Draper, John Alexander v Brosalco Pty Ltd

[1983] FCA 203

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IN THE FEDERAL COURT OF AUSTRALIA

1

BANKRUPTCY DISTRICT OF THE STATE	1
1 No. G 192 of 1983

OF NEW	SOUTH	WALES	AND THE	j
I

AUSTRALIAN CAPITAL TERRITORY 1

BETWEEN : JOHN ALZXANDER DRAPER

Applxant- Debtor

AND : BROSALCO PTY. LIMITED

Respondent -

Petitloning

Creditor

Morling J.

10 August 1983

EX TEMPORE JUDGMENT

Thls is an application for a stay of further

proceedings under a sequestration order made by McGregor J.

on 1 July 1983. After his Honour made the sequestration

order he granted a stay of proceedings under it for 21 days.

I have read his Honour's judgment which was given after a

contested hearlng in which the sole issue seems to have

been whether or not the debtor was in fact indebted to

the petitioning credltor for the amount of a debt in respect

of which a judgment had been recovered in the District Court.

I would have thought that the task of demonstrating

that hls Honour's decision on that issue was erroneous will

be almost insuperable. However, at the very heel of the hunt

2.

in the proceedings before McGregor J a question was ralsed

as to whether or not the petition had in fact expired.

The appeal which has been brought to the Full

Court raises for consideration not only the correctness of his Honour's decision that the debtor was in fact indebted to the petitioning creditor but also the question whether some fairly recent amendments to the Bankruptcy Act gives the court power to extend the life of a petition after the expiration of twelve months from its presentation. That

questlon may well be arguable and I am not prepared to say

that there is no substantial q<estion of law to be argued

on the hearing of the appeal. I

The stay granted by McGregor J ranlout-on 22

July or thereabouts. It was apparently allowed to run out

without an extension of it being obtained and a notice of

motion for continuation of the stay was filed in court on

23 July. It came before Neaves J on 28 July and was stood

over until today.	-
I have been informed that on 5 August the petition-

ing creditor filed and presented a sequestration order for

sealing by the court and that on the same day Beaumont J

granted an interim stay of proceedings under the sequestration

order until today. I am further informed that the trustee

3 .

has been served with today's application but has lndicated

he does not wish to be heard.

There is no evldence before the court as to what

assets, if any, the debtor possesses. Miss McSpedden who

put her client's case with admlrable clarity, said her instructions were that the debtor owned a grazlng property.

However, in view of the fact that it ~7as expressly disclaimed

on his behalf before McGregor J that he could meet hls debts

I think there must be some doubt as to the extent	of the
debtor's assets.

c

It seems to me that by force of the operation of

s.58(1) of the Bankruptcy Act the property of the debtor now

vests in the trustee. Miss McSpedden did not present a contrary argument. In those circumstances she correctly identified the purpose of the present applicatlon to be to

restrain the trustee from dealing with the assets vested in

him pending the determinatlon of the appeal.

Mr Hourlgan has, not unreasonably, expressed

concern on behalf of the petitionmg credltor that the

assets of the debtor may be disslpated pendlng the hearing

of the appeal. However, in my view any concern of that

kind can be overcome by the making of appropriate orders.

4.

The debtor is not in a position to give tltle

to any of his former assets as they now vest in his trustee

and should he attempt to dispose of them he would in my view

be unable to give title to them. Nevertheless it is desirable

that if he seeks some indulgence from the court he should

undertake that he will not attempt to deal with any of his

assets pending the outcome of the appeal.

Moreover I can see no reason why the debtor would

be prejudiced if he complies with s.54 of the Act by filing a statement of his affairs. If the appeal succeeds no harm

will be done from such a statement having been filed. If 9 -

it fails, it will relieve him of the obligation of then

filing a statement of affairs.

Accordingly I indicate as follows: that if the

appellant undertakes to prosecute his appeal with expeditlon

and to apply for an expedited hearing of the appeal, and if

he undertakes that he xnll not dlspose of or attempt to

dispose of any of his assets pendlng the hearlng of the appeal

and if he further undertakes to comply with the requlrements

of s.54(1) of the Act by filing a statement of his affairs

withln 14 days then I would propose to grant his applicatlon

and to order a stay of any further proceedings in the bankruptcy

pending the hearing of the appeal.

5.

In my view as today's application has been

brought about solely by the failure of the debtor to move

for an extension of the stay before the expiration of the

earlie- stay he should pay the petitioning creditor's costs

of this application. I would also propose to reserve

liberty to the petitioning creditor to apply on 24 hours notice

for a rescision of the order which I propose to make in the

event that any undertaking given by the debtor is not

honoured.

The only order I make now is that I grant a stay

of proceedings under the sequestration order up to and

including 17 August. I stand the present application over

untll 9.30 a.m. on that date. I will make no further formal

orders at this stage, but I indicate that I will continue

the stay until the hearing of the appeal if the undertakings

to which I have just referred are then given and I will make

formal orders as to cosizs on 17 August.

Mr. Justlce Eorling.