Re On, W.C.O

[1985] FCA 290

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a90 CATCHWORDS

BANKRUPTCY - Section 50 - Whether the section authorises

appomtment of a receiver - Form of summonses under sub-section *

( 2 ) of sectlon 50 - Approprlate seal to be placed on summonses

issued under section 50 - "Formal defect or lrregularlty".

Bankruptcy Act 1966 (C'wth) 5.50

RE: WILLIAM CH01 ON ON

NSW Pet. 839 of 1985

Burchett J.

24 June 1985

Sydney

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IM THE FEDEPAL COURT OF AUSTRALIA	)
)
GZI:'CRAL DIVISION	) NSW Pet. 839 of 1985
)
BANKXJPTCY DISTRICT OF THE STATE	)
1
OF NEW SOUTH WALES	)
RE: WILLIAM CH01 ON ON

MINUTE OF ORDER OF THE COURT

JUDGE MAKING ORDER: Bur che-tt J .

DATE OF ORDER: 1 .- 24. June 1985

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WHERE MADE: Sydnef- -

THE COURT ORDERS THAT:

The applications of William Choi On On to dissolve or

set aside the order appointing John Willlam O'Brien as

receiver, to set aside the order to summon him

for

examination, and to set aside the summons, be each

dismissed, costs to be reserved.

And that the applications of Ping-Ju Choi Ng be

dismissed, c o s t s to be reserved.

IN THE FEDERAL COURT OF AUSTRALIA	) )
GENERAL DIVISION	)
1
BANKRTJDTCY DISTRICT OF THE STATE	) NSW Pet. 839 of 1985
)
OF N!ZW SOUTH WALES	)
RE: WILLIAM CH01 ON ON
BURCHETT J.
24 JUNE 1985

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On 31st May 1985 Wilcox J. made orders ex parte under

s.50 of the Bankruptcy Act 1966, firstly, that a receiver be

appointed of the property of William Choi On On, and secondly,

that William Choi On On and his wife Ping-Ju Choi Ng be summoned

to give evidence and produce books regarding the said William

Choi On On (to whom I shall refer as Mr. Choi) or his trade

deallngs properties or affairs. Applications have now been made by Mr. Choi and his wife for the dissolution of the order appointing a receiver, and for the setting aside of the summonses

to them issued pursuant to the second order mentioned.

S.50 of the Bankruptcy Act 1966 reads as follows:

" 5 0 . If, on application by a creditor, it is

shown to be necessary in the interests of the

creditors, the Court may, at any tlme after

the presentation of a creditor's petition and

before sequestration, direct the Official

Trustee or a specified registered trustee to

take control of the property of the debtor

and may make such orders in relatlon to that

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property as the Court conslders lust.

( 2 ) Without i'imiting the generality of

sub-section (1) , the Court may, at any time

after glving a directlon under sub-section

(1). summon -

(a) The debtor or the spouse of the debtor;

or

(b) any person who is known or suspected to have in his possession any of the property of the debtor, or is supposed to be indebted to the debtor or'to be able to give information concerning the debtor or his trade dealings, property or affairs, - , . ,-, .&----L

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to attend, on d date and at a time and place

fixed in the summons, before the Court or the

Registrar '6W-if the Court thinks fit, before

a magistrate, to size evidence Concerning,

and produce any books in his custody or power

relating to, the debtor or his trade

dealings, property or affairs, and, where the

Court issues such a summons, the provisions

of section 81 apply, subject such o

modifications and adaptations (if any) as are prescribed by the rules, for the purposes of such an examination of the person so summoned

under this section .as if the debtor were a

bankrupt and the examination were an

examination under section 81.

( 3 ) In this section, "modification" includes

the addition or omission of a provision or the substitution of a provision for another

provision. "

Mr. Garllng, who appeared for Mr. and Mrs. Choi,

submitted that s.50(1) of the Bankruptcy Act is limited to

empowering the taking of control of property and does not extend

to the appointment of a receiver. But I do not think that is

correct. The structure of the sub-section 1s two-fold: It

provides for a direction to a trustee "to take control of the

property of the debtor", and then, In a case where such a

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direction 1 s made, for the Court also to “make such orders in

relation to that property as the Court considers just.”

In my opinion, the wldth of this last provlsion makes

resort to s.30(l)(b) unnecessary, and it is capable of sustainlng

an order appointing and empowering a receiver of the property,

even If that order involves wider powers than those necessarily

implicit in an appointment - of a trustee dlrected to take control

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of the debtor‘s property.&- Indeed, the opening words of sub-s.(2)

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show that extensive Gcillary orders were in the contemplation of

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the draftsman, f o r he was concerned that ss.(2) should not cut

down the meaning of ss.(l). In any case, a person directed to

take control of the property of the debtor may not inaptly be

regarded as a receiver of that property. The sub-title of rule

17 - ”Application for.receiver before sequestration” - indicates

that such	a view of s.50 is no novelty.
It was submitted that it was not in this case “shown to

be necessary in the interests of the creditors” to make an order

under 5.50. I thlnk the evidence is compelling. There has been

no challenge to it by cross-examination, or evidence to the

contrary. !The sum In question is very substantial, and the

circumstances of Mr. and Mrs. Chol‘s departure from Hong Kong and arrival in Australia, according to the evidence, afford serious grounds to fear that Mr. Choi’s property may be removed from the

reach of his creditors if the order is dlscharged.	I think the
order should stand.

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Counsel also challenged the order, pursuant to s . 5 0 ( 2 ) ,

for the Issue of summonses -in respect of the debtor and hls wife,

and the particular summonses issued, on a number of grounds.

First, it was said rule 129 had not been complied with, since the

grounds were not set out in the application or affidavit. But in

my view, the grounds clearly appeared from the affidavit, and he

case is one for the application of rule 195 and 5.306. NO

injustice was caused. Then-it was sald the summonses were too . . ..-~. ~ -.

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wide and oppressive. _;Ea;c&-of the summonses i s in the terms

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prescribed by rule 129(2). Those terms, referring as they do to

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5.50 and reflecting the ' tetms of- the section itself, must be .-< e

understood in the light of the purposes of that section. So

understood, I do not think they are open to objection. It is

clearly necessary, if the receiver is to take control of the

property of the debtor, that the details concerning that property

should be ascertained, and any allegations, such as, for example,

that some item is no longer his, should be adequately tested. In

any case, as I have indicated, the summonses reflect the very

language of the section, and cannot I	think be regarded as too
wlde to fall within its objects.

The final submission was that the summonses are not

appropriately sealed under rule 116. Having regard to the fact

that the summonses have issued by order of the Federal Court of

Australla, and to rule 129, I thlnk the summonses should have

been sealed on behalf of the Federal Court of Australia, and not

with the Registrar's stamp, as was done. However, on thls basis,

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there is in the proceedings to examine Mr. and Mrs. Choi under

s.50 "a formal defect or an irregularity" within 5.306 which in

my opinion has not caused any injustice. The present

applications demonstrate that Mr. and Mrs. Choihave been made

aware of the Court's orders under 5.50, and the point of course does not go to the validity of these orders. That validity has

been fully debated before me and I have upheld it.

Inaccordance with these reasons I order that the

zpplications of William Choi On On to dissolve or set aside the .

order appointing John William O'Brien as receiver, to set aside

the order to summon him for examination, and to set aside the

s~inmons~ be each. dismissed, costs to be reserved, and that the

applications of Ping-Ju Choi Ng be dismissed.	costs to be
-reserved;

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~ssociata '

l'	Dated: $4 .
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