Federal Court of Australia
RESTRICTED DISTRIBUTION
IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) BANKRUPTCY DISTRICT OF NEW SOUTH WALES ) No. W.190 of 1984 AND THE AUSTRALIAN CAPITAL TERRITORY )
RE:
ROBERT G. TOWNSEND and CHRISTINE M. TOWNSEND
Bankrupts
EX-TEMPORE REASONS FOR JUDGMENT
BURCHETT J.
This is an application by a trustee in bankruptcy under
s.131 of the Bankruptcy Act 1966, sub~secs.(1) and (2) of which
read as follows:
"(1) Subject to this section, a bankrupt who
is in receipt of income is entitled to retain it for his own benefit.
(2) The Court may, upon the application of the trustee, order that all, or such part as the Court thinks fit, of the income of the bankrupt shall be paid to the trustee for the benefit of the bankrupt's creditors."
The section has been construed in a number of decisions. It is clear that it confers a discretion on the Court. In Re
McLachlan (1975) 8 A.L.R. 162, at 165, Riley J. said:
"No order should be made under s 131 which would contravene the long-standing principle
1 7NOV 1986
FEDERAL cou AUSTRALIA OF
PRINCIPA, REGISTRY,
; . 2.
\ . income reasonably necessary for the maintenance of himself and his family.
But the cases consistently speak of what the bankrupt is entitled to retain as being what
is required or reasonably necessary for the support of himself and his family."
Riley J. also in that case said:
"The burden of proof of what is required or reasonably necessary is borne by the bankrupt w
| ace
and he cited authority for that proposition. But in the decision
of the Full Court of this Court in Lyford v. Levit (1984) 2
F.C.R. 264, at 269, the joint judgment of Bowen C.J., Toohey and
Fisher Jd. refers to that statement of Riley J., and then adds:
"In the matter now before this Court the learned primary judge described that onus as evidentiary, saying that 'in the long run the burden of establishing that an order should be made and the quantum of that order lies on the trustee'. With respect, we agree with his Honour's view. Section 131(1) begins with the assertion that a bankrupt is entitled to retain income for his own
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