ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PTY. LTD. AND ANOTHER v KENNETH F. WRAITH AND OTHERS

Independent Air Fares Committee Act 1981 ss.17 and 24({1)

ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PTY. LTD. AND ANOTHER

) ) VICTORIA DISTRICT REGISTRY ) No. VG 131 of 1983 ) )

ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PTY. LTD. AND ANOTHER Applicants

JUDGE MAKING ORDER: Woodward J. DATE OF ORDER: 11 August 1983

Subject to the provisions of s.13A of the Administrative Decisions (Judicial Review) Act 1977, the respondents furnish to the applicants within ten days an additional statement containing further and -better particulars of

(b) the evidence or other material on which those findings were based, and

{c) the reasons, for the decision of 6 July 1983 not to revoke approval of

East West Airlines (Operations) Ltd.'s discount air fare between Sydney and Brisbane via intermediate ports.

) ) VICTORIA DISTRICT REGISTRY ) No. VG 131 of 1983 ) )

ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PTY. LTD. AND ANOTHER Applicants

AND OTHERS Respondents CORAM: Woodward J. DATE: 11 August 1983 WOODWARD J. REASONS FOR JUDGMENT

Administrative Decisions (Judicial Review) Act 1977 ('the Judicial

Review Act'), for declarations and an order that the respondents, members of the Independent Air Fares Committee ('IAFC'), should give a better statement of their reasons for deciding to reject a recent, request by the applicants ('Ansett'). That request was, in effect, for the IAFC to revoke its approval of discount air fares to be charged by East West Airlines (Operations) Ltd. ('East West') fdr services between Sydney and Brisbane via intermediate

It is convenient first to consider the relevant parts of the legislation under which the IAFC operates. This is the

Independent Air Fares Committee Act 1981 ('the IAFC Act'). The

scheme of the Act provides that the Minister may refuse use of aerodromes and other air route facilities to any passenger operator which charges fares that have not been approved under the

In this case we are concerned with discount air fares.

"17.(1) A passenger operator may, in accordance .with sub-section (2), request the Committee to approve a discount air fare that the passenger operator proposes to charge in respect of travel over any route.

(2) A request under sub-section {1} 1n relation to a proposed discount air fare in respect of travel over a route shall be made by notice in writing given to the Chairman setting out -

(a) whichever of the following amounts is applicable:

(i) in a case to which sub-paragraph (11) does not apply - the amount (expressed as a percentage of the economy air fares charged by the passenger operator over that route) of the proposed discount air fare; or

(ii) in the case of a request by a passenger

• Operator, other than Ansett or the Commission, in respect of travel over a trunk route over which both Ansett and the Commission provide air services ~- the amount (expressed as a percentage of the economy air fares that are, for the purposes of sub-section 26(1), approved air fares in relation to Ansett and the Commission in relation to that route) of

{b) the conditions (if any) under which the proposed discount air fare is to be available.

(3) Where a passenger operator requests the Committee to approve a discount air fare, the Committee shall, before the expiration of 7 days after the Committee obtains such information as it considers necessary to be obtained from the passenger operator who made the request or from any other passenger operator in order to give its decision on the request, give its decision on the request.

(a) the introduction of that proposed discount air fare is likely to improve the profitability of

the operations of that passenger operator in relation to the provision of air services;

(b) the introduction of that proposed discount air fare is unlikely to result in economy air fares in respect of air services provided by any trunk route operator over trunk routes being increased; and

(c) the conditions (if any) under which that proposed discount air fare is to be available

are reasonable and will be applied without discrimination between persons or classes of

the Comnittee shall approve the proposed discount air fare but, if the Committee is not so satisfied,

the Committee shall not approve the proposed discount air fare.

(a) the Committee has approved, in relation to a passenger operator, a discount air fare in accordance with this section; and

(b) any passenger operator gives notice in writing to the Chairman requesting the Committee to conduct a review of the availability of that discount air fare or the Committee is satisfied that it is desirable to conduct a review of the availability of that discount air fare,

the Committee shall conduct a review of the availability of that discount air fare and shall complete the review before the expiration of 14

as it considers necessary to be obtained in order to complete the review.

(a) the Committee conducts a review of the availability of a discount air fare that was, in relation to a passenger operator, approved by the Committee in accordance with this section; and

(i) is satisfied that, if the Committee revoked the approval of that discount air fare, the profitability of the operations of that passenger operator in relation to the provision of air services would not be adversely affected;

(ii) is not satisfied that the continued availability of that discount air fare is unlikely to result in any economy air fares in respect of air services provided by a trunk route operator over trunk routes being increased; or

(iii)is not satisfied that the conditions (if any) under which that discount air fare is available are reasonable or are being applied without discrimination,

the Committee shall, by notice in writing given by the Chairman to that passenger operator, revoke the approval of that discount air fare and, where such a notice is given, the Committee shall be deemed not to have approved that discount air fare.

(7) In conducting a review of a discount air fare in accordance with this section, the Committee shall have regard to the fact that a discount air fare approved by the Committee in relation to a4 passenger operator in respect of travel over a route may be charged, in accordance with this Act, by any other passenger operator in respect of travel over that route."

It will be seen from this section that a passenger operator in Ansett's position in the present case is given the right (by sub-s.5) to require the IAFC to review a decision approving discount fares such as those being charged by East West on the Sydney-Brisbane route. The IAFC has the responsibility to obtain the information it considers necessary for a proper review and must then, within 14 days, complete the review. This must mean that it is required to complete its deliberations and formally make its decision within 14 days. The requirements for

publication of that decision are to be found in s.24 of the IAFC

Section 19 of the IAFC Act, dealing with parties to proceedings, provides that, in a case such as that under consideration, operators in the respective positions of East West and Ansett shall be parties to the proceedings (s.19(7)) and shail

pe entitled to present evidence and make submissions (s.19(10)).

Since the responsibility for collecting all necessary information remains with the IAFC (s.17(5)), it would be incorrect to speak of the parties bearing any onus of proof in such reviews. However, in the sense that a party seeking an affirmative finding will wish to ensure that there is material before a tribunal which will enable it to reach that finding, it can be said that, under s.17(6)(b), Ansett would wish to establish that the revocation of the discount fares would not adversely affect the overall

profitability of East West's passenger operations. Conversely,

East West would wish to establish, first, that the continuation of the discount fares would be unlikely to result in increased economy fare charges by the Australian National Airlines Commission ('TAA') and Ansett on trunk routes, and, secondly, that

the conditions attached to its discount fares were reasonable and

These were the statutory issues the IAFC was required to

The other provision of the IAFC Act directly relevant

for present purposes is s.24(1). This reads as follows:

passenger operator at the conclusion of a cost allocation review;

(b) makes a determination or an interim determination of the economy air fares that may be charged by a passenger operator; or

(c) approves, refuses to approve, or revokes the approval of, in accordance with section 17, a

discount air fare that a passenger operator proposes to charge,

(dad) before the expiration of 7 days after the

• making of that determination or decision, give notice in writing to the passenger operator setting out the terms of the determination or decision accompanied by a statement setting out any findings of facts made by the Committee, referring to the evidence or other material (other than any finding, evidence or material the publication or disclosure of which would, in the opinion of the Committee,

reveal a trade secret of another passenger operator) on which those findings were based, and giving reasons for the making of the determination or decision; and

setting out the terms of the determination or decision and any findings of facts made by the Committee, referring to the evidence or other material (other than any finding, evidence or material the publication or disclosure of which would, in the opinion of the Committee, reveal a trade secret of any passenger operator) on which those findings were based

and setting out the reasons for the making of the determination or decision."

Pursuant to s.17 of the Act, East West sought, and obtained from the IAFC cn 19 May 1983, approval of discount fares to be charged on flights between Sydney and Brisbane by way of Newcastle and Coolangatta. Ansett was not a party to those proceedings. When it heard that approval had been granted, Ansett

applied, on i June 1983, for a review of the availability of the

discount fares, pursuant to s.17(5) of the IAFC Act.

On 21 June 1983 the IAFC requested written submissions from Ansett, which were supplied on 27 June. Hearings were conducted on that same day and further submissions in writing were received on 30 June.

On 6 July the IAFC telexed its determination confirming approval of the discount fares and this led to an exchange of telex messages all of which are relevant for present purposes.

The exchange went as follows fomitting formal parts):

I refer to the review under section 17(5) of the East-West Airlines $130 excursion fare Sydney/Brisbane via ports which was approved by the Committee on 19 May 1983 for the period 20 May to 19 July 1983 inclusive.

I wish to advise that the Committee has completed the review of the above discount fare and on the basis of the information provided and evidence received has decided to confirm the approval previously granted. The Committee in reaching this decision did not consider that the period of availability of this fare namely to 19 July 1983 should be revoked on any of the grounds detailed in section 17(6)(b) of the Act.

The Committee noted evidence from the three airlines concerning- the diversicn of passengers from TAA and Ansett to East-West Airlines. The Committee was satisfied in this instance that trunk economy air fares would be unlikely to increase as a result of the operation of this fare to 19 July 1983. However it regards the satisfaction of sections 17(4)(b) and (c) as a matter of increasing concern in the assessment of applications for discount fares with these conditions on a continuing basis. It should be noted that the non-revocation of this discount fare should not be unterpreted as meaning that the Committee will necessarily approve an application to extend the $130 Sydney/Brisbane via ports fare beyond 19 July 1983.

We acknowledge your [an obvious error] receipt of your telex of 6th July 1983.

We based our argument that the fare should be reviewed on all three grounds set out in Section 17{6)(b) of the IAFC Act.

The telex of 6th July indicates the Committee's views on only one of the grounds, that contained in Section 17(6)(b)(1i) although observations are set out as to how that ground and the ground an Section 17(6)(b) (iii) may operate in the future.

Having regard to Section 24 of the IAFC Act, we request that you advise the Committee's views with regard to the grounds for review set out in Section 17(6)(b)(i) and (111) in relation to our request for a review of the specific fare in relation to which a review was requested.

I refer to your telex of 7 July 1983 requesting further advice relating to the Committee's review of $130 East-West Airlines Syd/Bne via ports excursion fare.

The Committee in respect of s.17(6)(b)(i) examined the estimates of additional net revenue and additional costs incurred as a result of introducing this fare for the time specified, and was not satisf1red that if it revoked the approval the profitability would not be adversely affected.

In regard to s.17({6)(b)(iii) this was considered, . and the Committee was satisfied in the context that the conditions relating to this discount fare were reasonable and were applied without discrimination.

The Committee noted that these findings were taken following advice received as to the matters covered by s.17(4) and s.17(6).

We refer to your telex of 12th July. We are not satisfied with the reasons supplied for the review . of the East West Discount Fare and would ask you to expand on those reasons and advise us of all the relevant facts and other evidence that in the Committee's opinion are not of a confidential nature. Full disclosure is in our view required including a statement setting out any material findings of fact made by the Committee, referring to the evidence or other material on which those findings were based and giving the reasons for the decision. {The word 'material' in this last sentence appeared to have been added, as an afterthought, to the first draft of the telex. ]

We repeat our advice in our telex of 24th June that we consider important questions of principle were involved in the Review and that the continued approval of the discount air fare is of great significance to ATI. We urge you to provide us with reasons/further reasons with all possible haste.

It is the view of the Committee that it has fulfilled the requirements of section 24(1) of the TAFC Act in relation to the review of this discount fare.

Notwithstanding that view, the Committee advises that in reaching a decision it had regard to the evidence and submissions both written and oral presented by Ansett, East-West and TAA.

On the basis of that material, the Committec concluded that the evidence did not justify a revocation of the approval under any of the grounds set out in section 17(6)(b} of the Act.

The Committee has conducted the review, reached a decision and notified its decision in the

• prescribed manner. Accordingly, we see little point in engaging in protracted correspondence on this subject.

It is clear from the telex of 7 July that when Ansett first sought further details of the findings of the IAFC, and its

reasons for those findings, it did so pursuant to s.24 of the IAFC

Act. Although there was no evidence before me of the state of mind of the framers of the various telexes - other than what can be deduced from the telexes themselves - I thank it is probable

that they were all sent and received on the understanding that this was the relevant statutory provision. Counsel for the IAFC

offered to call evidence that this was the case so far as their

The only hint to the contrary is contained in the Ansett telex of 14 July, at the point where the adjective 'material' is inserted before the word 'findings' as an apparent afterthought on the part of the draftsman. That word is used as an adjective in

s.13(1) of the Judicial Review Act, but not in s.24(1) of the IAFC

Act. However the phrase used in the telex - "material findings of fact" - differs from the phrase used in the Judicial Review Act - "findings on material questions of fact". And if the Judicial Review Act was in the mind of the draftsman of the telex, it is surprising that there was no reference to it, and no use of the other language of that Act such as "person aggrieved" or "request

I think it is most likely that both the parties to these exchanges thought that s.24(1) of the IAFC Act applied to the situation. Ansett thought that the sub-section entitled it to certain findings, statements as to the material on which those findings were based and reasons for the decision which had been reached. The IAFC did not dispute Ansett's entitlement, but

pelieved that it had in fact complied with the section.

If Ansett realized that in fact it had no entitlement

under the IAFC Act, but full entitlement under the Judicial Review

Act, it behaved very foolishly in framing its communications as it did. I prefer to think that hoth parties were labouring under a misapprehension as to the relevant law until very shortly before

the application in this matter was issued on 22 July 1983.

However this may be, there can be no doubt that s.24(1) of the IAFC Act did not apply in these circumstances and s.13(1) of the Judicial Review Act did. So much was conceded in argument, Section 24(1) does not apply, first, because para (c) limits its operation to cases where an existing discount air fare is revoked, thus excluding by necessary inference cases in which such revocation is refused. Secondly, it only applies in favour of the passenger operator charging the discount fare (see para (d)). Other interested parties have to be content with what they find in the Government Gazette (see para (e)). Accordingly, I say no more about the requirements of the IAFC Act.

"13.(1) Where a person makes a decision to which this section applies, any person who is entitled to make an application to the Court under section 5 in relation to the decision may, by notice in writing given to the person who made the decision, request him to furnish a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision."

Counsel for the IAFC conceded that the Judicial Review

Act applied to decisions such as that in the present case and

that, if a request had been made under s.13(1) of that Act, the IAFC vould have had to comply with it. They did not seek to argue

that the telexes sent by the IAFC to Ansett constituted an

adequate compliance with the requirements of s.13(1). In this they were clearly correct. Although those telexes, when read together, adequately stated the formal findings of the IAFC, they do not appear to have stated all the findings on material questions of fact, or to have identified adequately the material on which those findings were based, and they contained little if anything which could fairly be described as reasons for the

The passages from judgments which are conveniently brought together in Re Palmer and Minister for the Capital Territory 1978 1 ALD 183 at 193~4, serve to confirm my view that

s.13(1) of the Judicial Review Act requires the decision-maker to explain his decision in a way which will enable a person aggrieved to say, in effect, "Even though I may not agree with it, I now understand why the decision went against me. I am now in a position to decide whether that decision has involved an unwarranted finding of fact, or an error of law, which is worth

This requires that the decision-maker should set out his understanding of the relevant law, any findings of fact on which his conclusions depend (especially if those facts have been in dispute), and the reasoning processes which led him to those conclusions. He should do so in clear and unambiguous language, not in vague generalities or the formal language of legislation.

The appropriate length of the statement covering such matters will

depend upon considerations such as the nature and importance of the decision, its complexity and the time available to formulate the statement. Often those factors may suggest a brief statement

The arguments of counsel have left only one finding to

be made by this Court - whether a notice was given by Ansett to

the IAFC in accordance with s.13(1) of the Judicial Review Act. I

have reached the conclusion that such a notice was given.

In arriving at that conclusion, I begin with the general policy cf the Judicial Review Act, which clearly intends that persons aggrieved by administrative decisions which adversely affect them should have full opportunity to show, if they can, that such decisions have been improperly reached. They can only

do this if they know how the decisions were in fact reached.

The right to obtain information about decisions is given

by s.13(1) of the Act. It is to be noted that no form of request

is prescribed. Nor does the section require that the request be

stated as being made pursuant to the Judicial Review Act. Persons

making decisions to which that Act applies must be taken to know of their obligation to supply reasons when requested to do so. They should not need to be referred to the relevant legislation.

Nor should a person with rights under the Judicial Review Act be

denied those rights merely because he does not know of them, or only knows of them vaguely, and so makes a request in some informal letter or other communication which does not follow the

Providing the request is within time (28 days after receipt of the determination in the present case, see s.13(5)), 1s in writing, comes from a person aggrieved by the decision, and amounts to a request for reasons for the decision reached, I believe it ought to be complied with. It is probably sufficient for the decision-maker to comply with the actual terms of the request (or so much of it as falls within s.13(1)) and not to supply other information which might have been sought under the section but was not. That point does not arise in the present case because Ansett sought, in its telex of 14 July, "all the relevant facts and other evidence that in the Committee's opinion are not of a confidential nature". Full disclosure was said to require "a statement setting out any materzal findings of fact

made by the Committee, referring to the evidence or other material

on which those findings were based and giving the reasons for the

It will be seen that these words are very similar to

those in s.13(1) of the Judiczal Review Act. They would quite

clearly be adequate to require a response under that section were it not for the fact that they are equally close to the wording of

s.24({1) of the IAFC Act, and that Act had been specifically

(though, as I have said earlier, wrongly) invoked in an earlier telex in the series. But since the request of 14 July was, on its face, clearly sufficient to satisfy s.13(1) of the Judicial Review Act, I do not believe it was vitiated either by the fact that Ansett probably had other legislation in mind or because the IAFC was not aware of its legal obligations under relevant legislation and was suffering from the same misunderstanding as Ansett, due in part to the form of Ansett's earlier telex of 7 July. These considerations are relevant to the exercise of the Court's discretion to make an order, and to the question of costs, but

I believe that the Court does have a discretion in a

case such as this; the words "the Court may order" in s.13(7) of

the Judicial Review Act are permissive rather than mandatory. I

have seriously considered exercising that discretion against Ansett for two reasons - first, because it may well have misled the IAFC as to its legal responsibilities; and, secondly, because

the decision which gave rise to the request has run its course.

However I am assured by Counsel for Ansett that the decision is still of importance as the first made under s.17(5) of

the IAFC Act and as one of a series, and it has been replaced by

another decision in very similar terms covering the same subject-matter. And I think that, when in doubt under this

section, it can seldom be wrong to opt for disclosure.

As to the form of order to be made, Counsel for Ansett, at the close of argument, sought only an order that the IAFC furnish an additional statement "containing further and better particulars with respect to the findings, evidence or other material or reasons relevant to the decision". Counsel instanced some of the issues on which they would expect to receive useful

findings of fact and ceasons for decision, but they did not

attempt to formulate any more detailed order than was sought, in

the terms I have quoted, by the original application.

Among the matters instanced by Counsel on which, as at present advised, I would have thought they were entitled to

information (if such matters in fact played a part in the

(a) What was the approach of the IAFC to the determination of profitability of an operator

• what margins of profitability are relevant and what can be discounted as trivial - what is the relevance of excess capacity to considerations of profitability?

(b) What did the IAFC 'find to be the expected passenger and revenue loss (if any) to trunk operators as a result of the discount fare?

(c) What did the IAFC find to be the expected numbers of persons using the discount air fare who would not otherwise have flown the route?

conditions within the meaning of s.17(6) (iii) of the IAFC Act?

(e) What was the relevance to the IAFC decision of the short period for which the discount fare

(f) What weight, if any, did the IAFC accord to cost figures, relating to Air New South Wales, which were produced by Ansett?

Although I have drawn attention to these particular issues, and s.13(7) of the Judicial Review Act contemplates a more specific order as to the matters to be covered by way of 'further and better particulars', I do not believe such an order would be appropriate in the present case. This is so for three reasons; first, because the statement in fact made in response to the request of 14 July was so laconic that it is impossible to point to specific matters requiring elaboration; secondly, because only part of the material and submissions put before the IAFC were before me; and thirdly, because difficult questions of confidentiality, on which I have no information, may arise under

For these reasons I think the appropriate order of the Court is that, subject to the provisions of s.13A of the Judicial Review Act, the IAFC should furnish to Ansett within ten days an

additional statement containing further and better particulars of

(bd) the evidence or other material on which those findings were based, and

for the decision of 6 July 1983 not to revoke approval of East

West's dascount air fare between Sydney and Brisbane via

I intend to make no order as to costs. Although Ansett has been successful, it is only on a fine balance that I have exercised my discretion in its favour. Much of the trouble that has arisen in this matter has been caused by the inapt and

misleading terms used by Ansett in first seeking the information

it required; and Ansett is a major public company with ready

The Trustee of the property of WALTER HAROLD BETTERIDGE

a bankrupt Applicant and HENRY ZANDBERG Respondent Northrop J.

2. The costs of the respondent of and incidental to the

application be taxed and paid in accordance with the

BETWEEN : ~ . The Trustee of the property of WALTER HAROLD BETTERIDGE a bankrupt Applicant and HENRY ZANDBERG

' Respondent NORTHROP J. REASONS FOR JUDGMENT 12 OCTOBER 1983

The trustee of the property of Walter Harold Betteridge, a bankrupt, as applicant and pursuant to s.122

Bankruptcy Act 1966 seeks the following declaration:

"THAT payments made in February and March 1977 by the bankrupt to the Respondent Henry Zandberg of 63 Bambra Road, Caulfield in the State of Victoria of amounts totalling $5,057-88 are void as against the Applicant as Trustee of the property of the bankrupt as being payments having the effect of giving the Respondent a preference, priority or advantage over other creditors."

In addition, the applicant seeks consequential orders that the respondent pay to him the sum of $5,057.88 and the costs

Under s.122 of the Bankruptcy Act, certain types of

transactions are rendered void as against a trustee in

bankruptcy. For the purposes of the present application, the

"122.(1) ... a payment made ... by a person who is unable to pay his debts as they become due from his own money (... 'the debtor'), in

(a) within 6 months before the presentation of a petition on which or by virtue of

the presentation of which, the debtor becomes a bankrupt; ...

By paragraph 122(2)(a) nothing in s.122 affects "the rights of a... payee ... in good faith and for valuable consideration and in the ordinary course of business", but the burden of proving the matters referred to in that paragraph lies upon the person claiming to have the benefit of that paragraph; see sub-section 122(3). By paragraph

122(4)(c), for the purposes of s.122 a creditor is deemed not

to be a payee in good faith if the payment was made:

"... under such circumstances as to lead to the inference that the creditor knew, or had reason to suspect -

(i) that the debtor was unable to pay his debts as they became due from his own money; and

(ii) that the effect of the ... payment ... would be to give him a preference,

Under sub-section 122(5), where a payment is recovered in consequence of the cperation of s.122, the creditor in whose favour the payment was made may prove in the bankruptcy as if

the payment alleged, albeit in a round-about fashion, but

gave notice that he intended to oppose the application on the

"That the Respondent, at the relevant times of receiving the monies alleged, was not a

At the hearing of the application, the respondent was granted

leave to oppose the application on the further ground:

"... that the Respondent was at the relevant times of receiving the monies alleged, a payee in good faith and for valuable consideration and in the ordinary course of business."

The only issue raised on the first ground is whether, at the relevant time, the respondent was a creditor

within the meaning of sub-section 122(1) Bankruptcy Act.

On the evidence before the Court, the applicant has

proved that on 14 April 1977, Walter Harold Betteridge became

bankrupt upon his own petition and that the Official Trustee

in Bankruptcy is the trustee of the bankrupt's estate. The bankrupt died on 27 March 1979 before the administration of his estate was finalized. At all times from 14 October 1976 (being the date six months prior to the date of bankruptcy), the bankrupt was unable to pay his debts as they became due from his own money. In or about March 1977, being within six months before the presentation of his petition, the bankrupt made payment of various sums of money for a group of persons which group included the respondent, and on a distribution of those sums, the respondent received payments amounting to $5,057.88. If that payment was mde to the respondent in the capacity of a creditor of the bankrupt, then the payment had the effect of giving the respondent a preference, priority or

$5,057.88 to the respondent can best be described as bizarre.

The bankrupt was employed by Collins Book Depot, first as a

storeman, then as a salesman. During 1976 he commenced to

conduct an enterprise whereby he agreed to sell colour television sets at a price about half that which he paid for them. To finance the enterprise he received from a group of persons, including a Mr. Prince and a Mr. Feldman, the purchase price for a number of sets and from the monies so received he bought and delivered a smaller number of sets than the number he had promised to sell and for which he had received payment. As news of the cheap television sets spread, more and more prospective buyers flocked to acquire cheap television sets and paid the purchase price, thus

creating a fund from which the bankrupt paid for sone television sets which he delivered and from which he took money for gambling purposes. At a later stage and in order to keep the enterprise operating, the bankrupt borrowed money

at high rates of interest. The whole enterprise constituted

a treadmill and, of necessity, was doomed to failure.

The respondent first became attracted to the enterprise through Mr. Feldman and Mr. Prince. At the time the respondent was an electronic engineer employed by the Victorian Railways. He agreed to obtain colour television sets for "friends, acquaintances and business associates". He received the purchase price from those purchasers, kept some of the money for his own use and paid the balance to Mr. Feldman. At that time the respondent had not met the bankrupt. Although delays occurred in the delivery of the

television sets, a number were received. The respondent

checked with the distributor of the television sets and found that they were not stolen sets. Towards the end of 1976, the respondent began to deal directly with the bankrupt. Unfortunately, neither in his affidavit nor in his oral evidence before the Court has the respondent given evidence of the conversations between himself and the bankrupt which formed the basis for the new arrangements entered into between them. The respondent states conclusions only, and in the absence of evidence of what was said, the Court is placed in a difficuit position in determining what the actual arrangement was. The respondent claims that the arrangement was that of principal and agent whereby the respondent was to act as agent for the bankrupt in the sale of television sets

and was to receive commission on sales, the commission being

paid by the bankrupt. He describes the arrangements. The respondent was to collect the full purchase price from prospective purchasers on the basis that the television sets would be delivered at some time in the future. He paid the whole of the monies so received to the bankrupt who immediately handed back to the respondent an amount representing commission earned by the respondent. The amount of the commission varied from as much as $140 per set down to $30 per set. As a sign of good faith, the bankrupt was to give a receipt to the respondent for the amount of the money actually retained by the bankrupt, and at a later stage the

bankrupt was to issue receipts in the names of the persons

who had paid money to the respondent acknowledging receipt of

the total amount actually paid to the respondent. An example is given of a receipt issued by the bankrupt in the name of

The Sum of $500.00 Being full Payment for one 26 in. Colour T.V. Set to be delivered on or

before lst March 1977 W. Betteridge 67 Rochester Rd.

The bankrupt delivered very few of the television sets so

Between late December 1976 and 22 February 1977, pursuant to that arrangement, the bankrupt agreed to sell thirty-eight television sets comprising sixteen 26" sets and

twenty-two 18" sets. The bankrupt issued six receipts to the

respondent for those thirty-eight television sets, the earliest being undated but promising delivery of two 26" sets on or before 14 January 1977, and the latest being dated 22 February 1977 promising delivery of three 26" sets but no date being specified. The terms of two of the receipts are

" 6-1-77 Received From Mr. Henry Zandberg of 63 Bambra Rd. Caulfield The Sum $5000-00 Being full payment for 20 Colour T.V. Sets 18 in. Size to be delivered before the end of January 1977.

13-1~77 Received From Mr. Henry Zandberg the Sum of $4000.00 Being full Payment for 10 26 in. Sanyo Colour T.V. Sets to be delivered on or before the 14th Day February 1977.

The respondent claims that in total and under the two different arrangements the bankrupt had agreed to supply some

In addition to receiving finance from prospective purchasers of television sets and in an attempt to keep the treadmill moving, the bankrupt borrowed large sums of money from different persons, including some of those who had dealings with him relating to the sale of television sets. The bankrupt did not borrow money from the respondent. In his statement of affairs, the bankrupt disclosed liabilities consisting of monies borrowed by him. He did not dasclose any liabilities relating to the sale of television sets. He listed the respondent among his unsecured creditors but did not specify the amount owing to the respondent nor the basis

In order to succeed in his application, the applicant mst prove that the bankrupt, in paying the sum of $5,057.88 to the respondent, paid the sum to the respondent

as a "creditor" within the meaning of that word in s.122

Bankruptcy Act. The word "creditor" is not defined in the Bankruptcy Act. Section 122 is one of the sections within Part VI of the Bankruptcy Act. That Part is headed "Administration of Property". That Part contains many

sections concerning debts provable in bankruptcy and property of the bankrupt available for payment of those debts. Under s.82, all debts and liabilities to which a bankrupt was subject at the date of the bankruptcy are provable in bankruptcy. Demands in the nature of unliquidated damges arising otherwise than by reason of, inter alia, a contract, are not provable in bankruptcy; see sub-section 82(2). In its context, therefore, the word "creditor" in s.122 should be construed as meaning a person to whoma debt or liability is owed by the bankrupt. In other words, a creditor is a

person who would have been entitled to prove in the

bankruptcy under s.82 and the related sections of the

The applicant claims that at the time of the payment of the sum of $5,057.88 the respondent was a creditor, in that sense, of the bankrupt. Tt was submitted that the true arrangement between the respondent and the

bankrupt was that of buyer and seller of television sets,

namely that upon the respondent paying the bankrupt the agreed price for television sets, the bankrupt agreed to sell and in the future to deliver television sets, presumably, to

the respondent. This submission will be considered later.

The respondent submitted that at the time of the payment of the sum of $5,057.88 the respondent was not a

creditor of the bankrupt. It was submitted that the true

arrangement between the respondent and the bankrupt was that of agent and principal, namely that the respondent was engaged by the bankrupt as an agent to find buyers for television sets, that the respondent was to collect the purchase price from the buyers, but was to retain part of the money so collected as his commission and pay the balance to the bankrupt, whereupon the bankrupt agreed to sell, and in the future to deliver, the television sets to those buyers. It was submitted that the respondent was a mere conduit acting as agent between the bankrupt as seller and the persons aquiring the television sets as buyers, and that he acguired no title to or interest in the television sets so

As has been said, the resolution of this issue is made more difficult by the absence of evidence of what was said by the respondent and the bankrupt leading to the mking

of the arrangement between them. There is no written

agreement. The bankrupt is dead. The enterprise being

conducted by the respondent did not constitute a normal commercial business and it is inpossible to draw inferences from what would have occurred in a normal commercial enterprise. There is no oral evidence of the express terms

The respondent gave evidence. He was cross-examined at length. He presented as a rather pathetic figure. He appeared to have little commercial ability. He appeared to be acting outside his sphere of competency. In the vernacular, he was out of his depth. He gave the appearance of a little man greedy to make money out of the acquisitiveness of his "friends, acquaintances and business associates". At the same time he seemed to be keen to illustrate that he was an astute person, able to provide television sets at about half the normal discount value. In giving his evidence, he tended to prevaricate. He was confused and there is no doubt that he had no clear understanding of the weaning of words or of legal concepts. In many instances his evidence conflicted with evidence he had given on oath on other occasions. Despite all these matters, however, after seeing and hearing him give evidence over two days, I accept his evidence relating to the true

nature of the relationship between himself and the bankrupt.

The case for the applicant was based almost entirely on events that occurred after the payment of the sum of $5,057.88. On Friday, 25 February 1977, the bankrupt was discovered purchasing television sets from a discount store at the norml discount price. This caused consternation among the persons who were in @irect contact with him in relation to the sale of television sets. An urgently arranged meeting was held on Saturday, 26 February 1977. The respondent and the bankrupt attended that meeting. A number of those attending the meeting had lent money to the bankrupt. Apparently the bankrupt was able to convince those at the meeting that he was genuine and able to meet his commercial and financial obligations. He promised to make some payment to those to whom he oved money, particularly money which had been lent to him. At the meeting, threats were made that legal proceedings would be instituted against the bankrupt. The bankrupt transferred his car to the wife of the respondent, but the transfer was valueless. Subsequently, he gave cheques to Mr. Prince who apportioned the proceeds among those who attended the meeting. This was

the source of the $5,057.88 received by the respondent.

On 10 March 1977, on the instructions of the respondent, a Supreme Court writ was issued naming the bankrupt as defendant. There were six plaintiffs named in

the writ. The plaintiffs, including the respondent, were

those who had attended the meeting on 26 February 1977. The

endorsement on the writ, standing as a statement of claim,

"). The Plaintiffs claim is for payment of the sum of EIGHTY EIGHT THOUSAND DOLLARS ($88,000.00) being money payable by the Defendant to the Plaintiffs for money had and

received by the Defendant for the use of the Plaintiffs.

In or about the month of November 1976 the Plaintiffs paid to the Defendant the sum of $88,000.00 to enable the Defendant to purchase and supply for the Plaintiffs colloured [sic] television sets.

2. In the altermative the Plaintiffs claim from the Defendant the sum of $88,000.00 for

money paid to the Defendant for consideration which has wholly failed."

The respondent claims that the writ was issued in an attempt to force the bankrupt to perform his obligations and in an attenpt to show his, the respondent's, good faith to the persons from whom he had received money for television sets. It is clear that sum of $88,000.00 claimed in the writ related to monies lent to the bankrupt, and it

mist be said that the endorsement on the writ is misleading

On 23 May 1977, the respondent lodged a proof of debt in the bankruptcy. This was supported by a sworn

affidavit claiming that the bankrupt was justly and truly

indebted to the respondent in the sum of $12,080. Particulars of the claim show that the amounts claimed were for the purchase of television sets. The claim was supported by the six receipts already referred to which, in total, showed an amount of s12,080 received by the bankrupt from the respondent. The force of those receipts is lessened by the fact that the bankrupt had issued receipts to the persons who had paid the money to the respondent, indicating receipt of the full amount so paid by each person and indicating delivery of the television sets to each person. Further, if the submission of the applicant is correct, the arrangement between the respondent and the bankrupt being for the sale of goods, one would expect the respondent's proof of debt to claim damages for breach of contract based upon the provisions of the Goods Act 1958, and in particular based

A number of persons who had paid money to the respondent sued him for the recovery of the money so paid. The respondent defended one claim on the basis that he was acting as agent only. He did not succeed in his defence. He paid the other claims. He has also paid all the other persons from whom he received money for television sets. I accept that some sixty television sets in all were involved and that the respondent has paid back all the money he

respondent gave confused accounts of the nature of the

he gave in those examinations do not assist in the present

is not a recent invention. In a statement he made to the

police on 8 March 1977 and relating to the television sets,

"I bought a number of Thorn TVs for myself and family which were delivered after a period of eight weeks as specified by Mr Betteridge. I checked the serial numbers and model numbers with Thorn Australia and was told that the TVs were not stolen and were registered with them and soon after I was approached by a number of friends who, after seeing my TV, also wanted one. Mr Betteridge's proviso for supply of these TVs was that cash had to be paid at the time of the order and a receipt was issued by

TV to be delivered and the delivery time. I collected money from my friends and told them

paying the money to Mr Betteridge I distributed the receipts made out in the

sum of $5,057.88 was paid to the respondent in the capacity

of a "creditor". The fact that the bankrupt issued receipts

for the full amount paid to the respondent by the persons

desiring to buy television sets and stating the time for

delivery is crucial to this finding. Accordingly, the application mist fail. On the evidence, I am unable to say in what capacity the respondent received that money, but this does not detract from the finding already made. It follovs, that on this finding, the respondent is not a creditor of the

bankrupt able to prove in the bankruptcy, and his proof of

necessary for the Court to express an opinion on the other

defence raised by the respondent. It is sufficient to say

that having regard to the extraordinary nature of the

business being conducted by the bankrupt, there would have

been serious difficulties facing the respondent in establishing his defence, particularly since the onus would

Accordingly, the application is dismissed, costs of the respondent of and incidental to the application should be taxed and paid in accordance with the provisions of the

I cetafy that ils and the t:flees cs) pieceding pages are a true copy of the Reasons for Judgment heicin of the