Booth v Offerman as trustee of the bankrupt estate of Geoffrey David Booth

ROBERTSON J: 1 This application has come before me today as duty judge. The substantive relief sought is that the respondent trustee of the bankrupt estate of the applicant "be directed to give the Applicant forthwith consent in writing to travel out of Australia to Japan during January and February 2019 without any condition of payment of monies to the Respondent." It is on that basis that there is some urgency. 2 The trustee submits there is no urgency and that the matter should be adjourned to allow him to put on evidence. I do not accept that submission as the dispute has been on foot for some weeks and the subject-matter, the consent to the proposed travel, will disappear if not dealt with promptly. I shall however take into account the matters in relation to which the respondent seeks to put on affidavit material, as referred to at [9] of his written outline of submissions. 3 The statutory background is provided by s 272(1)(c) of the Bankruptcy Act 1966 (Cth) which provides that an undischarged bankrupt commits an offence where, without the consent in writing of the trustee of his estate, he leaves Australia or does an act preparatory to leaving Australia. By s 272(2), the trustee may impose written conditions on a consent given for the purposes of s 272(1)(c). If the bankrupt is liable to make a contribution to the trustee under s 139P or s 139Q, the conditions may include conditions regarding the payment of that contribution. 4 The Court's jurisdiction used to be found in s 178 and is now found in s 90-15 of Sch 2 to the Bankruptcy Act. By s 90-20, a person with a financial interest in the administration of the regulated debtor's estate may apply for an order under s 90-15. 5 For present purposes it is not necessary to compare the new and old bases of the Court's jurisdiction. It does not appear that any change was intended from the position described by Deane J in Re Tyndall; ex parte Official Receiver [1977] FCA 15; 17 ALR 182 at 186-187 to the effect that there is conferred upon the Court the widest possible discretion as to the appropriate order which should be made in the particular case and that the was empowered and obliged to make such order in the matter as it thinks just and equitable. Deane J rejected the approach that the Court was only empowered to interfere with the trustee's act, omission or decision if it was of the view that the trustee had acted absurdly or unreasonably or in bad faith. 6 The evidence in support of the application is, first, an affidavit sworn by the applicant on 9 January 2019. The applicant deposes that the purpose of the proposed travel is a family holiday over the Christmas break, travelling to Japan as earlier indicated. The applicant's ex-wife has agreed to pay for the air flight tickets, accommodation and other expenses relating to the holiday. The applicant proposes to travel with his three children: a 22 year old son who currently works in Australia; a 19 year old son who currently works in Australia and a 17 year old son who is currently studying in Australia. 7 On the basis of oral evidence given by the applicant this morning, I find that those three children are presently in Japan on holiday and that the applicant's former wife, their mother, is also in Japan with them but that she has to leave Japan for India on 11 January 2019. In these circumstances the applicant's 17 year old son will be in Japan without parental supervision unless the applicant is permitted to travel there. The applicant plans now to leave Australia for Japan on 11 or 12 January 2019 and to return, arriving in Australia on 18 February 2019. 8 The applicant became a bankrupt on 12 March 2012 and the Official Trustee in Bankruptcy was appointed as his trustee. The Official Trustee later transferred the file to the present respondent, Mr Denis John Offerman, who was then appointed as trustee of that bankruptcy. 9 Quite recently, on 29 November 2018, the applicant filed a debtor's petition which was accepted by the Official Receiver on that day. The applicant therefore became a bankrupt for a second time. The Official Trustee is the trustee in the second bankruptcy. 10 The correspondence, annexed to the applicant's affidavit, refers to events beginning on 5 December 2018 when the applicant applied to his trustees for consent to travel to Japan on 20 December 2018, returning on 20 February 2019. 11 The Official Trustee granted consent by letter dated 21 December 2018. The consent was subject to the following express conditions: 1. Provide the Official Trustee in writing of your overseas contact details i.e. address, phone number and email. 2. If the estate is later transferred to a registered trustee, the registered trustee may require you to return to Australia. 3. If the estate is later transferred to a registered trustee, the Official [Trustee's] consent to travel is withdrawn and you will need to apply to the new trustee for consent to travel. It also appeared that the applicant was required to inform the Official Trustee when he returned from overseas. The letter stated the applicant would not be required to surrender his passport to the Official Trustee when he had completed the travel. 12 The position of the respondent trustee, that is, the trustee in relation to the first bankruptcy, was not to grant approval for the applicant to travel overseas "as you are liable to make contributions under Section 139P of the Act." This refusal was conveyed by a letter dated 17 December 2018 in relation to a request sent to the respondent's office on 6 December 2018. 13 The letter also referred to the grant of approval in relation to a previous travel request, apparently in 2017. In this respect I find that the respondent trustee had granted a previous consent in relation to a similar period a year ago. 14 By further letter dated 20 December 2018, the respondent trustee did provide consent for the applicant to travel to Japan on holiday departing on 24 December 2018 and returning on 17 February 2019 but subject to certain conditions. The relevant condition was: "You must pay $21,668 to your Bankrupt Estate and provide confirmation of payment of cleared funds prior to departing Australia. Payment should be made by EFT to the nominated bank account below;". 15 Further correspondence followed. An email of the same day from David McGrath, on behalf of the applicant, to the representatives of the respondent trustee stated that the applicant "does not have that sort of money, it is not possible to pay that amount." That email also asked the trustee to outline how he claimed these funds were still payable in the first bankruptcy. Those acting for the applicant maintained that the contributions were "a debt owing to Offermans" and as such were provable in the second bankruptcy and should be listed as owing in that estate. Further correspondence between the parties was sent on 21 December 2018, after which there was then a lull until 2 January 2019. 16 The purpose of s 272 was explained by Bowen CJ in Weiss v Official Trustee in Bankruptcy [1984] FCA 2; 1 FCR 40 at 43 where his Honour said that a resident of Australia was entitled to expect that he may travel freely notwithstanding the fact that he is a bankrupt, provided it will not lead to staying overseas in order to defeat or delay his creditors and provided it will not interfere with the due administration of his bankrupt estate. It was to secure the proper administration of bankrupt estates that bankrupts were required by the Bankruptcy Act give their passports to the trustee and to obtain the permission of the trustee before travelling overseas. This interference with the travel of bankrupts, his Honour said, was not for the purpose of punishing or expressing disapproval of them for offences or alleged offences against the Bankruptcy Act. 17 A non-exhaustive list of relevant matters was stated in Re Hicks; Ex parte Lamb [1994] FCA 1473; 217 ALR 195 at 198, where Heerey J suggested three questions which would be at the forefront of the matters to be considered in the exercise of the Court's discretion in reviewing the trustee's decision: (i) Is the proposed visit genuine? (ii) Is the bankrupt likely to return to Australia as promised? (iii) Will the visit hamper the administration of the estate? Importantly, in the present case, it was expressly not contended for by the respondent trustee that the visit would hamper the administration of the estate. 18 It is not clear to me that s 139P is in play. That provision refers to where "the income that a bankrupt is likely to derive during a contribution assessment period as assessed by the trustee under an original assessment exceeds the actual income threshold amount applicable in relation to the bankrupt when that assessment is made". In such circumstances the bankrupt is liable to pay to the trustee of a contribution in respect of that period. The applicant submits that no assessment of post second bankruptcy income contributions has been made against the applicant: see [3] of his submissions. However, in my opinion, if s 139P is in play, it is not a bar to the trustee granting its consent but a basis for the imposition of conditions. Further, the balance of s 272(2) remains available for the imposition of appropriate conditions. 19 I find that the proposed holiday visit is genuine and that the applicant bankrupt is likely to return to Australia. In cross-examination it was not put to the applicant that he would not return to Australia. 20 In relation to the genuineness of the proposed holiday visit, for the purpose of the visit, I accept the respondent's submission that the visit does not qualify as compassionate but I find there is a need for the applicant to look after his 17 year old son in circumstances where the 17 year old's mother, the applicant's former wife, is presently in Japan but needs to travel to India on 11 January 2019. 21 As I have earlier noted, it is not contended on the part of the respondent trustee that the visit will hamper the administration of the estate. 22 I also take into account that the Official Trustee has consented in writing under s 272(1)(c) and that the respondent trustee, albeit before the applicant's second bankruptcy, in 2017 consented to the applicant bankrupt leaving Australia at a similar time of year for an apparently similar family holiday. 23 I have also taken into account the contention that the bankrupt may not have complied with his obligations: see Tinkler v Melluish (Trustee); in the matter of Tinkler (Bankrupt) [2017] FCA 52 at [22], but outweighing that circumstance is that the absence from Australia is to be short and the circumstances are that there is no hampering of the administration of the estate. 24 I do not draw the inference contended for by the respondent trustee that the applicant has the means and ability to pay the amount of $21,688. There is some evidence that it is not possible for the applicant to pay that amount. 25 I do not resolve, for present purposes, the dispute as to whether the amounts owed are or are not unsecured amounts payable in the second bankruptcy or whether s 139P is engaged. 26 These are significant matters which may be pursued by the respondent trustee on the applicant's return in a few weeks' time. 27 In my opinion the appropriate orders which are "just and equitable", and which take into account the decision of the respondent trustee, are as follows: THE COURT NOTES: Upon the applicant by his counsel undertaking to the Court that in the event the applicant travels to Japan pursuant to consent given in accordance with these orders he will return to Australia by no later than 18 February 2019 and, soon as practicable thereafter and in any event within 7 days from his date of return, return his passport to the respondent: THE COURT ORDERS THAT: 1. The applicant's application dated 9 January 2019 be returnable instanter. 2. The time for service of the applicant's application dated 9 January 2019, the affidavit of the applicant sworn 9 January 2019, the applicant's outline of argument dated 9 January 2019 and the applicant's short minutes of order dated 9 January 2019 be abridged to 5:00pm on 9 January 2019. 3. The respondent's decision made on 20 December 2018 refusing the applicant consent to travel to Japan except on condition that he first pay $21,668 to his bankrupt estate be set aside. 4. The respondent give to the applicant consent in writing to travel to Japan on the following conditions: (a) the applicant shall return to Australia by no later than 18 February 2019; (b) if the applicant expects his return date to be delayed for any reason, he must seek to obtain approval from the respondent before extending his travel beyond 18 February 2019; (c) the applicant shall provide to the respondent in writing full and up-to-date details of his address and contact information (including his mobile number and email address) at which he may be contacted in Japan and shall promptly notify the respondent by email of any changes thereto; (d) the applicant shall provide to the respondent prior to his departure true copy of the applicant's airline ticket for his return travel to Australia; (e) the applicant must report his return to Australia to the respondent's Townsville office within 48 hours of his return; and (f) the applicant must return his passport to the respondent's office as soon as possible after his return and in any event within seven days from his date of return. 5. The respondent return forthwith to the applicant the applicant's passport for the purpose of enabling the applicant to travel in accordance with the consent referred to in order 4 above. 6. Each party have liberty to apply on 48 hours' notice. 7. Costs reserved. 28 I note that the Official Trustee's decision is not subject to this application for review and the conditions on which The Official Trustee granted his consent continue to apply. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson.