+ Provable Debts

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On the application of the WA Real Estate & Business Agents Supervisory Board (REBA), the WA State Administrative Tribunal (SAT) fined Low, a real estate agent, $10,000 and ordered this to be paid to REBA, plus its costs of $65,000. SAT found that Low breached trust account requirements and engaged in intentionally dishonest and fraudulent conduct. REBA then applied to make him bankrupt.

The bankrupt argued that if the costs and the fine were not provable in the bankruptcy, then the petition could not proceed.

The Court noted s82(3) of the Bankruptcy Act which provides:

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 issue was whether the monies ordered to be paid under the Tribunal¿s orders were in relation to an "offence against a law" for the purposes of s82(3) of the Bankruptcy Act and therefore not provable.

The nature of disciplinary proceedings conducted under the relevant WA legislation, the Court noted, was to maintain proper professional standards and thereby protect the public. They were not designed to punish the person who is disciplined, and the legislation itself distinguished between 'offence' and 'disciplinary action'.

Hence, the Court concluded that the fine of $10,000 was not imposed in respect of an offence for the purposes of s82(3). Likewise, the costs order of $65,000 was compensatory in nature, not penal. They were both provable debts.

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