Gruzman, N.B. v American Express International Inc.

[1993] FCA 109

IOC\ 149'3 . ,

JUDGMENT No. ........ ........ .. I....,..,,,.. ,

.	.
, .

I  

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION	)
STATE OF NEW SOUTH WALES	1 NP 3151 of 1992

Re :  NEVILLE BRUCE GRUZMAN

Ex parte: AMERICAN EXPRESS

INTERNATIONAL INC

l 0 MAR 1993

FEDERAL COURT OF

PRINCIPAL

REGISTRY EX TEMPORE JUDGMENT

EINFELD J SYDNEY 17 FEBRUARY 1993

This is primarily an application under section 31A(7) of the Bankruptcy Act for review of a sequestration order made by a registrar yesterday. The jurisdiction granted by subsection

( 7 ) depends upon the exercise of a power by a registrar as set

out in sections 31 and 31A and it is clear that the granting of a sequestration order yesterday was the hearing and determination of a matter within section 31(l)(a).

It is not entirely clear to me that the circumstances made out here are appropriate for the exercise of this power of review. The only decision to which my attention has been drawn is one of Justice Northrop in Re Kwiatek [l9891 21 FCR 374. His Honour held that a review under section 31A(7) is a re-hearing de novo based on the evidence before the registrar supplemented by any additional evidence the parties desire to produce. At page 381 his Honour said:

The c o u r t w i l l rely upon t h e f a c t s p r o p e r l y brought

before i t by t h e p a r t i e s t o t h e r e v i e w .

The debtor applies, as an alternative to review, for an annulment under section 153A or 153B but prefers the relief sought under section 31A(7).

The facts relied upon are set out in an affidavit of the debtor of today's date. The affidavit establishes that the debtor commissioned a solicitor to appear for him at the hearing of the petition to seek an adjournment but it seems that the solicitor did not attend, or did not attend for that purpose. There seems to have been some falling out between the debtor and this solicitor at about this time. Counsel appearing for the debtor today says that the solicitor concerned, who is not the person instructing him, did in fact attend the court, but that all he did was to inform the court that his firm was no longer acting for the debtor. Even that limited role is not recorded on the court record which shows no appearance for the debtor at all.

In any case, the purpose of the adjournment was to enable the

petitioning creditor although the information given in the debtor to contemplate some type of cross-action against the	affidavit does not make clear how the cross-action would have
had much to do with the debt owing to the petitioning creditor which is not otherwise denied. However, the debt as at yesterday's date was just a little over $12,000 which together with the petitioning creditor's costs required payment of just over $14,100. The debtor says that he is a man of some substance, has no outstanding judgments or orders against him and no current liabilities, and has substantial assets. He states that he has what he describes as a fairly high profile in Sydney because of his association with the National Trust, his activities as a prominent architect and his position as an alderman on the Woollahra Council. He says that being made bankrupt may do him immense harm personally and professionally. Accordingly, after the order was made yesterday, the debtor caused to be paid to the petitioning creditor's solicitor the whole of the judgment debt plus interest, and the creditor's costs and disbursements.
His affidavit does not make clear what precisely the cross- action was expected to be, how it was in any way related to the debt, why it should be permitted to be included in the action on the debt, or why payment of the debt was not made earlier. Nevertheless, the circumstances under which he was made bankrupt do appear to have arisen out of at least a misunderstanding, possibly something somewhat worse, for which the debtor had no responsibility. These circumstances appear appropriate to consider as being within the power envisaged by
Evidence has been given to the Court that neither the registrar. section 31A(7) to review a sequestration order made by a
petitioning creditor nor the trustee objects to an order for annulment. They say nothing about their view on an order of review under section 31A(7) and an ultimate setting aside of the sequestration order and dismissal of the petition, the primary relief sought. However, it does seem to flow from their correspondence with the solicitor for the debtor and the
context of the matter that they would have no objection to relief which has precisely the same effect as an annulment except that it would not acknowledge that a sequestration order had ever existed.
The trustee sought in advance an undertaking from the debtor that he would pay the trustee's costs in the matter. Such an undertaking has been shown to me and has apparently been faxed to the trustee's office. In the event that annulment was granted, the trustee sought other orders but, as it seems to me, none of those orders are relevant to a case where, upon review, it is determined that the petition be dismissed. It is quite clear that if the sequestration order is set aside, the order appointing the trustee goes with it. If the petition is dismissed, it is also clear that the trustee would have none of the duties to make payments under rule 179 or to advertise for other creditors.
Not without some doubt about, but with sufficient confidence
sequestration order made by the registrar yesterday, together sought by the debtor under section 31A(7). I set aside the in, the correctness of the procedure, I accede to the orders
with the order appointing M r Peter Rogers as trustee of the debtor's estate. I dismiss the petition of the petitioning creditor. The debtor is to pay the trustee's costs of and in relation to such administration of the estate as has occurred since yesterday.

preceding pages are a tru Reasons for Judgment he

Just~ce E~nfeld