Re Fischer, M.F.

[1990] FCA 737

Re: MICHAEL FREDERICK FISCHER
Ex Parte: MICHAEL FREDERICK FISCHER
No. Q E391 of 1982
FED No. 737
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND
Pincus J.(1)

CATCHWORDS

Bankruptcy - applicant twice bankrupt - whether to annul bankruptcy second in time - meaning of "debtor" - whether automatic discharge operates as to first bankruptcy once second annulled.

Bankruptcy Act 1966, ss.149, 154

HEARING

BRISBANE

#DATE 19:12:1990

Counsel for the applicant: Mr. P.D. Baker

Solicitors for the applicant: Richard Hoare and Co.

Appearing for the Official Trustee: Mr. Eliftheriou

ORDER

The bankruptcy consequent upon the acceptance of the applicant's petition on 7 September 1982 be annulled.

By virtue of s.149(1) of the Bankruptcy Act 1966, the applicant is discharged from the bankruptcy consequent upon the sequestration order of 6 September 1982.

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

JUDGE1

This is an application for annulment of bankruptcy, made under s.154 of the Bankruptcy Act 1966. The applicant has been made bankrupt twice: on 6 September 1982 on a creditor's petition and on 7 September 1982 on his own petition, presented under s.55. According to the evidence, the second bankruptcy took place by mistake; it may be annulled if "the petition ought not to have been presented or ought not to have been accepted by the Registrar" - s.154(1)(a) of the Bankruptcy Act. In Clyne v. Deputy Commissioner of Taxation (1984) 154 CLR 589, the petitions were in the reverse order: the debtor's petition came first. It was held that if a creditor's petition is founded on a debt incurred before the date of presentation by the debtor of his own petition, it is beyond the Court's power to make a sequestration order and if made such an order may be annulled under s.154(1). The main reason given for that view was that at the date of the sequestration order, there could be no proof that the debt relied on by the petitioning creditor was "still owing" within the meaning of s.52(1)(c) (p 594 of 154 C.L.R.). The second reason which the Court gave was that it is "unlikely that the Parliament intended that it should be possible for two persons to be, separately, trustees for what might be, eventually or even entirely, one estate, for this could lead to chaos in administration ..." (597).

1. One difficulty about applying this reasoning in circumstances such as the present - where the sequestration order has preceded and not succeeded the acceptance of the debtor's petition - is the Registrar's limited power to reject debtors' petitions: s.55(3). If one reads that provision literally, it appears that the Registrar was obliged to accept the debtor's petition; he had no choice, because the petition and the statement of affairs complied with s.55(2). Whether or not that reading is correct, it appears to me that the second bankruptcy should be annulled, because the petition ought not to have been presented. That is so for two reasons: first, in my opinion, the applicant was not a "debtor", within the meaning of s.55(1), when he presented the petition, and secondly, the presentation of the petition was contrary to the policy of the Act.

2. As to the first ground, although the word "debtor" is undefined, it does not appear to me in this context to include a person whose debts have been rendered irrecoverable for the time being: s.58(3). The word "debtor" is, in my view, sufficiently flexible in meaning to be treated as having been used as excluding an obligation which has been converted, for all practical purposes, into a right of proof. As to the second ground, the two-trustee problem referred to by the High Court existed here; at the time of acceptance of the debtor's petition, a private trustee had already assumed office as trustee of the bankruptcy consequential upon the creditor's petition. In my view, the debtor's petition ought not, in those circumstances, to have been presented, because its presentation was contrary to the policy of the Act referred to by the High Court in Clyne's case (at p 597).

3. Mr. Baker, for the applicant, has also asked for a declaration as to discharge. There is a conflict of authority. It was decided in Re Hayes (1984) 59 ALR 219 that if there are two bankruptcies, the second of which is annulled, the automatic discharge provision (s.149(1)) does not apply. Mr. Baker submits that case is wrong; I declined to follow it in Re Fitzgerald (unreported, 23 February 1988), but do not propose to reiterate my reasons, to which I adhere, having reconsidered the point.

4. In Fitzgerald's case, as here, there was no suggestion that a retrospective declaration of discharge should be made. I therefore propose to follow the form of order in that case, as to the discharge.

5. For the reasons given above, and those I gave in Re Fitzgerald, it will be ordered that the bankruptcy consequent upon the acceptance of the applicant's petition on 7 September 1982 be annulled and there will also be a declaration that, by virtue of s.149(1) of the Bankruptcy Act 1966, the applicant is discharged from the bankruptcy consequent upon the sequestration order of 6 September 1982.