age IN THE FEDERAL COURT OF AUSTRALIA BANKRUPTCY DISTRICT OF THE STATE No. G 192 of 1983 OF NEW SOUTH WALES AND THE eee ee AUSTRALIAN CAPITAL TERRITORY BETWEEN JOHN ALEXANDER DRAPER Applicant- Debtor AND BROSALCO PTY. LIMITED Respondent Petitioning Creditor Morling J. 10 August 1983 . EX TEMPORE JUDGMENT This is an application for a stay of further proceedings under a sequestration order made by McGregor J. on 1 July 1983. After his Honour made the sequestration order he granted a stay of proceedings under it for 21 days. I have read his Honour's judgment which was given after a contested hearing in which the sole issue seems to have been whether or not the debtor was in fact indebted to the petitioning creditor for the amount of a debt in respect of which a judgment had been recovered in the District Court. I would have thought that the task of demonstrating that his Honour's decision on that issue was erroneous will be almost insuperable. However, at the very heel of the hunt in the proceedings before McGregor J a question was raised as to whether or not the petition had in fact expired. The appeal which has been brought to the Full Court raises for consideration not only the correctness of his Honour's decision that the debtor was in fact indebted to the petitioning creditor but also the question whether some fairly recent amendments to the Bankruptcy Act gives the court power to extend the life of a petition after the expiration of twelve months from its presentation. That question may well be arguable and I am not prepared to say that there is no substantial question of law to be argued on the hearing of the appeal. ° - The stay granted by McGregor J ran*out-on 22 July or thereabouts. It was apparently allowed to run out without an extension of it being obtained and a notice of motion for continuation of the stay was filed in court on 23 July. It came before Neaves J on 28 July and was stood over until today. I have been informed that on 5 August the petition- ing creditor filed and presented a sequestration order for sealing by the court and that on the same day Beaumont J granted an interim stay of proceedings under the sequestration order until today. I am further informed that the trustee has been served with today's application but has indicated he does not wish to be heard. There 1s no evidence before the court as to what assets, if any, the debtor possesses. Miss McSpedden who put her client's case with admirable clarity, said her instructions were that the debtor owned a grazing property. However, in view of the fact that it was expressly disclaimed on his behalf before McGregor J that he could meet his debts I think there must be some doubt as to the extent of the debtor's assets. It seems to me that by force of the operation of s.58(1) of the Bankruptcy Act the property of the debtor now vests in the trustee. Miss McSpedden did not present a contrary argument. In those circumstances she correctly identified the purpose of the present application to be to restrain the trustee from dealing with the assets vested in him pending the determination of the appeal. Mr Hourigan has, not unreasonably, expressed concern on behalf of the petitioning creditor that the assets of the debtor may be dissipated pending the hearing of the appeal. However, in my view any concern of that kind can be overcome by the making of appropriate orders. or The debtor is not in a position to give title to any of his former assets as they now vest in his trustee and should he attempt to dispose of them he would in my view be unable to give title to them. Nevertheless it is desirable that if he seeks some indulgence from the court he should undertake that he will not attempt to deal with any of his assets pending the outcome of the appeal. Moreover I can see no reason why the debtor would be prejudiced if he complies with s.54 of the Act by filing a statement of his affairs. If the appeal succeeds no harm will be done from such a statement having been filed. If it fails, it will relieve him of the obligation of then filing a statement of affairs. Accordingly I indicate as follows: that if the appellant undertakes to prosecute his appeal with expedition and to apply for an expedited hearing of the appeal, and if he undertakes that he will not dispose of or attempt to dispose of any of his assets pending the hearing of the appeal and if he further undertakes to comply with the requirements of s.54(1) of the Act by filing a statement of his affairs within 14 days then I would propose to grant his application and to order a stay of any further proceedings in the bankruptcy pending the hearing of the appeal. In my view as today's application has been brought about solely by the failure of the debtor to move for an extension of the stay before the expiration of the earlie- stay he should pay the petitioning creditor's costs of this application. I would also propose to reserve liberty to the petitioning creditor to apply on 24 hours notice for a rescision of the order which I propose to make in the event that any undertaking given by the debtor is not honoured. The only order I make now is that I grant a stay of proceedings under the sequestration order up to and including 17 August. I stand the present application over until 9.30 a.m. on that date. I will make no further formal orders at this stage, but I indicate that I will continue the stay until the hearing of the appeal if the undertakings to which I have just referred are then given and I will make formal orders as to costs on 17 August. I certify that this and the /gur (4) preceding pages are a true Copy or the Reasons for Judgment i of his Honour Mr. Justice Norling. Mf Li, ciate O Keso Dated: /O [8/8 3