Hudson, Robert Jnr v Whalan, Stephen William Michael & Anor [1998] FCA 1064

FEDERAL COURT OF AUSTRALIA BANKRUPTCY – application for annulment of a sequestration order made by another single judge – whether Court should resist the making of a sequestration order where the bankrupt is hopelessly insolvent and there is little prospect of a dividend to creditors – examination of the principles underlying the bankruptcy laws.

ROBERT HUDSON JNR v

STEPHEN WILLIAM MICHAEL WHALAN & ANOR NG 7610 of 1998

HILL J

SYDNEY

18 august 1998

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 7610 of 1998

BETWEEN: Robert Hudson Jnr

Applicant

AND: Stephen William Michael Whalan

First Respondent

Thomas James Donald

Second Respondent

JUDGE: HILL J

DATE OF ORDER: 18 AUGUST 1998

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The application be dismissed. 2. The Applicant pay the costs of the Respondents and the Official Trustee.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG7610 of 1998

BETWEEN: Robert Hudson Jnr

Applicant

AND: Stephen William Michael Whalan

First Respondent

Thomas James Donald

Second Respondent

JUDGE: HILL J

DATE OF ORDER: 18 AUGUST 1998

WHERE MADE: SYDNEY

EX TEMPORE REASONS FOR JUDGMENT Before the Court is an application brought by Mr Robert Hudson Junior, a bankrupt, seeking the annulment of a sequestration order made by Tamberlin J against him on 19 May 1998. In order to put the matter into context it is useful to have regard to some of the matters set out in the affidavit of Mr Whalan of 14 August 1998. Objection was taken to the reading of that affidavit on the basis that it was not relevant to the issues before the Court. Although there is some substance in that submission, it does set out the background of the proceedings that have taken place to which the Bankrupt was a party and I propose to use it for that purpose but no other. The bankruptcy petition on which the Bankrupt was made bankrupt was based upon a bankruptcy notice issued by the petitioning creditor, the First Respondent, on 8 April 1997. In due course an application was made to set aside that bankruptcy notice. It came for decision before Lindgren J. The arguments put to his Honour were dismissed but his Honour raised for the first time the questions whether there had been a misstatement in the bankruptcy notice, whether the provisions of s 41(5) of the Bankruptcy Act 1966 ("the Act") had been complied with and whether, if there was a misstatement, it invalidated the notice or whether it was capable of being cured under s 306 of the Act. Having raised these matters, his Honour then resolved them adversely to the Bankrupt. Application was then made to a full court of this Court to appeal the decision of Lindgren J. That appeal was heard on 11 March 1998 by a Full Court comprising Branson, Tamberlin and Kiefel JJ. In an ex tempore judgment their Honours unanimously rejected the appeal and agreed with the reasons of the learned trial judge. On 20 March 1998 the Bankrupt filed an application for special leave to appeal in the High Court. It is not necessary to consider in any detail the grounds upon which leave to appeal was sought. Suffice it to say that at least the grounds referred to now before me raised the correctness or otherwise of the matters concerning the alleged misstatement in the bankruptcy notice of $2. The application for special leave has not been heard. It is unlikely ever to be, unless the bankruptcy is annulled. The Trustee has no intention to prosecute it and it is, to say the least, doubtful that the Bankrupt himself has standing to do so. Ultimately the petition came on for hearing before Tamberlin J on 19 May 1998 after, it is said, numerous adjournments. His Honour rejected an application for an adjournment of the petition made to him that day and gave ex tempore reasons for so doing. It should be stressed that on that occasion, at least, the Bankrupt was represented by legal advisers and the application for adjournment and perhaps also the making of a sequestration order was the subject of argument. Having refused the adjournment Tamberlin J proceeded to make a sequestration order, refusing (presumably it must have been requested) a stay in regard to the operation of his Honour's orders. No appeal has been brought from his Honour's decision. An appeal would now be considerably out of time. Instead on 9 June 1998 an application was filed by the Bankrupt for annulment of the sequestration order. It initially was grounded upon a number of matters including a suggestion that Tamberlin J should have disqualified himself because he had previously sat on the full court appeal from the judgment of Lindgren J. That matter has, however, now not been pressed.