Re Blundell;
[1996] FCA 1179
•13 December 1996
CATCHWORDS
BANKRUPTCY - creditor’s petition - consent of trustee to act in that petition - competing debtor’s petition - if debtor’s petition accepted does person consenting to be trustee of creditor’s petition become the trustee in bankruptcy.
Re Agostino, Ex parte Jackson (1983) 78 FLR 142
Re Close, Ex parte Abbott (1983) 50 ALR 571
Re Lees, Ex parte Young, (unreported, 31 August 1984, FCA, Neaves J)
RE BLUNDELL; EX PARTE KALUS KENNY
No VP1036 of 1996 and No VP1041 of 1996
FINN J
MELBOURNE
13 DECEMBER 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
GENERAL DIVISION )
) No VP1036 of 1996
BANKRUPTCY DISTRICT OF THE )
)
STATE OF VICTORIA )
RE: DAVID JOHN BLUNDELL
Debtor
EX PARTE:HENRY KALUS AND MICHAEL JONATHAN KENNY trading as KALUS KENNY
Creditor
IN THE FEDERAL COURT OF AUSTRALIA )
)
GENERAL DIVISION )
)No VP 1041 of 1996
BANKRUPTCY DISTRICT OF THE )
)
STATE OF VICTORIA )
RE:DAVID JOHN BLUNDELL
Debtor
COURT:FINN J
PLACE:MELBOURNE
DATE: 13 DECEMBER 1996
MINUTES OF ORDERS
THE COURT ORDERS THAT:
the Registrar accept the debtor’s petition filed in 1041/96.
the creditor’s petition in VP1036/96 be dismissed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
GENERAL DIVISION )
) No VP1036 of 1996
BANKRUPTCY DISTRICT OF THE )
)
STATE OF VICTORIA )
RE: DAVID JOHN BLUNDELL
Debtor
EX PARTE:HENRY KALUS AND MICHAEL JONATHAN KENNY trading as KALUS KENNY
Creditor
IN THE FEDERAL COURT OF AUSTRALIA )
)
GENERAL DIVISION )
)No VP 1041 of 1996
BANKRUPTCY DISTRICT OF THE )
)
STATE OF VICTORIA )
RE:DAVID JOHN BLUNDELL
Debtor
COURT:FINN J
PLACE:MELBOURNE
DATE: 13 DECEMBER 1996
EX TEMPORE
REASONS FOR JUDGMENT
I have before me two separate proceedings. The first VP1036/96 is a creditor’s petition seeking a sequestration
order against the estate of David John Blundell. That petition was issued on 18 November 1996. Application was made by the present petitioning creditor to be substituted for the original petitioning creditor under s49 of the Bankruptcy Act 1966 (“the Act”). I made an order to that effect on 11 December, my purpose in so doing being to allow what I was led to believe were the real matters in contention between the parties to be ventilated.
The second proceedings before me (VP1041/96) arises in consequence of the debtor, Mr Blundell, seeking to present a debtor’s petition on 19 November 1996. Because a creditor’s petition was then pending, s55(3A) required that the Registrar refer the debtor’s petition to the Court for a direction to accept or reject it.
At the hearing on 11 December I indicated that I would direct the Registrar to accept the debtor’s petition. It then became apparent that this course may not necessarily remove the cause of contention between the debtor and the petitioning creditor.
It is this. A trustee has consented to act as such in proceeding VP1036/96. In contrast no trustee has been nominated or consented in VP1041/96. I am informed that it was the debtor’s intent that the Official Trustee be his trustee. If there had not been a parallel creditor’s petition, Mr Blundell’s intention would have been realised as of course by virtue of the provisions of s160 of the Act.
The debtor, while seeking to become bankrupt, objected to having the particular trustee, who has consented to act in VP1036/96, as his trustee. The issue, simply, is whether that trustee becomes the trustee of Mr Blundell’s estate by virtue of s156A(3) of the Bankruptcy Act. This provides:
“156A(3) Where:
(a)at the time when a debtor becomes a bankrupt, a registered trustee has, under subsection (1), consented to act as the trustee of the estate of the debtor and the consent has not been revoked, the registered trustee becomes, at that time, by force of this subsection, the trustee of the estate of the bankrupt;
...”
The terms of this subsection are such that they could be so construed as to allow for a trustee who has consented in one proceeding to become, by force of the section, trustee of
the estate of a bankrupt as a result of bankruptcy ensuing in another proceeding in respect of the same person if no trustee has consented to act in that other proceedings.
In Re Lees; Ex parte Young, (unreported, 31 August 1984, FCA, Neaves J) adopted this view in a case where, despite there being a creditor’s petition on foot, a sequestration order was made on an application under s222 of the Act, the person who consented to act as trustee in the creditor’s petition being appointed trustee in consequence of the s222 application.
In reaching this conclusion his Honour relied upon s156A(3). He further noted that although the trustee’s consent had not been filed in the s222 proceedings “that circumstance ... seems to me to be not material”. It does not appear that Neaves J attention was drawn to the decision of Fisher J in Re Close; Ex parte Abbott (1983) 50 ALR 571 and on which the debtor relies in this matter.
There, where there were two creditor’s petitions in each of which a separate consent to act as trustee had been filed, the question was whether both persons who consented became
joint trustees notwithstanding that the sequestration order was made on one only of the two creditor’s petitions. His Honour concluded that there was only one trustee, that person being the trustee who consented in the proceeding in which the order was made. In reaching this conclusion his Honour held that a consent is operative within, and is limited to, the particular proceedings in which it is filed.
I should add that Fisher J subsequently applied his decision in Re Close to a situation where, as here, the competition was between a consenting trustee, and the Official Trustee, the bankruptcy arising in consequence of a debtor’s petition in which no trustee had been nominated: Re Agostino; Ex parte Jackson (1983) 78 FLR 142.
I would have to say that views expressed in both decisions are ones which commend themselves to me.
Despite the general wording of s156A(3), it does not seem to me that the legislature should be taken as having intended that the fortuitous circumstance of a person having consented to act in one proceeding could or should have the effect of that person becoming trustee in another as a result
of a failure in that other (whether deliberate or not) to make provision for a trustee. Such could produce most inconvenient results. Some of the difficulties to which Fisher J adverted in both Re Close and Re Agostino apply here with equal force.
Given the state of authority on the point I am prepared to follow the approach taken in Re Close and Re Agostino in preference to that in Re Lees. It reflects my own view of the scheme of the Act.
In consequence I direct the Registrar to accept the debtor’s petition. This will have the effect of the debtor becoming bankrupt. And because no trustee has consented to act in the circumstance of a debtor’s petition, the Official Trustee will become the trustee by virtue of s160.
I should add that I do not consider this result as being one which is in any way unfair to the creditors. If they are so minded s157 of the Act provides them with the power to appoint a trustee of their own choice.
I direct the Registrar to accept the debtor’s petition in VP1041/96. Correspondingly I dismiss the creditor’s petition in VP1036/96.
I certify that this and the preceding 6 pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.
Associate
Dated: 21 January 1997
Counsel for the debtor : M Galvin
Solicitors for the debtor : Smith & Emerton
Counsel for the supporting
creditor : A McNab
Solicitors for the
supporting creditor: : Davies Ryan De Boos
Date of hearing : 11, 13 December
Date of judgment : 13 December 1996
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