Piccardi & Anor v Boral Johns Perry Industries Pty Limited

[1989] HCATrans 235

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4
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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S77 of 1989

B e t w e e n -

KURT and GERLINDE PICCARDI

Applicants

and

BORAL JOHNS PERRY INDUSTRIES PTY

LIMITED, DICK & DONS PTY LIMITED,

FIRE FIGHTING SPRINKLER CO LIMITED

and GEORGE GREGORY GRIVAS

Respondents

Application for special leave to

appeal

DEANE J
GAUDRON J

McHUGH J

Piccardi

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 OCTOBER 1989, AT 2.51 PM

Copyright in the High Court of Australia

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MR G. MASTERMAN, QC:  If the Court pleases, I appear for

the applicant, with my learned friend,

MRS J.H.H. BLACKi.~AN.	(instructed by Michael
G1anacas Arg1r1s & Co)

MR B.J. SKINNER:  I£ it please Your Honours, I appear for

the first-named respondent in this matter.

(instructed by Lobban McNally & Harney)

DEANE J:	Mr Masterman.
MR MASTERMAN:	If I might hand up to the Court the relevant

statutory provisions and a chronology of facts. It is

our submission, looking at the document headed Relevant

Statutory Provisions that section 37 of the BANKRUPTCY

ACT is an important section in that Act, that

currently one might say, as a result of erroneous

decision, it has been emasculated, and that this case

provides both an opportunity and an obligation to

reconsider in particular a decision of Mr J~tice Gibbs

when he was a judge in bankruptcy or a Federal Court

judge in RE DERIU. Just looking at briefly the

structure of the section and why we make the submission

we do, section 37(1) gives the Bankrupty Court or

the Federal Court exercising bankruptcy jurisdiction

power to rescind an order, in other words a sequestration

order, and that in the English legislation has been

interpreted extremely widely and to give the Court an

untrammelled discretion to rescind.

Now, of course, there are some differences in the

legislation which I will come to. The manner in which,

at least in the leading case, as I say, the decision of the discretion of the court impeded or hemmed in, is twofold; firstly, it is said that rescission is the

power - and I might say, by way of introduction, that

it has been said in CAMERON V COLE and I think is

probably well accepted, that sections 37 and 154 are

exceptional provisions. They go against the usual

proposition that when a judgment is obtained the only

way of dealing with it is to appeal, but here we are

dealing with the status of persons under bankruptcy

legislation and sections 37 and 154 provide exceptions

to that general rule.

Now the discretion of the Court to rescind under

the current decision of Mr Justice Gibbs in RE DERIU is -

and indeed the fault, as we see it, runs through the

Full Federal Court's decision in this case - firstly,
it is said that section 37(1) is subject to section 43(2);
in other words, that when you look at section 43 one

makes section 37 subject to it, or perhaps putting that

more correctly, whatever a rescission order under

section 37 achieves, so the prevailing theory goes -

that is the prevailing theory, as I say, of the DERIU

principle - is it does not recall, does not rescind

ab initio, the sequestration order.

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GAUDRON J:  That does not arise, does it, in this case, or if

it does, how does it arise?

McHUGH J:	Yes, I was just going to point out to you what is said at page 52 of the appeal book where the Full Court
said that:

Although counsel pressed the claim for

rescission,. it was conceded that, if

there was a case for the Court to interfere
with the sequestration order, the proper

course would be to use s.154.

MR MASTERMAN:	If I hand up the pages of the argument before the Full Federal Court, we submit that that is a complete
misstatement of the position.  The argument on
rescission was made fully. The sort of considerations
that I was about to advance are put at all those pages and what we would summarize the, if you call it a
concession, is that what we were dealing with was a
decision of Mr Justice Einfeld in our favour on
annulment, a decision in which His Honour found the facts in our favour, found the credibility of the
witnesses in our favour, and exercised his discretion
in our favour and we accepted the position - this is at the extreme - that if we held that, then we would be satisfied but if we did not hold it then we submitted that the rescission remedy was of a much more
substantial and significant and, like the English section, not subject to the same limitations that
section 154 is subject to, and that leads me to the
second condition.

I have said that the current approach to

section 37 is to read it subject to section 43(2) which,

we would submit, is both illogical, that the decision

of Mr Justice Manning in SCIGLITANO is much to be

preferred and there is a recent decision of

Mr Justice Davies in the Federal Court who himself

says that section 37 operates in its terms and is no

way subject to section 43.

GAUDRON J:  But that all assumes, does it not, Mr Masterman,

that the order has been rescinded. Is that not right,

or have I missed something entirely? The

question of the subjectionto section 43 only arises, does it not, in the event that the order is rescinded?

MR MASTERMAN:  Yes, but His Honour Mr Justice Einfeld said,

but for DERIU's case, he would have rescinded the order,

so that that was the only barrier as he saw the case,

but I take, with respect, Your Honour's point, namely

that a preliminary question is the question of the

exercise of the discretion.

GAUDRON J:  But not only a preliminary question, Mr Masterman,

but surely the only question. What happens

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afterwards is a matter for other proceedings if

need be.

MR MASTERMAN: 

I do not know that I would dissent from what

Your Honour, with respect, puts to me, which leads
to the second condition which this Full Federal Court,
in our respectful submission, erroneously imposed

upon section 37. What the Full Federal Court said, section 37 - the discretion in section 37 is subject

to the same condition as appears in section 154(l)(a),

namely that the sequestration order ought not to have
been made. Now, we submit that that is an illegitimate

fetter to place upon the discretion of the court

exercising the power under section 37. So that the

circumstances that led the Full Federal Court to

overturn His Honour's judgment, we submit erroneously

in any event, but - - -

McHUGH J: 

Mr Masterman, what I am having difficulty in following is this, section 137(1) is subject to

subsection (2).

MR MASTERMAN: 

But that is the next matter of public importance

we would seek to advance. We were first seeking to

put, and I realize the time of the Court and the

busy-ness of this Court, but the first submission we

are putting is that section 37 is a most important

section, that it has been emasculated, that it serves

a very useful function.	The facts of this case are
perhaps an example of a useful function.	Here a

debtor having problems was organizing a rescue

attempt in Newcastle with the trustee and creditors;

up until the day before the court he thought he had

the petitioners consent to an adjournment. That was

withdrawn and, perhaps foolishly, a limp application

for adjournment was made. That was refused by

Mr Justice Neave who said the applicants had plenty

of time to deal with all this.

That very afternoon an application for rescission

was filed, a trustee was in action and steps were

taken with the support of creditors. Now, the

rescission process is ideal to deal with that

situation, not in an ordinary court of law, of course, because judgment has been entered and the only way you

can deal with it is an appeal. The problem was, of

course, that the delays in the bankruptcy jurisdiction -
the rescission application was put on promptly in

accordance with a practice then in operation in the

Federal Court. The applicant's solicitors were told,

"Don't worry, don't make any application for urgency,

it's our practice never to seal an order for

sequestration when a rescission application is put on."

So here was the court's registry misleading an

applicant, putting on a rescission order and it came

to pass that things moved leisurely, perhaps because

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of the pressure of the court's business, but the

situation would be entirely different, of course,

if that representation had not been given, namely

that anyone making an application for rescission

under section 37, clearly, we would submit, an

important provision, otherwise it ought not to be in

the legislation, but an urgent hearing ought to be

granted and if, as the Full Court says, now this

practice has been discontinued, sort of Pontius

Pilot-like, it is inconceivable that the Court was
not aware of - and I am not saying these three judges,
of course - but it is inconceivable that the Court was

not aware of the practice and no doubt the leisurely

progress of the matter is a function of the fact that

everybody knew or believed that the practice would

operate, that rescission - - -

DEANE J:  Mr Masterman, at page 47 of the appeal book, the

Full Federal Court said in relation to the application

to set aside the signing and sealing of the

sequestration order that:

Since his Honour held that the bankruptcy should be annulled it was unnecessary

for him to deal with the -

that application. Is that correct?

MR MASTERMAN:	No, of course not, Your Honour.
DEANE J:	As I read his judgment he did deal with it and made

an order that the signing and sealing of the

sequestration order be quashed.

MR MASTERMAN:  Yes.

DEANE J:  I am right, am I? I was looking at page 18 of the

appeal book.

MR MASTERMAN:  What I think is the correct position, as I

understand it, Your Honour, is that His Honour said,

"But for RE DERIU I would have set aside and rescinded".

DEANE J:  I was just directing your attention to the signing

and sealing of the sequestration order which, as I
say, the Full Court said that His Honour did not deal
with, but at page 18, line 5, I had read him as not

only having dealt with it but as having quashed the

signing and sealing of the sequestration order and I

was just wondering if I was missing something.

MR MASTERMAN:	Well, what Your Honour I think is missing, and so is the appeal book - and the apologies, no doubt,
of both solicitors - is a correction. If I just hand
it up for completeness.
DEANE J:	Of what, what is the correction?

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MR MASTERt\.fAN:	It is headed Corrections to Judgment and Orders.
DEANE J:	A correction to His Honour's judgment?

MR MASTERMAN:  Yes. It is headed Corrections of Judgment

and Orders:

Due to a computer breakdown, there

was an accidental collating error when

this judgment was assembled. As in my

opinion the matter was one for

annulment, orders 1 and 2 were not

necessary and were not intended.	My
intention was to indicate, for the purposes of any appeal, that:
(1) if I erroneously concluded that
annulment was appropriate so that

rescission was held to be the correct

remedy;

(2) I would then have -

I think His Honour may mean llinappropriate" -

I would then have extended the time for

the application to set aside the signing

and sealing of the sequestration order,

and set aside the signing and sealing.

DEANE J:	I see, yes.
MR MASTERMAN:	So the only thing that stopped His Honour from

making the rescission order and setting aside it was

this RE DERIU point and that is at page - - -

DEANE J:  You have answered my question, Mr Masterman.

His Honour did not order that the signing and sealing

of the sequestration order be quashed, notwithstanding

what is said in the judgment that we have been given.

MR MASTERMAN:

and if the Court turns to page 21 of the appeal book No, Your Honour, but he said he would have

we see His Honour looking at:

It is clear that if a sequestration

order ought not to have been made, the
appr?pr~ate remedy is annulment and not

resc1ss1on -

and he relies on RE DERIU and see also section 43(2).

That is again what we submit is a fallacy of

submitting the unfettered discretion of section 37(1)

to section 43(2).

GAUDRON J:  It is not unfettered, is it really, Mr Masterman?

First of all, it is subject to subsections (2) and (3).

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MR MASTERMAN:  That is a condition as to time, yes, but the

discretion itself, we would submit, is - - -

GAUDR0N J:  At the very least it has to be confined by the

scope and purpose of the legislation of the

BANKRUPTY ACT.

MR MASTERMAN:  Yes, and we would submit that Mr Justice Einfeld

was fully alive to that.

GAUDR0N J:  The next matter, though, Mr Masterman, is this,

the provision would seem, on its face, to be dealing

with what happens in the recall of unperfected orders

in other courts.

MR MASTERMAN:  We, with respect, would not read that limitation

into it or see that it is so read into it.

GAUDR0N J:  I would have thought in the context where you do

have appea~ you do have provision for annulment,and

where the limitation as to time is that the

sequestration not have been signed and sealed - - -

MR MASTERMAN:  That clearly is a condition. We accept that.

GAUDR0N J:	- - - that you were in an area very analogous with the area of recall of unperfected orders.
MR MASTERMAN:	We, with respect, accept the condition as to time, except that we say - and this is an important
question for the Court - when the practice of the
court and the statements of officers of a court
mislead a party, serious consequences of bankruptcy,
there is equivalent to a denial of natural justice. It is something that all courts would lean over
backwards to prevent happening, so that turning over
to the - I am not sure whether this assists Your Honour or my argument, or not, but we turn to the United
Kingdom Bankrupty Act which is on page 3 of what I
have handed up. It says in section 108(1):

Every court having jurisdiction in

bankruptcy under this Act may review,

rescind or vary any order made by it

under its bankruptcy jurisdiction.

That is the 1914 Act and it is not very difficult to see that that is the origin of the federal Act with

the time limitation - if one calls it such, and I am

happy to call it such - in section 37(2) inserted.

Now, to give a flavour of the English decisions - and

they are in Williams and Muir on bankruptcy - it is

said:

The jurisdiction to rehear and rescind

or vary orders made in the exercise of

the bankruptcy jurisdiction is in a

proper case almost without limit. An

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appeal pending against the original

order does not prevent the court from

rehearing.

Even that does not, and that is citing EX PARTE

KEELY, (1874) Law Reports 9 Chancery Appeals 667,

and in the decision of the Court of Appeal in

IN RE THOMAS, which I need not trouble to hand up,

a decision in (1984) 1 WLR 232, 235, Lord Justice

Dillon says:

At first sight it is, to me -

someone who is not familiar with the bankruptcy

legislation, I suppose he is saying -

at any rate, startling that the registrar

sh o u 1 d have j u r i s d i c t i on to re s c ind h i s

order, dismissing the petition, nearly

a year later. The wording of section 108(1)

of the Act of 1914 is however unqualified

in providing:

"Every court having jurisdiction in
bankruptcy under this Act may review,

rescind or vary any order made by it

under its bankruptcy jurisdiction,"

and the general comment in Williams .....
"The jurisdiction to rehear or rescind
or vary orders made in the exercise of

bankruptcy jurisdiction is, in a proper

case, almost without limit".

So that while, of course, it is true, as Your Honour

properly puts to me,that for the general purposes

or the legislation have to be borne in mind, but so

Mr Justice Einfeld in a full and careful analysis of

the facts and the considerations did that. But we

see that DERIU's case does directly arise, as does the

Full Federal Court's reliance or statement that in some

way section 37 is subject to the same condition,

while unexpressed, that appears in section 154, and

we would submit that is plainly wrong and that within

the time limit imposed by section 37 the discretion
is of the most ample kind.

I will not, because of time considerations - in the three decisions of DERIU, SCIGLITANO and the more

recent decision of Mr Justice Davies in RE BAKER,

and I merely rely on those decisions as showing

there is a dispute between what Mr Justice Gibbs

said, the earlier judgment of Mr Justice Manning

interpreting what Mr Justice Starke said in CAMERON

V COLE and then, we would submit, a very sensible

judgment, with respect, by Mr Justice Davies where

he says in the headnote of RE BAKER - 79 ALR 445:

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Section 37 of the Act specifically gives

the court a power to rescind a sequestration

order in the circumstance where it has not

been signed and sealed. It must be given

effect according to its terms and other

provisions of the Act such as s43(2) must

be read subject to it. Where a

sequestration order is rescinded ab initio

under s 37 the debtor ceases to be a

person against whose estate a sequestration

order has been made and, because the
rescission will apply from the time of the
making of the sequestration order, the
debtor will cease to be bankrupt for all

purposes, including the operation of s 43(2).

We would submit that that is sensible, logical and,

with respect, the decisions to the contrary do
not stand up to proper analysis. We say the whole
question of section 37 does arise because what the
Full Federal Court has done is to narrow the

discretion and is itself applying NORBIS V NORBIS or

HOUSE V R, has misapplied the law. It has, by saying

that to succeed under section 37 you have to, in

effect, establish the condition that the sequestration

order ought not to have been made and making more

important all the non-compliance with bankruptcy notice,

default judgment, and all that. It is a matter of an

unfettered discretion of the judge.

DEANE J:  But did not the Full Court's decision turn not on that

point but on the other point and that is· - I am looking

at page 53 - there is the sentence you complain of

near the bottom of the page:

In either case it would be necessary to

consider whether the sequestration order

ought not to have been made.

I follow what you say about that.	The next sentence
1s:

In either case there would be a residual

discretion the exercise of which would

require consideration of the same factors.

Now, is that not what you have to attack because when one looks at page 55 you find that at line 18 they

dealt with the matter on the assumption that the

sequestration order ought not to have been made and

their judgment turned on their conclusion that the

judge's discretion had miscarried?

MR MASTERMAN:  That leads, with respect, to the second point

we were going to make and make briefly.

DEANE J:  Yes, except it seems to me that that is the first

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point and that unless you get over that hurdle one

would never reach the section 37 point.

MR MASTERMAN:  Yes, Your Honour, that would be so. What

we say the Federal Court has done and it is in our

affidavit, is that it has with respect picked out

a sentence of Mr Justice Einfeld which does not

truly reflect His Honour's judgment and appreciation

of the various matters and use that an excuse, misused

it as an excuse, to set aside a judgment they felt

uncomfortable with and we submit that raises a question
of public importance; namely whether an appellate

court, bound to apply HOUSE v Rand NORBIS laws,

can seize on some words, take them out of

context and then ignore the judgment and write their

own discretionary considerations into it.

Now, the passage, of course, is at page 31

that it seized upon and there are some problems, I
think, with the appeal book. I am not sure if it

has gone through to the copies- I hope not -handed

to the Court but page 31, at point 18:

I reject these submissions.

Listing certain submissions that had been made by

counsel for the respondent here:

In my view it would not only be in the

interests of the creditors, which are

paramount, to grant an annulment but

also in the interests of the public.

Now, that is seized upon by the Federal Court as

the key to overturning a discretionary decision of

a judge who heard a case for five days, made findings

of fact and took into account a wide range of

discretionary matters including quite clearly public

interest matters and that appears at a number of

places throughout his judgment, that he is considering

that. One might even have thought that it is a

judgment which bleeds with reference to the

significance of "for the public," the public of

Newcastle, and of - - -

McHUGH J: But your point is this, is it not: that even

taking what His Honour said at face value, and he
made an incorrect statement of principle, the fact

is that he thought it was in the interests of both the creditors and the interests of the public that

annulment should be made.

MR MASTERMAN:	Yes, and a more conservative course
McHUGH J:	So, the fact that he said the interests of creditors

was paramount was irrelevant because, in the

circumstances - - -

MR MASTERMAN:  But what can happen, of course, is that an

appellate court reads a judgment like this; it

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reacts unfavourably to it and then seizes upon some

stray words like that to overturn it and impose a

more conservative, if one likes, result and a more

adverse result to a person who the trial judge saw

and the community of Newcastle saw and the creditors saw as having contributed a lot to that town and who had put in place with assistance of a trustee a

scheme for redevelopment which the vast majority of
the creditors in value and number were prepared to

take a chance on and that is all rubbed out on the

basis of applying a legalistic approach by a court

of appeal and we would submit that this Court - it

is an issue for this Court. It is not merely a
matter of the circumstances of the individual case
but this Court ought to be astute, with respect,

to lay down the importance of not seizing on stray

expressions like that and then rewriting in

discretionary terms the importance of putting on

defences to district court actions, to doing

something about bankruptcy notices and about not

applying for adjournments unsuccessfully.

DEANE J: But, does that not really bring us to the point

that has to be faced and that is this: ultimately,

the case turned on the court's interference with

His Honour's exercise or non-exercise of discretion.

MR MASTERMAN:  But blinkered by their view, we would

respectfully submit, of both conditions that I have
referred to: RE DERIU and blinkeredby,despite the

words that are added, that parenthetical paragraph

that Your Honour referred me to.

DEANE J:  But they say expressly, "We'll accept that the

condition which we see; that is, that the sequestration

order should not have been made, is satisfied and

they, then, go to deal with the case on the question of discretion. Now, I appreciate what you say about

their approach there but query whether that raises

any question of general importance, particularly

when one looks at the emphasis they placed on the

fact that one creditor who had a particular series

of transactions accounted for more than $800,000 worth of the supporting creditors in the context

where Justice Einfeld does not seem to have paid

much attention to that.

MR MASTERMAN:  His Honour had a feel of the whole situation

from five days of seeing people in the witness box -

but we have tried to, and I suppose what we say

is a matter of public importance is to determine

when, attempt to - for this Court to determine -

the criteria for determining when another appellate

court has misused the discretionary power and while

paying verbal homage to the principles in NORBIS

V NORBIS and HOUSE V R has done just that. We tried

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to express it as a question of law on page 71 and

I think this will probably be my last words, the

Court will be relieved to know, at -

DEANE J: Mr Masterman, I am really trying to help the

identification of the area of problem but if I

can just complete the identification so you can

say what you think should be said about it, if

you go to page 59, the fifth line from the bottom,

at the end of the line, the distinction between

the different forms of procedure was - over to

page 60 - another ground on which they said

His Honour's approach to the exercise of discretion

had miscarried.

MR MASTERMAN:  Showing a total lack of reality and, in our

respectful submission - Your Honour, the difference

between an out-of-court scheme and an in-court

scheme is very significant and it is one that there

is an element of compulsion in; the other is meetings
of - and we would submit, far from what the court
says there, that the voluntary compositions are

to be encouraged, not discouraged merely because

someone welches on a deal about adjournment the

day before and a judge refuses to grant an

adjournment. We would submit there is a point of

importance there that out-of-court schemes of
arrangement are to be preferred, are to be

encouraged and that that is a defect in the

Full Federal Court's decision.

That is the submissions we would make and His Honour had the unrivalled opportunity - some

of the suggestions made by the Full Federal Court
with respect are unreal. This man was subjected
to two or three days of cross-examination, more

than the average registrar's efforts and the judge

was there to see them. We tried to express, I

suppose, the point of law that Your Honour has

reduced me to, if I can say so, with respect, at

page 71 where we said the three quest ions of law of importance	are, in effect, RE DERIU and the limitation on the
which is a beneficial power, we submit. This
question of what to do in a situation where a
Federal Court practice and statements by clerks
of the Federal Court have misled a party, the
courts, we would submit, would lay down, as
Mr Justice Wilcox in argument recognized, would
be astute to preclude that standing in the way of the exercise of a power in section 37 and when
one comes to 15.3:

discretion of the court in exercising the 37 power

Whether the Full Court of the Federal Court

wrongly interfered with the exercise of a

discretion by a judge of the Federal Court

by fixing upon certain expressions used by

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the trial judge which do not reflect

the totality of his reasons.

And, in some way, we would submit, in considering

this case, the High Court would be able to prevent

that happening in the future or at l~ast to say that

in looking at - that the High Court will, itself,

interfere where an appellate court, even of the

stature of the Full Court of the Federal Court has

done that totally, we would submit, against the

full reasoning of His Honour Mr Justice Einfeld.

It is impossible, we would submit, to read that

judgment and say that His Honour did not have

regard to, and proper and full regard, to the

public interest. They are the submissions we

would make.

DEANE J Yes, Mr Skinner.

MR SKINNER:  Yes, thank you. Your Honours, if I could deal

briefly with the first issue about section 37 and

section 154 in these terms: what His Honour

Mr Justice Gibbs as he then was recognized in

RE DERIU was the fundamental requirement that once

a sequestration order was signed and sealed, that

because of the vesting provisions which form part

of the law of bankruptcy, that simply to rescind
the sequestration order would not be to put an end
to the bankruptcy and when one looks carefully at

the circumstances in which RE DERIU came before

His Honour, what one finds is that the application

before His Honour was one for rescission;

His Honour prevailed upon counsel for the

applicant that there was a necessity to obtain an

order for annulment to put an end to the bankruptcy

and what occurred, in fact, was that the application

was so amended and the order was made.

His Honour Mr Justice Einfeld throughout the

judgment recognized that there was such a fundamental

need to annul and cites in his judgment the line

of authority commencing with RE DERIU concluding

with the judgment of His Honour Mr Justice Burchett

in RE ANASIS, 11 FLR 127. Those authorities are

cited by the trial judge at page 53 of the appeal

book and His Honour concludes with the words that

a rescission:

Even apart from the provisions of

s.37(2), there would be a difficulty about

merely rescinding the sequestration order.

The submission that the respondent makes in this

matter is that throughout the conduct of the case,

commencing with the trial judge through to the

Full Court, the distinction between the need to

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rescind and the need to annul was, at all times,

recognized and there is simply no question of

law which arises on that point which would attract

the court in its dealing with the matter of general

interest.

The second matter that the respondent submits

about the appeal is the question of discretion and
the submission made by the respondent is that it

is simply not a matter of the Full Court seizing

upon but one phrase, the Full Court goes on to
enumerate a number of matters upon which it says

the trial judge fell into error and Your Honour

has already indicated one such error; namely, the

distinction between section 73 and Part X of the

BANKRUPTCY ACT. The situation to assist the Court

by reference to the chronology is this: that,

after the making of the sequestration order, a

meeting was called by a trustee some months after

the sequestration order was made, the sequestration order having been made in November 1986. A meeting

was called in March 1987. That meeting was described

as a Part X meeting and as the Full Court observed

in its judgment, the distinction between a Part X meeting and a meeting of creditors called after a

sequestration order is made is a question of

substance and not of form. That passage appears

at line 25 of page 59 of the appeal book.

That is a fundamental distinction because

section 73 of the BANKRUPTCY ACT refers to a

composition by creditors after the making of a

sequestration order. Part Xis clearly headed,

"Arrangements made before Sequestration" and it

was urged upon the trial judge, even at the initial

stages, that no regard whatsoever could be had to

such a meeting described as a Part X meeting because

the Act clearly laid down the appropriate procedure

in section 73.

So, the submission that is made by the

respondent before this Court is that that is but

one further indication of the manner in which

the trial judge, His Honour Mr Justice Einfeld,

failed to adequately exercise the discretion which

was available to him pursuant to section 154. The

other matters are the submissions which were set

out by the trial judge relating to the submissions

which were made before him, relating to such matters

as the need to examine the affairs of the bankrupt,

the need to conduct public examinations and so forth.

They were all matters which were set out by the trial

judge. They were all matters to which the Full Court

held that His Honour ought to have had regard in

examining the question of discretion.	In summary,
the respondent	submits to this Court that all

of those matters are peculiar to the affairs of

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Mr and Mrs Piccardi; that no point of general interest

arises out of those matters; they were all clearly

matters of fact and discretion which the Full Court

dealt with. Thank you.

DEANE J:  Thank you, Mr Skinner. Mr Masterman, anything in

reply?

MR MASTERMAN:	I do not wish to reply, Your Honour.
DEANE J:	The question of the construction of and relation

between sections 37 and 43 of the BANKRUPTCY ACT is

plainly one of some general importance. However, as

we read the decision of the Full Court of the of the Full Court that the discretion of the learned trial judge to decline to rescind or annul the sequestration order had miscarried even if it be assumed that the sequestration order should not

have been made.

In these circumstances, we do not think that

the case is an appropriate one to consider the

abovementioned question of construction. Otherwise,

we do not consider that the proposed appeal would
involve any question of general importance such as
to warrant the grant of special leave to appeal.

Accordingly, special leave to appeal is refused.

MR SKINNER:  Your Honour, the question of costs in this

matter?

DEANE J:	Mr Masterman?
MR MASTERMAN:	The only matter I would say in relation to costs,

indeed, perhaps the costs below, is where one

successfully applies for annulment, then it is

overturned, one appeals, and if an order for costs

is made all along the line,which has happened, the

applicant will be bankrupt a second time, to no

advantage to anybody.	We would submit that no
order as to costs should be made anywhere and that

this Court should not only not make any order here but

should revoke the existing orders for costs. In other words, the costs should be paid out of the

estate of the bankrupt.

DEANE J:  The application for special leave to appeal is

refused with costs.

MR MASTERMAN: If Your Honour pleases.

AT 3.44 PM THE MATTER WAS ADJOURNED SINE DIE

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