REASONING
21 The first contention raised by the bankrupt was that the trial Judge had failed to take account of the fact that the sequestration order had been made in the bankrupt's absence, at a time when he was ill.
22 There was evidence to support the trial Judge's finding that the bankrupt had received notice of the adjourned hearing of the creditor's petition. Indeed the fact that the bankrupt forwarded a medical certificate to the Court the day before the hearing demonstrates that he was well aware that the hearing was to take place. The bankrupt's complaint appeared to be that the Registrar should have adjourned the hearing scheduled for 11 March 1998, until a date when he had recovered from his illness. We are prepared to assume, without deciding, that an erroneous refusal to adjourn a creditor's petition might be sufficient of itself to establish that the order "ought not to have been made" for the purposes of s 153B of the Bankruptcy Act.
23 The evidence in this case falls well short of establishing that the Registrar erred in declining to grant an adjournment. The medical certificate supplied by the bankrupt to the Court was unsupported by an affidavit. The certificate was a printed form completed in handwriting. The form stated (in print) that the bankrupt was suffering from a medical condition "and was/is unfit for work". The form identified the bankrupt's medical condition in handwriting and stated that he had been under the care of "this surgery" since 1993. The form did not say that the bankrupt's apparently longstanding condition prevented him from attending Court. Indeed the form was not directed to the question of the bankrupt's fitness to attend court in person on 11 March 1998.
24 In these circumstances, it cannot be said that the Registrar erred in declining to adjourn the petition on 11 March 1998. Nor was the trial Judge in error in the conclusion he reached. The certificate provided by the bankrupt did not address the question of his fitness to attend court on 11 March 1998. Moreover, it must be borne in mind that the Registrar had already adjourned the petition on one occasion, on the faith of a medical certificate provided by the bankrupt. The Registrar was entitled to take the view that the bankrupt had not made out a case for a further adjournment of the petition. This ground of appeal must fail.
25 The bankrupt's second claim, in essence, repeated the allegations that had been made by him in the proceedings determined by the Tribunal. As has been noted, the Tribunal considered the bankrupt's claims at a hearing that lasted three days and, in substance, rejected all of them. In his written submissions, the bankrupt asserted that the Tribunal had conducted the proceedings before it "with no regard for Australian or international standards". This contention was repeated in supplementary written submissions which also alleged bias on the part of the Tribunal. The evidence before the trial Judge does not establish or even suggest that the Tribunal's procedures were flawed. Nor is there any basis in the evidence for the bankrupt's assertion that the Tribunal member exhibited bias. Nothing else in the evidence justifies concluding that the trial Judge erred in upholding the Registrar's decision not to go behind the orders made by the Legal Profession Tribunal. This ground of appeal also fails.
26 We should mention one issue that was not raised by the bankrupt either before the trial Judge or in his written submissions, but was referred to by the Court in oral argument on the appeal. The trustee's report, made on 13 September 1999, showed that the bankrupt at that time had a half-share in the former matrimonial home. The half share had been independently valued as having a net realisable value of $99,000. After allowing for the interests of the mortgagee and caveators, the bankrupt's net equity was said to be $36,220. Unsecured creditors and costs amounted to $20,573, as follows:
Petitioning Creditor's taxed costs 2,143
Creditors claims 5,412
Trustee's Remuneration to 10/09/1999 9,850
House property insurance 318
Legal costs 2,850
$20,573
It follows that the bankrupt's assets at the date of the trustee's report exceeded his liabilities, most of which related to costs and the remuneration of the trustee.
27 It can be inferred from the trustee's report that, at the date the sequestration order was made, the bankrupt's equity in the matrimonial home probably exceeded the modest debt due to the creditor. Moreover, it probably did so by a significant margin. Whether the bankrupt's equity in the home was realisable within a relatively short time is, however, a different matter.
28 Orders had been made in the Family Court proceedings on 4 August 1995. These included an order that the matrimonial property
"be sold upon discharge of the mortgage to the [Bank] by the parties on or about the expiration of three years and six months from the date hereof."
The orders also provided for the bankrupt to pay $400 or $600 per month (the copy orders in evidence are not clear) off the mortgage and his former wife to pay $200 per month. Presumably a calculation had been made that if these monthly payments were made regularly and if interest rates did not rise, the bankrupt and his former wife would pay off the mortgage debt at the expiration of the specified period of three and a half years.
29 There are authorities which suggest that a bankrupt whose assets exceed his or her debts at the date of the sequestration order ordinarily will be entitled to an annulment of the bankruptcy, at least if the bankrupt gives undertakings to pay the costs of the petitioning creditor and the trustee's costs of administration: Re Gollan, at 41-42, per Spender J; Re McDonald; ex parte Deputy Commissioner of Taxation (1996) 33 ATR 1 (Spender J). This principle is said to follow from s 52(2)(a) of the Bankruptcy Act, which provides that if the Court is satisfied that the debtor "is able to pay his or her debts", it may dismiss the creditor's petition. In general, a debtor who so satisfies the Court will succeed in having the creditor's petition dismissed: Sarina v Wollondilly Shire Council (1980) 48 FLR 372 (FC), at 376; Re Stubberfield; ex parte Paradise Grove Pty Ltd (1995) 134 ALR 169; cf Trojan v Corporation of Hindmarsh (1987) 16 FCR 37 (FC), at 47. We are content to assume, without deciding, that the authorities to which we have referred correctly state the position.
30 In order to satisfy the Court that he or she is "able to pay his or her debts", it is not necessary for the debtor to show that he or she has cash resources immediately available for this purpose. But the debtor must be able to realise assets, sufficient to pay the debt, within a relatively short time. As Barwick CJ said in Sandell v Porter (1966) 115 CLR 666, at 670, the resources to be considered
"extend to moneys which [the debtor] can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time - relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency."
31 Under the terms of the Family Court orders, the matrimonial home was to be sold "upon discharge of the mortgage". That event was expected to occur by February 1999, just under one year after the sequestration order was made. Whether it would occur at that time depended, inter alia, on whether the bankrupt had maintained and would continue to maintain the mortgage payments as provided for in the Family Court orders. There was no direct evidence before the trial Judge as to whether the bankrupt had made the required payments. If anything, the fact that some $23,629 was still due under the mortgage in October 1998 (as appears from the trustee's report) suggests that the bankrupt had not made the payments contemplated by the Family Court orders, either before or after the date the sequestration order was made.
In our view, the evidence before the trial Judge was insufficient to establish that the bankrupt was able to pay his debts at the date the sequestration order was made. Although the value of the bankrupt's assets exceeded his liabilities, his only significant asset, his share in the matrimonial home, could not be realised within a relatively short time. Under the terms of the Family Court orders, the matrimonial home was not to be sold at least until February 1999 and, in the events which seem to have occurred at the date of the sequestration order, not until a date considerably later than February 1999. There was no evidence that the bankrupt had other resources to enable him to pay the debt due to the creditor.
32 It follows that the fact that the value of the bankrupt's assets at the date of the sequestration order exceeded his liabilities does not establish that the sequestration order should not have been made. It is not necessary to consider whether, in any event, discretionary considerations would have militated against an annulment order being made: cf: Re Wong; ex parte Wong (unreported, Sackville J, 15 September 1995). For example, no undertakings were proffered to the Court by the bankrupt to pay the costs of the petitioning creditor or the trustee.
33 The appeal must be dismissed. The costs of the creditor and the trustee should be taxed and paid out of the bankrupt's estate in the priority fixed by s 109(1)(a) of the Bankruptcy Act.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Drummond, Sackville & Dowsett JJ.