1 ree J ee ey TN emrevy ET Pe ot Tren beea cree tisshoe ge $.1°°(3) - bes Saavescucterer L979 up ees - ot on ~ = ye prrsav nr 1yt> - ont sabsequcnb ounscth oe tacts temivel. = ne 4+ a yalhi? tos anpnlicatior - anplictikb wrearently lisanle? - wiveli? sengsaner = AcsIrd. ko be Free cf st3aqme - ipsafficient reasons te qavstil Jisckarg? - out lic imtersst and eerroreial morality teninant consider. t1ons = orutilic lnlecest pretreted by caneitional suspenie? lischar ys of First stnkruxter, Rankruptcy Act 1456 5.149(3), 3.15., 3,269. Re: Z10n; 9 Re: Maher & Pe: Tarvydas x parte The Pankrupt (Unrep. Smithers J. 26/3/89) Aner (1935) 61 ALR 592 ;_ Cx parte Tervydas (Unren. Toohey J. 25/11/°S) RE: KLAAS ERCNTCS OX PAPTG: KLAAS POF PES No.361 of 1979 and 'Io. 535 of 1983 Freich J. ]2 Pebruary, 1987 PFPT? sreres eee Torey ine AES LP ALT ohne & Ae Shoot : aan] qn ' ree pen ee JUDGE OAC i tT "ICT tO auray ee a MOST UNTT TING OPDER: we Se "T™ STF ree rate ep oe ' aM pre Ranh rust PX APTA: Tor NTEAG onaeimee Aan licant "TP irh aE OF ORCOR PPC DATE OF ORDHR: 12 [Tebruary 1937 VIR MADE: PURTR TRE COURT OPRERS ThiT: 1. The Tankrupt 15 discharged but the oneration of the orier is susnended subject to the following condition until 12 Tebruary 1°39. 26 The condition is that the Bankrunt undertake to the Court not to carry on business cn his own account or in nartnershin, execute any guarartee, or hold effice as a director or s2cretary of @ company until hruary 1292. Mobo s Setbhemert an! tev cf orders 13 ucalt v2th in Pulz 124 -f the Pankeintcy Pulas. WW TIT PONT CoUPT ) OF AUSTPYALT. ) GUO L TIVISTAr ) MA"RPUODTCY OISTPICT ) Of THE STATP oP ) VESTORN AUSTPALIA ) No. 535 of 12233 PP: KLAAS BONTRS Rankrucet and "X PART: FLAAS RoMrns Anplicant MINUTC OF ORDER JUDGE NAKING ORDER: FRUNCT Jd. DATE OF ORDER: 12 February 1937 WHERE MADE: Perth THE COURT ORDEPS THA': The apnlication for discharge is dismissed. Note: Settlement and entry of orders is dealt with 1n Rule 124 of the Bankruptcy Rules. I™ THE PENEPAL COURT OF BRUSTPALIA GUNERAL DIVISION BANKRUPTCY DISTRICT OF THF STATP OF URSTURYT AUSTRALIA No. 361 of 1979 Mo. 535 of 1933 wwe were Vv VU PE: RLAAS BONTES Bankrupt EX PARTR: KLAAS BONTLS Applicant CORAM: FRENCH J. 12 February 1987 REASONS FOR JUDGNENT Klaas Bontes has been made bankrupt twice, on 14 September 1979 and 9 August 1983. By reason of the provisions of s.149(3) of the Bankruptcy Act he remains a bankrupt until discharged by order of this Court. He now applies for discharge from both bankruptcies. The bankrupt was born in Holland and came to Western Australia in 1949. In February 1957 he returned to Holland. In 1976 he came back to Western Australia and began vork as a product manager for a buildina company until September 1977. re then began to cerry on tusiness Suyiny and selliny dianonds under th2 name "Australian Diamond Holdings". Sales were made on consiynnent. At about that time he also vent into partnecsbin with his son to carry on a business |nown as Fast Printing Muplicating Services. The partnershin ontered a hire purchase agreement with Allianc>? Acceptance Corporation for the purchase of printing equipment for about $2,090. The business was said to have been carried on largely to meet the printiny requirements of Australian Diamond Holdings. The bankrupt later formed two other short' lived businesses under the names "Earth Rase One" (selling motivational tapes) and "Ravid Mail Orders". In May 1978 the Diamond Corporation of Australia Pty Ltd was incorporated. The bankrupt and one L.H. Steer were the directors and principal shareholders. The operations of the company were investigated by the Department of Consumer Affairs in Western Australia. There was attendant bad publicity unvolving the bankrupt personally and he resigned as a director in May 1979. The company then had liabilities in excess of $180,900.00 and Few assets. Legal action was taken against the bankrupt by creditors, in particular Lombard House Australia (now National Pn aa % \ f : i ? weEY TREND 3. Testminster Tinance) in relation to a shortfall after renossession of a Genini Sedan and by Alliance aAccentance Corporation. On 14 Sentendver 1979 the dankrupt filea@ a dehtor's petition. Seventeen proofs of debt for $100,733.00 were admitted to rank for dividends in the estate including a claim for $78,088.00 from the liquidator of the Diamond Corporation of Australia Pty Ltd. This claim was for goods and services provided to the bankrupt and also for an amount due for unpaid shares to the value of $76,000 which had been issued to hin. The assets of the estate realised $1,500. There were sufficient funds to enable payment in full of the official fees and costs of administration. No dividends are expected to be paid. Tn 1980 the bankrupt went into a partnershiv with three others including his son Stephen Poss Bontes. The partnership commenced operating a husiness of Funeral cirectors. The bankrupt was the goreral manager of the business. Capital was introduced into 1t by other partners who were aware of his bankruptcy. Subsequently ne was convicted of six offences against s.269 of the Bankruntcy Act. on % June 1982 he was sentenced to 18 months imprisonment with a mininum terms of 6 months to be served before eligibility for parole. An objection was lodyed on 13 September 1982 against the Statutory discharge. Nevertheless the Bankrupt applied for discharge on 19 October 1982. This was refused by the Court on 14 December 1932. The funcoral director business was sold. The agreement for sale included a condition that the purchaser would pay the outstanding debts of the business. This was not done and on 9 August 1983 upon a creditor's petition filed by the Commissioner of Taxation the bankrupt was made bankrupt for the second time. Mr S.F. Robson was appointed as trustee of the estate. Realisation of assets yielded $614.35 against a proof of debt in the sum of $20,921.50 for unremitted group tax. N£E1cial fees and costs were paid in part from funds received by the trustec. sop ROR eR RTE ESL TET SSE SE 8 ae meres oe ee xr e- A-ORR ETP rm At tne Jal? of second dankruptcy, the bankrupt vae 59 years c£ age and unemmloyel. Yoois now in receipt of an inval1? pension, The trustee has indicated in his roport that therc has been no reason why the centuct of the bankrupt since his seconde pankruptcy should be regarded as unsatisfactory. Creditors have been notified of the applications but no response has been elicited. In affidavits in support of his application for discharge the bankrupt said he 1s currently on an invalid pension with a disability of a permanent nature and there is no likelihood he would be able to obtain or accept remunerative employment in the future. Ye 1s not, he said, in a position to consider any business or private venture now or in the future which might conceivably require that he apply for any credit or which could lead to any possibility of a recurrence of the circumstances which lead to his bankruptcy. He also referred to discharge as enabling him to lead "a normal life devoid Crom the stigma of being an undischarged bankrupt". In oral z72dence before me, he said Lhat although barred by his paysical condition, namely degenerative sninal arthritis, from renumerative empleyment he was able to engag2 in community work, He said he had been approached »%y the Packy Bay Village organisation to assist with 1ts work. The Arthritis Poundation had indicated that it might be able to use his services on a part time basis. These services he said, would not be remunerated but would give him direction and something to do. Asked how his bankruptcy would interfere with such activities he said:- The very fact that I have, naturally become very wary of the provisions of the Bankruptcy Act which prohibit one from participating in th? management or control - or whatever - of any venture - it would appear - that I have, perhaps a little psychotically declined any and all invitations or opportunities to make any kind of a decision in any area." He could not say that he had received any firm offer of community work, In relation te the offences for which he was convicted, ne said they were "committed innocently" and that he simply did net know that he was »reaking the law. ~l1 The aonlicatiens are governei by the nrovisiens cf s3. 149 and 150 of the Bankruntcy Act 1953 wiich in the relevant parts provider- "149(1) Subject te this section a person who becomes a bankrust after the commencement of this section is, by forea of this section, unless sooner discharged an accordance with section 150, discharged From bankruptcy upon the cxpiration of three years from the date of the bankruptcy. (2) Subject to this section, a person who was an undischarged bankrupt immediately before the commencement of this section is, by force of this section, discharged from bankruptcy - (a) in a case where the bankrupt became a bankrupt more than 3 years before the commencement of this section - upon the commencenent of this section; or (b) a1.n any other case, unless sooner discharged in accordance with section 150 - upon the expiration of 3 years from the date of the bankruptcy. (3) A bankrupt is not discharged from bankruptcy by virtue of this section if - (a) at the time when he would have been so discharged but for this subsection, he 158 still undischarged from an earlier bankruptcy; (b) he has, since the date of the bankruptcy again become a bankrupt; (c) the Registrar, the Inspector General or the Trustee has entered, or a creditor has with the leave of the court, entered, an objection in accordance with the prescribed form and in the prescribed manner, to the discharge of the bankrupt by force of this section and the objection has not been withdrawn or lapsed »efore tha time when the bankrupt would have becn so discharged but for this subsection; "1590(1) A nerson who beacenes, or bas hofors the conmercenent of this subsection become, a vankrunt may annly to the Ceurt for an arder at tischarde at any tire after - (a) his vublic examination has been concluded; (b the trustee has notified hin in writing, that the trustee docs not intend to nake an application for his e#xaminetion under section 69; or (c) the expiration of the period of 12 months commencing on the date of the banktuptcy. (3) On the hearing of an application under this section, the Court shall take into consideration a report in writing by the trustee concerning the bankrupt, his conduct, trade dealings, property and affairs both in respect of the neriod before and the period after the applicant became a hankrupt. (4) The Court may, in addition - (a) hear, and put such questions as it thinks fit to - (i) an official receiver; (11) a creditor whose debt has been proved; (iii)the bankrupt; or (iv) the trustee; and (b) receive such other evidence as it thinks fit. (5) The Court shall, if any of the matters specified in subsection (6) is established - (a) vefuse to make an order of discharge; or (b) make an order of discharge but suspend the Operation of the order as the Court thinks proper, @1ither unconditionally or subject te coniitions. (6) The matters upon the establishment of which the Court may exercise the powers snecified in subsection (5) are as follows:- (a) that the S%ankrupt has omitted to kean ans preserve such books acccunts or rocords as sufficiently disclose his business transactions and financial nosition within the period of five years immediately preceding the date on which he became a bankrunt; (1) that the bankrunt has heen convicted of an offence aqainst this Act or the renealed Act or of any other offence related to his bankruptcy. (7) The Court shall not, under subsection (5), suspend the operation of an order of discharge subject to conditions that require, or have the effect of requiring, the bankrupt to make payments from his income at any time after the expiration of the period of five years commencing on the date of the bankruptcy. (9) Where none of the matters specified in subsection (6) 1S established the Court may - (a) refuse to make an ordor of discharge; (b) make an order of discharge; or (c) make an order of discharge but suspend the operation of the order as the Court thinks proper either unconditionally or subject to conditions. (10) The Court shall not, under subsection (9), suspend the operation of an order of discharge beyond the period of three years commencing on the date of the bankruptcy. (11) The Court may at any time while the operation of an order of discharge (including such an order made before the commencement of this section) 1s suspended, rescind or vary the order. (12) A report referred to in subsection (3) is for the purposes of this section, prima facie evidence of the statements contained in it." Py reason of sur-s.159(5) no immediat> 21ischarge order is vessible in relation to the first bankruptcy. The best the hankrunt can hope for in that regare 1s an uncendilional discharge suspendel for a period to be snecifiel by the Court. Mor in ny opinion would it be apnronpriate in any but the most excentional cases, to qrant a discharge from a sccond bankruptcy while a first hankruptcy 1s subsisting. There 1s however, no reason why the Court cannot consider both applications concurrently. The approach to be adopted by the Court in dealing with applications for discharge has becn expounded in many decisions, In my respectful opinion the following passages from the judgment of Smithers J. in Re: Z210n; Ex parte The Bankrupt (Unreported Smithers J. 26/9/86) and Woodward J. in Re: Maher & Anor (1985) 61 ALR 592 are helpful statements of the relevant principles. Smithers J. in Re Zion said at page 3:- "In my view 1t is the policy of the law that bankruptcy should in most cases come to an end at 3 years and when there 1s an objection at the end of 5 years from the decree for sequestration of the estate, but that ina case where public interest so requires the discharge may be delayed or made conditional according to the requirements of the public interest in the circumstances of the case. Public interest will require that a 2 mye MOET MIL ON WEN ier to see NAOT ERE SL. PUTT ENTE a oP LENE NT PS Se AP pte —r VIER AH Mischarye be @Gelaved or made conditional if the conéuct revealed or tne character of the vankrunt indicates that thre return of the bDankrunt to the commercial world in full freedem might irvolve unacceptable risk te »xersons likely to be cngagecd in commercial relations with hin in the future. In other words, 1t is for the applicant to shew that halancing the nolicy of the law in favour of the return to commercial Life of a bankrupt against the dangers that wight accrus to the public from full commercial canecity of the avolicant, it is appronriate that the dischecge be qranted." Sir Edward Woodward in Re : Maher & Anor (sunra) also said:- "An application for discharge 1s never treated lightly by the Court. As with the granting of a sequestration order, an application for discharge involves looking beyond the interests of the applicant and his or her creditors to considering both the interests of the public and commercial morality." In this case the two bankruptcies are comparatively recent, the second having commenced just over 3 years ago. It 1s just under 5 years ago that the Bankrupt was subjected to a significant criminal penalty for 6 offences against s.269 of the Act. lis reasons for seeking discharge at this time are, insofar as they relate to a desire to do community work free of aoprehension about the restrictions imposed by the Bankruptcy Act, somewhat unconvincing. 12. TInseftar as bo wishes to be Free cf the stigma of bankruntcy, trat 15 a factor which while not of itself sufficient to justify a discharge is a rolevant considcration - Re : Tarvyvas 2x Parte Tarvydas (Unreported looney J. 25/11/85). There boing ne opposition to the applications in this case, 1t 1s one wn which the public interest and commercial morality are the dominant considerations in determining their disposal. Recognition of the public interest also involves a recognition of the policy of the Bankruptcy Act as enunciated by Smithers J. in the Z10n case. As no matter arises under s.150(6) in respect of the second bankruptcy, the power of the Court to deal with the applications in respect to that Act 1s to be found in s.150(9). But the power of the Court to suspend an order of discharge in such a case is limited to a period of suspension explring at the end of 3 years commencing on the date of the bankruptcy (s.150(10)). In the present case that period expired on 9 August 1986. Mo such limit however aonlics to the power of the Court to suspend and aimnose conditions in relation to the first bankruptcy. 13. In my Granicn the pul-lic interest in relation to the first bantkruotcy will be protected if the annlicant 18 given a suspended discharge conditional upon his continuing exclusion fron commercial activity. Such conditions may operate beyond the period of the SUSHDENSION. Having regard to the serious nature of the misconduct which led to the bankrupt's conviction and imprisonment the suspension should be for a period of 2 vears. In relation to the first bankruptcy the order therefore will be:- 1. The Bankrupt 1s discharged but the operation of the order 1s suspended subject to the following condition until 12 February 1989. 2. 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 or secretary of a company until 12 February 1992, The effect cf that order is that if the undertaking is given then the Bankrupt will be discharged from his first bankruptcy in 2 years time, but will be bound by the condition for 3 years after the «ate of discharge. me ie E yd q ee » nossible n Ja, to tb? secon) bankrairtey neo seancnded Arscnarge 16 We Tt wourd, in mv opinien, be wnagsronrict: to order a discharae for the sccond vankruntcy at a tine whon tre first bankruptcy continue. 1t will be from that when the d second ban still sursists. The second bankruntcy will therefore Ro automatic @ischarge 1s possible in respect of it so necessary for the annlicant toa reanply for a discharye bankrurtcy no ecearlier than 2 yoars from today's date uscharye of the first hankruptcy becomes effectual. So ny order on the anplication for discharge from the kruptcy is that the application will be dismissed. I certify this and the preceding thirteen (13) pages to be a true copy of the Reasons for Decision of his Honour Nr Justice French. Associate: Cb belfry Moreteronr. Dated: Vy pha Leb IPe 7] fb 7 15. COUNSEL: . Mr FLD. O'Driscoll and Mr S.F. Robson for the Official Receiver Date of Hearing: 8 December 1986 Date of Judgment: 12 January 1987