JUDGMENT No. =S1...33 steed_seerntaraaccensse CATCHWORDS BANKRUPTCY -— Practice - Debtor a party to proceedings in the Family Court regarding division of property - Whether any collision between bankruptcy law and family law - Whether bankruptcy proceedings should be adjourned pending hearing in Family Court - Whether application for sequestration order under s.236(3) was stale as a deemed petition by virtue of ss.52(4) and 236(5) - Principles relating to adjournment of a proceeding pending the hearing of another proceeding - Whether leave to appeal against a discretionary judgment should be granted - Decision turning on error of principle - Desirability of prompt sequestration in a case where a deed of arrangement has been set aside under s.236 - Effect of protection of maintenance order or maintenance agreement under s.123(6). Income Tax - Application for relief under s.265 on ground of Serious hardship - Refusal does not create estoppel against later application. Bankruptcy Act 1966, ss.40(1)({i), 50, 52(4), 115(1), 116(1)(a), L236) BETSY, (3). Income Tax Assessment Act 1936, 5.265 DEPUTY COMMISSIONER OF TAXATION -V- JOHN PHILIP SWAIN NSW G.978 of 1988 Davies, Lockhart & Burchett JJ. Sydney 13 July 1988 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G978 of 1988 ) GENERAL DIVISION ) ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: DEPUTY COMMISSIONER OF TAXATION Applicant AND: JOHN PHILIP SWAIN Respondent MINUTE OF ORDER OF THE COURT Judges Making Order: Davies, Lockhart and Burchett JJ. Where Made: Sydney Date of Order: 13 July 1988 THE COURT ORDERS THAT: (1) (2) (3) (4) (5) NOTE: Leave be granted to the applicant to appeal from the order of adjournment made by Einfeld J. on 29 April 1988. The appeal be allowed. The application for leave to appeal from the order of adjournment made by Einfeld J. on 31 March 1988 be refused. The respondent pay the applicant's costs of the application for leave to appeal and of the appeal. The order of adjournment made on 29 April 1988 under appeal be set aside and in lieu thereof it be ordered that the application for a sequestration order be restored to the list with a view to its urgent hearing. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G978 of 1988 ) ) GENERAL DIVISION ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: DEPUTY COMMISSIONER OF TAXATION Applicant AND: JOHN PHILIP SWAIN Respondent COURT: Davies, Lockhart and Burchett JJ. DATE: 13 July 1988 WHERE: Sydney REASONS FOR JUDGMENT THE COURT This is a motion for leave to appeal from two decisions of a single Judge of this Court adjourning a summons to sequestrate the estate of the respondent, John Philip Swain, and for an order that the hearing of the motion be heard at the same time as the appeal. By consent we heard both the motion for leave and the appeal together. We shall describe briefly the circumstances which gave rise to the matter before us. On 16 April 1987 an application was filed with this Court by the applicant, the Deputy Commissioner of Taxation, seeking various declarations and orders including the following: 1. A declaration that a deed of arrangement made between the respondent, John Philip Swain, and Peter David Rogers, a registered trustee who was appointed trustee of the respondent's affairs under the deed of arrangement, dated 10 April 1987 and entered into pursuant to a special resolution passed at a meeting of creditors of the respondent on 1 April 1987 is void on various grounds including a ground that the applicant was incorrectly excluded from voting at the relevant meeting of creditors; 2. An order, in the alternative, that the deed of arrangement be terminated on the ground that it could not be proceeded with without injustice to creditors of the respondent; and 3. An order that a sequestration order be made against the estate of the respondent. The learned trial Judge heard this application on 23 September 1987, and on 7 October 1987 ordered pursuant to sub-s. 236(1) of the Bankruptcy Act 1966 ("the Bankruptcy Act") that the deed of arrangement be terminated. His Honour made additional orders, the material ones for present purposes being as follows: "Pursuant to s. 50: (a) the second respondent [the Trustee] be directed to take control of the property of the first respondent [the respondent in this appeal] comprising his interest in real property, furniture, motor vehicles and insurance policies, (b) the first respondent not remove, dispose of, deal with, charge or encumber his real property, furniture, motor vehicles or insurance policies except with the prior written consent of the applicant or the applicant's solicitor, and (c) the first respondent not remove, dispose of, deal with, charge or encumber, other than in the ordinary course of business and living, the remainder of his property, including the funds in his bank accounts with the Westpac Banking Corporation at 60 Martin Place, Sydney without prior written consent of the applicant's solicitor." His Honour noted certain undertakings of the respondent and of the applicant, as follows: "6. The undertaking of the first respondent to the Court not to execute any agreement nor consent to any orders in settlement of proceedings pending between the first respondent and his wife in the Family Court of Australia except after giving ten (10) days notice thereof to the solicitor for the applicant. 7. The undertaking of the first respondent to the Court to give ten (10) days' notice to the solicitor for the applicant (or where the first respondent receives less than ten (10) days' notice, to notify the solicitor for the applicant forthwith, and in any event within 24 hours) of any step taken or hearing or conference appointed in the Family Court of Australia in the said proceedings. 8. The undertaking of the applicant to the first respondent to take all steps within the power of the applicant to bring forward to an early hearing the application of the first respondent for relief under s. 265 of the Income Tax Assessment Act 1936." His Honour then adjourned the proceedings part heard to 31 March 1988. It appears that the reason, or at any rate the primary reason, for the grant of the adjournment was to allow the respondent to proceed with an application which he had made some years earlier to the Taxation Relief Board under s. 265 of the Income Tax Assessment Act 1936. That section enables the Board to grant a release to a_ taxpayer from payment of tax where, inter alia, the taxpayer is in such circumstances that the exaction of the full amount of tax will entail serious hardship. Before the hearing of the application had resumed on 31 March 1988, the Taxation Relief Board had refused the application of the respondent for relief. The applicant then sought to obtain a sequestration order. An adjournment was requested by the respondent. His Honour adjourned the application to 22 April 1988. This order of adjournment is the first of two orders granting adjournments from which leave to appeal is sought. The primary ground, on which the application for adjournment was sought by the respondent on 31 March 1988, was so that he could finalise an outstanding application which he had made inthe Family Court for a division of property jointly owned by himself and his former wife. The respondent had applied to the Family Court for an expedited hearing of his application for property orders, and the application for expedition was to be heard by the Family Court on 20 April. It had the support of his former wife, and was based upon his seriously deteriorating health. The applicant submitted to the trial Judge that he was entitled to a sequestration order ex debito justitiae, that the respondent had failed to supply all relevant information to the Court concerning his financial affairs, and that the deed of arrangement was one which sought to exclude the applicant, not only from voting, but from being paid, whilst preserving the interests of other creditors, although the applicant was by far the largest creditor of the respondent. His Honour described the deed of arrangement as "an unmeritorious and not particularly creditable attempt to create a deed of arrangement". His Honour granted the application for adjournment though, as he said, not without a little hesitation. He took into account an argument that it may "all be very theoretical because the debtor's chances of success in the Family Court may be less than high". He proceeded nevertheless to grant the adjournment on the basis that the application before the Family Court had at least some chance of being partly successful and said: "I do not think that it is right that I should make an order now which may deprive the Family Court of an effective opportunity to exercise its undoubted jurisdiction in the matter. It is true that the matter may ultimately boil down to who should get priority, the wife or the Commissioner, but I have no doubt that the Family Court will be able to take that matter into consideration. It strikes me as being unpalatable to take an act now which can be avoided or at least postponed and which would have the effect of promoting a _ potential dispute of considerable consequences and repercussions between the respective powers of the Federal Court and the Family Court over property which comes within the purview of both." His Honour, as has been said, adjourned the application for a summary sequestration order to 22 April 1988. Before that date, the application for expedition before the Family Court was granted, and the matter listed in the first available call-over, on 15 June. It appears that the Family Court was allocating dates for property applications of the kind involved here from 8 August 1988 onwards. The respondent's application in the Family Court, which had been filed on 2 September 1987, sought orders that' the matrimonial home at 12 Boolarong Road, St. Ives be sold (it being in the names of both the respondent and his former wife in equal shares as tenants in common), that out of the net proceeds there be paid the respondent's debt to the applicant, and that out of the balance of the net proceeds there be paid 50% each to the respondent and to his former wife. It was a cross-application, Family Court proceedings for a settlement of property having been earlier initiated by the respondent's former wife. Her application, which sought (inter alia) an order for the transfer of the respondent's share 1n the matrimonial home to her, a similar order with respect to furniture and furnishings in the home, and maintenance of $260 per week, had been filed on 21 July 1987. The matter came back before the trial Judge on 29 April 1988, and his Honour then gave a further judgment in which he noted that the matter in the Family Court would not be heard until some time in August. He referred again to the fact that the matter had the potential to raise difficult questions about the respective jurisdictions, and priorities of orders, of the Federal Court and the Family Court. His Honour adjourned the application for a sequestration order to 1 September 1988 on the following four conditions: "1. That the debtor undertakes to the court that he will not enter into any agreement, consent to any orders, or otherwise participate in any settlement or compromise of the current Family Court proceedings between his former wife and himself for property and other orders without 48 hours express notice to the judgment creditor, unless such notice is waived in writing by the judgment creditor or his solicitor. 2. That the debtor will support any application by the judgment creditor to intervene in the Family Court proceedings. 3. That the debtor or his solicitor report to the judgment creditor or his solicitor in writing on the first day of each calendar month from and including 1 May 1988 as to the progress and current situation in the Family Court proceedings including the stage and content of any settlement or compromise negotiations thereof. 4. That this written reporting take place on the final day of each week in the four weeks preceding the hearing of the Family Court proceedings and that telephone reporting at the end of each day of those proceedings be thereafter substituted. If a representative of the judgment creditor is present during the court proceedings by way of intervention or otherwise, the telephone reporting will not be required but the legal representatives of the debtor or the debtor himself are to keep the representative of the judgment creditor fully informed of the progress or developments in any settlement negotiations." The conditions were accepted by the respondent and appropriate undertakings were given on his behalf by his solicitor. It is from these two orders of adjournment (of 31 March and 29 April 1988) that the applicant seeks leave to appeal to this Full Court. The application of the applicant to the Federal Court was made pursuant to s. 236 of the Bankruptcy Act. Sub-section (1) of that section empowers this Court to make an order terminating a deed of arrangement. Sub-section (3) provides: "236(3) The trustee or a creditor may include in an application under sub-section (1) an application for a sequestration order against the estate of the debtor and, if the Court makes an order on the first—mentioned application terminating the deed of arrangement, it may, if it thinks fit, forthwith make the sequestration order sought." Sub-section (5) is relevant for present purposes. It provides: "236(5) The making of an application by the trustee or a creditor for a sequestration order under this section shall, for the purposes of this Act, be deemed to be equivalent to the presentation of a creditor's petition against the debtor, but the provisions of sub-section 43(1), sections 44 and 47, sub-sections 52(1) and (2) and Part XIA do not apply in relation to such an application." The orders made by the trial Judge on 7 October 1987 pursuant to s. 50 of the Bankruptcy Act were made on the basis, with which we agree, that the making of the application under s. 236, being deemed to be equivalent to the presentation of a creditor's petition against the debtor, picked up s. 50 so as to enable the Court to control the administration of the affairs of the respondent after the deed of arrangement had been terminated and before an order for sequestration was made. Section 50, so far as is presently relevant, provides as follows: "50. 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." The respondent's debt to the applicant is approximately $191,000, which includes a considerable amount by way of interest, late lodgment fees and other penalties. It appears the respondent made a payment of $16,000 shortly before the second of the orders under appeal, so that the balance owing is about $175,000. There are some other creditors of the respondent, but the applicant is by far the largest creditor. The most substantial asset of the respondent is his half interest in the house at St. Ives, of which there 1s little evidence as to value except that there was evidence before his Honour that the house had a value in March 1987 of $260,000. His Honour accepted that it was probably worth 10. something closer to $360,000 in March-April 1988. If one took a round figure of $400,000, the respondent's half interest would have a value of $200,000, which is only a little more than the amount of the debt due by the respondent to the applicant. There are other assets available to meet the debt due to the Commissioner in addition to the respondent's half interest in the house, which his Honour noted in his first reasons for judgment of 31 March 1988 as including a motor car and insurance policy, but there 1s no doubt that by far the largest asset in value is the respondent's half interest in the house. What emerges from a consideration of the respondent's position is that no order could be made by the Family Court requiring him to make any significant settlement upon his wife without depriving his creditors, pro tanto, of all recourse for the recovery of their debts. If he is not insolvent, his debts at least approximate his assets. This conclusion can hardly cause surprise, since the basis on which a sequestration order is sought is the making by the Court of an order terminating a deed of arrangement into which he had entered for the benefit of his creditors. But in this case the financial plight of the respondent is even more hopeless than in most such cases, because the medical evidence shows the state of his health will soon permanently preclude him from earning. If the Family Court ever has power, which it would be proper for it to exercise, to make an order the inevitable 11. result of which would be to deprive creditors of all remedy in respect of the whole or a significant part of their debts by taking from a spouse substantially the entire means of effecting payment, that could only be in the most exceptional case. It may be that there 1s no such case. At all events, the respondent did not put any evidence before the Court to suggest that the present application involved anything of that kind. What was actually put on his behalf was that he himself had a claim against his former wife for a settlement upon him of her share of the matrimonial home, and that if he succeeded he would be able to pay his debts. In the alternative, counsel suggested the possibility of success of the former wife's own claim to a settlement out of the respondent's share of the matrimonial home must be considered, notwithstanding that she has never appeared to put any such argument to this Court either at first instance or upon the appeal. As regards the chance of the respondent obtaining an order in the Family Court enabling him to meet his debts, a bare possibility that this might happen is clearly not enough to justify a lengthy adjournment of these already much delayed proceedings. In The Queen v. Ross-Jones; Ex parte Green (1984) 156 C.L.R. 185 at 211 Wilson and Dawson JJ. said that the existence of a claim for an indemnity, asserted by a defendant, would not of itself justify a stay of an action against him. And there is authority to support the proposition that a sequestration order would be no bar to the maintenance by the respondent of a claim on his own behalf in 12. the Family Court, any success of which could be recognized by a subsequent annulment. (See In the Marriage of I.H. and C.L. Page (1982) 8 Fam. L.R. 316 at 319; Luxton v. Luxton (1968) 12 F.L.R. 382 at 389-390; Coffey v. Bennett [1961] V.R. 264.) What persuaded the trial Judge was not any demonstrated prospect that some relevant relief could be obtained in the Family Court, but his view that there was in the matter a "possibility for conflict between the Family Court and the Federal Court" which was "very prominent". He described this conflict as "a substantial and controversial dispute as to whether the Family Law Act takes any kind of priority over the Bankruptcy Act." These quotations are taken from the former of the two judgments from which leave to appeal is sought. In the second of those judgments his Honour said: "I observed in the earlier judgment that this matter has the potential to raise difficult questions about the respective jurisdictions and priorities of orders of the Federal and Family Courts and I am still reluctant to make a decision which might bring such a conflict to a serious head. If I were to do so and the conflict were to arise, no party would be assisted, the standing of the two Courts would be adversely affected and their jurisdictional reaches result in difficult and complex litigation. I therefore propose to adjourn this petition to Thursday 1 September before me on the following conditions ... ." (H1s Honour proceeded to state the conditions which have already been set out in these reasons.) With respect to his Honour, who did not have the benefit of citation of the relevant authorities, these statements are 13. based on a misconception. The making of a sequestration order will raise no possibility of the suggested conflict. A sequestration order reflects a right of a creditor, and creates rights as between a debtor and his creditors and trustee. The Family Court, in the pursuit of its duty (in an appropriate case) to adjust rights as between the parties to a marriage, has no power to deprive other parties of their rights. Its power to deal with the property of the parties over whom it has jurisdiction must start with the property that is theirs, not with property that the law (whether the Bankruptcy Act or some other law) has vested in another. In Ascot Investments Proprietary Limited v. Harper (1981) 148 C.L.R. 337 at 354 Gibbs J., with whom Stephen, Aickin and Wilson JJ. agreed, stated the position in terms which have frequently been cited since. He said: "The authorities to which I have referred establish that 1n some circumstances' the Family Court has power to make an order or injunction which is directed to a third party or which will indirectly affect the position of a third party. They do not establish that any such order may be made if its effect will be to deprive a third party of an existing right or to impose on a third party a duty which the party would not otherwise be liable to perform. The general words of ss.80 and 114 must be understood in the context of the Act, which confers jurisdiction on the Family Court in matrimonial causes and associated matters, and in that context it would be unreasonable to impute to the Parliament an intention to give power to the Family Court to extinguish the rights, and enlarge the obligations, of third parties, in the absence of clear and unambiguous' words. It can safely be assumed that the Parliament intended that the powers of the Family Court should be wide enough to prevent either of the parties to a marriage from evading his or her obligations to the other party, but it does not follow that the Parliament intended that the legitimate interests of third 14, parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties. There is nothing in the words of the sections that suggests that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties, or to require them to perform duties which they were not previously liable to perform." At p.355 Gibbs J. added: "Except in the case of shams, and companies that are mere puppets of a party to the marriage, the Family Court must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it." In Ex parte Green (supra) Gibbs C.J., with whom Mason J. agreed, referred to his own earlier statement of the law in the Ascot Investments case, and also said at 202: "No doubt it is right to say that the Act [i.e. Family Law Act 1975] should be given a construction that would promote its objects and in particular would give the widest possible protection and assistance to the family and to the rights of children of the marriage. However, the objects of the Act do not anclude the destruction of the rights of third parties." Murphy J. at 204 put the matter tersely. He said: "Parliament has allocated federal jurisdiction between various courts. Bankruptcy 1s allocated to the Federal Court of Australia, not the Family Court." Wilson and Dawson JJ. at 211 said: "(I)t is now authoritatively established that as a matter of construction the general powers of the Family Court are to be understood in the context of the Family Law Act which confers jurisdiction upon the Court in matrimonial causes and associated matters. 15. Those powers, which include the power to grant injunctive relief under s.114, are not to be construed so as to confer jurisdiction to defeat the rights, or enlarge the obligations, of persons who are not parties to the marriage involved in the relevant matrimonial cause: Ascot Investments Pty Ltd v. Harper." The power to adjourn is a power which is inherent in the constitution of a court (see Pfitzner v. Pfitzner (1988) 62 ALJR 323), and it is a discretionary power, the exercise of which will not readily be disturbed upon appeal. This remains true when the question whether a matter should be adjourned involves an argument that another proceeding in another court should be accorded priority, though in such a case it has been said that there is an onus on the applicant for adjournment which is "not a light burden". See the joint judgment of this Court in Mudginberri Station Pty Ltd v. Australasian Meat Industry Employees' Union (1986) 12 F.C.R. 10 at 12-13. While it will happen only rarely, there are cases where a decision upon an adjournment application may be seen to result in serious injustice, and an appellate court has both the power and the duty to review the exercise of discretion. This Court did so in Ahern v. Deputy Commissioner of Taxation (Qld) (1987) 76 A.L.R. 137 - see the discussion at 146-7. In the present case, the decision turned on an erroneous statement of principle which, if not corrected, could be applied in a significant number of cases. Subject to the question whether the decision should be left undisturbed upon other grounds, the case is therefore one in which it is appropriate to grant leave, there being a serious risk of injustice. 16. Since, if a sequestration order is made, no discretion of the Family Court to dispose of any part of the respondent's property in favour of his former wife will ever (subject to the considerations discussed by Murray J. in In the Marriage of Wallmann (K.B. and G.) (1981) 60 F.L.R. 453) come to be involved, the question for the trial Judge was whether any ground had been shown to justify this Court in exercising its discretion in favour of adjourning the application of the applicant rather than proceeding to consider the making of a sequestration order "forthwith". Cf. Raffellini v. Raffellini (1985) 73 F.L.R. 332 at 339-340. It is clear that the Family Court would not have jurisdiction itself to issue against the Commissioner of Taxation an injunction in aid of any power it may possess to readjust property rights as between former husband and wife (Ex _ parte Green (supra)), but the question is whether this Court should exercise its discretion to that end. When the question 1s put in that way, and free of any notion of impending conflict with the Family Court, there is in the present case only one answer that is open. As _ was emphasized by this Court in the Mudginberri case (supra), an applicant for an adjournment 1n order to give priority to another proceeding bears a heavy onus. Prima facie, a party who approaches the Court is entitled to as prompt a hearing as the nature of the case and the exigencies of the administration of the Court permit. That prima facie entitlement is here reinforced by the terms of sub-s.236(3) 17. ("(I)£ the Court makes an order ... terminating the deed of arrangement, it may, if it thinks fit, forthwith make the sequestration order sought" (underlining added)) and by the logic of a situation where a debtor has acknowledged his insolvency by entering into such a deed but by reason of the Court's termination of it will not have his affairs duly administered, nor will his creditors be paid, during any period of delay in the making of a sequestration order. The use of the word "forthwith" by the legislature in sub-s.236(3) should not be construed as imposing a limit upon the Court's power, but rather as extending it to encompass the making of a summary order; but even so, a concern to ensure that a summary order may be made emphasizes that delay ought not normally to be permitted. It will of course be justified by such a situation as that which originally obtained in the present matter, in which no action had been taken over a long period upon the respondent's application under s.265 of the Income Tax Assessment Act, and there was good reason to believe that the taking of such action might significantly affect the respondent's position. In the present case, about a year's delay was involved in the prosecution of the proceedings for termination of the deed and in the original adjournment to await the decision under s.265. Against the practical problems of further delay and the right of the applicant to have his application proceed, the respondent urged the pendency of another action directed to different issues. That was not enough to 18. discharge the onus which lay upon him. He did not show that there were in the situation of the parties circumstances which made it just, or might reasonably be thought to make it just, that the rights of creditors should be subordinated to the rights of a party to the dissolved marriage. In the course of the argument, reference was made to sub-s.123(6) of the Bankruptcy Act which provides: "Subject to 5.121, nothing in this Act invalidates, in any case where a debtor becomes a bankrupt, a conveyance, transfer, charge, disposition, assignment, payment or obligation executed, made or incurred by the debtor, before the day on which the debtor became a bankrupt, under or in pursuance of a maintenance agreement or maintenance order." This provision may, in a particular case, protect a transaction which originated in an order of the Family Court, or, indeed, in a maintenance agreement made between parties; but its existence does not displace the need to demonstrate circumstances sufficient to justify an exercise of discretion in favour of the respondent. Nor of course does such a provision in the Bankruptcy Act entitle this Court to depart from the construction of the Family Law Act stated by the High Court in the cases earlier referred to in these reasons. Although the considerations which have been d2iscussed seem clearly to point to the appropriate answer to the problem of this case, there are some further considerations which should be mentioned. In the first place, the orders which the trial Judge made on 7 October 1987 were plainly 19. designed to prohibit the respondent from disposing of or dealing with his interest in the property in question without the consent of the applicant. Those orders were of course made to protect the statutory right of the applicant (a right conferred for his own benefit and for the benefit of all creditors) to seek, pursuant to his application filed on 16 April 1987, a sequestration order which would have relation back to and be deemed to commence at a date at least as early as 12 March 1987 when the respondent signed an authority under s.188 of the Bankruptcy Act (see para.40(1)(i) and sub-s.115(1) of the Bankruptcy Act). Under para.116(1)(a), the property divisible among the creditors upon the respondent becoming bankrupt pursuant to that application will include all property that belonged to or was vested in him at that date. If the making of a sequestration order were to be delayed until after the making of orders in the Family Court, and that Court were to require the respondent to settle his interest in the house at St. Ives upon his former wife, there would be a collision between the order of the Family Court and the order of this Court made on 7 October 1987 to protect the statutory rights which the creditors would normally be entitled to enforce upon the making of a sequestration order. Such a collision would only be possible if the order adjourning the application were to stand. As has been pointed out, nothing of the sort could result from the making of a sequestration order now. During the hearing of the appeal, a problem was' raised by the Court whether it 1s still possible for a sequestration 20. order to be made upon the applicant's application. The difficulty arises under sub-s.236(5) which has earlier been set out. That provision refers to sub-sections (1) and (2) of s.52, but not to sub-section (4) by virtue of which "a creditor's petition lapses at the expiration" of the relevant period specified in the sub-section, unless the time is extended before its expiration. If that provision applies to the present application on the footing that it is deemed to be a petition, then the application has already lapsed. But it is not the application that is the subject of the deeming provision in sub-s.236(5). It is the making of an application which is deemed to be equivalent to the presentation of a creditor's petition against the debtor. This provision is in the same terms as sub-s.221(3). In each case, the point is not to deem an application to be a petition, but to attract the operation of a number of provisions of the Act, such as paras.122(1)(a) and (b), para.123(1)(£) and para.124(3)(b), all of which depend upon the act of presentation of a petition. For the deeming provision to achieve its evident purpose, 1t is unnecessary that it should go further, and its language appears to have been chosen with precision to achieve only that purpose. In The King v. Adams (1935) 53 CLR 563, the High Court had to consider the effect of s.168 of the Bankruptcy Act 1924 under which it was provided that a deed of assignment "shall, so far as is consistent with the other provisions of this Part, be deemed for all purposes equivalent to - ... (c) 21. a sequestration order against" (the debtor). Starke J. at 570 said: "Sec. 168 does not prescribe that the deed shall be deemed a sequestration order, for that would be in direct opposition to _ the scheme of distributing the debtor's property without bankruptcy: it is only equivalent to a sequestration order, and that, in my opinion, for the purpose of administering the trusts and provisions of the deed. The section does not convert the debtor into a bankrupt for the purposes of sec. 210, or make the deed a sequestration order for the purposes of sec.212." It is appropriate to construe sub-s.236(5) in a similar fashion to that adopted by Starke J. with regard to s.168 of the Bankruptcy Act 1924, particularly having regard to the draftsman's careful choice of words which do not contain a statement deeming the application itself to be a petition. The only consideration of any significance to the contrary appears to be the fact that sub-sections (1) and (2) of s.52 are expressly excluded, while sub-section (4) is not. However sub-sections (1) and (2) do use the very words "ereditor's petition" and "petition", and in any case their exclusion may well have been ex majore cautela. There 1s one troubling feature of the matters before us, and that concerns the respondent's unsuccessful application for relief under s.265 of the Income Tax Assessment Act. It was made as long ago as 1983 and not dealt with until after the application was made in this Court by the applicant in 1987. Indeed, when the deed of arrangement was set aside and the application for sequestration order adjourned on 7 22. October 1987 the primary reason for the adjournment was, as we have said, so that the respondent could pursue his' then extant s.265 claim before the Taxation Relief Board. Little is known about the grounds on which the Board relied in refusing the application, although certain material relevant to that matter 1s before us. We do not think it appropriate in this appeal to comment on it except to say that the medical condition of the respondent is extremely serious and his life expectancy is short. It is difficult to imagine a graver case of personal hardship based on health grounds than the case of the respondent. Whether this was properly considered by the Taxation Relief Board, assuming its relevance, is, in view of the form of its finding, perhaps open to some question. In any event, the health of the respondent has deteriorated markedly since the Board considered the matter. It as doubtless open to the respondent to apply again to the Board for further relief, whether he is made bankrupt or not. A decision, even by a court, that at a particular time a person is not suffering serious hardship cannot raise an estoppel to prevent him showing that at a later time he is suffering serious hardship: Collett v. Loane (1966) 117 CLR 94; Commonwealth of Australia v. El Hassan (1985) 62 ALR 305 at 311; O'Donel v. The Commissioner for Road Transport and Tramways (NSW) (1938) 59 CLR 744. If any further claim is successful, in whole or in part, then appropriate orders can be made in this Court, in the exercise of its bankruptcy jurisdiction, whether by way of annulment or discharge. * 23. For these reasons we would grant leave to appeal from the order of adjournment made 29 April 1988 and allow the appeal with costs. There seems no point in making any order in respect of the earlier adjournment, which 1s now spent, and for that reason the application for leave to appeal from that order should be dismissed. There should be no order in respect of the costs of the application for leave to appeal from that order, which has not increased the costs of the matter. The application for a sequestration order should be restored to the list for consideration by the trial Judge or another Judge of the Court with a view to its urgent hearing. I certify that this and the preceding twenty-two (22) pages are a true copy of the Reasons for Judgment herein of the Court. Cighor associate Dated: 13 July 1988. Counsel for the applicant: Mr. M.R. Aldridge Solicitor for the applicant: Australian Government Solicitor Counsel for the respondent: Mr. R.G. Craigie Solicitor for the respondent: Mervyn Finlay, Thorburn and Marshall Dates of hearing: 9 June; 1 July 1988.