Hirning v Samson

[2012] QCATA 221

CITATION: Hirning v Samson [2012] QCATA 221

PARTIES:	Geoff Hirning (Appellant)
v
Craig Samson t/as Look and Listen (Respondent)

APPLICATION NUMBER: APL481-11

MATTER TYPE: Appeals

HEARING DATE: On the papers

HEARD AT: Brisbane

DECISION OF: Dr J R Forbes, Member

DELIVERED ON: 5 November 2012

DELIVERED AT: Brisbane

ORDERS MADE: 1.    The application for leave to appeal is refused.

CATCHWORDS:

BANKRUPTCY – DISCHARGE OF BANKRUPT AND ANNULMENT OF SEQUESTRATION ORDER – ANNULMENT OF BANKRUPTCY – EFFECT OF ANNULMENT OR RELEASE – GENERALLY – where minor civil claim for consumer debt –  where primary decision in favour of present Respondent – where Appellant declared bankrupt prior to Tribunal proceedings – where Appellant’s bankruptcy annulled by composition with creditors prior to Tribunal proceedings – where Respondent not notified of bankruptcy – where Respondent did not prove in bankruptcy – whether in circumstances Respondent entitled to recover debt – whether debt revived – whether award vitiated by Bankruptcy Act 1966 (Cth)

Bankruptcy Act 1966 (Cth), ss 58, 64A, 73, 74, 154, 265
Queensland Civil and Administrative Tribunal Act 2009, ss 32, 142

Boyapati v Rockefeller Management Corporation [2008] FCA 995

Cameron v Cole (1944) 68 CLR 571

Drew v Bundaberg Regional Council [2011] QCA 359
QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41
Raupach v McDonald [2010] NSWSC 1326
Re Coyle (1993) 42 FCR 72
Re Guica; Ex parte the Bankrupts (1986) 10 FCR 59

Re Taylor; ex parte Taylor (1898) 8 BC (NSW) 50

Theissbacher v MacGregor Garrick & Co [1993] 2 Qd R 223
Union Club v Lord Andrew Charles Robert Battenberg [2006] NSWCA 72

APPEARANCES and REPRESENTATION (if any):

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (“QCAT Act”).

REASONS FOR DECISION

1. The Appellant Geoff Hirning is an audiophile who expects the highest quality in his listening devices.  In March 2009 he engaged the Respondent Craig Samson to supply and install Bose and Sonos sound reproduction equipment at his Ashgrove residence.  Hirning made a part payment of $4,000.  In May 2012 Samson commenced proceedings in the Tribunal for the balance, $4,842.  After a default judgment was set aside, the Tribunal awarded Samson the amount claimed and filing fee of $90.  The Tribunal also ordered the Respondent to pay the Appellant $343; that order is not in question.

Does the Bankruptcy Act Vitiate the Award?

1. Hirning now seeks leave to appeal[1] upon the ground that the subject debt was compromised by a composition with creditors, according to section 73 of the Bankruptcy Act 1966 (Cth) (“BA Act”).

   [1]        Queensland Civil and Administrative Tribunal Act 2009, s 142(3).

2. A sequestration order over Hirning’s estate was made on 22 April 2009. Contrary to section 265(1)(ca) and (f) of the BA Act, Hirning failed to inform his trustee of the remaining debt to Samson. The reason for that omission, it seems, is that Hirning, having decided ex parte that Samson was not lawfully entitled to that debt, simply absolved himself from it.[2]  Consequently Samson was not notified of Hirning’s bankruptcy[3], and lodged no proof of debt.

   [2]As to the penalty for non-compliance with s 265 of the Bankruptcy Act 1966, see s 265(1) of that Act.

   [3]        Bankruptcy Act 1966, s 64A – persons to whom trustee must give notice of meeting.

3. On 30 November 2009 Hirning achieved a composition within his creditors, and his bankruptcy was ipso facto annulled on that date.[4]

   [4]        Bankruptcy Act 1966, s 74(5).

Retrospectivity of an Annulment

1. The effect of section 74(5) of the BA Act was considered by the NSW Court of Appeal in Union Club v Battenberg[5], where it was held that the annulment resulting from a composition has a retrospective effect.  Giles JA[6] referred to a dictum in 1898 that the former bankrupt “goes scot free, and it is as though he had never been in the Court at all”[7].  His Honour also noted the High Court’s approval of dicta that, upon annulment, the debtor is “restored to the status quo ante” and “remitted to his original situation”.[8]  Both Giles JA[9] and Bryson JA[10] referred with approval to Re Coyle[11] in which Drummond J took the same view, which accords with the ruling of the Queensland Court of Appeal in Theissbacher v MacGregor Garrick & Co[12].

   [5] [2006] NSWCA 72.

   [6] [2006] NSWCA 72 at [52].

   [7]        Re Taylor; ex parte Taylor (1898) 8 BC (NSW) 50 at 51.

   [8]        Cameron v Cole (1944) 68 CLR 571 at 594.

   [9] [2006] NSWCA 72 at [79].

   [10] [2006] NSWCA 72 at [177].

   [11](1993) 42 FLR 72. See also Boyapati v Rockefeller Management Corporation [2008] FCA 1995.

   [12] [1993] 2 Qd R 223.

2. It follows that when Samson commenced proceedings in the Tribunal on 20 May 2010 there was, by virtue of the composition on 30 November 2009, no relevant bankruptcy in existence and no leave to proceed[13] was required.  A fortiori there was no relevant bankruptcy when the Tribunal gave judgment against Hirning on 5 December 2011.

   [13]        Bankruptcy Act 1966, s 58(2).

Did the Composition Affect the Respondent’s Claim?

1. But did Hirning’s composition with his creditors affect the debt claimed by Samson?  In my view it did not, and in order to reach that conclusion it is not necessary to rely on Hirning’s improper omission to inform the trustee of that item.  In Re Guica; Ex parte the Bankrupts[14] it was held that an order for annulment under s 154 of the BA Act does not prevent an unsecured creditor who has not proved in the bankruptcy from maintaining an action to recover his debt. In the Union Club[15] case no distinction was drawn, for present purposes, between annulments under section 74 and section 154 of the Bankruptcy Act 1966 respectively.  Closer to the present situation is Raupach v McDonald[16] where an annulment under section 73 of the BA Act was involved. The creditors concerned had not sought to prove in the bankruptcy. Price J, relying on Re Guica[17] expressly rejected a submission that “the annulment was binding on the [creditors] by reason of the operation of s 75 [of the] Bankruptcy Act, with the effect that the debt alleged ... was released”.  On the contrary, “where a bankruptcy has been annulled, the rights of a creditor who did not prove in the bankruptcy are revived”.[18]

   [14] (1986) 10 FCR 59.

   [15] [2006] NSWCA 72.

   [16] [2010] NSWSC 1326.

   [17]        Re Guica; Ex parte the Bankrupts (1986) 70 ALR 219.

   [18] [2010] NSWSC 1326 at [93]-[94].

Claim unaffected

1. In the light of the above authorities, I hold that the Respondent Samson was at all material times entitled to sue Hirning, upon the parties’ agreement of March 2009, for the balance of $4,842, and the learned Adjudicator was entitled, according to his findings of fact, now unchallenged, to make the award in question, and accordingly it stands.

2. I find no substance in the only grounds of appeal, based on the Bankruptcy Act 1966.  No error of fact is alleged, and in the absence of any error of law[19] in the primary decision, leave to appeal must be refused.

   [19]QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41 at [6]; Drew v Bundaberg Regional Council [2011] QCA 359 at [18].

ORDER

1. The application for leave to appeal is refused.