Re McDonald, D.R. Ex Parte Wan, W.W.Y.L

[1992] FCA 661

IN THE FEDERAL COU

-	RT OF AUSTRALIA	)
GENERAL DIVISION	)

BANKRUPTCY DISTRICT OF 1

E OF OUEENSLAND	1
RE :	DONALD ROBERT McDONALD

Debtor

WENDY WAI YING LEUNG WAN

Creditor

MINUTES OF ORDER

JUDGE MAKING ORDER:	Drummond J
DATE OF ORDEe:	28 August, 1992
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:

1. The debtor's application for an adjournment of the creditor's petition until a date after 2 September,

   1992 is dismissed.

second line of paragraph one;

2.        A sequestration order be made against the estate of Donald Robert McDonald.

3.        The petitioning creditor's costs of and incidental to the petition in this matter, including any reserved costs, be taxed and paid in accordance with the Bankruvtcv Act 1966 ICthl.

THE COURT DIRECTS THAT:

1. The petitioning creditor has leave to amend her petition by:

(a) adding the word "and" at the end of the

(b)	by substituting the word "Sydney" for the word "Brisbane" in the fourth line of paragraph two;
(C)	deleting the words "of the Southern District" from the title.

2.        The petitioning creditor's affidavit of debt sworn on 25 August, 1992 and filed today shall be sufficient compliance with Rule 21(l)(b) of the Bankruptcy Rules.

3.        A draft of this order be delivered to the Registrar within seven days of today, in accordance with Rule 124(2) of the Bankruptcy Rules.

NOTE :  Settlement and entry of orders is dealt with in Rule
124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)	No. QP 1732 of 1992
GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF	)
THE STATE OF OUEENSLAND	1

RE:  DONALD ROBERT McDONALD

Debtor

EX PARTE: WENDY WAI YING LEUNG W a

Creditor

CORAM: Drummond J

PLACE: Brisbane

m: 28 August, 1992

EX TEMPORE REASONS FOR JUDGMENT

This is an application by the debtor for an adjournment of the hearing of a creditor's petition on the ground that the process which is likely, on the evidence, to lead to his creditors resolving in favour of the debtor

entering into a Part X arrangement is well advanced. The	submission for the adjournment is based upon the proposition
that the creditors should be given an opportunity to express their final views in circumstances where there is every indication that they are likely to accept the debtor's proposal. This will only result in the payment of a trivial dividend.
The application for an adjournment is opposed by the petitioning creditor, who petitions in reliance upon a judgment obtained in this court in January of this year against which the debtor unsuccessfully appealed, the decision of the Full Court being delivered on 11 May, 1992.
There is, on the material before me, unanswered evidence that the debtor has, at a time when he was required to be frank, deliberately concealed the extent of his liabilities which he now says exist. His liability to the trustee of his family trust for borrowings from the trust over the past four years, now secured by a second mortgage over the debtor's house, reduces very substantially the interest in that property which the debtor claimed to have available to him to satisfy the creditor's judgment in an affidavit he swore and filed on 11 March last in opposition to proceedings then brought by the petitioning creditor for the appointment of receivers to the debtor's legal practice in aid of execution of her judgment.
The other aspect of the matter is that in the material which the debtor filed, on oath, in the Federal Court in March last in aid of his opposition to the petitioning creditor's application for a receiver, he listed what, on the face of his affidavits, can only be taken to be all his assets and all his liabilities. But he did not mention certain shares he then owned or a liability to calls on them which now looms very large and which has produced creditors, including one creditor associated with the trustee of his family trust who has taken the second mortgage over the house property, who have a significant degree of voting power, which, on the evidence, will be exercised in favour of the Part X arrangement going through.
The circumstances and the timing at which the second mortgage was taken by the trustee of the debtor's family trust over his house property raise a very clear possibility that the granting of that security by the debtor was a preference.

I have been referred to the decision of ReDolman_:

E X ~arte: Elder Smith Goldsbroush Mort Ltd. (1967) 10 F.L.R.

384, and I am satisfied, on the basis of that authority, that I would have power under S. 206(1) of the Bankru~tcv Act to proceed to make a sequestration order even if a Part X a&angement had been resolved in favour of the debtor by the creditors, so long as I considered it to be in the interests of the creditors that an administration in bankruptcy proceed, rather than an administration under Part X of the Act.

I should also mention that, although the material disclosing what I have described as questionable conduct on the part of the debtor in relation to disclosure of his affairs, was delivered to his solicitor very recently, but in sufficient time to enable the material to be evaluated, no application was made for an adjournment to give the debtor an opportunity to file material which might go to answer the

quite serious picture that is presented by the material before me, until argument by counsel for the judgment creditor was well advanced. The initial approach on behalf of the debtor was simply to seek an adjournment on the ground that the Part

X arrangement should be allowed to proceed through to

finality.

I therefore reject the application for an

adjournment.

I certify that this and the preceding
three pages is a true copy of the
reasons for judgment herein of the

Honourable Mr. Justice Drummond.

Associate: PHY	-
28 August, 1992