Bridges Financial Services Pty Ltd, in the matter of Bell v Bell

[1999] FCA 1767

FEDERAL COURT OF AUSTRALIA

Bridges Financial Services Pty Ltd, in the matter of Bell v Bell [1999] FCA 1767

IN THE MATTER OF WILLIAM STUART BELL

BRIDGES FINANCIAL SERVICES PTY LTD v WILLIAM STUART BELL
N7249 OF 1999

EMMETT J
6 DECEMBER 1999
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N7249 OF 1999

IN THE MATTER OF WILLIAM STUART BELL

BETWEEN:	BRIDGES FINANCIAL SERVICES PTY LIMITED APPLICANT
AND:	WILLIAM STUART BELL RESPONDENT
JUDGE:	EMMETT J
DATE OF ORDER:	6 DECEMBER 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.        A sequestration order be made against the estate of William Stuart Bell.

2.The petitioner’s costs, including any costs that have been reserved, be taxed and paid in accordance with the Bankruptcy Act 1966.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N7249 OF 1999

IN THE MATTER OF WILLIAM STUART BELL

BETWEEN:	BRIDGES FINANCIAL SERVICES PTY LIMITED APPLICANT
AND:	WILLIAM STUART BELL RESPONDENT

JUDGE:	EMMETT J
DATE:	6 DECEMBER 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. I have before me for hearing a bankruptcy petition filed on 3 March 1999.  The petition seeks a sequestration order in respect of the estate of William Stuart Bell.  The Petitioner is Bridges Financial Services Pty Limited (“Bridges”).  The petition is based upon an act of bankruptcy alleged to have been committed on 10 February 1999 when Mr Bell failed to comply with the requirements of a bankruptcy notice served on him on 20 January 1999 or to satisfy the court, at that stage, that he had a counter-claim, set off or cross demand equal to or exceeding the sum specified in the bankruptcy notice.  The bankruptcy notice itself was founded on a final judgment in the sum of $24,036.15, obtained against Mr Bell in the Local Court at Sydney on 18 May 1998. 

2. The petition was returnable in the Court on 29 March 1999. A notice of appearance was filed on behalf of Mr Bell on 29 March 1999, together with a notice of intention to oppose the petition.  The notice of intention to oppose the petition specified eight separate grounds.  The petition was stood over to 12 April 1999.  On that day, directions were given that the matter be referred to a judge.  Directions were also given for affidavits to be filed by the parties.

3. The matter first came before me on 7 May 1999 when I was informed that certain of the grounds of opposition would not be pursued.  The remaining grounds were as follows: 

   “1.The respondent debtor has a counter-claim, set off or cross demand equal to or exceeding the amount of the judgment debt, being a counter-claim, set off or cross demand that the respondent debtor could not have set up in the action or proceeding in which the judgment was obtained.

   ………………………

   7.The respondent debtor is able to pay his debts.

   8.For other sufficient cause a sequestration order ought not to be made.”

   I directed Mr Bell to file and serve, no later than 28 May 1999, all affidavits intended to be relied upon in support of the remaining grounds of opposition. I stood the matter over for directions to 4 June 1999 and ordered Mr Bell to pay Bridges’ costs of that day, in the light of his failure to comply with the directions that had already been given by the registrar. 

4. On 4 June 1999, the matter came before me again.  I directed the debtor to file, no later than 11 June 1999, an affidavit as to his financial position and circumstances.  I stood the petition over to 18 June 1999.  Again, I ordered Mr Bell to pay the costs of that day, having regard to the failure to comply with the earlier directions.

5. On 18 June 1999, I stood the matter over again by consent to 30 July 1999. I had been informed that it was proposed to seek to have the Local Court proceedings removed into the District Court because a cross-claim or counter-claim which was asserted by Mr Bell exceeded the jurisdiction of the Local Court.  On 30 July 1999, I directed Mr Bell to file and serve, no later than 4 August 1999, an affidavit explaining what had happened with proposals in the District Court and the Local Court. My direction included a requirement that the affidavit indicate, on the basis of proper material, how long before the proceeding in the District Court could be resolved.  I reserved the costs of 30 July 1999.

6. On 6 August 1999, the matter came before me once again and the proceedings were stood over for directions on 27 August 1999. I ordered Mr Bell to pay the costs of 30 July and of 6 August 1999.  Again, the reason for that was his failure to progress the matter adequately.

7. On 27 August 1999, once again, I stood the matter over, this time to 22 October 1999.  On 22 October 1999, I fixed the proceedings for hearing today at 10.15 a.m.  I directed the respondent to file and serve any affidavits intended to be relied upon in opposition to the petition no later than 12 November 1999.  I also gave leave to the parties to issue subpoenas returnable on 10 November 1999.  The proceedings were stood over until 26 November 1999 for mention to ensure that they would be ready for hearing.  On 26 November 1999, I was again asked to extend the time for the debtor to file affidavits intended to be relied upon.  That was done by consent and I confirmed the hearing day for today.

8. On earlier occasions, Mr Bell had been represented by Mrs Cominos.  When the matter was called on for hearing this morning, however, while Mr Bell was present in court, no legal representatives were present. I adjourned the matter briefly to enable efforts to be made to communicate with Mr Bell’s legal representatives.

9. When I resumed, Mr Biady, the solicitor for Mr Bell was present.  He said that he was not in a position to conduct the opposition to the petition and sought a further adjournment.  The basis for the adjournment, as advanced from the bar table, was that Mr Bell had now placed Mr Biady in funds and that it was proposed to commence proceedings in the “Industrial Court of New South Wales” (which is probably a reference to the New South Wales Industrial Relations Commission in Court Session) for relief against Bridges. 

10. Reliance was placed on a paragraph in an affidavit sworn by Mr Bell on 30 November 1999, which is in the following terms:

    “I have instructed Mrs Cominos of counsel and Mr Biady my solicitor to initiate proceedings against Bridges Financial Service [sic] Pty Limited in the Industrial Court [sic] and to pursue a claim under section 106 of the Industrial Relations Act 1996. I met with Mrs Cominos and Mr Biady on 15 November 1999 and again on 23 November 1999 to provide instructions in relation to such claims.”

11. However, Mr Biady was not in a position to indicate, to any useful extent, the nature of the claims or the basis upon which they would be likely to realise funds that would justify the assertion of a set off or counter-claim against Bridges.  Having regard to the history of the proceedings, which I have briefly recounted, I refused any further adjournment. 

12. The matter then proceeded on the basis of the affidavits that had been filed earlier in the year and, more recently, on behalf of Mr Bell.  The affidavits can be characterised as having been cast in somewhat inadmissible form.  However, no objection was taken to the form of the affidavit by counsel for the petitioner.

13. In an affidavit sworn on 29 March 1999, Mr Bell asserted that he had a counter-claim against Bridges in the sum of $84,122.46.  He said in his affidavit that he had entered into a contract with Bridges in August 1992, as an authorised representative in financial planning.  He said that he brought with him all his current clients as at August 1992 and proceeded to build the business further, “under the Bridges umbrella”.  He said that he was not handed any business by Bridges but gained it through his own efforts.

14. It appears that Mr Bell himself got into financial difficulties some time before July 1997.  The intimation was that Mr Bell's family trust employed him through a trustee called Bellfour Pty Limited and that, because of a tax liability, Bellfour Pty Limited was ordered to be wound up.  Claims were made by the liquidator of Bellfour Pty Limited against Mr Bell.  The liquidator obtained a judgment in mid-1998 in the sum of $41,000.  Although Mr Bell says that he disputes his indebtedness, no steps have been taken to set that judgment aside. 

15. It appears that the source of Mr Bell’s complaint against Bridges is that, on 18 July 1997, a representative of Bridges attended his office and said:

    “You’re out, you have one hour to collect your personal belongings and go.”

    Mr Bell says that documents were seized by the representative of Bridges and that, from that time, Bridges “took my financial planning business as they took all documents relating to the businesses”.

16. Mr Bell formulates in his affidavit a claim in which he says that the value of a financial business is two to three times the ongoing “trail commission”.  He said that, as at 18 July 1997, the ongoing trails from his financial planning business amounted to $28,800 per year.  On that basis, he estimated that the value of “my business” was $28,800 times 2.5, namely $72,000.  He also asserted that he has outstanding commissions payable to him by Bridges in the sum of $12,122.46.  Thus, his total asserted claim was $84,122.46. 

17. No cross-claim or defence was ever filed in the Local Court.  Nor, despite the adjournments granted in this Court, have any steps been taken in any other court by Mr Bell in respect of those claims.  It was asserted, as I have indicated, that proceedings would be commenced in the District Court.  No such proceedings were ever commenced.  The final assertion was that made in the affidavit of 30 November 1999, that it is now proposed to take proceedings under the Industrial Relations Act 1996 (NSW).

18. I do not have material before me that enables me to form a view that there is at least an arguable claim that would justify either dismissing or adjourning the petition on the ground that Mr Bell has a counter-claim or cross-claim against Bridges that exceeds the amount of the judgment debt.  It would, of course, be unfortunate if there is a genuine claim and Mr Bell is deprived of the opportunity of pursuing that claim by reason of a sequestration order.  However, the history of the matter before me indicates that Mr Bell has had ample opportunity to formulate a claim or to put on satisfactory evidence that would indicate that there is some substance in any such claim.  On the basis of the material presently before me, I am not satisfied that the first ground of opposition to the petition is made out. 

19. The second ground, as I have said, is that Mr Bell is able to pay his debts.  The material before me clearly indicates to the contrary.  The most recent evidence on that question is contained in Mr Bell’s affidavit of 30 November 1999.  He says that his total assets amount to $109,000.  That includes a half interest in his family home at Charlestown, together with furniture and effects contained in that home.  The total interest is said to be $85,000. He says he has a motor car worth $20,000.  However, that car is leased and the amount outstanding under the lease is approximately equal to the value.

20. The total liabilities disclosed by Mr Bell in his affidavit are $148,600.  That includes a half-share of a secured debt owing to St George Bank of $46,000, that amount being secured on his house.  He also includes the $20,000 owing in respect of the lease of the car.  The other debts disclosed include a credit union debt of $6000 and a credit card debt of $3,000. 

21. The principal liabilities, however, are a debt said to be owed to a Mr Mead of $52,000 and a half-share of the debt due to the liquidator of Bellfour Pty Limited of $21,000.  Of course, the amount owing to the liquidator is some $42,000 and, while Mr Bell might be jointly liable with his wife, he is strictly liable for the whole of that debt, as I understand the position.  There is no evidence as to the assets of Mr Bell’s wife.  The list of creditors does not include the amount owing to Bridges. 

22. I have no evidence as to the precise terms of the debt due to Mr Mead.  The affidavit indicates that the sum of $52,000 was borrowed in December 1997.  In the absence of any evidence as to the terms of the loan, I can only assume that it is payable on demand.  It is not clear whether any demand has been made.

23. At present, Mr Bell's income is approximately $2,167 a month, which he estimates is likely to increase.  However, he also has supplemental income through his wife’s wages and Austudy payments in respect of his children who apparently presently live with their parents.  Those amounts total $4,254 per month.  I do not have any evidence as to Mr Bell’s outgoings.  Those figures do not support a contention that Mr Bell is able to pay his debts as and when they fall due.  It may be that some of the debts are disputed but, on the basis of the material before me, I am not satisfied that this ground is made out.

24. In the light of those conclusions, I am not satisfied that there is any basis for refusing the relief sought in the petition. Nothing has been advanced in support of ground 8 shown in the Notice of Grounds of Opposition.

25. I note that the petition was duly served. I note that the bankruptcy notice was served on 20 January 1999 and I am satisfied that the act of bankruptcy alleged in the petition was committed. I am also satisfied with the proof of the other matters of which section 52(1) of the Bankruptcy Act1966 requires proof. 

26. Accordingly, I make a sequestration order against the estate of William Stuart Bell.  I order that the petitioner’s costs, including any costs that have been reserved, be taxed and paid in accordance with the Bankruptcy Act.  I note that the act of bankruptcy was committed on 10 February 1999.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:             16 December 1999

Counsel for the Applicant:	B.J. Skinner
Solicitor for the Applicant:	Bowles & Associates
Counsel for Kymrag Pty Ltd (supporting creditor):	M.G. McHugh
Solicitor for Kymrag Pty Ltd (supporting creditor):	Crisp & Associates
Solicitor for the Respondent:	J Biady & Associates on the hearing of the adjournment application. Mr Bell appeared in person on the hearing of the petition.
Date of Hearing:	6 December 1999
Date of Judgment:	6 December 1999