Rozenbes v Kronhill [1956] HCA 65

95 C.L.R.] OF AUSTRALIA.

(HIGH COURT OF AUSTRALIA.]

ROZENBES AND OTHERS ' . F . APPELLANTS ; RESPONDENTS, AND KRONHILL AND ANOTHER 4 F . RESPONDENTS. PETITIONERS, .

ON APPEAL FROM THE FEDERAL COURT OF BANKRUPTCY, DISTRICT OF VICTORIA.

Bankruptcy—Petition for sequestration—I 'mproper issue—Extortion—W hat constitutes H.C. or A.

abuse of process—Discretion of Court to make sequestration order notwith- standing—Practice and procedure—Bankruptcy Act 1924-1954 (No. 37 of 1924—No. 83 of 1954), ss. 54 (1), 56 (2) (3).

The ultimate principle involved in the question whether a creditor should be debarred by reason of alleged extortion from obtaining a sequestration order against a debtor is that a court will not countenance an abuse of its process. There is an abuse of process.if a pending bankruptcy petition, or a threat of proceedings in bankruptcy, is used as a means of extortion; for, although that word is not a technical term and has in bankruptcy law no special significance divorced from its ordinary implications, extortion connotes an actual exertion of pressure by the creditor and a real intention on his part to use the process for some collateral purpose that is not legitimate. Since, however,. the power of the court to dismiss a petition supported by the constit- uent facts for sequestration is discretionary and results in a denial to a creditor of what is prima facie a legal right, proof of extortion and hence of abuse of process does not necessarily entitle a debtor to have a petition dismissed. ,

Authorities on '" extortion" reviewed.

Decision of the Federal Court of Bankruptcy, District of Victoria (Clyne J.), affirmed. ©

ApprAL from the Federal Court of Bankruptcy, District of Victoria.

On 18th October 1955 Jacob and Julia Kronhill petitioned the Federal Court of Bankruptcy, District of Victoria, for a seques- tration order in respect of the estates of Uszer Zelik Rozenbes, Betti Rozenbes, Chaim Rozenbes and Dina Rozenbes on the ground