COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
BANKRUPTCY DIVISION
Heerey J.(1) MELBOURNE #DATE 28:2:1991
  Counsel for the Official Trustee:      Mr J Lenczner
  Solicitors for the Official Trustee:   Australian Government Solicitor
  Counsel for the Bankrupt:              Miss J Davies
  Solicitors for the Bankrupt:           Reichman and Co

ORDER
  The Bankrupt's application dated 17 January 1991 seeking annulment of the
petition be dismissed.
  Upon the Bankrupt giving the undertaking in the form annexed to the minutes
of these orders:
   Find charge of contempt upon the application of the applicant
   dated 11 January 1991 proven but adjourn the said application
   without recording a conviction or imposing sentence to 9 July 1993
   or, if that date not be a Court sitting day, then the nearest
   available sitting day before that date and that in the absence of
   further order in the meantime the application be then dismissed.
  Trustee's costs of and incidental to the appeal against refusal to adjourn,
application for annulment and the contempt application (including reserved
costs) be taxed on solicitor and own client basis and paid out of the
Bankrupt's estate and in default of the payment out of the said estate, by the
Bankrupt.
  The Petitioning Creditor's costs of and incidental to the application dated
17 January 1991 including reserved costs of 6 February 1991 be taxed and when
taxed paid by the Applicant Debtor.
  That there be general liberty to apply to each of the parties upon three
days notice to the other which may be given to the solicitors presently on
record for the parties.

JUDGE1
  This is an application under s.54(3) of the Bankruptcy Act 1966 seeking an
order that the bankrupt be found guilty of contempt for failing to file a
statement of affairs within 14 days of him being notified of the bankruptcy.
It seems to be not in dispute that the bankrupt was, in fact, notified of the
sequestration order by, at the latest, 30 November 1990 and it is also common
ground that he did not in fact file a statement of affairs until 13 February
1991.
2.  Miss Davies on behalf of the bankrupt advanced two arguments.  The first
was that "fails" in s.54(3) only refers to failure by reason of inadvertence.
In this case she argued that the evidence disclosed that the bankrupt made a
positive decision to decline to file the statement of affairs because he was
so advised by his solicitors.  It is said that the bankrupt did not just
ignore the requirement to file a statement of affairs but took specific steps
and made a conscious decision not to do so.  This, it is said, is a case of
refusal and not failure.
3.  In my opinion, the word "fails" in s.54(3) plainly encompasses failure for
whatever reason, be it mere inadvertence or a conscious decision not to file
the statement.  It would be an incongruous construction of the section and one
quite inconsistent with the function of the Bankruptcy Act to hold that a
person who quite honestly and through inadvertence failed to file a statement
of affairs was guilty of contempt of court but a person who deliberately
refused to do so, no matter how unreasonable his grounds, and perhaps in
circumstances involving a contumacious refusal, nevertheless did not
contravene s.54(3).
4.  Miss Davies' second argument was that the same circumstances, that is to
say the bankrupt's acting on legal advice, gave rise to a defence of honest
and reasonable belief as established in the well known High Court authority
Proudman v Dayman (1941) 67 CLR 536.  Miss Davies said that the evidence
disclosed that the bankrupt's belief was that he did not have an obligation to
file a statement.  In my opinion, the Proudman v Dayman principle has no
application because, apart from anything else, there was not here a mistake of
fact.
For those reasons I find the offence proved.
5.  In my view the costs incurred have been a result of the bankrupt's
conduct, and I propose to order that the costs of the three matters, the
appeal, the annulment application and the contempt application be paid out of
the bankrupt's estate, and in default of such payment, to be paid by the
bankrupt.
6.  I order that those costs be taxed as between solicitor and own client.