, Not for distribution € JUDGMENT No.4 OE, ne IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) QLD PET 978 of 1987 BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND ) RE: DARRYL F. BLEDSOE EX PARTE: DEPUTY COMMISSIONER OF TAXATION SPENDER J. BRISBANE 3 AUGUST 1987 EX TEMPORE REASONS FOR JUDGMENT The debtor seeks an adjournment of a creditor's petition against him. The case for which I was dredging my memory before was Re William John Gleeson; ex parte Queensland Druggists Limited (unreported, 26.11.84). I gave judgment in that matter on 26 November 1984. In that case there was an application for an adjournment made by Mr. Gleeson and, on the morning of the adjourned hearing of the creditor's petition, counsel told me that Mr. Gleeson, the debtor, had on the previous Friday signed an authority for a registered trustee to call a meeting and take control of his property. In that case, I referred to the judgment of Mr. Justice Riley in Re Venetoulis; Ex parte Calsil Ltd. (1976) 1 at p. 626, where Mr. Justice Riley said:- " 25 AUC 87 ERAL CouveaT OF FED AUSTRALIA PAINCIPAL REGISTRY "On 1 June 1976 Calsil Ltd. filed a creditor's petition for a sequestration order against M.B. (Michael) Venetoulis. The return date of the petition was 18 August 1976. On that day I was told that on 11 August the debtor had signed an authority under s.188 of the Bankruptcy Act, that a registered trustee had consented in writing to exercise the powers conferred by the authority, and that a meeting of creditors was to be held soon. I thereupon adjourned the further hearing to 14 September, on which day 1t was, by consent, further adjourned to 29 September." In reliance on those observations, it was submitted for the debtor that, in the ordinary course, the matter should be adjourned so that the views of the creditors as a whole could be ascertained. In Field v. Commercial Banking Co. of Sydney Ltd. (1978) 22 A.L.R. 403, the Full Court of the Federal Court, by majority, dismissed an appeal from the trial jJudge's decision not to grant an adjournment go as to enable a meeting to be held pursuant to the authority under Part X. C.A. Sweeney and Franki JJ. said at p. 403: "The court has not adopted a practice, when a petition comes on for hearing after the execution of an authority and before any meeting of creditors has been held, of invariably or generally adjourning the hearing of the petition to enable the meeting to be held. It would be a strange result otherwise because, on the other hand, where a meeting of creditors has passed a special resolution for a deed, the court can, pursuant to s. 206 of the Bankruptcy Act 1966 (Com), adjourn the hearing of a petition only if 1t appears that it would be for the advantage of the creditors that the debtor's affairs be administered under the deed." Their Honours said at p.404: "The execution of an authority pursuant to Pt X of the Bankruptcy Act 1966 (Com) is only one of the circumstances, amongst many, to be considered with respect to an application for an adjournment of a creditor's petition." They referred to the well-known case of Rozenbes v. Kronhill (1956) 95 C.L.R. 407, where the High Court referrd to Cain v. Whyte (1933) 48 C.L.R. 639, and said: "this court expressed agreement with a judgment of the Supreme Court of Queensland (Henchman J.) in which his Honour said: ''...prima facie, on proof of the matters mentioned in s.56(2), the court will proceed to make an order for sequestration and ... 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 who are unable to get their debts paid to them as they become due. Something has to be put before the court to outweight those considerations before it can be said that sufficient cause 1S shown against the making of a sequestration order.'" In the light of the cases that I referred to there, it seems to me I ought not to grant the adjournment sought. On the other question, which is a short and interesting one, the position is that the Deputy Commissioner of Taxation, through his counsel, has indicated that it was his client's intention and hope that, pursuant to the provisions of 3.160, the official trustee would, on the making of the sequestration order, be trustee of the estate of the debtor. Section 160 provides:- "Tf at any time there is no registered trustee who is the trustee of the estate of a bankrupt, the Official Trustee shall, by force of this section, be the trustee of the estate." There seems in the provisions of the Act as they presently stand to be an initial preference for a _ private trustee. Section 157(1) provides that:- "Where a debtor becomes a bankrupt, the creditors may, if the Official Trustee 183 the trustee of the estate of the bankrupt, by resolution, at the first or a subsequent meeting of creditors, appoint a registered trustee to the office of trustee of the estate of the bankrupt in place of the Official Trustee." That is to say, the creditors may, by their choice, replace the Official Trustee with a registered trustee. On the other hand, where a registered trustee 1s the trustee of the estate of the bankrupt, ss.156A(4) and (5) provide that such a trustee can he removed by the Court on the application of a creditor if - "¢€a) ... the trustee is not fit to act as trustee; or (b) ... the connection of the trustee with, or the relation of the trustee to, the bankrupt 1s likely to make it difficult for him to act with impartiality in the interests of the creditors generally." That 1s to say, something in the nature of a disqualifying aspect has to be shown before a private trustee can be replaced or can be removed. The sub-section which is primarily relevant to the present question is 156A(3), which provides:- "Where - (a) at the time when a debtor becomes a bankrupt, a registered trustee has, under sub-section (1), consented to act as the trustee of the estate of the debtor and the consent has not been revoked, the registered trustee becomes, at that time, by force of this sub-section, the trustee of the estate of the bankrupt; Section 156A(1)(a) provides that:- "A registered trustee may, by instrument signed by him and filed with the Registrar, consent to act - (a) as the trustee of the estate of the debtor specified 1n the instrument 1n the event that the debtor becomes a bankrupt; The form prescribed by Rule 62B 18s, in the instance of the present case, Form 30B. This morning, at the callover of the creditor's petition, the consent of Desmond William Knight, which is dated today's date, 3 August 1987, was presented to the Registrar for filing. The Deputy Registrar hearing the callover merely placed the matter with the papers and referred the matter to me, it being indicated that there was a question in relation to whether Mr. Knight should act as trustee of the estate of the bankrupt. It has not been suggested that there is any abuse of process or a disqualifying feature about Mr. Knight acting as trustee of Mr. Bledsoe's estate should he become bankrupt. I do not think there 1s any basis on which the filing of this document should be resisted or any reason why I could order that Mr. Knight not act as trustee. The section 1tself is self-fulfilling: 1t does not require a court order that a person act as trustee of the estate of the debtor. The provisions of 156A(3) seem to be satisfied here. | certify that this and ts S — praveains mages are a true copy 9 S39 reaccns -or JLagment herein cf His Hoaser sy Mr Justice Sowider (5 \ {Ules | ' 2's { s7 Associa 2 je