Re Baker, S.W. v Ex parte TLE Electrical Pty Ltd

[1988] FCA 117

Re: STEVEN WILLIAM BAKER
Ex parte: TLE ELECTRICAL PTY LIMITED FORMERLY TELCON AUSTRALIA PTY LIMITED
No. W231 of 1988
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Davies J.(1)

CATCHWORDS

Bankruptcy - rescission of sequestration order under s.37 of the Act - sequestration order not signed or sealed - distinction between order made but not signed and sealed and an order which has been finalised - whether debtor ceases to be a bankrupt

Bankruptcy Act 1966 (Cth) s.37, s.43(2)

HEARING

SYDNEY

#DATE 21:3:1988

Solicitor appearing for the debtor: Mr G. Kourt

Solicitors for the debtor: Johnson and Co.

Official Receiver in Bankruptcy: Mr N. Bluett

Solicitors for the petitioning creditor: David G. Francis and Co.

ORDER

The sequestration order made on 16 February 1988 be rescinded.

The creditor's petition dated 10 September 1987 be dismissed.

Note: Settlement and entry of orders is dealt with in Bankruptcy Rule 124.

JUDGE1

This is an application for the rescission of an order of sequestration of the estate of Steven William Baker. The application is made under s.37 of the Bankruptcy Act 1966 (Cth)("the Act") which since its amendment by Act No. 12 of 1980 has read, inter alia:-

"37(1) Subject to sub-sections (2) and (3), the Court may rescind, vary or discharge an order made by it under this Act or suspend the operation of such an order.

37(2) The Court shall not, after a sequestration order has been signed and sealed as provided by the rules, rescind or suspend the operation of the order."

1. The sequestration order, which was made by the District Registrar on 16 February 1988 on the petition of TLE Electrical Pty Limited, has not yet been signed and sealed as provided by Rule 124 of the Bankruptcy Rules. The provisions of Rule 124, which provide for the drawing up, settling, signing and sealing of orders, are similar in purpose and effect to rules which have prevailed in rules of court before signing and sealing an order may be withdrawn or amended. After completion, an order may be amended only to correct a clerical error or the like and withdrawn only if there be fraud or the like. Thus, Archibold's Practice of the Court of Queen's Bench, 8th Ed., published in 1847, states:-
   
   

"At common law, the Court may amend in all cases whilst the proceedings are in paper, that is, until judgment signed, and during the term in which it is signed; for until then the proceedings are considered as only in fieri, and consequently subject to the control of the Court."

Likewise, Daniell's Chancery Practice, 8th Ed., published in 1914, states at p 709:-

"We have seen that, so long as a judgment or order remains in the shape of minutes, that is, until it has been passed by the Registrar and entered, it may be rectified upon application to the Court, or having it put in the cause paper to be spoken to. After the judgment has been entered the Court will not entertain any application to vary it, except in so far as may be necessary to make the entry correctly represent what the Court intended to decide."

More recently, Brennan J. said in Permanent Trustee Co (Canberra) Ltd v. Stocks and Holdings (Canberra) Pty Ltd (1976) 28 FLR 195 at p 198:-

"The general rule is that a perfected judgment cannot be recalled or varied, for the public interest requires that the judgment when it is entered should conclude the litigation: interest reipublicae ut sit finis litium. Until the final judgment is entered, the court retains a power to reconsider the matter, but, when entered, the jurisdiction to reconsider is gone: Re St. Nazaire Co. (1879) 12 ChD 88; Re Suffield and Watts (1888) 20 QBD 693; Texas Co.

(Australasia) Ltd. v. Federal Commissioner of Taxation (1940) 63 CLR 382, at p 457; and Preston Banking Co. v. William Allsup & Sons (1895) 1 Ch 141, at p 144."

1. Based upon this distinction between an order which has been made but not signed and sealed and an order which has been finalised, Sub-sections 37(1) and (2) specifically provide that the Court may rescind a sequestration order which has been made but not signed and sealed.

2. Section 43(2) of the Act provides:-
   
   

"43(2) Upon the making of a sequestration order against the estate of a debtor, the debtor becomes a bankrupt, and continues to be a bankrupt until -

(a) he is discharged by force of section 149;

(b) he is discharged by order of the Court; or

(c) his bankruptcy is annulled under section 74 or 154."

In Re Deriu (1970) 16 FLR 420, Gibbs J. held that, once a sequestration order had been made, it ought not to be set aside under the then provisions of s.37 of the Act, for s.43(2) would continue to apply and the debtor would remain a bankrupt notwithstanding the setting aside of the order. His Honour held that the proper order to make was an order under s.154(1) annulling the bankruptcy. This decision was followed in Re Bond; ex parte The Bankrupt (1978) 22 ALR 287 and in Re Anasis; ex parte Total Australia Limited (1985) 63 ALR 493. However, none of those cases was concerned with the present situation.

1. The present provisions treat a sequestration order which has been made but not signed and sealed as imperfect and vulnerable to rescission by the Court. The section specifically gives to the Court power to rescind a sequestration order in the circumstance where it has not been signed and sealed. This provision of the Act must be given effect according to its terms and other provisions of the Act such as s.43(2) must be read subject to it.

2. In my opinion, therefore, if under s.37 a sequestration order is rescinded ab initio, the debtor will cease 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 a bankrupt for all purposes, including the operation of s.43(2).

3. The petitioning creditor, TLE Electrical Pty Limited no longer seeks the debtor's bankruptcy. Payment of the debt due to it has now been secured by the debtor's father. The petitioning creditor therefore consents to the rescission of the sequestration order. In my opinion, as payment of the debt to the petitioning creditor has been secured in a proper manner and as no other person has shown interest in the bankruptcy, it is desirable that the power conferred by s.37 of the Act be exercised.

4. I therefore make the orders sought by the debtor and consented to by the petitioning creditor, namely that the sequestration order made on 16th February 1988 be rescinded and that the creditor's petition dated 10th September 1987 be dismissed. As it has been agreed that each party will pay his or its own costs of the proceedings, I make no order in respect thereof.