Bremer, Re D.L. Lawson & Laughlin Pty Ltd, Ex parte

[1988] FCA 348

.

NOT FOR DISTRIBUTION

I

3UDGMENT No. .3%.,/ ' ...,..,..... 88 I ",,,

IN THE FEDERAL COURT OF AUSTRALIA	)
)

DIVISION	GENERAL	)
) NO. P165 Of 1988
BANKRUPTCY DISTRICT	) )

OF THE	STATE	OF VICTORIA	)
Re :	BREMER	LAKE	DAVID

A Debtor

Ex parte:  LAWSON & LAUGHLIN PTY LTD

Petltlonlng Credltor

MINUTES OF ORDER

COURT: Woodward J

-	DATE: 30 June 1988
PLACE: Melbourne

THE COURT ORDERS THAT:

l.	A Sequestration Order be made against the estate	of
the Debtor.

with rule 124 of the Bankruptcy Rules.

2.    costs, includlng reserved costs, be in accordance wlth the statute.

Date of Commission of Act of Bankruptcy : 23 march 1988.

- NOTE: Thls order is to be settled and filed in accordance

IN THE FEDERAL COURT OF AUSTRALIA )

)

DIVISION	GENERAL	)
) NO. P165 Of 1988

DISTRICT	BANKRUPTCY	) )
OF THE STATE OF	VICTORIA	)

Re :  LAKE DAVID BREMER

A Debtor

Ex parte:  LAWSON & LAUGHLIN PTY LTD

Petitioning Credltor

COURT: Woodward J

- DATE: 30 June 1988

PLACE: Melbourne

EXTEMPORE REASONS FOR JUDGMENT

This is a petltion for sequestration of the

debtor's estate where the notice of intention to oppose the petltion, called "Notice of Grounds of Opposition", raised two issues. First, the debtor disputed the credltor's

alleged debt on the grounds set out in the debtor's

affidavit, sworn 7 June 1988. That argument has been, in my

view, properly abandoned by counsel for the debtor.

I should also say ln passing that there are no points taken about any of the formal matters that are required to be proved under the Bankruptcy Act 1966 ( 'the Act') before a sequestratlon order can be made.

This leaves one ground set out in the notice of

opposition, and perhaps a second which has been raised and

dealt with in argument, which the court has to consider. The

first of these is stated in the notice of oppositlon in the

following terms:

"Even if the creditor proves Its alleged

debt, the creditor says that his assets exceed hls liabilitles, and ln all the circumstances he ought not to be adludged bankrupt."

This takes me to sub-s.52(2) of the Act, which says, so far as is presently relevant,

"If the court .... 1 s satisfled by the debtor -

(a) that he is able to pay his debts; or

(b) that for other sufflclent cause a

sequestration order ought not to	be made,
it may dlsmiss the petltlon."

It is clear, on the material before me, that there are very

large amounts said to be owing by the debtor. This appears on the face of the affidavit of the trustee who has been placed In charge of the debtor's property pursuant to s.50 of the Act. That affidavlt by MC Lamb is strong evldence that

the	debtor	1 s	insolvent; one might	be	tempted to say,
I

hopelessly insolvent.

As agalnst that, It has been argued by MC Kaufman

for the debtor that there is a substantial action pending In

the Supreme Court, brought by the debtor against the

Australia and New Zealand Banking Group Llmited ('ANZ').

That action, if successful, would largely, ~f not entirely,

cancel out the very large sum of money which 1 s shown by the

debtor's statement of affairs, and the affidavit of hls

trustee, as owing by him to that bank.

I have studled the statement of clalm in that

action. It shows that the matters sued for are very closely

related to the alleged debt of the debtor. Indeed, at the

risk of over-slmplifying the matter, I would say that the claim recognises the substantial indebtedness of the debtor to ANZ, but at the same time says that the bank was in breach of contract and in breach of a duty which It owed to the debtor in calling up the debt, and realising upon a number of mortgages and other securlties which it held.

There is, as I see the material before me, no real

dlspute that the debtor owed ANZ some very large sums of
money running into millions of dollars. The only dlspute is
whether, as I have said, the bank was entitled to call up
that debt and reallse assets at the time and in the way that

It dld.

I do not thlnk It 1s appropriate that I should say

too much about that statement of clalm, whlch was apparently

only flled today in the Supreme Court.

There is no doubt that, under sub-s.52(2), the onus

1 s on the debtor to satlsfy me that he is able to pay his debts. And, in the light of all the materlal before me, I have no doubt that, within the meaning explained in

authorities such as re Noye (1956) 18 ABC 7 7 , and re Twidle,

[l9161 NZLR 7 4 8 , the bankrupt is not able presently to meet
his debts as they fall due.

Nor am I satisfied that the prospects of his succeeding In hls actlon against the bank are such that the court should hold its hand, or In some way delay the matter for what will obvlously be a long period before that complex claim can be determined.

I am therefore satisfled that the debtor has not made out his submissions that he is able to pay his debts	or
that his Supreme Court action represents a sufficlent	cause
for dismissing o r adjourning the petltion.

The other submlssion which has been argued,

although wlthout notlce, is that these proceedlngs are in some way tainted by the fact that the petitloning creditor has had some discusslons wlth ANZ, through their respectlve sollcitors, and that the bank has, apparently, up to thzs point paid the petitioning credltor's costs in bringing this

bankruptcy petition, and may well meet cbsts that have been

recently incurred, including today's.

I can find nothlng untoward or suspicious In those

clrcumstances. It seems to me to be no more than a sensible

arrangement that, where two petitions are waiting to be

heard, the one which is slmpler and more straightforward should proceed, and that the costs of that petitloner should

be borne, or contributed to, by a supporting creditor having

a very much greater Interest In the outcome of the

proceedings.

I can see nothing In this which amounts to an abuse

of the process of the Court, and indeed I think that, In his reply, Mr Kaufman sald that he did not put the matter so high. He rather suggested that the bank's intervention had prevented the petitioning creditor from properly considering

an arrangement which	had been suggested to it by the debtor,
OK that because of the arrangement entered into between	the

two petitioning creditors, the bank was in some way able to obtain its wishes by holding on to the coat-tails of the present petltionlng creditor.

I do not accept that the intervention of the bank

has in any way prevented the petitioning creditor from making

up its own mind that the arrangement suggested to it by the debtor was unsatisfactory - which I would have thought was clear beyond doubt - or that it was approprlate that the

petition should proceed.	I accept the evidence of M r Lawson,
for the petltionlng creditor,	that those were decisions whlch

he came to	by himself in consultation wlth	his own solicitor
and were not	the subject in any way of pressure, improper	or

otherwlse, from the bank. Nor, as I have said, do I belleve that there is anything significant In the circumstance that the bank has allowed and encouraged thls partlcular petition

to proceed ahead of Its own, or that thls amounts to

sufficient cause for a sequestration order not to be made.

I find that both the acts of bankruptcy alleged in

this matter, namely, the failure to comply with a bankruptcy

notice and the calling of a meeting of credltors on 6 may this year, have been made out; but I think it is approprlate that I should make the sequestration order simply upon the failure of the debtor to comply with the bankruptcy notice.

For the reasons that I have given, I am satlsfied

that an act of	bankruptcy has	been committed and I am
satisfied	with the proof of the matters	set out in

sub-s.52(1) of the Act. I note that Mr Kenneth Wayne Lamb

has consented to act as trustee In this matter. There will be an order of sequestratlon agalnst the estate of the debtor, the act of bankruptcy being the fallure of the debtor to comply wlth the provisions of a bankruptcy notice on or before 23 march 1988. Costs, includlng reserved costs, will

be in accordance with the statute.	I order that the costs of
Kenneth Wayne Lamb,	in this matter, be paid out of the
estate.

With regard to Mr Kaufman’s application for a stay,

I think that I must exercise my dlscretion havlng regard to
all the material that	has been put before me, and taking into

account as best I can the possibility of an appeal being instituted and belng successful. I am not sure that I have

to be satisfied, as counsel for	the petitioning credltor has
urged, that there are ‘special circumstances’ pointing	to the
grant of a stay.	I would merely say that there needs to be
something	about the case that causes the Court to be

satisfied that it is approprlate that a stay be granted. Whether that is the same thlng as saying that there need to be special c~rcumstances, I am not sure, but the state of mind in which I flnd myself 1 s that, havlng regard to all the

circumstances, I am not satisfied that it would be

appropriate to grant a stay	and I do not grant one.
I certlfy that thls and the

six ( 6 ) preceding pages are
a true and accurate copy of the
Reasons for Judgment hereln of

The Hon Mr Justice woodward

Associate

Dated:  12 July 1988

Counsel for the Debtor: Mr T. Kaufman

Solicitors for the Debtor: Weigall	& Crowther
Counsel for the Creditor:	Mr J Fajgenba'um QC with

Mr P Jopling

Solicitors for the Creditor:  Freehill Hollingdale & Page