Draude, G. v Chand, H

[1991] FCA 619

JUDGMENT No. C(? 7

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

No. NN223 of 1991

B E T W E E N :

GUNTER DRAUDE

Applicant

(Judgment Debtor)

- and -

HARRY CHAND

Respondent

(Judgment Creditor)

coram:  Olney J

Place: Melbourne

Date:  18 October 1991

REASONS FOR JUDGMENT

On 31 January 1991 the respondent in these proceedings (Chand) caused bankruptcy notice B223 of 1991 to be issued in the Bankruptcy District of the State of New South Wales. In this application the applicant (Draude) seeks an order that the bankruptcy notice be set aside.

with the application, was that the judgment debt upon	notice was sought, as disclosed by the affidavits filed
which the bankruptcy notice was based, had been extinguished prior to the issuing of the notice. In response to the application Chand gave notice of opposition upon the grounds that the debt the subject of the bankruptcy notice had not been paid and that there is no counter-claim, set-off or cross demand equal to or exceeding the sum specified in the bankruptcy notice that could have been set up in the action in which the judgment was obtained.
Chand filed an affidavit sworn 21 May 1991 and in response to various directions given prior to trial, further affidavits were filed on behalf of Draude, namely affidavits of Draude sworn 5 June 1991, Annette Draude (Mrs Draude) sworn 5 June 1991, Ludescher sworn 5 June 1991, Mrs Draude sworn 13 June 1991 and Ludescher filed 17 June 1991.
On 19 August 1991 an order was made transferring the
hearing of the application to the Victorian Registry of
the Court, and it came on for trlal on 4 September 1991.
The trial continued on 5 September, on which day I reserved my decision.
Counsel for Draude sought to rely upon the affidavits of Draude sworn 11 April 1991 and 5 June 1991, of Mrs Draude sworn 5 and 13 June 1991 and of Ludescher sworn 17 June 1991. Counsel expressly did not seek to rely on Ludescher's affidavit sworn 5 June 1991. Although it was not relied upon by Draude, Ludescher's affidavit of 10 April 1991 was referred to in cross examination and when asked Ludescher expressly adhered to it. In the circumstances I regard the affidavit as part of the evidence before me.
Counsel for Chand relied upon Chand's affidavit sworn 21 May 1991 and in addition (by leave) the oral testimony of Sonja Rochelle Bernadette Conlon.
A number of objections were taken to the admissibility of parts of the affidavit evidence as tendered. In each case I ruled on these objections and disallowed a number of paragraphs and parts of paragraphs. I do not intend to itemise the various rulings I made which are recorded in detail in the transcript. However, sufficient to say that I have not taken into account in my consideration of
the evidence, passages ruled to be inadmissible.
All deponents referred to above were made available for cross examination and were cross examined.
It will be of assistance if at this stage I give a brief overview of the events surrounding the matter in dispute and of the individuals involved.
Chand obtained a judgment against Draude in the County Court in Melbourne in May 1990. In July 1990 bankruptcy notice 1896 of 1990 was issued on Chand's behalf against Draude in respect of the outstanding judgment. The notice was issued on the application of Messrs J.J. Cullen and Associates, a firm of solicitors then practising at Balmain NSW, of which the sole principal was Mr J.J. Cullen (Cullen). Early in 1990 Messrs Fernon
& Ludescher, a firm of solicitors practising in
Melbourne, commenced- acting for Draude. Mr Christian William Ludescher (Ludescher) was at all relevant times a partner in that firm. Whether or not Fernon & Ludescher acted for Draude in the proceedings in which Chand obtained judgment does not appear from the evidence. However, it is clear that Chand was represented in those proceedings by the Melbourne firm of Messrs Schetzer, Brott and Appel. Subsequent to the judgment Mr J. Appel (Appel), a partner in Schetzer Brott and Appel, engaged in correspondence on Chand's behalf with Ludescher in
Court judgment. Simultaneously, J.J. Cullen & Associates relation to the costs payable by Draude under the County
were acting on Chand's behalf in respect of the bankruptcy notice issued in July 1990. J.J. Cullen & Associates on Chand's behalf were in contact with Ludescher both by telephone and correspondence in relation to the bankruptcy notice in the period from August 1990 to November 1990. In November 1990 Draude's wife (Mrs Draude) made funds available to enable a settlement to be reached in respect of Draude's liability for costs and at about the same tlme made an approach to 3.3. Cullen & Associates in an endeavour to settle the
judgment debt. On 13 and 14 November 1990 Mrs Draude, Cullen, Ludescher and Chand were involved in a number of telephone conversations which culminated in Mrs Draude paying $40,000 to the credit of 3.3 . Cullen & Associates' trust account on 14 November 1990. The circumstances and content of these conversations are central to the issues which presently fall for determination. The other witness called, Miss Conlon, is and was at all relevant times a receptionist employed by J.J. Cullen & Associates and (with one exception) is the person with whom both Mrs Draude and Ludescher first spoke on each occasion that they telephoned her employer's firm. She kept a record of incoming telephone calls to which reference was made in her evidence but she clearly had no independent recollection of the events in question. To a large extent the answers to the questions which arise in this proceeding will depend upon the credit to
be attached to the various witnesses, particularly Ludescher and Chand, and to a lesser extent to Mrs Draude. There are some facts which are common cause, and some which are established by objective evidence, but the central facts for determination require an assessment of credibility to be made, as the testimony of the two main witnesses relating to those facts is completely irreconcilable.
Perhaps the most notable aspect of the proceeding lies not in the testimony of the witnesses who swore affidavits and were cross examined, but in the complete absence of any evidence from the one person whose evidence would seem to be the most crucial of all. I refer to Cullen. The affidavit material filed on behalf of the applicant asserts that on different occasions both Mrs Draude and Ludescher spoke to Cullen by telephone concerning matters in issue, and in their affidavits, those witnesses relate their recollection of Cullen's responses. If those recollections are accepted as accurate then the evidence of those witnesses goes a long way to supporting the applicant's case. No explanation was offered for the failure of the respondent to adduce evidence from Cullen. Furthermore, Ludescher wrote
been forthcoming. They were letters which, given the several letters to Cullen to which no response has ever
respective roles of Ludescher and Cullen in the transaction, called for a reply. No explanation has been offered for Cullen's lack of response. In the circumstances I have drawn the inference that had Cullen given evidence his testimony would not have been helpful to the respondent. In the absence of any denial of the evidence of Ludescher and Mrs Draude in so far as it relates to conversations between each of them and Cullen, I accept what they say as being an accurate statement of the effect of Cullen's responses to them.
As between Ludescher and Chand, I have come to the conclusion, based upon my observation of them in the course of their evidence, and upon certain objective facts to which reference will be made hereafter, that to the extent that their evidence does not coincide, the version given by Ludescher is to be preferred to that of Chand. Chand's assertions that in two critical telephone conversations with Ludescher he identified himself as the judgment creditor lacked credibility and were inconsistent with Ludescher's responses as disclosed in his contemporaneous correspondence. So far as Draude and Mrs Draude are concerned, it was obvious that in both cases English was not their first language and that the style of cross examination adopted by counsel was not conducive to either witness readily understanding many of the questions put to them. The transcript when read out
of the context of the court room may tend to suggest that in some respects their evidence contained inconsistencies, but my assessment of their testimony is that both were honest and credible witnesses who responded to questions to the best of their understanding and recollection. This is particularly so in the case of Mrs Draude whose evidence was highly relevant. Draude himself, although the applicant in the proceedings, was not directly involved in the events of 13 and 14 November 1990 and what evidence he was able to give was of only marginal relevance.
Although it has little or no bearing upon any issue which I am required to determine it is appropriate that some reference should be made to the detail of Draude's evidence. Draude swore 2 affidavits which were both read. A number of objections were taken in respect of the affidavits and for the most part were either upheld or the relevant paragraphs not pressed. The thrust of the admissible affidavit evidence was as follows:
Draude is the applicant in the proceedings and the judgment debtor referred to in bankruptcy notice B223 of 1991. He was involved in litigation which resulted in
bankruptcy notice 1896 of 1990 was issued against him. the sum of approximately $52,000. Late in 1990 Chand obtaining judgment against him on 22 May 1990 in
On 14 November 1990 Chand's solicitors J.J. Cullen & Associates wrote him a letter of the same date which is exhibited to his affidavit sworn 11 April 1991. (Perusal of the exhibited letter reveals that it is in fact addressed to Mrs Draude and refers to bankruptcy notice 1896 of 1990. The contents of the letter will be referred to hereafter). In his second affidavit sworn 5 June 1991 Draude responded to a statement in Chand's affidavit of 21 May 1991 that he (Chand) had not had any personal communication with Draude since well before the commencement of the proceedings in which the judgment referred to above was obtained, by saying that it was agreed between himself and Chand by virtue of communications between their respective solicitors Fernon h Ludescher and J.J. Cullen & Associates and by virtue of
communications between his wife and Cullen that Chand would accept an amount of $40,000 in full and final settlement of a judgment debt entered in the County Court of Victoria in May 1990. Although the cross examination of Draude occupies some 20 pages of transcript, only the following short passage was directed towards the witness's evidence in chief:

The application, which was filed on 12 April 1991 was initially supported by affidavits sworn by Draude on 11 April 1991 and by Christian William Ludescher (Ludescher) on 10 April 1991.

The ground upon which the setting aside of the bankruptcy

MR STEWART: Does Mr Christian Ludescher act for you in any - presently in any capacity?--- NO.

Have you dispensed with his services?---Not

dispensed, no, no.

When did he last act for you?---In the case of - with Mr Chand.

You mean over the telegraphic transfer of

$40,000 to Mr Chand?---That is right, yes.

The balance of the cross examination was for the most part directed to the fact that on 12 November 1990 Draude (by his secretary) had sent by facsimile transmission to the offices of J.J. Cullen & Associates what appears to be a draft debtor's petition in his own name. It was said by Draude that this document which was never filed in any bankruptcy registry, was intended for his own solicitors and it was not until later that he discovered it had been sent to Chand's solicltors. The suggestion put to Draude was that he had deliberately sent the fax to Cullen's office to try to create the false impression that he was on the verge of filing a petition. This was denied, but even if it were the case, there appears to be no reason why such action on Draude's part should have any bearing upon any conclusion I may arrive at as to the credibility of Mrs Draude, Ludescher and Chand. One important fact that emerges from Draude's cross examination is that Ludescher was acting on his behalf in relation to the telegraphic transfer of $40,000 to Chand. Another fact appearing from his evidence is that the draft debtor's petition discloses assets of only a nominal amount which would be wholly insufficient to

need to refer further to Draude's evidence. satisfy the judgment debt due to Chand. There is no

In the following paragraphs I set out, for the most part

in chronological order, my findings of fact.

1.	On 22 May 1990 Chand obtained judgment for the sum of $52,530.50 and costs to be taxed against Draude in County Court action MC891099 at Melbourne.
2.	On the same day in action MC890846 in the same court E.R. Ronge & Co. Pty Ltd obtained judgment against Draude for the sum of $50,780.30 and costs to be taxed.
3.	By separate letters each dated 30 May 1990 Messrs Schetzer Brott & Appel as solicitors acting for Chand and for E.R. Ronge & Co. Pty Ltd wrote to Messrs Fernon & Ludescher as solicitors for Draude making demand for payment of the sums of $17,806.10 and $18,560.10 said to be due by Draude to Chand and E.R. Ronge & Co. Pty Ltd respectively for the costs in the proceedings referred to above.
4.	On 3 July 1990 Chand caused bankruptcy notice B1896 of 1990 to be issued against Draude out of the Bankruptcy Registry of the State of New South Wales.

5. In or about August 1990 Draude satisfied the

judgment due to E.R. Ronge & Co. Pty Ltd but not the

costs.

6.   On 21 August 1990 Ludescher received a telephone call from Cullen who said words to the effect

"I am a solicitor and I am acting for Harry Chand, we have issued a bankruptcy notice in respect of the judgment debt due to our client but we have been unable to effect service of the bankruptcy notice on

Draude . "

Ludescher replied to the effect

"Please forward to me a letter confirming the

matters that you have raised with me."

By letter dated 22 August 1990 Cullen wrote to

Ludescher in the following terms:

22 August 1990

Messrs Fernon & Ludescher
Solicitors
380 Burke Street
MELBOURNE VIC 3000

Your ref: CL:ME 0061F:l By fax : [phone]

Dear Sirs,

re: CHAND -v- DRAUDE

We are the NSW solicitors for Mr Harry Chand who is the Judgment Creditor against your client, Gunter Draude.

The Judgment Debt is $52,000.00 plus interest of $530.50, and further interest has been accruing at the rate of 19.6% per annum with effect from 22 May 1990, which amounts to $27.92 per day.

Our client has had a Bankruptcy Notice issued

client has made numerous attempts to serve your	and a copy of same is enclosed herewith. Our
client without success. He is of the view that your client is avoiding Service.
If necessary, a Court Order will be obtained for substituted Service upon your firm or the Judgment Debtor.
We confirm that you will seek instructions from your client in relation to payment of the debt.
Yours faithfully, J.J. CULLEN & ASSOCIATES

(Signed)

per: S. Conlon
enc :

A copy of bankruptcy notice B1896 of 1990 was enclosed with the letter.

7.    On 27 August 1990 Cullen wrote again to Ludescher in the following terms:

27 August 1990

Messrs Fernon & Ludescher
Solicitors
380 Burke Street
MELBOURNE VIC 3000

Your ref: CL:ME 0061F:l By fax: [phone]

Dear Sirs,

re: CHAND -v- DRAUDE

We refer to our letter of 22 August 1990 and our attempts to speak with your Mr Ludescher on Friday 24 August and Monday 27 August 1990.

We take it that you do not have instructions to arrange for payment of the Judgment Debt. Further, that you have no instructions to arrange for personal service upon your client of a Bankruptcy Notice.

We inform you that we are applying to the	Federal Court for an Order for Substituted
Service. These and all additional costs, including those in the attempt to serve, will be recovered against your client.
Yours faithfully, J.J. CULLEN & ASSOCIATE
per: (Signed) S. Conlon

8.  On 11 October 1990 in the Federal Court at Sydney orders were made that:

1.	Personal service of bankruptcy notice No. B1896 of 1990 be dispensed with.
2.	A true copy of the bankruptcy notice signed and

stamped by the Registrar in Bankruptcy and a sealed copy of the Order for amendment dated 25 July 1990 together with a sealed copy of this order be served on or before 18 October 1990 as

follows : -

(a)	by pre-paid ordinary post addressed to the Judgment debtor at 672 Nepean Highway, Carrum 3197;
(b)	by pre-paid ordinary post addressed to Messrs Fernon & Ludescher, Solicitors at 380 Bourke Street, Melbourne 3000.

3.    Service in accordance with this order shall be deemed good and sufficient service of the bankruptcy notice upon the debtor.

4.   The bankruptcy notice shall be deemed to be served on the debtor on 18 November 1990.

5 .    The bankruptcy notice be amended pursuant to Rule 108 by deleting the words "service of this notice on you, excluding the day on which this notice is served on you" and substituting "18 November 1990, excluding that date" and by deleting the words and figures "fourteen (14)" and substituting "twenty-eight (28)".

6.    Costs of this application be reserved.

9.   On 16 October 1990 Cullen wrote to Ludescher forwarding the order for substituted service and a copy of the bankruptcy notice. The letter and enclosures were received by Ludescher on 18 October

10.  On 13 November 1990

a)	At about 3.20 p.m. Mrs Draude telephoned the office of J.J. Cullen & Associates and spoke to Cullen.
b)	Mrs Draude later telephoned Ludescher on 2 occasions. In the first conversation she said to him words to the effect

"I have spoken to Harry Chand's Sydney Solicitor and I offered to pay Harry Chand $40,000 to settle the whole matter on the basis that $40,000 is all that I can afford to pay."

In the same conversation she also said words to the effect

"Harry Chand's solicitor told me that $40,000 would be accepted but the balance would have to be paid at some other time."

In the second conversation with Ludescher Mrs
Draude said words to the effect

"I have been told by Mr Cullen, Harry Chand's Solicitor that Harry Chand has accepted $40,000 in full and final settlement of all moneys payable by my husband to Harry Chand. Mr Cullen has given me details of his trust account so that I can transfer the sum of $40,000 to Mr Cullen's trust account."

c)	At about 5.01 p.m. Ludescher telephoned the offices of J.J. Cullen & Associates and asked to speak to Cullen. He did not speak to Cullen but indicated that he was telephoning in relation to Draude and left his own number.
d)	Ludescher spoke by telephone with Appel and reached an agreement that Draude's liability for the costs of the proceedings relating to E.R. Ronge & Co. Pty Ltd and Chand be settled in the total sum of $25,000.

11.  On 14 November 1991

(a) Mrs Draude telephoned Cullen's office at about 10.15 a.m., asked for Cullen but did not speak to him.

(b) Ludescher telephoned Cullen's office, asked for Cullen and was put on to a person described by Cullen's receptionist as a clerk and who on being asked identified himself as "Harry". The thrust of this conversation was that Chand had called at Cullen's office and given written instructions to accept $40,000 to be paid by Draude in full and final settlement of the judgment debt between Draude and Chand. Ludescher asked for written confirmation and was told words to the effect "I believe the arrangement agreed to

between Mrs Draude and Mr Cullen was that the money would be telegraphically transferred to the trust account of J.J. Cullen & Associates and written confirmation was to be forwarded to Mrs

Draude . "

To which Ludescher replied in words to the effect

"Written confirmation of the agreement should be forwarded by facsimile to me and if the terms of the confirmation are acceptable I will advise Mrs Draude to telegraphically transfer the money."

The person identified as Harry then replied in words to the effect

"Okay I'll forward the letter by facsimile

to you. "

(c) At some time during the morning, Cullen's office forwarded by fax to Ludescher's office a letter in the following form:

14 November 1990

Mrs A. Draude

By facsimile: [phone]

Dear Mrs Draude.

re: CHAND - BANKRUPTCY NUMBER 1896 of
1990

We refer to the telephone conversation between Mr Cullen and yourself yesterday, wherein it was agreed that we will withdraw the Bankruptcy Notice upon receipt of the $40,000.00, which we note that you wish to Telegraphic Transfer into our Trust Account.

Yours faithfully,

J.J. CULLEN & ASSOCIATES

per: (Signed)
S. Conlon

(d) After receiving the fax from Cullen's office Ludescher again telephoned Cullen's office and again spoke to the person to whom he had previously spoken and who was known to him at that time merely as Harry. He had a conversation with Harry in words to the following effect:

Ludescher: I am not happy with the terms of the letter because it does not acknowledge that the sum of $40,000 is accepted as full and final payment and satisfaction of all moneys which might be owed by Mr Draude to Mr Chand.

Harry: It is agreed by our client and acknowledged that the sum of $40,000 would if paid be accepted in full and final satisfaction and payment of all moneys owing by Mr Draude to our client.

There is going to be no problem because Mr Chand has actually called in to the office and signed instructions to accept the sum of $40,000 in full and final satisfaction.

(e)	The person to whom Ludescher spoke on each occasion was in fact Chand but at no time was Ludescher aware of the true identity of the person to whom he spoke.
(f)	After speaking to Chand on the second occasion, Ludescher telephoned Mrs Draude.

(g) After speaking to Mrs Draude, Ludescher wrote to Cullen and forwarded by fax to his office a letter in the following form:

14th November, 1990

Messrs J.J. Cullen & Associates

Solicitors

397 Darling Street

BALMAIN NSW 2041

Dear Sirs,

Re: Chand -v- Draude - Bankruptcy Notice

B1896 of 1990

We refer to previous correspondence and confirm that we have received instructions from Mrs Annette Draude.

Our client has agreed to pay the sum of $40,000-00 in full satisfaction of the Judgment Debt which is the subject matter of the Bankruptcy Notice dated 3rd July 1990 and numbered B1896 of 1990 and the foregoing sum is inclusive of all interest in relation to the Judgment Debt.

We understand from Mrs Draude and confirm that writer's telephone conversation of even date with Harry of your office that Mr Chand, the judgment creditor, has accepted the foregoing offer.

On the basis that your client, as judgment creditor, accepts the sum of $40,000-00 in full and final payment and satisfaction of the Judgment Debt together with all interest thereon being the subject matter of Bankruptcy Notice No. B1896 of 1990 and that any proceedings on foot will be withdrawn with no order as to costs against Mr G. Draude the judgement debtor, Mrs Draude will telegraphically transfer the sum of $40,000-00 to the credit of your trust account this afternoon.

Please acknowledge both the foregoing agreement and the receipt of the funds as soon as possible.

Yours faithfully,

FERNON & LUDESCHER,

Per: C. Ludescher.

(h) After speaking to Ludescher, Mrs Draude sent $40,000 by telegraphic transfer to the credit

of Cullen's trust account.

(i) At about 3.30 p.m. an employee of Cullen's bank telephoned Cullen's office and in Cullen's absence, left a message that $40,000 had been paid to his trust account for Chand.

12. After his f~rst telephone conversation with Chand on

14 November 1990 but prior to his second conversation on that day, and prior to receiving the faxed copy of the letter referred to in ll(c), Ludescher drafted, but did not dispatch a letter in the following form:

14th November, 1990

Messrs J.J Cullen & Associates
Solicitors
397 Darling Street

BALMAIN NSW 2041

Dear Sirs,

Re: Chand -v- Draude - Bankruptcy Notice B1896

of 1990

We refer to previous correspondence and confirm that we have received instructions from Mrs Annette Draude that she has offered to pay the sum of $40,000-00 in full satisfaction of the Judgment Debt which is the subject matter of the Bankruptcy Notice dated 3rd July 1990 and

numbered B1896 of 1990 and the foregoing sum is inclus~ve of all interest in relation to the	Judgment Debt.
We understand from Mrs Draude and confirm the writer's telephone conversation of even date with Harry of your office that Mr Chand, the judgment creditor, has accepted the foregoing offer.
Would you please immediately confirm that foregoing position namely that your client, as judgment creditor, well accept the sum of $40,000-00 in full and final payment and satisfaction of the Judgment Debt together with all interest thereon being the subject matter of Bankruptcy Notice No. B1896 of 1990.
Immediately your written confirmation of the foregoing agreement is received, we confirm that our client will, on our instructions, pay the sum of $40,000-00 to the credit of your trust account.
We look forward to your immediate advices.
Yours faithfully, FERNON & LUDESCHER,
Per: C. Ludescher.

Subsequent to receiving the fax Ludescher had his second telephone conversation with Chand and then amended the text of the letter to the form set out

13.  On 15 November 1990

a) Ludescher wrote a letter to Appel in the following form:

15th November, 1990

Messrs Schetzer Brott & Appel
Solicitors

1st Floor

FITZROY Vic 3065

288 Brunswick Street

Dear Sirs,

Re: G. Draude -ats- E.R. Ronqe & Co. Pty

Ltd and Harry Chand

We refer to the writer's telephone conversations of the 13th inst., with Mr Appel and as discussed now enclose our trust account cheque for the sum of $25,000-00 payable to your firm.

We confirm that on our instructions the funds represented by the enclosed cheque, have been provided by Mrs Annette Draude. We also confirm that the enclosed cheque is paid by Mrs Draude and is accepted on the basis that it is in full and final settlement of all outstanding costs as referred to in your letters of 17th August 1990 to our firm, as well as detailed in your letters of 30th May 1990, also addressed to our firm.

Please acknowledge both the receipt of the enclosed cheque and the basis upon which it is forwarded as soon as possible.

Yours faithfully,

FERNON & LUDESCHER,

Per: C. Ludescher.

Encl.

b) Appel wrote to Ludescher in the following terms :

15th November, 1990

Messrs Fernon & Ludescher
Solicitors
DX: 310

MELBOURNE.

ATTENTION: Mr Ludescher

Dear Sirs,

RE:

E .R. RONGE & CO. PTY LTD and DRAUDE &

HARRY CHAND

We confirm that we act on behalf of Chand and E.R. Ronge & Co. Pty Ltd.

We further confirm that we shall accept the sum of $25,000.00 from a Third-party in full satisfaction of the claim for costs on a party/party basis, made by Mr Chand through this office under-cover of our letter of the 30th May, 1990, and made by E. R. Ronge & Co. Pty Ltd., through this office under-cover of letter dated the 30th May, 1990. We further confirm that the sum shall include such costs as payable by your client in respect of the bankruptcy proceedings brought on behalf of E.R. Ronge & Co. Pty Ltd.

Yours faithfully,

SCHETZER BROTT & APPEL

PER: (Signed)

c) Ludescher wrote to Cullen in the following

terms	:
15th November, 1990
Messrs J.J. Cullen & Associates Solicitors 397 Darling Street BALMAIN NSW 2041
Dear Sirs,
Re: Chand -v- Draude - Bankruptcy Notice

B1896 of 1990

We refer to our letter of the 14th inst., and would appreciate your immediately response.

Yours faithfully,

FERNON & LUDESCHER.

(Signed)

Per: C. Ludescher.

14. On 20 November 1990 Ludescher telephoned Cullen's

office and spoke to Cullen. He said to Cullen words
to the effect

"Have you received the $40,000 and can you please confirm the contents of my letter of 14 November 1990."

Cullen replied in words to the effect

"I confirm receipt of the amount of $40,000 and
I will reply to your letter tomorrow."

15.  On 19 December 1990 Mrs Draude advised Ludescher by telephone that she had recelved a receipt from J.J. Cullen & Associates whlch was marked "without prejudice". On 20 December 1990 Ludescher wrote to Cullen in the following form:

Messrs J.J. Cullen & Associates
Solicitors
397 Darllng Street

BALMAIN NSW 2041

Dear Sirs,

Re: Draude ats. Chand

We refer to our letter of the 14th November 1990 and the writer's subsequent telephone conversation of the 20th November, 1990 with Mr Cullen.

Our client has now received what appears to be a trust account receipt which is marked "Deposit P which we assume means that it purports to be an instalment payment or part payment. Moreover the receipt is marked without prejudice and shows the money as being received from "G. Drauder".

As per our foregoing letter and the telephone conversations of the writer with Harry of your office and Mr Cullen, the payment of $40,000.00 was made by Mrs Annette Draude in full satisfaction of the judgment debt of your client, together with all interest and costs.

your office to accept the proposed payment on	Mr Chand had signed written instructions to Indeed, the writer was verbally informed that	the foregoing terms.
We can therefore only assume that the trust account receipt issued by your accounts department is incorrect, which we would ask you to confirm immediately.
We look forward to your immediate response.
Yours faithfully, FERNON & LUDESCHER

( Siqnedl . -

Per: C. ~udescher

16.  On 8 January 1991 Ludescher wrote to Cullen in the following form:

8th January, 1991

Messrs J.J. Cullen & Associates
Solicitors
397 Darling Street

BALMAIN NSW 2041

Dear Sirs,

Re: Draude ats Chand

We refer to our letters of the 14th November

1990 and 20th December 1990.

We would appreciate the courtesy of a response.

Yours faithfully,

Per: C. Cudescher

17.  At no time did Cullen, Chand or any other person on behalf of either of them reply, either verbally or in writing to the letters written by Ludescher on 14 November 1990, 15 November 1990, 20 December 1990

and 8 January 1991.

18.  Bankruptcy notice B223 of 1991 was issued on 31 January 1991 upon the application of Chand in person. The amount of the judgment debt referred to in the bankruptcy notice is $17,882.34 which is calculated as follows:

22/05/1990 JUDGEMENT DEBT:  $52,000.00

+ INTEREST:  530.50

23/05/1990 INTEREST AT 19.6%

TO	(176 days) ON JUDGEMENT
14/11/1990 DEBT OF $52,000.00:	$ 4,913.92

Less payment made on

14/11/1990 : $40,000.00 $40,000.00

15/11/1990 INTEREST AT 19.6%
TO (68 days) ON BALANCE

21/01/1990 OF JUDGEMENT DEBT OF

$12,000.00	$	437.92
BALANCE OF JUDGEMENT

DEBT $12,000.00 $17,882.34

From the facts which I have particularised above and from the evidence generally, I have drawn the following inferences.

a) In all his dealings with J.

Ludescher was acting as solicitor for and on behalf J. Cullen & Associates,

of Draude . He was authorised to negotiate, on Draude's behalf, a settlement of the debt due to Chand.

b)	In all her dealings with J.J. Cullen & Associates, Mrs Draude was acting on behalf of her husband and was understood to be so acting.
c)	Cullen was not present at his office at any relevant time on 14 November 1990.
d)	The letter forwarded by fax to Ludescher on 14 November 1990 was prepared at a time when Cullen was absent from his office and was probably prepared by Chand. It purported to be signed on behalf of J.J.

Cullen & Associates by MS Conlon but there is no evidence to suggest it was written with Cullen's knowledge.

e)	On 14 November 1990 both MS Conlon and Chand erroneously held out Chand (but described merely as "Harry") to be an employee of J. J. Cullen & Associates.
The sum of $40,000 paid to the trust account of J.J. Cullen & Associates on 14 November 1990 was paid by
Draude and this was known and understood by Cullen, Mrs Draude out of her own funds but on behalf of Chand and Ludescher. I also draw the inference that

Draude was not in a position to satisfy the debt out of his own resources, and this was known and understood by Chand and Cullen.

g) Subsequent to the payment of the $40,000 Cullen by inference verbally confirmed to Ludescher that the sum paid had been accepted in full and final settlement of the judgment debt.

In the circumstances, I am satisfied that the debt upon which bankruptcy notice B223 of 1991 was based had been discharged on 14 November 1990 in accordance with the terms of Ludescher's letter to J.J. Cullen & Associates of that date. Accordingly, the bankruptcy notice should be set aside.

The respondent should pay the applicant's costs of the proceedings.

: 1

I certify that this and the	!'.
preceding 27 pages are a	I
I
true copy of the Reasons	I
for Judgment of the	I
Honourable Mr Justice Olney	[ ?
l

-0

Associate	-	k	*	:	I.
1. .

Dated: 17. IO. lqql

Heard	4 + 5 September 1991
Counsel for the applicant	Mr H. Rapke
Solicitor for the applicant :	Law Partners
Counsel for the respondent	Mr C. Stewart
Solicitor for the respondent :	Rose & Co.