FEDERAL COURT OF AUSTRALIA

Nguyen v Scott as trustee of the bankrupt estate of Beth Ngoc Nguyen and Ian Stolyar [2019] FCA 1517

ORDERS

THE COURT NOTES:

1.    Upon the applicants undertaking to the Court that in the event that they travel overseas pursuant to any consent given in accordance with these orders:

(a)    they will return to Australia by no later than 11 October 2019;

(b)    subject to paragraph (d) below, they will not dispose of any of the assets identified in the Notice to Deliver dated 28 June 2019 (which, for the avoidance of doubt, includes the watch photographed on the second applicant’s arm at page 31 of Exhibit AT-1) until the respondent’s investigations into the ownership of those assets is finalised;

(c)    by no later than noon on 16 September 2019, they will provide to the respondent for the purposes of him obtaining valuations (after which they will be returned to the applicants as soon as practicable and, in the case of the Bulgari earrings, by no later than close of business on 17 September 2019) all the assets identified in the Notice to Deliver dated 28 June 2019 which are in their possession, subject to paragraphs (d) and (e) below;

(d)    as to the foreign currency which is identified in that Notice, the applicants will pay the respondent an amount of AUD$5,000 if the respondent’s investigations establish that the foreign currency belongs to either or both the applicants. Such repayment is to be made within seven days of the applicants being informed of the respondent’s determination on the issue of ownership;

(e)    they will on Monday, 16 September 2019 between 3:30pm and 4:00pm allow access to the premises at which they currently reside for the purposes of a valuer attending there to value the grandfather clock;

(f)    by no later than close of business on 16 September 2019, each of the applicants will provide the respondent with a statutory declaration which states, to the best of each applicant’s knowledge and belief, in respect of each of the assets identified in the Notice to Deliver dated 28 June 2019:

(i)    how and when the asset was acquired, including the purchase price;

(ii)    to whom each of the assets belongs; and

(iii)    how any of the assets came to be in the possession of either applicant; and

(g)    they will return their passports to the respondent by no later than close of business 14 October 2019.

THE COURT ORDERS THAT:

1.    The respondent’s decisions dated 13 August 2019, 20 August 2019 and 2 September 2019, which refuse consent for the applicants to travel overseas be set aside.

2.    The respondent is directed to give to the applicants consent in writing to travel in accordance with the request for travel forms dated 23 July 2019 on the following conditions:

(a)    the applicants shall return to Australia by no later than 11 October 2019;

(b)    the applicants shall provide to the respondent in writing full and up-to-date details of their email address and contact information (including their mobile telephone numbers) at which they may be contacted during the period 18 September 2019 to 11 October 2019.

3.    The respondent is directed to return to the applicants their passports for the purposes of enabling them to travel in accordance with the consent referred to in order 2 above.

4.    Each party have liberty to apply on the giving of 48 hours’ notice.

5.    There be no order as to costs.

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

REASONS FOR JUDGMENT

GRIFFITHS J:

1    These proceedings were commenced on 9 September 2019. They are urgent. The Court made orders on that day requiring the applicants to file and serve their originating application and supporting affidavit as well as a copy of the Court’s orders, on the respondent (their trustee in bankruptcy), by 10:00 am the following day. The respondent was directed to file and serve any affidavit in response by 2:15 pm on 12 September 2019. The matter was listed for hearing before me as Duty Judge at 9:00 am on 13 September 2019.

2    The applicants apply under s 90-20 of Sch 2 of the Bankruptcy Act 1966 (Cth) (Act) to review various decisions of the respondent, which refused consent to the applicants’ request to travel overseas and to have their passports returned for that purpose.

3    Section 90-15 of the Act provides:

Court may make orders

(1)    The Court may make such orders as it thinks fit in relation to the administration of a regulated debtor’s estate.

 Orders on own initiative or on application

 (2)    The Court may exercise the power under subsection (1):

(a)    on its own initiative, during proceedings before the Court; or

(b)    on application under section 90-20.

    …

4    It is an offence under s 272(1)(c) of the Act for a bankrupt to leave Australia before he or she is discharged from the bankruptcy, without the consent in writing of the trustee. Under s 77(1)(a)(ii) of the Act, a bankrupt is required to forfeit his or her passport to the trustee unless excused by the trustee from doing so.

Summary of background facts

5    A sequestration order was made in relation to both the applicants on 29 September 2016. Mr Andrew Scott of PricewaterhouseCoopers (PwC) was appointed as trustee.

6    Mr Stolyar is currently unemployed. His wife, Ms Nguyen, is currently employed by MSC Cruises and earns approximately $65,000 per year. They have a 7 year old daughter. The family currently lives at an address in Sydney (Property). I accept that the second applicant’s mother lives with them there at least part of the time. The mother is the sole owner of the Property. I accept that the mother has allowed the family to live in her house rent free until they are discharged from bankruptcy.

7    I also accept Ms Nguyen’s evidence that her mother-in-law sleeps with her granddaughter in the second bedroom.

8    On 19 June 2019, a s 77AA warrant was enforced at the Property, with Mr Scott in attendance. A considerable amount of documentation was seized. I also accept that there were discussions between Mr Scott and the bankrupts during the course of the raid. I accept that a sum of foreign currency in the amount of approximately US$5,000 was found in a book in a drawer in the master bedroom. I also accept that Mr Scott examined jewellery which was found in the master bedroom, including a watch, earrings and a necklace. Ms Nguyen gave evidence, which I accept, that she told Mr Scott that some of the jewellery belonged to her daughter. I also accept Ms Nguyen’s evidence that she initially told Mr Scott that she assumed that the money belonged to her husband and only later did she discover that the foreign currency had been taken from a pouch which contained things relating to her daughter.

9    On 28 June 2019, the respondent served a Notice to Deliver Assets on the applicants, directing them to deliver various assets to him by 5 July 2019. On 4 July 2019, both the applicants responded separately to Mr Scott disputing their ownership of some of the items the subject of the Notice and denying that either of them owned the foreign currency. Both of them also denied owing a Black Panther Sculpture valued at approximately $10,000 which had apparently been found in the mother’s storeroom at the Property.

10    Mr Scott has approved overseas travel by the applicants on four previous and separate occasions commencing on 21 February 2017 and ending on 17 December 2018. The travel was to Papua New Guinea, Europe, the United States of America and New Zealand.

11    The current request for approval to travel relates to a proposed trip to Hawaii commencing on 18 September 2019. The trip is to celebrate the applicants’ daughter’s 8th birthday. Ms Nguyen has paid for air tickets and a cruise which will take them to Tahiti, New Zealand and back to Australia on 11 October 2019. Ms Nguyen has paid for the travel in advance at a cost of approximately $8,000. She is concerned that she will forfeit that amount if they are unable to travel as planned.

12    On 24 July 2019, each of the applicants lodged a form with Mr Scott requesting his consent to their proposed travel. On 13 August 2019, Mr Scott responded in the following terms (emphasis in original):

I refer to your request for permission to travel overseas received via email on 24 July 2019.

I do not presently consent to your proposed overseas travel as there are a number of outstanding issues with respect to the administration of your estate which I require you to assist with resolving, as follows:

1.    You have not complied with my Notice to Deliver Assets dated 28 June 2019 (Notice) requiring you to deliver specific assets to my office by close of business on 5 July 2019. In this regard:

a.    You were asked to deliver up specific items of property (Assets) which were identified during my recent attendance on 19 June 2019 (Attendance) at [the Property] in accordance with the execution by the Official Receiver of a notice pursuant to section 77AA of the Bankruptcy Act 1966 (Act);

b.    The Assets were all discussed with you during the Attendance and you were advised you would be requested to deliver up the Assets following the conclusion of the Attendance;

   c.    In response to the Notice, you have indicated that:

i.    Neither Beth nor Ian owns a Rolex watch, notwithstanding the receipt from J Farren-Price Jewellers issued to 'Ian Stolyar' for a Rolex watch and Patek-Phillip watch for approximately $AUD45,ooo and $AUD 45,000 respectively. Ian subsequently identified the Rolex watch as being the watch which he was wearing;

ii.    Neither Beth nor Ian owns a Patek-Phillipe watch, notwithstanding the presence of the watch identified in the bedside table in the Master Bedroom of your house, description of the watch on the invoice at i) and Beth's description during the Attendance as her watch and Ian's response during the attendance that we would need to speak with Beth regarding same.

iii.    The Bulgari necklace and earrings located in the bedside table of the Master Bedroom belongs to your 8 year old daughter [daughter’s name];

iv.    Neither Beth nor Ian owns the foreign currency estimated to be worth approximately $AUD 5,000, and which was located in the bedside table of the Master Bedroom;

v.    Neither Beth nor Ian owns the black panther sculpture located in the large storage shed outside the main residence and which had a price tag $R45,ooo or approximately $AUD 15,000;

vi.    The substantial stamp collection and the substantial coin collection located in the large storage shed outside the main residence "belongs to my [Ian's] father/mother"; notwithstanding Ian's statements during the Attendance that the stamp collection had been his since he was a child; and that some items originally belonged to Ian's father and had been passed down to Ian;

d.    I am unable to accept the explanations provided for the failure to deliver up the Assets pursuant to the Notice.

e.    I require your assistance to administer your bankrupt estates and to determine the whereabouts of the Assets and whether there is any proper reason why they have not been delivered up in accordance with the Notice.

2.    In addition and during the Attendance on 19 June 2019 the Official Receiver collected a substantial volume of documents which appear to be relevant to your examinable affairs. In this regard:

a.    This appears to be inconsistent with your response to previous requests by or on behalf of my office for records relating to your examinable affairs, including but not limited to:

i.    Requests for production of documents during my administration of your bankruptcy by way of notices issued by me pursuant to section 77 of the Act;

ii.    Requests for production of documents by way of sealed Federal Court summons dated 16 February 2018; and

iii.    Evidence given under oath during the public examination proceedings to the effect that there were no records (other than the small quantity produced prior to the examinations) available to provide to me.

b.    I will require your assistance to administer your bankrupt estates whilst I review the substantial volume of material which has now been seized from your premises and which I am likely to require your co-operation to review;

c.    I will also require your assistance to administer your bankrupt estates so that I can be satisfied that I now have all documents of which you have possession custody or control and which relate to your examinable affairs the subject of the requests for production issued by and on my behalf;

d.    I will be shortly be providing Beth with a separate letter requiring further information in respect of substantial tax refunds received and estimated for prior tax years which I have only become aware of following review of the material obtained from my Attendance at the Property.

Once the above matters have been addressed I would be willing to reconsider a request for travel.

Alternatively, once I complete my review of the information and documents which have now been obtained during the Attendance, I may be in a position to determine point 2 above, namely whether I have now been able to obtain access to all of the information and records regarding your examinable affairs which I have requested that you produce. However, having regard to the large volume of material which has been obtained I do not believe that this review will be completed prior to the scheduled travel dates.

Accordingly and for the above reasons, I decline your request for permission to travel on the identified dates.

13    The next day, Ms Nguyen responded by email stating:

    Mr Scott’s letter dated 14 August 2019 was the first time he had advised that he was unable to accept the explanations in their replies to the Notice.

    She said that she had told Mr Scott when the warrant was executed that the watch was not hers and that he had taken a photo of a watch which was of a different brand to that described in the Notice.

    As previously explained (and allegedly accepted by Mr Scott), the earrings and necklace belonged to the daughter but were kept by the parents for safe keeping.

    She again denied that she owned the Black Panther.

    She reiterated that she did not own the currency, stamp and coin collection.

14    Ms Nguyen stated that she would be available to assist any inquiries by Mr Scott while she was away either by email or phone. She emphasised that she would forfeit the money she had paid if the family was unable to travel.

15    There was then a series of exchanges of emails between the applicants and Mr Scott concerning the request for leave. A letter dated 20 August 2019 sent by email from Mr Scott stated (emphasis in original):

I refer to your request for permission to travel overseas received 24 July 2019 and subsequent correspondence.

I have considered Beth's responses (noting Ian has not provided any further response) and remain of the view that I have not been given sufficient or adequate information to explain why there has not been compliance with my previous direction to deliver the specific items of property (Assets) identified during my recent attendance on 19 June 2019 (Attendance) at [the Property].

It should be noted that neither of you have provided satisfactory clarification of how either of you came to be in possession of the Assets. Furthermore, I believe that in certain instances the responses you have provided to date are materially inconsistent with discussions you both held with my staff, officers of the Australian Financial Security Authority (AFSA) and I during my Attendance.

Notwithstanding the above, I consent to you travelling for the period 18 September 2019 to 11 October 2019 under the following conditions:

•    Within 14 days of this letter, you allow a valuer to be provided uninterrupted access to the Property to itemise and value all items located at the Property including, but not limited to the Assets noted in my direction; and

•    You each provide me with a signed Statutory Declaration within 14 days outlining the providence of the disputed Assets including, but not limited to, how they were acquired, whom they belong to and how they came to be in your possession. Please provide supporting receipts and bank statements as evidence; and

•    You each provide me with a written undertaking that:

o    all of the Assets noted in my direction will not be disposed of until my investigations into the issue of their ownership are finalised and you will inform me of the whereabouts of these Assets and keep me informed if their location changes during this time; and

o    you agree to comply with any reasonable requests I make on both of you prior to and during your travel overseas

•    Within 7 days of your return to Australia you return your passports to my office for safekeeping.

I look forward to receiving your acceptance of the above conditions by no later than close of business on 23 August 2019.

16    On 26 August 2019, Mr Stolyar responded and made the following points:

    The applicants did not own the Property or have any rights to the Property and therefore could not grant access to his mother’s Property for the purposes of the proposed valuation of property which the applicants did not own.

    Mr Stolyar also commented on various other aspects of the conditions identified by Mr Scott, including making statements relating to the watches, the foreign currency, the Black Panther sculpture and the daughter’s jewellery. As to the coin and stamp collection, he said that this was his and that if Mr Scott thought that the collection had become valuable he was welcome to value them.

17    Mr Stolyar also indicated that he and his wife were happy to give the written undertakings sought by Mr Scott in the email dated 20 August 2019.

18    Ms Nguyen provided a similar response to Mr Scott in a separate email dated 26 August 2019.

19    On 2 September 2019, Mr Scott sent the following letter by email to the applicants (emphasis in original):

I refer to my previous letter dated 20 August 2019 (Letter) your emails of 26 August 2019 (Emails) and you request for permission to travel overseas received 24 July 2019 (Travel Request).

After considering your Emails, I remain of the view that the explanations of how either of you came to be in possession of the various assets set out in my previous direction to deliver the specific items of property (Assets) are inadequate and materially inconsistent with discussions you both held with my staff, officers of the Australian Financial Security Authority (AFSA) and I during my attendance on 19 June 2019 (Attendance), in addition to evidence obtained by me.

Notwithstanding the above, my consent to your Travel Request was provided under several conditions which are restated for your reference below:

1.    Within 14 days of the Letter, you were to allow a valuer to be provided uninterrupted access to the Property to itemise and value all items located at the Property including, but not limited to the Assets noted in my previous direction.

2.    You each were to provide me with a signed Statutory Declaration within 14 days of the Letter outlining the providence of the disputed Assets including, but not limited to, how they were acquired, to whom they belong, and how they came to be in your possession, together with supporting receipts and bank statements as evidence.

 3.    You each were to provide me with written undertakings that:

a.    all of the Assets noted in my direction will not be disposed of until my investigations into the issue of their ownership are finalised and you will inform me of the whereabouts of these Assets and keep me informed if their location changes during this time; and

b.    you agree to comply with any reasonable requests I make on both of you prior to and during your travel overseas

4.    Within 7 days of your return to Australia you return your passports to my office for safekeeping.

In light of each the above conditions and after consideration of your Emails, I note the following:

1.    You have stated that you are unwilling to provide access to the Property and accordingly, this condition has not been satisfied. On this basis, you are hereby again directed to deliver the Assets to my office so that I may engage a valuer to itemise and value them. Without granting my office the ability to itemise and value the Assets, I will not be in a position to consent to your Travel Request.

2.    This condition has not yet been satisfied. Until you each provide my office with a signed Statutory Declaration outlining the providence of the disputed Assets including, but not limited to, how they were acquired, to whom they belong, and how they came to be in your possession, together with supporting receipts and bank statements as evidence, I will not be in a position to consent to your Travel Request.

3.    In your Emails, you have confirmed you agree to both of the required undertakings. Please be advised that that the undertaking at 3.a. applies to all of the Assets noted in my direction including all foreign currency which I identified during the Attendance, including all foreign currency. Please find the enclosed a Notice of Undertaking for execution by both of you.

4.    You have agreed to return your passports to my office for safekeeping within 7 days of your return to Australia.

Please be aware that I will not be in a position to release your passports to you until the above conditions are satisfied.

Yours faithfully

20    On the same day, Ms Nguyen responded to a colleague of Mr Scott’s asking for a meeting the following day and stating that what was being asked by Mr Scott was “outside of my control”. Ms Nguyen said that if the meeting did not proceed she would reluctantly commence legal proceedings. A meeting took place on 3 September 2019.

21    By an email dated 4 September 2019, a colleague of Mr Scott (Mr Adam Treffiletti) sent an email to Mr Stolyar in response to Mr Stolyar’s email dated 3 September 2019. Mr Treffiletti’s email stated (emphasis in original):

1)    I am unsure of what you mean by "please draft the affidavits". The statutory declarations we have requested are to be your (you and Beth) written statements which you each swear, affirm or declare to be true in the presence of an authorised witness - usually a JP, lawyer or notary public. We cannot draft your statements for you. I have attached a word version of the statutory declaration form for you to complete.

2)    Please note your statutory declarations are at a mininum, required to outline the providence of each of the disputed assets (as set out in our notice to you dated 28 June 2019 - a copy of which is attached for your reference) and include the following details:

•    how and when the disputed assets were acquired (including how much they were purchased for)

  •    to whom the disputed assets belong and

  •    how the disputed assets came to be in your possession

We appreciate that if AFSA has not returned the original records to you, you may not be unable to provide supporting receipts and bank statements as evidence of the providence of the disputed assets.

3)    The form of undertaking that was previously provided to you in our letter dates (sic) 2 September 2019 is in a form that is satisfactory to us. Notwithstanding this, we enclose a word version of the undertaking as requested. Unless you are able to provide some valid basis to suggest otherwise we would expect the undertaking does not change materially.

We note you have still not adequately responded to condition 1 in our letter dated 2 September 2019 other than that to say access is not permissible. As an alternative, we previously offerred (sic) to you to deliver the disputed assets. We have not received any response from you on this condition. We again repeat our request as set out in our letter dated 2 September 2019 at condition 1 that you provide a valuer instructed by us with access to the property to value the disputed assets. We are prepared to limit this access to only valuing the disputed assets. We request your urgent confirmation as it will take time to arrange a valuer and we note your intention to travel overseas in the near future.

Subject to being satisfied that you have otherwise complied with our conditions as set out in our letter dated 2 September 2019 we are prepared to release the passports to you and Beth. We look forward to your confirmation of the above and compliance with the conditions of travel we have imposed.

22    In response, Ms Nguyen sent an email dated 4 September stating that Mr Treffiletti’s email did not reflect the discussion at the meeting on 3 September 2019 and that an agreement had been reached with Mr Scott that the applicants would provide an undertaking that they would not dispose of the disputed assets that were in their possession and that they would provide a statutory declaration concerning the disputed assets. She stated that Mr Scott did not insist that the items be valued before the passports were released.

23    In his email response dated 5 September 2019, Mr Treffiletti said (emphasis in original):

It is important to emphasise that at no point during the recent meeting at our offices did Andy indicate to Beth that he agreed to waive any condition which was set out in previous correspondence and the focus of my email of 4 September 2019. This includes condition 1 set out in our letter dated 2 September 2019 that you provide a valuer instructed by us with access to the property to value the disputed assets. While discussing the topic of gaining access to the property during the meeting, Andy agreed to limit the valuation to only the disputed assets to minimse (sic) any disruption. This concession was reiterated in my email to you yesterday.

The disputed assets were outlined in the trustee's letter to you dated 28 June 2019.

In the interest of timing, we have made arrangments (sic) with a valuer to attend the Rose Bay property on Tuesday, 10 September between 1 pm and 4pm. Please confirm your availability during this time to allow access.

We are willing to provide your passports to you tomorow (sic) to assist with processing your visa applications, on the basis you adequately and satisfactorily comply with all conditions below. Please be aware, this is not an approval of your travel request, which we will not be in a position to authorise until all conditions are met:

1.    You each provide a statutory declaration which, at a mininum (sic), outline the providence of each of the disputed assets and include the following details:

•    how and when the disputed assets were acquired (including how much they were purchased for}

  •    to whom the disputed assets belong and

  •    how the disputed assets came to be in your possession.

We reiterate that if AFSA has not returned the original records removed from the Rose Bay premises, you may not be unable (sic) to provide supporting receipts and bank statements as evidence of the providence of the disputed assets. However, we believe this should not have a material impact on the statutory declarations you are to provide.

2.    You return the written undertaking that was previously provided to you in our letter dated 2 September 2019 in a form that is satisfactory to us. Again, we reiterate that the undertaking relating to the non-disposal of the disputed assets extends to the foreign currency (being approximately $5,000) which was previously located in a drawer of Ian's bedside table and previously acknowledged by Beth as having accumulated over years of overseas travel.

3.    You agree to provide access to our valuer on Tuesday, 10 September between 1pm and 4pm. Following his attendance, if we become aware our valuer was obstructed or inhibited in any way, then the condition of you granting access will not be fulfilled and permission to travel will not be granted.

Andy will be on leave tomorrow. I confirm I will be available to meet you at our offices at 11.00am.

24    A further meeting was held on 6 September 2019. Before that occurred, Mr Stolyar sent an email in which he reiterated many of the points previously raised, including that his mother did not grant permission for a valuer to go through the Property, that some of the disputed assets could not be delivered up for valuation because they did not belong to the applicants, reiterating that the foreign currency did not belong to them and specifying the content of statutory declarations which the applicants were prepared to give.

25    Ms Nguyen was cross-examined. Mr Stolyar did not give evidence.

The respondent’s affidavits

26    The two affidavits filed by the respondent may be summarised as follows.

(a) Mr Scott’s evidence

27    Mr Scott said that his investigations to date indicated that the applicants may had potential creditors with claims in excess of $4.6m. He also described notices which he had issued under s 77 of the Act to the applicants and that public examinations had been conducted in respect of both the applicants in the period May to September 2018. He said that he formed the view, based on those examinations, that the applicants had not produced various documents pursuant to the s 77 Notices. He described a notice which he lodged with the Official Receiver under s 77AA in late May 2019. This led to the attendance at the Property (as well as another property). He described how the “attendance” involved himself, Mr Treffiletti, Ms Warren (a solicitor), ATO representatives, members of the NSW Police Force and a representative of the Official Receiver.

28    Mr Scott described searching a room which appeared to be an office, together with Mr Stolyar observing. He said that his search revealed “substantial records” which related to the examinable affairs of the applicants. He described the conversation which he had with Mr Stolyar about the documents. He also described searches which were conducted of the entirety of the Property and he noticed that there were only two bedrooms, which included the Master Bedroom. He said that he believed that the second bedroom was occupied by the applicants’ daughter. He said that he formed the view that the mother and owner of the Property was not living there.

29    Mr Scott described other aspects of the “attendance”, including discussions which he had with Ms Nguyen regarding the jewellery and foreign currency.

30    Mr Scott also described the execution of the warrant at the other property. He said that he formed the view that someone was living there and he noticed that there was a large amount of mail addressed to the mother. He also described a further “attendance” later that day and conversations that he had with Mr Stolyar, including certain photographs which were taken of various assets.

31    Mr Scott deposed that because he had had “no cooperation” from the applicants in ascertaining the true ownership and whereabouts of the assets and their denials of owning assets which were identified during the “attendance”, he had “serious concerns that without the assistance of the Bankrupts, those assets will never be recovered”. Mr Scott then said that as long as the applicants comply with the conditions previously described by him he would grant them permission to travel overseas as requested.

32    Mr Scott was cross-examined by Ms Nguyen. I have no reason to doubt his evidence.

(b) Mr Treffiletti’s evidence

33    Mr Treffiletti said that he assisted Mr Scott in administering the applicants’ bankrupt estates. He described his attendance at the Property and the other premises on 19 June 2019. He described his search of the master bedroom at the Property. He also described a meeting on 6 September 2019 with Ms Nguyen. He was accompanied by another employee of PWC, Mr Pasco. Apparently Mr Scott did not attend the meeting.

34    Mr Treffiletti deposed that at that meeting Ms Nguyen handed him signed written undertakings and two signed statutory declarations. He said that he reviewed the statutory declarations and then told Ms Nguyen that they were insufficient because they failed to address the provenance of each of the assets and that there were inconsistencies between explanations provided by the applicants now when compared with what was said at the inspection. He also described a conversation with Ms Nguyen in which she complained that the passports were not being handed over notwithstanding the provision of the statutory declarations and written undertakings. He described several telephone calls made by Ms Nguyen, which he overheard, apparently to her husband. This resulted in Ms Nguyen saying that her husband wanted her to retrieve the documents provided at the meeting. The documents were returned to her.

35    Mr Treffiletti was cross-examined by Ms Nguyen. I have no reason to doubt his evidence.

Consideration and determination

36    Before outlining the relevant principles relating to the proceeding, it is appropriate to note what Deane J said in Kleinwort Benson Australia Ltd v Crowl (1998) 165 CLR 71 at 82 concerning the courts’ approach to claims of defects in a bankruptcy notice. I consider that his Honour’s observations are apposite to bankruptcy proceedings generally (emphasis added):

It is true that the strictness of the above rules leaves open the possibility of abuse by unscrupulous debtors. That is, however, an unavoidable concomitant of the protection of ordinary people faced with the threat of being made bankrupt. Many, and possibly most, of the petitions in the bankruptcy lists of this country seek the bankruptcy of honest, albeit unbusinesslike or naive, people whose indebtedness springs from causes which evoke sympathy rather than indignation. For such people, bankruptcy does not represent a game to be played to the frustration of their creditors. It represents a pronouncement of failure and humiliation attended by the fear of unknown consequences and a susceptibility to criminal punishment for what would otherwise be innocent conduct…

37    The relevant legal principles regarding the Court’s determination of an application under s 90-15 of Sch 2 of the Act are uncontroversial. They are reflected in cases relating to previous comparable provisions of the Act in cases such as Re Tyndall (1997) 30 FLR 6 per Deane J and Sharma v Pattison [2006] FCA 287 per Goldberg J.

38    As Deane J made clear in Tyndall, the Court is not required to identify error in the trustee’s decision, nor is the proceeding limited to the question whether or not the trustee has acted absurdly, unreasonably or in bad faith. Rather, the task for the Court is to make such order as it thinks “just and equitable”, having regard to all the material before it.

39    Justice Deane’s observations in Tyndal were directed to the then s 178 of the Act, which was repealed on 1 September 2017. The Court’s power of review is now contained in s 90-15 of Sch 2 to the Act. Although the expression “just and equitable” no longer appears in that provision, I accept that the earlier caselaw still provides helpful guidance to the Court’s review.

40    There is a helpful summary of some of the relevant principles by Nicholas J in Tinkler v Mellusish (Trustee); In the matter of Tinker (Bankrupt) [2017] FCA 52; 14 ABC(NS) 508. There, reference was made to Bowen CJ’s decision in Weiss v Official Trustee in Bankruptcy (1983) 1 FCR 40. In that case, there was some evidence to suggest that the bankrupt may have committed several offences under the then Act. At 43, Bowen CJ said:

I am conscious of the fact that the evidence revealed in his public examination suggests that he has committed various offences against the Bankruptcy Act 1966 (Cth) which have characteristics involving nondisclosure and concealment. However, these are matters to be litigated at the proper time. It is a basic principle that a resident of Australia is entitled to expect that he may travel freely notwithstanding the fact that he is a bankrupt provided it will not lead to his staying overseas in order to defeat or delay his creditors and provided it will not interfere with the due administration of his bankrupt estate (see Tyndall's case at 15). It is to secure the proper administration of bankrupt estates that bankrupts are required by the Bankruptcy Act 1966 (Cth) to give their passports to the trustee (par. 77(a)) and to obtain the permission of the trustee before travelling overseas (par. 272(c)). This interference with the travel of bankrupts is not for the purpose of punishing or expressing disapproval of them for offences or alleged offences against the Bankruptcy Act 1966 (Cth).

41    The Court has a broad discretion, which must be exercised judicially. Consistently with Goldberg J’s approach in Sharma, the following three matters are relevant (though not exhaustive):

    Is the proposed visit genuine?

    Is the bankrupt likely to return to Australia as promised?

    Will the visit hamper the administration of the estate?

42    I have no doubt that the proposed overseas trip is genuine and that it is for the stated purpose of celebrating the applicants’ daughter’s birthday.

43    Similarly, I am satisfied that the applicants are likely to return to Australia on 11 October 2019 (as scheduled), together with their daughter.

44    The next question is whether their overseas trips will hamper the administration of the estate. I do not believe that it will. That is primarily because the applicants have indicated a willingness to give certain undertakings to the Court which are designed to assist the respondent in administering their bankrupt estates. The undertakings which the applicants have proffered are set out at the beginning of the formal orders above. The applicants told me that they understand that the undertakings are to the Court and that serious consequences may ensue if the undertakings are breached, including the possibility of a finding that they are in contempt of Court.

45    By the end of the oral hearing this morning, there was substantial agreement between the parties as to the terms of the undertakings and the other orders proposed to be made by the Court. In those circumstances, it is unnecessary to make findings about any disputed matters of fact.

Conclusion

46    For all these reasons, I consider that the trustee’s decisions refusing consent should be set aside and, on the applicants giving the undertakings to the Court which are set out in the Orders above, the trustee should be directed to give his consent on conditions which are set out in the Orders. Orders will be made accordingly.

Associate:

Dated:    13 September 2019