Re John William Jackson v Ex Parte: John William Jackson and the Registrar In Bankrupcy of the Southern District of Queensland [1989] FCA 459; 822 Bankruptcy 91 ALR 145 (10 November 1989)

FEDERAL COURT OF AUSTRALIA

Re: JOHN WILLIAM JACKSON
And: EX PARTE: JOHN WILLIAM JACKSON and THE REGISTRAR IN BANKRUPCY
FOR THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
No. QLD E819 of 1987
FED No. 822
Bankruptcy
91 ALR 145

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Spender J.(1)

CATCHWORDS

Bankruptcy - application for discharge - bankruptcy by debtor's petition - whether "the date of the bankruptcy" is date petition was presented or date it was accepted.

Words and Phrases - "the date of the bankruptcy"

Bankruptcy Act 1966 (Cth.) s. 5(1), 55, 57A, 149

HEARING

BRISBANE
10:11:1989

Counsel for applicant: Mr. T. Matthews Instructed by: Gilshenan & Luton

For respondent: Unrepresented

ORDER

The application be dismissed.

NOTE: Settlement and entry of orders is dealt with by Bankruptcy Rule 24.

DECISION

This is an application by John William Jackson seeking an order that the Registrar in Bankruptcy for the Southern District of the State of Queensland ("the Registrar") be directed to issue to him a certificate of discharge from bankruptcy. It raises a question as to "the date of the bankruptcy" as it appears in ss. 5 and 149 of the Bankruptcy Act 1966 ("the Act") in relation to a bankruptcy pursuant to a debtor's petition.

2. On 30 April 1986 the applicant presented a debtor's petition to the Deputy Registrar of the Federal Court at Brisbane. However, on 23 April 1986, Sheppard J. in Sterling Industries Limited. v. Nim Services Pty. Limited, John William Jackson & Ors. (Proceedings No. NSW G281 of 1984) had made various orders which included orders restraining the applicant from dealing with certain moneys and requiring him to provide security in the sum of $3,000,000. On the same day the debtor's petition was presented, Beaumont J. ordered, on an undertaking as to damages, that the applicant be restrained up to and including 1 May 1986 from presenting a petition against himself pursuant to s. 55 of the Act, and that the Registrar in Bankruptcy for the Southern District of the State of Queensland be restrained up to and including 1 May 1986 from accepting any such petition. Subsequently, on 5 May 1986, Burchett J. ordered that the orders of Beaumont J. be continued up to and including 6 May 1986, or until further order.

3. The decision of Sheppard J. of 23 April 1986 was affirmed on appeal in the Full Court of the Federal Court on 15 October 1986, but an appeal to the High Court was successful in having, on 11 June 1987, some of the orders of Sheppard J. of 23 April 1986 set aside.

4. The applicant then requested the Registrar to accept the debtor's petition which had been presented on 30 April 1986. A Deputy Registrar refused to accept the debtor's petition until such time as the order of the High Court of 11 June 1987 had been formally taken out. The applicant applied to Pincus J. for a review of that decision and on 6 July 1987 his Honour directed that the debtor's petition be accepted, subject to satisfaction as to the matters in s. 55(3) of the Act.

5. Consequently, the Deputy Registrar accepted the debtor's petition at 11 a.m. on 6 July 1987.

6. The question is whether, in the events recited above, Mr. Jackson's bankruptcy dates from 30 April 1986, when he presented his debtor's petition, or whether it dates from 6 July 1987, when it was accepted.

7. If the former, Mr. Jackson is entitled to a certificate of discharge pursuant to s. 149(1) of the Act, three years having elapsed from the date of his bankruptcy. If the latter, his bankruptcy does not determine by effluxion of time until 6 July 1990.

8. On 4 May 1989 the applicant's solicitors requested the Registrar in Bankruptcy to issue a certificate of discharge from bankruptcy. The Deputy Registrar replied in a letter dated 12 May 1989 stating that:-

"In light of the provisions of Section 55 and
Section 57A of the Bankruptcy Act 1966 I am of the
view that your client is not eligible for a
discharge at this time."

9. The applicant's solicitors wrote again on 22 May 1989 challenging the Deputy Registrar's reading of ss. 55 and 57A of the Act, contending that, pursuant to s. 55(3) of the Act, the applicant became a bankrupt "by virtue of the presentation" of his debtor's petition on 30 April 1986 and that since three years had elapsed from that date, he was entitled to a discharge from bankruptcy pursuant to s. 149(1) of the Act.

10. The Deputy Registrar considered this letter, but in a reply dated 30 May 1989 she indicated that her view had remained unchanged.

11. Section 5(1) of the Act defines "the date of the bankruptcy" in relation to a bankrupt who became a bankrupt by virtue of the presentation of a debtor's petition, as "the date on which he became a bankrupt by force of s. 55, 56 or 57 as the case requires".

12. Section 55 deals with debtors' petitions. It relevantly then provided:-

"(1) Subject to this section, a debtor may present
to the Registrar a petition against himself
accompanied by a statement of his affairs,
verified by affidavit, and a copy of that
statement.
(2) The petition and statement of affairs shall
each be in accordance with the prescribed form.
(3) Where it appears to the Registrar that a
petition presented to him under this section is in
accordance with the prescribed form and that the
statement of affairs accompanying the petition is
also in accordance with the prescribed form or the
Court directs, under sub-section (4), the
Registrar to accept the petition -
(a) the petition shall be accepted by the
Registrar, who shall endorse it accordingly;
and
(b) thereupon, by force of this sub-section, the
debtor becomes a bankrupt by virtue of the
presentation of the petition.
(4) Where it appears to the Registrar that a
petition presented to him under this section, or
the statement of affairs accompanying such a
petition, is not in accordance with the prescribed
form, the Registrar shall not accept the petition
unless the Court, upon reference by the Registrar,
directs him to accept it.
..."

(It may be noted that section 55(4A), which was not in operation at the date of presentation of the petition, having been omitted by Act No. 21 of 1985 and then re-inserted by Act No.119 of 1987, effective 31 July 1989, provides:-

"Where the Registrar accepts a petition presented
under this section -
(a) he or she shall endorse the petition
accordingly; and
(b) upon the Registrar endorsing the petition,
the debtor who presented the petition
becomes a bankrupt by force of this section
and by virtue of presentation of the
petition.)

13. Section 57A, which was inserted by Act No. 12 of 1980, is headed "Time at which Person becomes Bankrupt on Debtor's Petition". It provides:-

"Where, after the commencement of this section, a
person becomes a bankrupt by virtue of the
presentation of a debtor's petition, the person
shall, for the purposes of this Act, be deemed to
become a bankrupt at the first instant of the day
on which the petition is accepted by the
Registrar."

14. The Registrar did not participate in the hearing of this application; however counsel for the applicant bankrupt put submissions for and against the application.

15. The bankrupt says that the effect of the High Court's eventual decision to set aside certain of Sheppard J.'s orders was that, in retrospect, the debtor's petition should have been accepted when it was presented on 30 April 1986.

16. A decision of the Federal Court may be overturned on appeal, whether by the Full Federal Court or by the High Court. While the orders of Beaumont J. and Burchett J. in April and May of 1986 were in effect, the Registrar was bound not to accept the petition. When the High Court set aside some of the orders of Sheppard J. (in aid of which the restraining orders of Beaumont J. and Burchett J. had been made) the petition was accepted, although not before Pincus J. made orders directing the petition be accepted regardless of whether the High Court order had formally been taken out.

17. In my opinion, both the terms of ss. 55(3) and 57A require acceptance by the Registrar before a person who presents a debtor's petition becomes a bankrupt by virtue of the presentation of the petition. In the absence of acceptance, and that means actual acceptance, such a person does not become a bankrupt.

18. If dissatisfied by a Registrar's declining to accept a debtor's petition, the debtor can seek the direction of the Court to the Registrar to accept it.

19. The bankruptcy of a person, while a matter of personal status, can have profound consequences on the rights and interests of third parties. A notion of a deemed or constructive acceptance by the Registrar would lead to considerable confusion and uncertainty.

20. A sequestration order takes effect on the first moment of the day on which the order is made; it does not take effect from the presentation of the creditor's petition. A similar certainty is reached, in my view, by the requirement that a petition presented by a debtor to a Registrar for acceptance is to have effect on the acceptance of the petition by the Registrar.

21. In my opinion, that is the conclusion which the plain words of ss. 55(3) and 57A require.

22. Accordingly, the application is dismissed.