Re Gary William Lenske Ex Parte: Gary William Lenske [1986] FCA 13 (4 February 1986)

FEDERAL COURT OF AUSTRALIA

Re: GARY WILLIAM LENSKE
Ex Parte: GARY WILLIAM LENSKE
No. QLDE85 of 1985
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Pincus J.

CATCHWORDS

Bankruptcy - stealing - order for restitution - order for imprisonment in default - subsequent bankruptcy - whether power to order stay of order for imprisonment - matters relevant to exercise of discretion.

Bankruptcy Act 1966, ss.60(1)(b), 82(3) Criminal Code (Q.), ss.18, 685A

HEARING

BRISBANE
4:2:1986

ORDER

The orders of the Magistrates Court at Pomona made on 17 September, 1984 in respect of the applicant Gary William Lenske be permanently stayed, in so far as they require the payment of restitution in respect of eight charges of stealing from B. W. Coles Discount Furnishers and also in so far as they require the imprisonment of the applicant in default of payment of the restitution required.

The Attorney-General of Queensland pay the costs of and incidental to the hearing of the application other than those costs relating to the documents prepared before the Attorney-General's interest in the matter became known.

NOTE: Settlement and entry of orders is dealt with in Order 36
of the Federal Court Rules.

DECISION

G. W. Lenske applies pursuant to s.60(1)(b) of the Bankruptcy Act 1966 for an order staying certain proceedings which resulted in his being imprisoned. On 17 September 1984, the applicant pleaded guilty in the Magistrates Court at Pomona to eight charges of stealing as a servant and was convicted and ordered to perform 160 hours community service in respect of each charge. He was further ordered, under s.685A of the Criminal Code (Q.), to pay restitution in respect of each charge in a total sum of $2,347, at the rate of $50 per week. The Magistrates Court also made eight orders for imprisonment in default of payment of the restitution ordered.

2. The applicant did not pay any restitution. On 14 February 1985, he filed his own petition under s.155 and that was accepted by the Registrar. Thereupon, the debtor became bankrupt by force of s.55(3) of the Act.

3. On 13 January 1986, the applicant was arrested under warrants issued in consequence of his failure to pay the restitution ordered. The matter first came before me on Tuesday, 14 January. Mr. Bourke appeared, instructed by the State Crown Solicitor, to oppose the granting of the application and asked for an adjournment. He informed me that he had no objection to the applicant's being released from custody during the period of the adjournment and I adjourned the matter on that basis. When the case was ultimately argued, Mr. Bourke again appeared. No point was taken as to the standing of the State Attorney-General, for whom Mr. Bourke acted.

4. The provisions relied on by the applicant were held to be valid by the High Court in Storey v. Lane [1981] HCA 47; (1981) 147 CLR 549. There, the applicant had been convicted under Queensland industrial legislation of having paid a lesser amount of wages than prescribed by the award and having failed to pay holiday pay. The court had power to fine the applicant, which it did, and to order him to pay the sums due for wages and holiday pay, which it also did. There was, as here, an order for imprisonment in default of payment.

5. The applicant Storey failed to make the payments ordered and was imprisoned. He then filed his own petition and applied for a discharge from custody. The High Court itself exercised the discretion given by s.60(1)(b) in favour of the applicant.

6. Nevertheless, it was argued by Mr. Bourke that no order should be made in favour of the applicant here, because there is no power to do so. Alternatively, he said that the application should be refused as a matter of discretion.

7. Section 60(1)(b) reads as follows:

"60(1) The Court may, at any time after the
presentation of a petition, upon such terms and
conditions as it thinks fit -

...

(b) stay any legal process, whether civil or
criminal and whether instituted before or
after the commencement of this sub-section,
against the person or property of the debtor -

(i) in respect of the non-payment of a
provable debt or of a pecuniary penalty
payable in consequence of the non-payment
of a provable debt; or

(ii) in consequence of his refusal or failure
to comply with an order of a court,
whether made in civil or criminal
proceedings, for the payment of a
provable debt,

and, in a case where the debtor is imprisoned
or otherwise held in custody in consequence of
the non-payment of a provable debt or of a
pecuniary penalty referred to in sub-paragraph
(i) or in consequence of his refusal or
failure to comply with an order referred to in
sub-paragraph (ii), discharge the debtor out
of custody."

Mr. Bourke argued that the matter falls outside this provision because the obligation in question is not a provable debt. He argued that it falls within s.82(3):

"Penalties or fines imposed by a court in respect of
an offence against a law, whether a law of the
Commonwealth or not, are not provable in
bankruptcy."

The contention that the order for payment of restitution falls within the description "penalties ... imposed by a court in respect of an offence against a law" does not, if correct, lead to failure of the application; that is so because the power given by s.60(1)(b) is not confined to instances in which the process stayed creates a provable debt. It is enough that there is process against the person or property of the debtor in respect of such a debt, or in consequence of refusal to comply with an order for payment of such a debt. The underlying obligation which the stayed process is intended to enforce must be a provable debt; here, that obligation is that due by the applicant to the employer, in consequence of the thefts.

8. It therefore does not matter, in my view, whether or not the order for restitution was itself a penalty imposed by a court in respect of an offence against a law within the meaning of s.82(3). However, I am of opinion that, as submitted by Mr. Grant-Taylor on behalf of the applicant, the order for restitution was not a penalty. As counsel pointed out, such an order is not a punishment within any of the descriptions in s.18 of the Criminal Code (Q.). Further there is authority in the Queensland Court of Criminal Appeal that such an order as this is not a punishment: R. v. Civoniceva; Ex Parte Attorney-General (1983) 2 QdR 633 at 634, 635. There Connolly J. (with whom Andrews ACJ. agreed) expressed himself in favour of the view that neither an order for restitution nor an order for imprisonment in default of compliance, under s.685A of the Criminal Code, is a punishment. Since it was conceded, and correctly, that the victim of the applicant's theft was entitled to prove in the bankruptcy for the sums stolen, it is my opinion that the case falls within s.60(1)(b). That conclusion is consistent with a dictum of Beaumont J. in Re Sutherland-Cropper (1985) 61 ALR 713 at 717.

9. Some reliance was placed upon the decision of Gibbs J. (as he then was) sitting in the Supreme Court of Queensland in Re Caddies; Ex Parte Stapleton (1962) 19 ABC 155. His Honour there held it to be "quite clear" that an order of a similar kind was "of a punitive character"(p.158). On that point I prefer to follow the views of the Queensland Court of Criminal Appeal in Civoniceva's case referred to above. His Honour also held that the order was outside the scope of s.63(1) of the Bankruptcy Act 1924; however, the provisions of s.60(1)(b) relied on by the applicant here have no counterpart in that Act.

10. The remaining question is the exercise of the discretion. There was discussion as to the true effect of the remarks of Gibbs C.J., with whom the other members of the court concurred, in Storey v. Lane [1981] HCA 47; (1981) 147 CLR 549 at 558:

"In my opinion it is unnecessary to remit the
application back to the Supreme Court. Of course,
under s.60(1)(b) the court has a discretion to
exercise, but it seems to me clear that in the
circumstances of the present case, where the
applicant is bankrupt, and unable to comply with
the orders made by the industrial magistrate, the
Court should exercise the power under s.60(1)(b)
and discharge him out of the custody in which he
has been placed as a result of the orders made on
his conviction on the first and second charges."

Mr. Bourke contended that the reasons for the High Court's exercise of discretion did not assist the applicant here because (in substance) the circumstances giving rise to the order for imprisonment and order in Storey v. Lane were of a different character. There may well be a difference in moral quality between theft on the one hand, and failing to pay employees their due on the other. Further, the former is an offence of a more traditional kind; but it was not the character of the offence, viz. one of failing to pay a debt, which the High Court referred to as warranting a favourable exercise of discretion. The court said only that the applicant there was "bankrupt and unable to comply with the orders made by the industrial magistrate". Here also the applicant is bankrupt and, because he has no money and is living on the dole, in addition to a small income from casual work, it would not be feasible for him to pay the sums ordered. I think there is substance in the contention on behalf of the applicant that the views expressed in Storey v. Lane practically compel an exercise of the discretion in his favour.

11. If that be not correct, however, apart from Storey v. Lane the discretion should, in my view, be exercised in favour of the applicant. Mr. Bourke contended that I should take into account against the applicant the fact that he had a previous conviction; that was for false pretences and was recorded some six years before the convictions with which I am concerned. Mr. Bourke also pointed out that on the applicant's version of events, he committed the offences in question because he ran short of money as a result of his wife's expensive hobbies. It is uncertain whether the discretion I have is broad enough to justfy my determining whether or not the applicant should continue to be imprisoned by reference to detailed considerations of that sort; they would seem to be more appropriate to be weighed by a sentencing judge or magistrate. Mr. Grant-Taylor, on the other hand, contends that I should have regard to the fact that before he filed his bankruptcy petition he was said to have been told by an officer at the Official Receiver's office that he would not have to pay the restitution.

12. The central point to be considered, in my view, is that the offences in question, although no doubt serious enough, were not inherently of great heinousness; the sentencing court did not believe that a custodial sentence was warranted. While different considerations may apply where the compensation or restitution is ordered by reason of some truly vicious crime, it seems to me that, in an ordinary case such as this, prima facie the discretion should be exercised in favour of the applicant. I can see that it is a difficulty that, as Mr. Bourke pointed out, the sentencing court may well have imposed a heavier sentence if no order for restitution, with its accompanying penalty in default, had been imposed. However, that will very often be so in cases of this sort and cannot, I think, justify the dismissal of the application.

13. It will therefore be ordered that the orders of the Magistrates Court at Pomona made on 17 September, 1984 in respect of the applicant Gary William Lenske be forever stayed, in so far as they require the payment of restitution in respect of eight charges of stealing from B.W. Coles Discount Furnishers, and also in so far as they order the imprisonment of the applicant in default of payment of the restitution so ordered.