see CATCHWORDS BANKRUPTCY - Section 50 - Whether the section authorises appointment of a receiver - Form of summonses under sub-section (2) of section 50 - Appropriate seal to be placed on summonses issued under section 50 - "Formal defect or irregularity". Bankruptcy Act 1966 (C'wth) s.50 RE: WILLIAM CHOI ON ON NSW Pet. 839 of 1985 Burchett J. 24 June 1985 Sydney a Ii THE FEDERAL COURT OCF AUSTRALIA GENERAL DIVISTON NSW Pet. 839 of 1985 BANKRUPTCY DISTRICT OF THE STATE wee ewe ew OF NEW SOUTH WALES RE: WILLIAM CHOI ON ON MINUTE OF ORDER OF THE COURT JUDGE MAKING ORDER: Burchett J. DATE OF ORDER: ~ . 24, June 1985 WHERE MADE: Sydney —- THE COURT ORDERS THAT: The applications 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 summons, be each dismissed, costs to be reserved. And that the applications of Ping-Ju Choi Ng be dismissed, costs to he reserved. IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE NSW Pet. 839 of 1985 wevevevrvwns OF NEW SOUTH WALES RE: WILLIAM CHOI ON ON BURCHETT J. =~ 24 JUNE 1985 age SS et Po - SE REASONS FOR JUDGMENT 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 Qn and his wife Ping-Ju Choi Ng be summoned to give evidence and produce hooks regarding the said William Choi On On (to whom I shall refer as Mr. Choi) or his trade dealings 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. §.50 of the Bankruptcy Act 1966 reads as follows: "50. If, on application by a creditor, it 1s shown to be necessary in the interests of the creditors, the Court may, at any time 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 relation to that property as the Court considers just. (2) Without limiting the generality of sub-section (1), the Court may, at any time after giving a direction 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, to attend, on a@ date and at a time and place fixed in the summons, before the Court or the Registrar ofif the Court thinks fit, before a magistrate, to give 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 to such 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 861. (3) In this section, "modification" includes the addition or omission of a provision or the substitution of a provision for another provision." Mr. Garling, 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 is two-fold: 1t provides for a direction to a trustee "to take control of the property of the debtor", and then, in a case where such a 3. direction is made, for the Court also to "make such orders in relation to that property as the Court considers just." In my opinion, the width of this last provision makes resort to s.30(1)(b) unnecessary, and it is capable of sustaining an order appointing and empowering a receiver of the property, even 1f that order involves wider powers than those necessarily implicit in an appointment of a trustee directed to take control on of the debtor's property®" Indeed, the opening words of sub-s.(2) vee lam show that extensive ancillary orders were in the contemplation of the draftsman, for he was concerned that ss.(2) should not cut down the meaning of ss.(1). 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 s.50. I think 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. Choi'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 discharged. I think the order should stand. Counsel also challenged the order, pursuant to s5.50(2), for the 1ssue of summonses in respect of the debtor and his 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 the case is one for the application of rule 195 and s.306. No injustice was caused. Then it was said the summonses were too a= ete wide and oppressive. - Each of the summonses is in the terms Rte +: prescribed by rule 129(2). Those terms, referring as they do to She 4 oe ' r +. s.50 and reflecting the terms of- the section itself, must be 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 wide 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 Australia, and to rule 129, I think 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 this basis, 5. OF pig BIRD oe . . there is in the proceedings to examine Mr. and Mrs. Choi under s.50 "a formal defect or an irregularity" within s.306 which in my opinion has not caused any injustice. The present applications demonstrate that Mr. and Mrs. Choi have been made aware of the Court's orders under s.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. In accordance with these reasons I order that the cv. epplications 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 summons, he each. dismissed, costs to he reserved, and that the applications of Ping-Ju Choi Ng be dismissed, costs to be — reserved. --- . - I certify that this andthe feue. % preceding peges are a true copy of the Reasons for Judgment herein of his Honour q - Mr. Justice Poogore ty vg ett olf uo __ Associata aT Dated: Zoe lo oon ae ~ 1s