R v Tu Van Be Nguyen [1996] ACTSC 86 (13 August 1996)

SUPREME COURT OF THE ACT

THE QUEEN v. TU VAN BE NGUYEN
No. SCC110 of 1995
Number of pages - 5
Bankruptcy

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
HIGGINS J

CATCHWORDS

Bankruptcy - s271 Bankruptcy Act 1966 (Cth) - materially contributing to insolvency by gambling or by speculation not connected with a trade or business - onus of proving material contribution to insolvency - whether the term "rash and hazardous" in s271 qualify both "gambling" and "speculations".

Words and Phrases - "insolvency" - "gambling" - "rash" - "hazardous".

Bankruptcy Act 1966 (Cth), s271

Bankruptcy Act 1924 (Cth), s214
Bankruptcy Act 1914 (UK), s157

Marks v The King [1937] HCA 21; (1937) 57 CLR 58
Sempill v The Oriental Bank (1868) SCR (NSW) 68
Perry v Simpson (1857) Legge 997
Re Riley; ex p Riley (1894) 15 LR (NSW) (B and P) 54

HEARING

CANBERRA, 12 August 1996
13:8:1996

Counsel for the Crown: Mr J. White

Instructing solicitors: Commonwealth Director of Public Prosecutions

Counsel for the Accused: Mr R. Thomas

Instructing solicitors: Pappas J - Attorney

ORDER

THE COURT RULES THAT:
RULING ON SUFFICIENCY OF COUNT 1
Count 1, in its present form, does not sufficiently allege the offence created by s271 of the Bankruptcy Act 1966 (Cth).

DECISION

HIGGINS J A question has arisen as to the sufficiency of count 1 of the indictment in this matter. It charges the accused that he,

... at Canberra in the Australian Capital Territory between the
22nd day of November 1993 and the 14th day of January 1994 having
become bankrupt on the 10th day of February 1994 and within
2 years before the presentation of the petition on which he became
a bankrupt, materially contributed to his insolvency by gambling,
being gambling not connected with a trade or business carried on
by him.

2. That charge is intended to reflect the terms of s271, Bankruptcy Act 1966 (Cth). That section provides,

A person who has become a bankrupt after the commencement of this
Act (4 March 1968) and:

(a) within 2 years before the presentation of the petition on which,
or by virtue of the presentation of which, he became a bankrupt,
whether the petition was presented before or after the commencement
of this Act, materially contributed to, or increased the extent of
his insolvency; or
(b) (not relevant)

by gambling or by speculations that, having regard to his financial
position at the time and any other material circumstance, were rash
and hazardous, being gambling or speculations not connected with a
trade or business carried on by him, is guilty of an offence ...
imprisonment ... 1 year.

3. It is common ground that the relationship of "material contribution" between the gambling and the insolvency (or its extent) has to be proved by the Crown.

4. Indeed, that reflects the position under s214 of the preceding 1924 Bankruptcy Act as interpreted by the High Court in Marks v The King [1937] HCA 21; (1937) 57 CLR 58.

5. It is conceded also that the present section, s271, requires contribution to "the insolvency" of the accused rather than, as did s214, "the bankruptcy" of the accused.

6. "Insolvency" is usually defined as understood by Stephen CJ (Cheeke and Faucett JJ concurring) in Sempill v The Oriental Bank (1868) SCR (NSW) 68, 80,

And whether this word be taken to mean the inadequacy of a man's
assets as compared with his debts, or, in the case of a trader, a
general inability to meet his engagements at the time of the
credit given, it would seem that at any rate the word does not
mean sequestration.

7. See also, Perry v Simpson (1857) Legge 997 (general inability to pay debts) and Re Riley; ex p Riley (1894) 15 LR (NSW) (B and P) 54 (inability to meet trade engagements as they become due out of own monies).

8. It is not contested, also, that the "insolvency", if any, in the present matter is to be inferred only in relation to the debt alleged in and by the creditor's petition in this matter leading to the sequestration order of 10 February 1994.

9. The issue is whether the terms "rash and hazardous" in s271 qualify both "gambling" and "speculations" in the expression "gambling or speculations" first appearing or only the latter expression. It is conceded by Mr White, for the Crown, that where the expression "gambling or speculations" appears second in s271, each of the two words is qualified by the expression "not connected with a trade or business carried on by him".

10. In support of that submission, Mr White refers to two matters, the first is that the word "were" follows "gambling or speculations". Thus, he submits, the following words relate only to the plural expression preceding it not the singular.

11. The second submission relies on the legislative history of this and relevant preceding provisions.

12. The 1924 Act was based substantially on the UK Bankruptcy Act 1914. That provided, relevantly, for a similar offence in the following terms,

s157 Any person who has been adjudged bankrupt ... shall be guilty
of a misdemeanour, ... if, ...

(a) he has, within two years prior to the presentation of the
bankruptcy petition, materially contributed to or increased the
extent of his insolvency by gambling or by rash and hazardous
speculations, and such gambling or speculations are unconnected
with his trade or business; or
(b) (not relevant)
(c) (not relevant)

Provided that, in determining for the purposes of this section
whether any speculations were rash and hazardous, the financial
position of the accused person at the time when he entered into
the speculations shall be taken into consideration.

13. In that section, "rash and hazardous" qualifies only "speculations" but the "trade or business" qualification applies to both. The "financial position" proviso only applies to the "speculations".

14. In the 1924 Commonwealth Act, the equivalent provision was s214(1),

If a bankrupt brings about or contributes to his bankruptcy by
gambling or by unjustifiable speculations unconnected with his
trade or business, he shall be guilty of an offence.

15. In this sub-section, "rash and hazardous" has become "unjustifiable" and qualifies only "speculations". The phrase "unconnected with ..." seems to qualify only the "unjustifiable speculations". However, it would be untenable to argue that if "unjustifiable" followed "speculations" and appeared with the phrase "unconnected with ..." it should not also qualify "gambling".

16. The current provision was introduced in 1965 by the then Attorney-General, Mr B M Snedden QC (as he then was). The Second Reading Speech was delivered on 20 May 1965 (Hansard p1713).

17. A schedule of changes wrought was prepared and incorporated in Hansard. It summarised the effect of the existing section (s214(1)) and of the replacement section (s271) as follows,

s214(1) Bankrupt who has brought about or contributed to his
bankruptcy by gambling or unjustifiable speculations commits an
offence; proceedings not to be taken in respect of such offence
except by order of the Court.

s271 Offence limited to acts occurring within period of two years
before presentation of the petition; extended to cover loss of
property after presentation of petition by gambling or rash or
hazardous speculations; not necessary to obtain order of the Court
to institute prosecution.

18. That certainly indicates that the words "rash" and "hazardous" were intended to qualify "speculations" in s214(1) and no relevant change is referred to in s271. However, "rash or hazardous" is not what was enacted. It was "rash and hazardous". Nor was it expressed so as to unambiguously qualify only "speculations".

19. The insolvency law has been subsequently amended in the UK in 1985 and 1986 but these provisions retain the adjectival form of "rash and hazardous speculations" rather than separating that concept from the word it is supposed to qualify.

20. The term "gambling", of course, necessarily includes engaging in speculation. It is, however, a particular sub-species of speculation. As the Shorter Oxford Dictionary defines it, it refers to, "Any course involving risk and uncertainty". It can mean "to speculate recklessly". "Hazardous" is best described as the "incurring of risk" or "perilous". "Rash" carries with it the connotation "dashing or rushing hastily", or "hasty, impetuous, reckless, acting without due consideration or regard for consequences".

21. Thus, whilst all gambling is, of necessity "hazardous", not all gambling is "rash". This is so irrespective of whether the "gambling" is or is not part of a "trade or business" conducted by the bankrupt prior to the presentation of the petition.

22. The evil aimed at is clearly conduct which a person can be expected to anticipate seriously risks insolvency. In that context, unless the "gambling" had such a character that it was "reckless" and "without due consideration or regard for consequences", it is unlikely that it would be intended that it should be punishable.

23. That may be regarded as a trade-off for the elimination of the discretion in s214(2) residing in the then Bankruptcy Court to deny the right to prosecute for "gambling" which contributes to a bankruptcy as proscribed by s214(1).

24. The legislative device of creating an offence prosecutable only with leave is one not now regarded with favour. However, one of the factors in deciding to give leave would be whether the bankrupt had, in gambling as he or she did not only in fact contributed to his or her bankruptcy but also appeared to have been "rash" in doing so.

25. It, therefore, seems to me that, on balance, Mr Thomas, for the accused, has persuaded me of the correctness of his submission that it is an element of the offence under s271 when it relates to "gambling" that such "gambling" be characterised as "rash and hazardous".

26. I, therefore, rule that count 1, in its present form, does not sufficiently allege the offence created by s271.