Franca, H.D. v The Rural & Industries Bank of Western Australia
[1990] FCA 354
•16 JULY 1990
Re: HUGO DELLA FRANCA; CARLO DELLA FRANCA and JOSEPH DELLA FRANCA
Ex parte: THE RURAL AND INDUSTRIES BANK OF WESTERN AUSTRALIA
Nos. P65 and P445 of 1990
FED No. 354
Bankruptcy
COURT
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA
French J.(1)
CATCHWORDS
Bankruptcy - creditors petition by Bank executed by unauthorised officer - dismissed by consent - no trial on the merits - fresh petition lodged - same act of bankruptcy invoked - whether res judicata - sequestration orders made.
Bankruptcy Rules r.22
HEARING
PERTH
#DATE 16:7:1990
Mr B.R. Dharmananda appeared on behalf of the Creditor.
ORDER
Sequestration orders are hereby made against the Estate of:
(i) Hugo Della Franca of 7 Croxton Road, Kalamunda
(ii) Carlo Della Franca of Lot 820 Pickering Brook Road, Pickering Brook
(iii) Joseph Della Franca of 42 Carinyah Road, Pickering Brook
The petitioning creditor's costs in respect of Hugo, Carlo and Joseph Della Franca be taxed and paid out of their respective estates in accordance with the Bankruptcy Act 1966.
Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
JUDGE1
On 22 August 1988 in the Supreme Court of Western Australia the W.A. Teachers Financial Society Limited as plaintiff, obtained summary judgment in the amount of $2,904,277.07 against defendants, Hugo, Carlo, Frank and Joseph Della Franca. The defendants were also ordered to pay the plaintiff's costs to be taxed.
On 22 November 1989 the Deputy Registrar in Bankruptcy issued a bankruptcy notice to the Della Francas under which $2,588,422.32 of the judgment amount was claimed by the Rural and Industries Bank of Western Australia. The Bank's claim was based upon a recited transfer of engagements to it from the Society under s.37G of the Credit Union Act 1979 effective from 8 December 1988. The notice also recited that leave had been granted on 12 September 1989 for the Bank to proceed with execution on the judgment. Payment was required within fourteen days of the date of service. The amount of $2,588,422.32 was said to represent the unpaid balance of the judgment and interest together with interest accrued at judgment debt rates for the period of 22 August 1988 to 12 October 1989. Copies of the notice were served on Hugo and Carlo Della Franca on 24 November 1989 and on Frank and Joseph on 27 November 1989.
On 18 January 1990 a creditors petition, P65 of 1990, was presented against Hugo, Carlo and Joseph Della Franca. The petition was executed purportedly for the bank by Thomas Carey Whittle, Deputy Manager Securities, under the following signing clause:
"EXECUTED by the Rural and ) The Rural and ) Industries Bank of Western ) Industries Bank of ) Australia by their Attorney ) Western Australia ) by Power of Attorney dated ) by their Attorney ) 31 August 1988 and who ) declares that he holds the ) "T.C. Whittle" position in the bank ) indicated under the signature) THOMAS CAREY WHITTLE in the presence of: DEPUTY MANAGER SECURITIES "Signature of Officer" An Officer of the said Bank
The affidavit verifying the petition was sworn by Albert Barrie Brown the Commercial Lending Manager and exhibited, inter alia, the power of attorney invoked by Mr Whittle. This empowered a number of specified office holders to do various things set out in fifty numbered clauses in the Deed. Clause 21 referred to the presentation and verification of any petition and the signing and service of any bankruptcy notice. Under the terms of the Deed any of the officers mentioned in Schedules A and B were authorised to exercise the functions mentioned in cl.21. None of these designations included a Deputy Manager Securities. Schedule C to the Deed included reference to a Manager Securities, but the office holders in that Schedule were limited to the functions in cls.27 to 50. None of these included provision for presentation of a petition in bankruptcy.
The petition was served upon Hugo and Carlo Della Franca and upon Joseph Della Franca on 5 February. Affidavits of service were filed on 22 February. On 8 March the Deputy Registrar in Bankruptcy issued a certificate under r.22 of the Bankruptcy Rules which included the following statement:
"(b) In my opinion the facts alleged in affidavits filed in support of the petition are consistent with the debtors having committed the respective acts of bankruptcy specified in the petition, except that the petition is purportedly executed by "Thomas Carey Whittle, Deputy Manager Securities", however it does not appear that he has the power to do so under the terms of the Power of Attorney as his designation does not appear in any of the schedules thereto."
The matter came before the Registrar on 12 March. The petitioning creditor was represented but there was no appearance for the debtors. The petition was adjourned to 3 April when a further adjournment was requested by the Bank's solicitors to enable them to consider the problem raised by the Deputy Registrar. And when the matter came on again on 17 April, the solicitor then appearing informed the Registrar that the problem had not been resolved and that the Bank wished to have the petition dismissed with no order as to costs. The Registrar made the order for dismissal. The debtors did not appear on that or any earlier occasion.
On 20 April 1990 a fresh petition, p 445 of 1990, was presented by the Bank against Frank, Hugo, Carlo and Joseph Della Franca. In each case the act of bankruptcy relied upon was the failure to comply with the requirements of the bankruptcy notice dated 22 November 1989. The petition was executed by William John Phillips, the Bank's Deputy General Manager, an office holder appearing in Schedule A to the power of attorney and therefore authorised to present such a petition on behalf of the Bank. The petition was served upon Hugo, Carlo and Joseph on 2 June and upon Frank Della Franca on 6 June. On 21 June 1990 the Deputy Registrar signed a further certificate under r.22 which included the following statement:
"(b) In my opinion the facts alleged in the affidavits filed in support of the petition are consistent with the debtors having committed the respective acts of bankruptcy specified in the petition. However, these same respective acts of bankruptcy were relied upon to found a petition presented by the same Creditor against HUGO DELLA FRANCA, CARLO DELLA FRANCA, and JOSEPH DELLA FRANCA (p 65 oF 1990) and that Petition was dismissed by consent of the creditor on 17 April 1990. Accordingly, it would appear that the present proceedings (at least in respect of the three earlier named debtors) should not have been instituted as the doctrine of "res judicata" and possibly also the principle of "issue estoppel" applies. Further, the present proceedings may be regarded as an abuse of process of the Court. See Re Sparkes (1877) 5 QSCR 1 Re Larard Ex p Yeomans and Anor (1896) 3 Manson's Bankruptcy and Winding-Up Cases 317 Chamberlain v D.C.T. (1988) 164 CLR 502 D.C.T. v Chamberlain (Federal Court of Australia, unreported decision of Wilcox J., Sydney 16 March 1990). See also Visy Board Pty Ltd v A-G
(Cth) and Anor (1984) 53 ALR 283 and Re Sailport Pty Ltd (1990) 8 ACLC 400."
On 25 June the Registrar made an order in the following terms:
"1. A sequestration order be made against the estate of Frank Della Franca of 56 Carinyah Road, Pickering Brook in the State of Western Australia.
2. The petitioning creditor's costs in respect of Frank Della Franca be taxed and paid out of the estate of Frank Della Franca in accordance with the Bankruptcy Act 1966."
The petition was otherwise adjourned. On 28 June 1990 the Bank filed an application to vary the order made on 17 April so that the original petition (p 65 of 1990) would be dismissed "without prejudice to the rights of the creditor to present a new petition against Hugo, Carlo and Joseph Della Franca". Both the application and the fresh petition came on for hearing before me on 9 July 1990.
On its application to vary the order made on 17 April the Bank contends that the dismissal of the petition did not involve a determination on the merits. But to avoid any difficulties of the kind adverted to by the Deputy Registrar, it seeks the proposed variation to make clear that the dismissal order did not affect its right to present a fresh petition.
While the issues of principle arising in the case might attract lengthy discussion of the relevant law, it does not in my opinion warrant extensive analysis. The petition was dismissed without regard to its merits and on the basis that it may not have been properly authorised by the petitioning creditor. No cause of action was determined upon the dismissal. No principle in favour of finality or against the possibility of inconsistent decisions is at stake. It was apparent from the petition and annexures to the verifying affidavit that it had not been presented by one of the class of persons authorised to present petitions for the Bank. While this does not exclude the logical possibility that a specific authority was given to Mr Whittle in this case, the Bank's conduct in seeking a dismissal indicates that no alternative authority had been given. In the circumstances there is nothing to prevent the presentation of a duly authorised petition based upon the same acts of bankruptcy as those invoked in that which was not authorised.
The application to vary the orders made by the Registrar is unnecessary and the fresh petition in p 445 of 1990 can be dealt with on its merits. Service having been proven and subject to the tendering today of affidavits of search and continuing debt, I am satisfied that sequestration orders can be made against Hugo, Carlo and Joseph Della Franca.
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