Re Brian William Dickens Ex Parte: Bank of New South Wales Nominees Pty Ltd [1989] FCA 18 (14 February 1989)

FEDERAL COURT OF AUSTRALIA

Re: BRIAN WILLIAM DICKENS
Ex Parte: BANK OF NEW SOUTH WALES NOMINEES PTY LTD.
No. P801 of 1988
FED No. 180
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Foster J.(1)

CATCHWORDS

Bankruptcy - Bankruptcy proceedings - refusal to exercise discretion against the grant of a sequestration order - refusal to adjourn bankruptcy proceedings until further related Supreme Court proceedings are finalised.

Bankruptcy Act 1966 s 52(1); s 52(2)(b)

HEARING

SYDNEY
14:2:1989

Solicitor for the Debtor J. Chipendall, Esq.

instructed by Carney's

Solicitor for the Respondent: J.F. Boultbee Esq.
instructed by Piggot Stinson

ORDER

A sequestration order be made against the estate of the debtor, Brian William Dickens.

Richard John Grellman be appointed as trustee of the estate of the debtor.

An order for costs be made in accordance with the rules.

The operation of the sequestration order be stayed for seven days from Tuesday 14 February 1989.

DECISION

The creditor's petition in these proceedings is dated 13 April 1988. It appears that it was served on the debtor on 19 April 1988 and was returnable on 21 July 1988. The petition is based upon failure to comply with a Bankruptcy notice in respect of a judgment debt in the sum of $96,245.46 being made up of a principal sum of $92,548.59 together with an appropriate amount of interest then accrued due.

2. The amount in question was due under a final judgment recovered in the Supreme Court of the State of New South Wales on 1 December 1987. The judgment and debt related to default under a real estate mortgage by the principal debtor, Ellimatta Enterprises Pty Limited, the debtor in these proceedings being a guarantor of the mortgage.

3. The material placed before me satisfies me that the petitioning creditor has made out a prima facie case for the granting of the petition. I must, however, consider material raised by the debtor on the question of whether I should exercise a discretion to make a sequestration order under s 52(1). The debtor asserts before me that, by dint of material raised in these proceedings, I should not exercise a discretion in favour of making the sequestration order, either because I am of the view that the general discretion should not be exercised under s 52(1) or because "sufficient cause" for refusing to make a sequestration order has been demonstrated under s 52(2)(b) of the Bankruptcy Act.

4. The submissions of the debtor are really twofold. Firstly it is put that I should refuse to make the sequestration order; alternatively it is put that the material before me should induce me to adjourn these proceedings to a date in the future so that certain proceedings may be heard in the Supreme Court of New South Wales, the result of which would have significant bearing upon the making or otherwise of the sequestration order.

5. The hearing before me has proceeded on affidavit evidence. I have also been provided by way of annexures to affidavits and individual tender with a deal of material bearing upon past proceedings between the debtor and the petitioning creditor in the Supreme Court of New South Wales. I should say at the outset that proceedings have been taken in that court for the setting aside of the judgment upon which the petition has been based, and that those proceedings failed before Master Sharpe and also failed on appeal before his Honour Mr Justice Yeldham.

6. The relevant judgment in the Supreme Court was a default judgment and was entered on 1 December 1987. A bankruptcy notice based upon that judgment was served on 20 February 1988. The creditor's petition was served on 19 April 1988 and was returnable on 21 July 1988. Proceedings were taken by the present debtor's wife who was also a debtor in respect of that judgment to set aside the judgment. These proceedings resulted in the creditors petition being adjourned in this court until 9 August 1988. On 8 August of 1988 the present debtor also took proceedings by notice of motion to set aside the judgment in the Supreme Court.

7. It appears that this court, on being advised of those proceedings and on the application of the debtor, adjourned the proceedings in respect of the creditors petition until 19 August 1988. The notice of motion to set aside the judgment was heard before Master Sharpe in the Supreme Court on 18 August 1988. The proceedings in this court were further adjourned pending the giving of the Supreme Court's decision.

8. On 11 October 1988 Master Sharpe dismissed the application to set aside the judgment. The debtor appealed against the decision of the Master and in light of the existence of that appeal a further adjournment of the hearing of the creditor's petition in this court was obtained. Because of the pendency of that appeal the proceedings in this court were adjouned until today's date. The appeal from the Master's decision was dismissed on 3 December 1988. The result of the hearing and the appeal was of course that the judgment debt stood.

9. As recently as yesterday a further motion was filed in the Supreme Court to set aside the judgment debt in respect of which the previous hearing and appeal had taken place. This court has been asked either to adjourn once again the hearing of this petition or to dismiss it, having regard in effect to the existence of this notice of motion in the Supreme Court and the questions to be litigated at the hearing of that notice of motion.

10. It has been submitted that there is an entitlement in the judgment debtor once again to litigate before the Supreme Court the quesion of whether the judgment debt should be set aside and it is further put that material is available to be considered by the Supreme Court which should have the result of that judgment debt being set aside.

11. It is put that that material should also have the effect of causing this court either to dismiss these current proceedings or to adjourn them. On behalf of the petitioning creditor it is put that the application now made to the Supreme Court is not a bona fide application; that submission is based largely upon the prior history of the matter, a portion of which I have set out in these reasons but the full detail of which appears in the chronology annexed to the affidavit of Michael Kevin Hayter.

12. It is also put on the basis that the material placed before this court fails demonstrably to indicate any basis upon which the judgment debt could be set aside in the Supreme Court or any basis upon which it could be said that "sufficient cause" has been shown for the refusal of the sequestration order in this court.

13. I do not find it necessary to consider the question of whether the judgment debtor has an entitlement as of right or as a matter of discretion to litigate once again in the Supreme Court the question of whether the judgment debt should be set aside.

14. I feel some considerable doubt as to whether any such right exists. However, I can approach this matter on the basis that, assuming such a right exists of whether it is demonstrated before me that there is any material which might induce the Supreme Court to come to a different conclusion.

15. I am quite satisfied that there is no such material. The matters relied upon in this regard are set out in paragraph 50 of the affidavit in support of opposition to the making of a sequestration order of the debtor dated 10 February 1989.

16. It is put first of all that there was irregularity in the obtaining of judgment in the Supreme Court in the first instance. I can find in the material before me no evidence of any such irregularity. I am further satisfied that this matter has previously been canvassed and found adversely to the debtor.

17. The second matter raised is that the petitioning creditor failed to obtain the best possible price for the sale of the property which was the subject of the mortgage. The basis of this allegation is that at a point of time prior to the petitioning creditor taking over the sale as mortgagee that the debtor had been negotiating a sale at some $100,000 more than the price ultimatley realised.

18. There is evidence before the court of independent valuations indicating that the price in fact realised was in all respects a proper one. I am quite satisfied that the evidence sought to be adduced in this regard would be quite inadequate to satisfy the Supreme Court that there existed a defence by way of set off or otherwise sufficient to warrant the setting aside of the judgment debt.

19. The debtor suggests in his affidavit that the sale of the building, the subject of the mortgage, may have realised more if the individual strata units had been sold separately. There is absolutely no evidence placed before me to indicate that there was any substance whatever in that suggestion and indeed, the evidence points in the other direction.

20. I can see no basis in this evidence for any reasonable conclusion that the Supreme Court could be induced to change its original judgment in this matter nor is there anything in such evidence to indicate that I should exercise the discretion given to me by the Bankruptcy Act in favour of the debtor.

21. Paragraphs (d) and (e) are in my view not supported by any worthwile evidence placed before me and in themselves would be insufficient to induce a court to set aside the judgment already obtained.

22. The material referred to in subparagraph (f) is not in my view supported by any evidence and its relevance is in event, far from clear. Again, paragraphs (g) and (h) appear to have no weight whatever in establishing either a likelihood of the Supreme Court judgment being set aside or as bearing upon the exercise of a discretion by this court.

23. I am quite satisfied that the debtor has failed to make out any case for the exercise of a discretion against the grant of the sequestration order in these proceedings or for the adjournment of these proceedings until the intended further proceedings in the Supreme Court are finalised.

24. I should say that I am satisfied on the whole of the material placed before me that there is relevantly a lack of bona fides in the debtor in relation to the application before the Supreme Court and the application to oppose the granting of this petition.

25. As previously indicated, I am satisfied as to the matter stated in the petition, as to the service of the petition, and that the debt on which the petitioning creditor relies is still owing.

26. Accordingly, I make a sequestration order against the estate of the debtor, Brian William Dickens. I also appoint Richard John Grellman as trustee of the estate of the debtor. I make an order for costs in accordance of the rules.

27. I will stay the operation of the sequestration order for seven days from today's date. I will adjourn.