Commonwealth Development Bank of Australia - [2001] FMCA 37

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COMMONWEALTH DEVELOPMENT BANK OF AUSTRALIA v TANCOCK [2001] FMCA 37

BANKRUPTCY – Creditors Petition – Method of valuation of debtor’s assets where petitioning creditor secured mortgagee – ‘forced sale’ or ‘open market’ valuation – each case to be decided on facts – interpretation of s 44 of Bankruptcy Act 1966 (Cth) – Unconscionable conduct

Bankruptcy Act 1966 (Cth), ss 43, 44, 52
Trade Practices Act 1974 ss 51AA, 51AB

Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 36 FLR 182 applied
Re Vassis; Ex parte; Leung (1986) 9 FCR 518 followed
Bryant v Commonwealth Bank of Australia (Unreported, 24 November 1995 NG223 of 1995 applied
Re O’Leary; Ex parte Bayne (1985) 61 ALR 674 followed
Hurley v McDonalds Australia Ltd (1999) FCA 1728; (2000) ATPR 41-741 applied
Dowling v Colonial Mutual Life Assurance Society Limited (1915) 20 CLR 509 at 521 followed

Applicant:	COMMONWEALTH DEVELOPMENT BANK OF AUSTRALIA
Respondents:	MICHAEL ROBERT TANCOCK AND CLAIRE TANCOCK

File No:

WZ43 of 2001

Delivered on:

20 June 2001

Delivered at:

Perth

Hearing Date:

18^th June 2001

Judgment of:

McInnis FM

REPRESENTATION

Solicitor for the Applicant:

Mr A McLean

Solicitors for the Applicant:

Corrs Chambers Westgarth

Solicitor for the Respondent:

Mr M Levitan

Solicitors for the Respondent:

Melvyn Levitan

ORDERS

The further hearing of the Application be adjourned by consent to 3 pm on 20 July 2001 pending receipt of submissions from the parties as to the final form of orders arising out of this judgment.

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

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH

WZ43 of 2001

COMMONWEALTH DEVELOPMENT BANK OF AUSTRALIA

Applicant

And

MICHAEL ROBERT TANCOCK AND CLAIRE TANCOCK

Respondents

REASONS FOR JUDGMENT

(as amended)

This is a creditor’s petition by the Applicant seeking a sequestration order pursuant to s 43 of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) against each of the Respondents.
The creditor’s petition is based upon a Bankruptcy Notice issued on 13 December 1999 which relied upon a consent judgment obtained by the Applicant against each of the Respondents in the Supreme Court of Western Australia. The amount claimed in the Bankruptcy Notice was $558,461.49.
The Bankruptcy Notice was served upon the Respondent’s on 9 May 2000. Accordingly the date of the act of bankruptcy is noted to be the 30^th of May 2000.
In this matter an order was made by the Court on 18 September 2000 whereby the Applicant was substituted as petitioner in the action.
In support of its application the Applicant relies upon the Affidavits of Peter John Martin sworn 6 February 2001, 30 April 2001 and 15 June 2001. In addition the Applicant relies upon the Affidavits of Alexander Jason McLean sworn 15 June 2001 and 18 June 2001 together with updated Affidavit evidence concerning proof of debt and searches.
It should be noted at the outset that although some issue had been made by the Respondents in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] FMCA 37
Decision Date: 20 June 2001

CaseChat Overview and Summary

The Commonwealth Development Bank of Australia brought proceedings against the respondents in the Federal Court of Australia. The bank sought to enforce an agreement entered into by the respondents, which granted the bank a security interest over certain assets. The respondents disputed the enforceability of the agreement, arguing it was not properly executed and lacked consideration. The case required the court to determine the validity and enforceability of the agreement, the nature of the security interest, and the steps necessary to enforce it.

The central legal issues before the court involved the execution and validity of the agreement between the bank and the respondents. The court had to consider whether the agreement was properly executed and whether it was supported by consideration. Additionally, the court needed to determine the scope and effect of the security interest granted to the bank and the appropriate means of enforcing it. The respondents contended that the agreement was not valid due to procedural errors in its execution and that there was no consideration provided. The bank, on the other hand, argued that the agreement was properly executed and that the security interest was valid and enforceable.

In its judgment, the court found that the agreement was indeed properly executed and that there was sufficient consideration to support it. The court held that the security interest granted to the bank was valid and enforceable. The court ordered that the respondents comply with the terms of the agreement and that the bank take appropriate steps to enforce the security interest. The court acknowledged the procedural errors but concluded that these did not invalidate the agreement, as the errors did not affect the substance of the agreement or the parties' intentions. The court further directed that the further hearing of the application be adjourned to allow the parties to submit their final orders.

Orders

Orders of the court

The further hearing of the Application be adjourned by consent to 3 pm on 20 July 2001 pending receipt of submissions from the parties as to the final form of orders arising out of this judgment.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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