Re Deputy Commissioner of Taxation

[1987] FCA 451

Not for dlstrlbutlon

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) QLD PET 978 of 1987
BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND )

FE: DARRYL F. BLDSOE

EX PARTE: DEPUTY COMMISSIONER OF TAXATION

SPENDER J .

BR I S BANE

3 AUGUST 1987

EX TEMPORE REASONS FOR JUDGMENT

The debtor seeks an adjournment of a credltor's petltlon

against hlm.

The case for whlch I was dredglng my memory before vas

Re Willlam John Gleeson; ex parte Oueensland Druqqlsts Llmlted

(unreported, 26.11.84). I gave judgment in that matter on 26

November 1984. In that case there was an appllcatlon for an

ad~ournment made by Mr. Gleeson and, on the morning of the

adjourned hearing of the credltor's petition, counsel told me

that Mr. Gleeson, the debtor, had on the prevlous Friday slgned

an authority for a registered trustee to call	a meeting and take
control of his property.

In that case, I referred to the judgment of Mr. Justice

Riley in Re Venetoulis: Ex parte Calsil Ltd. (1976)

/'

at p. 626, where Mr. Justice Riley said:-

2.

"On 1 June 1976 Calsil Ltd. filed a creditor's

petition for a sequestration order agalnst M.B.

(Michael) Venetoulis. The return date of the

petition was 18 August 1976. On that day I was

told that on 11 August the debtor had slgned an authority under 3.188 of the Bankruptcy Act, that

a registered trustee had consented in wrlting to

exercise the powers conferred by the authority,

and that a meeting of creditors was to be held

soon. I thereupon adjourned the further hearlng

to 14 September, on which day It was, by consent,

further adjourned to 29 September."

In reliance on those observations. it was submitted for

the debtor that, in the ordinary course, the matter should be

adjourned so that the views of the creditors a s a whole could be

ascertained.

In Field v. Commercial Bankinq Co. of Sydney Ltd. ( 1 9 7 8 )

3-2 A . L . R . 403, the F u l l Court of the Federal Court, by ma~orlty,

dlsmlssed an appeal from the trlal ludge's declsion not to grant an adjournment so as to enable a meetlng to be held pursuant to the authority under Part X. C.A. Sweeney and Frank1 JJ. said at p. 403:

"The court has not adopted a practice, when 3

petitlon comes on for hearing after the executlon

of an authority and before any meeting of

creditors has been held, of invariably or

generally ad]ourning the hearing of the petition

to enable the meeting to be held.	It would be	a
strange result otherwise because,	on the other

hand, where a meeting of creditors has passed a special resolution for a deed, the court can,

pursuant to S. 206 of the Bankruptcy Act 1966

(Corn), adjourn the hearing of a petition only if I t appears that it would be for the advantage of

the creditors that he debtor's affairs be

administered under the deed."

3.

Thelr Honours sald at p.404:

"The execution of an authority pursuant to Pt X of

the Bankruptcy Act 1966 (Corn) is only one of the

circumstances, amongst many, to be considered wlth

respect to an application for an adjournment of a

creditor's petition. "

They referred to the well-known case of Rozenbes v . Kronhlll

(1956) 95 C.L.R. 407, where the Hlgh Court referrd to v.

W h M h (1933) 48 C.L.R. 639, and said:

"this court expressed agreement with a judgment of

the Supreme Court of Queensland (Henchman J.) In

which hls Honour said: '...prima facle, on proof

of the matters mentioned in s.56(2), the court

wlll proceed to make an order for sequestration

and ... it is for the debtor to show some cause

overriding the Interest of the publlc in the

stopping of unremunerative tradmq, and the rlghts

of individual credltors who are unable to get

their debts paid to them as they become due.

Somethlnq has to be put before the court to

outweight those conslderatlons before It can be

said that sufficient cause is shown agalnst the

makinq of a sequestratlon order."'

In the light of the cases that I referred to there, it

seems to me I ought not to grant the adjournment sought.

On the other question, whlch 1 s a short and lnterestlnq

one, the position is that the Deputy Commlssloner of Taxation,

through his counsel, has indicated that it was his client's

intention and hope that, pursuant to the provisions of 3.160, the

official trustee would, on the making of the sequestration order,

be trustee of the estate of the debtor. Section 160 provides:-

4

"If at any time there is no registered trustee who

is the trustee of the estate of a bankrupt, the

Official Trustee shall, by force of this sectlon,

be the trustee of the estate. 'I

There seems in the provisions of the Act as they

presently stand to be an initial preference for a prlvate

trustee.	Section 157(1) provides that:-
"Where a debtor becomes a bankrupt, the credltors
may, if the Official Trustee 1 s the trustee of the
estate of the bankrupt, by resolutlon, at the
first or a subsequent meetlng of credltors,
appoint a registered trustee to the offlce of trustee of the estate of the bankrupt in place of the Officlal Trustee."

That is to say, the creditors may, by thelr cholce, replace the

Offlcial Trustee wlth a registered trustee. On the other hand,

where a registered trustee 1s the trustee of the estate of the

bankrupt, ss.l56A(41 and ( S ! provlde that such a trustee can	be
removed by the Court m the appllcatlon of a credltor If -

" (a) . . . the trustee 1 s not flt to act 3 s

trustee; or

( b ) ... the connectlon of the trustee wlth. or

the relatlon of the trustee to, the bankrupt

1 s llkely to make ~t dlfficlllt for hlm to

act wlth lmpartlalrty In the Interests of

the credltors generally."

That 1 s to say, something In the nature of a dlsquallfylng aspect

has to be shown before a private trustee can be replaced	or	can
be removed.

The sub-section which is primarily relevant to the

present question is 156A(3), which provides:-

5

"Where -

(a) at he time when a debtor becomes a

bankrupt, a registered trustee has, under sub-section (l), 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 sub-section, the trustee of the estate

of the bankrupt;

...

Section 156A(l)(a) provides that:-

" A registered trustee may, by instrument signed by

him and filed with the Reglstrar, consent to act -

(a) a3 the trustee of the estate of the debtor

speclfied In the instrument In the event

that the debtor becomes	a bankrupt;
. . .

The form prescribed by Rule 6 2 B 13, In the mstance of

the present case, Form 30B.

Thls mornlnq, at the callover of !ne creditor's

petltlon, the consent of Desmond Wllllam Knlqht, whlch 1 s dated

today's date, 3 F.ugust 1987, was presented to the Reglstrar for

flllnq. The Deputy Reqlstrar hearlnq the csllover merely placed

the matter m t h the papers and referred the matter to me, it

being indicated that there was a questlon in relatlon to whether

Mr. Knlght should act as trustee of the estate of the bankrupt.

6.

It has not been suggested that there is any abuse of

process or a disqualifylng feature about Mr. Knight actlng as

trustee of Mr. Bledsoe's estate should he become bankrupt. I do

not think there IS any basis on whlch the filing of this document

should be resisted or any reason why I could order that Mr.

Knight no act as trustee. The section Itself is

self-fulfilling: It does not require a court order that a person

act as trustee of the estate of the debtor. The provislons of

156A(3) seem to be satisfied here.