Talacko v Talacko [2010] FCA 239 (17 March 2010)

Last Updated: 17 March 2010

FEDERAL COURT OF AUSTRALIA

Talacko v Talacko [2010] FCA 239

Citation:		Talacko v Talacko [2010] FCA 239
Parties:		HELENA MARIE TALACKO, ALEXANDRA ANN BENNETT, MARTIN THORBURN JAN TALACKO, ROWENA KIRSTEN EVE TALACKO and MARGARET HELEN BEATRICE TALACKO v JAN EMIL TALACKO
File number:		VID 142 of 2010
Appeal from:		Talacko v Talacko [2010] FCA 193
Parties:		JAN EMIL TALACKO v HELENA MARIE TALACKO, ALEXANDRA ANN BENNETT, MARTIN THORBURN JAN TALACKO, ROWENA KIRSTEN EVE TALACKO and MARGARET HELEN BEATRICE TALACKO
File number:		VID 152 of 2010
Judge:		RYAN J
Date of judgment:		17 March 2010
Date of hearing:	10 March 2010
Date of last submissions:	11 March 2010
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	No Catchwords
Number of paragraphs:	48
Counsel for the Applicants in VID 142 of 2010 and Respondents in VID 152 of 2010:	Mr G Bigmore QC with Mr P Fary
Solicitor for the Applicants in VID 142 of 2010 and Respondents in VID 152 of 2010:	Holding Redlich
Counsel for the Respondent in VID 142 of 2010 and Applicant in VID 152 of 2010:	Mr M D Wyles SC with Dr T J F McEvoy
Solicitor for the Respondent in VID 142 of 2010 and Applicant in VID 152 of 2010:	Findlay Arthur Phillips

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 142 of 2010

BETWEEN:	HELENA MARIE TALACKO First Applicant ALEXANDRA ANN BENNETT Second Applicant MARTIN THORBURN JAN TALACKO Third Applicant ROWENA KIRSTEN EVE TALACKO Fourth Applicant MARGARET HELEN BEATRICE TALACKO Fifth Applicant
AND:	JAN EMIL TALACKO Respondent

JUDGE:	RYAN J
DATE OF ORDER:	17 MARCH 2010
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The respondent’s application for variation or discharge of the order of 5 March 2010 or the undertaking given that day by the debtor’s solicitor be dismissed.
2. The respondent pay the applicants’ costs of the hearing on 10 March 2010, such costs to be taxed in default of agreement.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 152 of 2010

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	JAN EMIL TALACKO Applicant
	HELENA MARIE TALACKO First Respondent ALEXANDRA ANN BENNETT Second Respondent MARTIN THORBURN JAN TALACKO Third Respondent ROWENA KIRSTEN EVE TALACKO Fourth Respondent MARGARET HELEN BEATRICE TALACKO Fifth Respondent

JUDGE:	RYAN J
DATE OF ORDER:	17 MARCH 2010
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The application for leave to appeal from the orders of Dodds-Streeton J of 5 March 2010 be refused.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION		VID 142 of 2010
BETWEEN:	HELENA MARIE TALACKO First Applicant ALEXANDRA ANN BENNETT Second Applicant MARTIN THORBURN JAN TALACKO Third Applicant ROWENA KIRSTEN EVE TALACKO Fourth Applicant MARGARET HELEN BEATRICE TALACKO Fifth Applicant
AND:	JAN EMIL TALACKO Respondent
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION		VID 152 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN:	JAN EMIL TALACKO Applicant
AND:	HELENA MARIE TALACKO First Respondent ALEXANDRA ANN BENNETT Second Respondent MARTIN THORBURN JAN TALACKO Third Respondent ROWENA KIRSTEN EVE TALACKO Fourth Respondent MARGARET HELEN BEATRICE TALACKO Fifth Respondent
JUDGE:	RYAN J
DATE:	17 MARCH 2010
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. There are before the Court two applications by Jan Emil Talacko (“the debtor”) arising out of orders made by Dodds-Streeton J on 5 March 2010. The first application I take to be for a variation of her Honour’s order pursuant to liberty to apply which was reserved on 5 March 2010. The second is an application for leave to appeal from her Honour’s order (assuming that leave to appeal is required). It is convenient first to set out the factual background as summarised in her Honour’s reasons and supplemented by evidence which has been adduced since those reasons were published.

Factual background

2. The applicants Helena Marie Talacko, Alexandra Ann Bennett, Martin Thorburn Jan Talacko, Rowena Kirsten Eve Talacko and Margaret Helen Beatrice Talacko applied to this Court, ostensibly pursuant to ss 30, 50 and 78 of the Bankruptcy Act 1966 (Cth) (“the Act”) for orders that;

(a) The Official or a Registered Trustee take control of the property of the respondent, Jan Talacko, from the date of the order until a date specified by the Court.
(b) The respondent and his solicitor, Michael Witt of Finlay Arthur Phillips, deliver up to the District Registrar all the respondent’s passports.
(c) Alternatively, that Mr Witt (on provision of a suitable undertaking to the Court) hold the respondent’s passport until further order.
(d) That the respondent be ordered:
(i) not to leave the State of Victoria;
(ii) not to attend any point of international departure; and
(iii) not to apply for any other passport.
(e) That the time for service of the application be abridged.

3. Although the application referred to s 78 of the Act, in fact, only ss 30 and 50 were invoked in support of the orders ultimately sought. Her Honour noted that the application was attended by some urgency “as orders made in the Supreme Court restraining the debtor from departing Victoria would expire at 5.00pm today.”
4. Before the application under ss 30 and 50 of the Act was made, two bankruptcy notices dated 1 March 2010 had been served on the debtor, one at the instance of the first applicant, Helena Talacko, and the other at the instance of the second to fifth applicants. Each bankruptcy notice claimed a total debt of $7,569,482.50. Also adduced in evidence before the primary Judge were reasons for judgment in the Supreme Court of Victoria, the first by Habersberger J on 13 October 2009 and the second by Kyrou J on 24 November 2009. The judgment debt which was the foundation of the bankruptcy notices resulted from an order by Kyrou J on 11 December 2009 that the debtor pay to the first applicant, who is the sister of the debtor, the sum of €4,740,830.00 and €296,079 by way of interest and pay to the second to fifth applicants jointly a sum in the same amounts of €4,740,830.00 and interest of €296,079. The latter applicants are the children of a deceased sibling of the debtor. The reasons for judgment of Kyrou J disclose that the judgment debt was by way of equitable compensation for breach of duty arising from a family arrangement for the recovery of properties in Germany, the Czech Republic and Slovakia, which had formerly been confiscated from the parents of the first applicant and the debtor.
5. While judgment in the Supreme Court was pending, the debtor and two of his sons, Paul Talacko and David Talacko, who are resident in Prague, had been subject to freezing orders and other orders in aid of the Supreme Court proceedings. Amongst other things, those orders required the debtor to deliver his passports into the custody of his solicitor, not to leave the State of Victoria, not to attend any point of international departure and not to apply for any other passport. On 17 December 2009 the travel restrictions were extended by Kyrou J until 5.00pm on 5 March 2010. On 4 March 2010, Beach J in the Supreme Court dismissed an application for a further extension of the travel restrictions.
6. There was also evidence before the primary Judge that the debtor had filed a notice of appeal from the judgment of Kyrou J of 11 December 2009 and that, on 25 January 2010, a notice of cross-appeal had been filed on behalf of the applicants in proceeding numbered VID 142 of 2010. As well, there was evidence of an oral examination of the debtor before Daly AsJ in the Supreme Court, in the course of which the debtor claimed he had no real or personal assets in Australia and, apart from some modest balances in several bank accounts, and no personal assets in the Czech Republic or elsewhere.
7. At [39] of her reasons, the learned primary Judge summarised as follows a submission advanced before her on behalf of the applicants;

The applicants submitted that orders pursuant to s 50 and incidental relief under s 30 of the Act were necessary in order to ensure the effective administration of the estate, in circumstances where: there was an unsatisfied judgment for a very large sum; the tendency evidence demonstrated that, absent such orders, the respondent would be likely to leave Australia and deal with or dispose of remaining properties; the respondent’s presence overseas and his concomitant absence from Australia would create a significant impediment to the investigation, preservation and protection of the estate; the Czech Republic had not enacted the United Nations Commission of International Trade Law Model Law on Cross-Border Insolvency; the debtor had not demonstrated any ability to pay the debt and a sequestration order was likely; and, irrespective of the notice of appeal, the judgment debt was not stayed and no application to set aside the bankruptcy notice had been made or foreshadowed.

The reasons and orders of the primary Judge

8. After referring to Deputy Commissioner of Taxation v Clyne (1983) 50 ALR 118, at 123, on the purpose and effect of s 50 of the Act and to Tasman KB Pty Ltd v Watkins [2004] FCA 1190, in which Allsop J had made orders under the same section, her Honour noted, at [43]-[44];

43 In Re Allan Joseph Brazel Ex parte: Royal Nominees [1995] FCA 1276 (“Brazel”), Cooper J acknowledged that s 78 of the Act dealt specifically with the case where a debtor sought to flee the jurisdiction and s 30 of the Act should not be construed so as to impinge on or reduce common law rights. His Honour did not decide whether s 30(1)(b) empowered the restraint of a person leaving the jurisdiction prior to the making of a bankruptcy order, but declined to order such restraint.
44 Cooper J nevertheless considered that the debtor’s passport was in a different position. The passport was property of the Commonwealth and, as there was before the Court no specific proposal in relation to overseas travel, the passport could properly be held by the Court without imposing any present impediment to any common law right of travel. The debtor’s common law rights could be protected if he were permitted to apply to the Court for delivery up of his passport in relation to a specific and identifiable journey, with evidence of a present intention to return to Australia.

9. Her Honour acknowledged “curial restraint and caution must be exercised in relation to curtailing or interfering with a person’s travel and freedom of movement, even in a bankruptcy context.” She referred to Weiss v Official Trustee in Bankruptcy [1984] FCA 2; (1983) 1 FCR 40, where Bowen CJ, at 43, re-affirmed that an Australian citizen, notwithstanding that he is a bankrupt, is entitled to travel freely:

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 ... . The 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 [Act].

10. Reference was also made to observations by Finkelstein J to similar effect in ASIC v Wiggins (1998) 90 FCR 314, at 320. The learned primary Judge then observed, at [48]-[49];

48 Finkelstein J concluded that the appropriate course was to seek undertakings from the respondent’s solicitor as to the control of the respondent’s passport, which was currently in the solicitor’s possession.
49 Section 50 of the Act is aimed at facilitating the preservation and protection of the debtor’s property, so that in the event of sequestration, it will be available for equitable distribution to creditors. The considerations relevant to making an order thereunder differ from those relevant to the enforcement of a judgment and the present application differs from those recently made before the Supreme Court of Victoria.

11. In the light of her earlier observations and references, her Honour then reached these conclusions;

50 In my view, the applicants have established that orders broadly in the terms sought in paragraphs 1(a) and 1(b) of the applicants’ Contentions are necessary in the interests of creditors.
51 The order in paragraph 1(a) will, however, require adjustment to reflect its application only to certain properties listed in Attachment A.
52 In my opinion, for the reasons given by Cooper J in Brazel, travel restraints should not be imposed on the respondent in the terms sought pursuant to s 30 of the Act. Rather, as in Brazel, the appropriate course is to order that the respondent’s passports be delivered to the Court or his solicitor, from whom appropriate undertakings should be sought.

In the result, the orders made by her Honour on 5 March 2010 were in these terms:-

UPON THE UNDERTAKING OF Michael Witt of Findlay Arthur Phillips to hold the Respondent’s passports and not return them to the Respondent or any other person at the Respondent’s direction unless the Court so orders or the Applicants’ solicitors consent in writing, and that otherwise the undertaking shall continue until 5:00pm on 24 March 2010.
THE COURT ORDERS THAT:

1. Until further order, the Respondent, Jan Emil Talacko, be restrained from taking any further steps by himself or by his employees, agents or attorneys for the purpose of or in furtherance of selling, transferring, donating or otherwise dealing with any of the properties listed in Attachment “A”.
2. The Court directs that James Stewart of Ferrier Hodgson, a Registered Trustee, take control of the Respondent’s property until further order.

3. Liberty to apply be reserved.
4. The time for service of this application be abridged.
5. Costs be reserved.
6. The further hearing of the application is adjourned until 24 March 2010.

Evidence and submissions in relation to variation of the orders of 5 March 2010

12. On 9 March 2010 a flight reservation was made for the debtor and his wife, Judith Gail Talacko, on Cathay Pacific flight CX168 departing Melbourne, Tullamarine airport at 1.05 am on 13 March 2010 for London via Hong Kong. At the same time, a further flight was booked for the debtor and his wife departing from London for Prague at 2.40 pm on 14 March 2010. A Cathay Pacific itinerary exhibited to an affidavit by the debtor’s solicitor, Michael Geoffrey Witt, sworn 10 March 2010, discloses that return flights have been booked for the same passengers from Prague via London and Hong Kong to Melbourne between 10 and 12 September 2010. Also exhibited to the same affidavit are versions in translation of advice received by the debtor’s Czech attorneys from a Court in Prague which is apparently seized of a proceeding between the first to fourth applicants as plaintiffs and the debtor as defendant relating to “surrender of property + PO”. The effect of that advice seems to be that a hearing in that proceeding is to take place on 20 April 2010 “at 1.00 pm Door No. 6” but the presence at that hearing of the parties (as distinct from their legal representatives) is not necessary.
13. In another affidavit, also sworn on 10 March 2010 Mr Witt has deposed;
    6. I am informed by the Respondent and believe that on 9 March 2010 he purchased a return air ticket to travel from Melbourne to London on 13 March 2010 with the return leg of that ticket being scheduled to arrive in Melbourne on 11 September 2010. I am also informed by the Respondent and believe that he intends to travel from London on to Prague however at the time of swearing this affidavit he had not booked the London to Prague leg of his journey.
    7. I am further informed by the Respondent and believe that he wishes to travel to Prague in order that:

(a) He can visit family members (being 2 of his sons and 2 of his grandchildren) who live in Prague; and
(b) To be able to confer with and provide instructions to his Czech lawyers who are acting for him in respect of proceedings commenced against him in the Czech Republic by the Applicants which have been fixed for hearing on 20 April 2010 (“the Czech Proceedings”).

8. Additionally, I am informed by the Respondent and believe that it is his intention to return to Australia on 11 September 2010 in accordance with the air-ticket purchased by him.
   
14. In the same affidavit to which I have just referred, Mr Witt has further deposed to evidence given by the debtor at the oral examination on 19 and 20 February 2010 which has been noted at [6] of these reasons. According to Mr Witt, the debtor acknowledged that he had four bank accounts in the Czech Republic which had been opened in the early 1990s and two in Australia, one of which was in the joint names of himself and his wife but operated solely by his wife. Into the former Australian account is paid a pension at a rate of about $1,100 per week which the debtor receives from Sweden. The debtor further deposed in the same examination that properties formerly owned by him in the Czech Republic had been let to tenants who had paid rent directly into one or other of his bank accounts. His sons were also signatories to the Czech bank accounts. He denied owning any furniture, a car, or real estate in Australia, any shares in Australian or Czech companies, or any artworks.
15. In an affidavit sworn 10 March 2010, the applicants’ solicitor, Howard Roger Rapke, has deposed that, on 10 August 2009, “Mareva-type orders” were made by Kyrou J in proceeding No 7393 of 1998 in the Supreme Court against the debtor’s sons, David and Paul Talacko, restraining each of them from taking any additional steps to further the registration of transfers to himself of properties identified in Attachment A to each order. As well, each of David and Paul Talacko was required by the order to communicate to the Cadastral Registrar in Prague a request not to take any further steps to register transfers of the same properties. The orders also restrained each of David and Paul Talacko from selling, transferring, donating or otherwise dealing with any of the properties listed in Attachment A, and required each of them to sign a cancellation of deed and withdrawal of application form to be served on the Cadastral Registrar.
16. In September 2009, summonses were filed in the Supreme Court charging each of David and Paul Talacko with contempt of Court for non-compliance with the orders described at [15] above and, on 17 December 2009, Kyrou J made an order in proceeding No 7393 of 1998 which recited under the heading “Other Matters”;

Justice Kyrou issued warrants for the arrest of the Second and Thirdnamed Defendants – who are apparently in the Czech Republic – this day, directing the Sheriff to arrest and bring them before the Court forthwith to answer charges of contempt. It is the Court’s intention to hear the charges once the Second and Thirdnamed Defendants are brought before the Court.

17. In the affidavit noted at [15] above, Mr Rapke also gave further details of the oral examination of the debtor in the Supreme Court in the course of which, Mr Rapke believes, the debtor denied being a director of Grange Lynne Pty Ltd (“Grange Lynne”) and claimed to have ceased being a director of that company at a time which he cannot recall. In the same examination, according to Mr Rapke’s information and belief, the debtor disclaimed any knowledge of the affairs of another company, Noel Grave Pty Ltd (“Noel Grave”) and suggested that any interest in Unit 2, 6 Grange Road Toorak (“2/6 Grange Road”) of which Grange Lynne was the registered proprietor might have been acquired by his father-in-law. The debtor acknowledged that his daughter, Nicole, is presently residing at 2/6 Grange Road. Also exhibited to Mr Rapke’s affidavit are a title search and ASIC company searches which disclose that Grange Lynne is the registered proprietor of 2/6 Grange Road, the debtor is a director of Grange Lynne, Noel Grave is registered as the proprietor of approximately 23% of the shares in Grange Lynne and the debtor is registered as the holder of 50% in the shares in Noel Grave.
18. In the course of the hearing on 10 March 2010, Mr Wyles SC, who appeared with Dr McEvoy for the debtor, disclaimed any suggestion that it was necessary for the debtor to be in Prague for the hearing scheduled for 20 April 2010. However, Mr Wyles emphasised that the application for removal of the travel restriction was made by a person who was not a criminal and not a bankrupt. His right of unrestricted travel was said to have been recognised in Weiss v Official Trustee in Bankruptcy (supra) and was the right which the learned primary Judge considered, at [44] of her reasons, “could be protected if he were permitted to apply to the Court for delivery up of his passport in relation to a specific and identifiable journey with evidence of a present intention to return to Australia.”
19. Counsel then referred to s 30(1) of the Act which provides;

(1) The Court:
(a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and
(b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.

20. In the context of the present case, it was submitted, the Court could only consider the imposition of a restriction on the debtor’s right of travel as necessary for the purpose of carrying out or giving effect to the order which Dodds-Streeton J had made, also on 5 March 2010, under s 50 of the Act directing a registered trustee to take control of the debtor’s property. There was said to be no explanation of why the debtor’s continued physical presence in Australia was necessary to give effect to the direction under s 50 of the Act. Rather, it was pointed out, the debtor could, while in the Czech Republic, answer by telephone or email any questions or requests for information from the registered trustee.
21. Counsel for the debtor imputed to the learned primary Judge a view that there was no present reason to keep the debtor in Australia but as there was, at the time of the hearing before her, no evidence of a present intention to leave this country, “his passport[s] should simply be held” by his solicitor. It was also submitted that no inference could be drawn, that, by leaving the country, the debtor could more readily put out of the reach of the registered trustee property overseas in which he had an interest.
22. In a supplementary written submission filed by consent after the hearing on 10 March 2010, Mr Wyles and Dr McEvoy pointed out that freedom to travel, including to places outside Australia, has been described as basic right of all Australian citizens recognised in international as well as domestic law; see, for example, ERS Engines Pty Ltd v Wilson (1994) 35 NSWLR 193 and Danielletto v Khera (unreported, Sup.CT of NSW, 17 February 1995). It was also said that Cooper J in Re Brazel, Ex parte Royal Nominees Pty Ltd [1995] FCA 404 (“Brazel”) had suggested that;

Section 30 of the Act ought not to be given such a construction as would impinge or reduce the common law rights of a person where there are specific provisions which deal relevantly with the circumstances in which those common law rights are to be infringed or abrogated. ...

23. As well, Counsel referred to Potter v Minahan [1908] HCA 63; (1908) 7 CLR 277, Commissioner of Taxation v Citibank Ltd (1989) 20 FCR 403, Thompson v Mastertouch TV Service Pty Ltd (No 3) [1978] FCA 24; (1978) 38 FLR 397, at 408, and other authorities in which other statutes have been construed as not encroaching on established rights and freedoms unless the language of a particular provision could be seen unambiguously to have that effect. In the face of an express conferral in s 78 of the Act of a power to remove or restrict the common law right to travel freely, s 30(1), it was submitted, must be construed as not conferring any such power. Section 78 provides, in relevant part;

(1) Where it is made to appear to the Court:
(a) that a debtor against whom a bankruptcy notice has been issued or a petition has been presented has absconded, or is about to abscond, with a view to avoiding payment of his or her debts or to preventing or delaying proceedings against him or her under this Act;
... ... ...
the Court may issue a warrant for the arrest of the debtor or bankrupt, as the case may be, and his or her committal to such gaol as the Court appoints until the Court otherwise orders and may, by the same warrant, order that any property and books in the possession of the debtor or bankrupt be seized and delivered into the custody of such person as the Court appoints.

24. Mr Bigmore QC, who appeared with Mr Fary of Counsel for the applicants contended that the property of the bankrupt of which the registered trustee had been directed to take control included the benefit of the deeds of cancellation and withdrawals of application which the debtor’s sons, David and Paul Talacko, had been required to execute by the order of Kyrou J noted at [15] of these reasons. Given the amount for which judgment has been entered against the debtor in the Supreme Court there would be a strong incentive for the debtor, who is now 80 years of age, to absent himself from Australia permanently if that would preclude the applicants from recovering from him the amount of the judgment debt. If taking that course were to entail the loss of the return component of the Cathay Pacific ticket, that would be insignificant compared with the cost of satisfying the judgment debt.
25. As well, Counsel for the applicants pointed to the need for the registered trustee to investigate, and possibly explore with the debtor, whether his property includes any shares held by him directly or indirectly in Grange Lynne or Noel Grave or any interest held through either or both of those companies in 2/6 Grange Road.

Consideration of the application for variation or discharge of the orders of 5 March 2010

26. Contrary to the submission on behalf the debtor, I do not regard the statement quoted at [44] of Dodds-Streeton J’s reasons reproduced at [8] above that “the debtor’s common law rights could be protected if he were permitted to apply to the Court for delivery up of his passport in relation to a specific and identifiable journey, with evidence of a present intention to return to Australia” as indicating a view by her Honour that all the debtor had to do to recover his passports was to indicate a specific journey which he wished to undertake from which he presently intends to return to Australia. Rather, her Honour, in that passage, was paraphrasing part of the reasons of Cooper J in Brazel where his Honour observed, after doubting, without deciding whether s 30(1)(b) ought to be construed as giving a power to restrain a debtor, before the making of a sequestration order, from leaving the jurisdiction;

... ... Even if the power to restrain the debtor leaving Australia exists, the material does not to my mind make out a case for the exercise of the power.
However the question of the passport is a different matter. The debtor says that the passport is his property. That is a common but mistaken view. The property in a passport under s.6A of the Passport Act 1938 remains always in the Commonwealth. There is however a right to obtain a passport as a travel document to enable a person to exercise a common law right of travel and freedom of movement where in order to make use of that right a passport, as an internationally recognised travel document, is necessary.
In the instant case, there is before the court no specific proposal in relation to overseas travel. There is therefore, with the passport being held by the court, no present impediment of any common law right of travel. The position may be different should a specific occasion arise where the debtor wishes to exercise his right of travel for business or any other purpose and in order to do so needs his passport, or access to his passport as a document of international travel, to allow him to leave the country. If and when that occasion arises the question will then be whether or not there are circumstances which would enable the passport to be withheld notwithstanding that the withholding of the passport impinged or abrogated the debtor's common law right of travel.
Whether the passport ought to be retained pending the hearing of the creditor’s petition is a question of balancing the public interest in ensuring that if the debtor’s estate is sequestrated, any order of the court or the operation of the Act is not rendered nugatory by the debtor's refusal to return to Australia against the debtor's common law right of freedom of movement and travel.
Although the material would not satisfy me that a warrant should issue for Mr. Brazel's arrest as a fleeing debtor, objectively there are a number of reasons why, in the absence of substantial assets in his own name in Australia, he would seek to take up a position overseas if he could earn $100,000.00 a year.
There is in these circumstances some risk that the debtor may leave the jurisdiction and not return.
In my view the debtor's common law rights can be protected and given effect to by allowing him to apply on 48 hours notice to the court for delivery up of his passport in order to enable him to travel in relation to a specific and identifiable journey with a specific and identifiable itinerary where he has a ticket which shows that it is his then present intention to return to Australia. Therefore I propose, pursuant to s.30(1)(b) of the Act, to order that the passport be retained in the custody of the District Registrar with liberty to the debtor to apply on 48 hours notice for delivery up of the passport for the purpose of international travel.

27. As I understand her Honour’s reasons, she was persuaded to take a similar course and to allow the debtor to apply, before 24 March 2010, on appropriate evidence for the release of his passports to enable him to undertake specified international travel. If no extension or variation of the undertaking about the passport were obtained, presumably at the instance of the applicants or the registered trustee, by 5.00 pm on 24 March 2010, the undertaking would lapse and the debtor would be able to travel without restriction and without the need to approach the Court.
28. Given the state of the evidence when the orders of 5 March 2010 were made, I consider that the learned primary Judge perceived an appreciable risk that the debtor might never return to Australia or might, while overseas, collaborate with his sons to render immune from attachment by the plaintiffs or recovery by the registered trustee property in Prague, Slovakia or Dresden which had been the subject of orders in the Supreme Court. For myself, I am satisfied of the existence of each of those risks which are similar to those inferred by Cooper J in the passage quoted at [26] above.
29. The perception which I share with her Honour could be dispelled by appropriate evidence from the debtor of his intentions in undertaking international travel and by evidence that the overseas properties are not presently capable of being alienated so as to defeat the claims of the debtor’s Australian creditors. However, the debtor has not removed my perception of either of those risks by the mere purchase of air-tickets for himself and his wife to Prague and return and by the testimony of his solicitor on information and belief as to the purpose of the debtor’s visit to Prague and his intention to return to Australia on 11 September 2010. He has not excluded, as a reasonable inference, the conclusion that the purchase of the air-tickets for travel on 13 March 2010 has been opportunistic and that the intended purpose of the travel and lengthy stay overseas extends to matters other than the family contact attested by Mr Witt.
30. The learned primary Judge fixed a period of two weeks ending on 24 March 2010 before the matter returns to the Court. I consider that to be no more than is necessary to enable the registered trustee to carry out a preliminary investigation of the debtor’s assets and affairs and to seek, if so advised, whatever modification of her Honour’s orders is thought appropriate to effectuate the trustee’s taking control of the property of the debtor.
31. I accept that the authorities invoked by Counsel for the debtor establish a principle of statutory construction that legislation which arguably infringes a citizen’s common law rights, including the right to travel inside and outside of Australia, ought only to be given that effect if its language intractably requires it. However, a different approach is called for when the legislation to be interpreted, like s 30(1) of the Act, confers on a court a broad general discretion to be exercised judicially. That is not to say that an infringement of common law rights is not to be weighed in the balance in exercising the discretion. In my view, that was done by Dodds-Streeton J when she said, as noted at [9] above, that “curial restraint and caution must be exercised in relation to curtailing or interfering with a person’s travel and freedom of movement, even in a bankruptcy context.” That observation confirms that her Honour saw herself as engaged in the exercise described by Cooper J in Brazel of balancing the public interest in the efficacy of an order under s 50 against a debtor’s common law right to freedom of movement and travel.
32. I do not regard the presence in the Act of s 78 as negativing an intention that the power conferred by s 30(1) extends to an order restricting a debtor’s freedom of movement or travel if that is seen as necessary in aid of a direction under s 50. Section 78(1)(a) does not deal, in terms, with a restriction on travel or movement, even of an absconding debtor. It is confined to a power to issue a warrant for the arrest and committal of the debtor. Taken to its logical conclusion, the argument advanced on behalf of the present debtor would entail that, if the Court thinks it appropriate to release a debtor on bail after an order for committal, there is no power under s 30(1) to impose a condition requiring the surrender of the debtor’s passport.
33. In my view, the existence of the power exercised by the primary Judge is supported by the preferable construction of s 30(1) and confirmed by observations to be found in, amongst other cases, Re Brazel, Weiss v Official Trustee in Bankruptcy (supra) and ASIC v Wiggins (supra, at 320).
34. For the reasons which I have endeavoured to explain, the application for variation or discharge of the order of 5 March 2010 or the undertaking given that day by the debtor’s solicitor will be refused.
35. I turn then to consider the debtor’s submissions as to appeal from the orders of the primary Judge.

Application for leave to appeal

36. Counsel for the debtor contended, first, that leave to appeal is not required from so much of her Honour’s order as operates to prevent the debtor from travelling overseas. That was said to flow from s 24(1C) of the Federal Court of Australia Act 1976 (Cth) which provides;

Leave to appeal under subsection (1A) is not required for an appeal from a judgment referred to in subsection (1) that is an interlocutory judgment:
(a) affecting the liberty of an individual; or
(b) in proceedings relating to contempt of the Court or any other court.

37. The order of 5 March 2010 was said to be an interlocutory judgment “affecting the liberty” of the debtor because the undertaking extracted from his solicitor impinged on his liberty to travel overseas.
38. Alternatively, Counsel for the debtor invoked the test in Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 where the two limbs of the test for the grant of leave to appeal from an interlocutory judgment have been articulated as;

The first test, which relates to the prospects of the proposed appeal, is "whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court". The second
“is whether substantial injustice would result if leave were refused, supposing the decision to be wrong.”

39. The errors imputed to the learned primary Judge included the receipt into evidence of the reasons and findings of fact made in the Supreme Court by Habersberger J on 13 October 2009 and by Kyrou J on 24 November 2009. That was said to be contrary to s 91 of the Evidence Act 1995 (Cth) which provides;

(1) Evidence of the decision, or of a finding of fact, in an Australian or overseas proceeding is not admissible to prove the existence of a fact that was in issue in that proceeding.
(2) Evidence that, under this Part, is not admissible to prove the existence of a fact may not be used to prove that fact even if it is relevant for another purpose.

40. It was also suggested that the learned primary Judge’s reasons were insufficient in the sense discussed by Hayne J in Waterways Authority v Fitzgibbon [2005] HCA 57; (2005) 221 ALR 402, where his Honour identified, as an error in fact finding, a “failure to examine all of the material relevant to the particular issue.” His Honour continued, at 428-9;

The primary judge’s reasons stated his conclusion that the evidence of Dr Trevithick was to be accepted and preferred to that of other evidence but disclosed no reasoning supporting that conclusion. No analysis was made of the competing evidence and no explanation proffered for rejecting it. The most that might be inferred from what was said was that some special significance was attached to the existence of the written record upon which Dr Trevithick founded his oral evidence. But what significance was to be attached to the existence of that record might well be thought to have turned critically upon the source or sources of the information recorded in it. That was not a matter examined in the reasons. The absence of explanation for, and reasoning in support of, the conclusion expressed in the primary judge’s reasons reveals that the process of fact finding miscarried. It miscarried because, so far as the reasons reveal, no examination was made of why Dr Trevithick’s evidence was to be preferred to that of other witnesses. (original emphasis)

41. In my view the reference in s 24(1C)(a) of the Federal Court Act to “liberty of the individual” is synonymous with “liberty of the subject”. Sub-section (1C) of the Federal Court Act was inserted by s 3 and Schedule 2 of the Access to Justice (Civil Litigation Reforms) Amendment Act 2009 (Cth), the Bill for which was explained by the Attorney-General in his Second Reading speech as framed so that;

“Uncertainty surrounding appeal rights in relation to interlocutory judgments will be removed, so that the court’s time will no longer be spent unnecessarily hearing appeals from certain interlocutory decisions”.

That explanation supports a restrictive interpretation of the exception from the requirement to seek leave to appeal in respect of an interlocutory judgment affecting the liberty of an individual. An early legislative ancestor of the new provision seems to be s 1(1)(b) of the Supreme Court of Judicature (Procedure) Act 1894 (Imp) which provided that:

No appeal shall lie ...
(b) without the leave of the judge or the Court of appeal from any interlocutory order or interlocutory judgment made or given by a judge, except in the following cases ...
(i) when the liberty of the subject or the custody of infants is concerned.

42. In Ryan v Attorney-General [1998] 3 VR 670, Ormiston JA expressed the view, at 672, that “no niggardly construction should be given to the expression ‘liberty of the subject’ a concept nurtured and protected by the common law for many centuries.” His Honour’s observations were directed at s 17A(4) of the Supreme Court Act 1986 (Vic), which is to the same effect as s 1(1)(b) of the Judicature Act just mentioned, and despite taking a broader view of it than the other members of the Court of Appeal, his Honour was not prepared to give the expression a reading as expansive as that for which the debtor contends in the present case. His Honour said, at 672;

But where the order from which the appeal is brought does affect the liberty of the subject, whether by direct incarceration or otherwise or where the order authorises the deprivation of a person’s liberty then, prima facie, the exception should apply to permit appeal without leave. These views seem to me consistent with those expressed by Murphy J in Marriner v Smorgon (a judgment concurred in for these purposes by Gobbo J and myself). That case related to a warrant whose effect had expired inasmuch as it had been executed and the appellant released from custody, so that Murphy J. was able to say that he was “not imprisoned, nor is he under threat of imprisonment, by reason of the warrant”: at 503. Moreover, as was said in the same judgment at 505, the expression must “be construed to encompass only cases where the personal liberty of a natural person is to be affected by the outcome of the appeal”.

43. I consider that a similar approach to the construction of the corresponding new provision in the Federal Court Act compels the conclusion that the exception from the need to obtain leave to appeal is confined to orders which subject an individual to direct incarceration or other total deprivation of his or her physical liberty.
44. Of course, I recognise that my conclusion on this point cannot bind a Full Court of this Court if the debtor institutes an appeal which, he asserts, is as of right. However, I shall proceed to deal with the application on the basis of my conclusion that leave to appeal is required. It will be apparent from my reasons for refusing to discharge or vary the undertaking given by the debtor’s solicitor on 5 March 2010 that, with the benefit of additional evidence, I consider the imposition and continuation of the undertaking to be an appropriate exercise of the Court’s discretion. It follows that the interlocutory order of 5 March is not attended by sufficient doubt to warrant its being reconsidered by a Full Court.
45. I indicate parenthetically that, even if the learned primary Judge failed properly to apply s 91 of the Evidence Act to the reasons for judgment respectively published by Habersberger J on 13 October 2009 and Kyrou J on 24 November 2009, that failure did not effectively bear upon the orders which her Honour actually made. That was because, as explained earlier in these reasons, the exercise of her Honour’s discretion was predicated on the fact of the orders of Habersberger and Kyrou JJ having been made and not on the existence of a fact in issue in the proceeding in which those orders were made. As well, I consider, with respect, that her Honour’s reasons, having regard to the urgency with which they were prepared, were admirably extensive and fully explained why she exercised her discretion as she did. This was not a case which called for an explanation of the kind indicated in Waterways Authority v Fitzgibbon (supra) of a preference for one part of the evidence over another, conflicting, part.
46. In Sharp v Deputy Commissioner of Taxation (Cth) [1988] HCA 29; (1988) 88 ATC 4,184, Burchett J, after formulating the twofold test approved by the Full Court in Décor Corporation Pty Ltd v Dart Industries Inc (supra) observed, at 4,186;

In my opinion, the sufficiency of the doubt in respect of the decision and the question of substantial injustice should not be isolated in separate compartments. They bear upon each other, so that the degree of doubt which is sufficient in one case may be different from that required in another. Ultimately, a discretion must be exercised on what may be a fine balancing of considerations.

47. In the present case the presumptive injustice to the debtor, resulting from his inability to travel overseas for about a fortnight if the Court does not impose any further restraint, is slight. When that consideration is regarded in conjunction with the insufficiency of the doubt attending the orders of 5 March 2010, the case against leave to appeal becomes very strong.

Conclusion

48. For the reasons outlined above the application for variation or discharge of the orders of 5 March 2010 is dismissed and the application for leave to appeal from those orders is refused. The debtor must pay the applicants’ costs of the hearing on 10 March 2010 of both applications.

I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.

Associate:

Dated: 17th March 2010