Greenhill, Ronald David v Berney, Ronald Martin

333

I N THE

FEDERAL

COURT

A U S T R A L I A

D I V I S I O N

G E N E R A L

)

B A N K R U P T C Y

D I S T R I C T

T H E

S T A T E

O F

N E W

SOUTH

WALES

AND

THE

A U S T R A L I A N

P I T A L

E R R I T O R Y

N o .

3756

o f

1984

R E :

RONALD

DAVID

GREENHILL

and

GAY

G R A I G

G R E E N H I L L

PARTE:

RONALD

MARTIN

BERNEY

and

PETER

JONATHAN

LANDER

t r a i i n g as

DONALD,	BERNEY	& LANDER
ORDER

Judge making order:

Beaumont,

J .

Date order

made:

18 October 1984.

Where

made:

Sydney.

THE

COURT

ORDERS

THAT:

d i s m i s s

a p p l i c a t i o n

t h e

t o

s e t

aside

t h e

bankrup tcy no t i ce se rved he re in .

I suspend

the

opera t ion

o f o rde r 1 u n t i l 4

p.m.

5 November 1984.

3 .

r e s e r v e

l i b e r t y

t o

t h e

d e b t o r s

t o

a p p l y ,

o r

before 4 p.m.

on l November 1984, on g i v i n g 48 hour s ' notice

t o

t h e

j u d g m e n t

c r e d l t o r s

i n

t h a t

b e h a l f ,

t o

d i scha rge

vary- o rder

4 .

extend

t ime

f o r

compl iance

wi th

the

bankruptcy

n o t i c e u p t o

and

i n c l u d i n g 5

November

1984.

o rde r

t ha t

t he

deb to r s

pay

one -ha l f

o f

t h e

c o s t s

o f

t h e

j u d g m e n t

c r e d i t o r s

o f

t h i s

a p p l i c a t i o n ,

i n c l u d i n g

r e se rved cos t s .

,	I
i

I N THE FEDERAL COURT OF

AUSTRALIA

GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF THE STATE
i

OF NEW

SOUTH

WALES

AND

THE

AUSTRALIAN CAPITAL TERRITORY

)

No. 3756 o f 1984

RE :

RONALD

D A V I D

GREENHILL

and

GAY

G R A I G

GREENHILL

EX PARTE:

RONALD MARTIN BERNEY and

PETER

JONATHAN LANDER t r a a i n g as

DONALD, BERNEY & LANDER

C ORAM :

Beaumont ,

DATED :

18 October 1984.

REASONS

FOR

JUDGPIENT

This

is a n

a p p l i c a t l o n

b y

two

d e b t o r s

t o

s e t

a s i d e

a bankruptcy

not ice

served

them.

The

n o t i c e is based

o n

d e f a u l t

Judgment

obtained

the

Hornsby

Court

o f

P e t t y

S e s s i o n s

o n

1 August 1983 i n

t h e

sum

o f

$ 1 , 2 2 4 . 5 0 .

The

judgmen t c red i to r s a re

so l i c i to r s and

the

judgmen t a rose

out

o f

c l a i m

f o r l e g a l c o s t s

and

d i s b u r s e m e n t s ,

i n c l u a i n g

counsel's fees, incurred i n litigation conducted on behalf

of the debtors. Last month, the debtors made application to

the Hornsby Court of Petty Sessions to set aside its default

judgment. That

application is returnable on 2 6 October

1984. In this Court, the debtors also make an application,

in the alternative, that time for compliance with the

bankruptcy notice be extended until the Court of Petty

Sessions deals with the

matter.

The application to this Court

was supported by a

short affidavit from the first debtor in which he foreshadowed the application to set aside the judgment "on the grounds that there is complete failure of conslderation

for the professional services alleged

t o have been rendered

o n the basis of breach of contract by the plaintiff (sic)". The first debtor further explalned the nature of his claim

m an affidavit sworn on

27 September 1984 as follows:

"5. In about

June 1984, ... Ronalcl

Martin Berney of the firm of solicitors

Donald, Berney & Lander

informed

wife's cousin, Jan Rasdall, of details of our financial affairs, transactions

and

dealings.

This

information

was

passed onto my wlfe's family and our

friends and associates causing extreme

embarrassment and lowering our esteem

soclally, professionally an1 in business in the eyes of all who became aware and there existed the potential that if the information was given to my business associates that my business would be substantially affected.

6.	Prior to the issue of the Plaint and

Default Summons in the Court

o f

Petty

Sessions at Hornsby, wherein Judgment

was obtained on 1 August 1983, I

forwarded a cheque to the solicitors in

payment of the account.

At the same

tlme I was transferring my bank account

and as a result when the cheque was

presented payment was not made. At this

time

decided not to write another

cheque or make payment

as, without the

consent of my wife or I, Mr. Berney engaged the services of a barrister and

I felt that these fees should not have

to be paid. Mr. Berney iid not inform my wife o r I that he would be hiring a barrister although he did state words to

the	effect 'I will ask a barrister

friend of mine about this matter'.

was surprised to find

a barrister at the

court in connection with our affairs

and

it was clearly too late to tell him that

I did not require his services.

7. When the Plaint and Default Summons

had been served o n my wife and I, I telephoned Mr. Berney and said to him words to the effect 'I do not agree with

paying this account.

I did not ask for

a barrister.

You did not ask me if I

would agree to the hiring of a bar.rister

in this matter. I Mr. Berney said words

to the effect 'I will be proceeding to

Notwithstanding Mr. Berneyls statement I

execute judgment against you' .

believed

that

would

probably

not

proceed with the execution of

Judgment

in the circumstances.

8. Judgment was obtained on 1 August

1983

9. Having obtained new solicitors I

presented my financial affairs to my new

solicitor who recommended to me to pay

the Judgment debt off by instalments of

$100.00 per month. I was reluctant to

do so. I believe that my new solicitor had sympathetic comradeship towards what

might

described

as his fellow

solicitor.

Accordingly

instalment

documents were prepared and filed in

the

court.

I subsequently decided that I

should not pay

the account and I did not

make

Instalments

any

under

instalment application."

However, during the cross-examination of the first

debtor, further

facts emerged which cast real doubt

upon the

claims he now seeks to make. In the first place, on 6 May

1983, the second debtor, the wife of the first debtor, drew

a cheque on the account

of thelr family company, Kamella

Pty. Limited, in favour of the first Judgment creditor in the sum of $1,061.50, being the costs and disbursements in

question. The

drawing of the cheque, coupled with the

subsequent

application

pay

the

judgment

debt

instalments, is the strongest evidence of an admission Of the debt. In any event, the debtors have falled, on the material before me, to provlde any satisfactory defence to the claim for counsel's fees. The first judgment creditor

wrote to the first debtor

by letter dated 22 September 1982

informing them that a conference had been arranged with

"(y)our

barrister". The first debtor

now

denies receiving

the letter. But he concedes that he and his wife used the

services

the barrlster in the litigation which was

ultimately compromised. The suggestion, it would

seem, is

that the counsel concerned, who was

not

known to the

debtors, was expected to perform his servlces on an honorary basis. His fees were $286.50. In my opinion, the debtors

have failed to make out even

an arguable case on this branch

of their submissioas. At

the very least, they ratified the

retainer of counsel by adopting the use of

his services.

T h i s

l e a v e s

t h e c l a i m

f o r b r e a c h

c o n f i d e n c e ,

which i s brought

forward,

a t t h i s l a t e s t a g e ,

c l a i m f o r

damages

way o f cross-claim

i n answer t o

t h e

c l a i m

f o r

c o s t s

a n d

i s b u r s e m e n t s .

I n

h i s

o r a l

e v i d e n c e ,

t h e

f i r s t

d e b t o r

s a i d

t h a t

h e

o v e r h e a r d

t e l e p h o n e

conversation

between

the

second

debtor

and

Mrs.

Rasdall .

(The

second

debtor was

n o t

a v a i l a b l e

t o

g i v e

v i d e n c e

b e c a u s e

t h e

illness

one

o f

he r

ch i ld ren . )

alleges

t h a t ,

i n

t h e

conve r sa t ion ,

Mrs.

R a s d a l l

s a i d

t h a t ,

i f

t h e

fees

owed

t o

t h e

judgment

credi tors

were

not

paid,

bankrup tcy

no t i ce

would

i s sued and

a l s o

t h a t

h e

f i rs t

Judgment

c r e d i t o r

had

t o l d h e r

(Mrs. R a s d a l l )

t h a t

t h e

f i r s t

d e b t o r

"owed

money everywhere.

Tooth

& Company were

one

those

people

. I t .

Both

the

f i r s t

Judgment

c r e d i t o r

and

Mrs.

R a s d a l l

swore

a f f i d a v i t s which

were

r e a 3

i n t h e p r o c e e l i n g s

and

t h e y

were

cross-examined

t h e i r a f f i d a v i t s .

The

f l r s t

Judgment

c r e d i t o r g a v e h i s r e c o l l e c t i o n

h i s c o n v e r s a t l o n w i t h

Mrs.

R a s d a l l

fo l lows:

"Jan, some t ime

ago

you

re fer red

Mr.

and

Mrs.

G r e e n h i l l

t o me.

I ' v e

done

cer ta in

l e g a l work

for

them,

but

they

have

r e f u s e d

t o

p a y

o u r f e e s .

would

r e l u c t a n t

t o

t a k e b a n k r u p t c y p r o c e e d i n g s

aga ins t your cous in

and

her husband, but

w i l l have

a l t e r n a t i v e

b u t

t o

t a k e

v . .

t h o s e s t e p s

i f

they don ' t pay very soon.

Could

you

have

a word wi th

your

cous in

t o f i n d o u t

i f

t h e y ' r e

g o i n g

t o

pay .

I ' v e issued a summons against them,

but

6 .

Ron Greenhill has been

very hard

find. I believe that he's now working for Tooth's in Wollongong. I don't want

you to prejudice your friendship with

your cousin and don't want to involve

you in this if you'd rather not talk about it to your cousin, but I thought they might listen to you because I would rather prefer not to have to commence

bankruptcy proceedings against

them.''

This version, which

was not seriously challenged in

cross-examination, was substantially

confirmed by Hrs.

Rasdall in her affidavit and in cross-examination.

In her

oral evidence, Mrs. Rasdall said that her conversation with

the second debtor took place as follows:

"I rang her.

I said to her that I would

like to have

a private conversation with

her. I believed that Ron would be at work because, being a weekend, I thought that that is a good time for the liquor trade, and it would be a time to have a private conversation with her. As it turned out he was at home which - that

is just one of those things. I was

concerned for her,

that if bankruptcy

proceedlngs were going to take place

then I would like to let her know about

it and give her an opportunity of paying

an outstanding account, because it all

seemed so stupid.

I sa13 this to her,

that I had spoken to Ron Berney, that there seemed to be an account that had

not been paid

for; that he would seem to

have no other alternative than to take

out bankruptcy charges. He said that he

had

sent

out

letters

and

summonses.

Gay, as I remember,

called

out:

'Haven't you paid Ron Berney's account yet?'. Ron Greenhill asked whom was on

the telephone. Gay said, 'It is Jan' .	Oh, and he said something like what does
she want to know that for. Gay repeated what I had said, that Ron Berney had told me that the account had not been

7 .

paid, that he had sent summonses out and that he would have to take bankruptcy

proceedings against them

if they did not

pay that account.

So far as the evidence of Mrs. Rasdall and the

first

debtor is in conflict, I accept Mrs. Rasdall's

evidence. Whilst her recollection of the events in question was good, the first debtor faces the difficulty that he was

overhearing the conversatlon in circumstances

In which he

may well have allowed himself to become upset and therefore

unreliable in terms of retrleval of what happened. I reJect

his version of the conversation. It follows that the case

for the first debtor is that the flrst Judgment creditor

passed 03 to Nrs. Rasdall, the first debtor's referee, the

trholly

accurate information that the solicitors' costs and

disbursements had not been pai3.

13 the circumstances, even assuming that a breach of confidence is thereby established, ~t is, at best, a

technical breach.

A serious questlon thus arises whether

the first debtor is entitled to more than nominal damages. Although exemplary damages are claimed, it is at least

doubtful whether anythlng more

than aggravated compensatory

damages are available In this State (see Fleming, Law of Torts, 6th E l . at p.564; Luntz, Assessment of Damages, 2nd Ea. at p.65; cf. Andrews v. John Fairfax & Sons Limited

[l9801 2 N.S.W.L.R. 225). Even if the first debtor were to

c l a i m e q u i t a b l e

damages

f o r

an a l l eged b reach o f conf idence ,

it would

seem

t h a t h e

would

have

t o p r o v e a c t u a l

l o s s and

s u c h -

l o s s

i s

e s t a b l i s h e d

h e r e

( s e e

M e a g h e r ,

Gummow

a n d

Lehane,

Equity - Doctrines

and

Ramedies,

2nd

Ea.

p.841;

C o r d e r y ' s

Law

R e l a t i n g

t o S o l i c i t o r s ,

7 t h

E d .

a t

p .169;

Gurry,

Breach

Confidence

at pp.442-3).

I n

the

absence

o f

a n y

e v i d e n c e

o f

damage,

n o

f o u n d a t i o n

e x i s t s

f o r

counter-claim

the

kind

now

asserted

the

f lrst

debtor.

In t h e

r e s u l t , e v e n

i f

t h e C o u r t w e r e

t o

behind

t h e

j u d g m e n t ,

n o

b a s i s

f o r

s e t t i n g

a s i a e

h a s

b e e n

demonstrate3

i n

t h i s

application.

a l s o

a p p e a r s ,

t h e r e f o r e ,

t h a t

t h e d e b t o r s h a v e

l i t t l e ,

any,

p rospec t

s e t t i n g

a s l d e

t h e

J u d g m e n t

I n

t h e

C o u r t

o f

P e t t y

S e s s i o n s

s i n c e t h a t c o u r t a p p l i e s

slmilar

p r i n c l p l e s t o t h o s e a p p l i e d

h e r e i n an and Byron, Cour t s

a p p l i c a t l o n t o s e t a s i d e

judgment

(see

Jackson

o f

Sess

lons

(C iv l l

Clalms)

P r a c t i c e

a t

p p . 7 1

e t

s e q . ) .

N o n e t h e l e s s ,

a n

o r d e r

d i s m i s s i n g

a n

a p p l i c a t i o n

t o

s e t

a s l d e

defaul t

Judgment

does

no t

c o n s t i t u t e

b a r

t o

subsequen t

app l i ca t ion

t h e

same

c h a r a c t e r

( s e e

Attwood

Chichester

[l8781 3 Q.B.D.

722;

Hall v .

The

Nominal

Defendant

( 1 9 6 6 )

117

C . L . R .

423

a t

p.440).

Thus,

p o s s i b l e

t h a t

h e

d e b t o r s

c o u l d

a d d u c e

fu r the r

ev ldence ,

no t

p re sen ted

t o

t h i s

C o u r t ,

upon

which

t h e C o u r t o f P e t t y S e s s i o n s c o u l d

r e l y

t o

s e t

a s l d e

t h e

defaul t

judgment .

For

i n s t ance ,

t he

s econd

deb to r

may

then

b e

a v a i l a b l e

t o

g ive

ev ldence .

though

present

ind ica t ions

are that the application

to the Court of Petty Sesslons

will

fail, the question arises whether the debtors should have	an
opportunity to pursue it.

In Re Sterllng;

Ex parte Esanda Limited (1980) 30

A.L.R. 77, Lockhart, J., in dealing with an application of

the present kind, said (at p.84) that, although each case

must depend upon its own

facts, there may be cases where the

applicatlon to set aside a bankruptcy notice should be adjourned pending the outcome of an application by the

debtor to a court of competent jurisaiction to

set aslde the

judgment on which the bankruptcy notice

is founded.

In my

opinion, where the

Judgment has been obtained by default

where, for other reasons, there has been

no real hearing on

the merits (see Wren v. Mahoney (1972) 126 C.L.R. 212 at p.225), then, prima facie, the application to set aslde the bankruptcy notice should stand over until the application to

set aside the judgment has been disposed

o f .

The reason for

this approach is that this is a court of insolvency which 1s

not an appropriate fonm f o r the resolutlon of civil disputes, and in particular, the recovery of debts, except where the lnsolvency of the debtor is apprehended. In the latter event, this Court will readily intervene f o r the protection of the general body of creditors. But unless the debtor's solvency is not questioned, the primary forum f o r the resolution of the dispute between the parties should be the Court o f Petty Sessions. Although there was some room

10.

for doubting the debtors' solvency,

I was informed that they

have paid

the amount

of the Judgment debt into the trust

account of their solicitors

as an indication of their

liquidity.

In all the circumstances, I am not persuaded

that any insolvency should

inference

of insolvency or even

apprehended

be drawn.

In the result, whilst,

on the evidence presently

available, the debtors'

application to set aside

the

bankruptcy notice cannot succeed,

I think that the debtors

should be given the opportunlty to pursue their applicatlon

in the Court

of Petty Sesslons on 26 October 1984.

It is

unlikely that they will wish to do this in the light of the fxndings I have made, so that, in an effort to achieve some

finality in

the litlgation, I make the following orders:

I dismiss the

application

set

aside

the

bankruptcy notice served herein.

I suspend the operation

of orier 1 until 4 p.m. on

5 November 1984.

I reserve

liberty

the

debtors

apply,

on or

before 4 p.m.

on 1 November 1984, on giving 48 hours' notice

to the judgment creditors	in that behalf, to discharge	or
vary order 1.

1 1 .

I extend

t ime

for

compl iance

wi th

the

bankruptcy

n o t i c e u p

t o and

including

5 November 1984.

o r d e r

t h a t

t h e

d e b t o r s

p a y

o n e - h a l f

t h e

c o s t s

the

Judgment

c red i tors

t h i s

a p p l i c a t i o n ,

i n c l u d i n g

reserved

c o s t s .

I have made o r d e r s 1, 2 and 3 t o

c a t e r

f o r

t h e

r e m o t e

p o s s i b i l i t y

t h a t

h e

C o u r t

o f

P e t t y

S e s s i o n s

S e t s

a s i d e

i ts

Judgment

s h o r t l y

a f t e r

26 October 1984.

have

depr ived

the

judgment

c red i tors

o f

one-ha l f

o f

the i r

c o s t s

b e c a u s e

o f

t h e i r

u n r e a s o n a b l e

o p p o s i t i o n

t o

h e

d e b t o r s ' a p p l i c a t i o n

made

a t

t h e

commencement

o f

t h e h e a r i n g

be fo re

t h a t

t h e m a t t e r

s t a n d o v e r u n t i l

s h o r t l y a f t e r

October

1984 when

t h e a p p r o p r i a t e

f o r m ,

t h e C o u r t

o f

P e t t y

Sess ions ,

could

ea l

wi th

the

mat

Viewing

the

d i spute

as I do, as one o f d e b t

c o l l e c t i o n

r a t h e r

t h a n

a p p r e h e n d e d

inso lvency ,

appropr i a t e

t ha t

t he

Judgmen t

c r ed i to r s ,

no twi ths t and lng some

success

i n t h e

a p p l i c a t i o n ,

s h o u l d

n o t

r e c e i v e

a l l

t h e i r c o s t s .

t h e c o n c l u s i o n o f a r g u m e n t

i n

t h e a p p l i c a t i o n ,

a d j o u r n e d

t h e

m a t t e r

t o 25

October

1984,

r e se rved

decis ion

and

extended

t ime

f o r

compliance

with

the

bankrup tcy

no t i ce

t o an3 i n c l u d i n g 25 October

1984.

have

now

f u r t h e r

e x t e n d e d

t h a t

time

t o and

i n c l u d i n g

November

1984.

I t is now

u n n e c e s s a r y

t h a t

a n y

f u r t h e r

12.

h e a r i n g

t a k e

p l a c e

25 October

1984.

t h e r e f o r e

v a c a t e

t h a t

hea r ing da te .

[1984] FCA 333

18 Oct 1984