Ade IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA JUDGE MAKING ORDER: DATE OF ORDER: WHERE MADE: NOT INTENDED FOR GENERAL DISTRIBUTION No. 61 of 1986 RE: WILLIAM RODNEY QUINN-SCHOFIELD and ANNE QUINN-SCHOFIELD Bankrupts EX PARTE: WILLIAM RODNEY QUINN-SCHOFIELD and ANNE QUINN-~SCHOFIELD Applicants FRENCH J. 17 August 1987 Perth THE COURT ORDERS THAT:- A. As to the application of William Rodney Quinn-Schofield:- 1. The bankrupt is discharged but the operation of the order is suspended until 16 November 1987 on the following condition. 2. The condition is that the bankrupt undertakes to the Court not to carry on business on his own account, or in partnership, or execute any guarantee or hold office as a director or secretary of any company until 6 February 1989. cr. RECEIVED 18 AUG 1987 FEDERAL COURT OF AUSTRALIA PRINCIPAL REGISTRY a . - we pee FET Here ne nen eid a " : toaeecres pea. a) * rat 2. As to the application of Anne Quinn-Schofield:- The bankrupt is discharged but the operation of the order is suspended until 16 November 1987 on the following condition. The condition is that the bankrupt undertakes to the Court not to carry on business on her own account, or in partnership, or execute any guarantee or hold office as a director or secretary of any company until 6 February 1989. Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules. ' a aa —— i-° IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA CORAM: FRENCH J. 17 August 1987 REASONS FOR JUDGMENT NOT INTENDED FOR GENERAL DISTRIBUTION No. 61 of 1986 RE: WILLIAM RODNEY QUINN~SCHOFIELD and ANNE QUINN-SCHOFIELD Bankrupts EX PARTE: WILLIAM RODNEY QUINN-SCHOFIELD and ANNE QUINN-SCHOFIELD Applicants William Rodney Quinn-Schofield and his wife Anne, became bankrupt on 6 February 1986 on their presentation of a joint debtors' petition pursuant to s.56 of the Bankruptcy Act. They both now apply to be discharged from bankruptcy. Mr Quinn~Schofield is 37 years old and his wife, 35. They have two dependent children, aged 10 and 13 years. In May 1985 they purchased a restaurant business, not in their own names but in the name of Gabord Pty Ltd as trustee of the Gabord Trust. The purchase was financed by a loan from Westpac Banking Corporation secured by a second mortgage over their home at 10 Burroughs Road, Karrinyup. oer — 2. The business did not live up to expectations, indeed Mr & Mrs Quinn-Schofield now allege that its profitability was misrepresented to them prior to the purchase. They sought legal aid for advice about the possibility of bringing an action for misrepresentation against the vendors but it was refused. In the meantime the vendors instituted proceedings for the recovery of $2,099.00 representing the unpaid price for stock at valuation. The Quinn-Schofields filed a counterclaim. - The business, which operated in the evening hours, traded at a loss and its expenses were subsidised out of Mr Quinn-Schofield's wages from his employment as a property manager. ' In January 1986 the business ceased operating. In his initial report to the Court following filing of the application for discharge, the Official Receiver indicated that in the joint estate some 12 claims totalling $73,263.74 had been received of which 10 claims amounting to $18,320.00 had been admitted to rank for dividend. At that time claims for unpaid stock and lease payments exceeding $54,000.00 were not admitted pending legal advice. wry te v at ree oo 3. In a supplementary report, following fresh enquiry and the receipt of legal advice, the Official Receiver concluded that of the 12 proofs lodged in the joint estate only 2 were the joint liability of the bankrupts. The balance was rejected as comprising debts related to the business and owed by Gabord Pty Ltd. Accepted were claims for an amount of $5,143.00 owed to Westpac and $736.00 owed to Project Leasing Co, respectively. Among those rejected were $50,949.00 claimed by the vendors of the business and $3,996.00 claimed by Mair & Co. for R. & G. Nanni, Py presumably the lessors of the business premises. Realisations in the joint estate amounted to $1,184.94. In the separate estate of Mr Quinn-Schofield there is a liability of some $7,800.00, being the shortfall on a motor vehicle lease. Mrs Quinn-Schofield has no personal debts. No assets were realised in the separate estate of Mr Quinn-Schofield. In his wife's separate estate the sale of the house property yielded $2,831.88. The report of the Official Receiver indicates that the bankrupts have kept his office informed as to their circumstances and otherwise complied with his requirements From time to time. worry ao mn een ooo 4. There is no suggestion that their conduct has been other than satisfactory since the date of bankruptcy, nor are there any Matters arising out of sub-s.150(6) of the Act which would provide sufficient reason for the refusal or suspension of an order of discharge. In support of their application for discharge, the Quinn-Schofields lay the blame for their misfortune at the door of the vendors of the restaurant business. The Court has no means of determining the rights and wrongs of that issue on the material before "it in these proceedings. Mr & Mrs Quinn-Schofield say that their continuing bankruptcy is causing Mrs Quinn-Schofield and their children to be depressed, particularly having regard to what they see as the injustice of a situation visited upon them by the vendors of the business and in respect of which they have no redress. Mr Quinn~-Schofield is employed by a real estate firm as a property manager. It is his intention to continue in that type of employment. Neither he nor his wife intend to carry on any business on their own account. 5. Since the sale of their house they have had to rely upon rented accommodation. The fact of their bankruptcy, according to Mr Quinn-Schofield, recently created some difficulties in obtaining that kind of accommodation. The applications are brought under s.150 of the Bankruptcy Act 1966. None of the categories of misconduct referred to in sub-s.150(6) has been made out. It is therefore open to the Court to make orders discharging the Quinn-Schofields from their bankruptcy. However as Woodward J. observed in Re: Maher (1985) 61 ALR 592 at 598:- "An application for discharge from bankruptcy 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." While the applicant's desire to clear his or her name of the stigma of bankruptcy is a relevant consideration, it is not a sufficient ground to justify discharge - Re: Tarvydas; Ex parte Tarvydas (unrep. Toohey J. 25/11/86). In this case the bankrupts find themselves in their present position by reason of the failure of their business. a pe le Se eon or cate ee oe 6. That failure may be based upon a number of circumstances, including those suggested by the Official Receiver, namely, low turnover, lack of sufficient working capital and excessive use of credit facilities. In the circumstances of this case none of those are factors which give rise to concern that the public interest or commercial morality would be compromised by discharge prior to the expiry of the statutory minimum period of 3 years provided that appropriate undertakings are given to the Court in relation to any further commercial ventures. On the other hand the continuation of the bankruptcy has an impact on Mr Quinn~-Schofielid's ability to carry out his job, may make it more difficult to obtain rental accommodation in future and is a source of distress to the family. The Quinn-Schofields do not intend, so they have told the Court, to enter into any commercial undertaking on their own account for the time being. In the circumstances I consider that an order for discharge should be made. The public interest will be sufficiently protected if I suspend the discharge for a period of 3 months and make it conditional upon the bankrupts undertaking not to engage in any business on their own account for the balance of the statutory 3 year period, which expires on 6 February 1989. In each case therefore I propose to make orders in the following terms:- rr ee ee nner os, . . ZEN wee - ara ney see ee Noo a Bote erie = 7. The bankrupt is discharged but the operation of the order is suspended until 16 November 1987 on the following condition. The condition is that the bankrupt undertake to the Court not to carry on business on his or her own account, or in partnership, or execute = any guarantee or hold office as a director or secretary of any company until 6 February 1989. I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice French. Associate: Boho UIRKL Date: \7J Prges \48? . Mr & Mrs Quinn-Schofield appeared on their own behalf. Mr F. O'Driscoll appeared on behalf of the Official Receiver. Date of Hearing: 27 July 1987 Date of Judgment: 17 August 1987 SET ee tec ee