Held: (1) Section 178 of the Act confers the widest possible discretion as to the appropriate order in an application pursuant to the section, and the court is not confined to interfering with the trustee's act, omission or decision only if it is of the view that the trustee has acted absurdly or unreasonably or in bad faith.

Re Peters; Ex parte Lloyd (1882), 47 LT 64; Re A Debtor; Ex parte The Debtor v. Dodwell, (1949) Ch 236; Leon v. York-o-Matic Ltd., (1966) 1 WLR 1450; Re Carson; Ex parte Carson (1960), 19 ABC 108; Re Hall (1957), 20 ABC 21, referred to.

(2) Restrictions on travel under the bankruptcy legislation must be seen as being aimed at ensuring 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.

(3) On the facts, the application should be dismissed.

P. D. Urquhart, for the official receiver.

Cur. adv. vult.

The following judgment was delivered.

DEANE J. The applicant, Theodore Valentine De Vere Tyndall, is a bankrupt.

Pursuant to the provisions of the Bankruptcy Act 1966 ("the Act"), a sequestration order was made in respect of his estate on 13th April, 1976. The official receiver became, by virtue of the provisions of s. 160 of the Act, and has remained, the trustee of the applicant's bankrupt estate. Subsequent to the making of the sequestration order, the applicant, as required by the provisions of s. 77 (a) of the Act, delivered his current passport to the official receiver. As a result of the making of the sequestration order the applicant was, by reason of the provisions of s. 272 of the Act, constrained, under a maximum penalty of imprisonment for twelve months, from leaving Australia without the consent in writing of the official receiver as trustee of his bankrupt estate. (at p7)

2. On 21st July, 1977, the applicant wrote a letter to the official receiver in which he stated, inter alia, that he had prospects of improving his earning rate "by accepting brief overseas assignments" and that he "would now wish to take advantage of such offers if available". The letter referred to an attached letter from "Olympic Finance" and concluded with an application "for permission to renew my passport" (sic). Enclosed with the letter from the applicant was a letter from a company, Olympic Finance and Insurance Corporation Ltd., which was dated 20th July, 1977, and, omiting formal parts, read as follows:

" Overseas Consulting Visits

Further to my recent instructions please note that:

(1) It is possible as the result of our discussions with Mr. Maramis of

Indonesia and with Mr. Read relative to the Malaysian borrowings that we will be required to visit both those countries in the foreseeable near furture.

(2) As you will appreciate you will accompany the writer in a consulting role where the instructions are received and will be required to be absent for whatever number of weeks will be necessary to complete these assignments.

(3) It will be incumbent on the corporation to provide costs of your travelling expenses but we would remind you that we will seeking (sic) additional fees for consulting time outside the country which in due course will be of added income benefit to you and your family and, we understand, your estate. (at p8)

3. In view of these developments we would therefore commend you to make your travelling papers in order, complete the appropriate arrangements and be prepared to receive our instructions when these are received, in turn, from our client.

Please confirm that you are taking action in this matter not later than fourteen days from the date of this letter". (at p8)

4. The letter was signed on behalf of Olympic Finance & Insurance Corporation Ltd. by Mr. Dean Wentworth who was described as the "Resident Partner". (at p8)

5. The official receiver apparently treated the applicant's request for "permission to renew" his passport as being, in the context of the enclosed letter from Olympic Finance & Insurance Corporation Ltd., an application for his written consent to the applicant's leaving Australia. His response was brief and to the point. On 27th July, 1977, he wrote to the applicant a letter which, again omitting formal parts, read as follows: "I refer to your letter of 2nd July, 1977 and advise that I will not give you permission to leave Australia". (at p8)

6. On 12th September, 1977, the applicant lodged this application to the court. The application seeks an order from the court that the applicant "be permitted to leave Australia and that accordingly his passport be returned to him". Upon the hearing of the application, it became apparent that the question of the return of the passport was a subsidiary question depending upon whether, in fact, it was appropriate that an order be made permitting the applicant to leave Australia. Mr. Urquhart who appeared for the official receiver expressly stated that, in the event that an order was made by the court permitting the applicant to leave Australia, the official receiver would return his passport without the need for the making of any order in that regard. (at p8)

7. It was common ground between the parties that the application to the court was an application pursuant to the provisions of s. 178 of the Act. That section provides as follows: "If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable". (at p8)

8. The provisions of s. 178 of the Act differ, in a number of important respects, from the provisions of s. 148 of the Bankruptcy Act 1924. Section 148 of the Bankruptcy Act 1924 provided: "If the bankrupt or any of the creditors or any other person is aggrieved by any act or decision of the trustee, he may apply to the Court, and the Court may confirm, reverse, or modify the act or decision complained of, and make such order in the matter as it thinks just". (at p8)

9. The provisions of the old s. 148 corresponded closely with comparable provisions of English bankruptcy legislation. It was established that, under these English provisions, the courts would only interfere with the decision of a trustee if it appeared that the trustee was acting unreasonably or in bad faith (see. e.g., Re Peters; Ex parte Lloyd (1882) 47 LT 64,at p65; Re A Debtor; Ex parte Debtor v. Dodwell (1949) Ch236, at p 241 ; and Leon v. York-o-Matic Ltd. (1966) 1 WLR 1450, at p 1454-1455 ). The principles laid down in such decisions were stated, in at least two Australian cases, to be applicable to the provisions of s. 148 of the Bankruptcy Act 1924 (see per Clyne J. in Re Carson; Ex parte Carson; Sadlier (Respondent) (1960) 19 A.B.C. 108,at p. 122 and in Re Hall (1957) 20 ABC 21, at p29 ). The differences between the wording of s. 148 of the Bankruptcy Act 1924 and the wording of s. 178 of the present Act clearly makes it impossible, however, to regard what was said in any of those English or Australian cases as being automatically applicable to an application pursuant to the provisions of s. 178 of the present Act. (at p9)

10. The critical differences in wording between s. 148 of the 1924 Act and s. 178 of the present Act are that the present Act does not require that the applicant be a person "aggrieved" as did the previous Act and the English bankruptcy legislation and that the present Act does not make the focal point of the jurisdiction the confirming, reversing or modifying of "the act or decision complained of". Under s. 178, the bankrupt, a creditor or any other person affected by an act, omission or decision of the trustee is empowered to apply to the court. The express requirement that the applicant be a person "aggrieved" no longer exists. Nor is the court, in express terms, required to approach the matter on the basis that the appropriate question is whether "the act or decision complained of" should be confirmed, reversed or modified. Once the matter is properly before the court, the court is empowered - and obliged - to make such order in the matter "as it thinks just and equitable". (at p9)

11. It was strongly submitted by Mr. Urquhart for the official receiver that, notwithstanding the variation in wording, the authorities on the English legislation and the statements by Clyne J. to the effect that those authorities were applicable to the provisions of s. 148 of the Bankruptcy Act 1924, should lead me to conclude that, in an application under s. 178, the court should only interfere with the relevant act, omission or decision of the trustee if it appeared that the trustee had acted absurdly or unreasonably or in bad faith. I have reached the conclusion that this submission cannot be accepted. In my view, the wording of s. 178 of the Act is such as to confer upon the court the widest possible discretion as to the appropriate order which should be made in the particular case and is quite inconsistent with the approach that, upon an application made pursuant to the section by a bankrupt, creditor or other person affected by an act, omission or decision of the trustee, the court is only empowered to interfere with the trustee's act, omission or decision if it is of the view that the trustee has acted absurdly or unreasonably or in bad faith. Once the matter is properly before the court, the court is, by the express words of s. 178, empowered (and , as I have said, obliged) to make such order in the matter as it thinks just and equitable. (at p10)

12. This is not, of course, to say that the court should either disregard the relevant decision of the trustee or ignore the well-established policy under bankruptcy legislation that the court should not unduly interfere with the day-to-day administration of a bankrupt's estate by a trustee. The trustee is made responsible for the administration of the bankrupt estate under the general provisions of the Act. He must, in the course of that administration, make a variety of decisions aimed at enabling the administration to be carried out with promptness and efficiency. Some of these decisions will be business or commercial decisions in which the business or commercial experience of the trustee would itself provide a basis for arguing that, unless it were shown that the trustee's decision was preverse or clearly wrong, it would be inappropriate and unjust for the court to interfere. Again, under the present legislation, the trustee will ordinarily be the official receiver and the court must be conscious of the fact that the official receiver will be made responsible for the administration of an extraordinarily large number of estates. In such circumstances, the administration of the Bankruptcy Act demands that the court take into account, in exercising its functions under the provisions of s. 178 of the Act, the opinion of the official receiver, as trustee, as to what is expedient in the interests of the prompt and efficient administration of a particular bankrupt estate. That is, however, a completely different thing to saying that the court can only interfere with an act, omission or decision of the official receiver, as such trustee, when it is of the view that the official receiver has acted unreasonably, absurdly or in bad faith in so acting or failing to act or in reaching that decision. (at p10)

13. I pass now to the consideration of the particular matters which are relevant to the determination of the application before me. 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. (at p11)

14. As has been said, the sequestration order in respect of the estate of the applicant was made on 13th April, 1976. After the sequestration order was made, the applicant failed in his statutory duty to file a statement of affairs. On 17th June, 1976, an application was made for an order that the applicant be committed to prison for failure to perform that statutory duty. The application for committal was set down for hearing for 10th August, 1976. On 5th August, 19768 the applicant finally filed a statement of affairs with the registrar in bankruptcy. On 10th August, 1976, leave was given to the official receiver to withdraw the application for committal. The deficiency in the applicant's bankrupt estate was in the vicinity of $120,000. Apart from the sum of $40 referred to subsequently and the deposit on the petition, the only amount received by the official receiver, as trustee, has been an amount of $1,730.15 representing the proceeds of sale of certain furniture. (at p11)

15. After the making of the sequestration order, the applicant was concerned in two transactions which, on the face of them, could warrant some investigation. (at p11)

16. According to the affidavit of the official receiver filed in these proceedings, a proof of debt of a Mr. Allan Gordon Greig disclosed that $5,000 was lodged to the credit of the bankrupt's bank account on 15th April, 1976, that is to say, two days after the sequestration order was made. The applicant's evidence, before me, as regards this particular transaction was vague and somewhat unsatisfactory. Assuming the amount was so lodged it is clear that it never came to the hands of the official receiver as the applicant's trustee in bankruptcy. (at p11)

17. The second transaction was in relation to an amount of $8,000 which was lodged by a company called Kuranga Pty. Ltd. on an interest-bearing deposit on 1st July, 1976, that is to say, over two months after the applicant was made bankrupt. An agreement was signed by the applicant and his son, Jonathan Balchin Tyndall, in respect of this deposit. That document stated that the applicant and his son acknowledged receipt of the cheque for the sum of $8,000 and that such funds were received as a thirty-day deposit bearing interest at nine and three-quarters per cent per annum. It also stated that the agreement was made "on the basis that the commitment will be transferred to and taken up by Tyndall Sons Balchin De Vere & Co Ltd. presently being incorporated in Victoria" of which company it was stated that the applicant and his son were to be the directors. In his evidence before me, the applicant denied that he ever received the sum of $8,000 referred to in the document and said that the amount was received by his son. His explanation of the terms of the document which he had signed was, in effect, that he had never read it. Again, his evidence was, to put the matter mildly, somewhat unsatisfactory. (at p12)

18. The sequestration order made in respect of the estate of the applicant in April 1976 was not the first such order which had been made. A sequestration order had been made in respect of the estate of the applicant in February 1966. His bankruptcy, on that occasion, was annulled on 15th August, 1969, after an offer of composition was accepted by creditors and approved by the court. The relevance of the previous sequestration order to the present matter is that it would tend to indicate either that the applicant was aware of the general obligations and restrictions arising upon the making of a sequestration order or that he was indifferent, in a situation where two such orders had been made against him, to ascertaining precisely what those obligations and restrictions were. Assuming initial indifference to the ascertainment of the nature of such restrictions and obligations, nothing in the evidence before me would justify the conclusion that the applicant's approach has, in any way, changed. Assuming awareness of such restrictions and obligations, the applicant's conduct since the making of the sequestration order is such as to indicate a certain lack of enthusiasm in the observance of them. (at p12)

19. Since shortly after the sequestration order was made, the applicant has been associated with Olympic Finance & Insurance Corporation Ltd. in what has been described as "merchant banking activities". The precise nature of the arrangement between himself and that company has not been disclosed. It would seem that he is not an employee since no tax instalment deductions have been made from his earnings. It would seem that he is not merely a consultant since the evidence indicates that the "contacts" used in his merchant banking activities are his own rather than those of that company. Whatever be the formal relationship between the applicant and that company, his activities have, apparently, consisted of arranging loans for "clients" of that company through "contacts" of either that company or himself. (at p12)

20. The affidavit of the official receiver indicates that a public examination of the applicant was held on 14th July, 1977. In the course of that examination, the applicant indicated that since 23rd August, 1976, he had received $13,871.16 "subject to audit" from Olympic Finance & Insurance Corporation Ltd. The evidence before me indicated that in the preceding fifty-six weeks to the date of hearing he had earned approximately $16,000. These earnings were, however, largely not paid to the applicant. According to the applicant, a large part of them was paid to his wife and family at his request to cover living expenses. He said, however, that it was "totally incorrect" to say that the moneys had been paid to the applicant's wife rather than to himself because of the possibility that the official receiver might make a claim if the applicant received them. Mr Wentworth, the "resident partner" of Olympic Finance & Insurance Corporation Ltd., gave evidence before me that a large part of the applicant's earnings had been paid, at his request, to a company. Again, the details of what occurred are unclear. The one thing that is clear is that, at the time of hearing of this application, the only contribution which has been made from these earnings to the official receiver as trustee of his estate was an amount of $40 which was paid last July. As Mr. Urquhart mentioned in the course of his final submissions before me, the circumstances are such as to warrant careful consideration being given by the official receiver to the making of an application to the court pursuant to the provisions of s.131 of the Act. (at p13)

21. The applicant's wife has apparently been the beneficiary of amounts other than amounts earned by the applicant from his activities with Olympic Finance & Insurance Corporation Ltd. The affidavit of Mr. Bluett discloses that, in the course of his public examination, the applicant indicated that when he was moving out of the business premises he had occupied he, on occasions, directed his clients to pay commissions which were then due to him to his wife. Again, this is a matter which the official receiver, as trustee, may legitimately desire to investigate further. (at p13)

22. The evidence as to the precise reason why the applicant needs permission to travel overseas is, upon analysis, as vague and unsatisfactory as is the evidence in relation to so many other matters. The original application to the official receiver was on the basis that "there are prospects of improving my earning rate by accepting brief overseas assignments". There was no suggestion that permission to travel overseas was necessary if the applicant was to retain his present association with Olympic Finance & Insurance Corporation Ltd. The basis upon which the application was pressed before me was that it was essential, if the applicant were to retain that association, that he be permitted to travel overseas from time to time in connection with arranging loans through overseas "contacts" (which were mainly the applicant's) to clients of Olympic Finance & Insurance Corporation Ltd. There was one such proposed trip presently in mind. The evidence in relation to it has a degree of internal variety both as to the number of clients whom it was proposed the applicant would be representing, the payment which he would be entitled to receive and the basis upon which he would be engaged to act. The resident partner of Olympic Finance & Insurance Corporation Ltd. (Mr. Dean Wentworth) having given evidence that the proposed trip was on behalf of three definite clients was first reluctant and then unable to give evidence as to the identity of these clients. (at p14)

23. Unsatisfactory though the evidence as a whole is, I am persuaded that both the applicant and Olympic Finance & Insurance Corporation Ltd. desire the applicant to travel overseas in connection with the functions which the applicant is currently performing for that company. I am also persuaded that both the applicant and Mr. Wentworth of Olympic Finance & Insurance Corporation Ltd. believe that such overseas travelling by the applicant would be to the financial advantage of both the applicant and that company. Whether they are correct in this view is, of course, a matter of speculation. I am not persuaded that, as matters at present stand, the creditors in the bankrupt estate of the applicant could expect to benefit from such financial advantages accruing to the applicant in excess of the $40 per month which the applicant has at present undertaken to pay to the official receiver. If the application were for leave to make but one particular overseas trip of two to three week's duration, it may well be that it is difficult to see how the administration of the applicant's bankrupt estate would be adversely affected by such a trip. The application is not however in respect of a single projected journey; it is, in effect, an application to travel overseas whenever the applicant's association with Olympic Finance & Insurance Corporation Ltd. requires him so to travel. (at p14)

24. Mr. Urquhart for the official receiver has informed me that the applicant's public examination has not been completed and that it is proposed, before completing the applicant's public examination, to examine other witnesses. The evidence before me fully justifies this approach. Mr. Urquhart also informed me that consideration is being given to an application being made pursuant to the provisions of s.131 of the Bankruptcy Act. Again, the evidence before me fully justifies careful consideration being given to the making of such an application. The official receiver takes the view that to grant to the applicant permission to leave Australia whenever desirable in the performance of his activities with Olympic Finance & Insurance Corporation Ltd. could seriously hinder the prompt and proper administration of his bankrupt estate. On the evidence before me, I am satisfied that the official receiver is fully justified in taking that approach. (at p14)

25. Notwithstanding the considerations weighing against the applicant to which reference has been made above, the question whether, in all circumstances, the applicant should be given permission to leave Australia whenever the performance of his functions with Olympic Finance & Insurance Corporation Ltd. requires him so to do is not free of difficulty. 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 to do so. 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 possibility that the bankrupt has committed offences under the Act and is seeking to abscond from possible prosecution will be extremely relevant. There has not, however, in this case been any suggestion that the bankrupt is endeavouring to abscond to avoid possible prosecution. 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. This is not, however, such a case for the reason that, as I have said, I am unconvinced that the bankrupt estate of the applicant could be expected to benefit over and beyond the $40 per month which the bankrupt has currently undertaken to pay to the trustee. In some cases, the requirements of the prompt and efficient administration of the estate of the bankrupt and the administration of the Act will justify the refusal to grant leave to travel overseas. This is, in my view, such a case. (at p15)

26. Taking into account all the circumstances of the present matter, I have reached the conclusion that, in the present stage of administration of the applicant's bankrupt estate, I should not grant the leave which he seeks. The provisions of s.77 (a) and s.272 of the Act recognize that a bankrupt's legitimate desires to travel overseas must, in an appropriate case, be subordinated to what is necessary for the proper and efficient administration of his estate in bankruptcy and the administration of the bankruptcy law. All in all, the circumstances of the present case are such as to make that subordination necessary. (at p15)

27. Nothing in what I have said should be taken as indicating any view as to the attitude which should be adopted by the official receiver, as trustee of the bankrupt's estate, in relation to any future application which the bankrupt might see fit to make to him for leave to travel overseas. In particular, in the event that an appropriately specific application for leave to make a particular overseas visit is made to him, the official receiver may well decide that, subject to any safeguards which he might consider necessary to ensure the bankrupt's return, the administration of the bankrupt's estate and of the Act would not be adversely affected by the making of the proposed trip. Again, the official receiver may well decide that, at some stage in the future, leave in general terms to travel overseas if and when he desired so to do could be granted to the bankrupt without any prejudice to either the administration of the bankrupt's estate or of the Act. In the one case the official receiver would be justified in granting, subject to such safeguards as he considered necessary, leave to travel overseas in an appropriate limited form. In the other he would be justified in granting, subject to any safeguards which he might consider still to be necessary, such leave in a general and unrestricted form. (at p16)

28. I dismiss the application and order that the applicant pay the official receiver's costs. (at p16)

Solicitor for the official receiver: A. R. Neaves (Commonwealth Crown Solicitor).

(Reported by R.L. Crisp Esq., Barrister-at-Law.)