El-Hanania v Cull

1. The application be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

KATZMANN J: 1 The applicant is an undischarged bankrupt. He is, or was, also a legal practitioner. An order for the sequestration of his estate was made in this Court on 15 December 2022. The Official Trustee was appointed trustee of the bankrupt estate. In January 2023 Innis Anthony Cull and Andrew Reginald Yeo were appointed trustees under s 181A of the Bankruptcy Act 1966 (Cth), replacing the Official Trustee. More than 15 months later, on 7 April 2024, the applicant filed a notice of appeal seeking an annulment of the sequestration order and an application seeking an extension of time to enable him to appeal. That application is pending. 2 Yesterday the applicant filed an originating application seeking a declaration that "he is able to leave Australia" to be with his son and wife, who are currently in Honolulu, for a period of five days, requesting an urgent hearing as the flight upon which he is booked was scheduled to leave tonight. 3 Section 272(1)(c) of the Bankruptcy Act provides that it is a criminal offence for an undischarged bankrupt to leave Australia, or do an act preparatory to leaving Australia, punishable by imprisonment for up to 3 years, without the written consent of the trustee in bankruptcy. The applicant neglected to seek the trustees' consent before making arrangements to travel to Hawaii and when it was belatedly sought it was refused. 4 In his affidavit in support of the application, the applicant deposed that he "just received a call from [his] wife stressing out" and that was "causing [him] concerns" as his wife and son had never been overseas "alone" before. He said that he was concerned for the mental health of his son "in not being with his father". He asserted that throughout the period of his bankruptcy he was never "put on any notice by the trustee or anyone at all" that he was restricted from travelling. He claimed that had he known of this he would have approached the trustees and the Court much earlier. He deposed that he received a new passport recently and there was no restriction on him doing so. He also claimed that he had responded to all requests made by the trustees. Given the short duration of the trip, he submitted there would be no prejudice to the trustees. 5 The applicant deposed that he was "suffering from mental health issues" and was being treated by his "health team" for "major depressive orders with strong medication and regular treatment" from two general practitioners and a psychologist Anthony Pignataro. He deposed that he was suffering from end stage renal failure among other medical conditions for which he is receiving treatment and that his father, to whom he was very close, passed away some four months ago and "that had further implications on [his] mental health". He said he had been admitted to Royal North Shore Hospital (RNSH) no fewer than five times from 2016 to 2022 for sepsis and pneumonia. The relevance of this evidence was obscure. He also deposed that his son had "mental health issues", that he was diagnosed with "ADD" "and this event is impacting upon him". 6 He said he had no intention to defeat creditors, he only wanted to be with his son as he is doing his HSC this year and is on a short vacation before his trials commence. 7 The applicant deposed that he called the trustees at 9.10 am yesterday and left a message. He said he later received a letter from the trustees stating that a response would be forthcoming. He said he received a second letter "stating that my travel is unlikely to be granted". He claimed he was being treated unfairly "given the magnitude of [his] health issues". 8 The applicant undertook to the Court that he would surrender to the trustees his passport, currently secured in a sealed bag at the office of the Australian Federal Police (AFP) at Sydney Airport as soon as he returns to Australia on 30 July 2024. 9 The documents annexed to the affidavit are: (1) an email, marked urgent, that the applicant sent to the trustees at 8.09 am on 22 July 2024, entitled "Saba EL Hanania (Hanania) request permission to travel short period holidaying with my son" attaching a letter to the trustees of the same date in which the request is made; sealed copies of the application for an extension of time, affidavit in support, and notice of appeal; and a copy of Court orders made on 12 June 2024 in connection with his application for an extension of time; (2) a letter from Dr Pignataro, a consultant clinical psychologist, addressed "to whom it may concern" and dated 7 March 2024, which is also annexed to the affidavit in support of the application for an extension of time, in the following terms: Saba is under treatment which began on 16 February 2024. He will require ongoing intervention for some time. (3) a record from Flight Centre of his booking, issued on 22 July 2024, showing that he was booked on a Qantas flight to Honolulu at 8.25pm on 24 July 2024 with a return flight from Honolulu at 12.05pm on 28 July 2024; (4) other emails between the applicant and Mr Cull; and (5) a document, described in the affidavit as "a short summary" he had "tabled" from the Royal North Shore Hospital file, but no supporting documents save for a few pages which were annexed to his affidavit filed in support of his application for an extension of time. 10 The email exchange discloses that Mr Cull responded to the letter of request as follows: I refer to recent communications concerning your bankruptcy and in particular your desire to travel overseas. Pursuant to the provisions of the bankruptcy act, as an undischarged bankrupt, you are not permitted to travel overseas without my permission. I am not aware of any request prior to today for permission to travel overseas. Both me and my team have a number of other urgent matters to attend to and we will consider your bankrupt estate in due course once we have had the opportunity to review the file and consider our position. We will correspond further with you shortly. 11 That email was followed by three further emails from the applicant pleading with Mr Cull to allow him to travel. 12 At 7.37am on 23 July 2024 Mr Cull emailed the applicant to advise him that on a preliminary review of the file, he had not complied with his obligations as a bankrupt, a number of outstanding issues in his bankruptcy need to be addressed and consequently it was unlikely he would be able to give him permission to travel. 13 I interrupt the narrative to observe that, at the relevant time, s 77(1) of the Bankruptcy Act relevantly provided: (1) A bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause: (a) forthwith after becoming a bankrupt, give to the trustee: (i) all books (including books of an associated entity of the bankrupt) that are in the possession of the bankrupt and relate to any of his or her examinable affairs; and (ii) any passport or document issued for the purposes of travel held by the bankrupt; and (b) attend the trustee whenever the trustee reasonably requires; and (ba) give such information about any of the bankrupt's conduct and examinable affairs as the trustee requires; and (bb) as soon as practicable after becoming a bankrupt, advise the trustee of any material change that occurred between the time the bankrupt lodged his or her statement of affairs and the time the bankrupt became a bankrupt; and (bc) if a material change occurred later, advise the trustee of that change as soon as practicable after the change occurs; and … (e) execute such instruments and generally do all such acts and things in relation to his or her property and its realization as are required by this Act or by the trustee or as are ordered by the Court upon the application of the trustee; (f) disclose to the trustee, as soon as practicable, property that is acquired by him or her, or devolves on him or her, before his or her discharge, being property divisible amongst his or her creditors; and (g) aid to the utmost of his or her power in the administration of his or her estate. 14 I return to the narrative. Six minutes later the applicant replied, remonstrating with Mr Cull saying that he had "complied with the request" and "nothing remains outstanding", referring him to the proposed appeal, stating that "[his] health will come into it in particular mental health issues", and foreshadowing the present application. At 10.36am Mr Cull sent the applicant a lengthy email refusing him permission to travel with a detailed explanation. He wrote: Dear Mr Hanania I refer to recent communications: • On 21 July 2024, I was contacted by the Australian Federal Police who notified me that you had attempted to travel overseas that day. Pursuant to the Bankruptcy Act 1966, it is an offence for a bankrupt to leave Australia, or do an act preparatory to leaving Australia without the written of their trustee. My consent had not been sought for any overseas travel. • On 22 July 2024, you sent me a letter requesting my permission to travel overseas for the purposes of a holiday with your wife and son. • A bankruptcy trustee may refuse permission for a bankrupt for overseas for a number of reasons including: • That the bankrupt has not provided all of the information requested by the trustee. • There are outstanding matters that require the bankrupt's presence in Australia for their resolution. • On 23 July 2024, I notified you that there were outstanding information requests that you had not complied with in your bankruptcy and that I would be likely to refuse you permission for overseas travel. Outstanding Information and Document Requests • On 11 January 2023, you were sent an initial notification of your bankruptcy, which included a number of documents for you to complete, and a number of actions you were required to take (including contacting my office to arrange for a formal interview). You failed to complete the documents required or contact my office to arrange an interview. A copy of this letter is attached. • On 4 July 2023, you were sent a further detailed letter setting out your obligations and duties as a bankrupt. • This letter: • Notified you of the documents (including questionnaires) that you were required to sign. • Notified you that you were not permitted to travel overseas without my permission. • Asked you to either provide information or documents. • A copy of the letter is attached. • You failed to comply with this letter. • I subsequently lodged an objection to your discharge for bankruptcy, which you unsuccessfully sought to have reviewed by the Inspector General. Refusal for Permission to Travel Overseas • Given your failure to comply with your obligations, complete the documents requested and provide the information requested, I am unable to give my permission for your overseas travel. Circumstances in which permission will be granted • I am prepared to consider granting you permission for overseas travel provided you with comply with the following conditions: • You complete, sign and return the documents attached to the 11 January 2023 letter. • You answer the questions, provide the information and the documents requested in the 4 July 2024 (sic) letter. • You complete your income questionnaire for Contribution Assessment Period 2 (CAP2) attached to this email. • You provide written information and documents demonstrating who paid for your overseas travel tickets and how they paid for it (ie copies of bank statements showing the travel payments). • You attend a Microsoft Teams meeting with me subsequent to the provision of this information to provide information to me about your examinable affairs and to answer questions that I have about your affairs and the information I have requested you provide. • Please put any questions you to me in writing by return email. 15 None of the attachments to Mr Cull's email were included in the applicant's affidavit. 16 The applicant followed with two further emails saying that he was "more than happy to assist [him] with anything", that he would pay the airfares himself, that he could give him an undertaking to meet up when he returns "and go over everything [he] required", that his mental health was significantly impaired but that he is now "on strong medication and good treatment" and his ability to communicate is improving. 17 At the hearing the applicant told the Court that, the day after the sequestration order was made, he had a telephone conversation with a man whose name he could not recall, presumably the trustee or someone on the trustees' behalf, during which he told the man he did not have the passport, and in any case, it had expired. When I asked whether that meant he had been asked to surrender his passport at that stage, the applicant professed to have no real recollection. 18 The application is opposed. 19 Mr Cull filed an affidavit setting out the basis for his opposition. It undermined much of what the applicant had asserted in his affidavit. 20 Whereas the applicant deposed that he had complied with all the trustees' requests, Mr Cull deposed to making a number of requests for information and documents and for an interview, none of which had been complied with. Documents supporting Mr Cull's evidence were annexed to his affidavit. Whereas the applicant deposed that he had no idea that he needed the trustees' permission to travel overseas, documents annexed to Mr Cull's affidavit reveal that he had been informed at least twice that that was so. Whereas the applicant implied in his letter to Mr Cull, annexed to his affidavit, that he booked the flight to Honolulu that day, he informed the Court in response to a question I asked, that he had booked the flight on 26 June 2024, that is, nearly a month before, and Mr Cull deposed that on 21 July 2024, the day before the letter was emailed to him, he was contacted by representatives of the AFP who notified him that the applicant was attempting to leave Australia and they had confiscated his passport. The applicant made no mention in his affidavit that he had tried to leave the country without seeking permission from the trustees or explain how the AFP came into possession of his passport. Nor did he mention how the ticket was paid for or who paid for it. 21 In a letter from Mr Cull dated 11 January 2023, the day after he and Mr Yeo were appointed trustees of the bankrupt estate, the applicant was asked to complete a statement of affairs; directed to contact the trustees' office to arrange an interview; required to sign a "Warning Bulletin - Responsibilities of a Bankrupt under the Bankruptcy Act 1966"; required to complete a List of Household Furniture and Effects within 14 days; asked to provide certain books and records (including income tax returns, bank statements, loan and credit card statements); required to complete a Business Questionnaire if he had carried on a business over the previous five years as well as an Income Questionnaire; directed to surrender his passport; and notified that he could not travel overseas without written permission. The direction and notification with respect to his passport and overseas travel reads as follows: E. Passport and Overseas Travel You are directed to surrender your passport(s) to me, including any expired passport(s). Please contact my office to make immediate arrangements for secure delivery of your passport(s). You are not permitted to travel overseas without my written permission. If you are required to pay compulsory income contributions and wish to travel overseas, you may be required to make arrangements for the payment of these contributions prior to being granted permission to travel. It is an offence to leave the country without my written permission. 22 While Mr Cull acknowledged that the applicant completed a statement of affairs on 12 May 2023, he deposed that he had not provided any of the information, signed the documents or undertaken the other steps set out in the letter of 11 January 2023 despite being sent a second letter on 4 July 2023 directing him to do so. In that letter Mr Cull remined him of his obligations under the Bankruptcy Act. He also noted that he had not submitted the Warning Bulletin, the List of Household Furniture and Effects; the Business Questionnaire or the Income Questionnaire and directed him once more to comply with them and return them to his office with supporting documentation within 14 days. He also asked the applicant to answer further questions. What is more, he again told the applicant that he was required to surrender his passport(s) including any expired passport(s). He was asked to contact the trustees' office within 14 days to make immediate arrangements to secure delivery of his passport(s) and was reminded that he was not permitted to travel overseas without Mr Cull's written permission. The letter concluded with the following warning: Offence and Notice of Objection I remind you have obligations to assist me in the administration and to comply with your duties. If you fail to provide me with the requested information and documentation, I may proceed to lodge an objection to your discharge from bankruptcy pursuant to s.149D of the BA, without further notice. An objection to discharge will have an effect of extending your period of bankruptcy from three to eight years. A failure to disclose information is an offence punishable by a maximum term of imprisonment of one year, pursuant to s.265(1) of the BA. 23 Yet again, the applicant did not comply with his obligations. 24 Consequently, on 14 November 2023 Mr Cull lodged an objection to the applicant's discharge from bankruptcy on the grounds that: Section 149D(1)(d): the bankrupt, when requested in writing by the trustee to provide written information about the bankrupt's property, income or expected income, failed to comply with the request. Section 149D(1)(ia): the bankrupt failed to comply with subparagraph 77(1)(a)(ii) of the BA, being the duty to provide to the trustee any passport or document issued for the purpose of travel held by the bankrupt. 25 As a result, the term of the applicant's bankruptcy was extended until 13 May 2031. 26 The notice of objection to discharge, which was sent to the applicant, also recorded that the applicant had been sent emails from the trustees' office on 16 January 2023, 27 January 2023 and 4 August 2023, that the applicant confirmed receipt of the letter of 11 January 2023 and the 16 January 2023 email and promised to respond by the end of the week, that on 14 February 2023 the applicant wrote saying he would attend to all outstanding matters by 28 February 2023, and that after the email of 4 August 2023 the applicant wrote to him claiming that he had complied with all his obligations. The notice of objection to discharge also reveals that the applicant declared in his statement of affairs on 12 May 2023 that he held an Australian passport. 27 The applicant lodged an application for review of the objection with the Australian Financial Security Authority. On 21 February 2024 a delegate of the Inspector-General in Bankruptcy decided not to review the trustee's objection "as there are insufficient grounds to justify a review". In her reasons she noted, amongst other things: In your application for review of the objection, you stated that you did not discuss the matter with the Trustee to see if something could be done to withdraw the objection. You referred to your response letter and attachments in response to the question asking you if you had any reasonable excuse. The letter does not provide any explanation concerning any reasonable excuse, other than a reference to your health information that you stated, "if read properly, would have assisted the Trustee in relation to the serious health challenges you have had to deal with". I consider that although you have provided an extensive list of what appears to be serious health conditions, you have not provided any medical certificates and / or other documentary evidence in support of that information, nor have you provided any explanation as to how those health conditions may have prevented you from providing the information requested by the Trustee or delivering your passport to the Trustee. 28 The Court's jurisdiction to deal with a matter of this kind used to be found in s 178 of the Bankruptcy Act. It now appears in Sch 2, s 90-15. Section 90-15 relevantly provides that "[t]he Court may make such orders as it thinks fit in relation to the administration of a regulated debtor's estate" (subs (1)) and the Court may exercise that power on its own initiative or on application under s 90-20, which enables a person with a financial interest in the administration of the bankruptcy estate to make an application under s 90-15 (subs (2)). 29 As Nicholas J observed in Tinkler v Melluish [2017] FCA 52 at [19], the authorities recognise that a trustee's decision to refuse permission to an undischarged bankrupt to travel overseas is a special category because it affects the freedom of movement of a person who may not have committed or been charged with any offence. He referred to the remarks of Deane J in Re Tyndall: Ex parte Official Receiver (1977) 17 ALR 182; 30 FLR 6 at ALR 187, FLR 10-11: It can be said at once that I do not regard a decision by the trustee on an application by a bankrupt for permission to travel overseas as coming within the category of decision which should be treated as being within the ordinary day-to-day administration of a bankrupt estate. Even though applications for such leave are not uncommon, they must always be treated as being of fundamental importance, requiring careful consideration of all relevant circumstances for the reason that they are ordinarily related to the freedom of a subject, who is neither a criminal nor under criminal restraint, to travel to pursue his legitimate commercial or personal desires. 30 Deane J also said at ALR 190-191, FLR 14-15: It is only in recent years that the Commonwealth bankruptcy legislation has made it an offence for a bankrupt to travel overseas without the consent of his trustee and has required a bankrupt to surrender his passport to his trustee once a sequestration order is made. Bankruptcy does not, of itself, involve any criminal offence. A citizen should be free to travel if and when his commercial activities or personal desires prompt him so to do. Restrictions upon such travel under the bankruptcy legislation must be seen as being aimed at insuring the proper administration of the bankruptcy laws and of bankrupt estates under such laws and not as a penalty imposed upon a citizen as a consequence of inability to pay debts leading to the making of a sequestration order … In some cases the financial rewards to be derived by the bankrupt's estate from such overseas travel will clearly outweigh any inconvenience in the administration of that estate resulting from the bankrupt's departure from the jurisdiction. 31 In Re Hicks; Ex parte Lamb (1994) 217 ALR 195 at 198 Heerey J suggested that three issues should be at the forefront of matters to be considered in the exercise of the Court's discretion: first, whether the proposed visit overseas is genuine; second, whether the bankrupt is likely to return to Australia as promised; and third, whether the visit will hamper the administration of the estate. 32 This approach has been followed in a number of cases since, including Tinkler; Nasr v Dixon (Trustee), in the matter of Nasr (Bankrupt) [2018] FCA 1039 (Thawley J); and Booth v Offerman as the Trustee of the Bankrupt Estate of Geoffrey David Booth [2019] FCA 5 (Robertson J) as well as Stillman v Pascoe [2010] FMCA 549 (Lucev FM), upon which Mr Cull relied. 33 In Stillman v Pascoe, however, Lucev FM said at [52] that the Court was required to determine whether the trustee improperly exercised his discretion by not allowing Mr Stillman to travel and whether it ought to interfere with the exercise of the trustee's discretion. That is incorrect. In Macchia v Nilant (2001) 110 FCR 101 at [38] French J said that, in relation to s 178, it is unnecessary for the purpose of enlivening the court's jurisdiction to find that the trustee has done anything wrong; the trustee's decision may have been "quite correct and reasonable" on the material before him. His Honour emphasised the importance of the section "in providing for wide ranging supervision by the Court of trustees who are appointed to administer the interests of bankrupts in the interests of creditors and, in so doing, to have regard also to the interests of the bankrupts…" 34 In the present case Mr Cull conceded that there was no reason "at this point" to think that the proposed trip was not genuine or that the applicant did not intend to return, as he had purchased a return ticket. Nevertheless, he maintained that permission should not be granted. 35 The applicant made a number of submissions which were unsupported by evidence and overstated the effect and significance of much of the evidence. 36 First, the applicant submitted that he did not intend to breach any prohibition on travel and repeated what he had said on that subject in his affidavit about his state of knowledge, despite the evidence to the contrary in Mr Cull's affidavit. He submitted that he suffered from physical and mental health issues at the time that he received the letters from the trustees, referred to the letter from the psychologist, and suggested that his so-called "mental health issues" were to blame. 37 His evidence that he has been diagnosed with major depression is not supported by any of the medical reports which were annexed to his affidavit or the utterly uninformative letter from his psychologist. All but one of the medical reports pre-date the bankruptcy. The only one dated after the bankruptcy is a report of an abdominal ultrasound dated 19 December 2022 (four days after the sequestration order). None of the medical reports records a history of depression, a diagnosis of depression or a complaint of depression or, for that matter, any "mental health issue" so-called. The chronology of treatment at RNSH, prepared by the applicant, contains isolated references to "depression" in 2017, 2018, 2019 and 2020 but in the absence of the primary material those references are not entitled to any weight. In any event, they do not support the applicant's assertion that his repeated failure to cooperate with the trustees and to comply his obligations under the Bankruptcy Act, which arose in 2023, were attributable to any "mental health issue". 38 The applicant also maintained that he had complied with his obligations in relation to his bankruptcy. But the evidence flies in the face of that assertion. 39 The applicant said it was his understanding that his bankruptcy would be stayed until the appeal was resolved. When I told him that I did not believe that that was his understanding, his response was unintelligible. His reply, verbatim, was this: "the way I see it… is this - do you appeal the trustee's decision and grant another court matter, while you've got the same one on file?". He did not press the point, other than to say that at the relevant time he was suffering from physical health issues that then became mental health issues. 40 He submitted that the Court should grant him permission to leave the country, as the trip was only five days in duration, and would cause no prejudice to the trustees. He also submitted that as he had booked a return flight there was no indication that he would abscond or that he had an intention of leaving the country for the purpose of defeating his creditors. 41 In the absence of evidence to the contrary, I accept that the proposed trip is genuine and that the applicant is likely to return. The trip is short. It was not suggested that there were any specific events relating to the administration which were scheduled to take place over the days he would be away which would require his attendance (see Re Hicks at 198). On the other hand, more than 17 months have passed since Mr Cull first requested information and documents from the applicant and first sought an interview. Every day of continuing neglect hampers the administration of the estate. I am not satisfied that on his return the applicant would honour his assurances. His track record shows that he is not a man of his word. Having given careful consideration to all the relevant circumstances, and noting that the overseas trip would not afford any potential benefit to the estate, I am not persuaded to direct the trustees to consent to the proposed overseas travel. If the applicant fully cooperates with the trustees, he may be able to take his son on a post-HSC holiday. Had he sought the trustees' consent when the trip was in contemplation and been able to demonstrate that he had cooperated with the trustees or been open and honest with the Court or provided cogent evidence to explain his lack of cooperation and to support his concerns about his son's mental health, I might well have come to a different conclusion. 42 I contemplated whether I should direct the trustees to consent to the applicant travelling on certain conditions and raised the matter with the parties. The applicant said that he understood it was a very serious matter to give an undertaking to the Court and not to comply with it. In effect, he submitted that his understanding of the seriousness of an undertaking meant that he would be likely to comply with any conditions imposed on him by the Court, saying that he had complied with all court orders made in his application for an extension of time. In particular, he said that he had complied with the order requiring him to serve on the trustees a copy of his application for an extension of time and affidavit in support, pointing to the email that he sent to Mr Cull on 22 July 2024 at 08:09am, to which the application and affidavit in support were attached. He did not identify any other specific orders with which he had complied, though he submitted he had complied with all orders. 43 Although he assured the Court he would comply with any conditions and all Court orders, the applicant did not proffer any, and Mr Cull was convinced that he could not be trusted to comply with any. I regret to say that I have no more confidence in the applicant's assurances than Mr Cull. The applicant has a history of not complying with court-imposed orders: see El-Hanania v Vella (No 2) [2019] NSWCA 212. When invited to comment on that history, the applicant failed to say anything of relevance. 44 For these reasons, I dismiss the application. Mr Cull did not seek costs. I therefore make no order as to costs. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann.