Re Gleeson, William John Ex Parte Queensland Druggists Ltd

[1984] FCA 480

Re: WILLIAM JOHN GLEESON
Ex Parte: QUEENSLAND DRUGGISTS LIMITED
No. QLD PET 379 of 1984
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN
DISTRICT OF THE STATE OF QUEENSLAND
Spender J.

CATCHWORDS

Bankruptcy - application for adjournment of hearing of creditor's petition - effect on petition of execution of an authority to a registered trustee pursuant to Part X of the Bankruptcy Act 1966 (Com) - application refused.

Bankruptcy Act 1966 Part X

HEARING

BRISBANE

#DATE 26:11:1984

ORDER

The debtor's application for an adjournment be refused.

JUDGE1

I deal, first, with the question of the application for an adjournment.

1. On 12 November 1984, an application for a sequestration order was made by Queensland Druggists Limited against the estate of the debtor, William John Gleeson. On that day, on the application of Mr Gleeson, through his counsel Mr Morrison, I adjourned the application and the hearing of the petition until this morning, and I ordered that Mr Gleeson pay the petitioning creditor's costs of that day, which I fixed at $400, by 4 p.m. on 19 November 1984.

2. The purpose for which I granted the adjournment on that occasion was to enable Mr Gleeson to see whether a meeting or meetings in Sydney would prove fruitful in resolving his financial position, to enable him to have that opportunity and thereby avoid making a sequestration order against him if an alternative resolution could be found.

3. This morning, Mr Morrison informed me that Mr Gleeson had on Friday 23 November in Sydney signed an authority to a registered trustee, a John William O'Brien, to call a meeting of creditors and take over control of his property. A photocopy document, subsequently confirmed by a vocadex document from the Federal Court of Australia Registry, New South Wales District Registry, confirms that Mr O'Brien consented and signed that authority, also last Friday. I was told that no notice to the solicitors for the petitioning creditor had been given of those plans. Mr Morrison has requested on behalf of the debtor that the application for a sequestration order be further adjourned, and my attention was drawn to the comments of Riley J. in Re Venetoulis; ex parte Calsil Ltd (1976) 13 ALR 625. His Honour there said at p 626:-
   
   

"On 1 June 1976 Calsil Ltd filed a creditor's petition for a sequestration order against 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 signed an authority under s.188 of the Bankruptcy Act, that a registered trustee had consented in writing to exercise the powers conferred by the authority, and that a meeting of creditors was to be held soon. I thereupon adjourned the further hearing to 14 September, on which day it was, by consent, further adjourned to 29 September."

1. In reliance on those observations, it was submitted for the debtor that, in the ordinary course, this matter ought to be adjourned so that the views of the creditors as a whole could be ascertained.

2. In Field v. Commercial Banking Co. of Sydney Ltd (1978) 22 ALR 403, the Full Court of the Federal Court was concerned with the question of whether an application for a sequestration order ought to be adjourned by virtue of the fact that an authority pursuant to Part X of the Bankruptcy Act 1966 had been signed.

3. The Full Court, by a majority consisting of C.A. Sweeney and Franki JJ., in dismissing the appeal from the trial judge's decision not to grant an adjournment so as to enable a meeting of creditors to be held pursuant to the authority under Part X, held (as conveniently summarised in the headnote) that:-
   
   

"The court has not adopted a practice, when a petition comes on for hearing after the execution of an authority and before any meeting of creditors has been held, of invariably or generally adjourning 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

(Com), adjourn the hearing of a petition only if it appears that it would be for the advantage of the creditors that the debtor's affairs be administered under the deed."

1. I indicate that in respect of the application for an adjournment, there was no affidavit material filed in an attempt to persuade the court that it would be for the advantage of the creditors if the debtor's affairs were administered under a deed sanctioned by a meeting of creditors called under Part X of the Bankruptcy Act.

2. The Full Court also held that:-
   
   

"The execution of an authority pursuant to Pt X of the Bankruptcy Act 1966 (Com) is only one of the circumstances, amongst many, to be considered with respect to an application for an adjournment of a creditor's petition."

In the circumstances of the history of the litigation in that case, the court concluded that that history, the admittedly belated execution of the authority and the silence of the appellant's affidavit in support of his application for an adjournment all held strongly against the granting of the application, and that to adopt any view to the contrary would be taken as conferring a right upon a debtor to obtain an adjournment simply by executing an authority on the eve of the hearing of the petition.

1. In the judgment of C.A. Sweeney J. reference was made to Rozenbes v. Kronhill (1956) 95 CLR 407 at 414. His Honour said at p 414:-
   
   

"In Rozenbes v. Kronhill (1956) 95 CLR 407 at 414, Dixon CJ, Webb and Fullager JJ said: 'In Cain v. Whyte (1933) 48 CLR 639, this court expressed agreement with a judgment of the Supreme Court of Queensland (Henchman J) in which his Honour said: "'... prima facie, on proof of the matters mentioned in s.56(2), the court will proceed to make an order for sequestration and ... it is for the debtor to show some cause overriding the interest of the public in the stopping of unremunerative trading, and the rights of individual creditors who are unable to get their debts paid to them as they become due. Something has to be put before the court to outweigh those considerations before it can be said that sufficient cause is shown against the making of a sequestration order".'"

Franki J., in a short concurring judgment, said at p.414:-

"So far as concerns the proper approach to adjournment applications those reasons appear to me (referring to C.A. Sweeney J's. reasons) to be in accord with the principles expressed by the High Court in EG and H Nominees Pty Ltd v. General Mutual Insurance Co Ltd (in liq) (1976) 50 ALJR 460, and with the general principles referred to in The Supreme Court Practice 1976 (The White Book) at pp.548-9 and Williams Supreme Court Practice (1973) 2nd ed, pp.1562-4."

1. Applying those principles and being guided by those observations, this is a case where no material, sufficiently weighty, has been placed before this court to indicate that it would be to the advantage of creditors generally that the debtor's affairs be administered by a deed pursuant to the authority of a meeting called under the Part X authority. In those circumstances I will not grant the adjournment sought, and will now hear Miss Wadley in respect of the substantive application for sequestration.