Re O'Leary; ex parte Bayne

[1985] FCA 490

Re: DENNIS JOHN O'LEARY and ANOR.
And: RICHARD WAYNE KNIGHT BAYNE and ANOR.
No. P679 of 1985
Bankrupt

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
AND THE AUSTRALIAN CAPITAL TERRITORY
Sheppard J.

CATCHWORDS

Bankrupt - secured petitioning creditor - petitioners' security ranking after security held by another creditor - that creditor holding security over property additional to that upon which petitioners' debt secured - statement in petition that petitioners' security valued "at nil" - whether secured petitioning creditor stating his security to be worthless is bound to give security up - whether such a creditor may include in petition an estimate of value of security or whether he must establish its actual value - whether operation of doctrine of marshalling rendered statement that security valueless erroneous - review of evidence of financial affairs of debtors and of company in which they held all shares.

Bankruptcy Act 1966, ss. 44, 52, 90 to 94.

HEARING

SYDNEY
#DATE 13:9:1985

ORDER

1. The petition be adjourned to 13 December 1985.

2. The costs incurred on 3 September 1985 and today be reserved.
   
   Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

The making of a sequestration order in this matter is opposed. In order to understand the notice of opposition, it is necessary to refer to the amended petition. Paragraph 2 refers to a final judgment recovered by the petitioning creditors against the debtors in the District Court of New South Wales on 4 June 1984. The amount of the judgment was $43,804.43. Interest thereon ran from the date of judgment at 14.5 per cent per annum. In paragraph 3 of the petition the petitioning creditors say that they hold security over the property of the debtor for payment of the amount owing, being a second mortgage over property situated at 374 Rocky Point Road, Ramsgate in the State of New South Wales. The petitioners estimate the value of their security "at nil", and say that there is an unsecured balance owing to them, which, including interest, is $45,789.35. The act of bankruptcy alleged is failure by the debtors to comply with a bankruptcy notice served on them on 7 December 1984. The act of bankruptcy relied upon was committed on 22 December 1984.

Paragraph 1 of the notice of opposition is as follows:-

"1. In relation to paragraph 3 of the Petition:

(a) The Commonwealth Bank of Australia is the First Mortgagee over the said land:

(b) To secure repayment of its debt, the Commonwealth Bank of Australia holds other security;

(c) If the Commonwealth Bank of Australia exercised power of sale of the said land then, in law, the Petitioner is entitled to marshal against the remaining security held by the said Bank and, accordingly, the Petitioner is a secured creditor, within the meaning of the Act, to that extent."

Paragraph 2, which is an independent ground of opposition, says simply that the debtors are solvent and paragraph 3 says that, in the exercise of the Court's discretion, the sequestration order should not be made.

The debtors are beneficially entitled to the whole of the shares in a company, Record Marine Australia Pty Limited, which carries on business in the premises referred to in paragraph 3 of the petition, 374 Rocky Point Road, Sans Souci (otherwise Ramsgate). The Commonwealth Trading Bank of Australia holds an equitable charge over the assets and undertaking of the company and, pursuant to powers vested in it in the charge, has appointed receivers of the assets of the company. The receivers are in possession of the company's business and are carrying it on.

The company's liability to the Bank is of the order of $480,000. The debtors have given personal guarantees guaranteeing the repayment of the moneys owed by the company to the Bank. They have also either given themselves, or procured, mortgages to the Bank over property in addition to that mentioned in the petition, which I shall call "the Sans Souci property". They are the joint owners of a house and land at 100 North West Arm Road, Gymea. That property is mortgaged to the Bank. Furthermore, Mr. O'Leary's mother has mortgaged a property, which is situated at 43 Eddystone Road, Bexley, to the Bank to secure the repayment of the debt which is owed to it by the company.

On the best view the stock, plant and equipment of the company will not exceed in value the sum of $40,000. That is the figure which is referred to in an affidavit which Mr. O'Leary has sworn. Other evidence suggests that the value of these assets will be much less. Apart from the real property to which I have referred, the debtors have few assets. The shares in the company would have no value. They own motor vehicles and some sewing machines, the total value of which is not more than $15,000. Moneys owing on the vehicles and pursuant to a hire purchase agreement in respect of some stereo equipment total almost $12,000. It follows that the Bank, in order to recover the amount which is owing to it, will, almost certainly, need to have recourse to the securities which it has over the real property owned by the debtors and, perhaps, also that owned by Mr. O'Leary's mother.

In an affidavit, Mr. O'Leary claims that the value of the Sans Souci property is $333,000 and the value of the Gymea property $145,000. He gave evidence of some negotiations in which he said that he was prepared to accept $320,000 for the Sans Souci property. The figure of $333,000 for that property came from a valuation of L.J. Hooker Limited dated 23 April 1985. L.J. Hooker Limited expressed the view that the Gymea property would bring between $140,000 and $150,000. Their opinion of the value of Mr. O'Leary's mother's property was a figure between $85,000 and $88,000. That opinion was expressed in a letter dated 1 March 1985.

In evidence is a report by a firm of chartered accountants, Messrs. Graham M. Soper and Co., on the affairs of Record Marine Australia Pty Limited. Messrs. Soper and Co. are the debtors' accountants. Reference is made by them in a letter which accompanied the report to an offer by an investor of $340,000 for the Sans Souci property. In the report itself under the heading, "Current Financial Position", is an analysis of the liabilities and assets of the company. The report says:-

"The detailed accounts for 1983-84 are attached, but in essence the balance sheet is as follows:-

Liabilities

Commonwealth Bank 440,000
Vendor 45,000
Creditors 60,000
Group Tax 25,000

--------

$570,000

Assets

Current Auction

Business Premises ** 370,000 200,000

(owned in the name of O'Leary)

House - Mr O'Leary * 140,000 120,000

House - Mrs O'Leary * 80,000 60,000

Stock 110,000 20,000

Plant & equipment 15,000 4,000

------- ------- 745,000 484,000

* The valuations on the properties have been given by Mr O'Leary and have not been confirmed by this office.

** Valuation for auction purposes by L.J. Hooker"

The date of Messrs. Sopers' report was 14 January 1985. The debt to the Bank has since increased by some $40,000 to the present figure of approximately $480,000. Presumably the auction prices are based upon what might be expected if there were a mortgagee's sale of the properties. If those were the prices which were obtained, the amount would be no more than sufficient to pay out the Bank with the consequence that no other creditor, including the petitioning creditors, would recover any amount whatever. It was no doubt upon this basis that they alleged in their petition that the security which they held over the Sans Souci property was valueless. It may be that substantially more than the figures noted under the column headed, "Auction" will be obtained. The evidence does not enable one to tell. Only when the properties are put up for sale will it be known what amount will become available for the payment of the debts due to the Bank and the petitioning creditors. It must be said, however, that the figures noted under the column "Current" suggest a too optimistic approach. It seems unlikely that the Sans Souci property will yield a figure of the order of $370,000, and the figures of $110,000 and $15,000 for stock and plant respectively are plainly excessive. Mr. O'Leary himself did not suggest that their value was more than $40,000.

Against that background it is now possible to explain what the principal defence of the debtors to the petition is. The starting point is para. 52(1) (a) of the Bankruptcy Act 1966. It provides that at the hearing of a creditor's petition, the Court shall require proof of the matters stated in the petition. One of those statements, contained in para. 3 of the petition, is that the petitioner estimates the value of the security "at nil". It is submitted by the debtors that the evidence establishes that the security has some value with the consequence that the statement that it has no value is erroneous. It is to be observed that the allegation in the petition is prefaced by the words "The petitioner estimates the value of the security . . . " I shall say more of the significance of these words in due course.

None of the various estimates given in the evidence of the value of the Sans Souci property approaches, within $100,000, the amount of the indebtedness of the debtors to the Bank, some $480,000. Thus, assuming the Bank were to have recourse to its security over the Sans Souci property, there would still be a substantial deficiency. But the debtors say that, if the Bank were to realize the Sans Souci property first and then were to realize the other securities which it has, the petitioning creditors would be entitled, by reason of the doctrine of marshalling, to the Bank's security, so far as it would extend, over the Gymea property. The amount available to the petitioning creditors might vary, depending on whether the Bank also realized its securities over the company's assets and the Bexley property owned by Mr. O'Leary's mother. The debtors concede that valuing the security might be a difficult task, but contend, however the matter is looked at, that it was wrong to say that the security was valueless.

The submission depends on the provisions of s. 44 of the Act and upon an understanding of the doctrine of marshalling. Sub-sec. 44(1) provides that a creditor's petition shall not be presented against a debtor unless there is owing by the debtor to the petitioning creditor, or a combination of creditors, a debt or debts in the aggregate amount of $1,000. Sub-secs. (2), (3) and (4) of s. 44 are as follows:-

"(2) Subject to sub-section (3), a secured creditor shall, for the purposes of paragraph (1)(a), be deemed to be a creditor only to the extent, if any, by which the amount of the debt owing to him exceeds the value of his security.

(3) A secured creditor may present, or join in presenting, a creditor's petition as if he were 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 in the event of a sequestration order being made against the debtor.

(4) Where a petitioning creditor is a secured creditor, he shall set out in the petition particulars of his security."

Sub-sections (5) and (6) of s. 44 provide for the surrender of a security on request by a trustee and for punishment of a petitioning creditor who fails to surrender his security for contempt of Court.

At first sight it might appear that the provisions of sub-secs. 44(2), (3) and (4) operate to require a secured creditor who petitions in bankruptcy to surrender his security, notwithstanding that the value of his security is less by $1,000 or more than the amount of the debt owed to him. This is not, however, the case. In Re Wiggins; Ex parte Credit Assistance Pty Limited (1979) 36 F.L.R. 182 Lockhart J. held that s. 44 of the Bankruptcy Act permitted a petitioning creditor who held security, either to estimate the value of his security, in which case he would be deemed to be an unsecured creditor of the debtor for the amount by which the value of the debt exceeded the value of the security, or state his willingness to surrender his security for the benefit of creditors generally in the event of a sequestration order being made, in which case he might prove for the full amount of his debt. His Honour rejected a submission that sub-secs. 44(2) and (3) were cumulative so that a petitioning creditor must both value his security and include in the petition a statement as to his willingness to surrender it. His Honour referred to the former provisions of s. 55 of the Bankruptcy Act 1924 and to the provisions of s. 4(2) of the Bankruptcy Act 1914 (U.K.). Both these provisions made it clear that the two courses were alternative. It was the absence of any such statement in the 1966 Act which was the foundation for the debtor's argument in Re Wiggins. Nevertheless, his Honour rejected it.

I am in respectful agreement with his Honour's views. No other conclusion would give effect to the true intendment of the Act which appears to have been to allow a secured creditor, not wishing to surrender his security, to retain his security in order to obtain as much as possible as a secured creditor, and, at the same time, to petition in respect of the balance which was unlikely to be yielded upon the realization of the security, provided, of course, that the balance amounted to at least $1,000. It is important to bear in mind the distinction between the purposes served by the relevant sub-sections of s. 44, on the one hand, and the provisions of ss. 90 to 94 inclusive, dealing with proofs of debt by secured creditors, on the other. The only purpose of s. 44 is to specify the conditions upon which a creditor may present a petition. One of the conditions is that the petitioning creditor must have a debt which amounts to $1,000. If the creditor is secured, he may not petition, unless he surrenders his security, or shows that the realization of his security will not yield sufficient to enable him to be paid in full. If he establishes that to be the case, provided other requisite conditions are satisfied, he is entitled to a sequestration order. When he comes to prove his debt in the ensuing bankruptcy, none of what has gone before binds him. He proves in accordance with s. 90 of the Act and the succeeding sections provide for the various eventualities which may occur. In short then, the provisions of s. 44 determine whether or not a creditor may successfully present a petition; the provisions of ss. 90 to 94 determine how the amount of his debt is to be quantified when he comes to prove in the bankruptcy.

Lockhart J. followed Re Wiggins in Re Florance; Ex parte Turimetta Properties Pty Limited (No. 2) (1980) 39 F.L.R. 400 at pp. 403-404. Fitzgerald J. followed both Wiggins and Florance in Re Finn; Ex parte Finn v. Amoco Australia Limited (1982) 58 F.L.R. 54 at pp. 60-61.

Although the problem is of indirect relevance in the present case, I propose to say a little more about it. The source of the difficulty is the absence of alternative language in the relevant subsections of s. 44. It would appear to me that the problem has arisen because of the rejection by Parliament of suggestions made on the matter in the Report of the Committee Appointed by the Attorney-General of the Commonwealth to Review the Bankruptcy Law of the Commonwealth. The Committee was under the chairmanship of the former Judge in Bankruptcy, Sir Thomas Clyne, and reported to the Attorney-General on 14 December 1962. The Report led to the enactment of the present Bankruptcy Act. In paragraph 81 (p. 26) of its Report the Committee said:-

"81. . . . The Committee recommends that, if a petitioning creditor is a secured creditor, he should be required to set out in the petition particulars of his security and give an estimate of its value; otherwise, he should be able to petition as if his debt were an unsecured debt. The Committee further recommends that a petitioning secured creditor should not be bound by the estimate he has given in his petition when he seeks to prove his debt, and in this respect should be in the same position as other secured creditors."

The relevant clause of the Bill recommended by the Committee (cl. 44(2)) simply said, "Where a petitioning creditor is a secured creditor, he shall set out in the petition particulars of his security and given an estimate of its value". This provision may be compared with sub-sec. 44(4) of the Act. The Committee did not recommend any provisions similar to those contained in sub-secs. 44(2) and (3). A point of distinction between the Bill recommended by the Committee and the Act as it was passed is that there is no provision in the Act, at least expressly, enabling or requiring a secured petitioning creditor to estimate the value of his security. Tabled in the House of Representatives as part of the second reading speech of the then Attorney-General, when the second reading of the Bill was moved, was a tabulation showing the differences between the then existing provisions of the 1924 Act and those of the Bill before the House; see Hansard for the House of Representatives on 20 May 1965, pp. 1713 et seq. The relevant part of the tabulation is as follows (Hansard, p. 1714):-

--------------------------------------------------------
"Existing Provision Provision in Bill
--------------------------------------------------------
Secured creditor can petition Secured creditor has right
only if: to petition where:
(a) he is willing to give up (a) amount of debt owed
his security for benefit of exceeds value of
creditors generally; or security by at least
(b) he estimates value of his $250;
security and then he will (b) he is willing to
be admitted as a abandon his security
petitioning creditor to for benefit of
extent of balance of debt creditors generally;
above estimated value or

(c) in case of a joint petition with others, the unsecured portion of total debt owing

to all who join in

petition is at least

$250."

Reference to the report of the Clyne Committee and to the Attorney-General's second reading speech confirm me in thinking that the approach taken to the problem by Lockhart J. was, with respect, correct. The statements in the second column of the above tabulation show that that was the meaning which s. 44 was intended to have.

As I have said, the matters so far discussed have only an indirect bearing on the matters to be determined in this case. But they do have some relevance in the consideration of a submission made on behalf of the debtors that it is incumbent upon a secured petitioning creditor, unwilling to surrender his security, to establish positively what the value of his security is. Before I come to that matter, I should deal with some others. The doctrine of marshalling, which is relied upon in the notice of opposition, rests upon the principle that a creditor having two funds to satisfy his debt, may not, by his application of them to his demand, defeat another creditor, who may resort to only one of the funds; see Meagher, Gummow and Lehane, Equity - Doctrines and Remedies, 2nd ed., para. 1104, p. 300.

It should be emphasized that, if the doctrine has any application to the circumstances of the present case, it will only operate in relation to securities given by the debtors themselves. It has no application in relation either to the equitable charge given to the Bank by the company nor to the mortgage given to it by Mr. O'Leary's mother. Nor does the doctrine compel the Bank, in relation to the two securities it holds from the debtors themselves, to elect in which order it will realize the securities if that course has to be taken. But if it should first realize the Sans Souci property, over which the petitioning creditors hold security, then, upon the basis that that security will be totally exhausted in discharging, or partially discharging, the Bank's indebtedness, the petitioning creditors would, by reason of the operation of the doctrine, be subrogated to the security held by the Bank over the Gymea property. Upon the figures to which I have referred it would seem not unlikely that the Bank would need to have recourse to that property also to satisfy its claim and that such recourse may result in the total amount realized upon its sale being exhausted in payment of the Bank's debt. But if that were not the case, the petitioning creditors would be entitled to the balance remaining after the Bank's claim had been satisfied.

If the Bank were to resort to the Gymea property first and then to the Sans Souci property, there would be no occasion to invoke the doctrine. The solicitor for the petitioning creditors referred to paras. 1135-1137 (pp. 312-3) of Meagher, Gummow and Lehane, (op. cit.) and to the decision of Needham J. in the Supreme Court of New South Wales in Porter v. Associated Securities Limited (1976) 1 Butterworths Property Reports 97027 at pp. 9295-6. I do not think these references are of any assistance because they deal with a different problem, a problem which does not arise in this case. But the doctrine of marshalling can have no application, if the Gymea property is realized first of all, because, in that event, the Bank's debt would not nearly be satisfied. If it then had recourse to the Sans Souci property, it would either exhaust that security as well or it would not. If it did not, then the balance would go to the petitioning creditors because they hold the second mortgage. No recourse to the doctrine of marshalling would be needed. The doctrine would have no relevance. The position would be similar if the Bank satisfied itself, at least in part, by recourse to the securities it has over the assets and undertaking of the company and Mr. O'Leary's mother's home.

The fundamental submission made by counsel for the debtors was that the statement in the petition that the security was of no value was incorrect. The petitioning creditors had thus not made out their case and the petition should be dismissed. In counsel's submission, the security is not worthless because, upon the figures in the evidence, there is likely to be a surplus after the Bank's indebtedness has been satisfied. The petitioning creditors will have security for at least part of the indebtedness, either because the Bank has recourse to the Sans Souci property first of all and exhausts it, with the consequence that the doctrine of marshalling subrogates the petitioning creditors to the security which the Bank has over the Gymea property, or, because the Bank has recourse to the Gymea property first and then to the Sans Souci property, a surplus resulting upon the sale of it after the Bank's claim has been satisfied. The position would be even more favourable to the petitioning creditors if the Bank were, first of all, to have recourse to the securities it has over the company's undertaking and assets and the mother's property.

In my opinion this submission fails for two independent reasons, one based on the evidence and the other based partly on the proper construction of s. 44 of the Act and partly on the evidence. It fails for evidentiary reasons because on the face of the evidence there is reasonable ground for the view that the Bank's claim will exhaust all the securities leaving the petitioning creditors as unsecured creditors for the total amount of their claim. In that event their security is in fact worthless. Upon the basis of the report made by Messrs. Soper and Co. that is the likely outcome. It may not be the outcome in fact, but as things are looked at at the moment, it seems to me to be more likely to be the case than otherwise.

As earlier mentioned, the Bank may realize its securities in any order it pleases. There is no evidence on the point, but I would be surprised if it chose to have recourse to the security over the mother's house except as a last resort. Compassionate considerations would suggest this to be its likely approach. That would leave the company's assets and the Sans Souci and Gymea properties. On the face of the evidence, it seems unlikely that the Sans Souci property will yield more than $320,000 and the Gymea property more than $140,000, a total of $460,000. If, as the report of Messrs. Graham Soper suggests, the amount recovered from the sale of the company's assets is $24,000, the total recovery will be $484,000, about the total amount of the company's indebtedness to the Bank at the moment. I concede that the figures to be obtained may be somewhat more, but if they totalled $500,000, it seems unlikely that anything would be left for the petitioning creditors because one needs to take into account selling costs and receivers' charges and expenses. Although a degree of speculation is involved, I consider the analysis I have made provides the best guide available at the present time and indicates that the petitioning creditors' security is in fact valueless.

But if that view be wrong, the proper construction of s. 44 of the Act nevertheless leads to the conclusion that the petition does not contain any mis-statement. As earlier mentioned, the relevant sub-sections of s. 44 do not expressly require the statement of the value of any security held by a petitioning creditor. That is one of the matters that creates uncertainty about the meaning of the section. But sub-sec. 44(2) does permit a secured creditor to present a petition founded upon the amount of his debt which exceeds the value of his security. He needs therefore to state in the petition what that value is. In the present case he has stated, not the value of the security, but his estimate of its value. That was what a petitioning creditor was required to do under the comparable provisions of the 1924 Act. In Re Wiggins earlier referred to Lockhart J. said (36 F.L.R. at p. 185):-

"In my opinion, s. 44 means that a petitioning secured creditor may in his petition estimate the value of his security or state that he is willing to surrender his security for the benefit of creditors generally in the event of a sequestration order being made against the debtor.

If he takes the former course he is not bound by the estimate when he seeks to prove his debt. If he takes the latter course he is obliged, upon request by the trustee, to surrender his security after the making of a sequestration order, the sanction for non-compliance being contempt of Court; see s. 44(6)."

The emphasis is mine.

It is the fact that the petitioning creditor is not bound by the estimate when he comes to prove his debt in the bankruptcy of the debtor (see ss. 90-94 earlier mentioned) that leads me to think that a petitioning creditor is obliged to do no more than make the best estimate he can of the value of his security when he presents his petition. As I have earlier said, what must be shown is that he has an unsecured indebtedness which amounts to more than $1,000. That is the only purpose of the provision. But his estimate must bear a close relationship to the realities of the matter. It must certainly not be arbitrary or capricious. There is nothing of that kind in this case. The estimate made by the petitioning creditors here may turn out to be wrong, but in my opinion, as matters are looked at at the moment, it is a perfectly reasonable estimate for them to make. If they be wrong about it, the probabilities are that they will still be unsecured creditors for a sum of money which will substantially exceed the $1,000 which a petitioning creditor must be owed before he may present a petition. It follows, in my opinion, that there is no mis-statement in the petition and that ground 1 of the notice of opposition fails.

At first sight, it may seem odd that a secured petitioning creditor may claim that his security is valueless and yet not be obliged to surrender it. But I am satisfied, that upon its true construction, the Act was intended to enable this course to be taken in an appropriate case. Counsel for the debtors made no submission to the contrary. His submissions essentially were that the petitioning creditors were obliged to establish positively the value of their security and that, upon the evidence which was led, there was no basis for a finding that the security was valueless. I have decided, for the reasons earlier given, that these submissions should be rejected.

Ground 2 of the notice of opposition simply states that the debtors are solvent. This was intended to bring the case within para. 52(2)(a) of the Act which provides that, if the Court is satisfied by the debtor that he is able to pay his debts, it may dismiss the petition. I am not satisfied upon the evidence which is before me that the debtors are able to pay their debts. Ground 2 of the notice of the opposition, accordingly, also fails.

The final ground of opposition was that, in the exercise of the Court's discretion, a sequestration order should not be made. This was founded upon para. 52(2)(b) of the Act in which it is provided that the Court may dismiss a petition if it is satisfied that for other sufficient cause a sequestration order ought not to be made. The basis of this ground was that the petition was premature and that the petitioning creditors should have waited to see what realizations of assets the Bank would make so that their own position would crystallize. In my opinion they are not bound to wait. The evidence which has been led satisfies me that the probabilities are that the debtors are insolvent and that the security held by the petitioning creditors will not be available to meet their claim. No case that there is other sufficient cause why an order should not be made has been made out.

The third ground of opposition also fails.

During the course of the argument there was discussion as to whether the petitioning creditors might not be suited by an adjournment of the petition. The Bank has played no part in the proceedings. Apparently the Bank, by its receivers, is endeavouring to sell the business as a going concern. If that occurs, there will be a question as to whether the incoming purchaser will have tenure over the Sans Souci premises either by purchasing them himself or by being given some form of lease over them. The position in that regard is unclear. But it does seem to me that there may be something to be said for waiting a little longer to see what will happen. Receivers being in possession of the company's assets and the principal assets of the debtors being real estate over which there are mortgages, it does not seem that the petitioning creditors would be prejudiced by some further delay. On the contrary, it might well be in their interests to await the administration of the company's affairs by the receivers. I put this to the solicitor for the petitioning creditors who saw the force of what was said. He thought it might be advisable to seek instructions on the question of whether the petitioning creditors might be better served by an adjournment of the petition rather than by the making of a sequestration order to which, on the basis of the conclusions I have reached, they are entitled.

I shall not therefore now make a sequestration order but I shall stand this matter over for a short time to enable the parties and their legal representatives to consider what I have said. When the matter is again in the list I shall determine whether or not I should make a sequestration order or further adjourn the petition.
(Note: After his Honour published his reasons for judgment, discussion ensued on the question of whether the petition would be adjourned. The solicitor for the petitioning creditors said that her clients would agree to an adjournment for three months. This was consented to by counsel for the debtors. Thereupon his Honour adjourned the hearing of the petition to 13 December 1985 and reserved costs.)