Re Kwiatek

Re: MICHAEL KWIATEK AND KARIN KWIATEK
Ex Parte: BIG J. LTD
And: PAUL ANTHONY PATTISON (As Trustee of the Estates of the Bankrupts)
No. 630 of 1988
FED No. 574
Bankruptcy
89 ALR 631

COURT

IN THE FEDERAL COURT OF AUSTRALIA

EXERCISING FEDERAL JURISDICTION IN BANKRUPTCY
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
Northrop J.(1)

CATCHWORDS

Bankruptcy - proceedings in bankruptcy - practice and procedure - distinction between exercise of power by a Registrar in Bankruptcy under s.14 of the Bankruptcy Act and a Registrar of the Court under s.31A of the Act - different offices occupied by the same person - different review provisions - nature of review by the Court of the exercise of a power by a Registrar of the Court - review of application for extension of time to make a request under sub-section 44(5) - application for leave to amend petition after sequestration order made.

Bankruptcy Act 1966 s.14, s.31A, s.33, s.44

House v The King (1936) 55 CLR 499

Re: Greenhill Ex Parte Pook (1988) 83 ALR 295

The Commonwealth v Hospital Contribution Fund of Australia (1982) 150 CLR 49

Re: Finn Ex Parte Amoco Australia Ltd. 1982 41 ALR 487

HEARING

MELBOURNE

#DATE 8:9:1989

Counsel for Applicant: Mr Ellis

Solicitors for Applicant: Messrs Lewis Walker

Counsel for Respondent: Mr Rochow

Solicitors for Applicant: Messrs Lander & Rogers

ORDER

On the application dated 16 March 1989 to review the order of "Deputy Registrar: Susan Agnew" made on 24th day of February 1989, it is ordered that:-

1. The said order be set aside.

2. In lieu thereof, it is ordered that:-

(a) the time be extended pursuant to sub-section 44(5) of the Bankruptcy Act to deliver a request to Big J. Ltd. to surrender any security it holds on the property of the bankrupts to 4.00pm on 28 September 1989; and

(b) the applicant to pay the respondents costs, to be taxed, of this application and his costs of the application dated 23 December 1988.

On the application dated 5 April 1989 for leave to amend paragraph 3 of the petition, it is ordered that:-

1. The application be refused.

2. The applicant to pay the respondents costs to be taxed.

Note: This order is to be settled and filed in accordance with rule 124 of the Bankruptcy Rules.

JUDGE1

These two separate but related applications were heard together. In the first application, Big J Ltd. ("the petitioning creditor") has made an application to the Court under sub-section 31A(6) of the Bankruptcy Act 1966 ("the Act") to review the order of a Deputy Registrar of the Court made under sub-section 44(5) of the Act extending the time within which Paul Anthony Pattison in his capacity as trustee of the estates of the bankrupts ("the Trustee") be permitted to request the petitioning creditor to surrender to him its security over property of the bankrupts. In the second application, the petitioning creditor has made an application to the Court under paragraph 33(1)(b) of the Act for an order allowing an amendment to the petition upon which the sequestration order against the estates of the bankrupts was made.

A confusing amount of material was placed before the Court but the essential facts upon which the applications are to be determined are clear although one question of law does arise namely the nature of the "review" to be conducted by the Court under sub-section 31A(6) of the Act.
By a creditors petition dated 12 April 1988 but stamped as being presented on 11 April 1988, the petitioning creditor sought a sequestration order against the estates of the bankrupts. The act of bankruptcy relied upon was the failure of the bankrupts to comply with the requirements of bankruptcy notices. The petition alleged that the bankrupts were indebted to the petitioning creditor "in the sum of $32,463.54 for debt for monies owed under a Guarantee for which judgment was obtained". Paragraph 3 of the petition was as follows:-

"Big J Limited does not, nor does any person on its behalf, hold any security over the property of either or both of the debtors or any part of it for the payment of the amount specified in the last preceding paragraph".

By an affidavit sworn on 6 April 1988, Philip Charles Henderson, the credit manager of the petitioning creditor, swore that the statements contained in paragraph 3 of the petition were "within my own knowledge true". On 23 May 1988 a sequestration order was made against the estates of the bankrupts. That sequestration order has not been annulled.
In fact, the statements set out in paragraph 3 of the petition were wrong and in truth Mr Henderson knew it was wrong. By a deed of guarantee dated 23 September 1986 the bankrupts, in consideration of the petitioning creditor continuing to supply goods on credit to their company Kwiatek Constructions Pty. Ltd., guaranteed the due payment to the petitioning creditor of all monies then or thereafter owing by the company to the petitioning creditor for goods supplied. It was a term of the guarantee that the bankrupts "charge all our respective estates and interests in all land presently held by us or acquired by us during the currency of this guarantee to Big J to better secure our performance of this guarantee and we hereby consent to the lodging of a caveat by Big J on the title or titles to any of the land so held by us as evidence of this charge." The judgment debt referred to in the petition was based upon this guarantee.
The bankrupts were registered as the proprietors of several pieces of land including an interest in land known as Lot 35 Cooper Street Stawell and being the land described in certificate of title Vol. 9474, Fol. 548. On 21 April 1988, the solicitors for the petitioning creditor lodged a caveat with respect to this land. The caveat claimed an equitable estate or interest as "Chargee" in the land and was based upon the guarantee. This caveat was lodged by the same solicitors who were acting for the petitioning creditor in the bankruptcy proceedings and the caveat was lodged within weeks of the petition being presented and the affidavit being sworn by Mr Henderson. At the time the sequestration order was made and the Trustee became trustee of the estates of the bankrupts, the Trustee did not have knowledge of any of these facts.
In conformity with the obligations conferred upon him, the Trustee commenced to ascertain and get in the property of the bankrupts. This task was made difficult by the fact that Mr Kwiatek was in the Northern Territory and Mrs Kwiatek claimed no knowledge of the facts leading to the bankruptcy. It seems that the statement of affairs of the bankrupts was not given until 11th August 1988. In the meantime the Trustee had arranged for titles office searches and on 9 August 1988 had first learnt of the existence of other caveats with respect to some of the lands owned by the bankrupts. On 29 August the Trustee obtained a copy of the petition and discovered that the petitioning creditor had petitioned as an unsecured creditor when it in fact had security as evidenced by those caveats. On 13 October 1988 the Trustee first learnt of the caveat on the land being Lot 35 Cooper Street. By letter dated 8 November 1988 the Trustee wrote to the solicitors for the petitioning creditors requesting removal of that caveat. By letter dated 17 November 1988 the solicitors refused the request. By application dated 23 December 1988 the Trustee applied to the Court under s.33 of the Act for an order that the prescribed time within which a request under sub-section 44(5) of the Act could be made, be extended.
For present purposes, the relevant provisions of s.44(5) of the Act are:-

"Where a secured creditor has presented ... a creditor's petition as if he were an unsecured creditor, he shall, upon request in writing by the trustee within the prescribed time after the making of a sequestration order, surrender his security to the trustee for the benefit of the creditors generally."

Under sub-section 44(6) a secured creditor who does not comply with such a request is guilty of contempt of court.
Sub-section 44(5) is mandatory in form. Provided the request is made within the prescribed time, the secured creditor must surrender his security to the trustee. This sub-section must be read in the context of s.44. Under sub-section (2), but subject to sub-section (3), a secured creditor shall, for the purposes of calculating the amount of his claim, be deemed a creditor only to the extent by which the amount of the debt owing to him exceeds the value of his security. Under sub-section (4), where a petitioning creditor is a secured creditor, he must set out in the petition particulars of his security but under sub-section (3) he may present a petition as an unsecured creditor if he includes in the petition a statement that he is willing to surrender his security for the benefit of creditors generally if a sequestration order is made.
In the present case, it seems clear that the petitioning creditor has failed to comply with the requirements of sub-section 44(4) and to that extent did not comply with the requirements of sub-sections (2) or (3). Sub-section (5) is directed to preventing a secured creditor in the capacity of a petitioning creditor obtaining the benefits of a security as well as the benefit of being an unsecured creditor for the full amount of the debt owing.
For the purposes of sub-section 44(5) of the Act, Rule 29 provides that the prescribed time is three months. Thus, in the present case, if the Trustee had made a request to the petitioning creditor under sub-section 44(5) on or before 23 August 1988 the petitioning creditor, on pain of being in contempt of court, would have been required to surrender its security to the Trustee. The request was not made until 8 November 1988. Even then, there may be a doubt whether the request was in proper form.
Paragraph 33(1)(c) of the Act confers a power on the Court to extend the time for the doing of any act or thing. The parts of that paragraph relevant to the application for an extension of time are set out:-
"33(1) The Court may-

(a) ...

(c) extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act, ... for doing an act or thing ...".

It is noted that by definition, in the Act "the Court" includes the Federal Court of Australia as well as any other court exercising jurisdiction in bankruptcy and the words "this Act" includes the Bankruptcy Rules. Rule 29 does not expressly provide to the contrary so the Court has power to extend the time prescribed under s.44(5) of the Act.
Paragraph 33(2)(c) confers an identical power upon the Registrar but in that paragraph "the Registrar" has its defined meaning of a Registrar or a Deputy Registrar in Bankruptcy, being a person occupying the office created by the Act.
By application dated 23 December 1988, the Trustee made application to the Court for an extension of time to give a request to the petitioning creditor. The application was sought "pursuant to s.33". On 24 February 1989, the application came on for hearing before Susan Agnew who is a Deputy Registrar in Bankruptcy and in addition is a Deputy District Registrar of the Federal Court. The application was opposed. The Trustee and the petitioning creditor were each represented by counsel. The application was granted and an order was taken out as follows:-

"ORDER Deputy Registrar: Susan Agnew Date of Order: 24th day of February 1989 Where made: Melbourne Court

The Deputy Registrar made the following orders:- 1) That the time be extended pursuant to Section 44(5) of the Bankruptcy Act to deliver a request to Big J Limited to surrender any security it holds over the property of the bankrupts to 5.00 p.m. on the 1st day of March 1989 2) That Big J Limited pay the Trustee's costs of and incidential to the application dated 23 December 1988."

It should be noted that the order states that the decision was made by "Deputy Registrar: Susan Agnew". This suggests that the power being exercised was that conferred by s.33(2)(c) of the Act upon a Deputy Registrar in Bankruptcy. The Order was drawn in the same form but the words "Deputy Registrar made the following" were struck out and replaced by the word "Court". The Order is stamped in three places with the stamp of the Federal Court, Victoria District Registry, but is stated to be signed by a Deputy Registrar. The signature is not clear but if it is that of Susan Agnew, it should be noted that she is not a Deputy Registrar of the Court, but is a Deputy District Registrar of the Court.
By application dated 16 March 1989, the petitioning creditor made application to the Court to review "the Order of Deputy Registrar Susan Agnew made on the 24th day of February 1989". This is the first application referred to at the beginning of these reasons.
Before proceeding further with the facts, reference should be made to the confusion arising with respect to the powers being exercised by Susan Agnew when she made the order on 24 February 1989. Susan Agnew holds appointments to two offices. She holds the office of Deputy District Registrar of the Federal Court of Australia. In addition she holds the office of Deputy Registrar in Bankruptcy. A reference to the affidavit material before the Court as to what occurred at the hearing on 24 February suggests that she was exercising the power conferred upon her by paragraph 33(2)(c) of the Act in her capacity as a Deputy Registrar in Bankruptcy. A reference to the grounds set out in the first application suggests the same. If that was the case, any review by the Court would be under s.14 of the Act. That section creates the offices of Registrars in Bankruptcy and Deputy Registrars in Bankruptcy and specifies their powers and functions which includes the powers conferred by sub-section 33(2). Sub-section 14(5) provides that an order made by a Registrar in Bankruptcy or a Deputy Registrar in Bankruptcy "is subject to review on summary application to the Court".
A reference to the wording of the first application as well as the order made on 24 February 1989 suggests that Susan Agnew, in hearing and determining the application to extend time, was exercising powers conferred by s.31A of the Act. That section was first inserted into the Act in 1986, see Act No. 168 of 1986, s.3. In that section "the Court" means the Federal Court of Australia when exercising jurisdiction under the Act and "Registrar" means the Registrar, a Deputy Registrar, a District Registrar, or a Deputy District Registrar of the Court; see sub-section 31A(10). For present purposes, the relevant parts of sub-section 31A(1) are as follows:-
"31A(1) ... the following powers of the Court under

this Act may, if a Judge of the Court, in writing, directs, be exercised by a Registrar of the Court in relation to a proceeding:

(a) ...

(e) a power referred to in paragraph 33(1)(c); ..."

A Judge of the Court has directed, in writing, that the powers referred to in sub-section (1) may be exercised by a Registrar of the Court. In the Act the word "proceeding" is defined to mean a proceeding under the Act.
On all the material before the Court, including statements made from the bar table, I am satisfied that in hearing and determining the application to extend time, Susan Agnew was exercising the power conferred by s.31A of the Act. Attention is drawn to the fact that where a proceeding in bankruptcy comes before a person who holds the office of Registrar in Bankruptcy or Deputy Registrar in Bankruptcy as well as the office of a Registrar of the Court as defined in s.31A of the Act, and the power being exercised could be, as in the present case, a power arising under s.14 or s.31A of the Act, that person should make clear the source of the power being exercised in that proceeding. The distinction is important since different consequences may result depending upon the source of the power being exercised. In the present case, the review provisions are different.
Sub-section 31A(4) of the Act provides in substance that in the Act provisions relating to the exercise of a power by the Court shall, if the power comes within those enumerated in sub-section (1), apply as if references to the Court were references to a Registrar of the Court. Thus, for the purposes of paragraph 33(1)(c), the word "Court" is to be read as including a reference to a Registrar of the Court. Nevertheless in paragraph 33(2)(c) the reference to "The Registrar" is a reference to a Registrar in Bankruptcy or a Deputy Registrar in Bankruptcy. Sub-section 31A(5) is designed to ensure the independence of a Registrar of the Court when exercising powers under s.31A. Sub-section (9) enables a Registrar of the Court at any time before or during the hearing of a proceeding involving the exercise of a power referred to in sub-section (1) to make arrangements for the proceeding to be heard by the Court. This can be done on the motion of the Registrar and must be done on the application of a party to the proceeding.
Sub-sections 31A(6) and (7) are of importance and are set out:-

"(6) A party to a proceeding in which a Registrar has exercised any of the powers of the Court under sub-section (1) may, within the time prescribed by the rules, or within any further time allowed in accordance with the rules, apply to the Court to review that exercise of power.

(7) The Court may, on application under sub-section (6) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised."

It is noted that the Court may review the exercise of the power by the Registrar on its own motion or on the application of a party to the proceeding. The nature of the review will be considered later.
The first application was listed to come before the Court on 5 April 1989. It was an application made by the petitioning creditor. On that day the petitioning creditor filed in Court the second application. The second application is dated 5 April 1989 and was stated to be returnable before the Court on the same day. The application was pursuant to paragraph 33(1)(b) of the Act which provides that the Court may at any time allow the amendment of any written process, proceeding or notice under the Act. A similar power is conferred upon a Registrar in Bankruptcy by paragraph 33(2)(b), and is conferred upon a Registrar of the Court by paragraph 31A(1)(d). By the second application, the petitioning creditor is seeking leave to amend its petition by deleting paragraph 3 thereof and substituting the following:-

"Big J Limited holds security as Chargee over the Debtors' property at Lot 35 Cooper Street Stawell being the land more particularly described in Certificate of Title Volume 9474 Folio 548 pursuant to a charge in writing dated 23rd September 1986 between Big J Limited as Chargee and Michael Roman Kwiatek and Karin Kwiatek and Chargors. The security is valued at $12,000.00, leaving an unsecured balance owing to Big J Limited of $23,000.00"

There may be a defect in this formulation, but that matter will be referred to later in these reasons.

The effect of this amendment, if granted, would bring the petitioning creditor within sub-section 44(3) of the Act. The other requirements of that section are complied with and as a result there would be no basis for the application of sub-section 44(5). The false affidavit of Mr Henderson verifying paragraph 3 of the petition in its unamended form would remain unaltered.
The substance of the facts relied upon to support the second application is that the solicitor handling the bankruptcy proceeding did not know of the security arising from the guarantee and the caveat although another solicitor in the same firm had in fact lodged the caveat on behalf of the petitioning creditor. In an affidavit sworn by him on 31 March 1989, Mr Henderson says that at the time the petition was presented, the petitioning creditor held security from the bankrupts in the form of the guarantee. He then said:-

"Although I was aware of the existence of the said Guarantee at the time that I swore the Affidavit verifying the Petition, I did not connect this in my mind with the statement in paragraph 2 of the Petition to the effect that Big J Ltd. held no security. I swore the Affidavit becuase it had been prepared by the Petitioner's Solicitors and I trusted that it was in order. Had I appreciated the true significance of the paragraph I would not have sworn the Affidavit. Further, had I appreciated that by presenting the Petition herein, I might endanger the Petitioner's rights under the Guarantee, I would never have given instructions to present the said Petition."

At the very least, the material discloses a very poor standard of professional work by the solicitors and disingenuous behaviour by Mr Henderson. Having regard to the very explicit and strict provisions of s.44 of the Act, it is difficult to see how the Court could be justified in granting the second application. It is accepted that the Court has power to amend a petition after a sequestration order has been made but before determining the second application, further consideration will be given to the first application.
Under sub-section 31A(6) of the Act, the Court is "to review" the exercise of the power by the Registrar of the Court, as defined, in granting the extension of time under sub-section 44(5). Under s.31A(7), the Court may make such order or orders as it thinks fit with respect to that matter. A question arises as to whether the review is by way of rehearing by the Court on the material before the Registrar, a rehearing by the Court on the evidence given before the Court at the review or whether the review should be treated as an appeal from the exercise of a discretion with all the limitations therein arising as illustrated by House v The King (1936) 55 CLR 499.
In exercising the power conferred by sub-sections 31A(6) and (7) the Court is exercising original jurisdiction. It is not exercising appellate jurisdiction. In this respect, it is unlikely that the principles enunciated in House v The King should have any application. A reference to s.44 of the Administrative Appeals Tribunal Act 1976 shows that the Court, in the exercise of its original jurisdiction, hears an appeal, on a question of law, from a decision of the Administrative Appeals Tribunal. In these circumstances, the Court does not exercise the discretion conferred upon the Tribunal. The jurisdiction of the Court is limited to questions of law.
Under s.31A, a Registrar of the Court is exercising powers conferred by the Act initially on the Court itself. The Registrar is an officer of the Court. A party to a proceeding before the Registrar exercising a power referred to in s.31A(1), may make application that the proceeding be referred to the Court whereupon the Registrar must make arrangements for it to be heard by the Court. Where a review of the exercise of the power by a Registrar is undertaken by the Court it is important that there should be as little restriction as possible on the method by which the review is conducted. In reality, the Court is exercising a power conferred initially upon it. Unless authority constrains me to take a different view, it is my opinion that the review should be a rehearing based upon the evidence before the Registrar supplemented by any evidence the parties desire to produce.
The meaning to be given to the word "review" in the context of statutory provisions similar to s.31A of the Act, has been discussed in many authorities. In each case, the context in which the word is used is of importance. Thus under the Administrative Appeals Tribunal Act, the power given to the Tribunal to review decisions has been construed to mean that the Tribunal sits in the seat of the person who made the decision and exercises all the discretions conferred on that person; see s.43. Under O.62 r.44 of the Federal Court Rules, the Court has the power to "review the decision of the taxing officer" but that rule makes it clear that the Court, in exercising its powers, exercises all the powers and discretions of the taxing officer, who is an officer of the Court.
I have not been able to find any authority preventing me from adopting the construction referred to above. In the course of argument, I was referred to Re Greenhill Ex parte Pook (1988) 83 ALR 295. In that case, Gummow J. was hearing a review brought under sub-section 14(5) of the Act from an order of a Registrar in Bankruptcy. Gummow J. held that the Court was exercising the discretion conferred upon the Registrar in Bankruptcy and was able to look at additional material but limited to matters before the date of the hearing by the Registrar. In the course of his reasons, his Honour referred to The Commonwealth v Hospital Contribution Fund of Australia (1982) 150 CLR 49 per Mason J. at pp 63-4. That is a helpful passage since it emphasises the necessity to distinguish the position of a person exercising power as a Registrar in Bankruptcy from a person exercising powers as an officer of a Court.
Having concluded that the review under s.31A of the Act is a rehearing based upon the evidence before the Registrar, some general observations are made. In the present case, lengthy affidavits were filed on behalf of the petitioning creditor and the Trustee containing evidence of what had occurred at the hearing before the Registrar. In the present case, that evidence was not relevant to the review. In most cases evidence of that kind would not be relevant. The review is based upon the affidavits relied upon at the hearing of the application before the Registrar. If oral evidence was given at that hearing, the parties could agree that the transcript of that evidence be used on review, otherwise oral evidence would need to be led at the review itself. The hearing of the review by the Court is in reality a hearing de novo and the Court relies upon the facts properly brought before it by the parties to the review.
The Court now turns to consider the first application on the basis that the Court should exercise its discretion on whether the extension of time should be granted.
The evidence shows that the Trustee discovered land registered in the name of the bankrupts in which no caveat had been lodged on behalf of the petitioning creditor. These events occurred between August 1988 and October 1988. In October the Trustee lodged caveats with respect to his entitlement to an interest in these lands.
On 9 August 1988 the Trustee became aware that the petitioning creditor had lodged a caveat with respect to other land registered in the name of the bankrupts. It was not until 13 October 1988 that the Trustee became aware of the caveat lodged with respect to Lot 35 Cooper Street. On 18 October 1988 he requested the solicitors for the petitioning creditor to provide a copy of the security documents held by the petitioning creditor which he received on the same day. On 20 October, as a result of searches made, the Trustee first saw copies of the petition and supporting affidavit, although there is a strange sentence in the affidavit of the Trustee to the effect that previously (on 29 August) he had seen a copy of the petition by the solicitors for the petitioning creditor. Thereafter, by letter dated 8 November, the Trustee wrote to the solicitors for the petitioning creditor requesting they take steps to withdraw the caveat in respect of the land 35 Cooper Street. In form, the letter does not conform with the wording of sub-section 44(5) of the Act. The solicitors replied to the effect that they could not comply with the request since the period prescribed by s.44(5) had elapsed. On 10 December the Trustee instructed his solicitors to make the application under s.33 of the Act.
There is no evidence before the Court to show that the petitioning creditor has suffered any loss as a result of the failure of the Trustee to give the notice within 3 months after the date of the sequestration order. There is no evidence of any attempt by the petitioning creditor to enforce its security. The security extends to all the property of the bankrupts including the other lands registered in the names of the bankrupts. There is no evidence of the values of those other lands or what would be available if the securities were enforced.
The main arguments presented on behalf of the petitioning creditor were that the Trustee should have become aware of the security within the three months and so have given notice within the prescribed time, that the Trustee was negligent in failing to do that, and that the petitioning creditor had acquired a vested right in the security after the expiration of the prescribed period and that it would be unjust to deprive it of this vested right.
In my opinion, those arguments should not be accepted. The provisions of s.44 are clear. They were not complied with. It ill behoves the petitioning creditor to complain about the conduct of the Trustee in circumstances where its conduct has been such as to cause the trouble. There is no evidence before the Court to show the value of the security in its application to all the property of the bankrupts. The sequestration order remains in existence. It is not appropriate for the petitioning creditor to claim it acquired rights when no notice had been given within the prescribed time. It has always had those rights, it has failed to comply with the requirements of s.44, and as a result is liable for the results, including the possibility of the prescribed period being extended.
In considering this matter, it might be argued that principles developed by the Court in the exercise of a discretion to extend the time to commence a proceeding may be relevant. For example, applications for extensions of time to apply for orders for review under s.11 of Administrative Decisions (Judicial Review) Act 1977. It is unwise to impose limitations on an unfettered discretion such as that referred to by s.33(1)(c) of the Act. For present purposes it is sufficient to say that although there may have been some excessive delay on the part of the Trustee, that delay has been explained. It is not a case of negligence which has no application to the exercise of discretion in the present application. That delay has not caused the petitioning creditor to act to its detriment. Subject to what is said later, this is a case where leave should be granted.
Before determining the first application, further consideration should be made to the second application. Counsel for the petitioning creditor relied strongly on the views expressed in Re Finn, ex parte Amoco Australia Ltd. (1982) 41 ALR 487 where on facts similar to those of the present case, the Court granted leave to amend the petition. In that case, the bankrupts were seeking an order of annulment of the sequestration order and Amoco was seeking leave to amend its petition. Annulment was refused. A material difference of fact in that case was that within a matter of days of the sequestration order being made, Amoco surrendered its security over land owned by one of the bankrupts. The amendment sought, and granted, was to substitute paragraph 3 of the petition so as to include a reference to the security and statement that Amoco was willing to surrender its security. In other words, it was sought to bring the petition within sub-section 44(3) of the Act, not sub-section (2). The land of the bankrupt was held by the Trustee for the benefit of the creditors generally, including Amoco, without the restriction of the security. In the present case, the petitioning creditor desires to have the benefit of the security as well as receiving its share of the estate of the bankrupts. For reasons given earlier, in my opinion the petitioning creditor should not be permitted to do that.
Further, the proposed amendment itself is not in conformity with s.44 of the Act. The security goes further than lot 35 Cooper Street. The amendment makes no reference to the other property of the bankrupts which is subject to the security. Even as amended, the paragraph would be wrong.
The material before the Court does not show whether the Trustee has in fact made a request in conformity with the provisions of sub-section 44(5) of the Act. The Trustee should be granted an extension of time to make a request under sub-section 44(5). In the result and having regard to the confusion arising from the form of the order made by Susan Agnew, the following orders should be made.
On the application dated 16 March 1989 to review the order of "Deputy Registrar Susan Agnew" made on 24th day of February 1989, it is ordered that:-

1. The said order be set aside.

2. In lieu thereof, it is ordered that:-

(a) the time be extended pursuant to sub-section 44(5) of the Bankruptcy Act to deliver a request to Big J Ltd to surrender any security it holds on the property of the bankrupts to 4.00 P.M. on 28 September 1989.

(b) The applicant to pay the respondents costs, to be taxed, of this application and his costs of the application dated 23 December 1988.

On the application dated 5 April 1989 for leave to amend paragraph 3 of the petition, it is ordered that:-

1. The application be refused.

2. The applicant to pay the respondents costs to be taxed.

[1989] FCA 574

08 SEPTEMBER 1989