Jackson, J.W. v Sterling Industries Ltd

[1987] FCA 392

/-

C A T C H W O R D S .-

BANKRUPTCY - debtor’s petition - acceptance restralned until

discharge of order for security - setting aside of order for

security -	whether abuse of process	- right in debtor to
acceptance.

HIGH COURT - practice - judgment not yet entered - whether

effective.

Bankruptcy Act 1966

Ex parte: Sterlinq Industries Limlted (Receivers and Manasers

Appointed)

Re: John William Jackson & Anor.

Qld P452 of 1986

Re: John Willlam Jackson and Maxene Susan Jackson

Ex parte: National Westmlnster Finance Australia Limited

Qld P788 of 1986

Re: John William Jackson

Ex parte: National Westminster Finance Australia Limited

Qld P1337	of 1986
PINCUS J. BRISBANE

6 JULY 1987

.

IN THE FEDERAL COURT	OF AUSTRALIA	)
GENERAL DIVISION	)

BANKRUPTCY DISTRICT OF THE SOUTHERN	)
DISTRICT OF THE STATE OF OUEENSLAND	1

No. P452 of 1986

EX PARTE:

STERLING INDUSTRIES LIMITED (RECEIVERS AND

MANAGERS APPOINTED)

AppllcantlCreuitor

RE: JOHN WILLIAM JACKSON

First RespondentIDebtor

THE REGISTRAR IN BANKRUPTCY FOR THE SOUTHERN

DISTRICT OF THE STATE OF OUEENSLAND

Second Respondent

QLD P788 of 1986

RE: JOHN WILLIAM JACKSON and MAXENE SUSAN JACKSON

EX PARTE: NATIONAL WESTMINSTER FINANCE AUSTRALIA

LIMITED

QLD P1337 of 1986

RE: JOHN WILLIAM JACKSON

EX PARTE: NATIONAL WESTMINSTER FINANCE AUSTRALIA

LIMITED

MINUTES OF ORDER

JUDGE MAKING O R D E R : PINCUS J.

DATE OF ORDER:	6 JULY 1987
m MADE:	BRISBANE

THE COURT ORDERS THAT:

The debtor's petition be accepted sub~ect to the

Registrar being satisfled	as to the questions of
form in s.55(3).

NOTE:	Settlement and entry of orders is dealt with	in
Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	)

BANKRUPTCY DISTRICT OF THE SOUTHERN 1

DISTRICT OF THE STATE OF OUEENSLAND )

'No. P452 of 1986

M PARTE:

STERLING INDUSTRIES LIMITED (RECEIVERS AND

MANAGERS APPOINTED)

ApplicantlCredltor

RE: JOHN WILLIAM JACKSON

First Respondent/Debtor

THE REGISTRAR IN BANKRUPTCY FOR l ? SOUTHERN

DISTRICT OF THE STATE OF OWEENSLAND

Second Respondent

QLD P788 of 1986

RE: JOHN WILLIAM JACKSON and MAXENE SUSAN JACKSON

M PARTE: NATIONAL WESTMINSTER FINANCE AUSTRALIA

LIMITED

QLD P1337 of 1986

RE: JOHN WILLIAM JACKSON

M PARTE: NATIONAL WESTMINSTER FINANCE AUSTRALIA

LIMITED

PINCUS J. 6 JULY 1987

M "F'ORE REASONS FOR JUDGm

The question in this case is whether a d btor's petition

should be accepted. On 23 April 1986 Sheppard J., in proceedings

brought under s.52 of the Trade Practices Act 1974 by Sterling

Industries Limited (Receivers and Managers Appointed) against the

debtor and others, ordered that the debtor provide security in the

sum of $3 million. On 30 Aprll 1986 Beaumont J. made two orders

on the application of Sterling Industries Limited (Receivers and

Managers Appointed), the first being that the debtor be restrained

until 1 May 1986 from presenting a petition against himself

pursuant to s.55 of the Bankruptcv Act, and the second being that

the Reglstrar in Bankruptcy for the Southern District of the State

of Queensland be restrained up to	1 May 1986 from accepting such	a
petition.

Subsequently, those orders were extended by Burchett J.,

after a contested hearlng. His Honour's order was that the debtor

be restrained from presenting a petition against himself and that

the Registrar be restrained for a like period from acceptlng any such petitlon untll the earllest of three nominated events. The

second of those nommated events was the dlscharge of the order of

Sheppard J. mentioned above.

The petltion by the debtor which IS currently in

questlon was presented on the same day as the order of Mr. Justlce

Beaumont, that is, 30 April 1986. On 11 June 1987, the Hlgh Court

of Australia allowed an appeal from the Full Court of this Court,

which had upheld the order of Sheppard J.; the High Court set

aside the order of Sheppard J. The High Court's order has not yet

been taken out, but counsel for the debtor, Ms. Atkinson, says

that the debtor is entitled, there being	no relevant restraint, to
have the petition accepted.

3 .

Section 55(1) of the Bankruptcy Act says:

"Subject to this section, a debtor may present to

the Registrar a petition against himself

accompanied by a statement of hls affairs, verified

by affidavit, and a copy of that statement."

Under subs.(2) a form is prescrlbed, and under subs.(3) where the

form is complled with and the statement of affairs is in the

prescribed form, the petition "shall be accepted by the Reglstrar

. . . ' I . Acceptance is not discretionary.

If the petition is accepted, the result will be that the

debtor will become bankrupt by vlrtue of the presentatlon	of the
petition on 30 Aprll 1986: s.55(3)(b).

According to an affidavlt of Mr. W.J. Weir, the

solicltor for the debtor, on 16 May 1986 an authorlty was signed

In favour of Mr. A.R. Taylor, trustee, under s.188 of the

Bankruptcy Act. Apparently no meetlng of creditors has yet been

held, but Mr. Welr's affidavit, which was sworn on 22 June 1987,

says the meeting "1s now being called for Wednesday, the

twenty-fourth day of June at 3.00 p.m." The affidavlt says, "Our client 1s desirous of having his own petition processed prior to that meeting." Since that reason has gone, it 1s not clear why It

is that the debtor wants his petition accepted.

There is also a creditor's petition for sequestration

before me set down for hearing later this morning and Mr. Sullivan

has appeared on behalf of the petitioning creditor, and initially

asked that I not accede to Ms. Atkinson's request on behalf of the

4 .

debtor. He has, however, abandoned that stance, and the only

question is whether or not, leaving that initial opposltion aside,

the Registrar should or should not accept the petition.

The question is, as it seems to me, simply from what

date the order of the High Court, setting aside the relevant order

of Sheppard J., became effective. There is no doubt, from

communications from that Court, that the order has been made, and

the only reason it has not been taken out is that in a respect

unrelated to the order	for security there is a dispute as to the
proper form of order.

Order 4 3 r . 3 ( 1 ) of the Rules of the Hlgh Court says:

"When a Judgment is pronounced by the Court, the

entry of the judgment shall, sublect to the next

succeedlng sub-rule, be dated as of the day on

which the judgment is pronounced, unless the Court

otherwise orders, and the judgment shall take

effect from that date."

Order 4 4 r.19 of the same rules says:

"An order which is drawn up shall be dated as of the

day on which it was made, unless the Court or a Justice otherwise directs, and shall take effect

accordingly. "

Neither rule makes it absolutely clear, in my view, whether an

order of the High Court is effective from the day on which it is

made, in advance of its being entered.

5 .

A question of that sort arose before Atkin S., as he

then was, in Hambleton v. Brown C19171 2 X.B. 93. In that case, a

judgment for costs had been recovered. The costs were taxed, but

the amount of the costs had not at the date of Atkin S.’s judgment

been entered on the record. There was an assignment of the

~udgment, and various points were taken about it, only one of

which is presently relevant. At p.98 Atkin J. said:

“Thirdly, the further point was made that in any

case, whether valldly assigned or not, the debt was

not payable at the date of the wric because of the

failure to enter. I thlnk this is based upon a

misapprehension. In an actlon on a judgment It

appears necessary to prove the judgment by production of the record. The ordlnary traverse of the existence of the judgment sued on is “nul tiel record. The point, however, 1 s one not of llability but of evidence.”

The ~ u d g e accordlngly held that an assignment made before the

amount had been entered was effective, following Holtby v. Hodqson

(1890) 24 Q.B.D. 103. In that case, the Court of Appeal held that

a garnishee order absolute attaching a judgment debt which had not

been entered was effective. Hambleton v. Brown seems to go a

little further than Holtbv v. Hodqson, because In the earlier case

the question arose after entry, as to the date upon whlch the

attached judgment was effective.

What Atkin J. described as a purely technical point as

to proof should not, I think, be taken to detract from the

debtor’s rights under the Bankruptcy Act, although, in my vlew,

the Deputy Registrar acted rightly and prudently	in not proceeding
without reference to the Court.

P .rr

6 .

. - , -

A second point is whether I should direct the Deputy

Registrar not to accept the debtor's petition untll the creditor's

petition is heard. In view of the absence of opposition from the

petitioning creditor, this point must be one to be resolved ex

parte. In Clvne v. Deputv Commissioner of Taxation (1984) 55

A.L.R. 143 at 152, the judgment of the then Chief Justlce and of

Murphy, Brennan and Dawson JJ., reads as follows:

"It 1s a purpose foreign to the bankruptcy laws, and

an abuse of process, for a debtor to present a

petition for the purpose of maklng it impossible

for a creditor to obtain a sequestration order on a

pending petition and with the further purpose of

shortening the period of relation back, possibly placing beyond the reach of the trustee property which would otherwise vest in him."

Here It has been held In interlocutory proceedlngs that the

presentation of a petitlon was prlma facie an abuse of process,

but the reason for that holdlng, namely, the order of Sheppard J.,

no longer has effect. Burchett J., in his reasons of 5 September

1986, held that there was such a prima facle case on the basis

that the purpose of presentation was to make it lmposslble "for an

order of thls Court, which it is within hls capaclty to obey, to

be enforced by contempt proceedings aqalnst him." That prima

facie finding still stands, but the peculiarity of the matter is

that the purpose mentioned by Burchett J. must now have gone. The

debtor's current efforts to have his petition accepted presumably

must have some other purpose. Although some might well suspect

that the purpose is perhaps still a bad one, the dicta of the Hiqh

Court in Clvne's case (quoted above) cannot be held to apply,

particularly in view of	the absence of any	opposition from the
petitioning creditor.

' 2 7.

C .

. r

It seems to me that the proper course is to direct that

the debtor's petition be accepted, subject, to satlsfaction as to

the matters mentioned in s.55(3); that is, I direct that it be

accepted if the Registrar is satisfied	as to the questions of form
mentioned in that provision.

certify that this and the precedlng

pages ars a true copy of the reasons for

judqoent hcreln of HIS Honour

Mr. Justice Pincus 4

' m i a t e

Dafea 6 3~1~ 987

Counsel for the Applicant:	Ms. R. Atklnson
Solicitors for the Applicant:	Messrs. Gllshenan & Luton
Counsel for the Respondent:	Mr. J. Sullivan
Solicitors for the Respondent:	Messrs. Cleary & Hoare
Date of Hearmg:	6 July 1987