Haj, J.A. v ASG Australia P/L

[1994] FCA 456

CT OF m ) No. NB389 of 1993

OF NEW SOUTH )

Applicant/Bankrupt

EX PARTE:

Respondent/Petitioning
Creditor

HILL J SYDNEY 18 MARCH 1994

FOR

Mr Abdalla Haj applies to the Court for

the alternative that the decision of a Registrar of the Court to make a sequestration order against his estate be reviewed or that his bankruptcy be annulled.

It seems that on 28 February 1994, in the absence of

Mr Haj, a Registrar made a sequestration order against his

Mr Haj is a trader who operates a business of buying disputes the debt claimed by the petitioning creditor	and selling fruit and vegetables for export and sale. He
admitting that he owes $20,565.80 plus interest and costs, but disputes the balance claimed to be owing by the petitioning creditor. According to his affidavit evidence he had not paid the petitioning creditor, who he says was his only creditor, because of the dispute that existed between them. He claims to have assets worth $747,841 and liabilities excluding trade creditors payable in the ordinary course of business to be slightly over $255,000 including the debt to the petitioning creditor which is something in the order of $40,000, subject to the dispute to which I have already referred.
The initial question which arises is whether, having regard to the provisions of 6.37 of the m ~ t c v Act 1966
(Cth) ("the A c t " ) which operates as a bar to the Court rescinding a sequestration order, the Court has power, operating under s.31A(7) of the Act on an application under sub-sec.(6) of the same section, to set aside a sequestration order pursuant to the Court's power to make such order as it
the power of the Registrar was exercised. thinks fit with respect to the matter with respect to which That matter was considered by Burchett J in
ce Ltd (23 March 1993, unreported) where his Honour held that there was such power, relying upon the fact that the provisions of 6.37 was granted general power and the provisions of s.31A(7) a specific power which took priority over the general power.
I propose to follow his Honour's decision but, in addition to the reason which his Honour gives, it seems to me there is a more significant reason why the result should follow.
The power conferred upon a Registrar to make a sequestration order is a power conferred, having regard to the constitutional position revealed by a decision of the High Court in B v (1954) 90 CLR 353, to ensure that that power did not involve the exercise of the judicial power of the Commonwealth. Section 14(5) of the Act provides that any order made by a Registrar is subject to review on summary application to the Court. It cannot be assumed that it was
Parliament's intention in amending S. 37 ( t - -
A& 1991, 8.8) to bring about the result that the power of a
Registrar to make a sequestration order was no longer subject to review. If that had been the case then the power of the Registrar to make sequestration orders would be called once
more to question. For that additional reason it seems to me that the Act should be construed so as to ensure validity rather than invalidity and accordingly I find that there is
power in the Court to review an order of the Registrar making a sequestration order in an appropriate case.
The question arises as to whether this is an appropriate case. The power to review is, as I pointed out in

estate on a petition presented by ASG Australia Proprietary Limited as petitioning creditor. Mr Haj was aware that the petition was listed for hearing on 28 February 1994 but he says on oath that he was very busy and that the hearing of the petition slipped his mind.

te FB & FA McMahon Ptv . . (1992) 35 FCR

506, a power not of judicial review in the ordinary sense. The review operates as a re-hearing and the Court, in exercising the review, is entitled to take into account evidence which may be adduced subsequent to the decision of the Registrar. Further, the Court itself is entitled to exercise any discretion that might otherwise be conferred upon the Registrar.

It follows that the Court, in reviewing the Registrar's decision, must embark upon the task not only of determining whether to set aside the sequestration order, but also, as part of the same review, to determine whether or not a sequestration order should or should not be granted. The application which was made before me yesterday was an application in essence to set aside the sequestration order thereby to revive the petition and leave the petition on foot for a later hearing. No submission was made as to who should hear that matter but it seems to me to follow from the Court's

power of review as a very minimum that the question of setting	aside the sequestration order must be heard by the same judge	as will ultimately hear the petition in the event that the
sequestration order is in fact set aside.
The petitioning creditor was not represented before me yesterday save that the solicitor for Mr Haj appeared on behalf of the petitioning creditor as well. It appeared that, at least in respect of the hearing of a petition, if the sequestration order were set aside, there would be necessarily argument which would concentrate on the issue of whether, as a matter of discretion, a sequestration order should be made. As I have indicated that is a corollary question really to the question whether the sequestration order made by the Registrar ehould be set aside.
I am unable today to embark upon a hearing that would entail the question whether or not, as part of the setting aside of a sequestration order if that be done, a new sequestration order would be made which would in fact effect date back to the same time as the order made by the Registrar. For that reason I do not think it appropriate today to rescind the sequestration order, although it may well be that in due course that that order should be rescinded and some order made on the petition, whether or not that order be for the grant of a new sequestration order.
The urgency of the matter was, so I was told from the bar table, that the official trustee was required to take possession of the assets of the bankruptcy following the making of a sequestration order and the consequence to Mr Haj 'S bueineee, in the event that the sequestration order was eubeequently set aside, would be quite disastrous. That question can be solved for the moment in a particular way. Given the constitutional background of the power conferred upon a Registrar to make a sequestration order, it is clear that that order is made subject to the right of the person whose estate is sequestrated by timely application to seek a review. It may not be strictly accurate to say that the order made is a contingent one but it is, in an inexact way, subject to being set aside by a judge on a review.
In those circumstances I see no difficulty in the Court in an appropriate case ordering the trustee pending, before hearing of the review and the determination of the issue whether a sequestration order ought to be made, not to take possession of the assets that otherwise would pass upon the bankruptcy. It seems to me, however, that before such an order were made it might be appropriate to seek an undertaking on the part of the bankrupt not to dispose of assets other than in the ordinary course of business pending the review because the order against the trustee would be, of course, merely interlocutory and damages hardly seem to be quite a relevant matter so far as the truetee is concerned.
I would accordingly propose to set the matter down for hearing at some convenient date to be determined, making such directions as may be necessary to deal with matters of evidence and also for notifying creditors, if any, apart from the petitioning creditor who no doubt is still represented by proxy and subject to an appropriate undertaking being given as to which instructions would no doubt need to be taken. I would order the official trustee not to enter into possession
of assets in the meantime. It may well be that the trustee would be able to give an undertaking to that effect and obviate the need for a formal order.

Obviously costs will be reserved.

I note the undertaking given by Mr Haj given on behalf of his counsel not to dispose of any assets or records.

I note the undertaking given by counsel for Mr Haj

on behalf of Mr Haj and I make the orders which I foreshadowed
earlier.

I order the trustee not to take steps to give effect to the sequestration order pending the hearing of the review of the Registrar's decision and that matter will be placed then in the bankruptcy list on the 29th with any affidavits to be filed on or before seven days hence by the applicants. I

direct the applicant to notify the petitioning creditor and all other creditors named in the statement of affairs filed

today. The amending statement of affairs no doubt can wait

until the same date. Costs reserved.

I certify that this and the

preceding six (6) pages
are a true copy of the Reasons
for Judgment herein of his Honour

Mr Justice Hill.

Associate:  p

Date :

Counsel and Solicitors	J Johnson instructed by
for Applicant/Bankrupt:	Sally Nash & CO
Solicitors for Respondent/	Ledlin Partners

Petitioning Creditor:

Dates of Hearing:	18 March 1994
Date Judgment Delivered:	18 March 1994