} , Not for distribution IN THE FEDERAL COURT OF AUSTRALIA ) VA ) GENERAL DIVISTON ) Qld. Petitions 788 and 1337 of 86 Gy { Y BANKRUPTCY DISTRICT OF THE SOUTHERN } ) DISTRICT OF THE STATE OF QUEENSLAND ) 2 AFEB 1987 FEDERAL eotiay OF AUSTALIA PAINGIE GE RESUS AY RE: COHN WILLIAM JACKSON and SUSAN —" JACKSON ee EX PARTE: NATIONAL WESTMINSTER FINANCE (AUSTRALIA) LIMITED SPENDER J. BRISBANE 20 NOVEMBER, 1986. REASONS FOR JUDGMENT This is an application that the hearing of a creditor's petition be adjourned. It does have a number of quite unusual features. There are two associated creditor's petitions: onea joint petition against Mr. & Mrs. Jackson, which petition is number 788 of 1986; and the second is a petition against John William Jackson solely, that petition being number 1337 of 1986. It suffices for present purposes to confine consideration to the petition against Mr. Jackson personally. That petition is founded on a judgment of the Supreme Court of Queensland of the 14th May 1986, in which judgment was obtained against both Mr. Jackson and his wife in default of appearance in a Supreme Court proceedings number 1640 of 1986. The judgment sum and the amount in which the hankruptcy notice issued is 5§2,084,263.12. The material shows that this debt 1s founded on guarantees given by a number of companies as well as by John William Jackson and Maxene Susan Jackson. The application for an adjournment was made by Sterling Industries Limited (Receivers and Managers appointed), ("Sterling Industries"). As will later appear, Sterling Industries is an unsecured creditor of Mr. Jackson to the extent of $3,250,000.00 as a consequence of a judgment entered against him in the Federal Court of Australia, Sydney. That order was made by his Honour, Mr. Justice Neaves, on 29 April 1986. By a notice of motion filed in court, Sterling Industries sought amongst other things an order that Sterling Industries "be heard in opposition to the making of a sequestration order against the estate of the debtor", an order that Sterling Industries "be granted leave to intervene in these proceedings", and "an order adjourning the hearing of the petition herein." I granted the application made by Sterling Industries to be heard in respect of the making of the sequestration order and to seek the adjournment of it. It should be said that the application by Sterling Industries to be heard was not opposed by counsel for National Westminster Finance (Australia) Limited ("Natwest Finance"). It is clear that the making of a sequestration order on the petition of Natwest Finance would affect the rights of Sterling Industries pursuant to its judgment of 29 April 1986. Section 58(3) of the Bankruptcy Act 1966 provides that:- "Except as provided by this Act, after a debtor has become a bankrupt, it 1s not competent for a creditor - {a) to enforce any remedy against the person or the property of the bankrupt 1n respect of a provable debt; or (b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding." The making of a sequestration order on the petition of Natwest Finance would have the consequence of converting the remedies which Sterling Industries has in relation to its judgment against Mr. Jackson into a right to prove in his estate in bankruptcy. Unlike the position that applies on a company liquidation, there is no requirement that the hearing of a creditor's petition be advertised and, as a consequence, the position is that, generally, creditors are unaware that a creditor of a particular debtor is petitioning for the sequestration of the estate of that debtor. From time to time, however, creditors do appear and seek to be heard on whether a petition ought to be made. The basis on Which they are heard is a matter to which some attention should be directed. In Corporate Affairs Commission v. Bradley; Commonwealth of Australia (Intervener) (19741 1 N.S.W.L.R. 391, the Commonwealth, at first instance, had been granted leave to intervene on the hearing of whether the business name, Rhodesia Information Centre, ought properly to be registered. The Court of Appeal held that the Commonwealth ought not to have been granted leave to intervene. In the judgment of Hutley J.A., a detailed analysis of the cicumstances in which intervention ought properly to occur is. made. At p.396, he stated:- "A person accepted as an intervener becomes a party to the proceedings with all the privileges of a party. Thus he can appeal, tender evidence and participate fully in all aspects of the argument. His position is quite different from that of an amicus curiae. Interveners have been allowed to appeal. Thus the Attorney-General of the Commonwealth appealed to the Privy Council in Attorney-General of the Commonwealth of Australia v. The Queen (the Boilermakers' case) (1957) 95 C.L.R. 529; £19571 A.C. 288, though he was only an intervener in R. v. Kirby: Ex parte Boilermakers' Society of Australia (1956) 94 C.L.R. 254 in the High Court." me Hutley J.A. concluded that intervention was never permitted at common law and did not exist in equity unless permitted by statute or rule. Intervention was the rule in jurisdictions derived from the ecclesiastical or civil law. Intervention existed by statute in the matrimonial causes jurisdiction in certain circumstances, and also exists in probate. Reference was made by Hutley J.A. to the practice of the court in hearing an amicus curiae, while reliance was also placed on the practice of the Attorneys-General of the Commonwelth and States intervening in constitutional litigation in the High Court. In that regard, Hutley J.A. referred to the judgment of Dixon J., as he then was, in Australian Railways Union v. The Victorian Railways Commissioners (1930) 44 C.L.R. 319 at 331, where he said:- "I think we should be careful to allow arguments only in support of some right, authority or other legal title set up by the party intervening. Normally parties, and parties alone, appear in litigation. But, by a very special practice, the intervention of the States and the Commonwealth as persons interested has been permitted by the discretion of the Court in matters which arise under the Constitution. The discretion to permit appearances by counsel is a very wide one; but I think we would be wise to exercise it by allowing only those to be heard who wish to maintain some particular right, power or immunity in which they are concerned, and not merely to intervene to contend for what they consider to be a desirable state of the general law under the Constitution without regard to the diminution or enlargement of the powers which as States or as Commonwealth they May exercise." In Dollfus Mieg et Compagnie S.A. v. Bank of England £19513 Ch. 33, Wynn-Parry J. held that there was jurisdiction to permit the governments of the United States and France to be added as defendants, as they had a direct interest in the subject matter of the action anda right nearly akin to a proprietary right therein, the true test being what would be the result on the subject matter if the applicants' right could be established. Reference was made to the three classes of cases which are exceptions to the general rule that a plaintiff is not compelled to proceed against persons whom he has no desire to sue. The first of those three classes is a representative action in which the person seeking to intervene is one of a class that the plaintiff claims to represent and the intervener is unwilling to be so represented; the second class is where the proprietary rights of the iuntervener are directly affected by the proceedings; and the third class comprises actions for specific forms of contracts where third parties have an interest in the question of the manner in which the contracts should be performed. Those classes relate to Order 16 rule 1, as it then was, of the English Practice. There is no equivalent provision in the bankruptcy rules, but the cases show that creditors of a debtor have been permitted to be heard on the question of the disposition of the petition. They fall into the second class referred to above. The first of those to which I wish to refer is Re N.L.R. Griffin (1929) 46 W.N.N.S.W. 25. In that case, on an application under s.59 of the Bankruptcy Act 1924 for leave to withdraw a creditor's petition, Long Innes J. held that: ",..circumstances may exist when it would be proper for the Court to allow another creditor to show cause, or to attempt to show cause, why such leave should not be granted, notwithstanding the absence of any provision in the Act giving any such person a right to be heard on an application under the abovementioned section." In Re Harris (1930) 2 A.B.C. 77, the same judge was concerned with the hearing of a creditor's petition, and leave to intervene was granted to another creditor whose object was the protection of his own rights. His action resulted in no benefit to the creditors generally. While the case was concerned with the proper order as to costs in those circumstances, the sequestration order having been made, there appears to be no direct reference to the basis on which the intervention was granted or whether, in fact, there was any contention in relation to that issue. In Re McNamara (1930,31) 3 A.B.C. 169, the actual decision of which was reversed by the High Court in McNamara v. Langford (1931) 45 C.L.R. 267, a petition had been filed which came on for hearing some little time later. A person, not the petitioning creditor, to whom the debtor was indebted to an amount exceedingf50, obtained leave to appear and file affidavits and, if necessary, to be heard in support. When the petitioning creditor sought leave to withdraw, the application was opposed by the intervening creditor, who sought leave to be substituted as petitioner, as provided in s.35 of the Bankruptcy Act 1924. That application was granted but, on appeal, the High Court held that the person to be substituted under s.35 must be a person whose debt was in existence at the date of the act of bankruptcy alleged in the petition. Notwithstanding the extent of that litigation, no question seems to have arisen as to the right of Mrs. Langford to intervene. Finally in Re V.H. Moss and A. Moss; Ex parte D.W. Custer Pty.Ltd. (1948) 14 A.B.C. 160, Counsel for the Deputy Commissioner of Taxation, who was a creditor of Arthur Moss to the extent of £4000, sought leave to appear on his behalf, to protect his interests should any question of withdrawal of the petition by the petitioning creditor arise. Mansfield S.P.J., granted leave to the Deputy Commissioner of Taxation to appear on the hearing of the petition. Reliance was placed on Re N.L.R. Griffin and Re McNamara (supra). The report is silent as to whether there was opposition and as to the precise basis on which that leave was granted. In the circumstances of that case, his Honour also granted costs in respect of the appearance of the creditor who was not the petitioning creditor, those costs to be paid out of the bankrupt's estate. The ordinary principles that a party is entitled to be heard where his proprietary rights may be directly involved by the making of the order sought are reflected in the cases to which I have referred. Tam satisfied that it is not only competent but right that Sterling Industries should be heard on whether it was appropriate to make a sequestration order on the petition of Natwest Finance, that order having a direct and clear relevance to the rights of Sterling Industries under the judgment to which I have referred. It is necessary to have regard to the events leading to this present application. Those events are quite complex. They have their origin in the purchase by Sterling Industries of a number of taverns in May 1984. It was said in respect of those transactions that misrepresentations and contravention of the provisions of the Trade Practices Act 1974 had occurred and, on 10 August 1984, proceedings under the Trade Practices Act 1974 were commenced against NIM Services Proprietary Limited and John William Jackson in the Federal Court in Sydney. The trial of the matter had been listed for 4 November 1985, and was then adjourned until 11 November 1985 on the application of Mr. Jackson, the circumstances of the application for adjournment being his ill health. On 12 November the trial was further adjourned, and Mr. Jackson gave undertakings to the Court of a Mareva kind, undertaking not to dispose of his assets and so on. On 23 April eh 10. 1986, there was a motion for contempt heard by his Honour, Mr. Justice Sheppard, and his Honour made orders in respect of the payment of the sum of $3,000,000 into court (to which I need later refer in some detail). On 29 April 1986, Mr. Justice Neaves made an order by consent that there be judgment against Jackson in favour of Sterling Industries in the sum of $3,250.00. On 30 April 1986, Mr. Justice Beaumont made an ex parte order that Mr. Jackson be restrained up to and including 1 May 1986 from presenting a petition against himself, pursuant to s.55 of the Bankruptcy Act, and that the Registrar in Bankruptcy of the Southern District of the State of Queensland be restrained up to and including that time from accepting such petition. That order was as a result of Sterling Industries learning that it was proposed, but had not yet been done, that Jackson present a debtor's petition in Brisbane. On 2 May 1986, the Full Court of the Federal Court granted leave to appeal from the order of Mr. Justice Sheppard, but no stay of that order was given. On 6 May 1986, Burchett J. further continued the order made by Mr. Justice Beaumont on 30 April (and which had been extended) and on that day there was default by Mr. Jackson in compliance with the oder of Mr. Justice Sheppard, as extended by, first, Mr. Justice Beaumont and then by Mr. Justice Burchett. ee ee ll. On 22 May 1986, Mr. Justice Woodward adjourned the motion for contempt until the decision of the Full Court in the appeal from the order of Mr. Justice Sheppard. The appeal was heard on 4 and 5 August 1986. On 5 September 1986, Mr. Justice Burchett delivered judgment, and extended the orders restraining Mr. Jackson from presenting his own petition, and from the Registrar for the Southern District from accepting it. The basis of that judgment, in short, was that it would be an abuse of process to enable Mr. Jackson, by the mechanism of a debtor's petition, to frustrate the orders made by Mr. Justice Sheppard. On 15 October 1986, the Full Court dismissed by a majority the appeal of Mr. Jackson against the order of Mr. Justice Sheppard. On 4 November, an application for special leave to appeal to the High Court from a Full Court judgment was made. On 14 November, Mr. Jackson was committed for trial to criminal courts in Queensland on charges arising out of the events which were canvassed in the judgment of Mr. Justice Sheppard; that is to say, in relation to an alleged purchase by Mr. Jackson for $4.3 million of diamonds which, in fact, turned out to be fake. It is accepted that that trial will not proceed this year, and I am also told from the bar table, and it is accepted by the parties, that on 4 December, it is anticipated that the 12. application for special leave to appeal to the High Court will be heard, and that on 5 December, the motion for contempt of the Federal Court in Sydney is listed for mention and to fix a hearing date. For myself, I find some difficulty in these proceedings, which difficulty is occasioned by the fact that the contempt proceedings have been adjourned until the determination of the correctness or otherwise of the order of Mr. Justice Sheppard. By s.5 of the Federal Court of Australia Act 1976, the Federal Court is a court of record, and the orders of the court, therefore, remain valid until they are set aside. It its inimicable to the orderly and efficient discharge of the court's business if a party can disobey an order made by the court on the basis that he believes that it might be possible successfully to challenge the validity of that order on appeal. It cannot be that a party is entitled not to obey an order of the court on the ground that that party believes that there may be error in the order. Until the order is set aside, it stands in full force and effect and should be obeyed. If the appeal is successful, that does not, in my view, affect the obligation of the party to comply with the order in the terms in Which it was made. If, on the other hand, sucha practice were to be tolerated, it would mean that, on the hearing of committal for contempt proceedings, a party could urge that non-compliance was 13. occasioned by a genuine belief that the order was erroneous. While I fully appreciate that, as Mr. Justice Sheppard himself conceded, the order that he made was of a novel kind and, as the disagreement in the Full Court indicates, there is not unanimity as to the correctness of it, in no way does the obligation of a litigant to obey the orders of a court depend on an assessment of the correctness or otherwise of that order. If non-compliance of the order is to be engaged in, it can only be as the consequence of a successful application to stay the operation of the order, which did not apply in this case. That has a real significance in these proceedings, because it is the gravamen of Sterling Industries' application that the sequestration order ought not be permitted to be made because it would have the effect of frustrating the prospect of the sum of $3,000,000 being available to the general body of the creditors of Mr. Jackson if, by committal proceedings and the coercive powers associated or inherent in such powers, compliance with the order of Mr. Justice Sheppard can be obtained. That coercive power of the committal proceedings, it is submitted, would be put at risk by the making of a sequestration order in that Jackson would, by that order, be legally precluded from complying with the order of Mr. Justice Sheppard to pay the sum of $3,000,000 into court and, in those circumstances, the making of the sequestration order ought to be postponed until a reasonable opportunity has been given to enable the committal proceedings to be attempted to realise moneys for the benefit of creditors. 14, In that regard, reference ought to be made to two cases: first, in A.N.S. Nominees Pty.Ltd. v. Beverly Manufacturing Co. Pty. Ltd. £19793 2 N.S.W.L.R. 875, Needham J. was concerned with an application by a vendor for leave to issue a writ of sequestration against the property of the director of the purchaser, the purchaser having at some earlier time been wound up for insolvency. Needham J. said at 878:- "It is plain that sequestration is not directed to enforcing direct compliance with the judgment or order but is, again, a persuasive power depriving the person bound by the judgment or order of his personal property until such time as he complies with the judgment or the order. In the case of r. 6(2)(c) the purpose of the rule 1s even more clear, because that subrule gives the Court a power to commit an officer of a corporation, the corporation being the person bound by the judgment or order, or to sequestrate the property of the officer. It 1s the corporation in such a case which is bound by the judgment or order, not the officer, and the committal or sequestration of the property of the officer, 1n my opinion, must be directed towards obtaining the co-operation of the officer in persuading the corporation to comply with its obligations under the judgment or order. Rule 6(2)(c) does not substitute the officer for the corporation as the person bound by the judgment. It has the effect, in my opinion, to which I have already referred. In those circumstances, I think that the use of r.6 (2)(c) is limited to cases where orders made can have the effect of enforcement of a judgment. If the person bound by the judgment was legally unable to comply with it, then it seems to me the Court would not have power to commit an officer of a corporation in such a position under the provisions of r.6(2)(c). Nor would the Court have power to sequestrate that officer's property." In Enfield London Borough Council v. Mahoney [19831] 2 All E.R. 901, Mr. Mahoney had found a cross on the property of the local authority and had refused to surrender it to that local 15. authority. The court had made an order requiring him to deliver up the cross, which he failed to do. In proceedings for contempt, he was adjudged guilty of a serious contempt and, because the learned judge dealing with the matter thought the severity of the sentence might coerce the defendant into changing his mind, he imposed the maximum period of imprisonment of two years permitted under the Contempt of Court Act 1981. After serving nearly 12 months, it appearing that there was no inclination on the part of Mr. Mahoney to purge his contempt and rather, on the contrary, he was enjoying the novelty and attention which his case had attracted, an application to the court for a discharge was made by the Official Receiver, on the ground that 12 months imprisonment was sufficient punishment for the contempt. In the Court of Appeal, Civil Division, May L.J. said:- "As this court made clear in Re Barrell Enterprises £19721 3 All E.R. 631, £19733 1W.L.R. 19, to which Watkins L.J. had referred, the reasons fora committal to custody for a civil contempt are twofold: first, to punish the contemnor for disobedience of an order of the court and second, to attempt to coerce him to comply with the order." He later said:- "I therefore ask myself whether continuing custody in so far as he is concerned will have any coercive effect. I think that it is quite clear, 16. as Watkins L.J. has said, that it will not, and that any further imprisonment of Mr. Mahoney in this case will only enable him and his family to continue to exploit the existing situation to their misguided and selfish benefit." The basis of the application for an adjournment is not the usual one, either. Ordinarily, the object of an application for an adjournment is ultimately to resist the making of a sequestration order. Usuaully, it is sought either by the debtor, or by a creditor, or some number of creditors who desire a course other than that of sequestration to be followed. In this particular case, that is not necessarily the position of Sterling Industries. What it seeks is that the sequestration order not be made now, but that the hearing of the application for sequestration be adjourned until at least an attempt has been made, by the committal process for contempt, to persuade or coerce Mr. Jackson of disgorging in accordance with the order of Mr. Justice Sheppard. Sterling Industries asserts that, since one of the purposes of the coercive process of committal 1s to enforce compliance with the order of Mr. Justice Sheppard, it should not be shut out at this stage. If a sequestratin order is made, then Jackson is precluded by law from obeying the order of Mr. Justice Sheppard. The powers of the court and, therefore, the likely prospects of inducing compliance with the order of Mr. Justice Sheppard, will be greatly circumscribed by the making of a sequestration order. 17. 'The rival contention can equally shortly be put. That is that realistically Jackson is not going to disgorge the sums the subject of the order of Mr. Justice Sheppard, and that unnecessary delay will, therefore, be occasioned by adjourning the proceedings for a sequestration order. Applying the principle that a petitioning creditor prima facie is entitled to the rights given to him by the Bankruptcy Act 1966 and it not being shown that Natwest Finance is acting for any improper motive and, indeed, is a not insubstantial creditor, the sequestration order ought to be made and the ordinary processes of the bankruptcy law, including the discovery and realisation of the property the divisible property of the bankrupt, should be put into action. That, 1t is submitted, is the better method of securing the interests of the creditors of Mr. Jackson generally. So far as Sterling Industries is concerned, it may be accepted that the making of a sequestration order affects not only the legal rights of Sterling Industries and of Natwest Finance but also the legal rights of all other crditors. That is a consequence of s.58(3)a to which I have referred. I accept that the court ought not to be concerned only with the interests of the petitioning creditor but also with those of other creditors. Sterling Industries claims that ",..the real exposure of the petitioning creditor (after realization of the various securities which it holds, albeit not directly from John William Jackson) is substantially less than the amount of the judgments, and substantially less than the amount of the judgment obtained by Sterling." 18. While I accept that the amount of the judgments that Natwest Finance holds has been reduced by not an inconsiderable sum by the realization of a property, which has already occurred, and will also be substantially reduced by a further property which it holds, the material before me is not sufficient to say the extent to which that reduction will occur, except in the most general terms, and I think it is fair to proceed on the basis that, while the question of what ultimately will be the amount properly owing by Jackson to the petitioning creditor is uncertain, Natwest Finance from its point of view will be a substantial creditor of Mr. Jackson and is properly, in its view, seeking sequestration as being the method best suited in its commercial interests, and not inconsistent with the general interests of the creditors. It was submitted by Sterling Industries that, if an adjournment were refused, Jackson would be enabled to achieve indirectly what he has been enjoined from doing directly by Mr. Justice Burchett. The solicitor for Mr. Jackson who appeared on the hearing did not oppose the orders sought; his words were: "Mr. dackson was certainly not opposing the making of a sequestration order." There is not the slightest suggestion of collusion on the part of Mr. Jackson and the petitioning creditor, nor am I satisfied that there is anything other than a bona fide assessment of its own commercial interests that is prompting the petition for sequestration by the petitioning creditor. The fact that, if the sequestration is made on Natwest Finance's petition, 139. that will have a consequence much to be desired by Mr. Jackson, is not a matter which, in my view, should be prejudicial toa situation where otherwise it would be appropriate to grant to Natwest Finance the relief which the Bankruptcy Act gives it. It was suggested (and it is not an unimportant submission) that the prejudice to a petitioning creditor, if an adjournment is given, is not very great in that the petition remains on foot for 12 months after presentation (s.52(4)(a)) and can be further extended (3.52(5)), and that the other creditors are also protected by reason of the relation back period already having commenced, (s.115(1)). The question of prejudice to Natwest Finance by the adjournment of its petition has troubled me but, on balance, it seems to me that the possibility of some benefit accruing to the body of creditors generaily from allowing the committal application to proceed without the shackles of sequestration against Jackson is not antipathetical to the putting into motion of the disciplinary and investigatory powers of the Bankruptcy Act after sequestration. In a sense, they may be viewed as complementary, and I do not think it appropriate to make a sequestration order at this stage, since there may be something to be gained from permitting the committal proceedings to proceed unimpeded. That is a chance that I think ought to be permitted to be taken. Section 52(2) provides:- 20. "Tf the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor - {a) that he is able to pay his debts; or (b) that for other sufficient cause a sequestration order ought not to be made, it may dismiss the petition." That section is not directly in point here but, in essence, the application of Sterling Industries is that the court ought to adjourn the hearing of the petition for sequestration because there is sufficient cause why it ought not to be made at this stage. The plain view of the petitioning creditor is that Jackson is not going to disgorge. While that is a very real likelihood, I am not persuaded that that, beyond question, is what is going to occur and, weighing up the chances of something happening in that respect as against the likely prejudice to the creditors generally of postponing the hearing of the petition until that avenue has been further explored, it seems to me that, on balance, I ought properly to adjourn the petition. As to what I ought properly to do, I have had regard to a number of considerations. In Cain v. Whyte (1933) 48 C.L.R. 639, the High Court expressed agreement with the judgment of the Supreme Court of Queensland constituted by Henchman J.. Henchman J. had at first instance said, (his remarks being reported at p.646):- ",.-prima facie, on proof of the matters mentioned in s.56(2), the Court will proceed to make an order for sequestration, and that it is for the debtor to show some cause overriding the interest of the public in the stopping of unremunerative trading, and the rights of individual creditors 21. who are unable to get their debts paid to them as they become due. Something has to be put before the Court to outweigh those considerations before it can be said that sufficient cause is shown against the making of a sequestration order." In Mercantile Credits Limited v. Foster Clark (Australia) Limited (19651 A.L.R. 574, the Full Court was concerned with an appeal from a finding by the primary judge that he had jurisdiction to make a winding up order in respect of a company; that he hada discretion in that matter and that he ought to exercise it against the claim for winding up. The Full Court of the High Court constituted by Kitto, Taylor and Windeyer JJ. said at 575:- "The learned judge held that he had jurisdiction in the circumstances of the case to make a winding up order, and indeed no argument to the contrary seems to have been addressed to him. Nor is his jurisdiction questioned in this appeal. It could hardly be questioned, in view of such cases as Re Commercial Bank of South Australia (1886), 33 Ch. D. 4174, and Re Hibernian Merchants LUtd., £1958] Ch.76; £1957] 3 All E.R. 97. The contention to which the judge gave effect was that he hada discretion in the matter and ought to exercise it against the claim for a winding up. That he had a discretion is undoubted: see s. 197; Re Channel House Colliery Co. (1883), 24 Ch. D. 259. But it was a judicial discretion to be exercised in accordance with established principles. The leading principle is that as between himself and the company a creditor has a prima facie right to a winding up order: Re James Milward & Co., [1940] Ch.333; £19401 1 All E.R. 347; Re Home Remedies Ltd., C1943] Ch. 1; £19421 2 All E.R. 552; Re B. Karsberg Ltd., £19553 3 All E.R. 854. It isa right which he possesses on behalf of the whole class of creditors to which he belongs: Re Crigglestone Coal Co., [19061 2 Ch. 327; [1904-71 All E.R. Rep. 894; Re P. & J. Macrae Ltd., £19613 1 All E.R. 302, and for that reason the wishes of the majority in value, if they are expressed, will always be considered." 22. In this case, I accept that the material does not establish that Sterling Industries is the majority in value of the creditors of Jackson. All that can be gleaned from the material is that it is a substantial creditor and that this is not aocase where Sterling Industries' application ought to be viewed as representative of the view of the majority of Jackson's creditors. In Mercantile Credits Limited case, the position was that, as their Honours said at 576:- "The respondent bank opposes a winding up order precisely because this would be the result: it wishes to be ina position to apply for payment out to itself of the whole of the moneys in court." This is not the case here. Sterling Industries accepts that any sums paid into court pursuant to the order of Mr. Justice Sheppard are funds which are available for all the creditors of Jackson. As to an adjournment, $.33(1)(a) gives to the court a very wide discretion. That sub-paragraph provides:- "The Court may - (a) upon such terms as it thinks fit, at any time adjourn any proceeding before it, either to a fixed date or generally;" In Re Galvin (1952) 16 A.B.C. 38, a debtor had entered into a deed of arrangement under Part XII of the Bankruptcy Act 23. 1924, following which a non-consenting creditor presented a petition for sequestration of his estate. This was opposed by the trustee under the provisions of that Act, on the ground that it was to the advantage of the creditors that the estate should be administered under the deed. Clyne J. said at 42:- "The Court in acting under the provisions of s.197A has, I think, a wide discretion in the exercise of which the advantage of the creditors is not and cannot be the sole consideration. It is difficult to enumerate the considerations by which the Court should be guided upon this question. It is obvious that the interests of the petitioning creditor and of other creditors who have not assented to the deed cannot be disregarded. The interest of the public is also a very important consideration. Involved in this consideration is the conduct of the debtor." In Re Dolman & Ors.; Ex parte Elder Smith Goldsbrough Mort Ltd. (1967) 10 F.L.R. 384, Gibbs J., as he was then, in the Federal Court of Bankruptcy, held that:- "when a debtor shows that there is a deed of arrangement under Pt.XII of the Act and that there are some advantages in allowing an administration to take place under the deed, it does not follow that the petition must be dismissed unless the petitioning creditor proves that there are advantages to be gained from making a sequestration order." At p.390, his Honour said:- "In my opinion it is not helpful to approach a case of this kind by saying that the petitioning creditor has cast upon him the onus of proving that there would be advantages in making a sequestration order. Clearly enough, in the first instance, the debtor has the onus of showing facts which amount to 'sufficient cause' within s.56(3)(b) why no order should be made. When he has shown that there is a deed of arrangement under Pt.XII, and that there are some advantages in allowing an administration to take place under the deed, it does not follow that the petition 24. must be dismissed unless the petitioning creditor proves that there are advantages to be gained from making a sequestration order. The Court has a discretion to exercise; it is a wide discretion and must be exercised in the light of all the circumstances, not forgetting on the one hand that the petitioning creditor, if he has proved the existence of the debt and the act of hankruptcy, hag what may be called a prima facie right toa sequestration order, and, on the other hand, that the fact that a majority in number and value of the creditors desires an administration under the deed is a matter to be considered, and is an important matter if the majority is substantial. Finally, however, the Court has to decide in what Manner the discretion should be exercised in all the circumstances of the particular case, having regard to the interests of the various parties and the interest of the public (cf. Faulkner v. The Commonwealth (1962) 20 A.B.C. 148, at p.153; and Re Galvin (1952) 16 A.B.C. 38, at pp.42-43." Finally, reference can shortly be made to two further cases. In Re Grahame; Ex parte White (1940) 11A.B.C. 141, the debtor asked that the hearing of a creditor's petition against him be adjourned because there was the prospective sale of certain assets which would nore than cover his outstanding debts. That application was refused because the evidence was fragmentary, uncorroborated, and there were some doubts about the debtor's bona fides. Lukin J. said at 143:- "The discretion of the court to grant adjournments of petitions is referred to by Lord Esher M.R. in Re Thurlow; Ex parte Official Receiver £(1895) 1 Q.B. 724 at p.7303 where, referring to the case In re Reed, Bowen & Co. £(1887) 19 9.B.D. 24473 he said: 'The result of that case is that it is obligatory to make an adjudication of bankruptcy, unless something exists which constitutes a gocd reason for an adjournment.' See also Re Heyl, ex parte D.P. Morgan Ltd. £(1918) 1 K.B. 452 at p. 4563 where Swinfen Eady L.J. says: 'Speaking generally IT have formed the opinion these bankruptcy petitions are adjourned from time to time much more frequently than they should be. It is in the discretion of the Court ... whether an adjournment shall be granted or not.'" 25. And finally, in Re John Martyn and John Vivian Martyn; Ex parte Capes (1929) 1 A.B.C. 176, Foster J. was dealing with a petition. Some of the creditors other than the petitioning creditor had an informal meeting where they had agreed that a deed of assignment or a Pt. XI should be accepted from the debtor. Foster J. also referred to the observations of Lord Esher in the case to which I have referred. Those observations also included:- "The result of that case is that it 1s obligatory to make an adjudication of bankruptcy, unless something exists which constitutes a good reason for an adjournment. The power of adjournment is given to the Court in the largest possible terms by s.105(2) of the Bankruptcy Act, 1883, which provides that 'the Court may at any time adjourn any proceedings before it upon such terms, if any, as it may think fit to impose.' That enactment appears to me to apply to proceedings under s.20,(1), as much as to proceedings under any other section, and to enable the Court, even where the case is brought within that section, for good reason to adjourn the proceedings, although in the absence of such reason it would be bound forthwith to adjudicate the debtor bankrupt." Having considered the factual circumstances before him, his Honour declined the adjournment and made the sequestration order. The present matter is by no means clear cut. I am of the view that, on balance, it would better serve the interests of the creditors generally if the hearing of the petitioning creditor's petition be adjourned so as to enable the opportunity of the committal proceedings to be further explored without the shackles that would attend that application if a sequestration order were now made. While I am anxious not to adjourn this matter indefinitely, it seems tome that I should grant the 26. application for an adjournment and adjourn the matter to the first bankruptcy day in February of 1987 where I will review what has occurred after today and reconsider whether a further adjournment is appropriate. There is one matter dealing with the assets of Mr. Jackson with which it is appropriate to deal and I will now deal with that. Counsel for Natwest FPinance filed affidavits by Alan Richard Taylor, a registered trustee, and by his instructing solicitor, Mr. David John Edwards. That material shows that approximately two months ago Mr. Jackson executed and signed an authority under Pt.X of the Bankruptcy Act 1966 appointing Mr. Taylor controlling trustee of his estate. At that time he surrendered to Mr. Taylor a late model Mercedes Benz, registered number 310 NSY, which vehicle is currently located at Southside Auto Auctions at Woolloongabba and a computer comprising C.P.U., terminal, high speed printer and V.C.R. which is located presently at Systems and Management in Fortitude Valley. Further, there were given into the control of Mr. Taylor certain pieces of office furniture which are now located at Alex OQverett Auction Centre. These chattels are incurring costs by way of storage and, on the basis that the hearing of the sequestration petition is adjourned, the petitioning creditor asks for an order that these items of the property of Mr. Jackson be the subject of an order of the Court. ¢ @ ° ar 27. Section 50(1) provides:- "If, on application by a creditor, it is 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." A question may arise as to whether that merely entitles the Court to give directions to a registered trustee in respect of the entirety of the property of the debtor or whether, since the whole includes the part, it is competent for the Court to direct a specified registered trustee to take control of a specified part of the property of the debtor constituted in this particular case by identified chattels. For myself, I think the Court does have that power. It is obviously conducive to the purposes of the Bankruptcy Act that, in an appropriate case, the Court preserve and maintain property for possible later distribution. It may not he appropriate to make an order which applies to the whole of the property of Mr. Jackson under s.50(1), as this might tend to frustrate the committal for contempt proceedings in a like way as a sequestration order would. It should be noted, however, that sequestration vests the property in the trustee, while an order under s.50 would merely direct the trustee to take control of it. I should also refer to the general powers of courts in bankruptcy. Section 30(1) provides:- 28. "The Court - (a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part X or Part KI coming within the cognizance of the Court; and (b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter." While this is a general power, I feel confident that, either separately or in conjunction, ss.30(1) and 50(1) enable me to make the order sought by the petitioning creditor. I am satisfied that it is necessary in the interests of creditors that somebody take control of this specified property because it may be some time before the matter ultimately is resolved, and I therefore direct that Alan Richard Taylor, a registered trustee, take control of Mercedes Benz motor vehicle, registration number 310 NSY, presently situated at Southside Auto Auctions, Woolloongabba, and the computer comprising a C.P.U. terminal, high speed printer and V.C.R. situated at Systems and Management, Fortitude Valley, which are the chattels referred to in paragraph 3B of the affidavit of David John Edwards, filed today by leave, and of the items of office furniture which are currently situated at Alex OQverett Auction Centre, being those items referred to in paragraph 3C of the affidavit of David John Edwards filed today by leave. 1 certify that this and the 27] preceding pages are a true copy of the reasons for judgment herein of His Honour Mr. Justice Spender <X. Urania Sf Associate Dated Zofry (BPG