Re Nicholls, K.B. v Ex parte Widin, W.J

[1985] FCA 447

NOT CONSIDERED SUITABLE FOR CIRCULATION

447

IN THE FEDERAL COURT OF AUSTRALIA	)
)
GENERAL DIVISION BANKRUPTCY DISTRICT	)
)
OF THE STATE OF NEW SOUTH WALES	1 No. W.102 of 1984
)
AND THE AUSTRALIAN CAPITAL TERRITORY	)

RE :

KEVIN BRUCE NICHOLLS

EX PARTE:

WILLIAM JOHN WIDIN

Judse makins order:	Burchett J.
Where made:	Sydney
Date of orders:	2 September 1985

MINUTE OF ORDERS OF THE COURT

THE COURT ORDERS THAT:

1. The applicatlon be dismissed.

2. The trustee's costs be paid out of the bankrupt's estate

NOTE:

Settlement and entry of orders 1 s dealt with in Order 36

of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
1
GENERAL DIVISION BANKRUPTCY DISTRICT	)
)
OF THE STATE OF NEW SOUTH WALES	) No. W.102 of 1984
)
AND THE. AUSTRALIAN'CAPITAL TERRITORY	)

RE :

KEVIN BRUCE NICHOLLS

EX PARTE:

WIDIN WILLIAM JOHN

REASONS FOR JUDGMENT

BURCHm J.

This is an application under s.l54(l)(a) of the

Bankruptcy Act, 1966 brought upon the basis that the

sequestration order, as it is alleged, ought not to have been made. That ground for an annulment is the subject of authority

including, in particular, Re Griffiths and Others Ex parte Huntle

and Others, a decision of Manning J. reported In 3 Bankruptcy and

Company Cases (NSW) page 6. It is there said at page 9:

"The books contain a large number of cases in

which a supersedeas has been ordered to

issue, and it seems to me that the words used

here 'ought not to have been made,' are large

enough to include all the principles which

seem to have guided the Lord Chancellor and

Judge in dealing with the cases before them

prior to the Act of 1883, for I take it that

the words 'ought not to have been made' do

2.

not mean not (sic. - this "not" should be

omitted - see headnote and Australian

Bankruptcy Law and Practice, para. 887) only

upon the case as disclosed at the time, but as it would have been disclosed had all the true facts, as shewn in the appllcation for the discharge, been before the Judge on the making of the order.

A more modern authority is the decision in re Scott

reported in 6 ALR 558. In that case, the view was taken that new

facts, which came into existence only after the date of the

sequestration order, could not be considered for the purpose of

seeing whether the order ought not to have been made.

The bankrupt In this application relies on the decision

in re Otwav C18953 1 QB 812. That was a case where the effect of

a receiving order was held to be to deprive the debtor of the

only asset avallable for the payment of anything to his

creditors, since the asset was a life interest limited to cease

on bankruptcy, and the debtor had no other property.

Counsel for the bankrupt accepts that he could not and

cannot pay his debts in the sense relevant for bankruptcy law,

but he says that within s.52(2)(b) it is now shown that "other

sufficient cause" exists, and did exist at the date of the

sequestration order, on the basis of which that order ought now

to be annulled. Counsel suggests that the choice is between

leaving the situation as it is with the Creditors obcaining

nothing by the bankruptcy, and granting an annulment in order to

achieve payment in full of the debts; but I do not think that

either part of those propositions is sustained by the evidence.

-. 3 .

No such dazzling prospect as payment in full is in fact held out

to the creditors, with any sort of assurance, by the evidence

before me. Nor, on the other hand, IS the gloomy alternative of

no dividend inescapably clear.

The evidence is, in fact, rather vague. It does

bankruptcy were annulled this might glve rise to problems in	indicate that a number of the debts are disputed, and if the payment, if the bankruptcy were annulled, would be dependent
upon the success, at least to some extent, of the development of
a parcel of subdivisional land. In this regard It is important
to bear in mind that there 1 s no suggestion the bankrupt has any
experience as a subdivider of land, nor was any evidence
proffered as to what professional assistance might be available to him.

It does not seem to me that the evidence gives any

assurance that moneys will be available to meet the obligation

owed to the bank, or that at this time it is really to be

expected that the bank is prepared to advance the appropriate

moneys to enable the bankrupt, not only to reschedule his

obligation to the bank, but also to bear the cost, which on the

evidence would appear to be quite substantial, of carrylng out

the subdivision which is proposed.

L .%.

4.

The proceedings before me have been conducted in a

somewhat dilatory fashion and this in itself does not provlde any

reason for feeling assurance that the matter of the subdlvislon

would be conducted wlth the expedition which is obviously called

for. If the order is refused, one may hope that the trustee will

be able to proceed swiftly, as the evidence certainly suggests is

necessary, in order to realize the assets which are available,

and on the figures which have been provided to me such a

realization may in fact achieve a significant dividend.

To the extent that this is in doubt, it is equally in

doubt hat he value of the land would permit in the

circumstances of the bankrupt's position, and having regard to

the expenses which would be involved, any realistic prospect of

carrying through to fruition a plan which would result in a

significantly better dividend. At any rate, no assurance that

this would be so. or that the creditors could, if I granted an

annulment, look for a speedy resolution of their problem or,

indeed, for a proper dividend at any time, is in	my op ion given
by the state of the evidence before me.

I am not satisfied that it would be beneficial to the

creditors to make the order which is sought, and I am certainly

not satisfied that there is or was "other sufficient cause" to

enable me to say that the sequestration order ought not to have

been made. Accordingly, I refuse the application.

c .- I

5.

I order that the trustee's costs be paid out of the

bankrupt's estate. I will make, in all the circumstances, no

order as to the petitioning creditor's costs.

I certify that this and the

four (4) preceding pages are a

true copy of the Reasons for

Judgment herein of his Honour

Mr. Justice Burchett.

c. 1. Akdui

7'

Associate

Dated: 2rtd ~'eph-n&, 1485

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