Deputy Commissioner of Taxation v Clyne, Peter Leopold

[1983] FCA 276

Re: THE DEPUTY COMMISSIONER OF TAXATION
And: PETER LEOPOLD CLYNE
And: THE OFFICIAL TRUSTEE IN BANKRUPTCY
And: WILLIAM EDWARD ANDREW
No. P4 of 1983
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION, BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Neaves J.

CATCHWORDS

Bankruptcy - Continuation of orders made under ss. 30 and 50 of the Bankruptcy Act 1966 after judgment debtor becomes a bankrupt on debtor's petition.

Bankruptcy Act 1966 ss. 30, 50.

HEARING

SYDNEY

#DATE 13:9:1983

ORDER

1. Orders that the order made on 17 August 1983 "That the Official Trustee in Bankruptcy open an account in the joint names of the judgment debtor and the Official Trustee with a trading bank within the City of Sydney and arrange with the said bank that moneys may be withdrawn from the said account only upon the authority of the Official Trustee in Bankruptcy or a nominated officer of such Official Trustee" be varied by deleting the words "in the joint names of the judgment debtor and the Official Trustee" and inserting in lieu thereof the words "in the name of the Official Trustee in Bankruptcy".

1. Declares that, subject to the variation as aforesaid, the orders made on 17 August and 2 September 1983 continue to operate according to their tenor until further order of the Court.

JUDGE1

On 17 August 1983 in proceedings between the Deputy Commissioner of Taxation and Peter Leopold Clyne ("the judgment debtor") I made an order under s. 50 of the Bankruptcy Act 1966 directing that the Official Trustee in Bankruptcy take control of the property of the judgment debtor. I also made a number of ancillary orders relying for that purpose on the powers conferred on the Court by ss. 30 and 50 of the Act. It was unnecessary at that time to identify the power or powers under which each order was made.

On 2 September 1983 upon the application of the Official Trustee in Bankruptcy I made further orders ancillary to the order under s. 50 which had been made on 17 August 1983. These orders were made with the consent of the judgment debtor though without any admission by him.

On 6 September 1983 the judgment debtor presented a debtor's petition against himself pursuant to section 55 of the Bankruptcy Act 1966. The petition was accepted by the Registrar on the same day and thereupon, by force of sub-section 55(3), the judgment debtor became a bankrupt by virtue of the presentation of the petition. Mr. William Edward Andrew is the trustee of his estate.

The creditor's petition presented by the Deputy Commissioner of Taxation at present stands adjourned until 19 September 1983. It was adjourned by this Court pending the hearing by the High Court of an appeal by the judgment debtor from a decision of the Full Court of this Court refusing to set aside the bankruptcy notice upon which the petition is based. On 2 September 1983 the High Court unanimously dismissed the judgment debtor's appeal as being "without merit of any kind".

The Deputy Commissioner of Taxation intends, when the petition comes on for further hearing, to seek the making of a sequestration order notwithstanding that the judgment debtor is now a bankrupt. I say nothing about the prospects of that application succeeding but it is clear that, if it does succeed, the judgment debtor's bankruptcy will commence at a much earlier date than 6 September 1983 with all the consequences that that entails. The Deputy Commissioner of Taxation now seeks an order from the Court clarifying the question whether the orders made under ss. 30 and 50 of the Act on 17 August and 2 September 1983 continue in force notwithstanding that the judgment debtor became a bankrupt on 6 September 1983. The application seems to have been prompted by the attitude adopted by the judgment debtor, and supported by him in argument before me, that the orders made on 17 August and 2 September 1983, at least in so far as they were made in exercise of the powers conferred upon the Court by s. 50 of the Act, ceased to have any operation upon him becoming a bankrupt by the acceptance by the Registrar of the debtor's petition presented to him on 6 September 1983.

The judgment debtor submits that s. 50 only empowers the Court to make interim orders terminable upon the bankruptcy of the debtor to whom they relate. In support of this view of the section he refers to the provisions of paragraphs 58(1)(a) and 58(3)(a) and section 57A of the Act and to rule 18(2)(d) of the Bankruptcy Rules. He also refers to s. 15AA of the Acts Interpretation Act 1901.

In my opinion the power conferred by s. 50 is not limited in the way suggested in argument. The power, of course, does not arise until a creditor's petition has been presented and, if an application is to be made under the section, it must be made before sequestration, that is to say before an order of sequestration is made upon the hearing of a creditor's petition (see sub-ss. 43(1) and 52(1)). The Act, as was pointed out in argument, draws a clear distinction between "sequestration" and "bankruptcy", sequestration being limited in the manner I have indicated. The section is not expressly limited in the manner suggested and there is nothing in the language used which my mind requires, as a matter of necessary implication, that the Court's power be so restricted. There is no doubt that the Court has power, if it is satisfied that it is proper to do so, to vary or vacate at any time orders made in exercise of the power conferred by s. 50. I should add that, in my view, there is nothing in the other provisions of the Act referred to in argument or in rule 18 which requires that the power conferred by s. 50 be read down.

Several of the orders made on 17 August and 2 September 1983 were expressed to operate until further order of the Court. No such order has yet been made, the judgment debtor having become bankrupt without the intervention of the Court. The effect upon the orders of 17 August and 2 September 1983 of the making of a final order on the pending creditor's petition is a matter for consideration when that event occurs. It is unnecessary to express any view upon it at this stage.

In my opinion the orders made on 17 August and 2 September 1983 continue to operate according to their tenor notwithstanding the presentation by the judgment debtor on 6 September 1983 of a debtor's petition and its acceptance by the Registrar. Neither the Official Trustee in Bankruptcy nor the trustee of the judgment debtor's estate see any practical difficulty in the orders continuing to operate. There is much to be said for maintaining the orders in their present form until the further hearing of the pending creditor's petition.

A difficulty has arisen in carrying into effect order No. 2 that I made on 17 August 1983 namely "That the Official Trustee in Bankruptcy open an account in the joint names of the judgment debtor and the Official Trustee with a trading bank within the City of Sydney and arrange with the said bank that moneys may be withdrawn from the said account only upon the authority of the Official Trustee in Bankruptcy or a nominated officer of such Official Trustee". My reason for directing that the name of the account include the name of the judgment debtor was prompted by the consideration that he was not then a bankrupt. That consideration no longer applies and I, therefore, vary order No. 2 made on 17 August 1983 to the extent that the account be in the name of the Official Trustee in Bankruptcy alone.

I, therefore, declare that, subject to the variation of order No. 2 made on 17 August 1983 to which I have referred, the orders made on 17 August and 2 September 1983 continue to operate according to their tenor until further order of the Court.