Hill v James (No 1) - [2006] FMCA 483

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HILL & ANOR v JAMES (No 1)

[2006] FMCA 483

BANKRUPTCY – Preliminary matter concerning status of the parties – whether the applicants are proper parties to these proceedings or competent to bring them – whether the first applicant has assigned his debt pursuant to a personal insolvency agreement – whether second applicant should be substituted as petitioning creditor.

Bankruptcy Act 1966, ss.49, 52(1)(c), 108, 188
Federal Magistrates Court (Bankruptcy) Rules 2006, Part 4 (Rule 6(4))

Hicks v Minister for Immigration [2003] FCA 7
Zotovic v The Dobell Boat Hire Pty Limited [1985] 62 ACTR 29 at [32]
SZEEU v Minister for Immigration [2006] FCAFC 2
Morris Komesaroff v The Law Institute of Victoria [1997] 893 FCA
Australian Litigation Fund v Mearns and Anor [2005] FMCA 1727
McNamara v Langford (1931) 45 CLR 267

First Applicant:

TERRY DONALD HILL

Second Applicant:	PETER DAVID RODGERS
Respondent:	DAVID ANTHONY JAMES

File Number:

SYG1872 of 2005

Judgment of:

Raphael FM

Hearing date:

30 March 2006

Date of Last Submission:

30 March 2006

Delivered at:

Sydney

Delivered on:

30 March 2006

REPRESENTATION

Counsel for the Applicant:

Mr M Aldridge SC and Mr R Glasson

Solicitors for the Applicant:

Eakin McCaffery Cox

Counsel for the Respondent:

Mr D Allen

Solicitors for the Respondent:

Catalyst Legal

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG1872 of 2005

TERRY DONALD HILL

First Applicant

PETER DAVID RODGERS

Second Applicant

And

DAVID ANTHONY JAMES

Respondent

REASONS FOR JUDGMENT

These proceedings, which have been set down for a hearing of three days, commenced yesterday with an application by the respondent for me to hear a preliminary question to be tried. The draft preliminary question was in the following form:
“(1) It being the fact that Mr Hill has assigned his debt to Mr Rodgers that the petition presented by Mr Hill must be dismissed for Mr Hill cannot meet the requirements in section 52(1)(c) of the Bankruptcy Act and Part 4 (Rule 6(4) of the Federal Magistrates Court (Bankruptcy) Rules 2006.
(2) The petition must be dismissed as Mr Rodgers is not a petitioning creditor.”
No agreement was reached as to whether that matter would be heard as a preliminary matter but argument was heard concerning the status of the applicants and it is in relation to their status that this judgment refers. It is not strictly speaking a “preliminary issue” as a decision will not determine the whole matter.
The proceeding, which is an application for a sequestration order, was commenced by the presentation of a petition on 15 July 2005. At that time the applicant was Mr Hill. On 28 July 2005 Mr Hill signed an authority under s.108 Bankruptcy Act 1966 (Cth) (“the Act”) appointing Mr Rodgers his controlling trustee. On 9 September 2005 a meeting of Mr Hill's creditors took place and a resolution was passed requiring Mr Hill to enter into a personal insolvency agreement.
A personal insolvency agreement was entered into on 9 September 2005. Pursuant to the…

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.

Continue reading Hill v James (No 1)

Details

AGLC: Hill v James (No 1) [2006] FMCA 483
Case: [2006] FMCA 483
Decision Date: 30 March 2006

CaseChat Overview and Summary

The case of Hill v James (No 1) involved a dispute in the Federal Magistrates Court of Australia concerning the status of the parties in a bankruptcy application. Terry Donald Hill and Peter David Rodgers, the applicants, sought a sequestration order against David Anthony James, the respondent. The applicants argued that Hill had assigned his debt to Rodgers, and therefore Rodgers should be substituted as the petitioning creditor. The respondents argued that neither Hill nor Rodgers were proper parties to the proceedings, as Hill's rights had been assigned, and Rodgers was not a creditor at the time of the petition.

The central legal issue before the court was whether Rodgers could be substituted as the petitioning creditor under the Bankruptcy Act 1966 and the Federal Magistrates Court (Bankruptcy) Rules 2006. The court needed to determine if the assignment of the debt from Hill to Rodgers, pursuant to a personal insolvency agreement, was valid and if Rodgers could be substituted as the petitioning creditor despite not being a creditor at the time of the original petition.

The court considered the decisions in Morris Komesaroff v The Law Institute of Victoria and Australian Litigation Fund v Mearns, which held that a creditor could be substituted by assignment even if the assignee was not a creditor at the time of the act of bankruptcy. The court found these decisions persuasive and bound by judicial comity to follow them. The court concluded that Rodgers could be substituted as the petitioning creditor if required, but due to the ongoing attack on Rodgers' position as an assignee and the potential for the case to be adjourned, the court decided to retain both parties as applicants until further notice. The court would make the substitution order if necessary when concluding the proceedings.

Orders