Case: Re Tyndall Ex parte Official Receiver (1977) 17 ALR 182
Outcome: considered
In particular, at [60] to [64], the Full Court said the following: No affidavit was filed by the trustee in the proceedings before Wilcox J denying the version of events given by Mrs Maxwell-Smith. The only affidavit of Ms Gallucci before his Honour was an affidavit of 7 April 2004 sworn in the annulment proceedings. She gave very brief oral evidence in chief but did not address events surrounding the cruise. While the submission of Mrs Maxwell-Smith is a mixture of both submission and assertions of fact, in the absence of a denial by Ms Gallucci and any evidence from Mr Donnelly explaining why he refused permission (there was none), the evidence of Mrs Maxwell-Smith together with the submission raised, in our opinion, a serious issue concerning the conduct of the trustee in refusing his consent to her travelling. We do not accept, with respect, that the matter can be disposed of in the way suggested by Wilcox J. His Honour does not deal with whether an inquiry might be warranted in which the basis on which the trustee refused to grant consent can be investigated. It is not true to say that Mrs Maxwell-Smith had to be excluded from the ship because of the fact that she was on a Portwatch list maintained by the Australian Federal Police. She was excluded from the ship because it would have been an offence for her to travel without the consent in writing of the trustee: s 272(1)(c) and the trustee, on Mrs Maxwell-Smith's version of events, had the opportunity to give that consent but did not in a context where the captain of the vessel gave certain assurances designed to have Mrs Maxwell-Smith return to Australia. The principles governing the giving of consent by a trustee to a bankrupt to travel were articulated by Deane J in Re Tyndall; Ex parte Official Receiver (1977) 17 ALR 182 (at 190-191): It is only in recent years that the Commonwealth bankruptcy legislation has made it an offence for a bankrupt to travel overseas without the consent of his trustee and has required a bankrupt to surrender his passport to his trustee once a sequestration order is made. Bankruptcy does not, of itself, involve any criminal offence. A citizen should be free to travel if and when his commercial activities or personal desires prompt him so to do. Restrictions upon such travel under the bankruptcy legislation must be seen as being aimed at insuring the proper administration of the bankruptcy laws and of bankrupt estates under such laws and not as a penalty imposed upon a citizen as a consequence of inability to pay debts leading to the making of a sequestration order. In some cases, the possibility that the bankrupt has committed offences under the Act and is seeking to abscond from possible prosecution will be extremely relevant. There has not, however, in this case been any suggestion that the bankrupt is endeavouring to abscond to avoid possible prosecution. In some cases the financial rewards to be derived by the bankrupt's estate from such overseas travel will clearly outweigh [sic] any inconvenience in the administration of that estate resulting from the bankrupt's departure from the jurisdiction. It can be seen that relevant considerations in deciding whether to give consent may be the possibility of a bankrupt absconding to avoid prosecution or inconvenience caused to the administration of the bankrupt's estate. In the present case it is not apparent why the trustee refused to grant permission to Mrs Maxwell-Smith to travel. There may be a number of reasons having regard to the circumstances. However, if he was aware of various matters to which Mrs Maxwell-Smith referred in her material (her affidavit and her submissions) then a real issue arises about whether it was appropriate for him to have refused permission. In our opinion, Wilcox J gave insufficient consideration to the matters raised by Mrs Maxwell-Smith in support of an inquiry at least as it related to this question of travel. To use the language of the High Court in House v King set out at [54], his Honour did not take into account a material consideration, namely that the trustee may have misconceived his powers in refusing Mrs Maxwell-Smith permission to travel. The trustee's refusal is a matter, in our opinion, which warrants further investigation and it is appropriate that an inquiry be ordered to investigate that specific matter. It is, with respect, not enough to say, as Wilcox J did, that there was no financial aspect to this complaint. It was characterised by the appellants as an abuse of power. Whether that characterisation is apt or even relevant is a matter that should not be addressed at this stage. It is a matter for the judge who conducts the inquiry. An inquiry can be conducted on a particular matter: Re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262. In our opinion, there should be an inquiry into whether the trustee refused Mrs Maxwell-Smith permission to travel on or about 20 May 2005 [sic: 2004] and, if so, was that refusal appropriate in all circumstances. 8 Before me, evidence was led on behalf of the trustee. At the hearing before me Mr Donnelly swore to the truth of a comprehensive statement and was cross-examined. There was no objection taken to any part of his statement. Mrs Gallucci, his manager on the file, prepared a statement. She attended court. She was not required for cross-examination and no objection was taken to any part of her statement. I was informed by Mr Skinner, without any objection by counsel for Mr and Mrs Maxwell-Smith, and apparently accepting what Mr Skinner said without the need for evidence, that Mrs Gallucci was very ill. I think it appropriate to identify the nature of her condition. In many instances, I would not do so, but I think in the circumstances of the seriousness of the matter, Mrs Gallucci will understand my desire to ensure the completeness of these reasons. Mrs Gallucci is under medical treatment by the application of steroids for a spinal problem which is contributing to a condition of deafness. She has also recently had a stroke. In circumstances where counsel for Mr and Mrs Maxwell-Smith indicated that he had no questions for Mrs Gallucci in cross-examination, I raised the question as to whether counsel would agree to Mrs Gallucci's statement being tendered without formally being sworn. Counsel agreed and in those circumstances the trial proceeded on the basis of Mrs Gallucci's statement being tendered without being sworn to or affirmed as if that had occurred. 9 Given Mrs Gallucci's ill health, I permitted this somewhat unusual course because I did not think it appropriate to take any risk in relation to her health that was unnecessary, and no doubt, that is what prompted counsel for Mr and Mrs Maxwell-Smith to take the entirely proper course that he did in this respect. I rejected another statement from an employee of the trustee dealing with two aspects of the administration of the estate because I thought that the bounds of relevance were being stretched to a point where it was unnecessary. 44 It is clear that whilst the captain of the ship and Federal Agent Nagy had had discussions about the position, the captain was not prepared to give any guarantee about either the passport or the disembarkation of Mrs Maxwell-Smith. The Maxwell-Smiths, through Mr Brennan, say that the discretion miscarried because Mr Donnelly did not apply the considerations discussed by Deane J in Re Tyndall Ex parte Official Receiver (1977) 17 ALR 182, in particular at 190 and 191, where his Honour said the following: ...It is only in recent years that the Commonwealth bankruptcy legislation has made it an offence for a bankrupt to travel overseas without the consent of his trustee and has required a bankrupt to surrender his passport to his trustee once a sequestration order is made. Bankruptcy does not, of itself, involve any criminal offence. A citizen should be free to travel if and when his commercial activities or personal desires prompt him so to do. Restrictions upon such travel under the bankruptcy legislation must be seen as being aimed at insuring the proper administration of the bankruptcy laws and of bankrupt estates under such laws and not as a penalty imposed upon a citizen as a consequence of inability to pay debts leading to the making of a sequestration order. In some cases, the possibility that the bankrupt has committed offences under the Act and is seeking to abscond from possible prosecution will be extremely relevant. There has not, however, in this case been any suggestion that the bankrupt is endeavouring to abscond to avoid possible prosecution. In some cases the financial reward to be derived by the bankrupt's estate from such overseas travel will clearly outweigh any inconvenience in in the administration of that estate resulting form the bankrupt's departure from the jurisdiction. This is not, however, such a case for the reason that , as I haved said, I am unconvinced that the bankrupt estate of the applicant could be expected to benefit over and beyond the $40 per month which the bankrupt has currently undertaken to pay to the trustee. In some cases, the requirements of the prompt and efficient administration of the estate of the bankrupt and the administration of the Act will justify the refusal to grant leave to travel overseas. This, in my view, such a case. Taking into account all the circumstances of the present matter I have reached the conclusion that, in the present stage of administration of the applicant's bankrupt estate, I should not grant the leave which he seeks. The provisions of s 77(a) and s 272 of the Act recognize that a bankrupt's legitimate desires to travel overseas must, in an appropriate case, be subordinated to what is necessary for the proper and efficient administration of his estate in bankruptcy and the administration of the bankruptcy law. All in all, the circumstances of the present case are such as to make that subordination necessary. 45 But, as the facts reveal here, Mr Donnelly was never really called upon to make a decision on an application by the bankrupt to travel. To say that that is what occurred on 20 May 2004 misunderstands and misconceives the position Mr Donnelly found himself in. He was called upon, without notice, in circumstances where he is entitled to say that the matter came as a surprise to him, to consider a conversation with a Federal Police Officer (who had been sent to the wharf to prevent Mrs Maxwell-Smith travelling) about allowing Mrs Maxwell-Smith to travel in circumstances where what Mr Donnelly knew was set out in [44] of his statement and in circumstances where it was not, nor could be understood as being, a request by the bankrupt herself. 46 Given the irregularity of the behaviour, the failure of the Maxwell-Smiths to give any notice whatsoever that Mrs Maxwell-Smith would be travelling, despite the apparent clear opportunity of the previous days, given the failure to attend the s 81 examination, whatever might be the explanation for that, given the taking out of the warrants whatever might be the status of those and the circumstances of lack of notice and surprise in which Mr Donnelly found himself, his decision was not one, in my view, that is open to the kind of criticism that is made of it. In particular, I think what is said in [47] of Mr Donnelly's statement is legitimate. 47 The kinds of consideration discussed by Deane J in Re Tyndall presuppose a request, otherwise regular, to travel. The circumstances here were highly irregular. As I have said, there was no application by Mrs Maxwell-Smith. She had given no notice. She could be seen as having possibly committed an offence in failing to deliver her passport and to have acted in an attempt to board the ship. In all the circumstances identified by Mr Donnelly in [42] to [47] of his statement, I think it is a misunderstanding of the position to say that he breached his obligation as a trustee by failing to only turn his mind to the question of the due administration of the estate. 48 Even assuming that one can somehow construct some agency between Federal Agent Nagy and Mrs Maxwell-Smith, such that Mrs Maxwell-Smith can be seen to have been making an application through Federal Agent Nagy, I do not think that the conduct of Mr Donnelly is made any more liable to criticism. At the risk of repetition, it is quite unrealistic in my view, in the circumstances in which Mrs Gallucci and Mr Donnelly found themselves, to require them, on pain of criticism for breach of duty, to turn their minds only to the kinds of consideration identified by Deane J. Mrs Maxwell-Smith had failed to give up her passport. She had apparently, to their eyes, not given them any notice of the intended travel, had given no warning as to why she wanted to leave her country and even in the circumstances where there was an annulment application on foot and the estate on the current understanding of the facts was probably solvent, these matters did not mandate Mr Donnelly taking a course other than that which he took on pain of criticism that he was somehow abusing his position. 49 In my view, in all the circumstances, there was no miscarriage of discretion of the kind posited in address, there was no abuse of power, there was no act of mala fides, Mr Donnelly's actions in all the circumstances that he was placed in by others is not the subject of legitimate criticism. Of course he could have said, yes, it is all right for you to go, but he did not. If there is any responsibility for the most unfortunate events of 20 May 2004, they rest with others and not with Mr Donnelly or Mrs Gallucci. They should have been warned and told that overseas travel was desired. I have already expressed my view that I am prepared to accept Mrs Maxwell-Smith's evidence as honest as to why she thought she did not have to, but from Mr Donnelly's position, to attempt to criticise him in the serious way that has been done, in circumstances where he was given no notice whatsoever of the travel and in the other circumstances that I have described is, I think, somewhat unfair. 50 If Mr Donnelly had been given adequate notice for the decision, if the nature of the family trip had been explained to him, I have little doubt that with appropriate conditions of the kind imposed by Moore J in July, he would have consented to the travel.