Holbrook v Risinger

[1999] FCA 1486

FEDERAL COURT OF AUSTRALIA

Holbrook v Risinger [1999] FCA 1486

BANKRUPTCY - application for a summary sequestration order – debtor’s position improved from date of signing s 188 authority - debtor paid in full or made satisfactory arrangements with all remaining creditors with the exception of one disputed creditor - whether an adjournment should be granted - whether the Court should exercise discretion to make summary sequestration order.

Bankruptcy Act 1966, ss 120, 221(1)(c)

Sandell v Porter (1966) 115 CLR 666
Robson v Ingrilli (unreported, Federal Court of Australia, 2 October 1998)
ReSarina (1980) 32 ALR 596
Re Stubberfield (1994) 134 ALR 169
Re Williamson (1980) 43 FLR 305
Re Beames (1985) 7 FCR 216)
ReDriller [1970] ALR 217)
ReFlew [1905] 1 KB 278

KIM DAVID HOLBROOK v JOHN ERNEST RISINGER

W7093 of 1999

BOON JR
28 OCTOBER 1999
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W7093 OF 1999

BETWEEN:	KIM DAVID HOLBROOK Applicant
AND:	JOHN ERNEST RISINGER Respondent
COURT:	BOON JR
DATE OF ORDER:	28 OCTOBER 1999
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1The application for an adjournment is dismissed.

2The application for a sequestration order is dismissed.

3The question of costs is reserved.

4There be liberty to apply

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W7093 OF 1999

BETWEEN:	KIM DAVID HOLBROOK Applicant
AND:	JOHN ERNEST RISINGER Respondent

COURT:	BOON JR
DATE:	28 OCTOBER 1999
PLACE:	PERTH

REASONS FOR JUDGMENT

Background:

1. This matter has been referred to me pursuant to Order 79 rule 3 of the Federal Court Rules.

2. The applicant, Mr Kim Holbrook, has applied that the estate of the respondent, Mr John Risinger, be sequestrated pursuant to s 221(1)(c) of the Bankruptcy Act 1966 (“the Act”). 

3. The matter came before me for hearing on 13 September 1999.  On that date the respondent sought an adjournment to enable him to adduce new evidence regarding the state of his affairs.  An adjournment was granted.

4. The matter came before me again on 5 October 1999.  The applicant and the respondent were represented by counsel.  Further, Ms H Sobotnik appeared for Mr S MacDonald, who alleges he is a creditor of Mr Risinger.  At the hearing, both Mr Carles who appeared for the applicant and Ms Sobotnik argued that either a sequestration order be made or that the matter be adjourned to enable further evidence and submissions to be filed on behalf of Mr MacDonald.  Mr Aristei on behalf of the respondent argued that the matter should not be further adjourned and that the application should be dismissed. 

5. The issues in this case are therefore whether the matter should be adjourned, or, if not, whether a sequestration order should be made.  On behalf of the respondent it was also argued that Mr Holbrook does not have standing to bring the application as he is no longer the “controlling trustee” because he is functus officio.  

   The Evidence

6. Mr Holbrook filed an affidavit sworn 8 July 1999. This states that on 8 March 1999 Mr Risinger signed an authority under s 188 of the Act authorising Mr Holbrook to take control of his property and to call a meeting of his creditors under Part X of the Act. On 10 March 1999 Mr Holbrook signed the authority to consent to act as controlling trustee. Mr Risinger does not dispute that this occurred. A statement of affairs provided to Mr Holbrook on or about 8 March 1999 listed assets of approximately $51,700.00 and his total liabilities as $297,500. It showed that Mr Risinger had three secured creditors and eight unsecured creditors to whom an amount of substantially more than the listed assets was owed. Mr MacDonald was not listed amongst the creditors in Mr Risinger’s statement of affairs. The statement of affairs however indicated that Mr Risinger was currently involved in litigation instituted against him by Mr MacDonald.

7. On 9 April 1999, a meeting of Mr Risinger’s creditors was held.  Mr Holbrook was appointed as President of the meeting and signed the minutes.  Creditors resolved on that date that the meeting be adjourned.

8. On 6 May 1999, Mr Risinger provided Mr Holbrook with an amended Part X proposal. The adjourned Part X meeting of creditors was held on 14 May 1999. At that meeting the creditors did not by the necessary special resolution accept Mr Risinger’s deed of arrangement proposal. Creditors did not pass any of the special resolutions provided for in s 204(1) of the Act but resolved instead that Mr Holbrook apply to this Court under s 221 of the Act for the bankruptcy of Mr Risinger subject to sufficient funding being provided by the creditors.

9. In his affidavit Mr Holbrook states that certain creditors of Mr Risinger had provided him with their proportionate shares of funding for the purpose of making the application under s 221 of the Act. However, because some creditors did not provide the funding Mr Holbrook requested, he sought and received additional funding of $1,930.00 from Mr MacDonald. That amount was over and above Mr MacDonald’s proportionate share of funding which he had already provided. That amount was provided on the condition that Mr Holbrook include in the s 221 application a request for orders that:

   (i)the creditors of the respondent funding this application be placed in the same position regarding their costs as if their costs were the costs of a petitioning creditor pursuant to s 109(1) of the Act, or

   (ii) further or alternatively, that the funds provided by Mr Stanley MacDonald in excess of the proportion of his debt, namely $1,930.00, be given a priority over and above the costs of the other creditors of the respondent funding this application. 

10. At the first meeting of creditors, a claim of $379,750 by Mr MacDonald was presented to Mr Holbrook.   Mr Risinger has at all times maintained that no funds are owed by him to Mr MacDonald.  The minutes of the adjourned meeting of creditors held on 14 May 1999 show that Mr Holbrook accepted Mr MacDonald as a creditor in the amount of $119,900 and allowed Ms Sobotnik to vote at the meeting on Mr MacDonald’s behalf. 

11. On 27 August 1999 Mr Risinger filed a notice of intention to oppose the application on grounds as follows:

    “(1)That sequestration is not now sought by any party which is a genuine creditor of the respondent’s estate;

    (2)That in view of the circumstances surrounding the wrongful admission of a creditor who voted for sequestration it is inappropriate to make such an order;

    (3)In all the circumstances including the respondent’s current circumstances and the nature of the respondent’s debts it is inappropriate to sequestrate the estate.”

12. In his supporting affidavit Mr Risinger states that the minutes of the meeting of 14 May 1999 show that the application for sequestration was made as a consequence of the vote of five creditors including Mr MacDonald.  Mr Risinger goes on to state that he believes that with the exception of Mr MacDonald those creditors no longer wish that the application proceed.  He annexed letters from two of the creditors who voted in favour of the sequestration to the effect that they did not wish to pursue bankruptcy proceedings against Mr Risinger.  As to the other two creditors who voted in favour of an application for sequestration being made, Mr Risinger states that he was confident that by the time the matter came before this Court for determination, he would be able to produce similar correspondence to the effect that those creditors did not wish to pursue the application. 

13. The affidavit goes on to state in respect of Mr MacDonald that he was admitted by Mr Holbrook for voting purposes to be a creditor in the sum of $119,900.  Mr Risinger states that the total claim of Mr MacDonald is in dispute and is at least in part currently the subject of defended proceedings in the District Court of Western Australia in action number 4822 of 1998.  In those proceedings Mr MacDonald is claiming that Mr Risinger owes him $80,000.  The claim against Mr Risinger is based on three agreements by which Mr MacDonald was said to have lent Mr Risinger sums totalling $80,000.  In support of his application Mr MacDonald referred to two signed acknowledgments of debt.  An application for summary judgment was heard in the District Court on 24 March 1999.  That application was unsuccessful and Mr Risinger was given leave to defend.  Mr Risinger’s defence is based on a contention that he and Mr MacDonald were involved in a joint venture in relation to the acquisition of interests in two exploration companies.  Mr Risinger said he signed the acknowledgment of debt at Mr MacDonald’s request as Mr MacDonald did not want his wife’s solicitors to know that he had an interest in the companies.  Mr MacDonald was apparently involved in Family Court proceedings with his wife at around that time.

14. A further affidavit sworn by Mr Graeme Menzies, a solicitor of Victoria, was filed on behalf of Mr Risinger.  The thrust of that affidavit is that Mr Menzies believes that Mr Risinger has a prima facie defence to claims by Mr MacDonald.  I do not propose to set out in detail the basis of Mr Menzies’ belief.  Suffice it to say that I am satisfied on the material before me that Mr MacDonald and Mr Risinger are involved in a genuine dispute arising out of their dealings in relation to two companies and that Mr Risinger denies that he owes Mr MacDonald any money at all.  Further, at least part of the disputed debt is currently being litigated in the District Court of Western Australia, and an application for summary judgment against Mr Risinger was unsuccessful. 

15. When the matter came before me on 13 September 1999 it was argued on behalf of Mr Risinger that the matter should not be heard on that date as there was evidence yet to be processed which would tend to establish that Mr Risinger was not insolvent.  Affidavits had not been able to be prepared because there had been very recent events in relation to Mr Risinger’s solvency.  Mr Menzies’ affidavit detailed certain share entitlements held by Mr Risinger and stated that he was entitled to salary payments.  Settlement of the sale of some shares was to occur on the 16^th September.  Mr Risinger was earning a salary of $8,000 per month in relation to a family trust and it was said on his behalf that he had been able to arrive at an agreement with a number of creditors. 

16. It was argued on behalf of Mr Risinger that the only alleged creditor who was capable of bankrupting Mr Risinger was Mr MacDonald.  As there had already been a ruling in the District Court refusing an application for summary judgment, the claim for a debt gave rise to a triable issue.  It was submitted that if Mr MacDonald were able to have his way and bankrupt Mr Risinger he would never have to go through the hurdles of proving that he was entitled to the money. 

17. On the basis that new evidence relevant to Mr Risinger’s solvency was shortly to become available, I adjourned the matter to 5 October 1999.

18. A further affidavit of Mr Menzies sworn 13 September 1999 was filed.  That affidavit stated that Mr Menzies was a Director of Maple Oil NL, a company listed on the Australian Stock Exchange Limited.  Maple Oil’s securities were suspended from trading on the stock market following Maple Oil having appointed an administrator in December 1998.  The administration was terminated on 12 August 1999 and, according to Mr Menzies, Maple Oil was now solvent. 

19. Mr Menzies goes on to state that Maple Oil’s present assets comprise various tenements prospective for oil and gas situated in Australia and it was currently negotiating the acquisition of two oil exploration assets in Indonesia. 

20. Mr Menzies states that in relation to Maple Oil, there is a trustee scheme implemented in accordance with the Corporations Law and the listing rules of the Australian Stock Exchange.  Pursuant to the trustee scheme a company called Milliara Pty Ltd holds approximately forty one million shares which are credited as fully paid and are held pursuant to the provisions of a deed of covenant on trust for sale.  Pursuant to the provisions of the trustee scheme, Milliara Pty Ltd as trustee has executed transfers and sold shares held by it on trust for sale to a number of parties.  A total of six million one hundred thousand shares had been unconditionally sold by Milliara Pty Ltd between 18 June and 22 June 1999 to three purchasers of shares at a sale price of 5 cents per share.  Mr Menzies goes on to state that subsequently Milliara Pty Ltd has received offers from third parties to purchase not less than thirty five million shares in the capital of Maple Oil at a sale price of 7.5 cents per share conditional on the occurrence of various events.  Five million shares in Maple Oil were transferred to Mr Risinger and Mr Menzies expressed the opinion that Mr Risinger would be able to sell those shares for approximately 5 cents per share, and, on reinstatement of Maple Oil to quotation, Mr Risinger should be able to sell the shares at not less than 7.5 cents per share subject to the specified conditions.

21. Mr Menzies annexed to his affidavit a letter confirming Mr Risinger’s entitlement to five million shares in Maple Oil.  Mr Menzies states that those shares would have a present value of not less than $250,000, and based on a sale price of 7.5 cents per share would have a market value of not less than $375,000.  Further, Mr Menzies states that Larca Pty Ltd was presently acting as a consultant to Maple Oil and paying Mr Risinger a consultancy fee of $8,000 per month as a director of Larca Pty Ltd.  In addition to an entitlement to consultancy fees, Mr Risinger as a director of Maple Oil accrued an entitlement to director’s fees at the rate of $24,000 per annum.  Those director’s fees were in abeyance during the period of the administration of Maple Oil but had recommenced for the termination of the administration.

22. An affidavit of Mr Holbrook sworn 22 September 1999 states amongst other things that the bankruptcy of Mr Risinger would be in the interests of creditors, as a trustee in bankruptcy would have a claim of over $100,000 against Mr Risinger’s wife pursuant to s 120 of the Bankruptcy Act.  This arises because a former home of Mr Risinger and his wife was sold with over $100,000 of Mr Risinger’s share of the proceeds being applied towards the purchase of a new home in the name of the wife only. 

23. An affidavit sworn 4 October 1999 by Mr Lawton, the solicitor for Mr Risinger, was filed in this matter.  That affidavit states that he contacted Baker and McKenzie in Sydney, one of Mr Risinger’s former creditors, who advised that no monies were due to that firm by Mr Risinger.  Further, Mr Lawton sets out in his affidavit that on 1, 3 and 4 October 1999 he made payments in full or in part to all of Mr Risinger’s creditors, including Mr Holbrook, with the exception of Mr MacDonald. 

24. Mr Risinger filed an affidavit sworn 4 October 1999 which states that his entitlement to the transfer of five million shares in Maple Oil had been confirmed.  He had been able to sell two million of those shares and had received $100,000 being proceeds of the sale, as a result of which he had been able to either pay out or make arrangements with all of his unsecured creditors other than Mr MacDonald.  Mr Risinger still holds three million of the Maple Oil shares.  Mr Risinger sets out each of his creditors and states that he either no longer has a debt due and owing to that creditor or he has made arrangements to the satisfaction of the creditor for payment of the balance.  In addition, Mr Risinger states that he owns an oil rig which he believes to be valued at around $20,000, and has a lease with Esanda for a Honda Civic Hatchback in respect of which payments were up to date.

    Applicant’s arguments

25. When the matter came before me again on 5 October 1999, it was argued on behalf of Mr Holbrook that either a sequestration order should be made on the basis that Mr Risinger was insolvent and Mr MacDonald was a substantial unpaid creditor, or the application should be adjourned and further evidence should be adduced to explain some of Mr Risinger’s financial dealings.  For example, it was argued on behalf of Mr Holbrook that the evidence regarding the sale of shares in Maple Oil was unsatisfactory and should be explained.  Further, Mr Risinger’s debt to the Tax Office had disappeared and this had not been adequately explained.  In relation to another debt, Mr Risinger had owed Diners’ Club International a total of $19,000 of which only $8,000 had been paid off.  The fact that Diners’ Club International had accepted an agreement for the repayment of the balance did not alter the fact that $11,000 was presently owing.  It was further argued that there should be more evidence as to the value of the rig and whether it could be easily realisable as an asset. 

26. It was argued on behalf of Mr Holbrook that debts were presently due and payable and there was insufficient evidence to satisfy the Court that Mr Risinger was solvent.  In relation to the alleged debt to Mr MacDonald, it was submitted that the Court can go behind the District Court judgment.  It was said that the matter should be adjourned as Mr MacDonald needs time to prepare further evidence for the Court in relation to the debt.  It was further suggested that Mr MacDonald may want to be substituted as applicant rather than continue to have Mr Holbrook act as trustee.  It was said that it was not appropriate to dismiss the matter without further evidence as all the other creditors had been preferred over Mr MacDonald and Mr Risinger had transferred his equity in his former home to his wife. 

27. In a written outline of argument the applicant denied any suggestion that Mr MacDonald was attempting to use the present application as an improper “leapfrog” or “backdoor” method of bankrupting the respondent. It was said that if the respondent was solvent then he could or should have paid out all of his undisputed debts and then defended Mr MacDonald’s claim in the District Court. Mr MacDonald would then have had to follow the usual route of judgment, bankruptcy notice and creditor’s petition if he wanted to bankrupt the respondent. In the present case it was the respondent’s own act of signing a s 188 authority and not anything done by Mr MacDonald which had led to him being in his present situation. There is no reason for a solvent debtor to sign a s188 authority.

    Respondent’s arguments

28. In relation to the question of Mr Risinger’s solvency, it was stated that the recent sale of Maple Oil shares for the benefit of the respondent had resulted in the partial realisation of assets and the cash sum of $100,000.  This was referred to as a “fire sale” and it was suggested that this was why Mr Risinger accepted a price of 5 cents per share.  Mr Risinger still holds three million of those shares and this puts him in a situation where he has more money than he presently owes, save and except the disputed creditor Mr MacDonald.

29. It was submitted that Mr Risinger had either completely paid out or made arrangements with all of the creditors except Mr MacDonald.  The question was whether there was sufficient evidence adduced by the applicant to satisfy the test of insolvency as set out in the case of Sandell v Porter (1996) 115 CLR 666.  It was submitted that it was clear from the evidence that Mr Risinger was entitled to, owns or controls a number of substantial assets including the balance of the shares in Maple Oil; the balance of monies after discharge or satisfaction of his outstanding debts; his motor vehicle and a mounted drill rig.  It was suggested that the respondent was able to pay his debts “as and when they became due” and was not thereby insolvent at all.  Further, even if Mr Risinger remained unwilling to pay the disputed debt claimed by Mr MacDonald, it would not be appropriate for the Court to make a sequestration order against him (see ReSarina (1980) 32 ALR 596 and Re Stubberfield (1994) 134 ALR 169).

1. In relation to factors relevant to the exercise of a discretion pursuant to s 221, it was submitted that the onus falls upon the applicant to establish that the creditors of the respondent would gain by a sequestration order being made against him (see Re Williamson (1980) 43 FLR 305 and Re Beames (1985) 7 FCR 216).

2. In this regard, there was only one creditor knocking at Mr Risinger’s door and that is the creditor he disputes that he owes money to.  The District Court has refused summary judgment in relation to part of the alleged debt to Mr MacDonald, and it was submitted that this could not be ignored.  It was said that this was a substantial dispute which is to be litigated.  It is submitted that the respondent’s ability to defend the disputed creditor’s action for payment would be effectively lost if a sequestration order were made, thereby disadvantaging the existing arrangements and payments to the other creditors (see ReDriller [1970] ALR 217).

3. It was submitted that a sequestration order made in a summary manner pursuant to s 221(1)(c) of the Bankruptcy Act should not be ordered unless there is no alternative option available to benefit the creditors of the estate (see ReFlew [1905] 1 KB 278). The exercise of the jurisdiction under s 221(1)(c) in this case was conditioned upon a resolution at an adjourned creditor’s meeting on 14 May 1999 whereby a special resolution for the proposed deed of arrangement was not passed. However, it was submitted, consideration must be taken of the change in position of a number of the creditors since the date of that resolution.

4. It is argued in all of the circumstances of this case that the application for summary sequestration order should be dismissed.

   Arguments on behalf of Mr MacDonald.

5. Ms Sobotnik told the Court that she had received the relevant documentation on Friday 1 October 1999.  She had had no opportunity to see all of the material before the Court.

6. Ms Sobotnik stated that no decision had yet been made whether Mr MacDonald wished to be substituted as applicant.  Ms Sobotnik had not been in a position to receive instructions from her client as at the date of the hearing.  Mr MacDonald’s major concern, however, was that all the other creditors had been paid and that Mr MacDonald had not received anything.  Mr MacDonald was by far the most substantial creditor and had had no opportunity to participate. 

7. It was argued by Ms Sobotnik that natural justice demanded that Mr MacDonald should have an opportunity to respond to the matters raised by Mr Risinger.

8. Mr Sobotnik stated that as Mr Risinger allegedly owed Mr MacDonald over $300,000 there were clearly insufficient funds to pay out that debt.  Further, Mr Risinger had transferred the benefit of the sale of his former home to a new property solely in his wife’s name.  Mr MacDonald could possibly lose the ability to pursue this if a sequestration order was not made.

9. It was further submitted that Mr Risinger should file a statement of assets and liabilities to satisfy the Court on the issue of solvency.

10. Ms Sobotnik stated that Mr McDonald had had no opportunity to be involved or to put material before the Court and if an order was made dismissing the application, Mr MacDonald would lose rights to pursue this matter.  Once Mr Risinger’s money was gone, Mr MacDonald could not do anything about it.  It was submitted that it was appropriate for the Court to give Mr MacDonald an opportunity to consider his position. 

    Comment on the evidence.

11. It has been submitted on behalf of Mr Holbrook and Mr MacDonald that this Court should not accept the evidence of Mr Risinger’s current financial situation, and that it should instead order Mr Risinger to provide a more detailed explanation of his financial transactions.  I am, however, satisfied from the affidavit evidence of Mr Risinger, Mr McKenzie and Mr Lawton, and the annexures to those affidavits, that Mr Risinger has paid in full or has made arrangements for the repayment of all of his debtors except Mr MacDonald.  I am also satisfied that Mr Risinger is entitled to a further three million shares in Maple Oil and that those shares could be sold within a reasonably short time at a price of at least 5 cents per share.

12. Mr Risinger’s current financial position is quite different from what it was when he signed an authority under s 188 of the Act on 8 March 1999 authorising Mr Holbrook to take control of his property and to call a meeting of his creditors. The main reason his financial situation has improved so significantly is that Maple Oil NL, a company in which Mr Risinger has a significant interest, was no longer in administration as of 12 August 1999 and is now solvent. In addition, Mr Risinger started earning consultancy fees from Maple Oil in the past few months and is now entitled to director’s fees at the rate of $24,000 per annum.

13. Because of this, I am satisfied that (if Mr MacDonald’s claim is disregarded) Mr Risinger’s readily realisable assets are greater than the amount of his outstanding debts within the test set out in Sandell v Porter.

14. In relation to the alleged debt to Mr MacDonald, there is insufficient evidence before me to determine whether Mr Risinger owes all or any of the amount claimed by Mr MacDonald.

15. The question is whether this Court should now grant an adjournment to enable Mr MacDonald to put forward evidence to support his claim. In considering this question, the Court must look to the section under which the application has been brought. Section 221 states in part as follows:

    “221 (1)  Where:

    …

    (c)a meeting of creditors called in pursuance of such an authority [signed by the debtor under s 188] has not, within four months from the date for which the meeting was called, passed one of the special resolutions referred to in subsection 204(1);

    the Court may, if it thinks fit, on the application of the Inspector General, a creditor or the controlling trustee, forthwith make a sequestration order against the estate of the debtor

    . . .

    (3)  Subject to subsection 4, the making of an application under this section in respect of a debtor shall, for the purposes of this Act, be deemed to be equivalent to the presentation of a creditor’s petition against the debtor.

    (4)  The provisions of subsection 43(1), sections 44 and 47, subsections 52(1) and (2) and Part XIA do not apply in relation to an application under this section, but, on the hearing of such an application, the Court shall require proof (which may be given by affidavit) of the matters stated in the application and, unless service has been dispensed with by the Court, of service of the application on the debtor.”

16. It is not at issue that the formal requirements of s 221 have been met. The question is whether the Court should exercise its discretion under subsection (1) to make what would amount to a summary sequestration order against the estate of Mr Risinger.

17. In the case of Robson v Ingrilli (unreported, Federal Court of Australia, 2 October 1998) Nicholson J considered an application under s 221. His Honour stated that in considering whether to make a summary sequestration order the Court should have regard to the purpose and objects of the Part X procedure, the interests of creditors as a whole and the insolvency of the debtor.

18. The object of Part X of the Act is to provide a vehicle whereby a debtor may make arrangements with his or her creditors outside bankruptcy. The Part X arrangement enables a controlling trustee to take control of the debtor’s property and to deal with the debtor’s property in the interest of creditors.

19. In this case, Mr Risinger signed a s 188 authority when it appeared that he could no longer pay his debts as and when they fell due. A meeting of creditors voted by a majority that Mr Holbrook should make the present application. Mr MacDonald’s representative was one of those who voted in favour of the application. Since that time, Mr Risinger’s financial position has improved dramatically. He has either paid in full or made arrangements to pay each of his creditors, with the exception of Mr MacDonald. There is no doubt that Mr Risinger disputes, and will continue to dispute, Mr MacDonald’s claim that Mr Risinger owes him a substantial amount of money. At least part of the claim is currently being litigated in the District Court of Western Australia. If a sequestration order were to be made forthwith, Mr Risinger could no longer earn his director’s fees and this would affect his ability to pay his remaining creditors. A summary sequestration order would also have a significant negative effect on Mr Risinger’s ability to defend the District Court action.

20. Although it was argued on behalf of Mr MacDonald that natural justice requires that he be given an opportunity to state his case, I consider that Mr Holbrook as controlling trustee has been in a position to make submissions and put forward evidence on behalf of Mr MacDonald.   He did in fact do so.  It is clear from the documents before me that Mr MacDonald has been aware of the nature of the proceedings and has had some involvement in them. If this Court were to allow Mr MacDonald to put further evidence before it in support of his claim, this would not change the fact that Mr Risinger disputes the claim.  The matter is currently being litigated in another jurisdiction, and an application for summary judgment was dismissed. 

21. Mr Aristei on behalf of Mr Risinger maintained that as Mr Holbrook was no longer controlling trustee as at the date of hearing, he did not have standing to maintain the application.  I do not propose to deal with that issue in detail.  However, as Mr Holbrook was controlling trustee at the time of filing the application, and as the application was filed within time, I consider that he did have standing to bring the matter before this Court.

22. In view of all of the circumstances as already outlined, I do not consider it appropriate to either adjourn the matter or to make the sequestration order sought.  The application is dismissed.  The question of costs is reserved.

I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of Judicial Registrar Boon.

Associate:

Dated:             28 October 1999

Counsel for the Applicant:	Mr F Carles
Solicitor for the Applicant:	Carles Solicitors
Counsel for the Respondent:	Mr A Aristei
Solicitor for the Respondent:	Lawton Gillon/ Ms H Sobotnik appeared for Mr S MacDonald, interested creditor
Date of Hearing:	5 October 19999
Date of Judgment:	28 October 1999