Howard, J. v Wanard Pty Ltd

[1985] FCA 217

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IN THE FEDERAL COURT OF AUSTRALIA.	) )
GENERAL DIVISION	) )

BANKRUPTCY DISTRICT OF THE STATE OF ) No. P. 64 of 1985

)

NEW SOUTH WALES AND THE AUSTRALIAN	1
)
CAPITAL TERRITORY	)
)

Re : JOHN HOWARD

Ex parte: WANARD

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C m : Neaves J. * \

D=: 31 May 1985

REASOMS FOR JUDGMENT

On 27 1985 I made a sequestration ord

the estate of John Howard ("the debtor") upon a creditor's petition presented by Flanard Pty. Limited ("the petitioning

creditor"). Pursuant to sub-section 52(3) of the Bankruptcy

1966 ( "the Act"), on the application of the debtor, I

stayed all proceedings under the sequestration order for a

period of 21 days. I said that I would deliver as soon as

possible reasons in writing for making the sequestration order.

I now set out those reasons.

The petition alleged that the debtor was at the date

of the commission of the act of bankruptcy relied upon

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ordinarily resident in Australla, that the debtor was justly

and truly indebted to the petitioning creditor in the sum of

$64,519.99 and that the petitioning creditor did not, nor did any person on its behalf, hold any security f o r the payment of

the amount of that indebtedness. The act of bankruptcy relied

upon was referable to paragraph 40(l)(g) of the Act. It was

alleged that the debtor had failed on or before 19 December

1984 (being a date within 6 months before the presentation of

the petition) either to comply with the requirements of a

bankruptcy notice served on him on 5 December 1984 or to

satisfy the Court that he had a counter-claim, set-off or cross

demand equal to or exceeding the amount of the judgment debt

specified in the bankruptcy notice. The words appearing in

paragraph 4O(l)(gl of the Act "being a counter-claim, set-off

or cross demand that he could not have set up in the action or

proceeding in which the judgment ... was obtained" were omitted

from the statement in the petition of the act of bankruptcy

relied upon. No point was raised by the debtor in regard to

this omission and, having regard to the provisions of paragraph

40(l)(g), the petition is to be read as if an allegation in

those terms had been included. In any event it would, if the

point had been taken. have been	a proper case in which to
permit amendment of the petition.

The bankruptcy notice, which was dated 21 November

1984 and was apparently issued on that day, was based upon a

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final judgment obtained by the petitioning creditor against the

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debtor in the District Court of New South Wales on 12 March

1984. The amount which the bankruptcy notice claimed was due

by the debtor under the judgment was $64,519.99 being the

amount for which judgment was entered ($59,564.43) together

with interest thereon at the rate of	14.5 per centum per annum
from 12 March 1984 to 8 October 1984.

The petition was presented on 16 January 1985 and was

served on the debtor on 5 February 1985. It came before the

Court (McGregor J.) on 23 April 1985. In addition to

appearances for the petitioning creditor and the debtor, there

was an appearance for a supporting creditor, Ausfield Pty.

Limited. The debtor is indebted to that company in the sum of $14,327.50 being the balance due under a judgment for

$21,327.50 obtained by that company agalnst the debtor in

December 1983. The Court was informed that a bankruptcy notice

had been served on the debtor based on that judgment.

When the petitlon was called on for hearing the debtor

applied for an adjournment for a period of three to four weeks

so that he could consider his position. In the result the

petition was adjourned until 7 May 1985, the Court indicating

I that it was unlikely that any further application for

adjournment of the petition would be granted unless it was

supported by evidence on affidavit. Costs were reserved.

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4.

M e n the matter came on for further hearing on 7 May

1985, the debtor applied for a further adjournment of the

petition. The Court was informed that on the morning of that

day a notice of motion, returnable on 31 May 1985, had been

filed in the District Court of New South Wales on behalf of the

debtor seeking orders that the judgment obtained on 12 March

1984 by the petitioning creditor against the debtor be set

aside and that the debtor be allowed 7 days in which to file

grounds of defence. An affidavit sworn by the solicitor for

the debtor on 6 May 1985 was, by leave, filed in court. It

annexed a copy of the notice of motion filed in the District

Court of New South Wales and a copy of an affidavit sworn by

the debtor on 6 May 1985 in support thereof. The debtor had

sworn no affidavit in the proceedings in this Court and was not

present when the petition came on for hearing. Further,

although in saying this I imply no criticism of counsel,

counsel who appeared for the debtor on that occasion was not in

a position to assist the Court in elucidating the factual basis

of the debtor's claim that he was not indebted to the

petitioning creditor.

The application for further adjournment of the

petition was refused and the petition heard. At the conclusion

of the case for the petitioning creditor, counsel for the

debtor sought an opportunity, before a sequestration order was

made. to speak with the debtor who, as I have said, was not in

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5.

court. That request was acceded to and the matter was stood

down until later in the day.

When the hearing was resumed, counsel for the debtor stated that the debtor's legal advisers were not then in a position to prove the matters on which the debtor relied as showing that he was not indebted to the petitioning creditor.

It was also said that to present the debtor's case it would be

necessary to serve subpoenas and to cross-examine the

deponents of affidavits filed on behalf of the petitioninq

creditor. 'A short adjournment of the hearing of the petition

was sought to enable the necessary steps o be taken, as it was

said. "to prove the defence of this matter on the merits".

Although the further adjournment was strenuously

opposed on grounds which were compelling, I determined that I

should grant a short adjournment to afford to the debtor a

final opportunity to put material on oath before the Court

which might provide a proper foundation for concluding that

there was a real basis for the contention that he i s not pstly

and truly indebted to the petitioning creditor in the sum

claimed. The petition was adjourned until 22 May 1985, the

question being left open whether, if the Court were satisfied

on the material then placed before it that there was a

substantial issue to be tried. that issue should be tried in

this Court or whether the proceedings in this Court should be

further adjourned to allow the matter to be pursued in the

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6.

District Court of New South Wales. The costs of the

proceedings on 7 May 1985 were reserved.

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Because of the Court's other commitments, the petition

did not come on for further hearing until 27 May 1985.

On the further hearing of the petition the debtor

relied upon the affidavits of himself, Pierre Bondon and John

Edward Garnett all sworn 22 May 1985. The petitioning creditor

relied, in addition to the material already placed before the Court on its behalf, on an affidavit of Craig Leslie Lawrence

sworn 27 May 1985. The debtor gave oral evldence and the

parties tendered certain documentary material. Both the

petitioning creditor and the supporting creditor pressed for

the making of a sequestration order.

The proceedings in the District Court of New South

Wales between the petitioning creditor and the debtor were instituted on 24 October 1983 by the filing of a statement of

liquidated claim. It was alleged in paragraph 4 of that

statement that during the period 1 August 1982 to 30 April 1983

the debtor, who was at all material times the general manager

of the petitioning creditor, became indebted to the petitioning

creditor in the sum of $18,539.52. That indebtedness was said

to arise from the maintenance by the petitioning creditor of a

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loan account for the debtor in respect of various matters

including advances to the debtor and the payment of expenses on

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his behalf. Particulars of the indebtedness were set out.

Those particulars, with the addition of a column numbering the

items in consecutive order, were as follows -

"Item Date Cheque No. Amount Remarks

m. .$

1.	10.08.82	133835	1057.02	AMERICAN EXPRESS
2.	22.09.82	99	1860.45	ESANDA LIMITED

3. 09.82 Invoice 5 250.00 CAR SUPPLIED TO M. SIMMON

4. 29.09.82 ~~~~~ ~ 175 500.00 SERGE COPELLI

5. 08.10.82 237 5000.00 ADVANCE J.T. HOWARD

6.	08.10.82	241	560.00	B. HOAREY
7.	11.10.82	244	512.82	STATE BANK - COOGEE
8.	11.10.82	247	120.00	SYDNEY CRICKET GROUND
9.	15.10.82	293	500.00	B. PYNE

10.	21.10.82	337	89.00	J.H. WOOD & CO. PTY. LTD.
11.	28.10.82	395	36.65	M.W.S. & D. BOARD

12. 29.10.82 434 1290.00 DEPT. OF CONSUMER AFFAIRS

13.	04.11.82	498	592.44	MYERS NSW LTD.
14.	04.11.82	503	772.35	MYERS NSW LTD.
15.	05.11.82	513	250.00	MELZER & HINCH

16.	05.11.82	514	50.00	JOSEPHINE FLORIST
17,	05.11.82	516	60.00	SECRETmY. POLICE DEPT.

18.	17.11.82	581	905.00	L. KUPERMAN
19.	17.11.82	582	390.00	G. CREW
20.	23.11.82	623	477.83	GRACE BROS.
21.	23.11.82	624	607.46	DAVID J O N E S

22. 11.82 246.75 BOULEVARDE HOTEL

23. 11.82 69.00 LIBERTY FLORIST

24. 30.11.82 766 180 * 00 G. CREW

25. 02.12.82 781 645.00 L. KUPERMAN

26. 07.12.82 806 90.50 J . H . WOOD & CO. PTY. LTD.

27. 08.12.82 832 200.00 B. PYNE

28. 16.02.83 1481 35.00 ASHFIELD FLORIST

29.	16.02.83	1482	328.60	AVIS AUST.
30.	16.02.83	1483	229.90	THE GARDEN BAR RESTAURANT
31.	28.02.83	J15	352.20	VIATOUR TRAVEL
32.	31.03.83	J20	500.00	McLEISHPW DISCOUNT

33. 30.04.83 J20 1581.55 LOSS ON SALE SIN1047

20339.52

Less payments 1800.00

18,539.52"

It was also alleged in the statement of liquidated

claim (paragraph 5) that the debtor was indebted to the

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petitioning creditor in a further sum of $40,736.16 described

as money lent by the petitioning creditor to the debtor and

money had and received by the debtor for the use of the

petitioning creditor. The total amount claimed in the action

was, therefore, $59,275.60. It should, perhaps, be mentioned

that at the time the proceedings were instituted Errol George Chant and Desmond Livingstone Nicholl of the firm of Deloitte Haskins and Sells, Chartered Accountants, were the receivers

and managers of the petitioning creditor, having been	so
appointed on 16 May 1983.

Following service on the debtor on 29 October 1983 of

the statement of liquidated claim, correspondence took place

between the solicitors for the petitioning creditor and the

solicitors for the debtor. In answer to a letter dated 21

December 1983 from the solicitors for the petitioning creditor

stating that unless a defence was filed on or before 13 January

1984 application would be made for judgment in the action

without further notice, the solicitors for the debtor,	in a
letter dated 10 January 1984, said -

"This matter was forwarded to Counsel for advice

and the drafting of a Defence late in 1983 and we

do not, as yet, have Counsel's response. Efforts

to contact the Counsel briefed have indicated that

he will not be returning until the resumption of

the Law Term and we seek your indulgence and ask

for an extension of the time for filing of a

l Defence until Tuesday, 7th February, 1984."

9.

No defence had been filed prior to 12 March 1984 when

judgment by default was entered. Thereafter, further

correspondence took place between the solicitors. On 17 May

1984 the solicitors for the petitioning creditor wrote in the

following terms -

"We refer to previous correspondence in this matter

and to ur telephone conversation with your

Secretary on the 17th May last.

We note that you were to make a written,submission

to thls firm outlining the basis upon which the being set aside.

We are instructed that unless we receive that

submission by Friday, 25th May, 1984, we should

proceed to issue a Bankruptcy Notice with a view to

obtaining a sequestration order against your

client. "

The reference to "the Plaintiff" is of course a reference to

the petitioning creditor.

The solicitors for the debtor replied by letter dated

31 May 1984 in the following terms -

"We acknowledge receipt of your letter of 17th May,

1984 refer subsequent and to telephone

conversations both with Mr Hilliard and with Mr

Millar of Deloitte Haskins and Sells.

As discussed the statement of unsecured creditors

did not disclose the information which our client

anticipated that they would, namely that the

alleged indebtedness by him to Wanard Pty. Limited

was offset by a corresponding credit due by Wanard

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Pty. Limited to our client's company Facteal Pty.

Limited. Our client can only presume that the

books of the company inadvertently showed the debt

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due by the company to Facteal Pty. Limited as in

some way included in the debt due to Edward

Wanandi .

We have requested from you. and from Mr Millar the

opportunity to inspect the company's books or

alternatively extracts from the company's books

relating to the borrowings by the company from

Citicorp Australia Limited, to secure upon our

client's property at 2 Wolseley Road, Coogee, which

took place on 18 August, 1982.

We are informed by Mr Millar that he no longer

holds the books and they were delivered to one Ann

DiJong, an acquaintance of Mr Wanandi. Ne have

contacted her and she has been particularly

unhelpful. She would not confirm whether or not

the books remained in Australia, whether or not

they were avallable for lnspection or any other

information. She requested that we write to her

formally detailing information we require and she

would ascertain if it could be	made available and
advise us 'in due course'.	Her reluctance to

assist is obviouslv based upon the fact that we

have, on behalf of Mr Howkrd and Facteal Pty.

Limited instituted Proceedinss asainst Mr Wanandi

for monies claimed-upon ou; ciient by Citicorp

Australia Limited pursuant to our clients

guarantee, and the security he offered to them at

Mr Wanandi's request o provide the initial

deposit.

We are endeavouring to ascertain the necessary

information and we ask that in the meantime you do

not proceed to enforce the Judgement which you have

obtained against our client by default.

At this time it would be appropriate to indicate to

you the basis upon which our client denies

liability and defends the claim by Wanard Pty.

Limited in the Statement of Claim:

1. In relation to the claims made in

paragraph 4 our client says that prior

to the incorporation of the company he

was requested by Mr Wanandi to set up

the plant and equipment and pfemises in

which the company would operate, after

the company commenced to operate he was

l a senior employee entitled to claim

expense and entertainment allowances

from the company. The matters claimed

in paragraph 4 are either reimbursement

of monies expended by him prior to the

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company commencing to trade, expenses

incurred by him on behalf of the

company, or alternatively expenses

properly incurred in the course of his

employment. The one item of 30th April,

1983 being 'loss on sale S/N1047' our client denies any liability, saylng that this was a loss on a trade-in and was customary in the course of the business that losses would be so incurred. If a

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debit is claimed on a loss he enquiries

as to whether a credit cannot be granted

for those instances where in fact a

profit was made:

2. As to paragraph 5 of the Statement of

Claim, this is the matter dealt with in

the bulk of this letter namely the

offsetting credit in the name of Facteal

Pty. Limited. It may be of assistance

for us to ummarise our client's

instructlons as to	the basis upon which
he denies the claim.

I Our client was approached by Mr Wanandi

to act as a local representative and

assist in the setting up of a Mitsubishi

Dealership which proposed he to

establish in Australia. Mr Wanandi had

been a family friend of the Howards' for

some ten years and my client was happy

to assist him in setting up the

Dealership. Mr Howard was offered a

senior managerial appointment. Mr

EIanandi arranged for the 'Floor Plan' to be financed through Citicorp Australia

Limited but they required an initial

payment of $150,000 under the Bailment

Agreement. Mr Wanandi requested Mr

Howard to provide his property as security for these borrowings from Citicorp to which Mr Howard agreed. At

that time the house was in Mr Howard's

name, but was it decided that

simultaneously with the taking of the

mortgage it was appropriate to transfer

the ownership into the name of Facteal

Pty. Limited, Mr Howard's house was

subject to a mortgage of approximately

l $40,000. Borrowings of approximately

$190,000 were made from Citicorp

Australia Limited by Facteal Pty.

Limited, $40,000 of which was used to

pay off Mr Howard's mortgage, $150,000

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of which was retained by Clticorp on

account of Bailment Agreement.

Accordingly, our client maintains that the alleged indebtedness by him to the company of $40,000 is offset by Wanard Pty. Limited indebtedness to him of the

same amount, or in the alternative by

the fact that he continues through

Facteal Pty. Limited to owe that amount

of money to Citicorp Australia Limited."

By letter dated 12 June 1984 the solicitors for the

petitioning creditor informed the solicitors for the debtor

that, although the petitioning creditor wished to resolve the

matter expeditiously, they were instructed not o take

proceedings to enforce the judgment without notice to the

debtor's solicitors. The solicitors further stated that,

irrespective of the results of discussions concerning the sum

claimed in paragraph 5 of the statement of claim, the

petitioning creditor required full payment of the amount

claimed in paragraph 4 thereof and in that regard enforcement proceedings would be commenced unless appropriate arrangements

were made within	14 days from the date of the letter to pay
that amount.

By letter dated 20 June 1984 the solicitors for the

debtor requested a copy of a certain list said to represent the

actual items owing by the debtor. The letter continued -

"We are informed by our client that he was under

the impression that he paid all monies agreed to be

paid by him, if it can be established that monies

remain outstanding we are informed that he will

attend to payment. "

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.... . . . ..

13.

The copy list requested was furnished under cover of a

letter from the petitioning creditor's solicitors dated 27 June

1984. The letter contained the following paragraph -

"Whilst we believe it is unusual to request

Judgment Creditors to 'establish' the debt for

which Judgment has been obtained, we are instructed that your client should make arrangements with Noel

Forrest of Messrs Deloitte, Haskins & Sells (Ph.

2212311) to attend on him for the purpose of

examining the various invoices and company records

which establish your client's indebtedness to the

company. "

By letter dated 16 August 1984 the solicitors for the

petitioning creditor informed the solicitors for the debtor in

the following terms -

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"We refer to our letter of the 27th June, 1984. We

are instructed by our client that Mr Howard has not made contact with Mr Forrest as had been arranged with you.

We are instructed to issue a Bankruptcy Notice on

Monday the 20th August, 1984."

No further oral or written communication was received from the debtor's solicitors. It was not, however, until 8

October 1984 that application was made for the issue of a

bankruptcy notice against the debtor.

It was common ground between the parties that at all

material times the petitioning creditor conducted, under the

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trade name "Ashfield Mitsubishi". the business of a Mitsubishi

franchise motor dealer in both new and second-hand motor petitioning creditor as its general manager.

vehicles and of providing service facilities for such vehicles.

Paragraph 5 of the affldavit sworn by the debtor on 6

May 1985 and filed in the District Court of New South Wales in support of the notice of motion to set aside the judgment, was

in the following terms (the references to "the Plaintiff" being

to the petitioning creditor) -

"The alleged indebtedness referred to in paragraph

4 of the Statement of Claim are all payments made

by the Plaintiff in the normal course of its

business, and any payments made therein at my direction, were made in the normal course of the business of the Plaintiff either in establishing

the business of 'Ashfield Mitsubishi' or in the

conduct of its business when established. Any

payments made to me were payments made in

reimbursement of expenses I had properly incurred

for and on behalf of the Plaintiff in the

establishment of the business 'Ashfield Mitsubishi'

or in my employment as general manager acting on

behalf of the Plaintiff. I deny any indebtedness

to the Plaintiff in respect of any of the alleged

items of indebtedness referred to in paragraph 4."

The debtor was given every opportunity to say whether

he adhered to those statements. He maintained that what was

stated in his affidavit true. was However, in

l	cross-examination, the debtor agreed, after looking at certain
documents that were shown to him, that -

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(a) the sum of $512.82 (item No.7)

represented the purchase from the State was about to travel overseas;

Bank, Cooqee of traveller’s cheques in

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(b) the sum $36.65 of (item No.11)

represented a payment f o r water rates on

his property at 2 Elolseley Road, Cooqee;

(c) the sum of $1,290.00 (item No.12)

represented the payment of fines imposed

on a company, Motor Valuations Pty.

Limited, owned by him; and

(d) the sum of $328.60 (item No.29)

represented rental charges in respect of

the hire of a motor vehicle by his

daught e r.

The debtor was also not prepared to deny that the sum of $5,000

(item No.5) represented an amount paid by the petitioning

creditor at his request to his company, Motor Valuations	Pty.
Limited.

As to the amount of $328.60 referred to in (d) above,

the debtor, having agreed that it was a private expense,

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suggested that the petitioning creditor had been reimbursed for

that amount by deduction from his wages. This was no more than

a belated assertion on his part which, in the absence of some

supporting evidence, I was not prepared to accept. Indeed, I

may say at this point that I found the debtor to be a most

unsatisfactory witness. I should also add that I had regard to

the several affidavits of Pierre Bondon and John Edward Garnett

sworn 22 May 1985 but. in view of the very general nature of

the matters to which they depose, I did not find them of any

assistance.

In the light of the debtor’s oral evidence, I am

unable to accept that paragraph 5 of his affidavit sworn 6 May

1985 correctly states the position.

In paragraph 7 of that affidavit the debtor denied

that any moneys were lent by the petitioning creditor to him as

alleged in paragraph 5 of the statement of llquidated claim

filed in the proceedings in the District Court of New South

Wales. He supported this denial by stating that he

petitioning creditor approached Citicorp Australia Limited to

finance its acqulsition of motor vehicles pending their sale to

the public; that Citicorp Australia Limited, as a condition of

providing finance facilities to the petitioning creditor,

required the payment to it of a security fund deposit of

$150,000; that at the request of the petitioning creditor the

debtor offered his home at 2 Wolseley Road, Coogee as security

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to Citicorp Australia Limited for borrowings to raise the

moneys necessary to establish the funding facilities for the

petitioning creditor; that his home was subject to an existing

mortgage of approximately $40,000; that he acquired a shelf

company, Facteal Pty. Limited. the directors of that company

being himself and his wife; and that the home was transferred

to that company for a nominal consideration. The debtor also

deposed that, on or about 18 August 1982, Facteal Pty. Limited

entered into a mortgage with Citicorp Australia Limited

"wherein it borrowed upon the security of the property at 2

Wolseley Road. Coogee, the sum of approximately $190,000.00".

That sum was, he said -

"paid by Citicorp Australia Limited, or by Facteal of the Plaintiff in the following manner:-

$150,000.00 to Citicorp Australia Limited as the

securlty deposlt fund for the motor vehicle fundin9

facilities of the Plaintiff;

$ 40,000.00 (approximately) in discharge of the

mortgage on the property at 2 Wolseley Road,

Coogee, which had been in existence prior to the transfer of that property to Facteal Pty. Ltd."

The references to "the Plaintiff"	are, again, references to the
petitioning creditor.

The debtor's affidavit went on to say that the sum

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referred to in paragraph 5 of the statement of claim in the

proceedings in the District Court of New South Wales was not

advanced to him but to Facteal Pty. Limited and that the

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petitioning creditor was indebted to Facteal Pty. Limited for

the whole of the principal moneys borrowed from Citicorp

Australia Limited pursuant to the mortgage dated 18 August 1982

together with all interest and other moneys outstanding in

connection therewith.

Documents relating to the transaction were introduced

into evidence before me. From those documents it was clear

beyond doubt that. the petitioning creditor not Facteal Pty.

Limited was the borrower and that the role of Facteal Pty.

Limited was as guarantor. I could find no basis for the

statement sworn to by the debtor that Facteal Pty. Limited

borrowed $190,000 from Citicorp Australia Limited. It followed

that there was no basis for the further statement that Facteal

Pty. Limited lent $150,000 of the borrowed moneys to the petitioning creditor and used the balance to discharge the

existing mortgage on the property at Coogee.

Accepting that the sum borrowed by the petitioning

creditor of $40,000 (approximately) was used to discharge the

existing mortgage on that property, the only inference that

could properly be drawn was that the moneys were advanced to

the debtor by the petitioning creditor. The debtor did not

suggest that the moneys were advanced in circumstances which

I relieved him of any obligatlon to repay them.

19.

The only defence put forward by the debtor to this

part of the petitioning creditor's debt was. in my view,

untenable in	the face of the documentary evidence before the
Court.

Having reached those conclusions upon the debtor's

assertion that he was not indebted to the petitioning creditor

in the sum claimed, I also took into account that the debtor

had offered no explanation whatsoever why no defence was filed

in the proceedings in the District Court of New South Wales.

why no application was made to that Court for an order for

particulars or for discovery of documents. why the opportunity

offered to him in the solicitor's letter dated 27 June 1984 to

discuss the matter with Mr Forrest prior to the issue of the

bankruptcy notice was not availed o f , or why no steps were

taken until 7 May 1985 to seek to have the judgment set aside.

A s the debtor had at all material times the benefit of legal

advice, including at least at one stage the advice of counsel,

the only inference which was open in the absence of any

explanation was that he had little if any prospect of

successfully defeating the petitioning creditor's claim. I

also noted that the action foreshadowed when the petition was

before the Court on 7 May 1985 that documents would be

subpoenaed and the deponents to affidavits filed on behalf of

the petitioning creditor would be cross-examined was not,	in
fact, taken.

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20.

The debtor's affidavit sworn on 22 May 1985 was also

directed to the question of his solvency. He was

cross-examined as to his financial position.

The affidavit of the debtor's solvency was quite

unsatisfactory. He stated that he owned two licensed

restaurants, one called "Peppers 3 a.m. at 155 Dolphin

Street. Coogee (which had been operating since March	1984) and
the other "Rumours" at 113 William Street, Sydney	(which had

been operating for about four weeks). Although the debtor said

he owned the businesses, it emerged during the hearing that the

lease of the premises at 155 Dolphin Street, Coogee (being a

lease for a term of 5 years) was in the names of Facteal Pty. Limited, Pierre Bondon, Gary John Crew, Anthony Ernest Bishop and the debtor. The debtor said in evidence that the lessees

other than himself had no financial interest in the business

and held their respective interests in the lease as trustees for him. It also emerged that the lessee of the premises at

113 William Street, Sydney was a company (Keith Pearl

Enterprises Pty. Limited) in which the only shareholders and

directors were the debtor's daughters. A further complicating

factor was that an agreement dated 15 January 1985 entered into

by the debtor for the sale of a one half share in the

I businesses recited that the business of "Peppers 3 a.m." was

beneficially owned by a company, Laupen Holdings Pty. Limited.

The affidavit was also unsatisfactory in that it gave

no precise details of turnover or profit of the businesses.

The only material that was put forward were estimates made by the debtor which were not supported in any way.

But assuming, as he asserted, that he was the

beneficial o5mer of the businesses. the evidence of the debtor

established quite clearly that he was unable to pay his debts

as they fell due and was able to carry on only with the

forbearance of his creditors.

In the light of the above I concluded that the debtor

had failed to establish to my satisfaction any proper ground

for deferring the making of a sequestration order against his

estate and I then made that order.

I certify that this and

the preceding 20 pages are

a true copy of the Reasons

for Judgment herein of the

Honourable Mr Justice

Neaves .

Dated: 31 May 1985

. ..