JUDGMENT No.4, 7.ODS IN THE FEDERAL COURT OF AUSTPALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA LIMITED DISTRIBUTION No. 291 of 1986 Re: WENDY JOY McAULRY Bankrupt EX PARTE: WRNDY JOY MCAULEY Applicant MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 19 JANUARY 1988 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The bankrupt will be discharged but the discharge will be suspended until 19 April 1988. 2. The order of discharge is conditional upon the bankrupt undertaking not to carry on business on her own account or in partnership or as a director of any company before 21 May 1989. Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules. IN THE FEDERAL COUFT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY OISTRICT OC THE STATE OF WESTERN AUSTRALIA LIMITED DISTRIBUTION wwe we wv DY No. 291 of 1986 RE: WENDY JOY McAULEY Bankrupt EX PARTE: WONDY JOY McCAULFY Applicant CORAM: FRENCH J. 19 January 1988 EX TLEMPORE REASONS FOR _JUDGMFNT This 1s an application for discharge from bankruptcy under s.150 of the Bankruptcy Act. The applicant, Wendy Joy McAuley, became bankrupt on her own petition on 20 May 1986. Her statement of affairs disclosed ordinary assets of $1,033, a deficiency in overencumbered assets of $18,000, and liabilities, including that deficiency, of $60,515. There have been no realisations in the estate and there are no unrealised assets. No proofs of debt have been received, nor any called for, as the Official Trustee was of the opinion that a dividend was unlikely to be paid; nor does it appear that official fees and costs of administration will be paid. No dividend has been paid to unsecured creditors and there will obviously be no surplus available. At the date of her bankruptcy, Mrs McAuley was married and aged 41. She had then been separated from her husband since May 1985. She had two dependant children aged 13 and 15 years respectively and was in receipt of a supporting parent's pension of $320 per fortnight, out of which she paid rental of $100. She had been in partnership with her husband trading as Karratha Auto Engineering Services. In 1982 that business was restructured in the form of a comnany called "Karratha Auto Engineering Services Pty Ltd" of which the McAuleys were the directors = and shareholders. She participated in the business, attending to reception duties and maintenance of books of account. The company's financial records disclose that it made a net loss of between $1,000 and $5,000 over each of the three years prior to 1ts liquidation. Mrs McAuley says that as a result of illness she was unable to keep the books of account up to date and that the company began to deteriorate over a 2 year period. In May 1985, she left Karratha and went to hospital in Perth and at this time separated from her husband. The company was liquidated in December 1985, although 1t continued to trade until early February 1986, when her husband left the business. The company's records, according to the Official Trustee's report, disclosed assets of approximately $50,000 with unsecured debts of approximately $30,000, but a shortfall was incurred when various items of property were subsequently sold. The cause of bankruptcy 1s said to have been, and 1s accepted by the Trustee as having been, the bankrupt's long illness and her DUET Rte atten ee te 3. unability to honour director's guarantees which she gave in relation to the company. The non-renmission of PAY tax deductions was also a factor. There have been no offences committed by Mrs McAuley in connection with her bankruntcy nor was her conduct prior to the date of bankruptcy, other than satisfactory. However, the Official Trustce does complain that her conduct subsequent to the date of bankruptcy was unsatisfactory in that she changed her address without advising him in writing, as required by s.80 of the Act. This reflects a comparatively minor incident. Mrs McAuley says that in fact she telephoned the Official Receiver's office to advise of a change of address. There is, however, no record of that advice on the Official Receiver's files. I am unable to resolve that conflict in the present state of the evidence. But, 1n any event, I do not think that that 1s a factor which 1s critical in the disposition of this application. The creditors have been notified of the fact of the application but there has, not surprisingly, been no appearance to Oppose it. Mrs McAuley's reasons for seeking discharge are medical in accordance with a doctor's letter which she has attached to an affidavit. She has told the Court, in her sworn evidence, that she feels a sense of shame from the continuing bankruptcy and that 1t 1S a burden to her. She said that she has suffered a nervous breakdown at one time and that the fact of the continuing bankruptcy adds to the stress that she feels. This 1s 4. confirmed, to some extent, by the letter from her doctor. She has no plans to enter into any business on her own account. I€ she had, that would be a matter of some concern. What she does wish to do 1s te engage in some kind of employment retraining and take up paid employment to better support herself and her children, The statutory date for discharge 1s 21 May 1989. The bankruptcy did involve a significant deficiency and her creditors have been left with no recovery at all. An application For discharge 1s not a matter to be lightly granted. Questions of public interest and commercial morality have to be taken into account. In my opinion, however, this 1S a case in which neither the public interest nor commercial morality would be served by refusing the application. I think, however, that the circumstances of the bankruptcy and the amounts of the deficiency are such that it 1S inappropriate to make an immediate and unconditional order for discharge. Mrs McAuley did take an active part in the conduct of the business and, in particular, maintained the books of account. In the circumstances, I think the best course for me to take is to order that she be discharged but suspend the discharge until 19 April. That is, for a period of three months. I will do that on this condition, and the condition is that Mrs McAuley undertake to this Court that she will not carry on business on her own account or in partnership or act as a director of any company prior to 21 May 1989. wl . I certify that the preceding four (4) pages are a true copy of tne Reasons for Judgment cf his Honour Mr Justice French. associate: Se et Des iran areas "4 . ws Date: 4 \s wk SUS mn \ \n " Mrs W.J. McAuley appeared on her own behalf. Mr F.D. O'Driscoll appeared on behalf of the Date of Hearing: 19 January 1988 Date of Judgment: 19 January 1988 Official Trustee.