FEDERAL COURT OF AUSTRALIA

Wangelin v van der Velde [2016] FCA 410

ORDERS

THE COURT ORDERS THAT:

1.    The decision of the trustees not to permit the applicant to return to Germany be set aside in accordance with s 178 of the Bankruptcy Act 1966 (Cth).

2.    The trustees are directed to consent in writing to the applicant leaving Australia.

3.    The trustees pay the applicant’s costs, to be taxed if not otherwise agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLLIER J:

1    Mr Wangelin is a German national and resident, 68 years of age, and an undischarged bankrupt under the Bankruptcy Act 1966 (Cth) (the Act). The respondents are his trustees in bankruptcy (the trustees). The trustees have refused Mr Wangelin permission to leave Australia and return to Germany. Mr Wangelin now applies to this Court to have that decision of the trustees set aside in accordance with s 178 of the Act. Section 178 provides:

Appeal to Court against trustee’s decision etc.

(1)    If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.

(2)    The application must be made not later than 60 days after the day on which the person became aware of the trustee’s act, omission or decision.

2    Mr Wangelin’s application was filed on 3 March 2016. There is no issue in dispute under s 178(2) concerning the timing of lodgement of this application.

3    Mr Wangelin seeks the following orders:

1.    That the decision of the trustees not to permit the applicant to return to Germany be set aside in accordance with s 178 of the Bankruptcy Act 1966 (Cth).

2.    That a decision be substituted permitting the applicant to travel to Germany in accordance with s 272(1)(c).

3.    That the respondent pay the applicant’s costs.

Background

4    Mr Wangelin is an architect, based in Niefern-Oschelbrunn in Germany. He has clearly spent a great deal of time in Australia – indeed it appears that he and his late wife conducted a building business in Brisbane. He deposes that he returned to Germany to live at the end of August 2014 after the death of his wife in June 2014. From the material before me it appears that Mrs Wangelin had suffered a terminal illness requiring extensive medical treatment. It is also apparent that Mr Wangelin was significantly emotionally affected by the death of his wife at the time of her death, and remains so affected.

5    Mrs Wangelin bequeathed Mr Wangelin the entirety of her estate, which included a 1/8th share in a property in Moorooka, a suburb of Brisbane. Mr Wangelin entered into an agreement for the sale of that property for the amount of $182,500 on 11 July 2014 to Ms Ling Yan Sun, the partner of one of the co-owners of the property. It appears that, of those proceeds of sale, $155,391.43 has been dispersed to a German bank account. At the hearing yesterday it became clear that the German bank account is that of Mr Wangelin.

6    On 25 July 2014 the Queensland Building and Construction Commission (QBCC) obtained a judgment against Mr Wangelin in the District Court of Queensland in the sum of $282,378.69. Salient facts relating to this debt are the subject of evidence of Mr Darren Philip, a Debt Recovery Officer employed by the QBCC. In an affidavit sworn 13 April 2016, Mr Philip deposes that, in summary:

    Mr Wangelin had held a building licence pursuant to the Queensland Building and Construction Commission Act 1991 (Qld) (the QBCC Act) and the Queensland Building and Construction Commission Regulation 2003 (Qld).

    On or about 3 February 2001 Mr Wangelin had entered into a contract for the construction of 12 two-storey residential units at a property located at Woody Point in Queensland, and had paid an insurance premium to the QBCC in respect of the construction of those units.

    In 2004 and 2005 the QBCC received complaints from nine of the unit owners in respect of alleged defective or incomplete building work at the units. The QBCC found that the complaints were warranted and made payments to the claimant unit owners.

    Pursuant to s 71 of the QBCC Act the payments made by the QBCC to the unit owners, being made pursuant to the insurance policy in respect of which Mr Wangelin had paid premiums, were recoverable from Mr Wangelin as a debt.

7    A sequestration order was issued against Mr Wangelin’s estate on 26 March 2015 referable to the District Court judgment, the date of the act of bankruptcy on which the sequestration order was based being 12 January 2015.

8    Mr Wangelin deposes that he travelled between Australia and Germany during the months following the District Court judgment of 25 July 2014, and that he only learned in July 2015 that he had been bankrupted.

9    On 23 December 2015 Mr Wangelin returned to Australia to visit friends and family, including his stepson Mr Sven Waitz who lives in Brisbane. When he attempted to leave Australia on 29 January 2016 he was prevented departing from Brisbane airport.

10    On 1 February 2016 Mr Wangelin attended the premises of the trustees, and while there he was served with a sequestration order and a blank statement of affairs, and advised of the documents sought by the trustees. It appears that he was also hand delivered a letter from the trustees, which materially read as follows:

We refer to our appointment as joint and several Trustees of your Bankrupt Estate on 26 March 2015. A copy of the appointment document is attached for your reference.

Please find attached a copy of our initial correspondence dated 27 March 2015 which provides various information regarding your Bankruptcy and your obligations as an undischarged Bankrupt.

We require you to provide us with the following:

1.    A completed Statement of Affairs;

2.    Details of your assets including their current location;

3.    Any passports you hold;

4.    Bank statements for any accounts in your name (including joint accounts) for the period 1 January 2014 to date;

5.    Bank statements for any accounts in your late wife’s name for the period 1 January 2014 to date;

6.    Cheque book stubs for account number 586743 held with Westpac Banking Corporation;

7.    Any records regarding the construction of the unit complex at 11 Blackburn Avenue, Moorooka, including copies of any contracts, invoices received from subcontractors and suppliers, correspondence to and from subcontractors and suppliers, etc; and

8.    Details regarding the use of the funds received from the sale of your late wife’s interest in the property at 11 Blackburn Avenue, Moorooka (i.e. how was the $117,500.00 and $37,891.43 transferred from Wellners Lawyers to a German bank account in the name of Anna Wangelin on 25 July 2014 and 25 September 2014 respectively utilised?)

11    Mr Wangelin subsequently informed the trustees that all the documents they required were in Germany.

12    Mr Wangelin deposed that he telephoned his bank in Germany on 3 February 2016 requesting copies of bank statements sought by the trustees. However according to Mr Wangelin’s evidence a number of problems ensued:

    The bank informed Mr Wangelin on 3 February 2016 that it was not their policy to deliver statements by email or fax.

    On 5 February 2016 Mr Wangelin tried to access his bank account by internet but could not recall his pin number, and after three unsuccessful attempts he was locked out of the system. He immediately telephoned the bank, however he was informed that once an account was frozen the only way to “unfreeze” it was to attend personally on the bank identifying himself and sign for a new “pin” number.

13    Mr Wangelin deposes that he is in a predicament whereby he cannot produce to the trustees the information they want, while he is in Australia. Further, it appears that while his bank account is frozen Mr Wangelin cannot in any way access funds in the account or documents associated with the account.

14    Mr Wangelin deposes that the trustees appear prepared to leave him without means of support indefinitely, given his bank’s attitude to dealing with him while he remains abroad. He claims that he has run out of money, and is living with his stepson, Mr Sven Waitz, who has been supporting him.

15    In his affidavit sworn 15 March 2016 Mr van der Velde, one of the trustees, deposed that Mr Wangelin had, in breach of his statutory obligations under s 77 of the Act, failed to:

    cooperate with him and his staff in providing books and records, in particular bank statements for the German bank account in which the proceeds of sale of the Moorooka property were deposited;

    surrender his passport to the trustees despite numerous requests to that extent, and without adequate reason for that refusal;

    provide Mr van der Velde and his staff information relating to his examinable affairs, in particular in relation to the transfer of proceeds of sale of the Moorooka property to the German bank account.

16    Mr Sven Waitz, Mr Wangelin’s stepson, has sworn affidavits in these proceedings on 22 February 2016 and 24 March 2016 supporting the evidence of Mr Wangelin, and deposing further that he cannot support Mr Wangelin financially.

17    In an affidavit sworn 23 March 2016 Mr Wangelin deposes that his flat in Germany is in danger of being closed by the landlord for non-payment of rent. He also gives evidence, to the best of his recollection, accounting for the amount of $155,481 paid into his deceased wife’s bank account in Germany. The largest items of expenditure were repayment of a loan for his wife’s medical expenses (€30,000), money for “Moorooka building, carpet” (€10,363.50) and 13 months’ rent (€14,820). This evidence is expanded in a subsequent affidavit of Mr Wangelin affirmed 7 April 2016 in which Mr Wangelin deposes that he has procured documents relating to expenditure, and explains variances between actual expenditure and the some amounts stated in his affidavit of 23 March 2016.

18    In an affidavit sworn 13 April 2016 Mr van der Velde deposed that by letter dated 6 November 2015, as trustee of Mr Wangelin’s bankrupt estate, he received a proof of debt from the Australian Taxation Department claiming the sum of $1,004,895.27 to be owed by Mr Wangelin to the department on account of outstanding income tax liabilities, plus accrued general interest charges, for the period 1 July 2005 to 30 June 2013. Mr van der Velde also deposed that he has received a proof of debt from the liquidators of ABW Design and Construction Pty Ltd ACN 101 130 509 (ABW), a company of which (at varying times) Mr and Mrs Wangelin were directors, claiming that Mr Wangelin owed that company at least $422,420.

19    It appears further that, given Mr Wangelin’s connections overseas, in particular in Germany, as well as his refusal to surrender his passport, he is a flight risk.

Decision of the Trustees

20    The decision of the trustees the subject of this application is set out in Mr van der Velde’s affidavit sworn 23 March 2016 paragraphs 36-41. These paragraphs read as follows:

My Decision to Refuse the Applicant Permission to Leave Australia

36.    In the period between the Date of Appointment and late January 2016, the Applicant failed to complete and provide a copy of his statement of affairs.

37.    While the Applicant has since provided a copy of his statement of affairs, there are a number of elements of his bankrupt estate that I require further information upon.

38.    In particular I require detailed particulars as to what became of the portion of the Proceeds following the transfer of the sum of $155,391.43 to a German bank account held in Mrs Wangelin’s name.

39.    I require information from the Applicant, as well as documents in support, namely copy bank statements, so as to demonstrate what portion, if any, of the amount of $155,391.43 remains in Mrs Wangelin’s account.

40.    Given the Applicant was the sole beneficiary under the Will, he was entitled to receive the benefit of the Proceeds. I am of the view that the Proceeds ought form part of the Applicant’s bankrupt estate. I require information from the Applicant as to the current sum remaining of the Proceeds and to the extent those monies have been dissipated, I require information from the Applicant as to the recipient(s) of any such payments, the purpose for the payment and invoices, receipts or other similar documents demonstrating and verifying same.

41.    Additionally, I require the Applicant’s personal bank account statements confirming the current balance of any accounts in the Applicant’s name and the balance of any such accounts at the Date of Appointment. The Applicant has failed to provide me with same.

Procedural history

21    The parties appeared before me at a directions hearing on 15 March 2016. At that time I ordered, inter alia, that:

By 8 pm on 21 March 2016, all parties use their best endeavours to arrange a teleconference between the parties, the parties’ legal representatives and a representative of the applicant’s bank in Germany, to request the applicant’s bank in Germany to provide copies of the applicant’s bank accounts.

22    In an email to my Chambers dated 18 March 2016 Mr Wangelin’s lawyers informed my associate that the applicant’s bank in Germany had declined to participate in a teleconference. That the bank had so declined is accepted by all parties to this proceeding.

Submissions of the parties

23    Both parties have filed detailed submissions in this case, and yesterday made extensive oral submissions.

24    In summary, the trustees say:

    there is evidence that Mr Wangelin is indebted not only to the QBCC, but also ABW and the Australian Tax Department;

    Mr Wangelin has failed to provide a substantive response in relation to the transfer of $155,391.43 to the German bank account of Mrs Wangelin;

    Mr Wangelin has failed to provide a copy of his statement of affairs between the date of the trustees’ appointment and late January 2016;

    Mr Wangelin has failed to surrender his passport to the trustees;

    principles in Re Tyndall (1977) 30 FLR 6 support the position taken by the trustees;

    Mr Wangelin remains in breach of his obligations under s 77 of the Act;

    a denial of permission to Mr Wangelin to travel may encourage him to remedy his breach of statutory duty;

    Mr Wangelin has not tried hard enough to assist the trustees, including in relation to production of material they need to administer the estate;

    the trustees would consider allowing Mr Wangelin to leave Australia if they were provided with some form of security.

25    In response Mr Wangelin submits, in summary:

    the administration of Mr Wangelin’s bankruptcy is not assisted by his enforced stay in Australia;

    correspondence from the trustees to Mr Wangelin requesting completion of a statement of affairs and the surrender of his passport were sent to his “last known address” in Australia on 27 March 2015, however by this time Mr Wangelin had already moved home to Germany;

    Mr Wangelin has completed a statement of affairs;

    Mr Wangelin is unable to comply with the trustees’ request for information including copies of bank statements without personal attendance at the bank in Germany;

    Mr Wangelin is unable to provide other documentation requested by the trustees, in particular receipts and invoices, because those documents are in his flat in Germany;

    Mr Wangelin is not a criminal or under criminal restraint.

The hearing yesterday

26    At the hearing yesterday both Mr Wangelin and Mr van der Velde gave oral evidence, and were the subject of cross-examination by Counsel. An outcome of this evidence was that there was some refinement in the nature of the respective cases mounted by each party.

27    So far as concerns evidence of Mr Wangelin:

    His evidence was that his domestic position has become more desperate because his flat in Germany has been the subject of break-in, and is currently sealed by the police.

    He visited a Centrelink office at Mt Gravatt in Brisbane in February 2016 with a view to ascertaining whether he could receive any financial support during his stay in Australia, but was discouraged from applying because he was unable to provide proof of residence in Australia.

    The belief of the trustees that the account into which the proceeds of sale of the Moorooka property were paid was that of Mrs Wangelin was incorrect. The account was that of Mr Wangelin.

    The landlord of Mr Wangelin’s German apartment resides in South Africa, and is not due to visit Germany until mid-year.

    He promised his late wife that he would “look after” the grandchildren who live in Australia.

    He wishes to solve problems posed by his bankruptcy and return to Australia.

    He has no credit cards, only a debit card in respect of his German bank account which is currently frozen.

    In relation to the claims of the Australian Tax Department concerning outstanding tax payments – Mr Wangelin had understood his tax affairs between 2009 and 2014 were handled by his local accountant.

    Mr Wangelin at one stage had an account with Westpac Bank in Australia, however that account is now closed.

    Mr Wangelin’s brother-in-law regularly views the flat in Germany, and informed him of the damage due to the break-in.

    It is not feasible for Mr Wangelin’s brother-in-law to find the bank statements the trustees require in Mr Wangelin’s flat. The documents would be somewhere in a secured, fire-proof basement room in the apartment building, to which only Mr Wangelin and the landlord have a key. The key is a “special” key which would be very difficult to duplicate.

28    So far as concerns evidence of Mr van der Velde:

    In the view of the trustees, the main issue is Mr Wangelin’s bank statements and his failure to provide them to the trustees.

    The trustees acknowledge that Mr Wangelin’s German bank has refused to cooperate with them.

    The trustees do not need Mr Wangelin to remain in Australia for matters related to his alleged debts associated with the Australian Tax Department and ABW.

    The trustees want source material from Mr Wangelin, in particular bank statements.

    The trustees do not consider that it would be difficult for Mr Wangelin to provide that source material.

Consideration

29    The provisions of s 178 have been the subject of consideration in numerous decisions of this Court. In Moore v Macks [2007] FCA 10 at [28] Besanko J helpfully summarised principles relevant to the interpretation of s 178 as:

1.    Under the section, the court is fulfilling a supervisory role judicially, rather than an administrative role standing in the shoes of the trustee. As such, grounds for judicial review must be established by an applicant Re Wheeler; Ex parte Wheeler v Halse [1994] FCA 1348; (1994) 54 FCR 166 (‘Wheeler’) at 170 per Lee J, and the exercise of the court’s power is wholly in its discretion. The court has the ‘widest possible discretion as to the appropriate order which should be made in the particular case’ (Re Tyndall; Ex parte Official Receiver [1977] FCA 15; (1977) 17 ALR 182 (‘Re Tyndall’) at 186 per Deane J).

2.    The impugned act, omission or decision of the trustee in bankruptcy need not be absurd, unreasonable, or taken in bad faith before it is subject to review or a resultant order of the court under the section (Re Tyndall at 186 per Deane J). Indeed, the act, omission or decision of the trustee may be subject to review even though it was commercially sound at the time it was made: Macchia at 116 per French J. At the same time the trustee’s opinion will be a relevant factor in the exercise of the court’s discretion, and there is no presumption that the court will intervene in a given case. The fact that the court might have taken a different course to the trustee in bankruptcy at the relevant time is not, without more, a basis to disturb the trustee’s decision: Re Tyndall at 186 per Deane J; Macchia at 116 per French J.

3.    The court is able to take into account information which was not available to the trustee at the time of an impugned act, omission or decision (Gray v Clout (1990) 27 FCR 141, 144 per Pincus J).

4.    The exercise of the discretion is subject to the principle that the court will not unduly interfere with the day-to-day administration of a bankrupt’s estate by a trustee in bankruptcy: Re Tyndall at 186 per Deane J.

5.    The section does not provide an avenue for a bankrupt to pursue his or her personal interests at the expense of creditors (Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 139 per Brennan CJ, Gaudron and McHugh JJ) nor does it ‘create a cause of action which sounds in damages’, either in tort or under the general law (Macchia at 119). Both of these propositions reflect the purpose of the section which is to give the court a supervisory role with respect to a trustee in bankruptcy in the administration of the bankrupt’s estate.

6.    Ultimately the question is what result would be ‘just and equitable’ in the circumstances of the case.

(cf observations of Gordon J in Sopikiotis v Vince [2013] FCA 592 at [24]).

30    Expanding upon this summary, it is also useful to note that:

    the applicant bears the onus of showing a ground on which the trustee’s administration of the affairs of the bankrupt ought to be reviewed (Healey v Prentice (No 2) [2000] FCA 1598, cf McDonald, Henry & Meek, Australian Bankruptcy Law & Practice (Thomson Reuters, subscription service) at [178.1.10]).

    an order can be made by the Court under s 178 in the absence of any allegation of error or misconduct by the trustee (Wilson v Commonwealth [1999] FCA 219 at [11]-[14]; Tyndall at [11]; Frost v Sheahan [2009] FCAFC 20 at [8]).

    the Court should only interfere with the decision of the trustee if the applicant establishes that the impugned conduct of the trustee was either incorrect or that other conduct was or would be preferable, and that justice and equity require the court’s intervention (re the Bankrupt Estate of Hudson [2004] FCA 172 at [17]; Healey v Prentice (No 2) at [21]; Sarkis v Moussa [2013] FCA 373 at [34]).

    the travel restrictions in the Act are to ensure the proper administration of the bankruptcy law and of bankrupt estates pursuant to that law, and are not a penalty imposed on a bankrupt due to an inability to pay debts which resulted in bankruptcy (Tyndall at [25]; Groves v Robinson [2013] FCA 490 at [10]).

31    Taking into consideration these factors, the submissions of the parties and the evidence before the Court, I am satisfied that the Court should, with minor modification, make the orders sought by Mr Wangelin.

32    I have formed this view for the following reasons.

33    First, I am satisfied that Mr Wangelin is a credible witness. His demeanour in the witness box was such that he impressed me favourably as a witness of truth. He certainly did not demonstrate any attempts to avoid questions – rather his answers were in my view sensible and as direct as possible in view of occasional language difficulties.

34    Second, and critically, I am unable to identify how the administration of Mr Wangelin’s bankrupt estate will be assisted by the continuation of Mr Wangelin’s enforced presence in Australia. Mr van der Velde in evidence yesterday emphasised that the main issue for the trustees was that Mr Wangelin had not produced key source material, namely bank statements in respect of his German bank account. Frankly, I am at a loss to understand how Mr Wangelin remaining in Australia can possibly assist the objective of the trustees to secure this source material. Indeed, it is perfectly clear to me that:

    Mr Wangelin has tried to access his bank statements, but cannot do so remotely from Australia;

    Mr Wangelin has approached his bank in Germany by telephone to allow him to access his bank account, and to obtain bank account statements, and the bank has refused to assist;

    Mr Wangelin’s bank has insisted that he present in person before it will “unfreeze” his bank account and allow him access to either the account or records associated with it;

    Mr Wangelin’s bank in Germany refuses to cooperate with the trustees; and

    the trustees are aware of all of these points, but continue to insist that Mr Wangelin should somehow produce the bank statements they seek.

35    In this respect, an obvious solution to the conundrum facing the parties is to permit Mr Wangelin to return to Germany and attend the bank in person.

36    Counsel for the trustees put to Mr Wangelin that he should arrange for friends or relatives (including his brother-in-law in Germany) to search his flat and locate the source material (including historical bank records) possibly located there which the trustees want to examine. Mr Wangelin rejected this proposition. I accept Mr Wangelin’s evidence in this respect. This is because:

    I accept Mr Wangelin’s evidence that it would be difficult for third parties to access the material in the secured room in his apartment building, given that only he and the landlord (who apparently also has private material stored there) have keys.

    I am not satisfied that reproduction of the key to the storage room, being a secure facility, to a third party like Mr Wangelin’s brother-in-law, is as simple as the trustees contend.

    More relevantly, I am not persuaded that Mr Wangelin’s brother-in-law, who may or may not be familiar with Mr Wangelin’s business affairs, could locate the material the trustees required. The evidence before the Court is that Mr Wangelin returned to live permanently in Germany in 2014 after 30 years. During at least some of that time he lived in Australia. There is no material before the Court to indicate the extent of paperwork and other material there might be in Mr Wangelin’s storage room – it may be 30 years’ worth of records. To assume that a stranger could easily locate particular financial records of Mr Wangelin is, in my view, fanciful.

37    Third, I am not persuaded that Mr Wangelin has failed or refused to cooperate with the trustees as they claim. Both the submissions and evidence of the trustees evince their genuine frustration in dealing with Mr Wangelin, however in my view this frustration is bordering on unreasonable in that the trustees have sought detailed evidence and extensive source documentation of a person, all of whose material is located in a locked storage room and a bank half a world away.

38    In this light Counsel for the trustees repeatedly submitted yesterday that the trustees believe that Mr Wangelin has not made sufficient endeavours to cooperate with them, referring for example to the possibility of assistance from Mr Wangelin’s brother-in-law (to which I have referred above), and to Mr Wangelin’s inability to obtain a living allowance from Centrelink. In my view however the contentions of the trustees concerning Mr Wangelin’s dealings with Centrelink are of minimal relevance. In any event, I am satisfied from Mr Wangelin’s evidence yesterday that he did not press a claim with Centrelink because it was made clear to him in February 2016 when he approached Centrelink that he would not be successful.

39    That Mr Wangelin has not failed to cooperate with the trustees is, in my view, clear on the evidence. So:

    The letter from the trustees to Mr Wangelin of 1 February 2016 appears to be the primary formal written communication between them and Mr Wangelin specifying the material the trustees need.

    The trustees sought a completed statement of affairs from Mr Wangelin. At the hearing yesterday, Mr van der Velde conceded that Mr Wangelin had undertaken this task.

    The trustees sought details of Mr Wangelin’s assets, including their current location. At the hearing yesterday, after some hesitation Mr van der Velde conceded that the trustees could not point to any problem in relation to Mr Wangelin’s conduct.

    The trustees sought production of Mr Wangelin’s passport. At the hearing Mr Wangelin gave evidence to the effect that his reluctance to deliver the passport to the trustees arose from the fact that the passport includes a statement that the passport belongs to the state of Germany. In any event, I note that the passport has now been delivered to Mr Wangelin’s solicitors.

    The trustees sought bank statements for the period 1 January 2014 to 1 February 2016. I note that there were also emails from Mr Adam Kersey of SVPartners – the firm of the trustees – to Mr Wangelin in early February requiring details of the disbursement of moneys from the sale of the Moorooka property. Further, the trustees wrote to Mr Wangelin on 10 February 2016 stipulating that they required Mr Wangelin to produce bank statements for the period 1 July 2014 to date. I have already examined the endeavours made by Mr Wangelin to obtain copies of relevant bank statements, and the refusal of his German bank to assist, which refusal is conceded by the trustees.

    The trustees sought cheque book stubs for a Westpac bank account. Mr Wangelin’s evidence was that this material was with his previous accountant.

    The trustees sought records regarding the construction of a unit complex at Moorooka. Mr Wangelin’s evidence was that these records were in Germany.

    The trustees sought details regarding the use of funds received from the sale of Mrs Wangelin’s 1/8th interest in a property at Moorooka. Mr Wangelin has given detailed evidence in his affidavits as to the use of those funds. I am satisfied that this evidence was given to the best of Mr Wangelin’s ability, given that his records are located in Germany.

40    Fourth, I am satisfied that Mr Wangelin’s current personal circumstances, in being forced to remain in Australia, are particularly dire. I note his evidence that he is at serious risk of losing his flat in Germany, that his flat has been entered and apparently ransacked, that he is dependent on his stepson (who is himself of limited means) for financial support in Australia, and that he is currently unable to work in Australia because his building licence has been suspended. I do not accept the submission of Counsel for the trustees that Australia presently poses a more profitable financial prospect for Mr Wangelin than anywhere else in the world.

41    Finally however I note the serious and genuine concerns of the trustees that Mr Wangelin is a flight risk, and that should the Court grant him the orders he seeks he will, in effect, abscond. In my view that is a risk, however in the circumstances I consider that it is an acceptable risk. This is because:

    I have formed a favourable view of Mr Wangelin’s character from both his written and oral evidence. At the hearing yesterday Mr Wangelin claimed that he had never avoided tax or cheated anyone. The position in respect of Mr Wangelin’s alleged tax debts and debt to ABW has not yet been adjudicated, however I note that:

o    Mr Wangelin became a bankrupt as a result of substituted service, and his uncontradicted evidence was that he was unaware that he had been made a bankrupt for some time;

o    there is no evidence before the Court to suggest that Mr Wangelin had at any time endeavoured to avoid his obligations, or had tried to flee the jurisdiction;

o    Mr Wangelin gave evidence that he had repaid his wife’s family for the moneys they had advanced to assist his wife in respect of her medical bills;

o    irrespective of the legal position concerning Mr Wangelin’s payment of moneys in relation to carpets in a property at Moorooka, being an obligation actually residing in the company ABW – it appears that Mr Wangelin is a person who endeavours to pay his debts.

    Mr Wangelin gave detailed evidence at the hearing yesterday as to his strong ties of family and friendship with people in Australia. In the circumstances I consider it likely that he would wish to return to Australia, and would prefer to avoid a situation where he was, in effect, prevented from so doing.

    Mr Wangelin gave evidence yesterday that he wished to resolve the circumstances of his bankruptcy.

42    Further in this respect I note that the evidence of the trustees concerning Mr Wangelin’s possible debts to the Australian Tax Department and ABW appeared of little relevance to Mr van der Velde at the hearing yesterday. In my view those possible debts are of little actual importance to the trustees in respect of their decision to refuse to permit Mr Wangelin to leave Australia.

Conclusion

43    In light of all of these factors, I consider that justice and equity warrants the intervention of the Court to set aside the decision of the trustees.

44    At the conclusion of the hearing yesterday Counsel for the trustees raised the possibility whether an order could be made conditionally permitting Mr Wangelin to return to Germany. No terms were put to me, and in my view it would be impractical to place conditions on the orders sought. Indeed – the fact that in my view Mr Wangelin has done everything he practically can to cooperate with the trustees means that there are no grounds for placing conditions on the orders of the Court permitting him to leave Australia.

45    I note that the applicant has sought an order that the trustees’ decision be substituted with a decision permitting Mr Wangelin to travel to Germany “in accordance with section 272(1)(c)”. Materially s 272 of the Act provides:

Leaving Australia with intent to defeat creditors etc.

(1)    A person who:

(a)    …

(b)    …

(c)    after he or she has become a bankrupt and before he or she is discharged from the bankruptcy, without the consent in writing of the trustee of his or her estate, leaves Australia, or does an act preparatory to leaving Australia;

is guilty of an offence and is punishable, on conviction, if the offence relates to the doing of a thing specified in paragraph (a) or (b), by imprisonment for a period not exceeding 5 years or, in any other case, by imprisonment for a period not exceeding 3 years.

(2)    The trustee may impose written conditions on a consent given for the purposes of paragraph (1)(c). If the bankrupt is liable to make a contribution to the trustee under section 139P or 139Q, the conditions may include conditions regarding the payment of that contribution.

(3)    …

46    In my view an order in the terms sought by Mr Wangelin in terms of s 272(1)(c), which is referable to a criminal offence of a bankrupt, is inappropriate. Written consent of the trustees may be something to which s 272(1)(c) refers, but it would not be “in accordance with” that provision. I consider it both proper and appropriate to simply direct that the trustee consent to Mr Wangelin leaving Australia. The intention of an order of the Court in these terms is that, in leaving Australia, Mr Wangelin would not contravene s 272(1)(c) of the Act because the trustees have been directed to provide their written consent to his departure, and would have done so.

47    Finally Mr Wangelin seeks his costs. At the hearing yesterday, when I specifically asked the parties for the orders they sought, no reasons were put to me to depart from the usual rule explained in Oshlack v Richmond River Council (1998) 193 CLR 72 that costs ought follow the event.

Associate:

Dated:    21 April 2016