boyd Bofinger and James Magill trading as "J & P Carpets" (January 1979); li. (vi) $1,597.60 from John Fredericx Peters ura Taxe-A-Holiday" (vii; $702 from Grace Brothers Pry. Limited, using the false name "J. Duncan ' (viii) 20 from John Nevills Kemp (November Ut au be 'D NI w ) ' (1x) $388 from Rene Fabrics Pty. Lamited (December 1979-January 1980); (f) an offence against 3.269 of the Act of carrying on business under the firm name "Barmakers of Australia" without informing "every person with whom he dealt that he was we « "yan undischarged bankrupt (September ..1978-February 1979); (gq) 'an offence against s.29B of the Crimes Act 1914 (Cth) of imposing upon the Australian Telecommunications Commission, a public "authority of the Commonwealth, by means of an untrue representation contained in an application and agreement for a telephone - service that his name was Angus O'Hearn, a 'representation which he knew to be untrue. with a view to obtaining a benefit, namely a telephone service (October 1979). wa i - examination on 18 February 1975 the following exchange took Place - | ° 12. In respect of the nineteen offences to which I have refecced, the bankruct was sentenced on 27 November 19681 to vacious terms of imprisonment, seme to be served concurrentiy and some cumulatively. The effective sentence of imprisonment was for a period of two years six months with a non-parole period of six months. In passing sentence the learned sentencing judge said - "Your bankruptcy has been a substantial one and there has been a substantial amount of other people's money involved in these various offences. It is not only the nature of the offences, the frequency 1s also so appalling. You have just been doing your own thing regacdless of your effect on the property of other people. I regard this as an @xample of white collar crime which simply demands custodial punishment." In connection with the three offences of leaving Australia without the permission in writing of the trustee, it "may be _ noted "that in the course of the bankrupt's public You originally came from New Zealand? . Yes. 'Do you intend to qo to New Zealand in the near future? Not at all. A 7 ' Q@. Have you a passport? vl A. No. I have been through this with Mr Batten - (of the Official Receiver's Office) and I have told him quite clearly and definitely that I am here to co-operate with the Court and I would not be trying to leave. Q. I bring your attention to the necessity to obtain permission before you leave. A. He has made it clear tc me." 13. The bankrupt's attituae towards compliance with the obtain credit without disrzlotins taat he was an undischirded bankroupt ever afcer ne nad been romuitten for te1ial upon ene such offerce, namely tne "flence cf agcvairiry credit ts the entent of thereafter, he committed the offences particulacs of which are set out in sub-pars te)(111), (ivi, tv), (v1). (vii), (viii) and (1x) above. It appears that the banx.upt was not gainfully employed m £ yom 1976 to 1977 he was a from September 1974 to July 197 apparently employed as Clerk of Bills in the Parliament of New South Wales. About the same time he was involved in the business ventures of Forest Hill Joinery Works and Barmakers of Australia of which brief mention will be, made hereafter. Subsequently, in 1979, ne was employed by the Government of Fiji and in 1980 hy the Printing and Allied Trades Employers Federation of Australia. In October 1974, shortly after the making of the sequestration order, the bankrupt opened an account with the Commonwealth Trading Bank at St. Ives. Between 21 October 1974 , and 21 May 1975 the deposits to that account totalled $14,811.48. Some of the moneys deposited represented the receipt of social service benefits. The other deposits were explained by the bankrupt as being loans to him by FPurness Holdings Pty. Limited, BY ' 14. Narellan Golf and Country Lodge Pty. Limited and his wife. Jeanette Elizabeth Furness. Part of the moneys deposited to that account were withdrawn from an acccunt with the Commonwealth Savings Bank in the joint names of the bankrupt and Jeanette Elizabeth Furness. Into the latter account were deposited monevs (totalling $8,400) sala by the bankrupt to be loans to hin from Furness Holdings Pty. Limited and from South Redfern Packing Properties Pty. Limited and which he then loaned to Jeanette Elizabeth Furness. It appears from Mr Caddy's report that the bankrupt managed a business trading as "Forest Hill Joinery Works", the business name having been registered in the name of his present wife, Jeanette Elizabeth Furness, on 8 December 1975. The report further, states that no books of account or details concerning the a 'operation of that. business have been produced to the trustee and "details of the profits or losses made by the business are not wots ited se a known. 2 Se anak - wey ' Reference is also made in the report toa business rede coats! u-carried on under 'the, name "Barmakers of Australia" though no " . 7 astaits of that 'pusiness are given. In evidence before the take ef. " - District Court, of 'New South Wales in the criminal proceedings to "6 ' . 'which I have referred Detective Senior Constable Ronald Clive we ete te OF wee "Cramp said: "Enquiries were later carried out with accountants, solicitors and a number of businessmen in the southern area of Queensland, along with the Companies Office in Brisbane, and 15, it was revealed that the prisoner was the sole proprietor or a business known as 'Barmakers of Australia' which was operating from premises at Surfers Paradise. A number of statements were obtained and it was found that at no time did the prisoner disclose to any person with whom he or the said business dealt that he was an undischarged bankrupt. At the time that the business ceased operations it had accumulated debts of approximately $2,000 with a further $3,000 in unpald wages due to its Queensland representative, Mr A. Minkie. Subsequentiy the accumulated debts were satisfied by a sale of stock on hand and Me Minkie's wages remain unpaid." It appears from Mr Caddy''s report that the business name "Barmakers of Austcalia" was registered inthe name of the bankrupt's present wife. Jeanette Elizabeth Furness became a bankrupt on 25 October 1978. In her statement of affairs she disclosed eighty " unsecured creditors for amounts totalling $136,313.96. Forty-four unsecured creditors have lodged claims against her estate for amounts totalling §136,180. According to Mr Caddy, it appéar''s 'that the majority of the claims relate to debts incurred in the businesses trading as Forest Hill Joinery Works and Barmakérs of Australia. 'In duly 1977 and June 1978 the bankrupt was convicted of offences 'agdinst sub-s.117(1) of the Companies Act 1961 (N.S.W.) in that, 'as an undischarged bankrupt, he had acted as a director -of a 'Company or had directly or indirectly taken part in or been concerned in the management of a company. "Ue 16. The bankrupt has attributed the cause of his baxtkruptcy to his inability to pay personal guarantees of the debts of various clubs and companies which ne was called upon to mest when the companies and businesses fa1rled. The truatee attcioures the cause of bankruptcy to the bankrupt's poor management of his affairs and of the businesses in wnich he was involved. The trustee has also reported that a full investigation of the bankrupt's trade dealings and affairs has not been possible because of the lack of records of the bankrupt''s business transactions and that the lack of records has hampered the administration of the estate. The general principles to be applied in considering whether a direction under sub-s.143(12) should be given are not ,in doubt: see Re Palenkas; Ex parte Raymor (Brisbane) Pty. Ltd. (1982) 66 F.L.R. 115 and The Official Trustee v. Tennyson Turner aa (St. John J. - 31 October 1983 - unreported). In the former, . 7 7, . ' : \ -, Fitzgerald J. said at pp.116-7: : "The policy underlying the present legislation recognizes that it is inthe interests of the public as well as the person unable to pay his ; debts, that he should not be unduly denied freedom, Shee equality of status and opportunity, or the ability * and inducement to support himself and his family - , and contribute to society by his efforts. ~ * " Accordingly, the Act is in large part relevantly concerned with obtaining and administering the assets of the person unable to pay his debts for the benefit of his creditors and releasing the debtor from his obligations. However, the legislature has thought it appropriate that there should be a period during which the status and consequences of bankruptcy continue. It is not presently necessary to investigate the considerations underlying that decision. It is sufficient to note that the standard period , ' In.' "justification of the" Meg o ty cons the Ny, ideration was Perea ve a] Le Pag e a Sadieeupt « provided for by 38.149/1) 1s three years from the date of the pankruptey: ab that point a discharge from bankrustiy occurs sy force of the section However. 3ub-3.(1) is #xpressed to be subject to the provisions of 3,249. Puether, 3.150 maxes provision for the earlier discharge of a bankrust in an appropriate case by an order of tne court. Previsilon 13 made D7 3.150(4) for a ci:editsr whos debt has been proves in a bankruptcy to be neard on an application for discharge pursuant to 5.150, Tf certain matters are establisned the court 13 required to refuse to make an order of discharge or €3.150(5)). established, discharge order despite to suspend the cperation of the order Even where none of those matters is the court may refuse to make an order of or may suspend the operation of the (s.150(9)). It 1s well estabiiashed that. the general legislative policies underlying the Act, 1¢ may be appropriate in particular cases because of the public interest in acceptable standards of commercial morality that the status of bankruptcy with its attendant consequences should be centinued in cespect of some bankrugts, perhaps even permanently, put certainly for a longer than usual period." latter, St. dJchn J. accepted that the whether or not, in the public interest, should remain subject to the restrictions on which the trustee relies The matters upon direction sought (see rule 51A of - Banichuptcy Rules) are - (i) that the discharge of the bankrupt by virtue of 5.149 of the Act would prejudice the administration of his estate; genéral the his in the 18. (iil) that the bankrupt has failed to co-operate in the administration of his estate, and (iii) that the bankrupt's conduct both before and after the date of the bankruptcy has been dishonest and otherwise unsatisfactory The trustee also reiies on the evidence placed before the Court relating to the circumstances in which the debts of the bankrupt were incurred, including the bankrupt''s experience in, and understanding of, financial matters and of the obligations imposed on the bankrupt as a result of incurring the debts. As to the first of those matters, Mr Caddy gave evidence on the hearing of the application. His evidence included the "following: "OQ. What steps have been taken by way of , -administering this estate since 1975 when the ad 'public examination was held? A. , There is a lot happened since then. There -."s'was a full investigation regarding the "offences. In 1978 Mr Furness went overseas and obtained employment in Fiji and he was ) absent from Australia for a period and it was - * Goring this time that attempts were made to "try and locate assets and everything else as indicated. Consequently, or on his return to Australia - - - Q. When you say as indicated where does one find ' that? . e- ¥ ' A. When T 3ay indicated, the general administration of the estate was vroceeded with right down the iine. Attempts were made to obtain srecords anc to locate assets generally. The general aiministration just went on Q Can you give me some idea of what were the sort of things che trustee did in order to administez this estate from 1975? None of it seems to be veferred to in your report really, as &3 just What has Seen done. What I am concerned about 15 the Official Trustee 1s suggesting that I sheuld make an order which would prevent the operation of the automatic discharge provisions and one of the grounds. as i understanée it, is suagested that ta allow the automatic discharge provisions to operate would adversely affect the administration of the estate but what I want to know is in what vespects will that adverse position arise having in mind what has been done in the ten years, eleven years that Mr Furness has been bankrupt? A. Well, during the period the official receiver's file - a number of letters have been written to creditors ascertaining what went on. A full investigation has heen ' handled by the police and basic information vos "was obtained by the official receiver and given to then. The offences that have been referred to were undertaken and finalised, : . the prosecution of those. At this stage I . '© smust admit that' nothing very much is going on in the estate of Mr Furness. It is an old 'matter and virtually I must concede that as Ts . far as realisation of assets and the location of any assets and investigation into that the affairs have been virtually completed." fa In re-examination Mr Caddy quite fairly said that he did not think the discharge of the bankrupt from bankruptcy would have much effect, apart from making it a little more difficult to 'obtain the co-operation of the bankrupt if, for example, records concerning his trade dealings or affairs "ever did turn up". 20. In relation to the other matters I have read and re-read the transcript of the bankrupt's public examination. As a result I can well appreciate the difficulties with which the trustee has been faced in endeavouring to obtain a clear understanding of the bankrupt's trade dealings and affairs in the years preceding his bankruptcy. Such explanations as the bankrupt gave of his business ventures were unsatisfactory to say tne least. He was vague and evasive in his answers and. although he persisted in asserting that he had maintained adequate records of his transactions, no satisfactory records were every produced. Further, no clear distinction can be drawn between the transactions entered into on his own behalf and those entered into on behalf of the companies whose affairs he managed. _ Company and personal financial dealings were intermingled. Funds "h : were transferred between companies and, in the absence of any oye hate ole adequate explanations for such transfers, one can only conclude that 'they were designed to forestall action by various creditors. - 3 , Noir can 'the financial difficulties of the bankrupt be attributed ah? Sto" inexperience in business. The manner in which the hbankrupt's & share. of the net proceeds of the sale of the property at ' Castlecrag were disbursed is also indicative of a complete -.; disregard for the interests of his personal creditors. . : The bankrupt' s conduct during the five or six years ons 4 atter "the date. of his bankruptcy demonstrates a departure from a acceptable standards and, indeed, a lack of commercial morality. ' " T need not repeat all that has already been said concerning his ' = 2l. conduct in that period, It may be recalled. however, that he made no real effort to contribute to his estate for the benefit of his creditors. notwithstanding that he appears to have had access to substantial funds. and he committed serious offences against the Bankruptcy Act 1966 (Cth) and the Crimes Act 1914 (Cth) for which he was convicted and sentenced to imprisonment. He was also convicted of offences against the Companies Act 1961 (N.S.W.). The bankecupt's conduct in obtaining credit on numerous occasions during the years 1976 to 1980 without disclosing that he was an undischarged bankrupt was particularly serious. I have confined the above comments to the period of five or six years after the date of his bankruptcy as there is no evidence before the Court concerning the bankrupt's activities in espéct of any subsequent period. The bankrupt has not seen fit a "to give any evidence in that regard and the best that can be said eed Sst yysa - 'a. "4, in his favour is that no information adverse to him has come to "the trustee's notice in respect of that period. He has, however, '" in that period made no contribution for the benefit of his od v . - é ivxu, 'ereditors. ; a The Court is, of course, required to take into account 'all of the matters prescribed by rule 51A,. Against the 'considerations set out above are to be weighed the fact that the go ala i> bankrupt is in his seventieth year and has been a bankrupt for a . 7 © very long time, over eleven years. In the course of his . * submissions to the Court the bankrupt said: . Ny tu "Tam not ainterested in commercial empires or commercialism myself now. My activities these days are related to becoming a successful aplarist - probably raising what one would call stud st a Simple term 'fcr che bee-keeper. I am in always nave been. I e affect the public v t all. BR The alternative situation. your acnscur, 1s some"hing like this: at 70 years of age approximately, I hopefully can work for anothec five years. We have not a house, we pay rent; we have some furniture. I have a desire that when I leave my wife wili be cared for because she has been particularly loyal to me ain all matters, particularily those when Tf was committed to Silverwater. If I am not discharged, then I ask myself how long it will be before one might rightfully, or logically think, that one might ever get a discharge. Your Honour, so long as one has health and strength to work one would hope that one might put together some assets, but the maximum time that I would consider that I would have, considering my family's histories and my own, is probably five cy wf years. In the circumstances, therefore, your ' -*'*+ 'Honour, that whilst my learned friend has reviewed my inadequacies and my mistakes, and not quite correctly, but obviously to the best of his 'lo 'ability, I fail to see what further objections Lone vas eo Bre Gs conscious' a7 SM ee te "could be' raised to my discharge when I am no longer -, interested in the commercial field, but in doing oe or those things in which I may now find some solace, not only for myself but for my wife." eithér as to his past conduct or as to his future intentions. - The proposition that the bankrupt should not ""rn 'considering the weight I should give to those statements I am that the bankrupt chose not to qaive evidence on oath be : discharged by operation of law but should be required to apply for a discharge under s.150 of the Act and satisfy the Court that ' w a discharse should be granted 2a3 & ceéytain attzaccion in 'the lod aa all the material concerning The bankrupt chat 1s anium To 'whose administering the estate. There is littis add:tionai material would be available to che Csul.t cupen oan application made by the barkrupt under 5.150 In all the circumstances I éo not thins tnat chess 1s hat ab ze in tae Eublis cr , of fo any useful purpose to be serve interest, that the FEankruptcy be continued. The aApprcoriate course, in my opinion, is to decline to dive & direction that tne bankrupt be not discharged from bankruptcy by virtue of 5.142 of the Act read with sub-s.72(2) of the Bankruptcv Amendment Act 1980. The Official Trustee in Bankruptcy has acted properly in bringing the application and in putting before the Court matters relevant to the question whether the Court should intervene to prevent the bankrupt's discharge by operation of law. However. in all the circumstances I propose to make no order as to the costs of the application. I certify that this and the preceding 22 pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Dated: 10 Januacy 1328€