IT9 BANKRUPTCY - husband wife joint bankrupts - application by wife for discharge ~- failed business partnership - wife separated with child - government low cost housing not provided to bankrupts - no liabilities disclosed in wife's separate statement - no unsatisfactory conduct - no relevant opposition - no relevant consideration of commercial morality to preclude discharge. Bankruptcy Act 1966 s.56, s.150 Re: Maher (1985) 61 ALR 592 RE: RONALD JOSEPH MARKEY and DEBORAH MARGARET MARKEY Bankrupts EX PARTE: DEBORAH MARGARET MARKEY Applicant No. 422 of 1985 FRENCH J. 23 March 1987 Perth FEDERAL COURT OF AUSTRALIA PRINCIPAL "Stclegs Visca & IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA JUDGE MAKING ORDER: DATE OF ORDER: NO. 422 of 1985 RE: RONALD JOSEPH MARKEY and DEBORAH MARGARET MARKEY Bankrupts EX PARTE: DEBORAH MARGARET MARKEY Applicant MINUTE OF ORDER FRENCH J. 23 March 1987 WHERE MADE: * Perth THE COURT ORDERS THAT: 1. The applicant be discharged. Note: Settlement and entry of orders in Rule 124 of the Bankruptcy Rules. is dealt with IN THE FEDERAL COURT ) OF AUSTRALIA ) GENERAL DIVISION ) BANKRUPTCY DISTRICT ) OF THE STATE OF ) ) WESTERN AUSTRALIA NO. 422 of 1985 RB: RONALD JOSEPH MARKEY and DEBORAH MARGARET MARKEY Bankrupts EX PARTE: DEBORAH MARGARET MARKEY Applicant CORAM: FRENCH J. 23 March 1987 REASONS FOR JUDGMENT Ronald Joseph Markey and Deborah Margaret Markey became bankrupt on 10 September 1985 on their own petition pursuant to s. 56 of the Bankruptcy Act 1966. Although husband and wife, they have been living apart Since 23 April 1986. Mrs Markey has custody of their 8 year old daughter. She presently earns $175.00 per week from part time work and is in receipt of $123.00 per fortnight supporting parents benefit. The bankruptcy arose from the failure of the bankrupts' earthworks contracting business which they conducted at Busselton under the name "Handi-Joe" trom January 1980 until they ceased trading in June 1984. The bankrupts began operating their business in partnership in January 1980. Vehicles and equipment for the business were acquired under financing arrangements. Net profits for the first 3 years of operation were as follows:- Year Ended 30 June 1981 $ 9,626.00 Year Ended 30 June 1982 $14,660.00 Year Ended 30 June 1983 $11,786.00 The business ran into difficulties in 1984. Work began to decline and payments due to the partnership were not made promptly. They contracted to a one person operation but because of financial problems had to sell most of their equipment. Some items were repossessed. Subsequently the couple moved to Perth. There the male bankrupt had a number of jobs as a salesman and as a storeman. Mrs Markey obtained temporary work. As they were unable to pay debts outstanding from their business they filed their petition under s.56 of the Act. Since their bankruptcy Mrs Markey continued in her then capacity as an employee in the Land Titles Office. Thereafter she obtained part-time employment as a typist with Firetech Pty Ltd for which she was paid $154.90 per week. In September 1986 Mrs Markey ceased working for Firetech Pty Ltd and for about 1 month was in receipt of a full supporting parent's benefit at $292.50 per fortnight. Joint assets of the two bankrupts were as follows:- (a) Cash $ 50.00 (b) Household furniture $1000.00 (c) Debt due by Australian Taxation Office $ 678.00 $1728.00 Joint liabilities as disclosed in the Statement of Affairs amounted to $12,003.00. Mr Markey's separate estate disclosed unsecured creditors of $2,367.00 and partly secured creditors with a net ae roe eee deficiency of $8,200.00 making a total unsecured liability of $10,567.00. There were no liabilities disclosed in the separate estate of Mrs Markey. At the date of the Official Trustee's report, 3 claims totalling $7,321.90 had been received in the joint estate and 4 claims totalling $7,161.52 against the separate estate of Mr Markey. No claims have been received against the separate estate of Mrs Markey. Assets in the joint estate have realised $236.98 and in the separate estate of Mr Markey $100.00. _There are, it seems, no other unrealised assets in the joint or separate estates. There are insufficient fees to pay out the official fees and costs of administration in the joint estate and in the separate estate of Mr Markey. meee ttre ~ ' Adequate books of account were maintained with respect to the partnership business. There is according to the Official Trustee's report no reason why the conduct of the bankrupts since the date of bankruptcy should be considered unsatisfactory. wen ee Ee Se Ee epee ner eT There are, 1t 1S said, no matters of the kind specificd under sub-s.150(6) of the Act to ground a refusal or suspension of discharge. All creditors certified by the Official Trustee have been served with notice of the date, time and place for the hearing of Mrs Markey's application. Notice of intention to oppose the application has been filed by the following persons:- (1) E.P. & S.M. Hunter (2) A.G. White In the case of Mr & Mrs Hunter the objection is expressed as follows:- ",..no attempt has been made by either Ronald Joseph or Deborah Margaret Markey to pay back any part of the amount owing to E and S Hunter. In 1983 and 1984 we supported and assisted this couple by supplying fuel to them so that they could continue to operate their business even though they were experiencing financial trouble at that time. We gave them service and trust and feel greatly disappointed at the lack of courtesy that they have given in return. The amount of over $930 has been owing to E and S Hunter since the abovementioned date and at no time have they attempted to either phone, write or visit us." In the case of Mr White the objection is in the following terms:- "EL, "1, That the Bankrupt has contracted a debt provable in the bankruptcy without having at the time of contracting it any reasonable or probable grounds of expectation of being able to pay it after taking unto consideration her other liabilities at the time; That the Bankrupt has brought on or contributed to her bankruptcy by culpable neglect of her business affairs; That the conduct of the Bankrupt both in respect of the period before and the period after the date of Bankruptcy has been unsatisfactory." Mrs Markey in her affidavit in support of application says:- I no longer reside with Mr Markey. I receive supporting parents benefit for my daughter and work 20 hours per week and therefore I am a low income earner. The debts occurred from a business partnership with my former husband. I was a partner for mainly taxation purposes. Debts were from purchases arranged by Mr Markey for Machinery and goods for the business on his trips from Busselton to Perth. The purchases were made without prior knowledge to me. I only found out when the Lease or Hire Purchase papers were given to me to sign. I did not want to sign them but did so after arguments about the purchase, "to try and keep the peace", On several occasions I urged Mr Markey to sell the machinery or goods because of cash flow and the fact that they would sit idle for weeks on end without being used or hired out. On each occasion Mr Markey refused point blank. These arguments were the start of my marriage breakdown. I tried to get him to see reason and the economics of this action but he wouldn't. On approximately three occasions I approached both Mr Markey and Mr R.J. Armstrong the accountant, to draw up papers to cease my association with the business Handi-~Joe but they were refused. I stayed the on much against my better judgment. The worry did affect my asthma. 6. I, as far as I am aware, do not and have never had debts of my own. 7. I make application to the Federal Court' to discharge my bankruptcy in this matter." On 9 March 1987 Mrs Warkey appeared in person and Mr White by counsel. There was no appearance by the Hunters. Mr Thompson of the Official Trustee informed the Court that the Hunters' notice had been served on the Official Receiver but not on the bankrupt. No proof of debt had been lodged by Mr White. Mr Dundo appearing for Mr White, had only recently received instructions and asked that the creditor be given time to file an affidavit with respect to his opposition to the application for discharge. The application was then adjourned to 23 March at 8.45 am. On the adjourned hearing Mr Dundo informed the court that the creditor White, sought leave to withdraw his notice of opposition and leave was granted and Mr Dundo withdrew from the proceedings. This application is brought under s.150 of the Bankruptcy Act. arene pete flies nee It 1S not a case in which any of the categories of misconduct referred to in sub-s. 150(6) have been made out. It 21s therefore open to the Court to grant an unconditional discharge as sought by Mrs Markey. However as Woodward J. observed in Re Maher (1985) 61 ALR 592:- "An application for discharge is 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." It is plainly not enough that the bankrupt wishes to shake off the stigma of bankruptcy. In this particular case little has been given by way of reason for early discharge. It should however be noted that on the adjourned hearing Mrs Markey informed the court that she was applying to Homeswest for a purchase property to be occupied by her and her daughter. Mr O'Driscoll was good enough to make available to the court a copy of a letter from the manager of Home Ownership Services of Homeswest, written in response to a query by his Honour Mr Justice Toohey on a previous occasion in relation to the Homeswest policy with respect to purchase assistance. In that letter it 1s disclosed that Homeswest has a longstanding policy that purchase assistance will not be provided to an undischarged bankrupt or to applicants who have entered into an agreement for the benefit of creditors. Applications for assistance can be accepted, but the applicant is informed that assistance will not be provided until he or she has discharged their responsibilities. Although as I observed earlier, little has been given by way of reason for early discharge, the continuance of the bankruptcy would not appear to benefit the creditors in this case or to serve the public interest in any way. No relevant consideration of commercial morality appears to arise in this particular case. It may on the other hand, be the case that the effect of allowing the bankruptcy to continue is to place an obstacle in the way of Mrs Markey in connection with the acquisition of low cost housing for her daughter and herself. In all the circumstances and not without' some hesitation, I have decided that the appropriate course in this case is to make an order that the bankruptcy be discharged and I will so order. a eS ee TO ee . 10. I certify that the preceding nine (9) pages are a true copy herein of the Reasons for Judgment of His Honour Mr Justice French. Associate: Cigarerh borelien sate: 7 Pprt MET Counsel. . Mr F. O'Driscoll for the Official Receiver » Mrs D. Markey appeared in person. « for the Creditor : Mr K. Dundo instructed by Robinson Cox Date of Hearing: 9 March 1987 Date of Judgment: 23 March 1987