Re Canzoneri, S. Ex parte Canzoneri, S. & anor

[1992] FCA 1015

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JUDGMENT No. ..II.UI...YWWI	..~,....M	,
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IN THE FEDERAL COURT OF AUSTRALIA )	\
EXERCISING FEDERAL JURISDICTION	i
IN BANKRUPTCY	1 NO VB 3611 of 1992

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA

RE :  SEBASTIAN CANZONERI

Bankrupt

EX PARTE:  SEBASTIAN CANZONERI

Applicant , .

AND

HEINE FINANCE PTY LTD

Respondent

COURT :	NORTHROP J
PLACE :	MELBOURNE
m:	18 DECEMBER 1992

EX TEMPORE REASONS FOR JUDGMENT

This is an application brought by Sebastian Canzoneri under s31A(6) of the Bankru~tcv	! ,
!

Act 1966 seeking a review of a

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sequestration order made by Deputy Registrar Agnew on 10

to the petition including reserved costs be taxed

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December 1992 against him on the petition of a creditor, Heine	I
. ,
- Finace Pty Limited.	The order made on that date was in fact
entered on 11 December 1992 altho&h	the order wrongly states

that the date of order was 10 November 1992. The order made

was that:

"1. A sequestration order be made against the estate of

the debtor.

2.    The petitioning creditor's costs of and incidental

L

and paid in accordance with the Statute."

It is noted that there had been filed with the Registrar

in Bankruptcy a consent to act as trustee of the estate of the
applicant, the certificate being filed on behalf of Richard
Jell Mansell, care of Duesbury's, 555 Lonsdale Street,
Melbourne. As a result, under s156A(3) of the Bankruptcy Act

M r Mansell is now the trustee of the estate of Sebastian

Canzoneri.

The essence of the claim made on behalf of the applicant

is that on the application for review, and the review is as of
right, the Court should not make a sequestration order but
that it should adjourn the further hearing of the petition to
allow an adjourned meeting of creditors due to be held on 23
December of this year to take place to allow the creditors to

determine what should be done in this case. I put to one side

for the moment the problems that arise in relation to the
making of a sequestration order and the effect of ,537 and in

particular subsection 37(2) of the Bankruptcy Act. Subsection

37(1) provides: 

"32(1) Subject to subsection (2) the Court may

rescind, vary or discharge an order made by it under this

Act or may suspend the operation of such an order."

Subsection 37(2) provides:

"(2) The Court does not have power to rescind or
discharge, or to suspend the operation of:
(a) a sequestration order, or

(b) an order for the administration of the estate of a deceased person under part XI."

Subsection 37(2) was inserted into the Act by s8 of Act

No 9 of 1992 and is in a different form to the earlier subsection. The effect now is that once a sequestration order is made it cannot be rescinded or discharged or suspended even

though that order has not been entered. The position to that

extent has been varied to what it was previously.

As opposed to this subsection 31A(6) of the Act provides:

"31A(6) A party to a proceeding in which a Registrar

has exercised any of the powers of the Court under
subsection (1) may, within the time prescribed by the
rules, or within any further time allowed in accordance
with the rules, apply to the Court to review that

exercise of power."

Subsection 31A(7) provides:

"(7)The Court may, on application under subsection (6) or

of its own motion, review an exercise of power by a

Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the

. .	matter with respect to which the power was exercised."
In the present case, the power exercised by Deputy

Registrar Agnew was that conferred by paragraph 31A(l)(n)of the Bankruutcv Act:

"(n) the power to make a sequestration order against the

estate of a debtor under section 52(1), and the
power under section 52(2) to dismiss a creditor's
petition."

After some discussion, the matter proceeded before the

Court on review for the hearing of the petition.

The

matter de novo on material presented to it for the purposes of
that review. In this matter, on the material provided in
support of the petition, I am satisfied that the applicant
committed the act of bankruptcy alleged in the petition and I
am satisfied with the proof of the other matters of which
subsection 52(1) of the Act requires proof. I also note that

authorities make it clear that on review the Court hears the trustee of the estate of the applicant.

The question then is whether I should proceed to make a

sequestration order or to accede to the request by the
applicant for an adjournment of the further hearing of the
petition to enable the meeting of creditors to be held on 23

. December of this year. In considering this matter, it is

important to keep in mind certain dates. The bankruptcy

notice in this case is dependent upon a judgment debt in

- favour of the petitioner in the amount of approximately $1.5 million. Subsequently, some amount of that has been paid

from another source, but there is still some $600,000 owing to the petitioning creditor. The bankruptcy notice was served on 11 November 1991. It was a 14 day notice and the act of

bankruptcy therefore occurred on 25 November 1991. The
petition was presented on 12 May 1992 and the first hearing of
the petition was on 16 July 1992. On that occasion the
hearing of the petition was adjourned. There were three
further adjournments of the hearing of the petition, and on
10 December 1992, Deputy Registrar Agnew refused a further
adjournment and made the sequestration order which is now
sought to be reviewed.

It appears that on 21 July 1992 after the first hearing of the petition on 16 July, the applicant signed an authority

under s188 of the Bankru~tcv Act to a registered trustee.

Pursuant to s189, the control of the property of the applicant was assumed by that trustee. The first meeting of creditors pursuant to the authority was held on 19 August 1992. It was adjourned to 16 September 1992, and then adjourned to 9 December 1992, and adjourned to 23 December 1992. It appears that the applicant owes in all a very large sum of money, the full amount of which cannot be accurately determined on the material before the Court but is in excess of some $10

million. It appears also, although again there is no

satisfactory material before the Court to establish the

amount, that the applicant in reality has almost no, or very
little, assets to meet those debts.	One of the reasons for
xhe proceeding under Part X of the Bankru~tcv	Act is the

possibility of moneys being made available to any assignment
or composition, of an amount of about $100,000 which would be
some money at least to be distributed among the creditors. It
is said this would be of benefit to creditors generally
including the petitioning creditor.

It is also clear from the material before the Court that there is great uncertainty as to just who are the creditors of the applicant, the amount of the debts owing to those

creditors, and whether they are contingent creditors or not. including the adjourned meetings, further people have appeared

claiming to be creditors.	It is also apparent that the
there has been no investigation at this stage into the activities of the applicant in relation to those companies.	applicant was very active in a large number of companies and the other whether there are enough creditors to satisfy the requirements of passing any special resolution that might be made under s204 of the Bankruutcv Act, a special resolution being defined in the definition sectlon of the Bankruutcv Act.
In those circumstances, it is necessary to consider the matters in the exercise of the discretion to adjourn the
further hearing of this petition. The general principles

. relevant to a case of this kind are set out in the judgment of

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Svdnev Limited (1978) 22 ALR 403 p411-12. Sweeney J in the case of Field v Commercial Bankina Comuanv of

"It would be unwise to attempt to draw up an exhaustive
catalogue of the circumstances to which the court should
pay regard in considering an application for an
adjournment of a creditor's petition. However, to
illustrate the point that the one circumstance of the
execution of an authority should be looked at in the
general context of each individual case, one may usefully
refer to some other relevant circumstances in such a
case, as for example:

(1) The course of dealings between the parties, from the
time when the obligation to the petitioning creditor is
said to have arisen to the date of the hearing.

creditor, as prima facie, on proof of the matters	(2) The attitude to the application of the petitioning
mentioned in s52(1) of the Bankru~tcv	Act 1966, the court

will proceed to make an order for sequestration (see
Rozenbes v Kronhill (1956) 95 CLR 407).

(3) The general financial position of the debtor.

.

,

the Bankruptcv Act as indicating a policy of the Act similar to that referred to by Heerey J that the policy of the Act is to enable the creditors to determine what should be done generally in relation to an applicant who is insolvent rather than have the court decide the matter under the Bankruptcv Act provisions pursuant to a sequestration order. In that regard reference is made to the judgment of Olney J in the matter of

The relation between the debt of the petitioning

creditor and the total liabilities of the debtor, as it	( 4 )
may be seen, for example, that the petitioning creditor's opposition would be sufficient to defeat any special resolution proposed at a creditor's meeting.
(5) Any attitude to the application disclosed by other
creditors.
would be for the advantage of the creditors that the (6) Any evidence bearing upon the question whether it
debtor's affairs be administered under Pt X of the Act.
(7) The likelihood that the debtor would be able to place before a meeting of creditors a particular proposal, or evidence of his general circumstances, calculated to persuade them to vote for the administration of his affairs under Pt X.
It will at once be obvious that many of these circumstances will be within the knowledge of the debtor, rather than of the petitioning creditor, and it will be for the former to give evidence of them. Such evidence should, where practicable, be in affidavit form."
I am conscious of what was said by Heerey J in the case

.	of re Pantelli ex parte Geelonu Building Societv fin
liauidarion) in matter VB 2117 of 1992, judgment in which was

given on 13 August 1992. I am conscious also of the

submissions made on behalf of the.applicant based upon s206 of matter VP 92 of 1992, judgment in which was given on 5 March 1992 where an opinion is expressed that in complex cases it is often better to enable the powers to be exercised by the trustee in bankruptcy to investigate the affairs of the applicant rather than the more lax provisions under a Part X arrangement or composition.

In the present case there has been no final meeting of creditors. There has been no resolution passed pursuant to section 206, therefore that section can have no application.

At the same time I am conscious of the argument that there may, in an appropriate case, be good grounds for an

adjournment of the matter. I am conscious very much of the

fact that prima facie an adjournment should not be given in a case where a partitioning creditor has established a case for the making of a sequestration order.

In the present case I am influenced very much by the

delay between the act of bankruptcy and the signing of the
authority in July 1992 and by the fact that despite the time
from the calling of the first meeting until the present time
there is still uncertainty and confusion as to who are the
creditors, the amount owing to various creditors and the
uncertainty of whether there is any real possibility that
there are not sufficient creditors sufficient to pass a
special resolution. I am conscious also of the submissions
made on behalf of creditors who are supporting the application
for the adjournment and those who are opposing the application
for the adjournment. This is a case where in all the
circumstances I should not adjourn the hearing of the
partition, and I exercise my discretion accordingly.

In these circumstances, on the review of the exercise of

material before me today. I have already indicated that I am
satisfied in relation to the matters required by the Act, I am
conscious of the fact that one of the final affidavits has not
yet been filed. There is an affidavit of searches made today.

the power I now propose to make a sequestration order on the but, having regard to the affidavit which was in existence on

10 December of this year, and having regard to the matters

generally as to the position of the applicant, I am prepared
to act on that earlier affidavit.

In these circumstances I make a sequestration order

against the estate of the applicant. I have already noted that a consent to act as trustee has been filed by Richard	Joel Mansell. I will hear argument as to whether I should, in
these circumstances, do anything about the order made on 10 generally.
In the circumstances I set aside the sequestration order made by Deputy Registrar Agnew on 10 December 1992 and I make an order that the partitioning creditors costs, including
reserved costs and the costs ordered to be paid pursuant to the order of Deputy Registrar Agnew of 10 December 1992, be taxed and paid according to the Act.
I certify that this and the preceding nine (9) pages are a true copy of the Ex Tempore Reasons for Judgment of the Honourble Mr Justice Mr R.M. Northrop.
secretaryd.

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Date :  / . 93