Gradara v Bolt

[1999] FCA 1638

FEDERAL COURT OF AUSTRALIA

Gradara v Bolt [1999] FCA 1638

BANKRUPTCY – appeal against sequestration order – petition founded on judgment debt – whether circumstances warrant going behind judgment debt – whether injustice in allowing petitioning creditors to base petition upon costs order regularly made.

Bankruptcy Act 1966 (Cth) ss 52(1) and (2)

TARCISIO GRADARA v WENDY BOLT and SHARNEY BYRNE

V 229 of 1999

BRANSON, WEINBERG and DOWSETT JJ

11 NOVEMBER 1999
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 229 OF 1999

On appeal from a single judge

BETWEEN:

TARCISIO GRADARA
Appellant

AND:

WENDY BOLT
First Respondent

SHARNEY BYRNE
Second Respondent

JUDGES:

BRANSON, WEINBERG and DOWSETT JJ

DATE OF ORDER:

11 NOVEMBER 1999

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The appellant pay the respondents’ costs of the appeal, such costs to be included as costs of the respondents’ petition.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 229 OF 1999

On appeal from a single judge

BETWEEN:

TARCISIO GRADARA
Applicant

AND:

WENDY BOLT
First Respondent

SHARNEY BYRNE
Second Respondent

JUDGES:	BRANSON, WEINBERG and DOWSETT JJ
DATE:	11 NOVEMBER 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

THE COURT

1. This is an appeal from a judgment of Finkelstein J who, on 26 April 1999, ordered that a sequestration order be made against the estate of the appellant. 

2. The respondents to this appeal, Ms Wendy Bolt and Mr Sharney Byrne, had petitioned for the sequestration of the appellant's estate.  The petition was based upon the appellant's failure to comply with a bankruptcy notice which required him to pay a debt of $6,906, that sum representing the amount ordered on 24 August 1998 to be paid as costs arising out of an appeal to a Full Court of this Court. 

3. The appellant opposed the making of the sequestration order.  He appeared unrepresented before Finkelstein J, as he has before us.  This has made it difficult to follow some of the points which he wished to raise in opposition to the petition, and some of the contentions advanced during the course of the appeal before us.

4. The appellant's dispute with the petitioning creditors dates back to 1984.  The appellant had been involved in a motor car accident and had instructed solicitors to act for him in proceedings which he instituted.  Those proceedings were settled and a sum of $15,000 was paid into the appellant's solicitor's trust account with what was then the State Bank of Victoria.  The sum of $1,500 was paid to the Legal Aid Commission of Victoria as the appellant’s contribution to his legal costs.  On 13 August 1994, a cheque in the sum of $13,500 payable to the appellant was drawn on the solicitor’s trust account.  The cheque was taken to a branch of the State Bank, where the first respondent was employed as a teller.  The cheque was cashed.  Out of the proceeds, the appellant received $10,000 and his solicitor retained $3,500, ostensibly “on account of his costs”, it is said.

5. From that date onwards, the appellant has been of the opinion that his solicitor had stolen the sum of $3,500.  He has maintained that he had been asked by his solicitor to sign a blank sheet of paper – which, it transpired, was the back of the cheque for $13,500 - just prior to its being cashed.  The appellant has maintained that this constituted both fraud and forgery on the part of the solicitor. 

6. The appellant sued his solicitor for the recovery of the money.  He was unsuccessful in that proceeding.  He then complained to the Victoria Police.  As a result, the solicitor was charged with a number of offences.  Those charges were ultimately either dismissed or withdrawn.

7. Thereafter, the appellant instituted proceedings in various State courts against the respondents.  He pleaded a wide array of causes of action against them.  As noted earlier, Ms Bolt was an employee of the State Bank who worked at the branch where the cheque was cashed.  Mr Byrne was the manager of that branch.  The appellant’s proceedings against the respondents were unsuccessful. 

8. The appellant then commenced proceedings against them in this Court.  He alleged a criminal conspiracy, contrary to certain provisions of the Crimes Act 1914 (Cth), on their part.  On 1 August 1997, those proceedings were dismissed as disclosing no reasonable cause of action.

9. An appeal was taken to the Full Court against the decision.  That appeal was also dismissed, with costs. 

10. It is that order for costs by the Full Court which founded the petition.  The appellant sought before Finkelstein J to have the petition dismissed.  He sought to attack the decision of the Full Court which had earlier dismissed his appeal.  He also sought to persuade Finkelstein J that he had legitimate grievances against his former solicitor concerning the $3,500 allegedly misappropriated, which grievances had not been dealt with appropriately by the courts which had considered those earlier proceedings.  He complained specifically about the conduct of both Ms Bolt and Mr Byrne, claiming that they had both committed perjury in the earlier proceedings involving his former solicitor, and also in the subsequent proceedings brought against them.

11. Finkelstein J correctly observed that s 52(1) of the Bankruptcy Act 1966 (Cth) requires proof of the various matters set out therein as a condition to the making of a sequestration order.  Even if these matters are proved, however, the Court retains a residual discretion to dismiss a petition (see s 52(2)). 

12. Finkelstein J noted also that where a petition is founded on a judgment debt, the Court can, in certain circumstances, go behind the judgment to satisfy itself that there is a real debt.  His Honour found that there were no circumstances which warranted the adoption of that course.  Finkelstein J stated:

    “Whether Mr Gradara has suffered any injustice at the hands of his former solicitor is not for me to say, save to observe that other courts have taken the view that he has not.  What is important for present purposes is that Mr Gradara has suffered no injustice by reason of the conduct of the petitioning creditors in this court in the proceedings that led to the making of the costs order.  In relation to those proceedings, the petitioning creditors acted within their rights when they successfully obtained a dismissal of the claim brought against them.  When he appealed that decision, Mr Gradara assumed the risk of having an order for costs made against him in the event that his appeal was unsuccessful.  He was undoubtedly aware of that risk. 

    I accept that Mr Gradara considers, and has always considered, that he has a good claim against the petitioning creditors and that it was wrong that his claim against them was dismissed without a hearing on the merits.  But that is really beside the point.  The incontrovertible fact here is that the proceeding that Mr Gradara brought against the petitioning creditors in this court was bound to fail, as was his appeal to the Full Court.  There is no injustice in allowing the petitioning creditors to base and prosecute their petition on a costs order regularly made.”

13. We would respectfully adopt as correct his Honour’s remarks.  In our view, the appellant has failed to demonstrate any error of any kind on the part of his Honour.  Whatever Mr Gradara's grievances may be, and there is no reason to doubt that they are genuinely and strongly felt, they do not bear upon the correctness of the decision which is the subject of this appeal.  It follows that the appeal must be dismissed.  The appellant must pay the respondents’ costs of the appeal which should be included as costs of their petition.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Branson, Weinberg and Dowsett.

Associate:

Dated:             11 November 1999

Counsel for the Appellant:	The appellant appeared in person.
Counsel for the Respondent:	Mr JA Nolan
Solicitor for the Respondent:	Herbert Geer and Rundle
Date of Hearing:	11 November 1999
Date of Judgment:	11 November 1999