Bartercard v Dickins

[2000] FMCA 13

FEDERAL MAGISTRATES COURT OF AUSTRALIA

Bartercard Ltd v Barry Robert Dickins [2000] FMCA 13

BANKRUPTCY – Creditors Petition – Application to set aside sequestration order by Registrar – Bankruptcy Act 1966 s 52

Applicant:Bartercard Ltd

Respondent:  Barry Robert Dickins

File No:MZ123/00

Delivered on:  18^th December 2000

Delivered at:  Melbourne

Hearing Date:  18^th December 2000

Judgment of:  McInnis FM

REPRESENTATION

Applicant:Mr A Ellis instructed by Michael Sandor & Associates)

Respondent:  Mr B R Dickins in person

ORDERS:

1. The notice of motion dated 17 November 2000 be dismissed.

1. The costs of and incidental to the notice of motion, including reserve
                costs, be taxed, and when taxed, paid out of the bankrupt estate of the
                respondent debtor, number 3626 of 2000, with the same priority under
                section 109 of the Bankruptcy Act 1966 as if the sequestration order
                had been made.

IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
MELBOURNE REGISTRY

No MZ123 of 2000

BETWEEN

BARTERCARD LTD (ACN 050 542 544)
Applicant

And

BARRY ROBERT DICKINS

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an application by Barry Robert Dickins by way of a notice of motion dated 17 November 2000.  Before this court, that notice of motion is regarded as an application and is an application to appeal from the orders made by Registrar Efthim on the 31st day of October 2000.  On that day, the registrar made the following orders: 

1.  Leave be granted to amend paragraph 4 of the petition to substitute date of commission of act of bankruptcy 24 July 2000 for 22 July 2000.

2.  Reverification and reservice be dispensed with.

3.  A sequestration order be made against the state of Barry Robert Dickins.

4.  The applicant's costs of and incidental to the petition be taxed and paid in accordance with the statute.

1. In support of the notice of motion, Mr Dickins, who is unrepresented before this court, relies upon an affidavit which he has sworn on 17 November 2000.  That affidavit has attached to it two exhibits, namely, a medical report dated 14 November 2000 and a facsimile copy of a letter dated 10 November 1999, addressed to Mr Barry Dickins from Bartercard, the judgment creditor. 

1. In addition, Mr Dickins has filed with the court an affidavit of service in relation to the material that was served by him on 21 November 2000, that is, an affidavit sworn 21 November 2000, where he indicates that the documents to which I have referred were left at the reception desk with Michael Sandor and Associates.

1. This matter came before me on 5 December 2000.  On that occasion I made orders in relation to the further filing and service of other affidavits.  Consequently, the court has received the following further material in addition to that material which was before the registrar:  namely, an affidavit of Brook Adrian Bourke, sworn 11 December 2000; an affidavit of Jarryd Colin Gilmore, sworn 11 December 2000; an affidavit of Susan Rydell, sworn the 13th day of December 2000; an affidavit of Brook Adrian Bourke sworn 18 December 2000 and a further affidavit from Susan Rydell which is an affidavit of search sworn 18 December 2000.  Each and every one of those affidavits to which I have referred were filed for an on behalf of the judgment creditor.

Background

1. This application is an application as indicated by way of a notice of motion and the notice of motion states that the applicant wishes to move the court for the orders (1) to set aside the sequestration order made by Registrar Efthim on 31/10/2000 on the grounds of“(1) “medical” and (2) “documents not presented”.  In the course of submissions, Mr Ellis, who appeared for the judgment creditor, has indicated to the court that he has taken the applicant to mean and to refer to in this notice of motion matters which arise out of section 52 of the Bankruptcy Act (the Act) and in particular, has sought to rely upon whether there is sufficient cause that a sequestration order ought not to be made, and to that extent, refers to the medical evidence, and secondly, whether indeed there is a debt or debts still owing upon which the petitioner relies.

1. Reference has been made in this matter to the two exhibits and in fact I have heard, in addition to the submissions made by both parties, evidence by Mr Dickins referring to the letter which is said to have arisen out of a conversation between a representative of Bartercard Ltd and Mr Dickins, whereby some suggestion was made this matter be settled upon payment of 4000 Bartercard dollars. 

Reasoning

1. In this matter, it is appropriate to consider, first of all, the relevance and weight to be attached to the medical evidence.  The medical evidence that has been provided is a report dated 14 November 2000 which purports to be signed by Dr Shirley Francis.  In fairness to Mr Dickins, he has indicated that in the time available, he has not been able to obtain an update in relation to that medical evidence, though, having regard to comments I made at the first hearing of this matter, he realises that the medical evidence is perhaps less than satisfactory.  Nevertheless, it is appropriate to quote the precise words of that medical certificate.  The certificate states:

Mr Barry Dickins, date of birth 2/2/59, 24 Tintern Court, Frankston.  He has been a patient of this clinic, 14/12/87, needing treatment for depression, stress and anxiety.  He was on medication and attended a psychiatrist for some time.  Recently, he stopped all medication and is finding it difficult to cope with his present stress.  He is going backwards.

1. Before this court, Mr Ellis submitted that the medical evidence is not relevant to an application of this kind as it does not in fact go far enough in terms of being specific and supporting a conclusion that based upon the medical evidence, the judgment debtor did not know or was not aware of the implications of bankruptcy and/or the proceedings.  I note and accept at this hearing that the judgment debtor was able to present arguments in support of his case.  I also note, in fairness to him, that he displayed a certain amount of ignorance in terms of the full impact and nature of legal submissions that may be made and indeed in relation to evidence.

1. Having made that allowance, however, in terms of the ability to present the case, it is my conclusion that the medical evidence as presented to this court does not provide grounds in this case upon which I could make a decision exercising the discretion that I have not to make a sequestration order. That is, I do not accept that the medical evidence in the present form provides sufficient material which would allow me, pursuant to section 52 of the Act, to hold that there is sufficient cause that a sequestration order ought not to be made.

1. The second matter which has caused me some concern, however, is of more substance.  Mr Dickins has indicated and brought to the attention of the court that in November 1999, discussions were held between him and representatives of Bartercard.  I accept that a discussion did take place as set out in the affidavit material and accept in particular the fact that at least a discussion occurred on or about 1 November 1999, referred to in the affidavit of Jarryd Colin Gilmore, sworn 11 December 2000.  Whilst it is recognised that there is a dispute between the parties as to who had the conversation with Mr Dickins - and I note in particular his evidence on oath that at all times, he only had discussions with a person known as Fairlie Dowd and had not in fact spoken to Mr Gilmore - the fact seems to be very much in agreement between the parties that a discussion occurred on or about 1 November 1999 between Mr Dickins and a representative of Bartercard Ltd.  The thrust of that conversation would appear to be that some discussion in terms of resolving the indebtedness of Mr Dickins to Bartercard Ltd occurred.  It would appear that as a consequence of that discussion, the letter to which I have earlier referred dated 10 November 1999 was forwarded to Mr Dickins by Bartercard, and I note the letter is signed by Fairlie Dowd.

1. It is appropriate that I should set out the relevant paragraph from the affidavit of Jarryd Colin Gilmore in relation to the alleged conversation and it is also appropriate that I should then set out in this judgment the contents of the letter to which I have just referred.  In paragraph 4 of the affidavit sworn 11 December 2000, Jarryd Colin Gilmore states:

Dickins advised me that he had the amount of $4000 in Bartercard dollars and was in a position to deposit immediately the $T4000 into his Bartercard account to settle the debt owed by him to Bartercard.  Dickins further advised me that upon receipt of a letter from Bartercard confirming that the deposit of $T4000 would be accepted in full settlement of his debt to Bartercard, he would deposit with Bartercard the $T4000.

1. That conversation, according to the affidavit, occurred on 1 November 1999, and as I have indicated, appears to have been a conversation, at least on the affidavit, allegedly to have occurred between Gilmore and Dickins.  For the purpose of this application, I do not accept the conversation occurred between Gilmore and Dickins, but rather a representative of Bartercard and Dickins, and that the conversation in the circumstances generated the letter to which I have referred dated 10 November 1999.  That letter states:

We refer to your telephone call to this office of 1 November 1999 wherein you advised you had $T4000 to deposit to your Bartercard account.  We advise that we will accept this amount in full and final settlement of your outstanding debt owed to Bartercard.  Please forward the voucher to this office marked "Attention, Fairlie Dowd, legal services."  We look forward to receipt of the voucher in the sum of $T4000 and thank you for your assistance in finalising the matter.

1. Mr Dickins gave evidence that he noted that that letter was non-date specific and said that he thought he would see how far he would go or "how long I could get" without paying it.  They are not his exact words but that is the note that I have.  One thing is clear, namely, that no action was taken on that date, on 10 November 1999, and indeed no action has been taken since that date of which the court is aware in order to conclude any agreement that might have been in place at that time.

1. It is not in dispute that on 16 May 1997 a judgment was obtained in the sum of $7044.30 in favour of the judgment creditor against a judgment debtor.  It is also not in dispute that the creditor's petition dated 6 September 2000 was served and that other formalities in relation to bankruptcy have been complied with in this matter.

1. The question which I must address is the extent to which the letter to which I have referred and the agreement to which I have referred can be said to afford Mr Dickins an argument that should persuade me in the circumstances that this notice of motion to set aside the order made by Registrar Efthim should succeed.  I have reservations about the letter and indeed the agreement.  It seems to me the letter is very much an open-ended letter.  However, I am prepared to accept the submission made by Mr Ellis that in fact the circumstances were such that this was a letter constituting an agreement which might be described in contractual terms as "executory", that the failure to make a payment within a reasonable time is in fact sufficient to constitute a want of consideration for the agreement, and the fact does remain that nothing occurred from that date in November 1999 until the creditor's petition and proceedings which occurred by August 2000.  So in other words, there has been a significant period of time that has elapsed between the time of the letter of November to the time when the bankruptcy proceedings and the necessary steps have been taken in this matter.

1. Mr Ellis referred me to an authority in relation to what the courts interpret to mean "other sufficient cause".  In particular, he referred me to the unreported decision of Gabriel Jean Burton, ex parte Marsden International Australia Ltd v Volt Australia Ltd.  That is a decision of Cooper J delivered on 19 May 1993.  I was taken to paragraph 50 of that decision and it is appropriate that I should quote the extract to which I have been referred.  His Honour in that case said:

The approach to be taken by the court when a debtor seeks to have the petition dismissed for other sufficient cause was laid down by the High Court in Cain v Whyte (1932) 48 CLR 639.  The High Court agreed with the formulation of Henchman J at first instance where he said, 48 CLR at 645-646, "I approached that question with the full appreciation that prima facie, on proof of the matters mentioned in section 56 subsection (2), the court will proceed to make an order for sequestration and that it is for the debtor to show some cause overriding the interests of the public in the stopping of unremunerative trading and the rights of individual creditors who are unable to get their debts paid to them as they become due.  Something has to be put before the court to outweigh those considerations before it can be said that sufficient cause is shown against the making of a sequestration order."

Paragraph 51:

The Full Court in Clyne v Deputy Commissioner of Taxation (1985) 5 FCR 1 at 5, in applying Cain v Whyte observed, "The circumstances which may constitute 'other sufficient cause' for dismissing a bankruptcy petition are extremely variable.  It is not appropriate to attempt to catalogue or circumscribe that; see Cain v Whyte (1933) 48 CLR 639 at 645."

1. In this matter, I am conscious of the appropriate authorities and I am very conscious of the fact that a sequestration order is a significant step to take in terms of any court proceeding and it has significant consequences for the judgment debtor. 

1. On the material before me, however, I am satisfied that in this case, there are in fact no circumstances which would entitle the court not to proceed to make an order for sequestration.  I am not satisfied on either the medical evidence or the other material placed before me that in this case, the judgment debtor has in fact discharged his duty to show some cause overriding the interests of the public in the stopping of unremunerative trading and the rights of individual creditors unable to get their debts paid to them as they become due.  I am satisfied therefore that it is appropriate in all the circumstances to make the orders sought by the judgment creditor and I make the orders as follows:

1.The notice of motion dated 17 November 2000 be dismissed.

2.The costs of and incidental to the notice of motion, including reserve costs, be taxed, and when taxed, paid out of the bankrupt estate of the respondent debtor, number 3626 of 2000, with the same priority under section 109 of the Bankruptcy Act 1966 as if the sequestration order had been made.

I CERTIFY THAT THE PRECEDING PARAGRAPHS NUMBERED 1 TO 18 (INCLUSIVE) CONSTITUTE A TRUE COPY OF THE REASONS FOR JUDGMENT OF McINNIS FM.
DATED 18^th DECEMBER 2000

Associate to Federal Magistrate McInnis