Re: Piccardi

IN THE FEDERAL COURT

OF AUSTRALIA )

DIVISION

GENERAL

BANKRUPTCY

DISTRICT

No. W 1607 of 1986

NEW SOUTH WALES

AND

AUSTRALIAN

CAPITAL

TERRITORY

KURT

AND GERLINDE PICCARDI

Ex parte

GEORGE

GREGORY

GRIVAS

Coram:	Einfeld J.
-	Date:	8 July 1987
Place :	Sydney

MINUTE OF ORDERS

I order that the applicants file and serve any application to

annul the sequestration order within fourteen days from today,

together with any affidavits in support thereof.

I stand over the application to set aside the signing and

sealing

the sequestration order, and the application

rescind or suspend the sequestration order, to Thursday

23 July,

at 9.30 am on which date the application to annul should also be

returnable.

(C)

I direct that the applicants give notice

to the Registrar in

Bankruptcy by not later than Friday

10 July, of the proceedings

to set aside the signing and sealing of the sequestration order

and of the other orders made today,	so that he might aw+ar by	.	c
..

counsel or otherwise on 23 July to put such argument in relation

to the application as he may wish or be advised.

- 2 -

I direct that on

23 July the parties bring in short minutes

orders proposed

f o r

the further hearing

of all the matters

involved in these proceedings, including the filing

any

necessary affidavits, together with any discovery	or	other
interlocutory orders that are sought.

I direct that these proceedings be treated with urgency by the

parties in the first instance,

that the earliest possible

resolution of the outstanding matters can be envisaged.

I give leave to the parties to approach my associate in the

meantime, and before

July, to see what dates would be

available for the early hearing

of all the outstanding matters.

(9)

I reserve

costs

NOTE-. Settlement and entry	of orders are dealt with	in accordance with
-

Order 36 o f the Federal Court Rules.

IN THE FEDERAL COURT

OF AUSTRALIA 1

DIVISION

GENERAL

)

BANKRUPTCY

DISTRICT

No. W 1607 of 1986

NEW SOUTH WALES

AND

)

AUSTRALIAN CAPITAL TERRITORY

)

KURT

AND GERLINDE

PICCARDI

Ex parte

GEORGE

GREGORY

GRIVAS

Coram:

Einfeld J.

OF AUSTRALIA

Date :

8 July 1987

2 8 JAN 2003

Place :

Sydney

EX-TEMPORE JUDGMENT

This is an application for the setting aside

of the act of the Registrar

in Bankruptcy in signing and sealing the sequestration order made by

Justice Neaves on

18 November 1986.

The signing and sealing appears to

have taken place on

27 January 1987.

The application was first stated

to be based upon the powers

of the court under section 23 of the Federal

Court of Australia Act

1976 which states:

"The Court has power, in relation to matters

in which it has

jurisdiction,

make

orders

uch

kinds,

including

interlocutory orders _ _ .

as the Court thinks appropriate."

In the light of the powers set out in the Bankruptcy Act

1966

("the

Act") I have serious reservations as to whether that section would provide the power to make the order sought in this application.

However, in the light

of section 14(5)

and section 30(l)(b) of the Act,

it is not necessary to decide that question in these proceedings,

because it seems to me that one or other

of these sections of the Act.

- 2 -

especially

section 14(5), would permit this

order

be made in

appropriate circumstances.

Section 14(5) provides:

"An order or direction made

or given, or an

act done by a

Registrar or a Deputy Registrar under this Act,

subject to

review on summary application

to the Court."

This permits summary review

of any act done by a Registrar, and

notwithstanding

the argument of

counsel for

two of the judgment

creditors appearing in these proceedings that this

may not be possible,

there seems

to be no basis for reading down section 14(5) to

meaning

something less than what it says, and, in particular, to excluding

from

reviewable acts done

by the Registrar, acts done to sign and

seal

sequestration orders pursuant to Rule 26.

The first question in this case therefore is whether

on the evidence,

the order is available. I envisage that the order sought is that the signing and sealing, after review under section 14(5), should be set aside or quashed.

The facts

of the matter are in relatively short compass.

It appears

that immediately following the making

of the sequestration order by

Justice Neaves, the solicitors f o r the

bankrupt

wrote to the Registrar

the Federal Court of Australia, as distinct from the Registrar

Bankruptcy, to advise him that it was proposed

to seek rescission or

suspension of the sequestration order (under section

37 of the Act), and

seeking an assurance that the sequestration order would

not be permitted

to be "taken out", as the letter expresses it. The letter

announced

- 3 -

that the application for rescission

or suspension had already been

filed.

The

letter

was

dated

18 November,

the

same

day

the

sequestration order. It appears that this letter was not shared with

the petitioning creditor and was certainly not made known to the other

creditors of the bankrupt.

On 19 November 1986, the city agents of the solicitors for the bankrupt

wrote to the Registrar

in Bankruptcy, addressing their letter to the

Federal

Court

Australia.

This

letter,

amongst

other

things,

confirmed in substance that on the previous afternoon, the application

to rescind

suspend the sequestration order, and the affidavits in

support of it, had been filed, and that

at that time the earliest

possible return date had been asked for. The return date given, the

letter announces, was

15 December 1986, but the Registrar's attention is

drawn to the fact that at the time when that date was given, the

particular clerk's attention had been drawn to the fact that the

proceedings to rescind could be aborted

if the sequestration order was

signed and sealed in accordance with the rules before they had been

heard. The clerk had told the person presenting the application that

the file would be noted that the application had been filed so as, in

substance, to prevent the signing and sealing of the order until the

application had been dealt with. The city agents drew the Registrar's

attention to the concerns of their side of the record in this regard,

and again asked that the Registrar not sign and seal the order before

the application could be dealt with.

The evidence, though not entirely without doubt as to some aspects,

appears to indicate that such

a file note was made, and that the

sequestration order was lodged for signing and sealing six days after

- 4 -

the making of the sequestration order.

There also appears to be a file

note suggesting

that the solicitor for the bankrupt had been

advised

that there was a practice

of not signing sequestration orders while

there were pending applications under section

37.

When the application was returned on 15 December,

there was a

hearing

before Justice Jackson.

The transcript of that hearing is not free from

doubt. It is argued that the transcript should be read as revealing no application for an order

that the Registrar not seal and

sign the

sequestration

order,

even though the terms of the actual framed order

which appear at the top of page 7 of the transcript, are:

W . _ .

that the Registrar

of the Court and the trustee

be directed

to take no further

step in respect of this matter

without

specific direction of the Court."

These words, together with the response to them by counsel representing the petitioning creditor lower on page 7, would appear to indicate that

of all the

"steps" that the Registrar could

"take". there was no

intention to exclude the exercise of the signing and sealing power	under
Rule 26.

Ordinarily, I would be inclined to think, on

reading

of the

transcript, that when Justice Jackson declined the order

as so framed,

his

Eonour had in mind, inter alia, refusing to stay the

Registrar's

hand when it came to the signing and sealing operation provided by Rule

26 -

However, the matter was

before his Eonour,

not

as a matter for general

directions, but as the return

of an application to have the

Court

- 5 -

exercise its power to rescind

or suspend under section

37(1).

addition, the immediate consequence of his Eonour's declining to make the order sought was to list the matter for the return of subpoenas approximately a month after the hearing then under way, and to permit

the parties to approach the registry with

a view to obtaining a hearing

date in February 1987 for the application for rescission.

It seems hardly likely that his Honour would have made those orders in

the knowledge

or belief that the whole

of that procedure could be

aborted by the presentation to the Court

of a sequestration order for

signing and sealing, and by the Registrar proceeding to sign and seal

under his powers derived from Rule

2 6 .

In these circumstances, it seems to me that the legal representatives of

the bankrupts were proceeding upon the basis that their application

for

rescinding or setting aside the sequestration order was well

on foot and

was understood by the court and by the petitioning creditor as being

still open and available.

When the matter first came before me on

19 February 1987, there was then

a proposal that nothing should be done

in relation to the application

until

meeting of creditors could be held to consider some form of arrangement that was acceptable to them. That was permitted. The

report to the court, when the matter next came back

f o r hearing on

March

1987,

was that there had been substantial but not unanimous

agreement at the meeting to the proposed arrangement.

number

creditors have subsequently appeared in these proceedings to oppose the

application to rescind the sequestration order.

- 6 -

Some time after their appearances were first noted and permitted,

attention was drawn to the fact that, although the file contained	a
sequestration order that had not been signed and sealed, it also

contained one that had been signed and sealed, apparently, on

21 January

1987. Evidently this had been done without anyone having been notified,

either before the event

or after it. Of course, if it is a valid

signing and sealing, or if the signing and sealing is not now set aside

quashed, section

37(2) would immediately abort the application to

rescind the sequestration order.

It is true, as has been submitted, that there is no express evidence

available to me that

an application was not made to stop the Registrar

from

signing

and

sealing

because

the

alleged

agreement

understanding

with

the

Court

or Bankruptcy

Registry

that

sequestration order would not be signed and sealed pending this

application.

clear,

nonetheless,

that

basis

for

the

application is that the lawyers representing the bankrupts believed that

they did not have to make such

an application, because the practice of

the Registry in Bankruptcy was to withhold signing and sealing whilst

there was on foot

an undecided application for rescission

r suspension.

The Court's

power under section 14(5) to review any act done by the

Registrar provides

no limitation on the grounds upon which this review

can be undertaken and

o limitation on the basis upon which an act done

can

set

aside

or invalidated.

Unconstrained

authority

and

uninformed of any contrary view, it seems to me on general principles

that if there

is evidence that the signing and sealing was done in error

or done

inadvertence,

review

would

an available

remedy.

Similarly, if it was done following upon the holding out by the Registry

- 1 -

to a party who would be adversely affected by such

an a t, a feeling of

confidence

satisfaction that it would not be done, at any rate

without notice so that action could be taken if necessary in the court

to prevent the action being taken,

a ground would exist for

an order for

review to be made under section

14(5).

The next question therefore is whether any of those prerequisites exists

in this case. The problem immediately arises that the Registrar has not

been represented in these proceedings. It is being said, on behalf of

the applicants for the order, that,

in substance, this signing and

sealing was done in error. It is not suggested that

it was done

wilfully, and it is certainly not suggested that it was done by fraud

with

any

intent

mislead.

Obviously,

no personal or official

advantage

gained

any

Registrar

in signing

and

sealing

sequestration order.

That brings me to

a matter which I raised with counsel during the course

of this hearing. This is, on its face,

a bankruptcy of very large

proportions.

There

are

a very

substantial

number

identified

creditors and the

sum total of the alleged debts of the bankrupts are,

to say the least, quite enormous. The bankrupts, through their counsel,

have advised the court that if the application under section

rescind or suspend the sequestration order fails, they will make an application to annul the sequestration order. They have said that as part of their resistance to the application to rescind and to annul when

it is filed, they

will be seeking to go behind the judgment obtained by

the judgment creditor. If there was a successful attack on the status of the judgment creditor, the Court is on notice that a number of other

judgment

creditors

would

wish

substituted

petitioning

- 8 -

creditors.

The Court has also been informed that there would also be a

challenge to the meeting

of creditors to which I have earlier referred,

and other attacks on the

capacity of the bankrupts to pay their debts at

any time now or in the future. This foretells a future of very substantial litigation, including I suspect appeals against first instance decisions. In view of the fact that the sequestration order under assault is now eight months old, it is essential that all these

matters be brought to the court for resolution at the earliest

possible

time. Nothing of any significance in relation to the bankrupt's

estate

is proceeding

at the present time, and nothing will proceed, as I

understand it, until all these matters are

resolved, the trustee having

been asked to give and

having given undertakings to this effect.

the

application

to set aside the signing

and

sealing

of the

sequestration order, it seems to me that the Registrar should be

given

an opportunity to be heard when, in particular, the challenged

act of

his is alleged to be either accidental

or inadvertent but when it may

have been deliberate, perhaps for very good reason.

I do not think

that

in a matter such as this

it is appropriate to speculate on the

reason

why the act subject to review was

done. In accordance with long

established authority and in any

event, the Registrar is entitled to an

opportunity to be heard when there is a possibility of a finding	which
may be conceived as adverse to him in some way.

Further, assuming that the signing and sealing were set aside, it would obviously be inappropriate to proceed with an application to rescind the sequestration order, have that fully litigated, and then, if it were

unsuccessful, embark upon an application to annul.

The reasons for this

are obvious and do

not have to be stated but to say the least of it, the

- 9 -

litigation would have no visible	OK identifiable end if such a procedure
were adopted.

In those circumstances, what

I propose to do in this case is as follows:

(a)

I order that the applicants file and serve any application to

annul the sequestration order within fourteen days from today,

together with any affidavits in support thereof.

I stand over the application to set aside the signing and

sealing of the sequestration order, and the application to

rescind or suspend the sequestration order, to Thursday

23 July,

at 9.30 am on which date the application to annul should also be

returnable.

I direct that the applicants give notice to the Registrar in

Bankruptcy by not later than Friday

10 July, of the proceedings

to set aside the signing and sealing of the sequestration order

and of the other orders made today,

so that he might appear by

counsel or otherwise on

23 July to put such argument in relation

to the application	as he may wish or be advised.
I direct that on	23 July the parties bring in short minutes of

orders proposed for the further hearing of all the matters

involved in these proceedings, including the filing of any

necessary affidavits, and any discovery or other interlocutory

orders that are sought.

- 10 -

I direct that these proceedings be treated with urgency by the

parties in the first instance,

that the earliest possible

reesolution of the outstanding matters can be envisaged.

I give leave to the parties to approach my associate

in the

meantime, and before

July, to see what dates would be

available f o r the early hearing of all the outstanding matters.

I reserve costs.

[1987] FCA 820

8 Jul 1987