NG 8064  of  1997

NG 8065  of  1997

EX TEMPORE REASONS FOR JUDGMENT

HIS HONOUR:   There are before me two motions in substantially or at least relevantly identical terms.  Each is brought by a bankrupt.  The first is Eric Abraham Jury and the second is Houda Jury.  Each was made bankrupt by orders made by Lockhart J on 22 May 1997.  On 11 September 1997 applications were filed on behalf of the bankrupts seeking a stay of proceedings under the sequestration orders and removal of the Trustee.  The applications also seek orders that the bankrupts be allowed to continue the prosecution of appeals against the sequestration orders. 

Each has filed a notice of appeal against the sequestration order made in respect of his or her  estate pursuant to section 24 of the Federal Court of Australia Act 1976 (Cth).  It appears that a question arose, however, as to whether or not those appeals and the right to prosecute them vested in the Trustee as “property” within the meaning of section 5 of the Bankruptcy Act 1966. Doubt apparently arose as a result of the decision of this Court in Fuller v Beach Petroleum NL (1993) 43 FCR 60, where a right of appeal in respect of a money judgment obtained in the Court was held to be property within the meaning of that term.

The term “property” is defined in the Bankruptcy Act as meaning:

... real or personal property of every description, whether situate in Australia or elsewhere, and it includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property;

In the case of a judgment debt, it is simple enough to conclude that property is involved.  In so far as there is a right of appeal in relation to that debt, it is also easy enough to conclude that that is an aspect or an incident of the property and as such would vest in the Trustee.

However, an order by this Court sequestrating the estate of a debtor is in a different category from an order that money be paid or an order that judgment be entered.  A sequestration order affects the status of the debtor.  It has an effect on the debtor's property to the extent that the “property” of the bankrupt vests in the Trustee.  I do not consider that any right to appeal which is conferred by statute on a bankrupt could in any sense be regarded as property of the bankrupt which vests in the Trustee.  It would be a curious consequence if the right to appeal which arises only after a sequestration order has been made is treated as property which vests in the Trustee by reason of the making of the sequestration order itself.

In the circumstances I have no doubt, as presently advised, that any right of appeal which the bankrupts have is something which can be prosecuted by them and does not vest in the Trustee.  I have not been asked to consider the other prayers for relief contained in the applications filed on 11 September 1997 and, accordingly, it is appropriate that I make an order under Order 29 of the Federal Court Rules that the question of whether or not any right of appeal is property within the meaning of section 5 of the Bankruptcy Act be determined separately from and prior to the determination of all other questions arising under the applications.

Accordingly, in each matter, I order that the question of whether or not any right of appeal against the sequestration orders made on 22 May 1997 is property which vests in the Trustee be determined separately from and before the determination of any other question arising in the application.  I declare that any right of appeal from the sequestration order made by Lockhart J on 22 May 1997 is not property of the bankrupt within the meaning of section 5 of the Bankruptcy Act.  I order that the costs of this separate determination be the costs of the parties in the application.  I order that the application of 11 September 1997 be adjourned to 18 November for directions before the Registrar.

Associate:

Dated:              4 November 1997