Campagna, Re F. Ex Parte Climax Electric Pty Ltd

[1986] FCA 612

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) QLD P864 of 1986
BANKRUPTCY DISTRICT OF THE SOUTHERN	1
DISTRICT OF THE STATE OF OUEENSLAND	1

RE: FRANK C W A G N A

Debtor

M PARTE: CLIMAX ELECTRIC PTY. LTD.

Creditor

MINUTES OF ORDER

JUDGE MAKING ORDER: PINCUS J.

DATE OF ORDER: 1 DECEMBER 1986

~

WERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1. The petltlon be dismissed.

2 . The petltioning credltor pay the debtor's costs of

and incidental to the hearings of 12 November and 1

December 1986, to be taxed.

m:

Settlement and entry of orders is dealt with in

Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) (LLD P864 of 1986
BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF OUEENSLAND )

Re: FRANK CAMPAGNA

Debtor

Ex parte: CLIMAX ELECTRIC PTY. LTD.

Credltor

PINCUS J. 1 DECEMBER 1986

Ex TEMPORE REASONS FOR JUDGMENT

This is a petition for sequestration of the estate of

Frank Campagna based upon a bankruptcy notice lssued on 30 June

1986 In respect of a default ~udgment	in the Distrlct Court of 2
May 1986.

The petitioning creditor is associated with another

company, the name of which is Salchlor Pty. Ltd., and the point

which has been taken is that, assuming that there 1s any debt owed

by the judgment debtor in truth, it is not owed to the petltionlng

i creditor.

Salchlor Pty. Ltd. was incorporated on 10 December 1984.

The debt upon which judgment was obtained was incurred about April

1985 to March 1986, that is, after the incorporation of Salchlor

2 .

Pty. Ltd. During the relevant period there were two forms of

guarantee by the judgment debtor in force. One was dated 3 April

1985, and signed by, Inter alia, the judgment debtor; it

guarantees payment of Precise Pool Products' account in favour of

Salchlor. Mr. Applegarth, on behalf of the judgment debtor, has

polnted to the fact that there was a registered business name,

Salchlor, which reglstration ceased on 31 October 1984, and asked

me to Infer that the guarantee was probably Intended for Salchlor

Pty. Ltd. Counsel for the judgment credltor made no further

submissions. On 9 August 1985 a further guarantee was given by

Mr. Campagna in favour of Salchlor Pty. Ltd.

The case is plainly one in which it is right to go

behind the judgment debt; there 1 s no doubt about that. A more

dlfficult question 1 s whether there "m reality" is a debt.

One possible view of the facts is that despite the

cessation of the registration, the judgment creditor in fact

continued to carry on busmess in the busmess name, Salchlor,

after that name ceased to be reglstered, and that therefore the

guarantee dated 3 April 1985 is in favour of the judgment

credltor. That guarantee might have survived the execution f the

subsequent guarantee dated 9 August 1985.

Another possible view of the facts is that the first

guarantee was in favour of the judgment creditor and that ceased

to have effect on 9 August 1985, being superseded by that bearing

that date.

. . 3 .

A third possible view is that the first guarantee was

intended to be in favour of Salchlor Pty. Ltd., as was the second.

The question is whether there is a debt, and If so of

what amount, and depends upon which of those three views is

correct. For example, if it is correct that the guarantee dated 3

April 1985 should be read as being in favour of the petitioning

creditor, then at least part of the debt claimed, and for which

judgment was obtained, must have been due. The evidence is rather

scanty, and I must do the best I can with it, keeping in mind that

it is, in a sense, up to the petitioning creditor and its

associated company to explain the discrepancies In the facts,

because one would not expect the judgment creditor to know in

detail the intricacles	of	the internal arrangements of	these
companles.

Startlng from the propositlon, which there is no reason

to doubt, that the goods were supplled by the ~udgment creditor,

the most difficult point is the constructlon of the guarantee of 3

April 1985. It is certainly arguable that that guarantee should

be read as being one In favour of Salchlor Pty. Ltd., which had

been incorporated some four months before it was given if, indeed,

it should not simply be treated as a nullity. I think the better

view is not to presume any illegality, but take the	view that the
guarantee was intended for that company.

On that basis, then, both the guarantees should be taken

to be in favour of Salchlor Pty. Ltd., and there is no guarantee

in favour of the petitioning creditor.

4 .

I therefore hold that there is no debt.

The petition will be dismissed with costs. The costs

will be limited to costs of and incidental to the hearing of 12

November 1986 and today's hearing.	The order of Spender J. for
costs will, of course, stand.

certlfy that t l ~ i s and the 3 preceding

pages ara a t r w copy of T ~ C reasons for

Iud-Jrrent hcreln of H:s Honoar