Bankruptcy - exercise of ON NOT FOR GENERAL DISTRIBULION CATCHWORDS Application for discharge ~- Principles governing discretion Bankruptcy Act 1966 (Cth), s.150 Re: Ex Parte: No. W 639 of Neaves J. VICTOR WILLIAM DURIE, A BANKRUPT VICTOR WILLIAM DURIE 22 April 1986 Sydney IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION No. W 639 of 1984 BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY ee ee Re: VICTOR WILLIAM DURIE A Bankrupt Ex parte: VICTOR WILLIAM DURIE CORAM: Neaves J. DATE: 22 April 1986 REASONS FOR JUDGMENT This is an application by Victor William Durie ("the bankrupt") pursuant to s.150 of the Bankruptcy Act 1966 (Cth) ("the Act") for an order of discharge from bankruptcy. On 9 July 1984, on the petition of Sterland Bros. Pty. Limited, a sequestration order was made against the estates of the bankrupt, Laurence Walter Dummett and Clifford William Glew as joint debtors. Mr Maxwell William Prentice, a registered trustee, is the trustee of their estates. It appears that in 1978 the bankrupt conducted a plumbing business in partnership with Mr L.W. Dummett. In March 1980, a company, Durie and Dummett Plumbing Services Pty. Limited, was incorporated and took over the business. In Fyn pe men meee gcages er ero cerry ts October 1980, the name of the company was changed to Spanish and Colonial Homes Pty. Limited and the company commenced the business of a project home builder in the Gosford and Central Coast areas of New South Wales. The bankrupt and Messrs Dummett and Glew were the shareholders in, and the directors of, the company. The bankrupt apparently had a 40% interest in the company, Mr Dummett and Mr Glew each having a 30% interest therein. In November 1982 it became apparent to the directors that the company was in financial difficulties. Attempts were made to complete the work in progress and to refinance an exhibition home to generate a cash flow to enable the company to pay its creditors. However, on 10 October 1983 the company was wound up voluntarily and Messrs M.W. Prentice and §.J. Parbery were appointed joint liquidators. The company will pay no dividend to unsecured creditors. Certain debts of the company were guaranteed by the bankrupt and Messrs Dummett and Glew. The failure of the company led to claims being made against those individuals, claims which they were unable to meet. This led directly to the sequestration of their estates. On the hearing of the application the bankrupt appeared in person. He was not legally represented. There was before the Court a report in writing by the trustee of the star oe hy Pa ee fe tee ey wo oof ~ >» 3. estate but the trustee was not present and was not represented. Mr M. Quilter appeared on behalf of Network Finance Limited, a creditor, to oppose the granting of an order of discharge. The grounds on which the application was opposed were - "(a) That the bankrupt has made no attempt at restitution. (b) The bankrupt has not demonstrated any pressing need to be discharged from bankruptcy. (c) It is inequitable and against public policy that the bankrupt be discharged." The bankrupt did not adduce any evidence, oral or documentary, in support of his application. He was, however, sworn and answered questions put to him by Mr Quilter and the Court. The bankrupt's statement of affairs sworn on 28 July 1984 disclosed assets of $340 (cash at bank $20, cash in hand $20 and household furniture and effects $300) and liabilities of $55,736. He also disclosed a debt due to him by Spanish and Colonial Homes Pty. Limited of $68,917 but stated that the amount likely to be received in respect thereof was nil. There was thus an estimated deficiency of $55,396. There is no information in the trustee's report under sub~-s.150(3) of the Act concerning the realizations (if any) made in the bankrupt's estate or as to any proofs of debt prom ore re rer ea . a. ' roma, ee ATT ee oe lodged or admitted in the estate. The trustee, however, certified to the Reqistrar in Bankruptcy that there were six creditors of the estate who were to be notified of the application for an order of discharge. The amount claimed by each of those creditors tao be owing by the bankrupt is not shown. The trustee has reported that no amounts have been brought to the credit of the estate by way of contributions made by the bankrupt. The bankrupt is a married man, 36 years of age, with his wife and four children aged between 2 and 10 years dependent upon him. He attributed his bankruptcy to the collapse of the company, Spanish and Colonial Homes Pty. Limited. He said that he had worked mainly in the field, the administration of the company being largely in the hands of Messrs Dummett and Glew. A summary of the affairs of the company dated 22 September 1983 discloses that the company then had assets consisting of trade creditors only with a book value of $46,462 and liabilities of $346,909. The creditors of the company subsequently determined that the further expense required to pursue the company's book debts was not warranted. It is obvious that no dividend will be paid to the company's creditors. See ee eee re meee Te er oe . wean ong = - 3s atom ast ns fawn ore 5. It is equally obvious that no dividend will be paid in the estate of the bankrupt. The trustee has not reported any of the matters mentioned in sub~-s.150(6) of the Act. Nor is it alleged that the bankrupt has committed any offence against the Act. The bankrupt gave evidence that, after becoming a bankrupt, he commenced to carry on business as a plumber on his own account in the Central Coast area of New South Wales and that that business is continuing. He said that the business is carried on under the name Durie Home Plumbing, a business name registered by his wife. He said that when he commenced the business he approached a supplier of plumber's requisites for credit explaining that he was an undischarged bankrupt. He further said that he was allowed a credit rating of $500 and that that remains the situation at present. I should add that there is nothing before the Court to suggest that any offence against s,.269(b) of the Act has been committed. In Re Maher (1985) 61 A.L.R. 592 Woodward J. at pp.601-2 said: "Although I have stated that I am of the opinion that there is no presumption that a bankrupt should be discharged by effluxion of time under s.149, it does not follow that every applicant under s.150 is entitled to a discharge simply by reason of the fact that there is nothing to he said against the granting of that order. The court still must be persuaded to exercise its discretion in favour of the granting of a discharge order. It is for the applicants to persuade it. Whilst I agree with Te procs -n ponaty we 1 Wee ape sree 5 cr aren es Toohey J. in Re Benda that an applicant need not show 'special circumstances' to succeed, he or she must, in my opinion, show some cogent ground or grounds for the exercise of that discretion in his or her favour. A mere dislike of being bankrupt ~ a consciousness of the stigma of bankruptcy, attaching to all bankrupts but felt more by some than by others - cannot of itself be enough." The bankrupt advanced as a reason why the Court should exercise its discretion in favour of granting him a discharge from bankruptcy that, as a bankrupt, he is finding it difficult to carry on business as a plumber with the restricted credit limit allowed to him and that this is having an adverse effect on his ability to provide for his family. He also said that he is having difficulty in obtaining rental accommodation, although [I did not understand this to be a difficulty attributable directly to his bankruptcy. According to the trustee's report the bankrupt's earnings are of the order of $370 gross per week. In the course of his submissions opposing the grant of an order of discharge, Mr Quilter very properly referred me to an unreported judgment of Beaumont J. given on 27 September 1985 granting an order of discharge from bankruptcy to Laurence Walter Dummett but suspending the operation of that order until 8 July 1986. As has been previously mentioned, Mr Dummett had been in partnership with the bankrupt and was later a shareholder and director, with the bankrupt, of Spanish and Colonial Homes Pty. Limited (formerly Durie and Dummett Plumbing Services Pty. Limited). As has also been mentioned, t - at we 7. he became bankrupt on 9 July 1984 at the same time as Mr Durie, the cause of both bankruptcies being the failure of that business consequent upon the economic recession in 1982. There is a marked similarity between the facts of this case and those in the case of Mr Dummett both as to the cause of bankruptcy and as to the respective circumstances in which the bankrupts now find themselves. After reviewing Mr Dummett's circumstances, Beaumont J. concluded: "On the whole, I am of the view that the circumstances of the case do not warrant the grant of an absolute discharge at this stage. On the other hand, there are present here mitigating factors, especially the absence of any suggestion of misconduct, which support the conclusion that the statutory period of bankruptcy should be reduced from three to two years. In short, I am of the view that a proper balancing of the private and public interests involved calls for the grant of a discharge provided it were suspended so that the duration of the bankruptcy would be two years." Bearing in mind the general principles enunciated by Woodward AG in the passage cited from Re Maher (supra), I regard the present application as a borderline case. There is, however, a matter lying outside Mr Durie's particular circumstances to which, in my view, it is proper to have regard and which supports the grant of an order of discharge in his case. To make an order similar to the order made by Beaumont Jd. in Re Dummett would have the merit of dealing consistently with two bankrupts whose circumstances bear, as I have said, a coer reat weer v7 Yae eer aT . . 8. marked similarity. In all the circumstances I think it is appropriate to give some weight to that consideration and I am, in consequence, persuaded to exercise the Court's discretion in Mr Durie''s favour. I, therefore, make an order of discharge from bankruptcy but suspend its operation until 8 July 1986. I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Associate Dated: 22 April 1986 Site ee eeeegas ttamenen amen ane aa pot ene ore wwe ne-— ee astcr of IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION No. W 639 of 1984 BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY Re: VICTOR WILLIAM DURIE A Bankrupt Ex parte: VICTOR WILLIAM DURIE MINUTE OF ORDER JUDGE MAKING ORDER Neaves J. DATE OF ORDER 22 April 1986 WHERE MADE : Sydney THE COURT ORDERS THAT: l. The applicant, Victor William Durie, be discharged from bankruptcy. 2. The operation of the order of discharge be suspended until 8 July 1986. NOTE: Settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules. ve Sollee aeeeea Rema chel ate neal namie oop . aa woe atts — = rye oe spots