CATCHWORODS BANKRUPTCY - application for discharge - whether cogent ground need be shown - attachment of condition to order. Bankruptcy Act, 1966 s.150 Re: Oswald Milne Mackay Ex parte: The Bankrupt QLD E754 of 1986 PINCUS J. BRISBANE 14 NOVEMBER 1986 ote a can voe, epee cep oe IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISTON ) OLD E754 of 1986 BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND ) RE: OSWALD MILNE MACKAY EX PARTE: THE BANKRUPT MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 14 NOVEMBER 1986 WHERE MADE: BRISBANE THE COURT ORDERS THAT: The bankrupt be discharged, but the operation of this order be suspended until 26 November 1986 subject to the condition that the bankrupt undertake to the Court not to carry on business on his own account or in partnership, execute any guarantee or hold office as a director of a company, until 26 November 1987. NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules. rm oor wry IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION ww QLD E754 of 1986 ~~ BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND ~ RE: QSWALD MILNE MACKAY EX PARTE: THE BANKRUPT PINCUS J. 14 NOVEMBER 1986 REASONS FOR JUDGMENT The applicant became bankrupt on his own petition on 26 November 1984 and now applies for an order of discharge. The statement of affairs disclosed liabilities of $91,095, and assets of no substantial amount. Proofs of debt for amounts totalling $55,580.89 were lodged, according to the Official Receiver''s report, and there is no prospect of a dividend. The report says that the bankrupt returned to Australia from New Zealand in 1978 accompanied by his wife; they had $300,000 in cash and invested the money in real estate at the Gold Coast, and also by way of loan to a company, Caprino Pty. Limited. That company, also, bought real property, using funds given to it by the bankrupt and his wife. In 1981, the company bought land at the Gold Coast for sub-division, and in the same year the Gold ' N Deen reve sone oer ware see eae gy wer uptn pae er reer ee lee aaron SSM TT . Coast City Council is said to have trespassed upon the land in question. That led to some expensive litigation which had an unsatisfactory outcome so far as Caprino Pty. Limited was concerned. The company apparently got into financial difficulties and property it owned in Brisbane was sold by the mortgagee, the National Australia Bank. Money which had been borrowed by Caprino Pty. Limited was the subject of guarantees by the applicant and his wife. In 1983, the applicant and his wife entered into a further venture, through a company called Bafero Pty. Limited, borrowing money in the process. Its principal or only business appears to have been a haberdashery shop at Tweed Heads which was unsuccessful, and the company went into liquidation. Although, according to the applicant, he did not guarantee Bafero Pty. Limited's debts, he says that through an error he was made liable for them. The Official Receiver's opinion is that the main causes of bankruptcy were the failure of the two companies I have mentioned. There is evidence of some gambling activities. The applicant told the Official Receiver he was making substantial amounts from punting up to August 1984, and that he continued gambling after his bankruptcy, but with smaller sums. The applicant told me that he wished to obtain a discharge to do work for "some business people from Malaysia, who are interested in me spending time in Malaysia on their behalf, with alternate trips at een wearers eae sepa Ree pe rere, pn a oe back to Australia". He said the people in question might pay him "somewhere around $30,000" and that he could not do the work while he remained a bankrupt. In Re Zion (unreported, 26 September 1986), Smithers J. said: "In my view it is the policy of the law that bankruptcy should in most cases come to an end at three years and when there is an objection, at the end of five years from the decree for sequestration of the estate ..."" His Honour referred to Re Maher (1985) 61 A.L.R. 592 at p.598, that being a decision which I have followed on a number of occasions. In particular, I have applied the view of Woodward Jd. in that case that some "cogent ground or grounds" must be shown for the exercise of discretion in the applicant's favour - see pp.601, 602. Here, the bankruptcy has subsisted for nearly two years. On the evidence I find that the cause of the bankruptcy was the failure of each of the two several business ventures mentioned above - i.e. that by Caprino Pty. Limited and that by Bafero Pty. Limited. None of the creditors has opposed the application. The applicant is 60 years of age and if he is ever to re-establish himself commercially it must be fairly soon. However, applying the "cogent ground" test, the case is, in my opinion, a marginal one. I think an order should be made enabling the applicant to take employment, but subject to conditions designed to prevent him tm rpwer cee oid ah eerie @ aot ns eee fe oo end entering into a business venture during the period 1n which he would ordinarily have remained a bankrupt. It appears from Re Mallan (1975) 25 F.L.R. 20 (special leave refused 7 A.L.R. 259) that the power to impose a condition given by s.150(9)(c) may extend beyond a period of suspension; it is necessary to have a suspension to enable a condition to be attached, as I read the provision. It will therefore be ordered that the bankrupt be discharged, but the operation of this order 1s suspended, subject to the following condition, until 26 November 1986. The condition is that the bankrupt undertake to the Court not to carry on business on his own account or in partnership, execute any guarantee or hold office as a director of a company, until 26 November 1987. If the undertaking is given, then the bankrupt will be bound by the condition until the date on which he would, apart from this order, have obtained his discharge; if the applicant is not willing to give the undertaking, the application will simply be dismissed. 1 certify that this and the 3 preceding Pages are a true copy of the reasons for judgrrent herein of His Honour Mr. Justice Pincus pb eg Bn . Asséciatq Dated 1p Weve Leer 1986, oy iene Radler moll a iene Sian nna es eae ou -to° en ae ef Tor