Re David Jules Israel

[1991] FCA 895

IN THE F E D E ~ COURT OF AUSTRALIA J U D ~ ~ E N T NO.

GENERAL DIVISION	1
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND

NO. QP 2162 of 1991

RE:	DAVID JULES ISRAEL
EX PARTE:	AUSTRALIAN TRADE COMMISSION TRADING AS EXPORT FINANCE AND INSURANCE INSTITUTION

No. QP 2211 of 1991

RE : DAVID JULES ISRAEL EX PARTE: DAVID JULES ISRAEL

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	13 SEPTEMBER 1991
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.    The debtor's petition presented on 3 September 1991 be rejected.

2.    The costs of today be costs in the creditor's petition.

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

BANKRUPTCY DISTRICT OF THE

STATE OF OUEENSLAND

No. QP 2162 of 1991

RE:	DAVID JULES ISRAEL
EX PARTE:	AUSTRALIAN TRADE COMMISSION TRADING AS EXPORT FINANCE AND INSURANCE INSTITUTION

No. QP 2211 of 1991

RE:	DAVID JULES ISRAEL
EX PARTE:	DAVID JULES ISRAEL

CORAM: PINCUS S . PLACE: BRISBANE

DATE: 13 SEPTEMBER 1991

EX TEMPORE REASONS FOR JUDGMENT

This is a matter in which there are before the Court

a debtor's petition and a creditor's petition, both relating
to the same debtor. The question which arises is posed by

s.55(3A) of the Bankruvtcv Act 1966, which reads as follows:

"Where, at the time when a debtor's petition is

presented under this section, a creditor's
petition is pending against the debtor (whether
alone or jointly with another person) or
against a partnership of which the debtor is a
member, the Registrar must refer the debtor's
petition to the Court for a direction to accept

or reject it".

That subsection fits the facts of this case, because

the sequence of events is that the creditor's petition was
presented on 29 August 1991 and the debtor's petition was
presented on 3 September 1991. The creditor's petition came
in first, as sub-s.(3A) contemplates. The argument which is
advanced by counsel for the petitioning creditor, Mr. Couper,
is that sub-s.(3A) gives the Court a discretion to accept or
reject the debtor's petition, and that is plainly correct.
The question arises in what circumstances the discretion
should be exercised one way and in what circumstances it
should be exercised the other. There is, as far as I know, no
authority on that point, but it seems to me that, prima facie,
if there is any substantial reason why the debtor's petition
should be accepted, that must receive careful consideration.
If there is not any such reason, then I would have thought
that, prima facie, the creditor's petition should be accepted.

Mr. Battersby has submitted on behalf of the debtor

that he is concerned that there has been an abuse of process
on the part of the petitioning creditor, and he is also
concerned about expense. As to the abuse of process, what Mr.

Battersby argues is that at a meeting of creditors which took

place on 30 August 1991 - that is, the day after the

creditor's petition was presented - the petitioning creditor was present and did not raise the question of the creditor's petition having been presented; Mr. Battersby argues that on

the material, I should find that the petitioning creditor's representative seconded the motion which was passed, to the effect that the debtor should file his own petition. He says

in this sequence of events is to be discerned an abuse of

process.

It seems to me, with respect, that that is plainly

not so. It is unclear why the representative acted as he did

at the creditors' meeting, but an abuse of process it could
not conceivably be, if for no other reason than that the

creditor's petition had already been filed at that stage.

The main point taken by Mr. Battersby is that I

should be concerned about the fact that the debtor's trustee
has done a certain amount of work; he has prepared a statement
of affairs and has interviewed the debtor. The statement of
affairs shows assets of the order of $100,000 and liabilities
of the order of $18 million; a sufficient answer to Mr.
Battersby's second argument is that it could not conceivably
be an important consideration to anyone that a few hundred
dollars might have been spent on work by the trustee. No

doubt that work will prove valuable in the future.

In short, as far as I can see, there is no cogent

reason for the debtor's opposition to the course which the

petitioning creditor wants to take which is, not surprisingly,

that the trustee it has nominated shall take control, rather
than the trustee selected by the debtor. It should also be
mentioned that one of the creditors - a creditor owed about $9
million who was represented at the creditors' meeting - has
filed an affidavit to the effect that had it known that the
creditor's petition was already in, it would not have voted,
as it did, in favour of the motion that the debtor file his
own petition. The circumstances are such that it seems to me
plain beyond any possibility of serious argument that the

4   l

discretion should be exercised in favour of the petitioning

creditor.

I should, however, mention that an affidavit has

been filed on behalf of the petitioning creditor by Justin

~ichael Taylor, which sets out various transactions supposedly

entered into by the debtor, which Mr. Taylor says may need to
be investigated. Mr. Battersby has explained to me, in
relation to some of those, that the debtor contests the
inferences which might follow from Mr. Taylor's affidavit. I
should make it plain that I have no view on those matters; it
is no part of my task, at this stage, to investigate the
debtor's affairs, and it is clear that in such a large
bankruptcy - it is a very large one - that the creditors would

necessarily want to investigate closely.

The circumstances, then are, in summary, that the

creditor's petition was filed first as the subsection

requires:  that there is no disadvantage of any consequence to

the debtor in the creditor's petition proceeding - the only

matter. The only other argument advanced against the exercise	one which has been mentioned, cost, is a relatively trivial
of a discretion in favour of the creditor's petition is the suggestion that the creditor has acted in a'way which is an abuse of process, and that, as I have found, is not so. The
order will therefore be that the debtor's petition, which was presented on 3 September 1991, be rejected. I will order that the costs of today be costs in the creditor's petition.

I certify that the four

preceding pages are a true
copy of the reasons for
judgment herein of his

Honour Mr Justice Pincus

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Associate

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