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KEVIN KINGSLEY ALLCHURCH (A Bankrupt)
No. SB940 of 1990
FED No. 572
Number of pages - 6
Bankruptcy
(1993) 44 FCR 182
COURT
IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
VON DOUSSA J
CWDS
Bankruptcy - sequestration orders against bankrupt in 1951, 1956 and 1990 -
whether bankrupt discharged from 1951 and 1956 bankruptcies before 1990
bankruptcy - whether objection to discharge from 1951 bankruptcy validly
entered in the prescribed manner in 1970 - whether any basis for objection -
whether "prescribed manner" included posting copy of objection by registered
mail to bankrupt - whether automatic discharge from 1951 and 1956 bankruptcies
in 1991 prevented the trustee of the 1956 bankruptcy proving in the 1990
bankruptcy - whether there existed a difficulty in the application of the 1980
Bankruptcy Amendment Act to the provisions for discharge in the Principal Act
which attracted the power in the Court to make such order as it thinks fit.
Bankruptcy Act 1966, ss.59, 149, 300
Bankruptcy Amendment Act 1980, ss.72, 176
Bankruptcy Rules 1966-1968, r.49
HRNG
ADELAIDE, 27 July 1993
#DATE 20:8:1993
Counsel for the applicant: Mr S Milazzo
Solicitor for the applicant: Kemp and Co
Counsel for the Official Trustee: Ms S Singh
Solicitor for the Official Trustee: Australian Government Solicitor
ORDER
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The bankrupt pay the Official Trustee's costs to be
taxed.
Note: Settlement and entry of order is dealt with in Bankruptcy Rule 124.
JUDGE1
VON DOUSSA J The bankrupt, who is the applicant in these proceedings, has
beendeclared bankrupt on three occasions, in 1951, in 1956 and in 1990. On 29
August 1992 the Official Trustee in Bankruptcy as the trustee of the 1956
bankruptcy sought to prove for the deficiency in that estate in the 1990
bankruptcy. The applicant seeks a declaration that the trustee of the 1956
bankruptcy is not a creditor in the 1990 bankruptcy, and is not entitled to
prove as such.
2. The impugned proof of debt was purportedly lodged pursuant to
sub-para.59(1)(c)(i) of the Bankruptcy Act 1966 which relevantly provides:
"59(1) Where a person who is a bankrupt again becomes a bankrupt -
...
(c) the trustee in the earlier bankruptcy -
(i) shall be deemed to be a creditor in the later
bankruptcy in respect of any unsatisfied balance of
his expenses or remuneration in the earlier
bankruptcy, the liabilities incurred by him in
administering the estate in the earlier bankruptcy and
the debts proved in the earlier bankruptcy..."
An important issue in this application is whether the applicant remained a
bankrupt under the 1956 bankruptcy when his 1990 bankruptcy commenced.
3. The matter has a long and complicated history. The applicant was first
declared bankrupt in South Australia on 18 June 1951 ("the 1951 bankruptcy").
On 26 September 1951 the Official Receiver in Bankruptcy for the District of
South Australia applied pursuant to sub-s.119(1) of the Bankruptcy Act 1924
for an order that the bankrupt be ordered to apply to the Court of Insolvency
in the State of South Australia exercising federal jurisdiction in bankruptcy
for an order of discharge. On 1 October 1951 the Court so ordered, and the
applicant applied for an order for discharge. The compulsory application for
discharge came on for hearing on 28 February 1952 and was adjourned to a date
to be fixed. The application was never relisted for hearing. The compulsory
application for discharge was the procedural mechanism in force under the 1924
Act for bringing a summary prosecution before the Court pursuant to s.217, and
the application resulted in a prosecution of the bankrupt.
4. The balance of the trustee's expenses, remuneration and the debts proved
in the 1951 bankruptcy, after the distribution of available assets, amounted
to $22,398.81 (converted into dollars).
5. The applicant's estate was sequestrated again on 24 July 1956 in Victoria
("the 1956 bankruptcy"). The Official Trustee in Bankruptcy was appointed
trustee. On 19 November 1956 the applicant was ordered by the Bankruptcy
Court for the District of Victoria to make compulsory application for an order
of discharge. He did so. The application was refused on 6 December 1956.
Again, the applicant was prosecuted pursuant to s.217 of the 1924 Act.
6. The proofs of debt lodged in respect of the 1956 bankruptcy included a
proof of debt from the trustee of the 1951 bankruptcy. Including the
deficiency from the 1951 bankruptcy, the total deficiency in the 1956
bankruptcy was $41,242.11 after bringing to account all fees, and assets
realised.
7. The 1924 Act made no provision for automatic discharge of bankrupts by
effluxion of time. The Bankruptcy Act 1924 was repealed by the Bankruptcy Act
1966 which came into force on 4 March 1968. On that date the applicant
remained a bankrupt by force of the sequestration orders made in 1951 and
1956.
8. Section 149 of the Bankruptcy Act 1966, as originally enacted, relevantly
provided:
"149(1) Subject to this section, a person who becomes a bankrupt
after the commencement of this Act is, by force of this section,
unless sooner discharged in accordance with the next succeeding
section, discharged from bankruptcy upon the expiration of five
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 Act, whether
he became a bankrupt under a law of the Commonwealth or of a State
or Territory, is, by force of this section, unless sooner
discharged in accordance with the next succeeding section,
discharged from bankruptcy upon the expiration of three years from
the commencement of this Act or five years from the date on which
the sequestration order was made against his estate or he
otherwise became a bankrupt, whichever is the later.
(3) This section does not operate to discharge a bankrupt from a
bankruptcy if -
(a) at the time when he would have been so discharged but
for this sub-section, he is still undischarged from an
earlier bankruptcy; or
(b) the Registrar, the trustee or a creditor has entered
an objection, in the prescribed manner, to the
discharge of the bankrupt by force of this section and
the objection has not been withdrawn before the time
when the bankrupt would have been so discharged but
for this sub-section.
(4) An objection entered under the last preceding sub-section may
be withdrawn in the prescribed manner.
(5) Where -
(a) such an objection is withdrawn after the time referred
to in paragraph (b) of sub-section (3) of this
section;
(b) there is no other objection to the bankrupt's
discharge that has not been withdrawn; and
(c) the bankrupt's discharge is not prevented by paragraph
(a) of sub-section (3) of this section,
the bankrupt is, by force of this section, unless sooner
discharged in accordance with the next succeeding section,
discharged from bankruptcy upon the withdrawal of the
objection.
(6) In sub-sections (2), (3) and (5) of this section -
"bankrupt" includes an insolvent;
"bankruptcy" includes insolvency."
9. On 23 February 1970 the trustee of the 1951 bankruptcy entered an
objection dated 19 February 1970 under para.149(3)(b). At that time, the
Bankruptcy Act 1966 did not specify the grounds upon which an objection could
be entered. However the objection which was filed with the Court stated that
the trustee objected to the discharge of the bankrupt on the ground "that the
bankrupt has failed to complete the return required of him under s.80(3) of
the Bankruptcy Act, 1966-1969". The validity of the objection is disputed by
the applicant in these proceedings. I shall for the moment assume that the
objection was regularly entered and had legal effect in accordance with the
tenor of para.149(3)(b).
10. No objection was entered in respect of the 1956 bankruptcy. However by
virtue of the objection entered in respect of the 1951 bankruptcy under
para.149(3)(b), the provisions of para.149(3)(a) had the effect that the
applicant did not become eligible for an automatic discharge under s.149 from
the 1956 bankruptcy.
11. The objection entered to the discharge of the applicant from the 1951
bankruptcy was at no stage withdrawn.
12. By s.72 of the Bankruptcy Amendment Act 1980 (No.12 of 1980), s.149 of
the Principal Act was substantially amended. The amendments reduced the
qualifying periods for automatic discharge from bankruptcy, and provided for
the lapsing of objections at the expiration of five years from the date of the
bankruptcy or at the expiration of such other period as might be fixed by
order of the Court. A transitional provision contained in sub-s.72(2) of the
Bankruptcy Amendment Act 1980 had the effect that the objection entered to the
discharge of the applicant from the 1951 bankruptcy lapsed on 1 February 1986,
being five years after the Bankruptcy Amendment Act 1980 came into force.
However the fact that the objection lapsed did not lead to the discharge of
the applicant from the 1951 bankruptcy as sub-s.149(3) of the Principal Act
had also been amended by the Bankruptcy Amendment Act 1980 so as to provide:
"(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 sub-section, he is still undischarged from an
earlier bankruptcy;
(b) he has, since the date of the bankruptcy, again become
a bankrupt;
(c) the Registrar, the Official Receiver 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 before
the time when the bankrupt would have been so
discharged but for this sub-section; or
(d) an order of the Court under sub-section (12) is in
force in relation to the bankrupt."
The new para.149(3)(b), inserted by the amending Act, prevented the automatic
discharge of the applicant from the 1951 bankruptcy upon the lapsing of the
objection as he had since the date of that bankruptcy become bankrupt again in
1956. Counsel for the bankrupt points out that had the objection entered on
23 February 1970 been lodged in respect of the 1956 bankruptcy, that objection
would also have lapsed on 1 February 1986 and the provisions of sub-s.149(3)
(as amended) would not have prevented the automatic discharge of the applicant
from each of his bankruptcies: cf Re Harrison; Ex parte Official Trustee in
Bankruptcy v. Registrar in Bankruptcy and Another (1987) 71 ALR 207.
13. By s.22 of the Law and Justice Legislation Amendment Act 1990 (No.115 of
1990), paras.149(3)(a) and (b) were omitted. That amendment came into force
on 4 February 1991, and had the effect that the applicant became entitled
there and then to an automatic discharge under the remaining provisions of
s.149 as amended. However in the meantime the third bankruptcy had taken
place. On 22 August 1990 a sequestration order had been made against the
applicant ("the 1990 bankruptcy"). The Official Trustee in Bankruptcy became
the trustee of his 1990 estate. The operation of the order was suspended for
14 days. The bankruptcy commenced on 5 September 1990.
14. The sequestration order was based upon an act of bankruptcy constituted
by the applicant's failure to comply with a bankruptcy notice served on 10 May
1990. The petitioning creditor was the Australian Telecommunications
Commission which had obtained a judgment against the applicant in the District
Court of Adelaide on 19 June 1989 for $22,360.56 in respect of unpaid
telephone accounts.
15. For some two years prior to the 1990 bankruptcy the applicant had been
self employed as a commission broker for clients mainly outside of Australia
for whom he was acting in respect of finance and commodity sale transactions.
At the time of his bankruptcy he claimed that substantial commission payments
would become due to him in the near future upon the completion of several
transactions, and that the commissions would be sufficient to discharge his
indebtedness to the petitioning creditor and others. The sequestration order
was suspended to provide one last chance for the applicant to realise these
commissions but he was not able to do so in time. In his statement of affairs
in the 1990 bankruptcy the applicant listed unsecured creditors totalling
$44,729 which included approximately $29,000 then due to the Australian
Telecommunications Commission. The applicant did not include as an unsecured
creditor the trustee of his 1956 bankruptcy.
16. The applicant asserts that he believed that he had been discharged from
the 1951 and 1956 bankruptcies before the 1990 bankruptcy. He says that in
1985 he was told by someone in the Victorian office of the Official Receiver
for that State that he would receive an automatic discharge in 1986. (If this
were so the advice was wrong as it overlooked the objection filed in the South
Australia Registry against the applicant's discharge from the 1951
bankruptcy). In 1988 the applicant was informed by the Department of
Immigration to whom he had applied for a passport that he was an undischarged
bankrupt. He then contacted the Registry of this Court in Adelaide and
enquired as to his status. The letter which he received from the Registry
dated 26 September 1988 read:
"I wish to advise that the Bankruptcy Act, as amended, provides
that a person who becomes a bankrupt is discharged from that
bankruptcy automatically, on the expiration of a period of 3 years
from the date on which he became a bankrupt, provided that:
(a) at that date no objection had been entered against his
discharge;
(b) he was not then undischarged from an earlier bankruptcy; or
(c) he has not since the date of bankruptcy again become a
bankrupt.
The objection to your discharge entered on the 20th February,
1970, lapsed on the 1st day of February, 1986, and therefore you
were discharged from the 1st day of February, 1986, provided that
at that date your discharge is not prevented by either of the
other two alternatives."
The letter accurately stated the legal position, but it was misunderstood by
the applicant who failed to appreciate that paragraph (c) applied to him.
17. In December 1991 the Official Receiver received a total of $51,500 from
an overseas institution on account of commissions which had at last become
payable on transactions negotiated by the applicant. This sum would have been
sufficient to pay 100 cents in the dollar to the unsecured creditors disclosed
by the applicant in his statement of affairs in the 1990 bankruptcy. At that
time the applicant was informed by the Official Receiver for the State of
South Australia that as he had not been discharged from the 1951 and 1956
bankruptcies at the commencement of the 1990 bankruptcy, the trustee of the
1956 bankruptcy would be claiming as an unsecured creditor in the 1990
bankruptcy with the result that the commissions received would be insufficient
to pay in full all the creditors and expenses of the 1990 bankruptcy.
18. The point of particular concern to the applicant, which I infer to be the
underlying reason why the present application has been made, is that the
Official Receiver for the State of South Australia on 28 August 1991 made
application to the Department of Veterans' Affairs for approval under s.45A of
the Defence Service Homes Act 1918 to take the applicant's share in a
residential dwelling house property in suburban Adelaide to be made available
to the creditors of the 1990 estate. The applicant had held an interest in
the property for more than 40 years throughout which time it had been subject
to a War Service Homes mortgage, and to the protection against creditors
afforded by s.45A of the Defence Service Homes Act 1918. The applicant's
interest in that property is now valued at somewhere between $50,000 and
$75,000. When the Official Receiver sought approval from the Secretary of the
Department of Veterans' Affairs it was his belief that the commissions which
the applicant asserted would become due to him would never materialise. The
application to the Department of Veterans' Affairs stated that if the
applicant's interest in the property could not be taken there would be no
assets for distribution to the creditors of any of the bankruptcies. The
Secretary approved the removal of the protection otherwise afforded to the
applicant under s.45A on 13 November 1991. The applicant now complains about
the circumstances in which the Secretary made his decision, and in particular
that the applicant was not given any notice of the Official Receiver's
application, and further asserts that as the commissions have now been paid,
the grounds upon which approval under s.45A was sought have substantially
changed. Whilst these events explain the applicant's concern to press the
present application, this Court is not able in these proceedings to review the
decision of the Secretary under s.45A. That is not an issue before the Court.
19. The Official Trustee opposes the present application. The Official
Trustee contends that as the applicant was not discharged from his 1951
bankruptcy at the date of his 1956 bankruptcy, the trustee of the 1951
bankruptcy was entitled to prove for the deficiency in that bankruptcy in the
1956 bankruptcy pursuant to sub-s.61(1) of the Bankruptcy Act 1924. The
applicant does not dispute the correctness of this proposition.
20. The Official Trustee further contends that the combined operation of the
objection lodged on 23 February 1970 to the discharge of the applicant from
the 1951 bankruptcy, and of paras.149(3)(a) and (b) of the Bankruptcy Act 1966
as amended in 1980 had the effect that the applicant remained undischarged
from the 1956 bankruptcy at the date of the commencement of the 1990
bankruptcy thereby entitling the Official Trustee as the trustee of the 1956
bankruptcy to prove for the 1956 deficiency in the 1990 bankruptcy.
21. The first submission of the applicant is that his automatic discharge
from the 1956 bankruptcy on 4 February 1991 operated to release him from all
debts which were provable in that bankruptcy: see sub-s.153(1) of the
Bankruptcy Act 1966. Those debts included all the debts actually proved in
the 1956 bankruptcy including the deficiency in the 1951 bankruptcy. It is
contended that a debt can only be proved in a bankruptcy where the liability
therefore subsisted at the date of the bankruptcy and continued to subsist at
the time when the proof of debt is filed. As the discharge operated to
release the applicant from all debts provable in the 1956 bankruptcy, it is
contended that the liability for those debts was not still subsisting when the
trustee sought to file the proof of debt in the 1990 bankruptcy on 29 August
1992. No authority was cited for this proposition.
22. In my opinion the contention is inconsistent with the provisions of s.59
of the Bankruptcy Act 1966. Sub-paragraph 59(1)(c)(i) which is set out at the
commencement of these reasons, deems the trustee of the earlier bankruptcy to
be a creditor in the later bankruptcy. Sub-paragraph 59(1)(c)(ii) provides
that the trustee of the earlier bankruptcy shall rank equally with the
unsecured creditors in the later bankruptcy, and sub-para.59(1)(c)(iii)
provides that where the trustee of the earlier bankruptcy has filed a proof of
debt in the later bankruptcy, that proof of debt may be amended without the
consent of the trustee of the later bankruptcy for the purposes of adding,
among other amounts, debts proved in the earlier bankruptcy after the proof of
debt was lodged. These provisions are correlative to para.59(1)(a) which
provides:
"59(1) Where a person who is a bankrupt again becomes a bankrupt-
(a) the property of the bankrupt -
(i) that was acquired by, or devolved on, the bankrupt on
or after the date of the earlier bankruptcy; and
(ii) that had not been distributed amongst the creditors in
the earlier bankruptcy before the date on which the
person became a bankrupt on the later occasion,
shall (subject to any disposition of that property made by
the trustee in the earlier bankruptcy without knowledge of
the presentation of the petition on, or by virtue of the
presentation of which, the person became bankrupt on the
later occasion and subject also to section 126) vest
forthwith in the trustee in the later bankruptcy;..."
The creditors of the earlier bankruptcy are deprived of property which has not
been distributed, but in exchange the trustee of the earlier bankruptcy is
deemed, by force of para.59(1)(c), to be a creditor in the later bankruptcy.
Although para.59(1)(c)(iii) contemplates that a proof of debt will be filed in
relation to the statutory entitlement so created, that requirement is for the
obvious administrative purpose of quantifying the extent of the liability of
the later bankruptcy to the earlier bankruptcy, and is not intended to operate
as a limitation upon the rights of the earlier bankrupt estate.
23. The fact that para.59(1)(c)(iii) permits a proof of debt lodged in the
later bankruptcy to be amended without the consent of the trustee of the later
bankruptcy to include debts proved in the earlier bankruptcy after the proof
of debt was lodged, is a further indication against the argument advanced on
the applicant's behalf. Under a regime which permits automatic discharge with
the effluxion of time, situations where a bankrupt is discharged from the
earlier bankruptcy whilst the administration of the later bankruptcy is still
in progress will be common. It has been understood since in In re Brealey
(1900) 26 VLR 209 that the release of a bankrupt by discharge does not release
the bankrupt estate from debts provable in the bankruptcy. Hence even after
the discharge of the bankrupt from the earlier bankruptcy, proofs of debt
could be received in that bankruptcy. Unless the trustee of the earlier
bankruptcy was able to amend the proof of debt filed in the later bankruptcy,
the creditors of the earlier bankruptcy would be disadvantaged. The power to
amend the proof of debt provided in 59(1)(c)(iii) is not by its terms limited
to debts proved in the earlier bankruptcy prior to the discharge of the
bankrupt from the earlier bankruptcy. If the applicant's argument is correct
such a limitation would nonetheless be imposed to the disadvantage of the
creditors of the earlier estate. This limitation could also complicate the
administration of the earlier bankruptcy in a case where s.59 applied. These
considerations point to a construction of s.59 which would permit the trustee
of the earlier bankruptcy to lodge, or add to, a proof of debt in the later
bankruptcy regardless of whether the bankrupt has been discharged from the
earlier bankruptcy.
24. The next submission of the applicant concerned the validity of the
objection entered on 23 February 1970. Counsel contended that the objection
was invalid as the ground stated as the reason for opposing automatic
discharge was patently untenable, and, further, that the objection was not
made in the "manner prescribed" as required by para.149(3)(b) of the
Bankruptcy Act 1966. Rule 49 of the Bankruptcy Rules 1966-1968 relevantly
provided:
"49(1) For the purposes of paragraph (b) of sub-section (3) of
section 149 of the Act, a person may enter an objection to the
discharge of a bankrupt by filing a notice of the objection, in
accordance with Form 23, at any time before the bankrupt would
have been discharged but for that sub-section.
(2) A person who enters an objection to the discharge of a
bankrupt shall post a copy of the notice of the objection to the
bankrupt, by pre-paid registered post, at the last-known address
of the bankrupt."
The stated ground of the objection entered on 23 February 1970 was that the
applicant had failed to complete the return required of him under sub-s.80(3).
The first limb of the applicant's argument was based on the factual assertion,
not disputed by the Official Trustee in the early stages of the trial, that
the objection was based on the failure of the applicant to complete a return
posted to him on 1 July 1969. That return was sent back to the office of the
Official Receiver for the State of South Australia by the postal authority as
unclaimed mail on 11 July 1969. The return had been posted to an address in
Adelaide which was not the most recent address of the applicant known to the
Official Receiver. Correspondence received from the applicant in 1966 had
given an address in New South Wales which superseded the Adelaide address. It
was contended that a cursory check of the Official Receiver's file in 1970
when the objection was being prepared should have disclosed that the applicant
had not been required to complete a return under sub-s.80(3), and that there
was no basis for the objection. It is however not necessary to consider
whether the objection entered was for this reason invalid as evidence was led
by the Official Trustee at the end of the trial that a missing record card in
the Official Receiver's office had just been discovered which disclosed that
after the incorrectly addressed return came back to the Official Receiver on
11 July 1969, the file had been checked; the more recent address in New South
Wales had been noted; and another return was posted as a prepaid letter to
that address on 29 July 1969 for completion by the applicant. The New South
Wales address was the last known address of the applicant, and by virtue of
s.309 of the Bankruptcy Act 1966 was deemed to have been served at the time at
which the letter would have been delivered in the ordinary course of post. I
accept the evidence given by Mr Peel of the Official Receiver's office as to
the finding of the missing record card, and as to the explanation of the
entries contained on it which sufficiently prove the postage of the return
required to be completed by the applicant to him on 29 July 1969. I also
accept the evidence of Mr Peel that the records of the Official Receiver
disclose that the return was not received completed by the applicant. The
first ground of challenge to the validity of the objection therefore fails at
the factual threshold.
25. The second ground of challenge involved the following propositions: (a)
when the trustee of the 1990 bankruptcy received the proof of debt filed by
the trustee of the 1956 bankruptcy it was his duty to check and be satisfied
that when the 1990 bankruptcy commenced the applicant was already a bankrupt;
(b) the trustee could only be so satisfied if there were evidence that the
objection had been entered in accordance with para.149(3)(b), that is, in the
"prescribed manner"; (c) under sub-rule 49(2) the person entering the
objection (the trustee of the 1951 bankruptcy) was required to post a copy of
the notice of the objection to the bankrupt, by prepaid registered post, at
the last known address of the bankrupt; (d) whilst it is to be assumed that
the trustee of the 1990 bankruptcy would have available the files of the
trustee of the 1951 bankruptcy (the trustee in each case being the Official
Trustee) there was no evidence on those files that sub-rule 49(2) had been
complied with; (e) therefore the trustee of the 1990 bankruptcy could not be
satisfied that the objection had been properly entered so as to prevent the
automatic discharge of the applicant, and could not be satisfied that the
applicant was a bankrupt at the commencement of the 1990 bankruptcy. The
proof of debt should have been rejected.
26. In my opinion this ground of challenge fails for two reasons. First, I do
not consider that the requirement in sub-rule 49(2) that a copy of the
objection be posted to the bankrupt constitutes part of the "prescribed
manner" of entering an objection. The "prescribed manner" is set out in
sub-rule 49(1). The requirement of sub-rule 49(2), whilst obviously an
important requirement, is an additional one placed on the party entering an
objection which arises once the objection has been entered. A failure to
comply with sub-rule 49(2) would not invalidate an objection entered in the
manner required by sub-rule 49(1). Secondly, I consider this challenge also
fails on a threshold factual issue. The evidence is that a copy of the
objection was posted under cover of a letter addressed to the applicant at his
last known address in New South Wales on 19 February 1970. The copy letter
which exists on the Official Receiver's file does not indicate whether it was
posted by ordinary mail or registered mail. However it was at that time the
practice of the Official Receiver's Office to post copies of objections by
registered mail. The trustee of the 1990 bankruptcy when considering the
proof of debt was entitled to presume, and the Court should presume, so long
after the event, that the regular practice of the Official Receiver's Office
was followed in this case unless there is strong reason to believe otherwise.
The applicant now says that he did not learn of the objection in 1970. The
inference from that assertion is that he did not receive the Official
Receiver's letter, but he should have done so even if it were posted by
ordinary mail. I do not think the bare assertion that the objection was not
received should be accepted at this stage to rebut the presumption that the
objection was posted by registered mail in accordance with the practice at the
time. The applicant suggests that at about this time he was serving a prison
sentence in Victoria which could provide an explanation why a document
forwarded to him by registered mail would not be received, but a note as to
the time of his imprisonment on Exhibit R1, a record from the Official
Receiver's Office, suggests that the imprisonment occurred subsequently.
27. The final submission of the applicant is that the intent of the 1980
amendments to the Bankruptcy Act, Part VII - Discharge of Bankrupts, was to
reduce the qualifying period for automatic discharge, and to lapse objections
after a period of time. It was not the intent of the amendments to
disadvantage bankrupts. However, in the application of the amendments to the
applicant, and in particular the provision inserted in the new para.149(3)(b),
he became trapped in a circle which prevented his automatic discharge. Even
when the objection to discharge from the 1951 bankruptcy lapsed he would not
get an automatic discharge from either bankruptcy because, in the case of the
1951 bankruptcy, he had since the date of the bankruptcy again become
bankrupt: para.149(3)(b); and because, in the case of the 1956 bankruptcy, at
the time when he would have been discharged but for sub-s.149(3), he was still
undischarged from the 1951 bankruptcy.
28. The circumstances of the applicant were described by his counsel as
anomalous. It was pointed out that a consequence of his continued bankruptcy
beyond 1986 (a date five years after the commencement of the 1980 amendments)
would, in the events which had happened, be the loss of the applicant's
interest in the dwelling house property earlier mentioned. It was said to be
fortuitous that the objection entered in 1970 had been made in the 1951
bankruptcy rather than in the 1956 bankruptcy, and if it had been entered in
the 1956 bankruptcy, the applicant would have received an automatic discharge
on 1 February 1986. In the circumstances counsel contended that the provisions
of s.176 of the Bankruptcy Amendment Act 1980 should be invoked as the source
of power to order with retrospective effect that the applicant be discharged
from the 1951 bankruptcy upon the lapsing of the objection filed on 23
February 1970, viz 1 February 1986. Section 176 reads:
"176.(1) Where any difficulty arises in the application, in
accordance with provisions of this Act, to a particular matter of
the amendments of the Principal Act made by this Act, the Court
may, on the application of an interested person, make such order
as it thinks proper to resolve the difficulty.
(2) An order so made has effect notwithstanding anything
contained in the Principal Act as amended by this Act."
The researches of counsel could find no case where a court has considered the
application of s.176. However the section is in terms similar to s.300 in
Part XV of the transitional provisions of the Bankruptcy Act 1966. That
section has received judicial consideration. In Re Marc; Ex parte Stapleton
(1968) 12 FLR 48 at 58 Gibbs J said:
"I have not been referred to any authority in which a section
similar to s.300 has received consideration. The section cannot
simply mean that the court has power to resolve the difficulty by
construing the statute, because the court would have that power
even though it were not expressly conferred. If the official
receiver or any other interested party made application for an
appropriate declaration as to what fees should be paid in a case
such as the present, there seems to me no doubt that the court
under its general powers would have power to construe the various
statutory provisions and to make a declaration and consequential
orders in accordance with the result that it reached. It seems to
me therefore that s.300 is intended to empower the court to do
more than merely construe the provisions of the statute itself.
Its intention is to give the court power to make an order
resolving a difficulty in a case where the statute itself does not
resolve it. This view is strengthened by the provisions of
sub-s.(2) which expressly gives force to an order notwithstanding
anything contained in the Bankruptcy Act 1966 or the repealed Act.
It is unnecessary for present purposes to consider fully the scope
of s.300. It may however be said that the wide discretionary
powers which it confers may only be exercised where a difficulty
arises by reason of the operation of Pt.XV of the Bankruptcy Act
1966."
Gibbs J referred to what he had said in Re Marc; Ex parte Stapleton, in Re
McDonald and Another (1969) 14 FLR 262 at 266 where he observed that
beneficial as s.300 is, it does not extend to supply a power that does not
exist in the Act.
29. In my opinion s.176 does not assist the applicant. No difficulty arises
in the present matter in the application of the provisions of s.149 as amended
by the Bankruptcy Amendment Act 1980, in the sense that the provisions of the
amended section do not resolve the legal situation and status of the
applicant. The applicant's complaint is not that his position under the
amendments to s.149 is uncertain. It is that his position, which is clear
under the language of the section, will work unusual hardship upon him in the
events which have happened in the 12 years since the amendment came into
force. The order which he seeks is not one that will resolve a difficulty
which arises from the transition from the operation of the Principal Act
before amendment to the operation of the Principal Act after amendment, but
one which will deny the operation of the clear language of the new
para.149(3)(b) inserted by the amending Act. Section 176 does not empower
that course.
30. Before the Bankruptcy Amendment Act 1980 the applicant would not have
obtained his discharge for either the 1951 bankruptcy or the 1956 bankruptcy
unless he made application to the Court under s.150 for an order of discharge.
The 1980 amendments did not alter that position. After 1 February 1981 when
the amendments came into force, the applicant could have applied under the
amended s.150 for an order of discharge which would have broken the circular
operation of paras.149(3)(a) and (b) as amended which prevented his automatic
discharge. This is what happened in Re Hayes; Ex parte Hayes (1984) 59 ALR
219. The applicant's particular situation in reality was not made more
onerous by the 1980 amendments.
31. In my opinion the applicant has not made out any of the grounds advanced
in support of his application. The application must be dismissed.