ar IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND / JUDGMENT No. b 99, lr —~ QLD E780 of 1977 RE: ROGER GREGORY MATSON EX PARTE: THE OFFICIAL RECEIVER IN BANKRUPTCY DATE OF HEARING: DATE JUDGMENT DELIVERED: COUNSEL : for the applicant for the debtor 10 MARCH 1986 10 MARCH 1986 Mr. Dutney instructed by the Australian Government Solicitor Mr. Bell instructed by Dowling and Dowling J. A. LYONS ASSOCIATE TO PINCUS J. 10 MARCH 1986 CATCHWORODS BANKRUPTCY - application for order that bankrupt not be discharged - bankrupt apparently wealthy - bankrupt apparently carrying on business in breach of Act - no steps taken to stop him - application granted. Bankruptcy Act 1966, s.149, 265(1)(a), 269 Re: ROGER GREGORY MATSON Ex P: THE OFFICIAL RECEIVER IN BANKRUPTCY QLD E780 OF 1977 PINCUS J. BRISBANE 10 March 1986 IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION ) QLD E780 of 1977 BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND RE: ROGER GREGORY MATSON EX PARTE: THE OFFICIAL RECEIVER IN BANKRUPTCY MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 10 MARCH 1986 WHERE MADE: BRISBANE THE COURT ORDERS THAT: l. The bankrupt not be discharged from bankruptcy by virtue of s.149 of the Bankruptcy Act. 2. The applicant's taxed costs of and incidental to this application be paid out of the bankrupt's estate. NOTE; Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) QLD E780 of 1977 BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND ) RE: ROGER GREGORY MATSON EX PARTE: THE OFFICIAL RECEIVER IN BANKRUPTCY PINCUS J. 10 MARCH 1986 REASONS FOR JUDGMENT This 1s an application for an order that the bankrupt, Mr. Matson, not be discharged from bankruptcy by virtue of 5.149 of the Bankruptcy Act. The application is made under s.149(12). Although the history of the matter goes back to 21 November 1977, when Mr. Matson became bankrupt, little has been placed before me in admissible form as to the subsequent history of events. It is convenient to begin with an account of the facts of recent origin, beginning with a letter written by Mr. G.J.M. Blewett, the Official Receiver, on19 August 1985. In that letter Mr. Blewett asked the bankrupt for disclosure of his connection with a business under the name Matson Computer Services at 135 Lancaster Road, Ascot, which had been publicly advertised as one which could produce substantial profits for those who dealt with 1t, profits of the order of $1000 per week from $5000 capital. A reply came promptly from the bankrupt's solicitor saying that the bankrupt had not operated such a business; that his wife Janette had done so, but had ceased to trade. The cessation must have been fairly recent, since the advertisement to which I have referred appeared on 3 August 1985. On 6 September 1985, Mr. Blewett wrote again asking for similar information and he received a reply dated 14 October 1985 saying that the bankrupt had received no income whatever from any source, that he had not worked at Matson Computer Services, that the business "is operated by Mrs. Matson and, according to our client, he is not privity (sic) to details as to why the business ceased trading." No further enquiry was made. Two months later, the bankrupt called State police to the Lancaster Road premises and complained that he had been the victim of an armed robbery, which had resulted in the removal of jewellery, gold and money valued at more than $50,000. He showed the police jewels and gold bars he still had. They attempted to question his wife about the matter but he managed to prevent her from speaking to the police on the ground that she knew nothing of the matters under investigation. As will be deduced from what has just been said, the initial story to the police was that the bankrupt was the owner of the property, but later more prudent counsel presumably prevailed and he claimed that it was owned by his wife. The following day, the police came to the premises again and the bankrupt showed them figurines which he said were worth $25,900 and a piece of furniture which he said he had bought at auction and was worth $20,000. He told the police that he was employed by his wife Janette at $200 per week and that he had kept gold on the premises in places other than those which nad been the subject of the robbery the previous day. On 23 January 1986, the police interviewed the bankrupt again and were told that all the property in question belonged to his wife. They noticed a late model Mercedes-Benz and another vehicle in the garage. A week later officers from the Taxation Department came to the premises and interviewed the bankrupt, his wife and an accountant, Mr. McKennariey, apparently acting on behalf of the bankrupt and his wife. The general tenor of the conversation was that the bankrupt and his wife were operating an extremely profitable business, apparently being that which was advertised. In speaking of assets in the house, the bankrupt said, "They are all officially Jan's because with me being bankrupt, I can't physically own anything. It's just ridiculous." It appeared that the business was a computer tipping service from which the bankrupt expected a million dollars profit would he made. He told the officers, "All we want to dois just sort of get down and, you know, make a bit of money and pay some tax." The bankrupt pleaded guilty on 18 October 1985 to two charges under s.265(1)(a) of the Bankruptcy Act relating to concealment of assets and was placed on a good behaviour bond. However, not enough is known about that matter to make it of any great importance in the case. The question 1s whether, on the facts relating to the tipping business, it 1S appropriate to make the order sought. The principal contention advanced by counsel for the applicant was that if the period of bankruptcy were extended, that would facilitate the recovery of any assets. It is not clear to me that this 1s so. It should be mentioned that the reason for the already prolonged period of bankruptcy 1s that an objection to discharge was made on 30 May 1980, and the result of the statutory provisions dealt with in my previous decision in this matter on 23 January 1986 and the order I then made is that, absent any further step, the objection will lapse and the bankruptcy cease on 31 March 1986. Despite the then imminent termination of the bankruptcy and the circumstances disclosed last year, no effective step seems to have been taken by the applicant to investigate the matter and it seems probable that but for the efforts of others, such as the State police and the taxation officials, nothing more would be known by the applicant of the bankrupt's affairs, so far as presently relevant, than the bald denials emanating from his solicitor. I have been somewhat concerned that after sucha period of inactivity, the applicant now says he needs more time. I have, of course, no knowledge of whether the resources available to the applicant are such as to make 1t easy for him to devote manpower to the task which then seemed to require attention. However that may be, I am by no means' convinced that Pursuit of the bankrupt for assets would be facilitated by making such an order as 1s applied for. Nevertheless, 1t 1s right to make the order sought for other reasons. The bankrupt has claimed to be the owner of a substantial quantity of gold and jewellery and is apparently conducting a business, which 1s said to be extremely profitable, presumably in breach of one or more of the paragraphs of s.269 of the Act. As his counsel, Mr. Bell, has pointed out, he has denied in correspondence that the business 1s his. He has, indeed, denied through his solicitor that he has even worked for it. However, the records of interview which have been placed before me make both of those denials ones which should be taken very cautiously and indeed, it would be astonishing 1f the facts did not turn out to be as they appear from the interviews, namely that both Mr. and Mrs. Matson are in the business, he having the dominant role. The question I have just mentioned would no doubt have to be further investigated but as things stand, in the absence of any evidence from the bankrupt, the prima facie conclusion must be as I have stated. The basis upon which I consider the application, then, is that there 1s good evidence that the bankrupt has flouted his obligations under the Bankruptcy Act and is, rather surprisingly, being allowed to get away with that. No attempt has been made to secure the property to which I have made reference or to achieve a cessation of the carrying on of this business. Again, that may be due, for all I know, to an inadequacy of resources. The impression created by allowing the bankrupt to achieve the status of a discharged bankrupt on 31 March 1986 would be that the court was unconcerned about the sort of conduct in which Mr. Matson was apparently engaged. The case demonstrates, if demonstration 1s needed, that there are those in the community who are under the impression that bankruptcy is not a matter which need greatly affect those who are prepared to create a quite superficial appearance that the business they are engaged in is one in which they are not legally interested. It seems important to do what can be done to dispel that impression. Counsel for the bankrupt referred me to the principle which seems to emerge from at least some authority, that one should have regard to "acceptable standards of commercial morality". In my view, the matter may be put more broadly and in exercising the relevant jurisdiction, the court should so act as not to encourage the notion that the Bankruptcy Act and those who administer it are toothless, because to do so would be harmful to the administration of the Act and tend to bring it into contempt. I also take into account the nature of the business which the bankrupt is apparently carrying on; it is one notoriously open to fraudulent practices. It will therefore be ordered that the bankrupt not be discharged from bankruptcy by virtue of s.149 of the Bankruptcy Act, and that the applicant's taxed costs of and incidental to this application be paid out of the bankrupt's estate. i ~ oe ry ' Cuted