St George Bank Ltd v Field [2009] FMCA 519 (10 June 2009)

Last Updated: 11 June 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ST GEORGE BANK LIMITED v FIELD

[2009] FMCA 519

BANKRUPTCY – Bankruptcy petition – opposition based on pending litigation against creditor – whether ‘other sufficient cause’ for dismissing or adjourning petition – likelihood of obtaining verdict exceeding or removing creditor’s debt – insufficient merit shown in litigation – other relevant considerations – sequestration order made.

Bankruptcy Act 1966 (Cth), ss.52(2)(b), 52(5)

Field v Jenolan Caves Resort Pty Ltd [2009] NSWSC 491 Ling v Enrobrook Pty Ltd (1997) 74 FCR 19 St George Bank Ltd v Field [2007] NSWSC 902 Totev v Sfar [2006] FCA 470

Applicant:

ST GEORGE BANK LIMITED

Respondent:

ARCHER PHILLIP FIELD

File Number:

SYG 2887 of 2008

Judgment of:

Smith FM

Hearing date:

22 May 2009

Delivered at:

Sydney

Delivered on:

10 June 2009

REPRESENTATION

Counsel for the Applicant:

Mr P Dowdy

Solicitors for the Applicant:

Henry Davis York

Counsel for the Respondent:

Mr R Newton

Solicitors for the Respondent:

The Peoples Solicitors Pty Ltd

ORDERS

(1) A sequestration order be made against the estate of ARCHER PHILLIP FIELD.
(2) The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
(3) All proceedings under the sequestration order are stayed under s.52(3) of the Bankruptcy Act 1966 (Cth) until 5pm on 17 June 2009, on the following conditions:

• (a) that Mr Field shall not dispose of any property which may be vested in his trustee in bankruptcy exceeding $5,000 except with the agreement of his trustee,
• (b) that Mr Field shall not enter into or incur any new liability exceeding the amount of $5,000, or such other amount as is agreed upon by his trustee.

(4) Note that the date of the act of bankruptcy is 13 May 2008.
(5) Note that a consent to act as trustee has been signed by David Kerr and has been lodged with the Official Receiver in Sydney.
(6) The applicant must within 2 days give a copy of this order to the Official Receiver in Sydney.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 2887 of 2008

ST GEORGE BANK LIMITED

Applicant

And

ARCHER PHILLIP FIELD

Respondent

REASONS FOR JUDGMENT

1. In this petition, the Bank relies upon a debt against Mr Field for $6,800,632.72 under a judgment of the Supreme Court of NSW made on 8 August 2007. Mr Field does not challenge his indebtedness, nor an act of bankruptcy arising upon non-compliance with a bankruptcy notice which was served on 26 November 2007. He concedes that the Bank has established a prima facie entitlement to the making of a sequestration order. However, he invites the Court to exercise its discretion to decline to do this on the ground that it may be satisfied “that for other sufficient cause a sequestration order ought not to be made” within s.52(2)(b) of the Bankruptcy Act 1966 (Cth). This is because he has commenced Federal Court and Supreme Court proceedings claiming damages and other relief against the Bank and other parties, which, if successful, will enable him to pay the Bank or avoid his liability to it. He submits that, if the Court is not satisfied that the litigation has sufficient prospects of success, he at least has real claims which would justify a lengthy adjournment of the petition until their prospects become clearer.
2. There is extensive evidence before me as to the background to the pending litigation, but it is sufficient for me only to give an outline. It concerns the failure of Mr Field’s efforts, through various companies, to revive an historic icon of NSW tourism, the Jenolan Caves Guest House. He became involved in this when a company in the Peppers Hotel Group took a 99 year lease of the premises from the NSW Tourism Commission dated 29 June 1990. The lease envisaged extensive refurbishing to be undertaken by the lessee, and required observance of the Jenolan Caves Reserve Plan of Management which was under the responsibility of the Jenolan Caves Reserve Trust, a NSW government instrumentality (“the Trust”). The Trust entered into agreements to provide services to the lessee. It also seems to have taken over the role of lessor, although how and when this happened is unclear to me, as are the legal implications for the lease and for its transfer, of the disbanding of the Trust and the appointment of an administrator on 31 January 2004.
3. Since 1994, the rights of the lessee were owned by companies in which Mr Field held ownership interests and management responsibilities. By 2004, the lessee company was Jenolan Caves Resort Pty Ltd “JCR”. The company had raised funds from the Bank, and its borrowings were secured by a mortgage and charges over the assets of JCR, and by a deed of guarantee and indemnity dated 8 May 1997 executed by Mr Field, his wife, and their company Rosecharm Pty Ltd. The last funding was agreed by the Bank on 24 May 2004 under a commercial bill facility for advances up to $5.88m for twelve months from the first drawdown, with no promise to extend the facility. Mr Field does not dispute that this also was secured by his previously given guarantee.
4. Difficulties in JCR’s operations reached a crisis during 2005. JCR was in default to the Bank, and it demanded repayment of its advances on 4 November 2005. JCR was also behind in its obligations under the lease in relation to rent, refurbishments, and other covenants, and was served with a notice of default under the lease which expired in July 2005. Under cl.12.7 of the lease, the lessor had a right to terminate the lease and take possession, but the lessee was allowed a twelve month period to sell the lease to a person acceptable to the lessor. JCR’s directors invoked this right on 21 July 2005.
5. Mr Field and JCR blamed the company’s difficulties upon defects in the Trust’s management of the reserve, which impacted upon the water supply, roads, and other necessary amenities for the hotel. The full history and particulars of these disputes is not clear on the evidence before me. It seems that JCR endeavoured to resolve them, and its financial difficulties, through discussion with people and agencies in the NSW government and with the Bank. No litigation challenging or seeking compensation for the deficiencies of the Trust in relation to its provision of services and amenities has ever been commenced, either before or after Mr Field lost control of JCR. JCR did, however, obtain and circulate a short favourable opinion of Mr RP Meagher AO QC dated 10 November 2005. This concluded:
   • One thing seems clear to me, viz, that although the lessor has no contractual duty to implement the Plan of Management, as far as the lease is concerned, it has a clear statutory duty to do so. That is the unambiguous meaning of s.114(2) Crown Lands Act 1989. It, however, raises the question of whether that statutory duty raises a cause of action in the lessee. This is a matter of statutory construction, and in my view should be answered in favour of the view that such a statutory cause of action does arise so that Jenolan Caves Resort may sue the Trust either for damages or for an injunction compelling the Trust to perform the Plan. It is difficult to see the purpose of s.114(2) unless such an interpretation is correct. Of course, less difficult is the question of Jenolan Caves Resort’s right to sue under the Services Agreement: it obviously may do so as the Trust has broken its contract with Silkboard.
6. Mr Meagher’s opinion was given to the Bank during JCR’s discussions about the future of the hotel during November 2005, and Mr Field claims to have been led to expect that the Bank would assist his negotiations with the government and would also assist Mr Field to keep JCR operating. However, on 9 December 2005, the bank appointed Messrs Billingham and Pogroske as receivers and managers of its assets (“the receivers”).
7. By deed dated 30 June 2006 “the Jenolan Deed”, the receivers purported to transfer the lease and JCR’s assets to the Trust, for cash consideration of $1,407,000 and releases from liabilities to the Trust in the amount of $943,000. Messrs Parberry and Hill were then, on 25 July 2006, appointed as voluntary administrators of JCR (“the administrators”).
8. The Bank’s recovery from JCR was insufficient, and it made a demand on Mr Field under the guarantee on 8 June 2006. On 23 April 2007, it commenced recovery proceedings against him in the Supreme Court of NSW, Commercial List of the Equity Division. Mr Field filed responses which, without adequate identification of their legal foundations, made claims that the Bank’s rights under the guarantee were, or should be, “discharged” or set-off against rights of damages arising from the events of 2005 and 2006. These claims were accompanied by assertions that the Bank was involved in misleading or unconscionable conduct in the course of those events, that the transfers under the Jenolan Deed were ineffective due to an invalid appointment of the administrator of the Trust in 2004, and that the transfers occurred at an undervalue.
9. On 8 August 2007, McDougall J ordered that Mr Field’s amended response be struck out, and directed entry of judgment for the Bank in the sum of $6,800,632.72 (see St George Bank Ltd v Field [2007] NSWSC 902). He explained his conclusion that the response failed to show legal grounds for opposition to the relief claimed by the Bank with adequate clarity.
10. He also explained why he gave summary judgment, without allowing Mr Field a further opportunity to articulate a defence. He referred to provisions in the guarantee in which Mr Field waived “all rights of set-off, combination or counterclaim in relation to payment of Guaranteed Money”, and which denied Mr Field rights to rely upon various defences. He cited judgments in which courts give such clauses their full effect, at least where there is no challenge to the making of the guarantee. He noted at [18] of his judgment that none of Mr Field’s contentions asserted that “the taking of the guarantee was itself affected by some vitiating circumstances”, and that Mr Field only sought to attack the exercise of rights under it. He said: “In my view that is the kind of exercise prohibited by the terms of the guarantee which terms, as I have said, are to be enforced according to their wording”. He said that they also precluded claims for equitable waste in the exercise of mortgagee powers being relied upon by way of defence. However, he observed that “the giving of judgment in favour of St George would not create any estoppel preventing Mr Field from raising any cross-claim that might be maintainable”.
11. The hint that Mr Field might reformulate his claims in separate proceedings was not taken up immediately. He first sought leave to appeal to the Court of Appeal, and the merits of an appeal were fully canvassed in written submissions exchanged between senior counsel. However, leave was refused in chambers by Mason P and Handley AJA on 1 May 2008, for the reasons:
    • The judgment of McDougall J was clearly correct in concluding that the (second) commercial list response did not identify the nature of the dispute or the factual or legal bases of the ten issues raised.
    • Furthermore, the matters raised by way of “confession and avoidance” in response to the bank’s application for summary judgment did not establish a defence to the claim having regard to (1) the terms of the Guarantee and (2) the incapacity of the facts alleged to constitute legal or equitable defences to the claim.
12. On 13 May 2008, Mr Field consented to orders in this Court, which dismissed his application to set aside the bankruptcy notice, in which the Bank relied upon the judgment ordered by McDougall J. An act of bankruptcy therefore occurred on that day. The present petition was filed on 7 November 2008, and has been adjourned on several occasions.
13. On 23 October 2008, Mr Field filed a summons in the Supreme Court Administrative Law Division, seeking relief which was subsequently pleaded in a statement of claim filed on 23 December 2008. It joins JCR, the Bank, and the Crown in the right of NSW as defendants. Relief is sought by way of declarations that the Jenolan Deed “was invalid, null and void” due to an invalid appointment of the person who executed it on behalf of the Trust. It seeks consequential orders for accounts and “re-transfer” to JCR of “the leasehold interest the subject” of the registered transfer. I note that it does not clearly address Mr Field’s locus standi to seek this relief, and the effect of JCR being under liquidation. I also note that it does not attempt to litigate whether an agency of NSW was or is liable in damages to JCR or to Mr Field for the previously alleged defaults by the Trust in relation to the provision of services and amenities to the hotel.
14. It was conceded before me, that the Supreme Court matter cannot proceed in relation to JCR without leave, since it is in liquidation, and leave has not yet been sought. There is no evidence before me as to the defences which have been or are expected to be filed by the defendants, and the proceedings appear at present to be awaiting directions as to their future case management. The statement of claim requests an order for expedition of the hearing, but there is no evidence that this has been pressed by Mr Field, nor granted by the Supreme Court.
15. A second proceeding was commenced by Mr Field on 7 January 2009, by way of statement of claim in the Federal Court. The respondents are the Bank and the former receivers of JCR. The pleading recites the asserted invalid appointment of the Trust administrator in 2004, and some of the events of 2005 and 2006. It claims that the Bank is liable to Mr Field for relief under the Trade Practices Act and other legislation, for its failure to “use its influence and connections with the New South Wales government to facilitate a resolution of” a deadlock in JCR’s negotiations with the government, and for the subsequent appointment of the receivers and their sale of JCR’s assets at an undervalue. It seeks a declaration discharging Mr Field from his obligations under the guarantee, without clearly revealing an answer to the points made by McDougall J as to the effect of the waiver provisions in a context where no challenge is made to its making. It also seeks the same relief as is sought in the Supreme Court, setting aside the Jenolan Deed and the transfer, notwithstanding that it does not join any agency of NSW nor explain the duplication of claims, though this might appear oppressive to the Bank. It also seeks damages for Mr Field from the Bank and the Receivers, apparently for their conduct in relation to JCR during 2005 and 2006.
16. In effect, the Federal Court proceeding attempts better to present the facts and claims which were raised in the amended response before McDougall J. However, the legal foundations of the pleading remain obscure in many respects, and its prospects of surviving interlocutory examination unscathed are, in my opinion, not good. Although it also seeks to stay enforcement on the Bank’s judgment against Mr Field, there is no evidence that this has been pressed by Mr Field by any urgent interlocutory application. On the evidence before me, this proceeding is also awaiting case management, and there is no evidence as to what defences or interlocutory applications have been filed, or are expected to be filed, by the respondents.
17. Mr Field’s notice of opposition to the present petition was filed on 31 March 2009. It refers to the pending proceedings in the Supreme Court and the Federal Court, and makes the assertions of fact found in the pleadings in those matters, without giving them better legal substance. It is then contended:
    • The pendency of the other proceedings in the Supreme Court and Federal Court of Australia demonstrates a substantial bona fide dispute which could ultimately lead to the respondent debtor receiving a substantial award of damages or other relief against the applicant creditor. In those circumstances the petition should be dismissed or there should be a stay of proceedings until after the disposal of the other proceedings in the Federal Court of Australia and the Supreme Court of New South Wales.
18. Mr Field’s notice of opposition also refers to a third set of pending proceedings, in the Industrial Court of NSW, in which he is suing the NSW government for entitlements unpaid to him by JCR, arising from his management of the company over 14 years. However, the nature and prospects of that proceeding are not disclosed in the evidence before me and, as I understood him, Mr Field’s counsel disclaimed reliance upon its pendency as part of the grounds of opposition to the present petition.
19. In an affidavit filed two days before the hearing of the petition, Mr Field attempted to add to his grounds of opposition a contention that the Bank has failed to “provide me with a report of its investigations” in response to a complaint to it under the Code of Banking Practice. His complaint was made by letter dated 16 June 2006 to the chairman of the Bank, and made numerous detailed criticisms of how officers of the Bank had responded to correspondence and events during 2005 and 2006. Although this letter was in a very large bundle of documents exhibited to his affidavit, it received no mention in the affidavit and had no apparent relevance to the grounds of opposition except as background of dubious relevance. The Bank’s responses to the complaint were not in the bundle, nor, understandably, in its evidence in reply to the notice of opposition.
20. It is not apparent to me how the evidence of this complaint could substantially advance Mr Field’s grounds of opposition. The raising of the additional issues at a late stage, and outside the time-tables previously directed by the Court, was opposed by counsel for the Bank. He pointed to prejudice facing the Bank’s legal representatives in attempting to take instructions on short notice about the issues raised by the 2006 complaint and the attack on its handling. Taking into account both that prejudice, and my difficulty in discerning how the matter materially advances Mr Field’s opposition to the petition, I refused leave to rely upon these parts of the affidavit and upon the new contention.

Consideration

21. The Court’s discretion to dismiss a petition on the ground that pending litigation by the debtor against the petitioning creditor provides ‘other sufficient cause’ for which ‘a sequestration order ought not be made’ has been explored in many authorities. They were, with respect, very helpfully identified and discussed by Allsop J in Totev v Sfar [2006] FCA 470 at [37]-[44]. He identifies the starting point as:
    • On proof of the matters in s.52(1) of the Act, the Court will generally proceed to make an order for sequestration. It is for the debtor to persuade the Court that the public interest in the dealing with the insolvent debtor and the rights of individual creditors are outweighed by other considerations.
22. Allsop J then examined a line of cases which have considered the Full Court’s discussion in Ling v Enrobrook Pty Ltd (1997) 74 FCR 19, as to the circumstances when a countervailing public interest arises in allowing the debtor to prosecute litigation against the petitioning creditor, and its statement:
    • The authorities also show that satisfaction that the debtor is well advanced with litigation likely to result in the debtor being in a position to pay his or her debts may well provide a basis for a finding that there is a ‘sufficient cause’ for a sequestration order not to be made (see, for example, Maddestra v Penfolds Wines Pty Ltd). But the authorities do not suggest that it is in the public interest to allow insolvent debtors to prosecute litigation generally. They only recognise that it is not in the public interest for a debtor to be forced into bankruptcy by reason of a state of insolvency likely to be of only short duration.
23. Other authorities support the possibility that if the test of ‘likely to succeed’ is not established, the existence of a ‘real claim’ which appears to the court “to have sufficient integrity to warrant the debtor being given an opportunity to have it litigated” might make it appropriate to “adjourn the petition pending resolution of the litigation”. Allsop J gave his own description of how the discretion should be approached at [44]:
    • what is clear is that the fact that there has been an act of bankruptcy does not make the claim by the debtor against the petitioning creditor irrelevant. It should be examined to assess whether it can be said that there is sufficient evidence to show that it is a real claim which is likely to succeed. Also relevant is the stage of the litigation, the length of time for its vindication and any other relevant matters. It goes without saying that solvency is a relevant consideration. In some circumstances, it may be difficult to assess the likelihood of success of the debtor’s claim. All the authorities show that central to the showing of “other sufficient cause” for the purposes of s 52(2)(b) is the question of the prospects of success. The case is not tried in the bankruptcy court, but the material is examined for the purpose alluded to by Gibbs J in Re Schmidt. As Olney J identified in Re James, if a likelihood of success can be demonstrated, that may justify a refusal of a sequestration order. Alternatively, the circumstances may reveal a claim of a character and nature in which likelihood of success cannot be predicted with accuracy but in the circumstances the petition should be dismissed or an adjournment of the petition should granted: see the approach of Sundberg J in Ling v Commonwealth [1996] FCA 1646; (1996) 68 FCR 180 at 195–196, with which Wilcox J and Whitlam J agreed. If the claim is one in which credit of witnesses will be involved, and a debtor sets out the nature and detail of the case and all his or her evidence the debtor may only be able to persuade the bankruptcy court that, if relevant criteria are believed, he or she has good prospects of success. What should be proved, or what is sufficient to be proved, in any given case will depend upon the circumstances. The context in which the issue arises is also important. The discretion involved in s 52(2)(b) is a broad one, and, importantly, it is informed by public interest considerations concerned with the dealing with insolvents.
24. In the present case, I have not been persuaded that Mr Field’s litigation pending in the Supreme Court and the Federal Court comes within any of the descriptions of pending litigation which justifies dismissing the petition or adjourning the petition until its resolution. There are many weaknesses which cause me to be unable to see any sufficient prospect of success in Mr Field obtaining relief which will either prevent the Bank from enjoying the judgment it has already obtained under the guarantee, or will give rise to some quantifiable advantage flowing to him or to JCR which will allow JCR’s debt to the Bank, which is reflected in that judgment, to be discharged. In my opinion, there is not a sufficient prospect of success either to characterise the proceedings as ‘likely to succeed’, or even as ‘a real claim’.
25. Both proceedings are far from “well advanced”. Certainly, there is little present prospect that either of these very complex claims could be litigated to a successful completion within the life of this petition, which is due to expire on 7 November 2009. I can see little prospect that additional merit in the claims will emerge before that date to justify further adjournment under an extension of the petition under s.52(5). The present pleadings present obvious deficiencies, and will need to be cleaned up and properly particularised, even if an opportunity to improve them survives interlocutory challenges. Mr Field’s delay in bringing both sets of litigation until the brink of bankruptcy, and his failure to press for any stays, expedition or other interim orders which recognise the urgency of his predicament, leaves me doubtful of his capacity to achieve any improvement in his prospects of success within the lifetime of the petition, even if it is extended under s.52(5).
26. In particular, I am not persuaded that this could be achieved by Mr Field gaining a preliminary hearing in one of the courts on the issue of the validity of the execution of the Jenolan Deed on behalf of the Trust. I note that there is no evidence that any application for a separate trial of this issue has been made, nor that it is likely to be granted. Moreover, even if such a ruling were achieved it would not, in my opinion, significantly advance Mr Field’s prospects of achieving relief which off-sets his liability to the Bank. His claims for this relief face some major difficulties, and Mr Field’s evidence and submissions have not explained to me reasonably arguable solutions.
27. One of the difficulties is, as was pointed out by counsel for the Bank, that even if the Jenolan Deed was held to be void of legal effect, it is not apparent that this would allow the return to JCR of any valuable rights of a lessee under the 99 year lease. This is because they would appear to have expired by effluxion of time under cl.12.7.
28. Other substantial defences would also appear to be available for consideration by the Bank and the other defendants. These include the difficulties facing Mr Field: in establishing standing to make claims which appear to be those of JCR only; in answering the contractual effects of the waiver provisions of the guarantee; in finding evidence of misleading or unconscionable conduct on the part of the Bank during 2005 and 2006; in explaining his delays in seeking equitable or other similar discretionary relief; and in winding back the legal effects of the liquidation of JCR. All of these issues have not yet even started to be explored in pleadings in the Supreme Court and Federal Court, and I could detect in the evidence and submissions little constructive thought being yet applied to them on the part of Mr Field and his legal advisors.
29. Perhaps the clearest difficulty facing Mr Field which emerges in the material presented to me is the valuation of the losses suffered by JCR when deprived of its lease and business as a result of all the actions during 2005 and 2006 which are challenged in Mr Field’s litigation. The weight of this evidence, in my opinion, points to a lack of any prospects, rather than the contrary, of a material advantage flowing to JCR and Mr Field from the relief which is sought, sufficient to off-set the debt to the Bank exceeding $6.8m.
30. I draw this conclusion from the evidence which was presented by Mr Field to the Court. It includes a report of the administrators of JCR to creditors dated 14 August 2006. The evidence gives me no reason not to give weight to their opinions, particularly since their objectivity and competence to assess the value to JCR of litigation of the sort now contemplated by Mr Field was not challenged. It is clear that they closely considered the foundations of Mr Field’s claims of very substantial loss arising from the making of the Jenolan Deed. In particular, they examined a valuation report of Messrs Magin and Roberts obtained in 2001 by JCR for financing purposes, upon which Mr Field largely pins his claim that the true value of the lease in 2006 exceeded $11m, rather than the total consideration of $2.350m which reached the receivers. The administrators pointed to substantial reasons for doubting the 2001 valuation, and its continuing weight. The relevant passages in their report are too lengthy for me to extract, but I find their analysis of the various valuations and the history of JCR and its receivership to be strongly persuasive. They summarised some significant conclusions at p.26:
    • Summary
    • For there to be a successful claim against St George or the Receivers and Managers under Section 420A of the Act, it would have to be proven that the above transaction was either below market value or if there was no market for the asset, it was realised for below the best price possible.
    • We are of the opinion that this would be a difficult action to pursue for the following reasons:
    • The Receivers and Managers obtained formal advice that the asset was unsaleable in its current form;
    • The trust was required to consent to the assignment;
    • A major factor in ensuring the assets were saleable was negotiating a reduction in the rent payable under the lease. While the Receivers and Managers attempted to obtain such a reduction, they were unsuccessful in this regard;
    • Major rectification works were required to be undertaken or committed to before any assignment could take place;
    • There was a limited timeframe in which to sell the leasehold;
    • No co-operative marketing and management structure existed between the cave operator and the resort operator;
    • No commitment had been provided by the Trust to upgrade the existing infrastructure and/or services provided under the lease; and
    • The Receivers and Managers had undertaken negotiations with three (3) parties, all of which were unsuccessful.
    • We note that the following additional factors also need to be considered in respect of any potential legal action:
    • Due to the inherent uncertainty and cost involved in pursuing litigation, a detailed legal opinion would be required as to the merits or otherwise of this claim;
    • We currently do not have any funds in the Administration to obtain a legal opinion or become involved in a potentially lengthy or costly litigation; and
    • In discussions with the Receivers and Managers, it has been indicated that in the event that any such claim was brought, it would be vigorously defended.
31. Mr Field’s evidence and submissions have not demonstrated to me any real prospect of his being able to overcome the factual or legal foundations of these opinions. In my opinion, the administrator’s opinions in this summary and elsewhere in their report to creditors, and the evidence to which they point, suggest that there is little prospect that Mr Field will be able to establish that the true value of JCR’s business at the time of the Jenolan Deed exceeded the consideration provided in that Deed, whether it was validly or invalidly entered into, and whether or not it was attended by challengeable behaviour by the Bank.
32. In the face of the JCR administrators’ analysis, and on all the evidence before me, I am not persuaded that Mr Field has established any real prospects of gaining an outcome in his current litigation which would exceed the value of the Bank’s debt upon which the petition is based. Moreover, bringing into consideration the other difficulties facing this litigation, I am not persuaded that Mr Field has been able to raise a public interest in allowing the litigation to continue, which outweighs the public interest in allowing Mr Field’s creditor to take his estate into bankruptcy administration.
33. In reaching this conclusion, I have taken into account Mr Field’s genuine desire to litigate so as to vindicate his contentions about the failure of his business and the losses he has suffered. I am conscious that he contends that his incurring of the debt to the Bank occurred as a result of its conduct towards JCR during 2005 and 2006 which he is seeking to characterise as unlawful or improper. However, his pending litigation presents such a cloud of uncertainty as to its merits, value, and future progress, that I am unable to characterise it in the terms required under the authorities cited above, both in relation to dismissing a petition or adjourning it. I am left with an impression that the relevant public interests support, rather than otherwise, the vesting in a trustee in bankruptcy of a power to decide, in the interests of all creditors, the future continuance of that litigation.
34. I therefore am not persuaded by the ground of the notice of opposition, and consider that it is appropriate to proceed immediately to make a sequestration order.

Postscript

35. After completing the above judgment, my attention was drawn by the Bank’s solicitor to the judgment of Barrett J given on 5 June 2009 in Field v Jenolan Caves Resort Pty Ltd [2009] NSWSC 491. His Honour dismissed Mr Field’s Supreme Court Administrative Law List proceeding against the Bank, and also refused to grant Mr Field leave to proceed against JCR in that proceeding. At [28] he concluded that summary dismissal was appropriate:
    • Because, first, the causes of action sought to be advanced by Mr Field’s statement of claim are causes of action belonging exclusively to JCR and are in no sense available to Mr Field himself and, second, Mr Field has no authority or capacity to sue on behalf JCR, the statement of claim filed by Mr Field and by which he seeks declaratory and other relief must be regarded as disclosing no viable cause of action. The appropriate course is therefore the first for which St George contends, namely, that the Administrative Law List proceedings as a whole be dismissed as against St George.
36. The evidence before me made no mention of the interlocutory applications which were addressed by Barrett J, and their hearing on 26 May 2009 occurred subsequent to the hearing of the present petition. In my opinion, the orders and reasons of Barrett J support the opinions I have explained above as to the lack of prospects attending both the Supreme Court and Federal Court proceedings.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate: Michael Abood

Date: 10 June 2009