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[2002] FamCA 1003
appellant. Appeal allowed; Orders 11(b) and 11(c) of Steele J's 11 March 1998 orders set aside; Registrar directed to forward husband's passport to the Official Trustee in Bankruptcy; costs certificates...
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The Full Court held that injunctions the Family Court made to stop a husband (later declared bankrupt) leaving Australia and to keep his passport as security for a $70,000 property settlement could not continue after his bankruptcy. Relying on Bankruptcy Act s 58(3) and the High Court's reasoning in Clyne that bankruptcy converts a creditor's personal claim into a right to prove against the estate, the Court concluded the underlying personal obligation to pay had been displaced and therefore the enforcement-type injunctions were no longer sustainable. The appeal was allowed: the restraining orders were set aside, but the Court directed the Registrar to forward the passport to the Official Trustee in Bankruptcy and noted other Bankruptcy Act provisions limit the bankrupt's travel. The Court also observed the husband retained standing to apply for discharge despite bankruptcy (paras 14-21).
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1,958 words · generated 03/08/2026
This Full Court appeal concerned the interaction between Family Court enforcement measures and the effect of bankruptcy on personal obligations. On 11 March 1998 Justice Steele ordered the husband to pay the wife $70,000 as a property settlement and, until the sum was paid, restrained the husband from leaving Australia and required him to deposit his passport with the Court (Orders 10 and 11) [2]. The husband was declared bankrupt on his own petition on 12 June 1998 [4]. Years later (31 October 2001) the husband sought to vary the restraint so that he could leave Australia "except upon the approval of the Insolvency and Trustee Services Australia" and that his passport be released to the Insolvency and Trustee Services Australia (now the Trustee) [5]. A Judicial Registrar dismissed the application; a review by Lawrie J was also dismissed (application for review dated 18 December 2001; dismissal 4 July 2002) [7-11]. The husband's sole ground of appeal was that the trial judge failed to consider the effect of the Bankruptcy Act on the enforceability of the Family Court's restraint orders [12].
The Full Court (Finn, Coleman and Mullane JJ) allowed the appeal and set aside the Family Court orders that restrained the husband from leaving Australia and required the passport to be retained by the Court (Orders 11(b) and 11(c)). The Court held that once the husband was relieved by bankruptcy of the obligation to pay the $70,000, injunctions made to secure enforcement of that obligation were no longer sustainable, applying the High Court’s reasoning in Clyne v Deputy Commissioner of Taxation that bankruptcy converts the creditor's right into a right of proof and relieves the bankrupt of the personal obligation to pay [16-19]. The Registrar was directed to forward the passport to the Official Trustee in Bankruptcy; the Court emphasised that separate Bankruptcy Act provisions nevertheless regulate a bankrupt's ability to leave Australia and require passport surrender to the Trustee [20]. Costs certificates were granted for both parties [Orders].
The decision hinges on statutory effect and High Court authority on the nature of a bankrupt’s obligations. Two statutory provisions frame the problem.
Bankruptcy Act 1966 s 58(3) provides that, except as provided in the Act, after a debtor has become bankrupt a creditor cannot enforce any remedy against the person or property of the bankrupt in respect of a provable debt, nor commence fresh proceedings in respect of a provable debt without leave (the text of s 58(3) is quoted at para 14). The Full Court treated this prohibition as central to the husband's argument.
Family Law Act 1975 s 114(3) authorises the Family Court to grant injunctions, including injunctions in aid of the enforcement of a decree, where it appears just or convenient (para 18). The Full Court regarded this as the statutory source of Steele J's original restraining orders.
The decisive authority was the High Court’s statement in Clyne v Deputy Commissioner of Taxation that bankruptcy renders the debtor no longer obliged to pay creditors and converts their right into a right of proof against the estate: "The effect of the bankruptcy however is that the debtor is no longer obliged to pay his creditors; indeed he is disabled from doing so. If he offered payment they could not safely accept it; their right is a right of proof against the estate" (para 16, quoting Clyne). The Full Court concluded that, although the Family Court had power under s 114(3) to make enforcement injunctions, that power could not sustain injunctions that in substance enforced an obligation which, by operation of the Bankruptcy Act and Clyne, had been displaced and become a provable debt. Hence Orders 11(b) and 11(c) were no longer sustainable and had to be discharged (para 19).
The Court took care to explain practical consequences: setting aside the Family Court injunctions did not free the husband to travel at will because the Bankruptcy Act contains independent restrictions on travel and a requirement to surrender a passport to the Trustee; accordingly the Court directed the Registry forward the passport to the Official Trustee (para 20). The Court also observed the husband had standing to seek discharge despite bankruptcy (para 21).
Before this Full Court's decision the legal materials showed two positions in tension:
This Full Court decision resolved the specific tension in the factual circumstances: where injunctive orders are essentially enforcement devices securing a personal obligation that has, by bankruptcy, been displaced and converted into a provable debt, those injunctive orders cannot stand. The effect is that Family Court enforcement orders that are materially indistinguishable from creditor remedies to enforce a provable debt will be discharged once bankruptcy displaces the underlying obligation. The Court's disposition also emphasises that separate bankruptcy statutory controls (passport surrender; leave to travel) remain the proper regulatory mechanisms for addressing travel by a bankrupt.
The decision therefore clarifies that Family Court injunctive enforcement cannot be used to subvert the statutory regime of bankruptcy by continuing to enforce personal liabilities converted into provable debts.
Para 14 (s 58(3) quotation): The statute says that after someone becomes bankrupt, a creditor cannot enforce a remedy against them or their property for a debt that can be proved in bankruptcy. Plain English: once you are bankrupt, creditors generally cannot keep suing you or seize your property for claims they can prove in your bankruptcy.
Para 16 (Clyne quotation): "The effect of the bankruptcy ... the debtor is no longer obliged to pay his creditors ... their right is a right of proof against the estate." Plain English: bankruptcy replaces a creditor's ability to insist on direct payment from the debtor with the ability to make a claim against the pool of assets managed in the bankruptcy.
Para 18 (s 114(3) quotation): The Family Court can grant injunctions, including to help enforce its orders, if it is just or convenient. Plain English: the Family Court can make orders to stop someone doing something to make sure court orders are obeyed.
Para 19 (core reasoning): "Once the husband was relieved by his bankruptcy of the obligation to pay ... those orders ... are no longer sustainable and must be discharged." Plain English: because bankruptcy took away the husband's personal duty to pay the $70,000 and converted the wife's remedy into a claim in bankruptcy, the Family Court injunctions that were securing that duty cannot continue.
Para 20 (consequence): Discharging the orders does not free the husband to leave Australia; bankruptcy law separately controls travel and passport surrender, so his passport should be sent to the Official Trustee. Plain English: even though the Family Court injunctions were set aside, different bankruptcy rules still restrict travel and regulate the passport.
The Full Court’s reasoning is triggered when:
In that fact pattern the Family Court injunctions that function to enforce the now-provable debt will be vulnerable to discharge on the basis that bankruptcy has displaced the personal obligation and converted the creditor's remedy into a right of proof (paras 14-19).
This deep dive is confined to the reasoning and citations within the judgment under review. The Full Court expressly applied Clyne and cited Guirguis as authority that the bankrupt nevertheless had standing to apply for discharge (para 21). The judgment does not catalogue subsequent treatments by other courts. The Full Court’s reliance on Clyne shows the continuing force of High Court authority concerning the effect of bankruptcy on personal obligations; practitioners should expect lower courts to treat the principle as authoritative when the same statutory and factual overlap occurs.
Several points of practical and doctrinal nuance remain open or were acknowledged by the Court as not entirely free from doubt:
Source of Power versus Effect: The Court said it was "not entirely free from doubt" about the source of power for the orders, concluding they were made under s 114(3) of the Family Law Act but indicating that the legal effect of bankruptcy nonetheless defeats them (para 18). That leaves a space for close analysis where an injunction is not simply enforcement of a personal obligation but is aimed at protecting third-party interests or preserving assets. Would such orders be treated differently? The judgment resolves the case before it but leaves application to varied forms of injunctive relief open.
Exceptions under the Bankruptcy Act: The Full Court noted exceptions to s 58(3) had no relevance in this case (para 15). There may be factual scenarios where an exception applies, or where leave or court-ordered arrangements under the Bankruptcy Act permit enforcement steps. How those exceptions interplay with Family Court powers in other factual matrices would require case-by-case analysis.
Alternative Security: The trial judge observed the husband did not propose any alternative security to secure payment (para 9). If a bankrupt proposes acceptable alternative security that does not conflict with the Bankruptcy Act's scheme, could the Family Court make orders framed to avoid the s 58(3) bar? The Full Court’s reasoning suggests difficulty where the order functions to enforce a provable debt, but finer distinctions about types of security were not resolved.
Standing and procedural posture: The Court explicitly accepted the husband had standing to seek discharge despite bankruptcy (para 21), citing Guirguis. The extent and limits of a bankrupt's standing to seek modification or discharge of family law injunctions in other contexts could be explored further.
Interaction with passport and travel controls: The Court directed the passport be forwarded to the Official Trustee (para 20). Practical administration and timing of that step, and how leave to travel applications to the Trustee or Federal Court (Bankruptcy Act ss 139ZU, 272 etc.) interact with subsequent family law proceedings, remain matters practitioners will need to navigate on a factual basis.
This judgment provides a clear statement on the fundamental point: where a Family Court injunction functions as enforcement of a monetary obligation that has been displaced by bankruptcy and become a provable debt, the Family Court injunction cannot be sustained. The decision leaves open finer questions about orders serving other protective or proprietary functions and about situations where statutory exceptions or alternative securities are present.
Note: This deep dive is a grounded analysis of the Full Court’s written reasons in Ejje & Ejje [2002] FamCA 1003, confined to the material and paragraph citations contained in that judgment. It does not purport to canvass subsequent authority beyond the text of the judgment reviewed above.
This is general legal information, not legal advice; I can make mistakes. Before you act on any of this or rely on any draft, get a qualified Australian lawyer to check it.
CASES: Clyne v Deputy Commissioner of Taxation and Others [1984] HCA 44; (1984) 154 CLR 589; Guirguis v Guirguis and Official Trustee in Bankruptcy (1997) FLC 92-726.
This was an appeal by the husband against orders made by Lawrie J. The order, which is the subject of the husband's appeal, is most conveniently explained after setting out the factual background to this matter.
In March 1998 Steele J made orders in proceedings between the husband and the wife which required the husband to pay to the wife $70,000 by way property settlement and which also restrained the husband from leaving Australia and required him to deposit his passport with the Registrar of the Sydney Registry of this Court, who was to retain the passport pending written notice from the wife that all moneys payable pursuant to Steele J's orders had been paid.
In June 1998 the husband was declared bankrupt on his own petition. In October 2001 the husband filed an application seeking to vary the orders made by Steele J to provide that he be restrained from leaving Australia "except upon the approval of the Insolvency and Trustee Services Australia" and that his passport be released to the Insolvency and Trustee Services Australia. Judicial Registrar Johnston dismissed the husband's application in December 2001.
Thereafter the husband filed an application to review the decision of the Judicial Registrar. That application was dismissed by Lawrie J on the basis that the he had not established any basis for the variation of Steele J's orders. It is Lawrie J's order dismissing the husband's application which is the subject of the husband's appeal.
On appeal it was submitted for the husband that the effect of the Bankruptcy Act 1966 was to transfer the wife's right to be paid by the husband to a right to prove a debt against the bankrupt's estate, and thus the injunctions made by Steele J to secure enforcement of the husband's liability to make a payment to the wife were no longer enforceable.
HELD in allowing the appeal and setting aside the restraining orders made by Steele J:
1. The Full Court held that once the husband was relieved by his bankruptcy of the obligation to pay the wife the sum of $70,000 by way of property settlement, the orders made by Steele J were no longer sustainable and must be discharged. C_lyne v Deputy Commissioner of Taxation_ and Others [1984] HCA 44; (1984) 154 CLR 589 applied.
2. The Full Court noted however that the discharge of the orders would not mean that the husband is free to leave Australia or to have possession of his passport. There are provisions in the Bankruptcy Act 1966 which prevent the husband from leaving Australia without the consent of his Trustee in Bankruptcy or in certain circumstances (ss 139ZU and 272 of the Bankruptcy Act). There is also a provision which requires the surrender of the husband's passport to his Trustee (s 77 of the Bankruptcy Act).
1. This is an appeal by the husband against orders made by Lawrie J on 4 July 2002. The orders in question can most conveniently be described after we have set out the factual background to this matter.
2. On 11 March 1998, Steele J made orders in proceedings between the husband and the wife which required, amongst other matters, that by way of property settlement the husband should pay to the wife the sum of $70,000 within 28 days (Order 10). His Honour's orders further provided that pending payment of the sum of $70,000, the husband was (again, amongst other things), restrained from leaving Australia (Order 11(b)) and required to deposit his passport with the Registrar of the Sydney Registry of the Court, who was to retain the passport pending written notice from the wife that all moneys payable pursuant to Steele J's orders of 11 March 1998 had been paid (Order 11(c)).
3. On 25 June 1998, Steele J made some further orders amending pursuant to the slip rule his orders of 11 March 1998. Those amendments are not relevant for present purposes.
4. On 12 June 1998, the husband was declared bankrupt on his own petition. (We understand that there has been no application to set aside, or other challenge to, the husband's bankruptcy).
5. On 31 October 2001, the husband filed an application (together with a supporting affidavit) in the Sydney Registry of this Court seeking orders which would vary Order 11 of the orders made by Steele J on 11 March 1998 in the following way (at Appeal Book p.24):
11.(b) By adding the words "except upon the approval of the Insolvency and Trustee Services Australia".
11. (c) By deleting the first four lines of the order and be substituted as follows:
"That the Respondent (sic) current passport held with the Registrar of the Sydney Registry be released forthwith to the Insolvency and Trustee Services Australia".
6. The husband's application was opposed by the wife.
7. On 14 December 2001, Judicial Registrar Johnston dismissed the husband's application. We have not been provided with a copy of the Judicial Registrar's reasons for judgment.
8. On 18 December 2001, the husband filed an application to review the decision of the Judicial Registrar. That application was heard by Lawrie J on 22 February 2002. Her Honour reserved her judgment.
9. On 4 July 2002, her Honour delivered her judgment and made an order dismissing the husband's application for review of the Judicial Registrar's decision.
10. In the course of her judgment, her Honour explained the husband's case before her and her reasons for rejecting his application in the following terms:
8. It was put on behalf of the husband that because he was now a bankrupt that the Family Court should no longer play any part in enforcing the orders. He said that the injunction against leaving Australia and the holding of his passport were by way of enforcement of the orders of Justice Steele.
9. The history of this matter is that shortly before the separation, the husband liquidated all the matrimonial assets and took the proceeds to Lebanon where he purchased two shops. He has not complied with the order of Justice Steele. He says now that the shops have been sold by his sister and he cannot pay the wife unless he goes to Lebanon in person to resolve "the dispute" which he claims he has with his sister. He makes no suggestion for any alternative security for the payment of the sum ordered. He has been advised by the Registry of the availability of Section 79A in the event that he can establish that he cannot comply with the orders. He has made no such application.
...
11. This is not a matter where the wife is seeking any additional enforcement orders. The orders themselves provide the practical security for the payment by requiring the husband to pay if he wishes to leave Australia.
12. The husband has made no payment under the order. He has sought to leave Australia before. He says that he has an offer of a job in Saudi Arabia for which he needs to have his passport. His evidence of this is an annexed photocopy of a printed form of contract in Arabic filled in with his name printed in English and the word "Supervisor" and "$4,000" filled in. The original document has not been provided to the Court. There is no evidence from the putative employer. I am not satisfied that a job offer has been made.
13. The husband has not established any basis for the variation of the order as sought in his application.
14. The application for a review is therefore dismissed.
11. It is her Honour's order of 4 July 2002 dismissing the husband's application for a review which is the subject of this appeal.
12. The sole ground contained in the husband's Notice of Appeal (which was filed on 23 July 2002) is that her Honour "failed to consider the effects of the provisions of the Bankruptcy Act".
13. It became clear from the submissions of Counsel for the husband that what was being asserted by that ground of appeal was that the effect of the husband's bankruptcy was that all unsecured debts of the husband, such as the debt to the wife for property settlement, had become debts provable in the bankruptcy and could no longer be enforced by the creditors. In support of this proposition, reliance was placed by Counsel for the husband on the provisions of s 58(3) of the Bankruptcy Act 1966 (Cth) and also on the decision of the High Court in Clyne v Deputy Commissioner of Taxation and Others [1984] HCA 44; (1984) 154 CLR 589.
14. Section 58(3) is in the following terms:
(a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
15. The exceptions to s 58(3) have no relevance in the present case.
16. The passage from the joint judgment of Gibbs CJ, Murphy, Brennan and Dawson JJ in Clyne v Deputy Commissioner of Taxation on which particular reliance was placed by Counsel for the husband is as follows (at 594-595):
The effect of the bankruptcy however is that the debtor is no longer obliged to pay his creditors; indeed he is disabled from doing so. If he offered payment they could not safely accept it; their right is a right of proof against the estate.
17. In light of this statement by the High Court, it was submitted on behalf of the husband, that the scheme or effect of the Bankruptcy Act had transferred the wife's right to be paid by the husband to a right to prove a debt against the bankrupt's estate, and thus the orders or injunctions made to secure enforcement of the husband's liability to make a payment to the wife were no longer sustainable.
18. Although not entirely free from doubt, we think that the better view must be that the orders of Steele J restraining the husband from leaving Australia and requiring him to surrender his passport were made pursuant to s 114(3) of the Family Law Act 1975, which is in the following terms:
A court exercising jurisdiction under this Act in proceedings other than proceedings to which sub-section (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.
19. But whatever the source of power for the orders in question, we think it clear that once the husband was relieved by his bankruptcy of the obligation to pay the wife the sum of $70,000 by way of property settlement, then having regard to what was said by the High Court in Clyne v Deputy Commissioner of Taxation concerning the effect of bankruptcy on the bankrupt's obligations to his or her creditors, those orders (being Orders 11(b) and (c) of 11 March 1998) are no longer sustainable and must be discharged.
20. The discharge of those orders will not mean that the husband is free to leave Australia or to have possession of his passport. There are provisions in the Bankruptcy Act which prevent him leaving Australia without the consent of his Trustee in Bankruptcy or in certain circumstance, the Federal Court (see s 139ZU and s 272 of the Bankruptcy Act). There is also a provision which requires the surrender of his passport to his Trustee (see s 77 of the Bankruptcy Act). We propose to direct the Registrar to forward the husband's passport to the Trustee in Bankruptcy.
21. Finally, we mention that we consider that there is no issue but that the husband had standing (notwithstanding his bankruptcy) to make the application for the discharge of the orders in question. (See Guirguis v Guirguis and Official Trustee in Bankruptcy (1997) FLC 92-726).
22. In light of the submissions received from both Counsel at the conclusion of the hearing of the appeal, we propose to grant both parties certificates under the Federal Proceedings (Costs) Act 1981 in respect of their costs incurred in the appeal.
1. That the appeal from the orders of the Honourable Justice Lawrie made 4 July 2002 be allowed.
2. That Orders 11(b) and 11(c) of the orders made by the Honourable Justice Steele on 11 March 1998 be set aside.
3. That the Registrar of the Family Court of Australia (Sydney Registry) is directed to forward the husband's passport to the Official Trustee in Bankruptcy, care of the Insolvency and Trustee Service Australia, New South Wales Branch, 10th Floor, 255 Elizabeth Street, Sydney, NSW, 2000.
4. That the Court grants to the Appellant Husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the Appellant Husband in respect of the costs incurred by the Appellant Husband in relation to the appeal.
5. That the Court grants to the Respondent Wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the Respondent Wife in respect of the costs incurred by the Respondent Wife in relation to the appeal.
CASES: Clyne
Deputy Commissioner of Taxation and Others
(1984) 154 CLR 589
Appeal allowed; Orders 11(b) and 11(c) of Steele J's 11 March 1998 orders set aside; Registrar directed to forward husband's passport to the Official Trustee in Bankruptcy; costs certificates granted for both parties (Orders).