+ Overseas Travel Restrictions for Bankrupts

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Overseas Travel Restrictions for Bankrupts

Sydney

Wednesday 22 November 2006

Melbourne

Wednesday 29 November 2006

Prepared and presented by Leigh Adams

Principal,  Leigh Adams Lawyers

Bankrupts

One of the bankrupt’s duties, unless excused by the trustee, or prevented by illness or other sufficient cause, is to forthwith after becoming a bankrupt, give to the trustee his or her passport, if any (s. 77 (1)(a) Bankruptcy Act 1966).

Under s. 272 (1)(c), a bankrupt who is liable to pay the bankruptcy trustee an income contribution is not entitled to leave Australia unless he or she is granted permission in writing to do so by the trustee. This restriction extends to any act preparatory to leaving Australia.

The trustee may impose written conditions on a consent given for these purposes. If the bankrupt is liable to make a contribution to the trustee under s. 139P or s. 139Q, the conditions may include conditions regarding the payment of that contribution – see s.272(2).

Permission is not required once a person is discharged from bankruptcy or the bankruptcy has been annulled.

Furthermore, a debtor who has entered a formal arrangement with creditors under either a Part IX debt agreement or a Part X personal insolvency agreement is not restricted from leaving Australia.

Applications by a bankrupt may be made to a court under s. 178 of the Act to review a decision by the trustee to refuse travel overseas.

Reviewing a trustee’s decision in relation to travel

A bankrupt can appeal the trustee’s decision to refuse to return the bankrupt’s passport and not to give written consent to the bankrupt to leave Australia – s. 178.

If the trustee’s decision is set aside, the appropriate order is to remit the matter to the trustee for reconsideration.

An example of a successful application to review a trustee’s refusal of permission to travel overseas based on compassionate grounds was that of Jatcar -v- Rambaldi [2003] FMCA 355.

This brings us to the case of Sharma -v- Pattison, a decision of Goldberg J in the Federal Court of Australia [2006] FCA 287. The case was heard 18 March 2006. In that case, the applicant was a religious Hindu. Her mother passed away and her faith required her to undertake a ceremony called a Pinda Daan ceremony for her mother.

It involved visiting a number of holy places in India over a period of about a week in March 2006. The application had particular urgency in view of the fact that for astrological reasons, according to the Hindu religion, the ceremony had to start on or shortly after 21 March 2006. His Honour had received evidence of an itinerary. His Honour applied the principles set out in Re Tyndall (1977) 17 ALR 182 and Re Hicks (1994) 217 ALR 195 and was satisfied on the material before him that the proposed visit by the applicant was genuine. The applicant lived in Australia and had lived in Australia for some considerable time. She lived with her children and she was working in her daughter’s business. His Honour considered that it was likely that she would return to Australia as she said she would.

On that basis, he felt that there was no basis to impose a surety.

The trustee had a number of questions which he considered had not been answered satisfactorily by the applicant, including issues concerning the applicant’s disclosures of her assets, liabilities and participation in a company called Ishwar P/L. His Honour held that it was open to the trustee to pursue those matters by further investigations and in particular, a s. 81 examination, but he was not satisfied that the administration of the estate would be hampered by the proposed visit by the applicant as it was only for a period of three weeks and it was not suggested that a s. 81 examination had to be undertaken during that period.

Accordingly, the appeal was allowed.

As well as the possibility of appealing under s. 178 of the Bankruptcy Act to the Federal Court or the Federal Magistrates Court, consideration should also be given to the possible application of the Administration Decisions (Judicial Review) Act 1977 (Cth).

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