No. QB 319/89
| The factual situation surrounding the circumstances in which the sequestration order came to be made is complex. | In |
summary, Mr Kasuba, the applicant, had, in December 1984, guaranteed the account of a company, Kasuba Investments Proprietary Limited, with which his son Michael Kasuba was associated. The company failed, and the Australian New Zealand Banking Group Limited ('ANZ'), pressed Josip Kasuba for payment.
As part of the guarantee provided by Josip Kasuba he had put up a security, a bill of encumbrance, which he held over property owned by a M r Hamlin, known as the Charlie's Gulley Road property. The bank required that the mortgage or bill of encumbrance held by Mr Kasuba over the Charlie's Gulley Road property be assigned to it, and pursuant to those requirements, NI Kasuba deposited the certificate of title and deed of grant, and a bill of encumbrance with the AN2 Bank on 2 November 1984. He had also executed a transfer of interest which may have enabled the AN2 Bank directly to exercise the powers conferred in respect of the Charlie's Gulley Road property.
In any event, at the time when the AN2 Bank presented a bankruptcy petition against Mr Kasuba on 6 June 1988 it had both the deed of grant, certificate of title, bill of encumbrance, and the transfer of interest in respect of the Charlie's Gulley Road property. That security was to secure the debt on which the petition was presented, which was the debt arising out of the guarantee given by Mr Kasuba in respect of the company Kasuba Investments Proprietary Limited.
| The affidavit of Mr Bemrose, sworn on behalf of the petitioning creditor on 13 April 1989 supporting the creditor's petition, makes no mention of any security in respect of the debt on which the petition is founded. |
After the presentation of the petition there was, if I may say so, a very curious series of transactions involving the Charlie's Gulley Road property. It is unnecessaryto detail them for present purposes but they are set out in the outline of facts and the chronology furnished by senior counsel for Mr Kasuba at the hearing of his application for annulment.
The consequence of those arrangements, however, was that
the bill of encumbrance was retransferred to Mr Kasuba, and on
26 September 1988 he signed a release. The ANZ Bank took a first
mortgage over the Charlie's Gully Road property but the debt owing by Mr Josip Kasuba to the bank by virtue of the guarantee was not discharged. It seems to me that the bank's position was significantly enhanced as a result of the events that occurred and about which there has been more than a little confusion.
The significance of it for present purposes is that by the time the sequestration order was made on 14 April 1989, in my opinion, the A N Z Bank did not have security "on the property of the debtor." The question is whether, in the events that I have described, it is right to say that the sequestration order ought not to have been made.
| It seems to me on a consideration of the facts thus far, I am of the opinion that the sequestration order ought not to have been made. The reason I am of that opinion flows as a result of the requirements of S. 44 of the Act, which relevantly requires : |
" (1) A creditor's petition shall not be presented
against a debtor unless:
| (a) | there is owing by the debtor to the petitioning creditor a debt that amounts to |
| |
| ( 2 ) S u b j e c t | t o s u b s e c t i o n | ( 3 ) a | secured | c r e d i t o r |
| s h a l l , | f o r | the purposes | o f paragraph | l ( a ) , be |
deemed t o be a c r e d i t o r o n l y t o the extent, i f any , by which the amount o f the d e b t owing t o
| h im exceeds | the | v a l u e o f h is s e c u r i t y . |
| ( 3 ) A | secured | c r e d i t o r may p re sen t | o r j o i n | i n |
| p r e s e n t i n g | a | c r e d i t o r ' s | p e t i t i o n | a s | i f he | were |
| an | unsecured | c r e d i t o r | i f he | i n c l u d e d | i n the |
| p e t i t i o n | a | s t a t e m e n t | t h a t | he | i s | w i l l i n g | t o |
| su r render | his | s e c u r i t y | f o r | the | b e n e f i t | o f |
| c r e d i t o r s | g e n e r a l l y | i n | the | e v e n t | o f | a |
| s e q u e s t r a t i o n | o r d e r | b e i n g | made | a g a i n s t | the |
| deb to r . |
| ( 4 ) | Where | a | p e t i t i o n i n g | c r e d i t o r | i s a | secured |
| c r e d i t o r , | he | s h a l l | set | o u t | i n | a | p e t i t i o n |
| p a r t i c u l a r s | o f h is s e c u r i t y . | " |
The evidence establishes that at the time of the presentation of the petition the value of the security held by the ANZ Bank was greater than the amount owed by Mr Kasuba to the
A N 2 Bank and in respect of which the security was held by the
bank. Two conclusions flow from that circumstance. First, it seems to me that the A N 2 Bank was a secured creditor at the date of the presentation of the petition and were in breach of the requirements of S. 44(4) in that nowhere in the petition did the bank set out particulars of the security held by it. That position was never at any stage rectified nor, at the time of the hearing of the petition for a sequestration order, was any reference made to the fact that security had on an earlier occasion been held in respect of the property of the debtor.
Of more immediate concern is the fact that the value of the security exceeding the amount of the debt, the ANZ was not then in a position to satisfy the fundamental requirement of S. 44(l) (a), namely, that there was owing by Mr Kasuba to the ANZ Bank a debt that amounts to $1500. It follows, in my opinion, that there was no right to present a petition, and it follows inexorably that the sequestration order, founded on a petition which should not have been presented, should not have been made.
For these reasons the court has a discretion conferred by S. 153B. On the entirety of the material here it is clear that I should exercise that discretion in favour of the applicant. The order that I make is that the sequestration order
| annulled. I make no order as to costs of the application. | against the estate of Josip Kasuba, made on 14 April 1989, be | I | c e r t i f y t h a t | t h i s and | t h e preced ing |
| f o u r | ( 4 ) pages | a r e a | t r u e c o p y o f t h e |
| r e a s o n s | f o r | judgment | h e r e i n | o f | t h e |
| Honourable | M.z- | J u s t i c e Spender. |