In the Estate of Wray, Norman John Ex parte Wray, Norman John v The Official Receiver as Trustee of the Estate of Wray, Norman John

[1979] FCA 5

Re: NORMAN JOHN WRAY
And: THE OFFICIAL RECEIVER AS TRUSTEE OF THE SAID ESTATE and DAVID HENRY
SCOTT
No. 807 of 1979
Bankruptcy Act 1966, s. 154

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
C.A. Sweeney J.

CATCHWORDS

Bankruptcy Act 1966, s.154 - Order made annulling bankruptcy resulting from the acceptance by the Registrar of a petition described as a debtor's petition, lodged without the authority of the debtor and against his expressed wish by a person who had been his controlling trustee pursuant to a s.188 authority.

HEARING

MELBOURNE

#DATE 19:12:1979

JUDGE1

By application dated 25 October 1979 Norman John Wray sought the following orders:

"1. That the order bankrupting the said Norman John Wray be annulled pursuant to Section 154 of the Bankruptcy Act 1966.

1. An injunction postponing the sale by auction of the stock in trade of the said Norman John Wray until such time as a determination has been made in respect of the application set out in paragraph 1 hereof.

1. Such further or other order or orders, directions or declarations as this honourable Court shall deem meet."

The application was listed for hearing on that day, when Mr Maginn of counsel appeared for the applicant and Mr Santospirito appeared for the Official Receiver and, by leave, for the Deputy Commissioner of Taxation who claimed to be a creditor in the amount of $29,206.06.

The applicant filed an affidavit in support, in which he deposed:

"1. That I am the person referred to in these proceedings as the Debtor.

2. That the facts stated herein which are within my personal knowledge are true and all other facts are true to the best of my information and belief.

3. That on the 24th day of October 1979 I was informed by Mr. John Watson of the Official Receiver's Office that I had been made bankrupt by my own petition.

4. That as a result of the said bankruptcy an auction of all stock in trade by me has been ordered to be held at 11 a.m. on Friday 26th day of October 1979.

5. The said auction is to be conducted by J.W. Styles and Son Pty. Ltd. of 280 Spencer Street Melbourne.

Now produced and shown to me and marked with the letter "A" is what purports to be a catalogue of my stock in trade to be sold at the said auction. If the said auction takes place on Friday 26th day of October 1979 I verily believe that the true market value of the said stock will not be realised.

6. That I am the sole proprietor of Rennoserve, registered business name which carries on business at 6 Varman Court Nunawading. On or about the 17th day of September 1979 I lost possession of the said premises as a result of a Writ of Possession issued out of the Supreme Court of Victoria. I was forced to discharge my nine employees immediately and to close down my trading operations.

7. That on the 20th day of September I attended at the offices of Messrs. Scott and Lamb accountants and registered trustees pursuant to the Bankruptcy Act 1966, of 325 Warrigul Road Burwood. In the course of a conversation with Mr. Kenneth Lamb, I signed an authority pursuant to Section 188 of the Bankruptcy Act 1966.

8. That on or about 3rd day of October 1979 I then attended at the offices of Scott and Lamb and signed a number of documents including a statement of affairs, and debtors petition. I insisted that I did not wish to go into voluntary liquidation and I was advised by Mr. Scott that I was merely signing a list of creditors.

9. That on or about Tuesday 9th October 1979 a meeting of creditors was arranged at which I attended. I put a proposal to my creditors which was not accepted by the meeting. I insisted to the meeting that I would not go into voluntary liquidation as I was confident in any event that if I could not trade out of my financial difficulties I would be able to liquidate my business assets and I was confident there would be a surplus after discharging all creditors. This confidence was based upon and is based upon a detailed knowledge of the value and market value of all my business assets.

10. That I was in attendance at the meeting from start to finish and at no stage was a special resolution within the meaning of Section 5 of the Bankruptcy Act 1966 passed or put to the meeting. Now produced and shown to me and marked with the letter "B" is a photo copy of a Certificate signed by the Chairman of the said meeting and stating inter alia that: "the following resolutions were passed; 'that the debtor be required to file a debtors petition within seven days of the date of this meeting'".

11. That at no stage during the above proceedings or at any other time did I believe that I had signed a debtors petition, and at no time during these proceedings or at any other time did I authorise any person on my behalf to file a debtors petition with this Honourable Court. I have never at any material time filed a debtors petition or instructed anyone on my behalf to do so.

12. In the light of these presents I respectfully request that this Honourable Court grant me such relief as it may in all the circumstances deem meet and in particular to restrain the said auction sale, to give further directions as to the hearing of the issues raised herein and any necessary declaration or direction."

On the hearing of the application, Mr Maginn was granted leave to amend it to show that the grounds on which annulment was sought was that the petition ought not to have been presented and ought not to have been accepted by the Registrar; but conceded that there was no evidence to support the latter ground.

Late in the day, the hearing was adjourned to 9.30 on the following morning, the day for which the auction had been advertised. When the hearing was resumed David Henry Scott was called by the applicant and said that he was the registered trustee named in the s.188 authority signed by the applicant. Early in the course of his evidence, Mr Santospirito announced that the Official Receiver and the Deputy Commissioner of Taxation did not wish to contend that the debtor's petition had been presented on behalf of the applicant.

Mr Scott admitted that the applicant had not given him any instructions at any time to file a debtor's petition on his behalf, but, on the contrary, had insisted that he was not going to make himself bankrupt. He stated that he had followed a procedure of having the applicant sign a debtor's petition in case it was required. He agreed that in retrospect it was a very dangerous procedure. He appeared to consider that the debtor's petition had been included in the documents forwarded to the Registrar as a result of a mistake by a member of his staff. He conceded that he received a letter from the Registrar dated 12 October, which included the statement:

"The above named became bankrupt on the 12th October 1979. You cease to be controlling trustee on that date".

He agreed that receipt of that letter should have caused him to look to see whether he still held the debtor's petition but he did not do so.

Mr Santospirito then indicated that, provided that the applicant proceeded with his application for annulment with all proper expedition, the Official Receiver was prepared to state that he would not proceed with the auction advertised to be held later that day or to conduct any other auction until the application for annulment had been heard and determined. Mr Maginn then stated that his client would so proceed with his application and it became unnecessary to make any order in relation to that aspect of the case. The hearing of the application for annulment was then adjourned until 14 November 1979.

On that day Mr Maginn appeared for the applicant, Mr Burzacott as Acting Official Receiver and Mr Santospirito for the Deputy Commissioner of Taxation. The Acting Official Reciever did not oppose the making of an order of annulment. Being satisfied that the debtor's petition ought not to have been presented, I then made an order annulling the bankruptcy.

A debate took place on the subject of costs, during the course of which Mr Maginn sought leave to join Mr Scott as a party. He had been present throughout the hearing on that day. The hearing was adjourned to 5 December 1979 to permit the making of an application for leave to add him as a party.

On that day Mr T. Irlicht appeared for Mr Scott and leave was granted that he be added as a respondent to the application. After hearing argument it was ordered as follows:

1. That the respondent, David Henry Scott, pay the costs of the applicant of an incidental to an application including the costs reserved on 25th and 26th October 1979, such costs to be taxed as between solicitor and client, if not agreed;

2. that the Official Receiver's costs of administering the estate which have been agreed between the applicant an Official Receiver at $1,669.63 be recovered from the estate by the Official Receiver;

3. that the applicant recover from the respondent David Henry Scott the taxed costs of the Official Receiver in administering the estate of the respondent, such taxed costs not to include any costs which, in the opinion of the taxing officer, the respondent David Henry Scott, as controlling trustee, would have incurred in any event after 12 October 1979.

Liberty was reserved to any party to apply.