Re Ginnane; Ex parte Ginnane

[1994] FCA 426

. 42&&

JUDGMENT No. ..,.

IN THE F E D E W COURT OF AUSTRALIA	) )
VICTORIA DISTRICT REGISTRY	) NO VB 2384 of 1993
1
BANKRUPTCY DIVISION	)

BETWEEN:  ANTHONY GINNANE

(Bankrupt)

EX PARTE:  FNlmONY GINNANE

(Applicant)

!z?zm:  Ryan J

W : Melbourne

Date:  06 July 1994

REASONS FOR .IUXMENT

Rvan _\ Application has been made by Anthony Ginnane ("the bankrupt") seeking an order pursuant to s.153B of the

Bankruptcy Act 1966 ("the Act") that the sequestration order

made against his estate on 30 August 1993 be annulled on the ground that it ought not to have been made ("the annulment application"). Consideration of the application requires examination of the lengthy and often unsatisfactory history of the bankruptcy proceedings in respect of the bankrupt.

AUSTRCI "

On 21 November 1991 the bankrupt signed an authority pursuant to s.188 of the Act authorizing Barry Keith Taylor ("Taylor") to call a meeting of the bankrupt's creditors for the purposes of Part X of the Act and to take over the control of his property in accordance with that Part. On 25 November 1991 Taylor consented to act in accordance with the authority.

- 7 JUL 1994
FEDERAL O U R T Of

On 5 December 1991 the s.188 authority together with an affidavit verifying the affairs of the bankrupt, a statement pursuant to S. 188(2) (c) of the Act, and a report prepared by

Taylor as controlling trustee of the estate of the bankrupt pursuant to s.l89(A) were filed with the Registrar in Bankruptcy for the Bankruptcy District of Victoria. In each of the first three documents the bankrupt is referred as "Anthony Ginnane of Llnlithgow, 653 Burke Road, Camberwell Victoria 3124".

Pursuant to s.l88(l)(a) of the Act, a debtor who desires to have his or her affairs dealt with under Part X must, at the time of signing the s.188 authority, be either personally present or ordinarily resident in Australia. It is common ground that the s.188 authority was executed by the bankrupt when he was personally present in Australia.

Pursuant to s.194 of the Act, Taylor called a meeting of creditors of the bankrupt which was held on 19 December 1991.

The only resolution passed at that meeting was to adjourn the

meeting to 31 January 1992. The meeting was reconvened and

subsequently adjourned on 31 January 1992, 14 February 1992 and 10 March 1992. On the latter occasion the meeting resumed and a special resolution was proposed by the bankrupt embodying a composition with his creditors. That special resolution was in these terms:

"... that the proposal put forward by AUTBOttr GI- for a

Composrtlon pursuant to Part X of the Bankruptcy Act 1966 lncorporatrng the following provlslons be accepted:

1.     THAT this Composition shall be in full settlement of all debts as at the date of its acceptance by Creditors, being the 10th March, 1992.

2.

-	THAT the Trustee of thls Composition shall be a registered
Trustee nom~nated	by the creditors.

3.    m I covenant to pay to my Trustee the sum of $70,000.00

(Seventy thousand dollars) as follows:

1.	$1,388.89 (One thousand three hundred and eighty-eight dollars and eighty-nine cents) per month for 36 (Thirty- six) consecutive months, commencing on 10th April, 1992.
2.	$20,000.00 (Twenty thousand dollars) on or about the 10th Aprzl, 1995.

4.

- THAT I covenant to obtain Releases by the 10th April, 1992 to

the effect that the following companies will not lodge Proofs
of Debt in the Administration:

F.G. Film Productions (Auet.) Pty. Ltd.
55 Claremont Street
SOUTH YARRA VIC 3141

T.L.N. Film Productions Pty. Ltd.
55 Claremont Street
SOUTH YARRA VIC 3141

First Film Finance Pty. Ltd.
55 Claremont Street
SOUTH YARRA VIC 3141

I.F.M. Fllm Associates Pty. Ltd.
55 Claremont Street
SOUTH YARRA VIC 3141

Internat~onal Fllm Releaslna Ptv. Ltd. ~a .

55 Claremont Street
SOUTH YARRA VIC 3141

Internat~onal Fllm Entertainment Ptv. Ltd.

55 Claremont Street
SOUTH YARRA VIC 3141

5.

-	THAT the Trustee shall apply monles
received by h m pursuant to this Composltlon as follows:-

FIRSTLY in payment of all disbursements and remuneration of the Trustee of this Compos~tion and that of the Controlling Trustee of the Debtor.

SECONDLY ln payment to all creditors; to be apportioned to them calculated on their admitted ordznary claims.

6. THAT thls Composition za made purauant to Part X of the Bankruptcy Act 1966".

Before the s p e c ~ a l resolution was put to the meeting, an issue arose as to the entitlement of Credit Lyonnais Bank Nederland

N.V. ("Credlt Lyonnals"), which had attended the meeting by

proxy, to vote at the meeting. Credit Lyonnais claimed to be a creditor in respect of moneys due and payable from the bankrupt pursuant to a guarantee. A motion was put to the meeting that the meeting be adjourned in order for the controlling trustee to determine the entitlement of Credit Lyonnais to vote. However, that motion was lost, and Taylor, as chairman of the meeting, accepted the entitlement of Credit Lyonnais to vote. Credit Lyonnais voted against the debtor's proposal. The special resolution seeking a composition was lost.

Pursuant to sub-S. 189(1) of the Act, on the giving of an effective authority to a registered trustee under s.188, the property of the debtor becomes subject to control under Division 2 of Part X and remains so until the happening of one of the events stipulated in sub-s.189(1). In the present case none of the events there set out occurred at the meeting of 10 March 1992 and the bankrupt's property remained under the control of Taylor. At the conclusion of the proceedings on 10

March 1992 Taylor declared the meeting closed.	The failure of the meeting of creditors to pass a special	resolution of the type contemplated by sub-s.204(1) within
four months from the date for which the meeting was called, permitted an application to be made under s.221 of the Act. That section provides that the Court may, if it thinks fit, on the application of the Inspector-General in Bankruptcy, a person authorized in writing by the Inspector-General, a creditor or the controlling trustee, forthwith make a sequestration order. However, no application pursuant to 8.221 has been made.
On 6 March 1992 Diners Club Ltd, as creditor, petitioned the Court for the making of a sequestration order against the estate of the bankrupt. The creditor's petition issued by Diners Club ("the creditor's petition") recited:

'1.	The Judgment Debtor was at the date of the comission of the act of bankruptcy specrfied in paragraph 4 of this petition ordinarily resrdent in Australia.
2.	The Judgment Debtor rs justly and truly rndebted to the Judgment Creditor in the sum of $65,884.82. Judgment was obtained in the County Court at Melbourne on 16 May 1990 for an amount of $68,884.82. Two amounts of $1.500 each have subsequently been pard to the Judgment Debtor by the Judgment Credltor .
3.	The Judgment Cred~tor does not, nor does any other person on rts behalf, hold any aecurrty over the property of the Judgment Debtor or any part of rt for the repayment of the amount specrfied in paragraph 2 hereof.
4.	The Judgment Debtor, wlthin 6 months before the presentatron of thra petltron, comrtted the followrng act of bankruptcy, namely, that the Judgment Debtor ergned an authorrty under sub- aectron 188(1) of the Bankruptcy Act 1966 on 21 November 1991".

In accordance with r.13 of the Bankruptcy Rules ("the Rules")

return date for the hearing of the cred~tor's petition. On	the Registrar, on 6 March 1992, appointed 12 May 1992 as the
that occasion the hearing was further adjourned and, on 19 June 1992, a Registrar in Bankruptcy made an order for substituted service of the cred~tor's petition permitting the petitioning creditor, in sat~sfaction of the requirement of service, to leave a copy of the creditor's petition and of each affidavit verifying the creditor's petit~on at the office of the bankrupt's solicitors.
The creditor's petition returned for hearing before a Registrar on 13 July 1992 at which time the petitioning creditor and two supporting creditors were all separately represented. The bankrupt was represented by Counsel. At the hearing the following orders were made by consent:

"1.	Pursuant to Rule 119A(2) time is extended to 27 July 1992 for the debtor to file and serve an application to review the order for subetrtuted service of the petitron made 19 June 1992 and such applrcation is to be made returnable on 26 August 1992.
2.	Adjourn further hearing of Petltron/~pplication to 26 August 1992.
3 .	Debtor frle and serve any further affldavlt in opposition by 27 July 1992.
Petrtlonmg Creditor flle and serve any affidavit in reply by 10 Auguet 1992.
5 .	The debtor file and serve any affrdav~t in reply to the cred~tors' affrdavlts by 24 August 1992.
6.	Costs of each party be reserved".

It was not, in my view, appropriate for orders conducive to the hearing of the creditor's petition to have been made simultaneously with an order extending time for the filing of

an application to review an order made for substituted service
of the petition. Nevertheless, an application to review the

order of the Registrar was filed on 28 July 1992. The decision of the Registrar was affirmed by a single Judge of the Court on 31 August 1992. That order was the subject of a grant, by another Judge of the Court, of leave to appeal to the Full Court. The Full Court dismissed the appeal on S March 1993.

On 22 June 1993, the debtor filed a notice of intention to appear which raised one ground of opposition to the creditor's petition being:

"That the judgment debtor was not ordinarily resident in Australia at the date of the alleged commission of the act of bankruptcy referred to para 4 of the petition".

The creditor's petition returned to Court on 14 July 1993 when the judgment creditor made an oral application to amend paragraph 1 of the petition so as to read:

"That the judgment debtor was at the date of the commission of the act of bankruptcy specified in para 4 personally present in Australia".

No material was filed in support of the application to amend and it was resisted by the bankrupt. In making application to amend, Counsel for the creditor sought to rely on s.306 of the Act arguing that the creditor's petition contained a formal defect or irregularity. The application to amend was refused.

The ground of opposition sought to be agitated by the bankrupt

went solely to the question of whether the debtor was	relied on an affidavit of Ann Lyons sworn 4 September 1992 but not filed with the Court until 22 June 1993. That affidavit
ordinarily resident in Australia at the time when he signed the s.188 authority. The petitioning creditor had, by notice in writing, required the production of the deponent Lyons for cross-examination. However, she was not present in Australia on the hearing of the creditor's petition on 14 July 1993. The learned Judge hearing the creditor's petitlon was not persuaded to grant leave pursuant to r. 135(2) of the Rules to enable the bankrupt to rely on the affidavit without the deponent's being available for cross examination. His Honour did, however, adjourn the hearing of the creditor's petition to 23 August 1993 to allow the witness to be present.
Also on 14 July 1993, Counsel for the bankrupt foreshadowed an application to be made by the bankrupt pursuant to s.212A of the Act in respect of the decision of Taylor to admit the proof of debt of Credit Lyonnais at the creditors' meeting held on 10 March 1992. An alternative submission was also foreshadowed that as Taylor had, in June 1993, resigned as the controlling trustee of the affairs of the bankrupt, then, pursuant to 6.192 of the Act, the bankrupt was entitled to sign a new authority under s.188 to enable a new meeting of creditors to be called.
On 19 August 1993, as foreshadowed by his Counsel, the bankrupt made application ("the Part X application") to the meeting held on 10 March 1992: Court seeking the following orders in respect of the Part X "1. That there be set aside the following declsione of the Debtor's then Controlling Trustee, Barry Keith Taylor, made at the meeting of creditors on 10 March, 1992:

(a)	to adm~t a proof of debt of Credrt Lyonais Bank Nederland, a contingent creditor;
(b)	to accept the proxy of Credlt Lyonars Bank Nederland for votlng purposes; and

(C) to admit Credlt Lyonais Bank Nederland, a contingent credltor to vote at the meeting and on the special resolutions.

2. That t h e Court g ive auch d i r e c t i o n s ae t o t h e c a l l i n g and

holding of a fu r the r meetrng of c r e d i t o r s as it deema f i t .

3. That t h e debtor f i l e a f u r t h e r and up t o d a t e Statement of

Affairs and such propoaal t o c r e d i t o r s a s he may be advised

withrn 14 daye.

4.          Al terna t ive ly , t h a t t h e f u r t h e r hearing of t h e p e t i t i o n be adjourned t o a da te t o be frxed t o permit t h e Debtor t o s ign euch fu r the r au thor i ty pursuant t o sec t ion 188 of t h e Bankruptcy A c t 1966 aa he may be advieed with 21 days.

5. such f u r t h e r o r o ther Orders and d i r e c t i o n s a s t o t h e Court may

seem f ~ t " .

The Part X application to review the decision of Taylor appears to have been brought pursuant to ss.30 and 212A of the Act. No time limit for the bringing of such an application is prescribed by the Act or the Rules. In the present case seventeen months elapsed between the making of the impugned decision and the filing of the application to review.

The Part X application filed on 19 August 1993 was glven a return date of 8 September 1993. It recited that the bankrupt proposed to rely on the following affidavits on the hearing of the application:

i.   Affidavits of G B Mills dated 13 July 1993 and 18 August 1993;

ii. Affidavit of A Ginnane dated 25 June 1993;
iii. "Proposed affidavit of D R McVeigh".

It is necessary to refer briefly to the evidence contained in those affidavits.

In his affidavit of 13 July 1993 Mr Mills, a solicitor in the

- l0 - \ !

employ of the f i n of solicitors retained by the bankrupt, deposes that he was informed in June 1993 that Taylor had resigned as a registered trustee under the Act. He then says that on 8 July 1993 he spoke with a Mr Drenen of the Insolvency and Trustee Service Australia ("ITSA") who confirmed that Taylor's file in respect of the bankrupt's Part

X meetings had been forwarded to the Official Trustee. It is

then recounted that, on 12 July 1993, the bankrupt's

solicitors wrote to ITSA requesting that office to:

"... peruse the file [i.e. Taylor's file] and provlde preliminary

views Ln relatlon to the conduct of the creditors' meetmgs held in

late 1991 and early 1992".

In par. 22 of his affidavit Mr Mills deposes:

"I have exarn~ned the minutes of meetmgs held by Hr Taylor on 19 December 1991, 14 February, 1992 and 10 March, 1992, and am unable to conclude from the contents of the minutes whether any errors referred to in the Affrdavlt of Mr Ginnane sworn 25 June, 1993 and filed herein were made. I believe that ~t would be neceseary to examine the Trustee's file and re-do the calculatione in order to verify thin. Now produced and shown to me and marked "GBM3" are copies of the minutes of meetings held respectively on 19 December, 1991, 14 December 1991 and 10 March, 1992".

to and repeated the allegation of fact contained in par. 22 of	In his further affidavit of 18 August 1993 Mr Mills referred
his first affidavit and continued that on 9 August 1993 he was informed by Mr John Lynch of ITSA that the trustee service would not examine the conduct of the Part X meeting nor provide any opinion on it. Mr Mills then deposed that he had been instructed by the bankrupt to obtain an opinion in respect of the conduct of the Part X meeting from Mr Dean

McVeigh ("McVeigh") a registered trustee under the Act. By 18

August 1993 no documents related to the Part X meeting had been received from ITSA by the bankrupt's solicitors.

The bankrupt also proposed to rely, at the hearing of the Part X application, on his own affidavit sworn in Los Angeles on 25 June 1993. It is not necessary to refer to the contents of that affidavit.

The creditor's petition returned to the Court for hearing on

23 August 1993. As I have already noted, the Part X

application was not made returnable on that day. It is now contended for the bankrupt that he had desired to make the Part X application returnable with the creditor's petition on

23 August 1993. It appears that, on the filing of the Part X

application on 19 August, the bankrupt's solicitor was told by a member of the Registry of the Court that the business of the Court would not enable the Part X application to be dealt with on 23 August.

petitioning creditor. Mr Fraser of Counsel appeared for the

On 23 August 1993 Mr Mitchell of Counsel appeared for the

debtor. No application was made by the bankrupt for an adjournment of the hearing of the petition to a date on which the petition and Part X application could be heard together. However, it appears from the transcript of 23 August that the attention of the Judge hearing the petition was drawn to the existence of the Part X application. During the course of an exchange between the learned trial Judge and Counsel, Counsel for the bankrupt said:

"... as your Honour would not hear the appllcatzon so far as the

challenge to the creditors meeting was concerned today, but it has been I think now fixed for 8 September, really the only issue is the formal proofs of the petitionzng creditor on his petrtion and the issues of ordinary residence".

The hearing of the creditor's petltlon proceeded over two	l. .
I

days. The sole ground of opposition was that the bankrupt was not ordinarily resident in Australia at the date of the signing of the s.188 authority, which was the act of bankruptcy relied upon by the creditor. Evidence was adduced by the petitioning credltor and the bankrupt which went to the question of ordinary residence. At the conclusion of the hearing, the learned trial Judge reserved his decision and the following exchange occurred:

"Hls Honour: ... I propose to reserve my judgment zn respect of this matter. I wzll endeavour to gzve an answer as quickly as possible. I am mindful that there are other proceedznga lzsted, and I forget now what the date of that Part X matter is.

Counsel :  That is 8 September, your Honour.

His Honour:	8 September.
Counsel :	Yes.
His Honour:	Well, I will make sure the decision is given before

then, anyhow. Yes. Thank you".

His Honour pronounced judgment on 30 August 1993 and at that time published written reasons. His Honour resolved adversely to the bankrupt the question of the ordinary residence of the bankrupt which had been the only issue in dispute before him. His Honour indicated that he proposed to make a sequestration order against the estate of the bankrupt. That indication from his Honour prompted the following response from Counsel for the bankrupt:

"COUNSEL: If your Honour pleases, there rs the pending application on 8 September concerning the attack on the trustee'e decrslons and determinatrons made rn the course of the credrtor's meeting and I would seek a stay of your Honour's order making a sequestration order against the estate of the debtor pending the hearing and determination of that applicatron. Othewrse, your Honour, once the sequestration order is made and it is passed and entered and has effect, that would effectively deetroy our abality to bring that meeting into quest~on and to challenge the dmc~sions made at that meetmg.

I would have to take your Honour in relatron to some of the material in relation to the meeting which suggest that if one particular contingent cred~tor, Credrt Lyonnais, had not voted, then - that was the contrngent creditor, then is there rs some suggestion in the minutes of the meetrng that the composrtion would have been carrred, and that would be a matter which we would want to agitate on that application. There has been qurte a bit of materral filed, your Honour, which I have not yet taken your Honour to concerning the difficulties we have had with nr HcVeigh, the trustee, in obtainrng the papers and whrch has now gone off to another trustee to consider the papers and to consrder the proxies and to put affrdavit material before the court.

But there is enough in the mmutes, your Honour, to suggest that if thrs cont~ngent credrt had not voted or was drsallowed to vote, as rt should have been, then the composit~on would have been carried. So that is the only issue which is outstandrng; to agitate, your Honour, on 8 September, and I would seek a stay pendrng the agxtation of that issue on 8 September".

prosecuted his Part X application before the determination of	creditor on the ground that the bankrupt should have The application for a stay was opposed by the petitioning
the creditor's petition. Counsel for the bankrupt replied:

"COUNSEL: ... I would say that it was intended to bring the application that is now listed for 8 September, it was intended to bring that applicat~on foward to deal with the petition and the matters referred to in that applicatron when the petrtion was heard and agitate that at the one time, but for reasons in the registry and in your Honour's chambers the matter was set down for the 8th rather than for the hearing of the petition, so othewrse it would have been dealt wrth by now, your Honour".

His Honour was persuaded to grant a stay, and on 30 August

1993 the following orders were made:

l	A sequestration order be made agalnst the estate of the debtor.
2.	The petitioning creditor's costs including all reserved costs be taxed and paid in accordance with the statute.
3.	The Official Trustee in Bankruptcy be the trustee of the estate.
4.	The sequestration order be stayed for 14 days or until further order".

On 7 September 1993 an affidavit, sworn by McVeigh on the previous day, was filed on behalf of the bankrupt. That

affidavit relevantly contains the following:

"5.	I have carefully examaned the Minutes and conclude that the credltor known as Credit Lyonals Nederland Bank ("Credit Lyonais") ought not have been allowed to vote or participate at the various meetlngs of credztors on the basre that there is suff~cient verbal evidence in the M~nutee to cast severe doubt on the eliglbzllty of Credlt Lyonals to vote as it would appear that Credlt Lyonais 1s a contrngent credltor. Moreover, prior to the specral resolution which was put to creditors and lost on 10 March, 1992, the ~esue of whether Credrt Lyonais ahould have been admltted to vote was cast some three months prior to the vote having been taken. T h ~ s would have provrded ample time for the Chairman to either obtain a wrrtten legal opinion on the eligibility of Cred~t Lyonais to vote or to seek darections from the Federal Court in that regard. According to the Minutee, no such effort has been made.
6.	It is my clear view that the admiseron of Credit Lyonais to vote at the meeting of creditors on 10 March, 1992 was critical an determ~ning the outcome of the speclal resolut~on, that was ultimately lost, for the reasons set out below.
7.	It is my further view that the votes that were admitted in favour of American Express International Inc and American Express International Inc (NZ) were znvalid and the Chairman ought not have allowed these votes to be counted for the following reasons:
(a) In respect to American Express International Inc.:

The proxy on behalf of American Express International Inc was dated 17 December, 1991 and made out in favour of Nlcole Howell for the sum of $43,428.84. Now produced and shown to me and marked "DRMl" is a copy of that proxy. The Minutes clearly show that Nicole Howell was not present at any of the meetings of creditors referred to herein and the proxy itself provides no alternate person who would be entitled to act as proxy in the absence of Nicole Howell. It is therefore clear that whoever was in attendance on behalf of American Express International Inc was not able to or entitled to vote and accordangly that vote should not have been counted.

(b) In relatron to American Express Internatronal Inc (NZ):

The proxy rs dated 29 January, 1992 in the sum of $127,895.55 in favour of Anthony John Mulr. Now produced and shown to me and marked "DFIMZ" re a copy of that proxy. I have examined the Minutes and the attendance register relating to the meetrng of creditors that took place on 10 March, 1992 where the special resolution was voted upon and conclude that Anthony John Muir was not present at the meetrng of creditors, yet the vote on behalf of American Express International InC (NZ) was

admitted. Now produced and shown to me and marked "DRH3"

is a copy of the attendance regaster for the meeting of creditors held on 10 March, 1992. It is clear that American Express Internatronal Inc (NZ) ought not have

been admitted to vote at the meetrng of cred~tors on 10

March, 1992.

8.     I have recalculated both the number of proxies and the value of each proxy that ought to, in my view, have been admitted to vote at the meeting on 10 March, 1992. The result of votang rs detailed below:

Recalculations:  Number in favour 20
Value in favour $2,797.266

% ~n favour	78.08
Number against	13
Value agarnst	$785,426
% agarnst	21.92

9.     The above calculations do not rnclude Credlt Lyonals. It is clear that rf Credit Lyonars had not been allowed to vote at the meetzng of credrtors held on 10 March, 1992 the special resolution would have passed".

On 8 September 1993 the Part X application was listed for

and for Diners Club. Appearances were also made on behalf of	hearing. On that occasion Counsel appeared for the bankrupt
the Official Trustee and another creditor, American Express International Inc ( " A M E X " ) . On that day a Registrar in Bankruptcy granted leave to the bankrupt to file and serve an amended Part X application in the following form:

"1.

There be set aside the following decisrons of the Trustee's then Controlling Trustee, Barry Keith Taylor, made at the meeting of creditors on 10 March, 1992:

(a)	to admit a proof of debt of Credit Lyonnaie Bank Nederland, a contingent credrtor;
(b)	to accept the proxy of Credlt Lyonnara Bank Nederland for votrng purposes;
(c)	to admit Credrt Lyonnais Nederland, a contingent creditor, to vote at the meetrng and on the special resolutions;
(d)	to accept the proxy of American Express International InC for $43,428.84 for voting purposes at the meeting;
(e)	to admit American Express International Inc to vote at the meeting and on the epecral resolutions;
(f)	to accept the proxy of Amencan Express International InC New Zealand in the sum of 5127.895.55 for voting purpoees at the meetlng;
(g)	to admit American Express Internatronal Inc New Zealand to vote at the meeting and on the apecral resolutions.

2.

That the Court gzve such drrectione as to the calling and holding of a further meeting of creditors as rt deeme fit.

3.

That the debtor file a further and up to date Statement of

Affairs and such proposal to cred~tore as he may be advised.

4.

Alternat~vely, that the Orders stayrng the Sequestration Order made by the Honourable Mr Justlce Olney on 30 August, 1993 be extended to a date to be fixed to permit the Debtor to sign such further authority pursuant to eect~on 188 of the Bankruptcy Act 1966 as he may be advrsed within 21 days.

5.

Such further or other Orders and directions as the Court may deem frt".

The application was adjourned for directions to 15 September.

On 9 September 1993 the bankrupt filed in the Court a further

application seeking the following orders:

"1.	That the stay on the Sequeetration Order made on 30 August, 1993 be extended pending the hear~ng and determination of the Debtor's Appeal, Notice of which has been filed herein.
2.	Alternat~vely, that the stay on the Sequeetration Order made on 30 August, 1993 be extended pending the hearing and determination of the Debtor's Applicatron to the Court in proceeding no. VX561 of 1991.
3.	That the time for service of this Application be abridged.
4.	Such further or other Orders and directions as to the Court may seem frt".

Aleo, on 9 September, the bankrupt filed a notice of appeal

from the judgment of the Court whlch had been delivered on 30 August. The grounds of appeal set out in that notice of appeal were as follows:

"2. (a) That the Learned Judge ought not to have been satiafred of the matters stated in the Petrtion of the respondent and the requirement of s.43(b)(i) Bankruptcy Act that the debtor was ordinarily resident in Australia on 21 November, 1991;

l

(b) That ~ z s	Honour ought not to have made a Sequestration Order against the estate of the debtor;
(c)	That Hie Honour erred in that he found that the debtor was on 21 November, 1992 ord~narlly resident rn Australia;
(d)	That His Honour erred in that he found or rnferred that there was no evadence of any werght that the debtor was not ordlnarrly resident in Australia;

(0) That His Honour erred ln that Hrs Honour took lnto account subject~ve evidence of the debtor's rntention contained in the Minutes of the Creditors' Meetlng and in the debtor's lncomlng and outgorng passenger cards from the Department of Immigration and Ethnic Affairs and rejectrng subjective evidence of the debtor's lntent contarned in the evidence of Ann Lyons;

(f)	That Hrs Honour erred in law in that he took lnto account sublectrve evrdence of the debtor and failed to take rnto account oblective evldence of all of the acts, facts, matters and clrcumetancea of the debtor as at 21 November, 1991 and approached the matter on that basls;
(g)	That Hrs Honour erred in concluding that evrdence of the debtor's rmigration status in the United States of America was ~nconsistent with him being permanently
resident ln the United States of America;
(h)	That His Honour erred in inferring from evidence of the debtor livlng at Burke Road on 14 February, 1992 that the debtor was ord~narrly resident rn Australia on 21 November, 1991;

(i)   That Hie Honour erred in law in inferrang from the absence of drrect evidence from the debtor that if he had grven direct evrdence it would not have helped the debtor's case and for the purpose of rejecting the evidence of Ann Lyons as to the debtor's ordinary residence;

(j) That His Honour erred in the exercise of his discretion in determining the significance His Honour ought give to the debtor's failure to give direct evidence of hie ordinary residence".

On the following day, 10 September, the application for an

extension of the stay granted on 30 August, or the granting of a fresh stay, came on for hearing before another Judge of the Court. It was accepted by the parties on that application that there was jurisdiction to order a stay under 0.52 r.17 of the Rules of this Court. The learned Judge was persuaded to grant a stay of the sequestration der to enable the debtor 'ft b

to pursue his appeal from the judgmept of the Court in respect

1

of the petition. His Honour did pot find it necessary to consider the alternative basis for a stay which was to enable the Part X application to proceed.1 In those circumstances, the sequestration order made on 30 August 1993 was stayed until the hearing and determination of the appeal from the orders made on 30 August.

On 15 September 1993 orders were made in the Part X application for the filing and service of affidavits in reply. The Registrar also ordered that the title to the amended application be further amended so as to delete Diners Club Ltd as a respondent. The Part X application was further adjourned	to 25 October 1993. A further adjournment was sought by	consent and the application returned for hearing on 3 November
1993 before myself.
On the hearing of the Part X application, Mr Fraser of Counsel again appeared for the bankrupt. MS Zapparoni of Counsel appeared for the third respondent, AMEX, and Mr O'Brien, Solicitor, appeared for the Official Trustee. There was no appearance by any other respondent. Evidence of service of the Part X appllcation on Credit Lyonnals and Australia and New Zealand Banking Group Ltd, another major creditor of the bankrupt, was adduced by the bankrupt.
At the outset of the hearing, AMEX, through its counsel, said that it appeared solely for the purpose of seeking certain costs in respect of the application. It did not oppose the application. Similarly, M r O'Brien for the Official Trustee informed the Court that his client neither opposed nor consented to the orders sought.
Material filed in support of the application was read to the Court. The fact that a sequestration order had been made and then stayed was referred to. The interaction between the appeal against the sequestration order and the Part X application was alluded to by Counsel for the bankrupt who submitted:

"COUNSEL:	Well, no, your Honour, because if a further meeting
that wrll effectively render nugatory the full court appeal and annul	of creditors is called and accepts the composition which is put up
the bankruptcy your Honour. So in the sense we are coming forward with bona frdes now rather than waitrng and seeing what the full court does. We are keen to face our creditors now as it were, your Honour, and have the further meeting held. And then that will render
- the appeal will either be allowed, your Honour, or the bankruptcy
will then be annulled".

Reliance was principally placed upon the affidavit of McVeigh sworn 6 September 1993, the relevant parts of which have been set out above. No submissions were made on the effect that the making of a sequestration order might have on the ability of a bankrupt to deal with his affairs under Part X of the

Act. Counsel for the bankrupt assumed that the staying of the sequestration order meant that the sequestration order had no present effect on the estate of the bankrupt. The Court acceded to the application and the following orders were made:

"1.	The Official Trustee reconvene the meeting of creditors last held 10 March, 1992 and as provided ln section 194 Banlrruptcy Act 1966.
2.	The Debtor's statement of Affairs be annexure "A" referred to in the Affidavit of Anthony Glnnane eworn on 28 September, 1993 ("the debtor's Statement of Affairs").
3.	The debtor's proposed Composltlon set out in paragraph 14 of his Affidavit eworn on 25 June, 1993 be the debtor's statement indicat~ng how the debtor proposes that his affairs be dealt with under Part X of the Bankruptcy Act ("the debtor's Proposal").
4.	A copy of today's Order, together with a copy of the debtor's Statement of Affalrs and the debtor's Proposal, be served on each person and In the manner referred to in s.194(2) Bankruptcy Act 1966 and together with the other documents referred to in 8.194 Bankruptcy Act 1966.
5.	That the coats of American Express Internatronal Inc of and incidental to this Order including its reserved costs of 8 and 15 September 1993 and its costa of t h ~ s day be taxed and paid by the debtor."

On 6 January 1994 ITSA issued a circular to creditors of the bankrupt advising them that a further meeting of creditors was

of the order of the Court made on 3 November 1993, the	to be held on 3 February 1994. That circular enclosed minutes
statement of the affairs of the bankrupt sworn 28 September 1993, a proposal for a composition by the bankrupt dated 25 June 1993, an amendment to that proposal and draft proxies. The circular also contained a statement purportedly in compliance with s.189B of the Act.
A meeting of the bankrupt's creditors was held on 3 February 1994. McVeigh was elected chairman of the meeting and during
the course of it ruled that Cred~t Lyonnais was not entitled to vote. The following special resolution was passed at the
meeting :

"1.	THAT this Composition shall be in full settlement of all debts as at the date of its acceptance by Credrtors, being the 3rd February, 1994.
2.	THAT the trustee of this Composition shall be a Registered Trustee nominated by the creditora.
3.	THAT I covenant to pay to my Trustee the sum of $2.000 (Two thousand dollars) per month 1 for 60 consecutive monthe, commencing on 31 March, 1994 and a further lump sum of $28,000 (Twenty-erght thousand dollars) pn the expiry of a perrod of 36 months from the date hereof in full and final satisfaction of my debts, such sums totallrng an amount of $148.000.
4.	THAT the Trustee shall apply monxes received by hrm pursuant to thls Compositron solely rn payment to all creditors to be apportioned to them calculated on their admitted ordinary clarms and that the companies known as FG Frlm Productions (Aust) Pty Ltd. TLN Film Productlone Pty Ltd. Flrst Fllm of
Finance ~ t y Ltd. IFM Film Assocrates pcy Ltd. Internat~onal
Film Releasing Pty Ltd, and Internatronal Fllm Enrertarnment Pty Ltd, of whit< I was a director or shareholder shall not participate for the purposes of a dlstribut~on from the payments referred to in paragraph 3 hereof.
5 .	THAT I covenant to pay all drsbursements and remuneration of the Trustee of this Compositron separate from any monres payable pursuant to paragraph 3 hereof.
6.	THAT thls Composit~on be made pursuant to Part X of the
Bankruptcy Act 1966".

to s.153B of the Act for an order that the sequestration order	On 18 February 1994 the bankrupt applied to the Court pursuant
made on 30 August 1993 be annulled. On 1 March 1994 both Diners Club Ltd and AMEX issued applications seeking orders from the Court setting aside the composition entered into pursuant to the special resolution of 3 February.
On 7 March 1994 the bankrupt filed a notice of discontinuance
of the appeal brought against the sequestration order made on 30 August 1993
It is against that tortured factual background that I turn to consider the application for an annulment of the sequestration order which seeks the following orders:

"1.	An order pursuant to sectron 33(1) of the Bankruptcy Act ("the Act") that the Court abrrdge any time limits applicable to this application to the extent necessary to enable the appl~cation
to be heard upon its return date.
2.	An order pursuant to Rule 195 of the Bankruptcy Rulea ("the
Rules") relieving the Applrcant from the consequences of non- compliance with Rules 57 and 104 of the Rules.
3.	Alternatively, an order pursuant to Rule 104(2) abridging the trme wrthln whrch thrs appllcatlon re requrred to be served.
4.	An order pursuant to section 1538 of the Act that the eequestratron order made herein against the Debtor on 30 August 1993 ("the order") be annulled.
5.	Alternatrvely, a declaratron that upon presentment to the
Registrar of thrs Honourable Court of the original "Certificate
that resolution passed" referred to in paragraph 10 of the affrdavit of Mr D R McVelgh sworn 18th February, 1994 and filed in support of this applrcation, the Registrar enter in his or her records the fact that the order has been annulled.
6.	Alternatrvely, that pursuant to sectlon 23 of the Federal Court Act the order be struck out, rescrnded vacated and/or forever stayed".

Section 153B provides:

have been made or, in the case of a debtor's petition, that the	"If the Court is satrsfied that a sequestration order ought not to
petitlon ought not to have been presented or ought not to have been accepted by the Registrar, the Court may make an order annulling the bankruptcy".

Applications made pursuant to s.153B of the Act are subject to r.57 of the Rules which provides:

"(1) An application may be made to the court in relation to the exercise of the court's powers under section 153B or 2528 of the Act. (2) An appl~cation referred to Ln subrule (l), being an appllcatlon in accordance with rule 102, shall specify the grounds on which the application is made.

(2A) A person who makes an application referred to in subrule (1)

shall:

(a) not later than 28 daye before the hearing date of the applicatlon, serve a copy of the application:

(i) on the trustee;

(ii)	if the truetee 1s a registered trustee - on the Official Receiver; and
(iii)	~f the first-mentioned pereon is not the bankrupt - on the bankrupt;

(b)

not later than 14 days before the hearing date of the appllcation, serve a copy of the applicatlon on each of the creditors of the bankrupt, or of the estate of the deceased person, as the case may be.

(3) If an application for an order annulling a bankruptcy is served on the trustee, the trustee must file a report, not later than 10 days before the hearing date of the application, about the bankrupt's conduct, and examinable affalrs, in both the period before and the period after the bankeuptcy occurred.

(4) The Court may, upon the hear~ng of an applxation for an order annulling a bankruptcy, have regard to the report filed in accordance with subrule (3)".

By paragraph 2 of his application, the bankrupt seeks relief from the consequences of non-compliance with rr.57 and 104 of the Rules. Rule 104 is related to service of the application and may be put to one side. In respect of r.57 it is necessary to note the orders of the Court made on 25 February

1994 which include: 

"That a report in compliance with r.57(3) of the Bankruptcy RuleB and any affidavit by the trustee be filed and served by 5.00pm on 2 Harch

1994 and that the trme stipulated in r.57(3) be abridged

accordingly".

It will be recalled that the Official Trustee was appointed trustee of the estate of the bankrupt on 30 August 1993. The Official Trustee has not appeared on the present application before the Court. There is no evidence before the Court to indicate that the Official Trustee has been served with the annulment application. No report pursuant to s.57 of the Rules has been filed.

The submission which the bankrupt has advanced on the annulment application can shortly be stated. It is said that, as at 19 August 1993, the bankrupt had on foot an application to set aside the decision of Taylor to admit a proof of debt at the Part X meeting held on 10 March 1992. Counsel for the bankrupt submitted that, on the filing of the Part X application, the bankrupt intended to prosecute the application on the hearing of the creditor's petition but was precluded from doing so by the business of the Court. According to the submission, had all the facts, including the pendency of the Part X application, been before the Court on the hearing of the petition then the sequestration order would not have been made. It is further said that the position of the bankrupt was protected by the stay of the sequestration order made on 30 August 1993 and that the present proceeding

sequestration order.	seeks to rectify the record by the removal of the
It is indisputable that all of the matters required by the Act to be proved for the making of a sequestration order were established at the hearing of the creditor's petition: see s.52 of the Act. It will be recalled that the bankrupt discontinued his appeal against the sequestration order. Apart from raising the question of ordinary residence, the
bankrupt did not oppose the creditor's petition on any other ground. Nor did the bankrupt seek to satisfy the Court that "for other sufficient cause a sequestration order ought not to be made": s.52(2).
Sub-S. 52(1) provides that, on proof of the matters required under the Act, the Court may, in the exercise of a discretion, make a aequestration order against the estate of a debtor. However, a petitioning creditor has, on the proof of the matters referred to above, a prima facie legal right to an order for sequestration: see Rozenbes v Kronhill (1959) 95 CLR 407 at 414; Re Burlock; Burlock v Deputy Commissioner of Taxation (unreported decision of Full Court of Federal Court of Australia delivered 10 May 1994).
In that context the issue to be resolved on the annulment application is whether the sequestration order ought not, in the exercise of a discretion, to have been made. Before I consider that question, a preliminary issue arises as to
which it is asserted that the sequestration order ought not to whether s.153B is available to a bankrupt where the basis upon have been made is a discretionary one.
In my view, s.153B provides a facility whereby a bankrupt can challenge the making of a sequestration order in a very wide range of circumstances. Those circumstances are not confined to facts supporting an attack on jurisdiction or on the proof of the matters required under s.52(1) of the Act and which serve as a precondition to the making of a sequestration order. Section 153B is, in its terms, wide enough to encompass matters of discretion and should be so construed: see Re Prank Ex Parte Piliszky (1987) 77 ALR 511 at 517. However, the requirement that the sequestration order ought not to have been made will not be satisfied by showing that some alternative course could have been taken, like, for example, allowing a meeting or further meeting of creditors, which to the bankrupt, or even to his creditors seems preferable to the making of a sequestration order.
In my view, s.153B is available to a bankrupt who can establish that, in the light of facts which existed at the time when the sequestration order was made, the Court ought not to have exercised its discretion in favour of sequestration. While the facts relied upon must have been in existence at the time of the sequestration order, they need not have been before the Court at the time when the order was made and may be established by proof of facts occurring after
that time: see Cameron v Cole (1943) 68 CLR 571 at 589 per
Rich J; Re Williams (1968) 13 FLR 10 at 23 per Gibbs J; Re Scott (1975) 6 ALR 558 at 359; Re Ditford (1988) 83 ALR 265 at 267; Pollock v Deputy Commissioner of Taxation (unreported Federal Court of Australia per Carr J 4 March 1994).
Support for the proposition that events occurring after a sequestration order may be taken into account on an annullment application can be derived from the dissenting judgment of
Williams J in Cameron v Cole (supra) where his Honour observed, at 608:

"By e . l 2 4 ( l ) ( a ) t h e Court i s given t h e f u l l e s t power t o remedy

any i n j u s t i c e t h a t t h e debtor may have su f fe red through a

seques t ra t ion order havrng been improperly obtained. It can

annul t h e order whenever, rn t h e oprnion of t h e Court, it ought

not t o have been made. It can decide, therefore , a t a properly cons t i tu ted hearing whether t h e order ahould have been made on t h e m e r i t s i n t h e l i g h t not only of t h e evidence which was

ava i l ab le a t t h e d a t e t h e seques t ra t ion order waa made, but

a l s o of any evidence t h a t has subsequently become ava i l ab le

before t h e d a t e of t h e applrcat ion t o annul, eo t h a t I agree with t h e statement of t h e learned author of Wllliamrr on Bankruptcy, 15th ed. (1937). a t p.143, t h a t t h e r e is no power t o annul o the r than t h e express power conferred by t h e aection:

see per Cave J i n I n re Gyll; Ex p a r t e Board of Trade (1988) 58

L J QB a t p.10; 5 Morr., a t p.274 and In re Herrter (1889) 22 QBD

a t p.633; per Vaughan Wllllarna J rn ~n re P a i n t e r (1895) 1 QB

a t p.87	and i n In re Burnott;	Ex p a r t e Offrc ia l Receiver (1894)
63 L J QB 423, a t p.424;	1 Manson 89, a t p.90;	and per Manning J

i n I n re	G r ~ f f r t h s ; Ex p a r t e Huntley	(1892)	3 BC	(NSW)	6 a t
p.9".

That dictum was applied by Sweeney J in Re Bond (1978) 22 ALR 287. In my view, the passage from the judgment of Williams J just quoted is consistent wlth the approach which I favour in that it permits consideration of evidence which subsequently becomes available but only for the purpose of proving events existing before the sequestration order was made

must satisfy the Court that, had all the true facts in	For the bankrupt to succeed on the annulment application, he
relation to the Part X meeting as they existed at 30 August
1993 been before the Court, the Judge ought not, in the
exercise of his discretion, have made the sequestration order. I should add that, in my view, it is not necessary in order for a bankrupt to invoke s.153B that he or she identify an error on the part of the Judge or Registrar who made the sequestration order. Clearly, the identification of an error will be a factor relevant to the Court's consideration and, where that error goes to a condition precedent to the making of the sequestration order, it may be determinative of whether the sequestration order ought not to have been made. However, as s.153B contemplates a consideration of the true facts, it is possible that the sequestration order ought not to have been made even though the material before the Court on the creditor's petition supported the making of the order and an appealable error may not have been demonstrated: see Re Raymond; Ex parte Raymond (1992) 36 FCR 424.
On the uncontradicted evidence of McVeigh there were errors in the conduct of the meeting of 10 March 1992 pursuant to Part X the making of which had an effect on the outcome of the meeting. If one were to accept that evidence then, on an application to the Court, brought before the making of the sequestration order, the bankrupt would have been entitled to a declaration as to whether Credit Lyonnaise was a contingent
vote: see Forshaw v Thompson (1992) 106 ALR 633 at 643. In creditor for the purposes of determining its entitlement to
his application under Part X, the bankrupt did not seek a declaration that the special resolution put to the meeting of 10 March had been passed; cf Re McLean (1992) 108 ALR 360. The position of the bankrupt, at its highest, on the hearing of the creditor's petition was that he had an expectation of calling a fresh meeting of his creditors pursuant to the provisions of Part X. In my view, it would not have been possible for the Court to have formed an opinion as to the prospects of the bankrupt's succeeding at that meeting and, consequently, entering into a composition.
In the light of these facts two courses were open to the Judge hearing the creditor's petition up to the making of the sequestration order. First, he could have adjourned the creditor's petition. Alternatively, he could have determined the matters raised by the creditor's petition and proceeded, if appropriate, to make the sequestration order. The Judge in the present case took the latter course. Can it be said that he should not have done so?
In Field v Commercial Banking CO of Sydney Ltd (1978) 22 ALR
403, a Full Court of this Court considered the relevant principles to be applied by a court faced with an application for an adjournment of a creditor's petition in order to allow for the holding of a creditors' meeting under Part X of the Act. In his judgment, with which Franki J agreed, Sweeney J held that a debtor has no right to obtain an adjournment in those circumstances and the practice of the Court does not
require that an adjournment be granted as a matter of course.
Sweeney J referred to s.33(l)(a) of the Act which gives to the Court an unfettered discretion to adjourn a proceeding before it on such terms as the Court thinks fit. His Honour contrasted the general power there conferred with that described in s.206 which provides:

"(l) Where -

(a)	a meeting of creditors has, in accordance with this Part, passed a special resolution requiring a debtor to execute a deed of assignment or a deed of arrangement under this Part; and
(b)	a creditor's petition was presented against the debtor before the passing of the resolution or is presented against h m after the passing of the resolution but before the deed has been duly executed,

the Court may, upon application by the debtor, a creditor or a person nominated as trustee of the proposed deed, if it appears to the Court that it would be for the advantage of the creditors that the debtor's affairs be administered under the deed, adjourn the hearing of the petition for such period as it considers necessary to allow the deed to be executed and, if the deed is duly executed within that period, shall dismiss the petition.

(2) Where a creditor's petition is presented against a debtor who has been required by special resolution of a meeting of creditors to execute a deed of assignment or a deed of arrangement under this Part, the Registrar shall, as soon as practicable, give notice in writing of that fact to the person who has been nominated as trustee of the deed."

The limitation prescribed in s.206 provides an indication that the Court is required to have regard to a wlde range of matters when considering an application in the circumstances of the present case. Without seeking to lay down an exhaustive catalogue of relevant matters, Sweeney J, at 411, referred to the following:

"(1) The course of dealings between the parties, from the time when

the obligation to the petitioning credrtor is sard to have arisen to	the date of the hearing.
(2) The attitude to the appl~cation of the petitionrng creditor, as prima facie, on proof of the matters mentroned in e.52(1) of the
Bankruptcy Act 1966, the court will proceed to make an order for
sequestration (see Rozenbes v Kronhrll (1956) 95 CLR 407).
(3) The general financial position of the debtor.
(4) The relation between the debt of the petitioning creditor and
the total liabilities of the debtor, as it 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.
(6) Any evidence bearing upon the question whether it would be for
the advantage of the creditors that the 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 h i s general c~rcumstances, calculated t o persuade them t o vote for the

adminietration of h i s a f f a i r s under Pt X.

I t w i l l a t once be obvious that many of these circumstances w i l l be

within the knowledge of the debtor,	rather than of the p e t ~ t i o n i n g
creditor,	and it w i l l be for the f o m r t o g i v e evidence of them.

Such evidence should, where practicable, be i n a f f idav i t form."

In the present case no application for an adjournment of the creditor's petition was made by the bankrupt. Even if it had been, I am far from persuaded that the Court ought to have acceded to the application for an adjournment and ought not to have proceeded to make a sequestration order. The matters required to be established were, in fact, proved, thereby giving rise to a prima facie right in the petitioning creditor to a sequestration order. The bankrupt, it has been conceded, has, at all relevant times, been hopelessly insolvent.

Further, as at 30 August, it is doubtful that the bankrupt was ready to proceed with the Part X application. The material on the affidavits filed to that stage was insufficient for a successful prosecution of the application. The bankrupt's

determine whether errors had been made at the Part X meeting	solicitor deposed that, as late as 18 August, he was unable to
on 10 March 1992. It is disingenuous for the bankrupt now to say, through his Counsel, that he was ready and willing to prosecute his Part X application on 23 August, being the date on which the creditor's petition had been listed for hearing, but was precluded by the Court from doing so. I have no hesitation in concluding, on the material before me, that the bankrupt was not in a position to prosecute his Part X
application on that day. It is also highly relevant, I consider, that the bankrupt made a dellberate decision not to apply for an adjournment of the creditor's petition. On the annulment application Counsel for the bankrupt informed the Court :

" W e w e r e content with that i ssue [the question of ordinary residence] t o be dealt w ~ t h f r r s t because I suspect w e had a reasonable prospect of eucceeding, and we did not".

A court faced with an application for an adjournment to allow the prosecution of an application by a bankrupt must be astute to avoid or minimize the possible prejudice to a petitioning creditor as a result of the adjournment. In the present case, as no application for adjournment had been made, the attitude of the petitioning creditor must be a matter of speculation. However, it is clear that the bankruptcy proceedings had been intensely fought and considerable delay had already been occasioned between the filing of the creditor's petition and its coming on for hearing in August 1993. Responsibility for that delay cannot be visited solely on the bankrupt but the	Court has an interest in ensuring that bankruptcy proceedings	do not continue indefinitely but are resolved with all the
expedition which a just determination of the issues will allow. In the present case, the bankrupt has been dilatory in the prosecution of his Part X application, and, I consider, his conduct has not been conducive to the early resolution of the proceedings in this Court.
Taking into account all the matters which are before me, I do not regard it as possible to say that a Judge, in the circumstances of this case, was bound to adjourn the hearing of the creditor's petition. Had an application for adjournment been made, (and it was not), it would have been entirely appropriate for the Court to have refused it and to have proceeded to determine the creditor's petition.
It is necessary, however, to say something about what happened when the Judge pronounced his reasons and indicated that a sequestration order would be made. His Honour was invited to stay the order to enable the Part X application to be heard. It would appear from the transcript that hls Honour was persuaded to make a sequestration order but did not wish to exclude the debtor from pursuing his Part X application and, accordingly, acceded to the request for a stay. In my vlew, his Honour was in error in taking the course that he did.
The learned Judge imposed a stay on the sequestration order for a period of 14 days. In doing so, his Honour appears to
which provides:  have relied upon the power conferred by sub-s.52(3) of the Act "The Court may, if it thinks f ~ t , upon such terms and conditions an it thinks proper, etay all proceedings under a sequestration order for a period not exceeding 21 days".
The effect of a stay of that kind was considered by a Full
Court of this Court in Evans v Heather Thiedeke Group P t y Ltd
(unreported Federal Court of Australia delivered 28 September
1990) . At p.32 of the Court's reasons it was said:

"Following the making of the sequestratron order on 4 May, 1990, Spender J made a further order that "all proceedings under the sequestration order are to be stayed pursuant to 8.52(3) until 4.00pn Friday, 18 May 1990". On that day, following the filing by the appellant of a notice of appeal from the making of a sequestration order, a Deputy District Registrar of the Court made an order that the time set out in the order made by Spender J be extended until 4.00pm on 25 May 1990. No question has been raised before us as to hie power to do so. On 23 May 1990, Pincus J ordered that "the proceedings under the sequestration order made by Spender J on 4 May 1990 be stayed until 4.15pm on Friday, 27 July 1990". On 25 July 1990, at the conclusion of the hearing of argument upon the appeal, this Court, by consent, ordered that "the proceedings under the sequestration order made on 4 May 1990 be stayed until the determination of this appeal or further order". That Court declined to accede to a request by the appellant that the proceedings under the sequestration order be stayed for a further period beyond the date on which the appeal is determrned, indicating that that request would be further considered by the Court before ludgment was glven upon the appeal.

It is clear from what was sald to us by the appellant that he is under the impression that, by reason of the orders to which we have referred, his statue has not been affected by the makrng of the sequestration order on 4 May 1990. He 1s further under the impression that, if his appeal to this Court is unsuccessful, his status will be affected as from the date of the dismissal of his appeal, a consequence from whlch he seeks to be relieved for a sufficient perrod to enable hlm to consrder whether an appl~cat~on
should be made to the High Court for special leave to appeal from

this Court's decrs~on.

It is apparent that the order made by Spender J on 4 May 1990 was an order under s.52(3) of the Bankruptcy Act. Following the terms of that prov~sion, ~t stayed all proceedings under the sequestration order. Such an order rs to be contrasted w ~ t h an order under 8.37(1) of the Act suspending the operation of a sequestration order. The contrasting effect of the two kinds of order was considered in Re Wardle; Ex parte Wxdin (1987) 70 ALR 633. It is not the sequestration order itself which operates to change the debtor's	status or vest his property rn the trustee: the making of the order	is but the factum upon whrch the statute (particularly ss.43(2) and
58(1)) operates to brrng about the consequences upon the debtor's status and property. What was sald by a Full Court of this Court in Allanson v M~dland Credzt Ltd (1977) 16 ALR 43 is also in point. It follows that, in the present case, the appellant has had the status of a bankrupt since the making of the sequestration order on 4 May 1990. We should add that, the sequestration order havlng been signed and sealed as provided by the Bankruptcy Rules on 17 May 1990 (see 8.37(2)), no order may now be made- under 8.37(1) suspending .the operation of that order'.

In the light of those observations, it is clear that the staying of the sequestration order did not postpone the acquisition by MX Ginnane of the status of a bankrupt under

the Act. By sub-s.l89(l)(e) the estate of a debtor who has signed an authority under s.188 ceases, on the making of a sequestration order, to be subject to control under Division 2 of Part X of the Act. It is clear that the making of a sequestration order prevented the bankrupt from continuing to have his affairs dealt with under Part X. That is so notwithstanding that a stay was granted under sub-s.52(3).

Had his Honour's attention been drawn to the decision of the Full Court in Evans v The Heather Thiedeke Group then it is possible that, in order to protect the position of the bankrupt, he may have adjourned the creditor's petition without pronouncing judgment. It does appear from the transcripts of the hearing on 24 August and 30 August that his Honour was concerned to allow the Part X application to be heard. Counsel for the bankrupt has not conceded that the grant of a stay was inadequate to protect the position of the bankrupt and has submitted that it had been understood by the

bankrupt that he was entitled to continue with his Part X	application, did so, and was granted the orders which he had
sought.
As I have already observed, the identification of an error is not determinative of an application under s.153B. Even taking into account the intention which Counsel for the bankrupt seeks to impute to the learned trial Judge, I am not satisfied, on all the relevant evidence, that the sequestration order ought not to have been made. It was entirely appropriate, given the history of the matter, to refuse an adjournment and, on proof of the matters required by the statute, proceed to make a sequestration order on the creditor's petition.
If I be wrong in that conclusion and it be accepted that the sequestration order ought not to have been made, s.153B still reposes in the Court a discretion as to whether an annulment order should be made. Should it have been necessary, I would have exercised that discretion by refusing the application for annulment. I would have done so for the reasons given for concluding that a refusal of an application for adjournment was open. I also regard as relevant the discontinuance by the bankrupt of his appeal against the making of the sequestration order. The issues raised by the Part X application should have been agitated before the Judge hearing the creditor's petition and any order made in consequence of it could have been the subject of an appeal in the ordinary way. Moreover,
the refusal of an annulment does not preclude the bankrupt from submitting his proposed composition or some other
proposal to a meeting of his creditors pursuant to s.73 of the Act.
In relation to the annulment application itself, it is relevant to note that the bankrupt has not complied with the requirements of r.57 of the Rules and that the Court has not had the benefit of the submissions of the Official Trustee or
the expression of his opinion as required by r.57.
None of the creditors before me has suggested that there is any matter involving the affairs of the bankrupt which requires examination under s.81 of the Act. However, it is still necessary to take into account that, once an act of bankruptcy has been committed and the processes of the Court have been put in motion "the case is thereafter affected with the interests of other creditors and the public": see Re Quinn Ex Parte Deputy Commissioner of Taxation (1970) 17 FLR 136 at 138; Boral Johns Perry Industries Pty Ltd v Piccardi (unreported decision of the Full Court of the Federal Court of Australia delivered 23 June 1989). In my view, the interests of the public would not be served by an annulment of the bankruptcy.
For these reasons, the application for an annulment of the sequestration order made on 30 August 1993 must be dismissed.
I shall hear the parties on the question of costs.

I certify that this and the preceding

thirty six (36) pages are a true copy of the reasons for judgment of his Honour Mr Justice Ryan

Associate: Q-J-&-

Date: L* ," tqq+ .

Counsel for Applicant Ginnane:	Mr H Fraser
Solicitor for Applicant:	Kliger Partners
Counsel for Creditor American Express:	MS C Zapparoni
Solicitors for Creditor American Express:	Salinger & Associates
Counsel for Creditor Diners'Club:	Mr R Mitchell
Solicitors for Creditor Diners Club:	Eggleston & Associates
Counsel for Creditor AN2 Bank:	Mr S Gardiner
Solicitors for Creditor ANZ Bank:	Dunhill Madden Butler
Counsel for Trustee (McVeigh):	Mr M Galvin
Solicitors for Trustee:	J M Smith &
Emmerton