Re Donald T Campbell Ex Parte: National Australia Bank Limited [1991] FCA 54 (28 February 1991)

FEDERAL COURT OF AUSTRALIA

Re: DONALD T. CAMPBELL
Ex Parte: NATIONAL AUSTRALIA BANK LIMITED
No. V B1090 of 1990
FED No. 89

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
BANKRUPTCY DIVISION
Heerey J.(1) MELBOURNE 28:2:1991

Counsel for the Official Trustee: Mr J Lenczner

Solicitors for the Official Trustee: Australian Government Solicitor

Counsel for the Bankrupt: Miss J Davies

Solicitors for the Bankrupt: Reichman and Co

ORDER

The Bankrupt's application dated 17 January 1991 seeking annulment of the petition be dismissed.

Upon the Bankrupt giving the undertaking in the form annexed to the minutes of these orders:
Find charge of contempt upon the application of the applicant

dated 11 January 1991 proven but adjourn the said application
without recording a conviction or imposing sentence to 9 July 1993
or, if that date not be a Court sitting day, then the nearest
available sitting day before that date and that in the absence of
further order in the meantime the application be then dismissed.

Trustee's costs of and incidental to the appeal against refusal to adjourn,

application for annulment and the contempt application (including reserved costs) be taxed on solicitor and own client basis and paid out of the Bankrupt's estate and in default of the payment out of the said estate, by the Bankrupt.

The Petitioning Creditor's costs of and incidental to the application dated 17 January 1991 including reserved costs of 6 February 1991 be taxed and when taxed paid by the Applicant Debtor.

That there be general liberty to apply to each of the parties upon three days notice to the other which may be given to the solicitors presently on record for the parties.

DECISION

This is an application under s.54(3) of the Bankruptcy Act 1966 seeking an order that the bankrupt be found guilty of contempt for failing to file a statement of affairs within 14 days of him being notified of the bankruptcy. It seems to be not in dispute that the bankrupt was, in fact, notified of the sequestration order by, at the latest, 30 November 1990 and it is also common ground that he did not in fact file a statement of affairs until 13 February 1991.

2. Miss Davies on behalf of the bankrupt advanced two arguments. The first was that "fails" in s.54(3) only refers to failure by reason of inadvertence. In this case she argued that the evidence disclosed that the bankrupt made a positive decision to decline to file the statement of affairs because he was so advised by his solicitors. It is said that the bankrupt did not just ignore the requirement to file a statement of affairs but took specific steps and made a conscious decision not to do so. This, it is said, is a case of refusal and not failure.

3. In my opinion, the word "fails" in s.54(3) plainly encompasses failure for whatever reason, be it mere inadvertence or a conscious decision not to file the statement. It would be an incongruous construction of the section and one quite inconsistent with the function of the Bankruptcy Act to hold that a person who quite honestly and through inadvertence failed to file a statement of affairs was guilty of contempt of court but a person who deliberately refused to do so, no matter how unreasonable his grounds, and perhaps in circumstances involving a contumacious refusal, nevertheless did not contravene s.54(3).

4. Miss Davies' second argument was that the same circumstances, that is to say the bankrupt's acting on legal advice, gave rise to a defence of honest and reasonable belief as established in the well known High Court authority Proudman v Dayman [1941] HCA 28; (1941) 67 CLR 536. Miss Davies said that the evidence disclosed that the bankrupt's belief was that he did not have an obligation to file a statement. In my opinion, the Proudman v Dayman principle has no application because, apart from anything else, there was not here a mistake of fact.
For those reasons I find the offence proved.

5. In my view the costs incurred have been a result of the bankrupt's conduct, and I propose to order that the costs of the three matters, the appeal, the annulment application and the contempt application be paid out of the bankrupt's estate, and in default of such payment, to be paid by the bankrupt.

6. I order that those costs be taxed as between solicitor and own client.