Betteridge, Walter Harold v Zandberg, Henry

[1983] FCA 275

I N TAE FEDEPAL COURT GE AUSTKALIA

E X E R C I S I N G F E D E X A L J U R I S C I C T I G N )

I N BAbXRUPTCY	1	No. 103 of 1083
)

BAKKRUPTCY D I S T R I C T O F THE STATE )

O F V I C T O R I A 1

The Trus t ee cf t k e proper-1, of

WALTER F>.ROI,D !?ETTERIX’.

a b a n k r u p t A p p h CZXL

and

HENRY Z.VJT’EE.SG

c 0 KX.1:	N o r t h rc,- J .
--
DATE OF GP2P;I:	1 2 O c t c b e r 1082

WHERE -- MACE: M e l b o u r n e

IJO. : c 3 cf l?-;

an d

.

- 2 -

I n a d c ? l t l o n , t h e applicant s e e k s c o c s e q u e n t l a l o r d e r s k h a t

t h e r e s p o n d e n t p a y t o h i r the suz of $ 5 , 0 5 7 . 8 8 acc? t h e coscs

o f a n d I n c l d e n t a l to t h e a p p l i c a t l o n .

I

Ucder s . 1 2 2 of the Bankruptcy A c t , c e r t a l n types of

t r a n s a c t l o n s a r e n d e r e d vole a s a g a i n s t a t ru s t se in

I

bankrup tcy . Fo r t he pu rposzs af t h e present a p p l l c a c l o n , t h e

r e l e v a n t par ts of s u b - s e c t l o n 1 2 2 ( 1 ) z r e s e t O u t :

" 1 2 2 . (1) . . . a paynen t r zde . . . by a p e r s o n

who 1 s ur.able t o p a y h i s d e b k s a s t h e y Secome

due f ron h i s own money (. . . ' t h e e e k t o r ' 1. l3

f avour of a c r e d i t o r , h a v i n o t h e f f e c t of

g l v l n g t h a t c r e d i t o r a p r e f e r e n c e , p r l o r l t ; . o r

a d v a n t a g e o v e r o t h e r creditors, 3 e l n g a . . .

p a - p e n t . . . mace . . .

( a ) w l t h i n 6 mon ths oe fc re tke p r e s e n t e t l c r

o f a p e t l t i o n o n ~ h l c : ~ cr by v i r t L e of

the p resec tnc ;on of which , the c ieb tor

becomes a benkr~pt ; . . .

i s v o i d a s a q a i n s t t h e t r u s t e e 13 t h e

bankrupt c]. "

- 2 -

I n a d d l t i o n , t h e a p p l l c a n t s e e k s c o n s e q u e n t l a l o r d e r s t h a t

t he r e sponden t pay t o hlm t h e sum of $ 5 , 0 5 7 . E 9 and t h e c o s t s

of a n d i n c l d e n t 2 1 t o t h e a p p l i c a t l o n .

Under s . 1 2 2 of the Bankruptcy Act, c e r t a i n types cf

t r a n s a c t l o n s a r e n d e r e d v o i e B S a g a i n s t a t r u s t s e I : :

I

bankruptcy . For t h e p u r p o s e s sf t h e present a p p l l c a c l o n , t h e

r e l e v a n t p a r t s of sub- sec t lon 1 2 2 ( 1 ) a r e s e t o u t :

" 1 2 2 . (1) . . . a payment Fade . . . by a pe r son

who i s unable t o ?ay h ~ s d e b t s as t h e y become

due from 51s own noney ( . . . ' t h e d e b t o r ' ), i n

f avour of a c r e d i t o r , h a v i n g t h e f f e c t of

g i v l n q t h a t c r e d i t o r a p r e f e r e n c e , p r i o r i t y o r

ove r o the r c r ec ' , l t o r s , be inc j a ...

advantage

payment . . . made ...

( a ) w l t h i n 6 r n s n t h s b e f c r e t h e p r e s e n t a t i c n

o f a p e t l t i o n sn whlzh or by v i r t c ? o f

t h e p r e s e n c a t l o K of w h l c h , t k e d e b t o r

becones 2 >azkru;t; . . .

i s v o l d a s a q a i n s t t h e t r u s t e e i n t:he

b a n k u p t cy . I'

l	-
l .

- 2 -

I n a d d l t i o n , t h e a p p l i c a n t s e e l t s c o n s e q u e n t l a l o r d e r s t h a t

t h e r e s p o n d e n t p a y t o h i m t h e s u m of $5,057.82 and the c o s t s

of a n d i n c l d e n t a l t o t h e a p p l l c a t i o n .

I i

Under s . 1 2 2 of the Eankrup tcy A c t , c e r t a i n ty-pes of

t r a n s a c t i o n s a r e n d e r e d v012 a s a g a i n s t a t r u s t s e in

I

bankrup tcy . Fo r t he pu rposes a: tl?e p r e s e n t a p p l i c a t i o n , t k e

r e l e v a n t Fares of s u b - s e c t l o n 1 2 2 ( 1 ) a r e s e t o u t :

" 1 2 2 . (1) . . . a payxent made . . . by a p e r s o n

who i s ur.able t o pay h i s i e b t s a s t h e y Secome

due from hls own money (. . . ' t h e d e b t o r ' ), i n

f avour of a c r e d i t o r , h a v l n g t h e f f e c t of

g l v i n g t i n a t c r e d l t o r a p r e f e r e n c e , p r l o r l t y o r

a d v a n t a g e o v e r o c h e r c r e d i t o r s , b e i ? g 2 . . .

payment . . . made ...

(a) w i t h i n 6 months before t h e p r e s e r t e t l o n

o f a p e t - c i o n c n which or by v i r t c e of

t h e presentation o f w h l c h , t h e d e b t c r

becomes a bexkrurt; . . .

1 s v o l d a s a g a i n s t t b e t r u s t e e 1 n t h e

bankr u_st cy . "

- 4 -

T h e o n l y i s s u e r a i s e d on t h e f i r s t g r o u n l 1 s

w h e t h e r , a t t h e r e l e v a n t t i r r e , t h e r e s p o n d e n t was a c r e d l t o r

w i t h i n t h e m a n i n g of s u b - s e c t i c n 1 2 2 ( 1 ) - Bar.krx?tcy Pc?. -

On t h e e v i 8 e n c e b e f c r e t h e C o u r t , t h e a p p l i c a n t h e s

I

p r o v e d t h a t on l 4 F.pri1 1 0 7 7 , W a l t e r H a r c l d E e t t e r i d s e k c a m

b a n k r u p t lipon :?is cwn p e r i t i c n a n d t h a t t h e O f f i c l a l T r u s t e e

i n Bad<ruptcy is t h e t r u s t e e of t h e h r k r r u p t ' s e s t a t e . T h e

bankrup t d l ed on 27 Merch 1 9 7 9 b e f o r e t h e a d m i n l s t r a t l o r . of

h i s e s t a t e w e s f i n a l i z e d . A t a l l tilres frorr 14 C c t o k r 1975

(be ing t he c i a t e s i x montins p r l o r t o t h e d a t e cf % n k r u p t q / ! ,

t h e h n k r u p t was ur.et.le t o p a y h l s S e t t s as they F.ec3.e &,c

from h i s m n money. I n o r a b o u t F a r c h 1977, be123 w1thl.n S1

m n t h s ? e f c r e t h e p r e s e n t a t l c n of h i s p e t l t l o n , *Fe h ? k r d F z

m Z e p a y z e n t of v z r i c u s surs of roney f o r a crocp of p s r s z r ~

w h l r h q c d p i r . c l u d e 2 t T e r e s p c ? l e c c , ar,? on a d i s t r l l x t l c r . zf

t h o s e sums, =:7e r e s p o n 6 e r . t r e c e l v e d p a y n e n i s ~ r c u n t i n o tc

$ 5 , 0 5 7 . 3 8 . If t h a t pay7er.t we-5 m d e t o =:?e respcn6sr . t i n c h c

. -

c a p a c i t y of a c r e d i t o r of th7e ?arL,rJpt, t'en t h e p i y r e n t - e :

t h e e f f e c r cf s i - ~ r s =:-e respcndent a s r a f e r e z c e , p r l o r l Y L - cr

ad\?.r.taCe o " e r c t k e r c r 2 t i t o r s .

- 5 -

- 6 -

c h e c k e d w i t h t h e d l s t r i k u t o r of t h e t e l e v i s i c n sets and found

t h a t t h e y d e r e n o t s t o l e n s e t s . T c w a r d s t h e e n d of 1 9 7 6 , t h e

r e s p o n d e n t b e q a n t o d e a l d i r e c t l y w i t h t h e b a n k r u p t .

U n f o r t u n a t e l y , n e i t h e r i n h i s a f f i c k x - i t n o r i n h i s o r e l

ev idence ’= fo re t he Cour t has t he r e sponc len t G iven ev idence

of the c o n v e r s a t l o n s b e t w e e n h i m e l f a n d t h e b a n k r u p t w h i c h

forms2 t h e h s i s f o r t h e new a r r a n g e m e n t s e n t e r e d 1 n t o

between them. T n e r e s p o n d e n t s t a t e s c o n c l u s i o n s o n l y , ar.2 ~n

t h e absence of evidence of what was s a d , t h e C @ u r t i s p ecerl

i n a d i f f i a l t p o s i t l o n i n d e t e r r r i n i n c w h a t t h e a c t c a l

a r r2 .nqeesn t was . The r e sponden t c l a ims t ha t t he a r r angcFen t

w a s t h a t of p r inc1 ;a l and a sen t whereby the r e spcnden t w e 5 tc

a c t a s a c e n t f o r t h e hnk,upt i n tine s a l e of t e l e v i s l c n s e t s

and was t o recei7:e commiss:.cn OR s a l e s , t h e c o m n i s s l c n k e i y q

i

p a i d by t h e lx rkrJpk . Y e describes t h e a r r a n c e r e n t s . Tbe

r e s p c n e e n t was t o c o l l e c t t h e f u l l p u r c k F s e p r i c e frL?!r

prospective p u r c h a s s r s cn t h e ‘ a s i s t h e t t h e teieYs.isic?. sets

would be del:.vered a t s a r e t i n e I n t h e f u t u r e . i ie Fa12 ;be

I w h o l e c f t h e x o n l e s s o r e c c - l v e d t o t h e bankrLT:t W:-o

i m m e d i a t e l y :?z?.ded back t o r e s p c n d e n t a n ~ p m n t

r e ; , r e s e n t i n z c o r n i s s i c n e s - n e ? F1 t he r e s3cneen t . The a r cLn t

cf t h e m r x s s i x - E r i e 6 f r o n ss x k 2s S120 ? e r s e t E m , c t n

,z

$30 p e r s e t . A s a s l L 7 cf qzcd - 2 ~ ~ 3 , t h e kan’<ru?t w‘es L?

g i v e a r ece i ?? t c t!le r ? s p x Z e n t f c r t::e aTocnt sf t:?s r c n e )

a c t u a l l y r e t a l i l e c : by t k e kzi?\rd?t, e r e a t 2. l a t e r s n e c e t:-e

b a n l r ~ p c vas t c ~ S S J E r o c e l s t s 11” the naxes cf t h e r ; e r s z - s

who :?cc‘ p s i ? - o n e ? t3 r e s ; c l r : o ~ ez ’<rcsv :e f~ : r~ rece;~: : : ,

c

- 7 -

I

l .

- 8 -

13-1-77

Receivsd From Mr. X e n r y Z a n d k r g t h e Sum of

$4000.00 2eln: f u l l Pay ren t fcr 10 26 i n .

Saxyo C o l c u r ?.V. S e t s t o be d e h v e r e d on or

&fore the 14tz l?3y February 1 9 7 7 .

N a m e s a n d Ad2resses t o be S u p p l i e d .

i

W. S e t t e r i 2 c e

67 Roches t e r Rd.

83-5893 Ba lwy n. I'

i

- 9 -

n a m e l y t h a t u p c n t h e r s p o n d e n t p a y l n g t h e h n k r u p t t h e

a g r e e d p r l c e f o r t e l e v i s l c n s e t s . t h e b a n k r u p t a g r e e d t o s e l l

i ;

! a n d i n t h e f u t u r e t o d e l i v e r t e l e v l s l o n s e t s , p r e s u m b l y , t o

the re spor :den t . Tn i s suSmiss ion wlll ke c o n s i d e r e d l a t e r .

T h e r e s p o n & r . t s u b p i t t e d t h a t a t h e tire of t h e

payment of t h e sum of S5,057 .El8 t h e r e s p c n d e n t was n o t a

c r e d i t o r of t h e bznkrcpt. I t was s u b f i t t e e t h a t t h e t,Tile

a r rangement be tkeen the re sponeen t and the k a r k r u p t w a s t h z t

of a g e n t a n d p r i n c i p a l , n a E l y t h a t t h e respondent was

engaged by the t a n k r u p t a s a n a g e n t t o f i n d b c y e r s f c r

t e l e v l s s o n s e t s , that t h e r s p o n s e n t was to c311ect t h e

I .

p u r c h a s e p r i c e f r o m t h e b u y e r s , b u t was t o r e t a i n p a r t 0: the

m n e y so c o l l e c t e d as h i s cor - r i ss icn and pay t h e b a l a n c e t c

' I

I ! t h e k r k r d p t , w h e r e x p c n t h e k a r k r u p t a q r e e d C O s e l l , and l - .

the f u t c r e t o E e h v e r , the t e l e v i s i s n sets t o t h c s e k u y e r s .

I t was s d b r i c t e i t h a t t h e r e s p o n z e n t was 2 r r e re ccn6u l t

a c t i n g 2 s a c e f i t b e t w e e n t h e h r i < ? x F t a s s e l l e r a i l d t h e

perso i l s a q u l r i n q t 3 e t e l e v l s i c n s e t s a s b u y e r s , 2 n d t h a t ?.e

am-u i r ed no t l t l z t o or	i n t e r e s t	~n	t h e	t e l e v i s i c n	s e c s	S?
s o l d .

- 12 -

The case f o r t h e applicant $ ? ! S 5 a s e d alrro5t

e n t i r e l y o n e v e n t s t h z t o c c u r r e d a f t e r t h e p a y r r e n t of t h e s u z

of $ 5 , 3 5 7 . 8 8 . On F r i d a y , 2 5 February 1977, Yne h n k r u ? t w a s

d i s c o v e r e d p u r c h a s i n g t e l e v i s i o n sets from a d i s c c u n t s t o r e

a t t h e norm1 d i s c u u c t p r i c e . T h l s c a u s e d c o n s t e r n a t l c n

among f n e p e r s o n s who were 13 Zirr2ct c o n t a c t w i t h h i m i n

r e l a t i o n t o t h e s a l e of t e l e v i s i c n s e t s . An urgenL 1:;

a r r a n g e d r e e t r n a was h e l d o n S a t u r d a y , 26 F e b - n a m 1 9 7 7 . The

r e s p c n d e n t a n d t h e i ; a n k r u p t z t t e n 2 e d t h a t r e e t l n g . A n u r b e r

of t h o s e a t t e n d i n g t h e m e e t r n g h a d l e n t money t o t? ,e

b a n k r u p t . A p p a r e n t l y t h e 'hrkrupt W B S aSle t o c o n v l n c e t h c s e

a t t h e d e e t i n g t h a L h e was q e n u i n e n d a b l e t o n e e t h i s

commercial a n 2 f i n a n c i a l o b l i q a t l o n s . %e promise? t o T ~ . < E

s o n e p a y n e n t o t h c s e t o whom h e w e d rroney, p a r t i c ~ l a r : : .

m n e y whzch hed Seer ! l en t t o him. A t t h e m e t i n g , t h r e z x s

were m?e t h a t l e q a l p r o c e e d i n g s w a u l d b e i n s t i t u t e d a c z i z s l

t h e b*r!n".rUpt. The h z k - x p c t r a r s f e r r e d h;s c a r t o t h e ,,L:2

of t h e r e s p o n d e n t , b u t t h e t r a n s f e r was v a l u e l e s s .

Subsequent ly , he qave cheques t o Hr. P r r n c e k h o a p p o r t i c r e ?

t h e ? r c c e e d s a!?cnG t h c s e .*h0 a t t e z d e d tks meet inq . This W'S

t h e s c c r c e of t h e $ 5 , 9 5 7 . 8 8 r e c e l v e d 211 t h e r e s p o n ? e n t .

- 13 -

- 14 -

i n d e b t e d t o h e r s p o n d e n t i n t h e s u m of $ 1 2 , 0 3 r ,

P a r t l c u l a r s of t h e c l a l m s h c d t h a t t h e a m c u n t s c l a i m 3 w e r e

f o r t h e p u r c h a s e of t e l e v i s i o r . s e t s . T h e c l a i m was s u p p c r t e d

by t h e s i x r e c e i p t s a l r e a d y r e f e r r e d t o w h i c h , ir. t o t a l ,

s h m e d a n a m u n t of $ 1 2 , 0 8 0 r e c e i v e d by the kankrupt f rom t i le

responzent . The Force of t h o s e r e c e i p t s i s lessened. ty t h e

i

f a c t t h a t t h e k a n k r u p t h a d l s s u e e r e c e i p t s t o c h e p e r s 0 r . s x h o

I

had ~ a l d t 3 e noney t o t h e r e s p o n d e n t , i n d i c a t i n s r e c e i p t of

t h e full a m l i n t s o p a d by e a c h p e r s o n a n d l r d i c a t i n q

d e l i v e r y of t h e television s e t s t o e a c h p s r s o n . F u r t h e r , i f

t h e s u h i s s i c n of t h e app11car.t 1 s c o r r e c t , t h e a r r a n 5 e ; r s r . t

b e e d e e r . t h e r e s p m d e n t a n d t h e k n k r c p t b a n g f o r t h e s a l e of

goods, oEe wcu ld expec t t he r e sponden t ' s p roo f of ?eb t t ~ .

c l a l x d a n a q e s f o r b r e a c h of con t r acc t based cpon t:??

p r o v i s i o n s of ti.e - Goods Act - 1053, a m i I n par+- lcu lar k s .

upon s.57 cf t h a t A c t .

- 15 -

,

- 16 -

d e l i v e r 1 1s c r u c i a l t o th i s f i n d l n g . A c c o r d i n s l y , t h e

a p p l i c s t i o n m s t f a i l . O n the e v i d e n c e , I am u n a b l e t o s a y

i n w h a t c a p a c l t y t h e r e s p o n d e n t r e c e i v e d t h a t m n e y , h t t h i s

does n o t d e t r a c t f r o m t h e f i n d i n g a l r e a t y m d e . I t folIGVs,

t h a t on t h i s f l n d l n g , t h e r e s p o n d e n t i s not a c r e d i t o r of t:he

b a n k r c p t ab le t o p r o v e i n t h e knknkruptcy, an? h i s p r o c f c?

debt s h o u l d be re j e c t d .

- I n v i w of t h e f i n d i n q a l r e z & y m&, it i s rct

n e c e s s a r y f c r t h e C o u r t t o e x p r e s s an op in icn on t he cthsr

d e f e n c e r a i s e d by t h e r e s p o n d e n t . I t i s s u f f i c i e n t t o sa:

t h a t h a v i n g r e g a r d t o t ine e x t r a o r d i n a r y n a t u r e of t h e

bus iness ke i? .? conducted b y t h e h ? . k r J p t , t h e r e woulc? 7127.:.

b e e n	s e r i o u s	d l i f i c u l t i e s	f a c i n g	t h e	r e s p o r . ? e n t	_ .
. .

e s t a b l i s k l r c h l s & f e n c e , par'-lcruIar!y s i n c e t:!e 0?.11s XCL

h a v e k e n vpon F i n s o to dc.