Re Hayes, Charles Raymond Ex parte The Bankrupt

[1983] FCA 259

Re: CHARLES RAYMOND HAYES
Ex Parte: THE BANKRUPT
No. W226 of 1977
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Beaumont J.

CATCHWORDS

Bankruptcy - Sequestration order - Second sequestration order - Application for annulment of second order - Whether sequestration order ought not to have been made.

Bankruptcy Act, 1966, s.149(3)(a), 154.

HEARING

SYDNEY

#DATE 7:10:1983

ORDER

1. The sequestration order made against Charles Raymond Hayes made on 28 April, 1977 be annulled pursuant to s.154 of the Bankruptcy Act, 1966, as amended.

2. No order as to costs.

JUDGE1

On 28 April, 1977 a sequestration order was made in Sydney by this Court against the estate of the applicant Charles Raymond Hayes. It appears that, when the sequestration order was made, there was no evidence before the Court that the applicant had already become bankrupt in Queensland but on 16 December, 1976, a sequestration order had already been made against the applicant in the Supreme Court of Queensland exercising federal jurisdiction in bankruptcy. The petitioning creditor in the New South Wales bankruptcy, L.G. Chandler Timber and Hardware Merchants Pty. Limited, was also a creditor in the estate the subject of the sequestration order made in Queensland on 16 December, 1976. This is an application by the applicant bankrupt for an order that the sequestration order made on 28 April, 1977 be annulled pursuant to s.154 of the Bankruptcy Act, 1966 ("the Act"). The application for annulment of the New South Wales bankruptcy is not opposed by L.G. Chandler Timber and Hardware Merchants Pty. Ltd.

The applicant submits that the sequestration order in New South Wales should never have been made since the applicant had already become bankrupt in Queensland when the sequestration order was made in New South Wales on 28 April, 1977. He says that he is prejudiced by the fact that in neither the Queensland nor the New South Wales jurisdiction has a discharge from bankruptcy been granted: as a result of the dual bankruptcy, the applicant cannot be automatically discharged from the New South Wales bankruptcy pursuant to s.149 of the Act by reason of the proviso to s.149(3)(a):

". . . if (a) at the time when he would have been so discharged but for this sub-section, he is still undischarged from an earlier bankruptcy . . . "

By s.154(1) where the Court is satisfied:

"(a) that a sequestrion order ought not to have been made. . . the Court may make an order annulling the bankruptcy."

In Re Deriu (1970) 16 F.L.R. 420, Gibbs, J. said (at p.421), in relation to s. 154(1),:

"Under this section there are two matters which the Court has to consider, first, whether a sequestration order ought not to have been made, and then, if the Court is satisfied of that, whether in the exercise of the Court's discretion the order should be annulled. (Re Williams (2))"

In considering whether the New South Wales sequestration order ought not to have been made in the present case, reference should be made to the decision of Lucas, J. in Re Coles; Ex parte Richards (1966) 9 F.L.R. 190. In that case, a debtor's estate was sequestrated in New South Wales by the Federal Court of Bankruptcy. A second sequestration order was made by the Supreme Court of Queensland upon a debt provable in the first bankruptcy. The Official Receiver appointed by the second order moved to have that order rescinded. The petitioning creditor sought an annulment of the order upon terms protecting the costs of his petition. It was held that the second sequestration order was wrongly made and should be rescinded. Lucas, J. said (at p.191):

"I am satisfied that G.B.Holdings Pty. Ltd. had no legal right to the sequestration order made upon its petition. On 7th March, 1966, pursuant to the sequestration order made in Sydney, operating as it did throughout Australia, the bankrupty's property, wherever in Australia it was situated, was vested in Mr. Stapleton, the official receiver named in the order, and the company's right to enforce payment of its debt ceased to exist. Instead it acquired the right to share in the distribution of the bankrupt's estate in the course of administration of that estate in the Federal Court of Bankruptcy: see s.60(1) of the Act and Ex parte Trustee of Property of Cork; Blackburn (Respondent). The situation which arises here is somewhat similar to that dealt with in Re White, except that in that case the second sequestration order appears to have been made in the same court as was the first. In these circumstances the Queensland sequestration order must in my opinion be either rescinded or annulled and to me the course of rescission seems preferable."

In my opinion, the present case is on all fours with White and with Cole. It is true that special circumstances such as existed in my decision Re Clyne; Ex parte Deputy Commissioner of Taxation - unreported - 7 October, 1983 - may justify departue from the approach taken in White and in Cole. In Clyne, a question of relation back arose but there is no special feature in this case which calls for any departure from the general rule.

It is also true that in both White and Cole, rescission was thought to be the appropriate relief. However, having regard to the reasoning of Gibbs, J. in Deriu, I am of the opinion that annulment is the proper order to be made (see also Re Bond; Ex parte the Bankrupt (1978) 22 A.L.R. 287).

For these reasons, on 4 October, 1983, I annulled the bankruptcy.