William John Jamieson v Glenn Stewart Pearson [1998] FCA 499 (5 May 1998)

Last Updated: 12 June 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7327 of 1998

BETWEEN:	WILLIAM JOHN JAMIESON Applicant
AND:	GLENN STEWART PEARSON Respondent

JUDGE:	LINDGREN J
DATE:	5 MAY 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

(ex tempore)

By an application filed on 24 March 1998, the applicant ("Mr Jamieson") seeks an order that a bankruptcy notice NN2514 of 1997 be set aside and that, pending such order, the time for compliance with the notice be extended.

The bankruptcy notice bears date 28 November 1997 and was issued on the application of the present respondent ("Mr Pearson"). It claimed a total debt of $563,719.42. The schedule to the notice gave particulars of that amount as $511,072.00 representing the amount of the judgment relied upon by Mr Pearson and $52,647.42 representing interest accrued since judgment.

The notice required Mr Jamieson to comply with the notice within 21 days after 9 March 1998, that is, by 30 March. Mr Jamieson filed the present application on 24 March and its return date was 20 April. On 24 March an order was made extending the time for compliance to 20 April and on that date an order was made further extending the time for compliance to 4.00 pm today.

When the matter came before me as Duty Judge earlier today, I was told that an application by Mr Jamieson for a stay of the judgment on which the bankruptcy notice was founded, was this morning refused by Cole JA in the Supreme Court of New South Wales. Clearly, Mr Jamieson's present application then assumed particular urgency since the bankruptcy notice was to expire at 4.00 pm this afternoon.

After some confusion, the case has been argued on the basis that all that is before me is the application for an extension of time. Mr Jamieson accepts, however, that the only ground of the application for the extension of time for compliance with the notice is the one which has been argued and to which I will shortly refer, and concedes that if the application for extension is refused, he will inevitably commit an act of bankruptcy at 4.00 pm today, nothing will remain in the present application to be determined, and it will be appropriate for it to be dismissed.

The judgment on which the bankruptcy notice is founded finds its origin in reasons for judgment delivered by Bryson J on 11 December 1996 in proceeding No 1438/93 in the Equity Division of the Supreme Court of New South Wales. Going a little further back, it finds its origin a deed dated 14 November 1991 executed by the parties, a copy of which is annexed to his Honour's reasons for judgment.

The parties had been directors of a company called Cenepro Pty Limited ("Cenepro"). As at the date of the deed, Mr Jamieson held fifty-five shares in Cenepro and Mr Pearson held the remaining forty-five shares.

According to the deed, for some time the parties had been involved in the company and in various real estate and building developments and Mr Pearson wished to sell his shareholding to Mr Jamieson. Recitals F and G of the deed have assumed some importance. The former recited that Mr Pearson had provided professional architectural services to Cenepro and that the parties agreed that Cenepro owed him approximately $380,000 for outstanding professional fees, out-of-pocket expenses incurred and paid by Mr Pearson in respect of work done for and on behalf of Cenepro, and interest.

Recital G recited that in addition, Mr Jamieson personally owed Mr Pearson $300,000 for loans made available by Mr Pearson to Mr Jamieson and for other financial accommodation provided by Mr Pearson over the preceding two years. By clause 2 of the deed the parties agreed that Mr Pearson would render to Cenepro accounts in respect of the outstanding professional fees, out of pocket expenses and interest "as previously agreed to a maximum figure of three hundred and eighty thousand dollars ($380,000.00)" and Mr Jamieson agreed that he would ensure that Cenepro paid the invoices within 28 days of receipt. Separately, by clause 3, Mr Jamieson undertook to pay within twenty-eight days from the date of the deed $300,000 to Mr Pearson in satisfaction of his personal liability.

His Honour, Bryson J, gave the judgment to which I have referred in favour of Mr Pearson and his company Glenn Pearson & Associates Pty Limited against Cenepro and Mr Jamieson after a lengthy contested hearing.

The one and only ground on which the application to set aside the bankruptcy notice is made is that there was "double counting" in his Honour's judgment. In order to understand this contention it is necessary to refer to the evidence relied upon on the hearing today. That evidence shows that after signing the deed on 14 November 1991, Mr Pearson had a conversation with, inter alia, Mr Jamieson in which he asked Mr Jamieson whether Mr Jamieson wanted Mr Pearson to issue new invoices for $380,000 or whether invoices already issued could be used; that Mr Jamieson said that the existing ones were "Okay" and asked Mr Pearson to make sure that they did not total more than $380,000; and that Mr Pearson returned to his office and collected all of the invoices which he had issued to Cenepro and prepared a bundle of them. A copy of the bundle of invoices is in evidence before me today. They are as follows:

Invoice 007 $54,250.00

Invoice 008 $13,312.00

Invoice 011 $100,750.00

Invoice 013 $500.00

Invoice 053 $34,385.44

Invoice 054 $121,462.83

Invoice 055 $53,312.00

TOTAL $377,972.27

There is also in evidence another copy of the last invoice mentioned (invoice 055) accompanied by a document showing how the amount of it, $53,312.00, is made up. The "back-up" document shows that the sum of $53,312.00 comprised the amounts of the first three invoices mentioned above, that is, invoices 007, 008 and 011 and a "progress claim" for $2000 making a total of $170,312.00, minus payments totalling $117,000, giving the balance of $53,312.00. In other words, invoice 055 for $53,312.00 is a summation of the first three invoices listed above plus $2,000 minus payments made.

The result is that Mr Jamieson claims that there is a very substantial overstatement in the bankruptcy notice of the amount for which he is indebted to Mr Pearson. It is not in contest, however, that the bankruptcy notice accords with the judgment. Mr Jamieson and Cenepro appealed against the judgment by a notice of appeal which was apparently filed on 17 January 1997, within the time allowed by Supreme Court Rules. One of the grounds of appeal was that the invoices on which the respondents to the appeal had made their claim duplicated some of the amounts claimed. However, neither Mr Jamieson nor Cenepro applied, at the time of appealing, for a stay of the judgment.

It was in response to the service of the bankruptcy notice, that Mr Jamieson and Cenepro made their application to the Supreme Court for a stay of the judgment. There has been admitted into evidence by consent a solicitor's handwritten account of what Cole JA said this morning in refusing the stay, there being no transcript yet available. His Honour noted that senior counsel appearing for Mr Jamieson and Cenepro had no instructions to bring money into Court or to make any offer as to the whole or any part of the judgment or to offer any security. His Honour noted that in his view there were significant difficulties in the appeal's succeeding, as the findings of the trial Judge had depended largely on credit. His Honour gave, as his reasons for dismissing the application for a stay with costs, the considerations that the appellants' chances of success on the appeal were not high, that no form of security or payment was offered, and that there had been significant delay between the date of judgment and the making of the application for a stay.

On the face of the invoices which have been tendered in evidence before me there appears to have been double counting. However, the position is not so straightforward. It is necessary to go to the reasons for judgment of Bryson J. His Honour referred to complicated and ill-documented transactions between the present parties and other persons in October and November 1991. He referred to the fact that the parties had been seeking to do what they could to settle their rights. His Honour said that notwithstanding a large effort devoted by counsel and witnesses to explaining and expounding conversations and documents, this had been without any significant result. He said that there were many documents and that they were "completely obscure". Importantly, his Honour concluded that what emerged from a series of documents in October and November 1991 was that the figures which the parties agreed upon in the deed represented a compromise and did not express the result of "any defensible or even readily identifiable line of reasoning". His Honour said:

" ... they represent the point at which Mr Pearson and Mr Jamieson were able to come to an agreement about what would go in their deed, no matter what the underlying merits were. As reasonable people, they both must have seen at the time that what was required was not more discussion, which could become endless, but an agreement about a figure, and a record of it, and I am satisfied that that is what they did." (Judgment transcript at 24)

The point is that it would not be conclusive against the result reached by his Honour that it has become possible to demonstrate that there was double counting. While it is conceivable that a mistake occurred, the mere production of invoices today suggesting it would not persuade me to conclude that there was indeed an error and that Mr Jamieson is not indebted to Mr Pearson for the amount of the judgment. I should also note, as Cole JA observed, that Bryson J made findings on credit in favour of Mr Pearson and against Mr Jamieson.

I take into account as a weighty factor indeed that Mr Jamieson has applied for a stay on the judgment in the Supreme Court this morning, that precisely the same argument that has been put before me this afternoon was put before Cole JA, and that the application for a stay was nonetheless unsuccessful. Counsel for Mr Jamieson has not pointed to any special considerations relevant to my decision on the present application which were not relevant to the issue before his Honour. The result of Cole JA's dismissal of Mr Jamieson's application this morning is that the judgment on which the bankruptcy notice is based remains, as it always has been, immediately enforceable.

The approach of this Court on an application such as the present one may be seen in such cases as Re Geard; Ex parte Reid, unreported, FCA/Sheppard J, 11 February 1994; Re Smith unreported, FCA/Whitlam J, 4 May 1994; Agrillo v Codisposto, unreported, FCA/Sackville J, 16 December 1994; and Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264 (Lehane J).

The application for an extension of the time for compliance with the bankruptcy notice should be refused with costs. Accordingly, the Court orders that:

(1) the application for an order that the time for compliance with bankruptcy notice NN2514 of 1997 be further extended be refused;

(2) the applicant be ordered to pay the respondent's costs of that application.

(3) the application be otherwise dismissed.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren

Associate:

Dated: 13 May 1998

Counsel for the Applicant:	Mr R N Gye
Solicitor for the Applicant:	Hunt and Hunt
Counsel for the Respondent:	Mr P Walsh
Solicitor for the Respondent:	Neil Lawson & Co
Date of Hearing:	5 May 1998
Date of Judgment:	5 May 1998