Bankruptcy Act 1966 - appeal - debtor's petition - annulment - whether petition abuse of process - ratio decidendi of decision of High Court - whether dicta of High Court obiter Bankruptcy Act 1966 5.55 PETER CLYNE v. DEPUTY COMMISSIONER OF TAXATION AND WILLIAM EDWARD ANDREW No. G 373 of 1983 TOOHEY, JENKINSON & WILCOX JJ. SYDNEY 16 NOVEMBER 1984 deve wan IN THE FEDERAL COURT OF AUSTRALIA BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY No. G373 of 1984 www w www ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA (Mr. Justice Sweeney) BETWEEN: PETER CLYNE Appellant and ; DEPUTY COMMISSIONER OF TAXATION First Respondent and WILLIAM EDWARD ANDREW Second Respondent oO R D E R JURGES MAKING ORDER : Toohey, Jenkinson & Wilcox JJ. DATE OF ORDER : 16 November 1984 WHERE MADE 3 Sydney THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the costs of the respondents of the appeal. ~wewewewm - AUSTRALIAN CAPITAL TERRITORY No. G.373 of 1984 ON APPEAL COURT OF AU L (Mr Justice Sweeney) BETWEEN: PETER CLYNE: we Appellant ; r a AND: D ia] STO ie) ' TAXATION First Respondent AND: WILLIAM EDWARD ANDREW Second Respondent REASONS FOR JUDGMENT: CORAM: TOOHEY. JENKINSON AND WILCOX JJ DATE: 16 NOVEMBER 1984 PLACE: SYDNEY TOOHEY AND WILCOX JJ This matter. relating to bankruptcy proceedings broucaht by the Deputv Commissioner of Taxation against Peter Leopold Clyne. arises consequentiallv upon the decision of the 2. High Court of Australia in Clyne v Deputy Commissioner of Taxation (1984) 58 ALJR 398 in which the Court held that a sequestration order made by a Judge of this Court upon the petition of the Deputy Commissioner, as a judgement creditor of Mr Clyne, must be set aside as being made beyond power. The reason for that conclusion was that. shortly before the hearing of the creditor's petition. Mr Clyne had filed a debtor's petition which had been accepted by the Reqistrar with the result that he had become bankrupt pursuant to s.55(3)(b) of the Bankruptcy Act 1966. The High Court unanimously held that whilst a statutory bankruptcy continués this Court lacks power to make a sequestration order against the estate of the debtor pursuant toa creditor's petition founded ona debt incurred before the date upon which the debtor presented his petition. The matioritv of the High Court (Gibbs CJ. Murphy. Brennan and Dawson JJ) went on to hold that, where a debtor's petition constitutes an abuse of the process provided bv s.55 of the Act for the presentation of petitions bv debtors, it was open to this Court to annul the bankruptcy resulting from the presentation of that petition on the basis that the debtor's petition "ought not to have been presented": see s.154(1) of the Act. Their Honours then considered what constituted abuse of process. they having already noted that the maior consequence of the debtor being made bankrupt upon his own, rather than the Deputy Commissioner's petition,would be to oe me 3. shorten the period of relation back of the bankruptcy - apparently by about nine months - and that property which "might otherwise have been divisible amongst the creditors - might no longer be available for that purpose. At p 402 their Honours said: "In the present case the debtor submitted that he had not been guilty of any abuse of process, and that he was entitled to present his own petition for the purpose, which he frankly admitted, of preventing the making of a sequestratin order and thereby preventing his bankruptcy relating back to a time since when he has disposed of moneys to which the trustee's title may relate back. He relied on a dictum of Lord Evershed™.R. in Re Dunn at 647: 'The circumstance that the debtor has filed his petition in order to protect himself from evils which he might otherwise suffer, and not with anv benevolent intention of benefiting his creditors bv securing a fair distribution of assets amona them, is no reason why an order should not be made.' Re Dunn was the case of a gaming debt. which was possibly unenforceable, and it is not entirely clear from the report what were the 'evils' to which Lord Evershed referred. unless it was the possibility of having to fight a doubtful claim. That decision, and others like Ex parte Painter; Re Painter and Re Hancock, where the object of the petition was to avoid the pressure of a committal order, and Re Mottee. where the debtor wished to avoid a possible claim by his wife under the Matrimonial Causes Act 1959 (Cth). may be explained as cases in which 'the debtor was entitled to use the machinery of the Bankruptcy Act for his own purpose so as to shield himself from further liability to committal or other harassment': see Rea Debtor at 596. In none of those cases however was the debtor seeking to avoid a liability or harassment of a kind that ak eee new 4. resulted from the operation of the bankruptcy laws. In our opinion, a distinction must be drawn betwen the pursuit of 'an ulterior private purpose' - which may not necessarily amount to an abuse of process - and a purpose foreign to the nature of the process in question: see the discussion in Dowling v Colo 1 iet (1915) 20 CLR 509 at 521-523. It isa purpose foreign to the bankruptcy laws, and an abuse of process, for a debtor to present a petition for the purpose of making it impossible for a creditor to obtain a - sequestration order on a pending petition and with the further purpose of shortening the period of relation back, possibly placing beyond 'the reach of the trustee property which would otherwise vest in him. For these reasons we have concluded that although the Federal Court could not make a . sequestration order without first annulling the bankruptcy resulting from the acceptance of the debtor's own petition, it had power to make a sequestration order on the creditor's petition if it had first annulled the existing bankruptcy . However. no annulment was souqht either at first instance, or on appeal to the Full Court of the Federal Court, or in argument before us. Although no order annulling the bankruptcy resulting from the acceptance of the appellant''s own petition can be made here, it does not follow that the setting aside of the sequestration order should be followed by a dismissal of the petition. That would sanction what appears to be an abuse of process. The appropriate course is to allow the respondent or any other creditor an opportunity to apply for annulment." Their Honours thought that the sequestration order made by this Court should be set aside and the matter remitted to this Court. This became the order of the High Court. Deane J aqreed with the other members of the Court that an annulment of the statutory bankruptcy would remove the barrier to the making of a sequestration order upon the creditor's petition and accepted the 5. possibility that an annulment order would have been made if previously sought. But he thought it too late for the Deputy . Commissioner to now take that course and would have ordered that 'the creditor's petition be dismissed. The Deputy Commissioner took the course left open to hia by the High Court and made application for an annulment of the statutory bankruptcy on the ground that the presentation of a debtor's petition by Mr Clyne was, in the circumstances, an abuse of process. That application came before Sweeney J on 18 and 19 September 1984. At the hearing Mr Clyne expressly conceded that his purpose in presenting his own petition was to prevent the makina of a sequestration order upon the petition presented by the Deputy Commissioner. This was elaborated in the Notice of Appeal from the decision of Sweeney J wherein the appellant said: "(1) His Honour rightly held and it was common ground that the debtor's petition was filed by the appellant for the following purposes: (a) to make it impossible for the first respondent to obtain a sequestration order on his pending petition (b) to ensure that the trustee chosen by the appellant should be the trustee in the appellant's bankruptcv (ec) to avoid having the trustee chosen by the first respondent act as trustee in the appellant's bankruptcy (ad) to shorten the period of relation back". 6. At the commencement of the hearing before us Mr Clyne expressly reaffirmed his concession that these were the purposes actuating the presentation by him of his petition. In a judqement delivered on 12 October 1984 Sweeney J treated the concessions made before him as bringing the case within the principle stated by the majority Justices in the High Court, coneidered and rejected an argument relating to the exercise of the discretion of the Court and held that the statutory bankruptcy resulting from the presentation of the debtor's petition should be annulled. Mr Clyne now appeals fron that order. The attack on the order of Sweeney J was limited to one matter: whether, upon the facts conceded. there had been an abuse of the process provided bv 3.55. Although the Notice of Appeal as originally formulated (para 2(v) and (vi) ) challenged his Honour's ruling upon the matter of discretion, these crounds were expressly abandoned before us and the Notice of Appeal amended to delete any reference to them. In relation to that one matter Mr Clyne accepted that the facts conceded before Sweeney J fall squarely within the situation described in that part of the majority judaement in the Hich Court. quoted above, as "a purpose foreign to the bankruptcy laws, and an abuse of process". However, he submitted that his Honour erred in regarding himself as bound by what was there said, that this passade should be regarded as an obiter dictum and that his Honour, considering the 7. matter without reference to that passage, should have held that . it can never be an abuse of process for a debtor to accede to the invitation extended to him by 8.55 to present his own bankruptcy 7 petition. The advantages which he sought to obtain in presenting his petition, he contends, are advantages flowing from the operation of the Act itself. - in our view Sweeney J correctly held himself bound by what was said in the majority judgement about abuse of process. We do not accept that this was a mere obiter dictum: on the contrary it was critical to the order which the Court made. Had the majority not taken the view that the existence of the assumed purposes would amount to an abuse of process entitling the Court to annul the statutorv bankruptcy it would not have remitted the matter to this Court. In the absence of a possibility of annulment there was no purpose in keeping alive the creditor's petition: the majority would presumablv have aareed with Deane J that the Deputy Commissioner's petition be dismissed. Literally, therefore, the view of the matority upon this question was the reason for part of the decision of the Court. In support of his submission that the view of the Hiach Court majority was obiter Mr Clyne complained that there had not been full argument upon the question of annulment, and that although the matter was referred to. it was treated by the Court as not arising in the then proceedings. It is not possible. and it would not be fitting, for us to enter upon this question. There is before us a reasoned judgement of the High Court upon the precise question in issue in relation to which the view expressed was critical to the course taken by that Court. If the doctrine of precedent is to be respected, that must be enough. The appeal from the order of Sweeney J annulling the statutory bankruptcy should be dismiseed with costs. I certify that this and the seven preceding pages are a true copy of the Reasons for Judgement herein of their Honours Mr Justice Toohey and Mr Justice Wilcox. reroctare _{ [atsrten Kevrman Cc Date Ilo Miember [184 IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISTON = ——C—~—S——S OF NEW SOUTH WALES AND THE ) ) BANKRUPTCY DISTRICT OF THE STATE ) No. G373 of 1984 ) AUSTRALIAN CAPITAL TERRITORY ) On appeal from the Federal Court of Australia (Mr. Justice Sweeney) - BETWEEN: PETER CLYNE Appellant (First Respondent in the Court below) DEPUTY COMMISSIONER OF TAXATION i First Respondent (Applicant in the Court below) AND: WILLIAM EDWARD ANDREW Second Respondent (Second Respondent in the Court below) CORAM: Toohey, Jenkinson and Wilcox JJ. PLACE: Sydney DATE: 16 November, 1984 REASONS FOR JUDGMENT Jenkinson J. Appeal against an order annulling the bankruptcy of the appellant. On 6 September 1983 a petition presented against himself by the appellant was accepted by a Registrar in 2. Bankruptcy and, by force of s.55(3) of the Bankruptcy Act 1966, the appellant became a bankrupt. At that time a bankruptcy petition by the respondent Deputy Commissioner of Taxation against the appellant had been presented and served, and was pending. On 7 October 1983 a sequestration order was made by Beaumont J. on that petition. Appeals concerning that_order concluded on 31 July 1984, when the High Court set aside the sequestration order, holding that while the first bankruptcy continued there was no power to make such an order. The reasons of Gibbs C.J., Murphy, Brennan and Dawson JJ. included the following observations: "For these reasons, in our opinion, the Federal Court had no power to make the order that it did while the bankruptcy which resulted from the acceptance of the debtor's petition continued. It had, however, power to annul that bankruptcy, and the course open here was to annul the bankruptcy which arose by force of s.55 and then to make a sequestration order. Power to annul a bankruptcy is given by s.154(1) where the court is satisfied, in the case of a debtor's petition, 'that the petition ought not to have been presented or ought not to have been accepted by the Registrar'. The words of this paragraph show that the court has power to annul a bankruptcy resulting from the acceptance of a debtor's petition even though the petition was properly accepted by the Registrar. If the presentation of a petition amounted to an abuse of the process provided by s.55 of the Act, it can rightly be said that the petition ought not to have been presented and in those circumstances power exists to annul the bankruptcy resulting from its acceptance. It has been consistently held in England that the court has power to annul an adjudication and rescind a receiving order based on a debtor's own petition if the presentation of the petition was an abuse of the process of the court, and that this is so even though s.6 of the Bankruptcy Act 1914 (U.K.), and the predecessors of that section, are mandatory in form and provide that the court 'shall' make a receiving order on a 3. debtor's petition which alleges that the debtor is unable to pay his debts; see Re Bond (1888) 21 Q.B.D. 17; Ex parte Painter: Re Painter [1895] 1 Q.B. 85; Re Betts; Ex Parte Official Receiver [1901] 2 K.B. 39; Re Hancock K.B. : Re Dunn [1949] ch. 640; Re a Debtor [1967] Ch. 590. (The English legislation gave power to annul an adjudication, but not a receiving order, and it was therefore necessary to rescind later.) The principle of those decisions applies equally, in our opinion, when there is an abuse of the process provided by s.55, 'notwithstanding that it cannot be said that 'there has been an abuse of the process of the court because no judicial order is made when a registrar accepts the petition under s.55. We agree with the conclusion stated in Re Mottee (1977) 16 A.L.R. 129 at 135, that a bankruptcy resulting from the acceptance of a debtor's petition may be annulled if the presentation of the petition was an abuse of the procedure provided by s.55. In the present case the debtor submitted that he had not been guilty of any abuse of process, and that he was entitled to present his own petition for the purpose, which he frankly admitted, of preventing the making of a sequestration order and thereby preventing his bankruptcy relating back to a time since when he has disposed of moneys to which the trustee's title may relate back. He relied on a dictum of Lord Evershed M.R. in Re Dunn at 647: 'The circumstance that the debtor haa filed his petition in order to protect himself from evils which he might otherwise suffer, and not with any benevolent intention of benefiting his creditors by securing a fair distribution of assets among them, is no reason why an order should not be made.' Re Dunn was the case of a gaming debt, which was possibly unenforceable, and it is not entirely clear from the report what were the 'evils' to which Lord Evershed referred, unleas it was the possibility of having to fight a doubtful claim. That decision, and others like Ex parte Painter; Re Painter and Re Hancock, where the object of the petition was to avoid the pressure of a committal order, and Re Mottee, where the debtor wished to avoid a possible claim by his wife under the Matrimonial Causes Act 1959 (Cth), may be 4. explained as cases in which 'the debtor was entitled to use the machinery of the Bankruptcy Act for his own purpose so as to shield himself from further liability to committal or other harassment': see Re a Debtor at 596. In none of those cases however was the debtor seeking to avoid a liability or harassment of a kind that resulted from the operation of the bankruptcy laws. In our opinion, a distinction must be drawn between the pursuit of 'an ulterior private purpose' - which may not necessarily amount to an abuse of process - and a purpose foreign to the nature of the process in question: see the ' discussion in Dowling v. Colonial Mutual Life 'Assurance Society Ltd. (1915) 20 C.L-R. 509 at 521-523. It ts a purpose foreign to the bankruptcy laws, and an abuse of process, for a debtor to present a petition for the purpose of making it impossible for a creditor to obtain a sequestration order on a _ pending petition and with the further purpose of shortening the period of relation back, possibly placing beyond the reach of the trustee property which would otherwise vest in him. For these reasons we have concluded that although the Federal Court could not make a sequestration order without first annulling the bankruptcy resulting from the acceptance of the debtor's own petition, 1t had power to make a sequestration order on the creditor's petition 1f 1t had first annulled the existing bankruptcy. If it had ordered an annullment, no difficulty would have arisen in relation to the appointment of the trustee, since once the existing bankruptcy had been annulled the second respondent would have ceased to be a trustee and the third respondent would have automatically become the trustee upon the making of the sequestration order. Further, there is no doubt that the court has power to impose conditions on the making of an order for annulment and it would have been competent for the court to order that any costs properly incurred by Mr. Andrew should be paid out of the bankrupt's estate. It is not possible for the court on the present material to say whether, having regard to the orders made under s.50 of the Act, Mr. Andrew did properly incur any costs. However, no annulment was sought either at first instance, or on appeal to the Full Court of the Federal Court, or in argument before us. Although no order annulling the bankruptcy resulting from the acceptance of 5. the appellant's own petition can be made here, it does not follow that the setting aside of the sequestration order should be followed by a dismissal of the petition. That would sanction what appears to be an abuse of process. The appropriate course is to allow the respondent or any other creditor an opportunity to apply for annulment. Thereby the interests of the general body of creditors and the public may be protected. It is true that the respondent had an opportunity to apply for annulment and declined to take it, - but he cannot be held to have elected finally not to apply for annulment. The respondent was contending that the petition could found a sequestration order though the existing bankruptcy were not annulled. In those circumstances, the respondent cannot be taken to have elected not to apply for annulment if his contention were rejected. Now that the question is resolved against the respondent's contention, he must elect whether to apply for annulment. Although we regret that these proceedings cannot be brought more speedily to inality, we find it necessary to set aside the sequestration order made on the creditor's petition, and to order that the matter be remitted to a judge of the Federal Court to enable him to consider any application that may be made for an annulment of the sequestration order made on the debtor's own petition and any application for _ the imposition of conditions on the making of any order for annulment. If no application for an annulment is successfully made, the creditor's petition for a sequestration order must be dismissed. If an application for an annulment is successful, a sequestration order may be made on the creditor's petition if the other necessary proofs are satisfactory." (Clyne v. Deputy Commissioner of Taxation (No. 3) (1984) 58 A.L.J.R. 398 at 402-403). On 12 October 1984 Sweeney J. annulled the bankruptcy of the appellant on the application of the respondent Deputy Commissioner. 6. The grounds of the appeal against the order of Sweeney J., after amendment shortly after the hearing of the appeal commenced, were expressed thus: "2. The grounds of the appeal are as follows:- (i) His Honour rightly held and it was common ground that' the debtor's petition was filed by the appellant for the following purposes:- (a) To make it impossible for the first Respondent to obtain a sequestration order on his pending petition (b) To ensure that the trustee chosen by the appellant should be the trustee in the appellant's bankruptcy (c) To avoid having the trustee chosen by the first Respondent act as trustee in the appellant's bankruptcy (d) To shorten the period of relation back (ii) His Honour wrongly held that the above purposes or any combination thereof constituted or could constitute an abuse of process (iii) His Honour wrongly held that the above purposes or any combination of the same constituted or could constitute reasons for the conclusion that the debtor's petition should not have been presented (iv) That His Honour should have held that there is no such thing as an abuse of statutory process in relation to the presentation of a debtor's petition." 7. The second respondent is the person to whom reference is made in the grounds of appeal as "the trustee chosen by the appellant", and by whom an instrument of consent to act as the trustee of the appellant's estate in the event that the appellant should become a bankrupt had been filed with the Registrar, pursuant to 3s.156A, before the appellant's petition was presented. After referring to parts of the passage I have quoted from the reasons for judgment of the members of the High Court whose opinion had prevailed in Clyne v. Deputy Commissioner of Taxation (No. 3), supra, Sweeney J. observed: "I have therefore, in the first place, to answer the question whether the evidence before me brings the debtor within the operation of the doctrine so laid down. In the course of his final submission to me the debtor said that he asked for a finding that he had no other purpose than the choice of his own trustee and the shortening of the period of relation back. I am satisfied that the debtor wished to make it impossible for the applicant to obtain a sequestration order on his pending petition, and to avoid having as his trustee the person chosen by the applicant. I am also satisfied that he had the purpose of shortening the period of relation back. The debtor conceded, as was the fact, that the possibility existed that this would place beyond the reach of his trustee property which would otherwise vest in him. Having regard to the debtor's legal qualifications and experience and to his extensive writings and speeches on the subject of bankruptcy law and in particular on the steps which are open to a debtor who wishes to place obstacles in the path of a petitioning creditor, it is easy to conclude, as I do, that he was aware of the possible advantages to him of the shortening of the period of relation back. It is unnecessary and undesirable for the 8. court to attempt to decide the effect in money terms of the shortening of this period. That is a question for examination in the course of any administration of the estate of the debtor. In the present case it was common ground that there were at least two transactions by the debtor with his property during the period of relation back which would not have been open to attack by his trustee if the bankruptcy resulting from the acceptance of the debtor's own petition had remained on foot. - | The debtor submitted that if the court were satisfied, as it is, that there was an abuse of process, it should in the exercise of its discretion refuse to make an order of annulment. It is clear that the court has a discretion under 8.154." His Honour then passed to a consideration of matters relevant to the exercise of the discretion to which he had referred. When the appeal was heard, no appeal book had been prepared. After discussion and amendment of the notice of appeal, and after counsel for the second respondent had expressed that respondent's submission to such order as the court should see fit to make and had been excused from further attendance, the learned presiding judge addressed Mr. D. G. Hill of counsel for the respondent Deputy Commissioner. The transcript records what was said: "TOOHEY J.: Mr. Hill, in the light of the notice of appeal as it now stands, do you wish to. say anything about the appropriateness of the court's proceeding to hear the appeal in the absence of any material other than his Honour's judgment? MR HILL: We would see it as quite appropriate for the court to do so on the basis that Mr Clyne has 9. said earlier that he accepts the - findings of fact as well, that the court, Mr Justice Sweeney, made. TOOHEY J: Yes, thank you. TOOHEY J: The court is prepared to deal with the appeal on this basis, that an order has been made dispensing with the preparation of appeal books, but the material - which was before his Honour is before us - it is simply in its original form and is not in the . conventional form of inclusion in an appeal book. If counsel therefore wish to refer to any of that material they may do so and the court does not foreclose the possibility that we may ourselves need to resort to that material in determining the appeal. But on that basis, and on the assurance from Mr Clyne that none of his Honour's findings were challenged, we are prepared to hear the appeal." During the course of his submissions Mr. Hill addressed the question whether in the passage from the reasons of Sweeney J. which I have quoted there is expressed a finding that one of the purposes of the appellant in presenting a petition against himself was to bring about the result that the "two transactions" to which reference was made in that passage would precede the time at which his bankruptcy would, by virtue of s.115, be deemed to have commenced and thereby to avoid the result, which the making of a sequestration order upon the respondent Deputy Commissioner's petition would produce, that those transactions would follow "the commencement of the bankruptcy", within the defined meaning of that expression. a ee 10. When the appellant was asked whether he wished to address the court in reply, the following discussion followed: "MR CLYNE: Yes, sir. If your Honour pleases, first of all in relation to what the High Court said I frankly admitted to them, I never made any such admission, frank or otherwise - I think Mr Hill concedes that. Before - Sweeney J, the transcript of argument before the High Court was carefully gone through and no such admission became apparent. And this is one of the problems that arises when High Courts make decisions about matters that have not been properly debated. Secondly, your Honours, before Sweeney J - and this may be one aspect where the court may have to go back and have a look - I gave sworn evidence, which so far as I remember, was not contradicted, that the moneys involved in the two transactions - not challenged I should have said, or contradicted - that there were indeed two transactions during the disputed period and the moneys involved in those transactions had been disclosed as assets, in the statement of affairs filed with the debtors petition had been brought back from overseas and had been paid to Mr ......- - 6 « «, the trustee. So there was never any real question of my gaining any advantage whatsoever from the increased period of relation back. I aid put to the High Court, on a purely hypothetical basis, that it was a legitimate thing for a debtor to invoke the provisions of section 55 for the purpose of crystallizing his position and obtaining whatever advantages the Act gave him including the shortening - if the facts were appropriate - of ll. a period of relation back; and the whole problem has always been that what I put to the various courts as a hypothetical proposition seems to have been, somewhere or other, construed as an admission that I had a financial motive of some sorts in filing the petition. But in my submission, it would not matter in the end because my contention is that there is a legitimate purpose which a debtor is entitled to entertain when filing his petition, and it does not matter what his state of mind is that that purpose - - JENKINSON J: Yes, but what happens if your contention is not accepted in the ultimate court of apppeal and it does matter what your purpose was in relation to those transactions? MR CLYNE: Well, I do not know - - - JENKINSON J: That is our problem I _ suppose you would say. MR CLYNE: I can see that. Unfortunately, you know, every time I am brought down from the theoretical to the practical, that problem does arise. But anyhow the evidence as far as I know that was given before Sweeney J was that I had no financial advantage either in mind, nor was there any that I actually gained, nor was there any such purpose when I filed that petition. TOOHEY J: Mr. Clyne, just let me make this clear: we began this appeal and entertained it on the basis that there was no challenge to any findings of fact by his Honour. There are findings that he was satisfied that you had the purpose of shortening the period of relation back. There is a conclusion that you were aware of the possible advantages to MR CLYNE: JENKINSON J: MR CLYNE: JENKINSON J: MR CLYNE: JENKINSON J: 12. you of the shortening of the period of relation back. Those and other findings are findings which are accepted for the purpose of this court's decisions - - - Which I accepted - so that it may well be that what we have just been discussing is not relevant. But I thought the question I was asked by one of your Honours was what happens if we came to the conclusion, or if his Honour came to the conclusion that you had some other purpose over and above those admitted purposes, well then there is no such finding. I do not know whether we really need to go into - - - That is right, there is not. What do you think we might do about it, Mr. Clyne? Do you think we would look at the evidence and see whether properly considered it would have to compel that finding? I do not think that your Honour would inquire into whether or not a finding was supported by the evidence when that finding was not made. If we thought it was a finding necessary to the conclusion that the bankruptcy be annulled we might. Or if we wanted to be quite sure I suppose you would say we ought to send it back to Sweeney J to make quite sure that he makes the finding. Your Honour will see that, if your Honour does look at that material first of all that he made a finding in my favour which I also accept that I proceeded to the debtor's petition quite openly, that I had informed the Commissioner of the fact that I was going to do it. Oh yes, we are not concerned MR CLYNE: JENKINSON J: MR CLYNE: 13. about that, are we? We are talking about your purpose. I know. And I had asked his Honour and he did what I asked, to make no finding of any sort that I had either acted dishonestly or improperly or for any ulterior motive or for any purpose other than this which I conceded. My impression is that his findings are based on what I conceded. I do not know that there is any need to inquire beyond those parameters; they were set by the parties and accepted by his Honour, and what your Honour - - - But as you have learned already, what parameters the parties set do not always suit the High Court, do they? That is a fact. And sometimes the parties depart from one of the parameters as I did this morning. I do not know, your Honour, I cannot assist on that except to say this, that in my submission there is no finding and there 1s no evidence, there never has been any evidence, and there has never been = any admission to any court of my purpose - could I just get this Clear for the record because I might as well get it straight? There is no finding by his Honour, Mr Justice Sweeney. There was no evidence before his Honour, Mr Justice Sweeney. There was no admission by me before his Honour, Mr Justice Sweeney, and there was no admission by me before the High Court of there having been any purpose on my part when I filed the debtor's petition other than {1} to obtain the benefit of having the trustee of my choice: (2) to establish my own statutory bankruptcy and prevent the commissioner from obtaining a sequestration order bankruptcy. Inferentially (3), I do concede TOOHEY J: MR CLYNE: TOOHEY J: MR CLYNE: 14. - and I always have - that whatever advantages flowed to me from having a statutory bankruptcy and shutting out the Commissioner's sequestration order bankruptcy were deliberately obtained. So whatever advantage I got from the Act, it was my purpose to obtain that advantage. There is another purpose which you have not' referred to expressly and that is the purpose of shortening the period of relation back. In that respect there is a finding against you by his Honour, a finding which is not challenged. That is what I mean by what I just said, number 3, #=your Honour. If the statutory bankruptcy has a certain relation back under section 115(2) a sequestration order bankruptcy has a different and usually longer period of relation back under section 115(1). Yes, I understand that. But I put that to you because a finding of purpose in those terms is a finding of a purpose in terms used by the High Court. It may have some importance for that reason. It has to be so though, your Honour. If a statute makes available a procedure which has the result of shortening the relation back if it is invoked, and if a person who is familiar with the Bannkruptcy Act invokes that procedure, then it has to be inferred against him that it was his purpose to obtain that advantage. I have never disputed that and to the best of my ability I have said that every time. I am saying it again so there will not be any misunderstanding about it. I invoked a procedure which gave me certain advantages and I knew 15. what I was doing and I knew the - inferences and the consequences and it was my purpose to obtain those advantages." Upon a consideration of the passage I have quoted from the reasons of Sweeney J., I conclude that his Honour did make the finding I have specified. Upon a consideration of the evidence before the learned judge on the application for annulment I myself make that inferred finding. Upon that and the other findings of the learned judge the conclusion in my opinion follows that the appellant presented his petition for a purpose foreign to the bankruptcy laws and the presentation of the petition constituted an abuse of process. I cannot accept the appellant's submission that the exploitation of an advantage which presentation of a petition against oneself may gain in consequence of the operation of a provision or several provisions of the Bankruptcy Act cannot be characterised as an abuse of process and cannot justify a conclusion, pursuant to s.154(1)(s) of the Act, that the petition "ought not to have been presented". I respectfully accept the observations quoted from Clyne v. Deputy Commissioner of Taxation (No. 3), supra concerning the legal consequences of presenting a debtor's petition for a purpose foreign to the bankruptcy laws. It is unnecessary to determine whether those observations were obiter, as the appellant submitted that they were. 16. Being unable to uphold any of the grounds of appeal, I agree that it should be dismissed with costs.