Jeffrey,(t/as Elaine Guiffre Couturiere Exclusive Bridalwear), Re A. Ex Parte Australian Consolidated Press

CATCHWORDS

BANKRUPTCY - Contested petition

- Denial of debt - Principles

In relation to going behind judgment

- Non disclosure

alleged principal	- Whether business conducted on behalf	of
debtor.

Bankruptcy Act 1966 ss.52, 269

Wren v Mahonv	(1972) 126 CLR 212, Watteau v Fenwick C18933 1
QB 346 applied.

Cornev v Brien

(1951) 84 CLR 343, Re Pinkerton; ex parte B G

Textiles Pty Limited (Wilcox

J., 27 September 1984, not

reported), Re V & J Removals; ex parte Earl (Pincus J.,

June 1985, not reported), Re Johnson; ex parte Greendale

Ensineerins and Cables Ptv Limited	(1967) 11 FLR 335 referred
to.
P.404 of 1984

Re ANTHONY JEFFREY

t/as ELAINE GUIFFRE COUTURIERE EXCLUSIVE

BRIDALWEAR; ex parte AUSTRALIAN CONSOLIDATED PRESS

Wilcox J.

Sydney

28 Februarv 19R6F7 March 1986

IN THE FEDERAL COURT OF AUSTRALIA

) )

GENERAL DIVISION

) )

BANKRUPTCY DISTRICT OF THE STATE OF

)	No. P.404 of 1984

NEW SOUTH WALES AND

)

THE AUSTRALIAN

CAPITAL

TERRITORY

)

a: ANTHONY

JEFFREY t/as

ELAINE GUIFF'RE COUTURIERE

EXCLUSIVE BRIDAL=

Debtor

M PARTE:

AUSTRALIAN

CONSOLIDATED

PRESS

Petitioning Creditor

CORAM :	WILCOX J.
m:	7 MARCH 1986

PLACE

: SYDNEY

MINUTE OF ORDERS

THE COURT ORDERS THAT:

The petition

dismissed.

NOTE :

Settlement and entry

of orders is dealt with by

Bankruptcy Rule

124.

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

BANKRUPTCY DISTRICT OF THE STATE OF )

No. P.404 of 1984

)

NI;w SOUTH WALES AND	)
)
THE AUSTRALIAN CAPITAL TERRITORY	)

RE :

ANTHONY JEFFREY

t/as

ELAINE GUIFFRE COUTURIERE

EXCLUSIVE BRIDALWEAR

Debtor

EX PARTE:

AUSTRALIAN

CONSOLIDATED

PRESS

Petitioning Creditor

CORAM

WILCOX J.

FEBRUARY

1986

PLACE

: SYDNEX

REASONS FOR JUDGMENT

The debtor Anthony Jeffrey has filed a Notice of

Intention to Oppose Petition, specifying four grounds. When the matter came on for hearing counsel for the debtor indicated that only two grounds were pressed: that the

. .

Bankruptcy Notice had not been served and that, not

withstanding the existence of

a default judgment, no moneys

were in fact owned by the debtor to the petitioning creditor.

In relation to the first matter little needs to be

said. Counsel for the petitioning creditor read the affidavit of Themis Michael, sworn 22 December 1983 and deposing to the

service of the Bankruptcy Notice upon the debtor on

L j

December 1983.

Mr Michael was cross-examined about the

circumstances of the service and gave evidence as to the

location of service, which evidence accords well with the

other evidence in the case. He gave a description of the

person served which matches that

of Mr Jeffrey. There is no

reason to doubt Mr Michael's evidence and, in the end, counsel for the debtor did not contend otherwise. I am satisfied as to service of the Bankruptcy Notice.

'. <

There

question

the

power

of this

Court

go behind a judgment and to examine for itself the question

whether the debt alleged by

a petitioning creditor is in fact

owing. The test to be applied in determining whether such a course should be adopted was considered by me in

R P kerton:

ex parte B

G Textiles Pty Limited

L27 September 1984, not

reported) and by Pincus J.

in Re V & J Removals; ex parte

Earl (21 June 1985, not reported). In Cornev v Brien (1951)

84 CLR 343 Dixon, Williams, Webb and Kitto

JJ. cited with

approval various statements

of principle, one of which was

that the court may go behind a judgment “upon

a prima facie

case being shown“. Fullagar J. at pp.357-358 said that the

court will go behind the judgment “if there is what it regards

as a bona fide allegation that no real debt ’lay behind‘ the

judgment“. However, this test was not adopted by the other

members of the High Court

in that case. Moreover, the test

suggested by Fullagar J. I s more generous than the test

7 adopted in Wren v Mahonv (1972) 126 CLR 212 by Barwick CJ.,

with whom Windeyer and Owen JJ. agreed,

wh n he said at

pp.224-225 that the discretion to accept the judgment as satisfactory proof of the debt 1 s “not well exercised where substantial reasons are given for questioning whether behind

that judgment there

is in truth and reality

a debt due to the

petitioner“. I apply this test

in the present case by

enquiring whether it appears, on the evidence now before this true existence of a debt by the debtor to the petitioning

_/ creditor.

The petitioning creditor, Australian Consolidated Press Limited, is the publisher of

a periodical called “Mode

for Brides”. The claim is that the debtor is liable to the

company for the cost of three advertisements published

in the

1983 summer, autumn and winter editions

of that organ. There

is no doubt that the advertisements were commissioned by the

then wife of the debtor, Elaine Margaret Jeffrey, who was

known professionally as Elaine Guiffre and who managed

I-

.-.

4 .

business conducted at

179 Parramatta Road, Annandale known as

Elaine Guiffre Couturiere Exclusive Bridalwear. There is

doubt that the advertisements were in fact published; and

there is no contest over price. The issue sought to be raised

by the debtor is whether he is liable for the cost of those	-
advertisements.

Mrs

Jeffrey

was

made

bankrupt

6 April 1981 and

was

'L ;

not discharged from bankruptcy until

5 November 1985. She

apparently had some prior experience in the bridal wear trade.

On 31 March 1982 Mr Jeffrey -- who had himself prevlously been

bankrupt but who was then discharged

-- obtained registration,

under the Business Names Act

1962 (NSW), of the business name

"Elaine Guiffre Couturiere Exclusive Bridalwear". The

registration was obtained in his

own name alone, the place

business being shown as

179 Parramatta Road, Stanmore. This

is, I think, the same place as the Annandale address

~-..

previously mentioned. It should be noted that there is no

prohibition in the Business Names Act upon the registration of

a business name in the name of

an undischarged bankrupt,

although there are, of course, restrictions in 5.269 of the Bankruptcv Act 1966 upon a bankrupt obtaining credit and a prohibition upon a bankrupt carrying on business under a firm

name without disclosing the fact of the bankruptcy to every

person with whom

he or she deals.

.I I .

.* . .

The date upon which the bridalwear business commenced

to operate does not appear from the evidence. It must have been before 28 July 1982 because it was on that day that MS Sandra Larkin called on behalf of Australian Consolidated

Press in a successful attempt to sell the first advertisement. the subsequent advertisements. According to her she met Mr

Jeffrey once -- and only once -- namely on 15 November 1982

when she called with a proof of the first advertisement. At

that time Mrs Jeffrey telephoned her husband, who at all

material times conducted a florist shop across the road, and

asked him to come over and see if

he liked the proof. He did

so.

He was introduced to MS Larkin

by Mrs Jeffrey simply as

"my husband Tony". He looked at the proof and said "That is

alright".

The debt incurred in respect of the three

X-,

advertisements was not paid.

On 19 July 1983 a Default

Summons was issued by Australian Consolidated Press against Mr

Jeffrey out of the Court of

Petty Sessions, Newtown claiming

$3,093.00 plus costs. On 10 August 1983 Mr Jeffrey attended

the court and there signed

a Statement of Confession of Claim

in which he admitted that the

sum of $3,093.00 was due by him

to the plaintiff and in which e sought the right o pay by instalments of $40 per week. Although the evidence is not

entirely clear, it seems that he may have paid a first

instalment of $40 on that day. No further instalments were

paid, hence the proceedings in bankruptcy.

The debtor contends that, notwithstanding the fact

that the business was reglstered in his name and his

confession of the debt, the Court should reach the conclusion

that there is a substantial reason to question his liability

and, indeed, that, on the evidence, it ought to be held that

he is not liable. There is no evidence to suggest that,

any relevant time, Australian Consolidated Press was aware

that Mr Jeffrey was the owner of the business name.

Therefore, says his counsel, there

can be no estoppel arising

out of that registration. He refers to Re Johnson: ex parte

Greendale Ensineerins and Cables Ptv Limited (1967)

1 FLR 335

at pp.341-342. In relation to the Statement of Confession of

Claim, counsel concedes that, if this document stood alone, it

‘.

-7

would provide cogent evidence against his client by way of

admission. However, he points to the evidence of Mr Jeffrey

that, in August 1983,

he was beset by various financial

clams

-- mainly incurred in relation to the florist shop

-- that he

was in some turmoil because of the breakdown of his marriage at about that time -- although apparently final separation did

not occur until March 1984

-- and that, on that particular

day, he took out seven or eight applications for instalments

“to just pay the debts off

to get rid of

them”.

. _

7 .

I think that there is substance in both of these

submissions. In the absence of evidence of reliance

Australian Consolidated Press upon the register, the registration of the business name in the name of Mr Jeffrey

cannot found an estoppel.

The fact of registration in his

name remains an important circumstance in consldering what

conclusion ought to be drawn in respect of the ownership of

the business but it does not conclude the inquiry. Similarly,

the fact that Mr Jeffrey signed a confession of debt, which he

admitted he read and understood, is powerful evidence that

this was in truth his debt; but it is not conclusive since it

is possible to accept that,

in his then situation, he was

prepared to accept

a responsibility which

he did not believe

was rightfully his.

The case put by Mr Jeffrey is that there were

direct contractual dealings between himself and Australian

Consolidated Press, that the debt was incurred on behalf

o f

the business carried on under the name “Elaine Guiffre

Couturiere Exclusive Bridalwear” and that, upon

a true

analysis of the

facts, that business was the business of

his

wife. It is, I think, correct to say that there were

direct contractual dealings between Mr Jeffrey and Australian

Consolidated Press. The only contact between them in respect

of these advertisements was the visit by Mr Jeffrey to

look at

the proof of the first advertisement. This contact is

neutral. Nothing was said on that occasion to indicate that

he was the person incurring the obligation or that he was the proprietor of the business. He was introduced by Mrs Jeffrey as her husband. He did no more than express approval of the quality of the proof. It was entirely natural that Mrs

Jeffrey should seek

a second opinion on the proof; she might

equally well have shown it to

a shop girl or

a customer. No

contractual commitment may be inferred from Mr Jeffrey's

f --	approval of the proof.
L '

The second step in the argument

-- that the debt was

incurred on behalf of the business

-- is also correct. That

is made plain not only by the evidence of MS Larkin as to her

conversations with Mrs Jeffrey but also by the contemporaneous

documents: the advertisements themselves, the various

confirmations of instructions, the invoices and the

correspondence.

So the issue depends upon the answer to the

question: who owned the business? If the business was that

of Mr Jeffrey, it would be no defence for him to show that

Australian Consolidated Press was unaware

of that fact. An

undisclosed principal is bound by a contract made on

his

behalf by his agent. The principle was enunciated by Wills J.

in Watteau v Fenwick

C18931 1 QB 346, a case in which the

manager of a business ordered goods usual for such

a business

without disclosing t-o the supplier that

he was not the

principal. The case was stronger than the present one in that

the order was given despite a specific direction that such

goods were to be acquired by the manager only from the

principal. At pp.348-349 Wills J. said:

‘ I . . .

once it is established that the defendant

was the real principal, the ordinary doctrine

as to principal and agent applies

-- that the

principal is liable for all the acts of the

agent which are within the authority usually

confided to

an agent of that character,

notwithstanding limitations, as between the

principal and the agent, put upon that

authority. It is said that it is only so

where there has been

a holding out of

authority -- which cannot be said of

a case

where the person supplying the goods knew

nothing of the existence

of a principal. But

I do not think so.

Otherwise, in every case

of undisclosed principal, or at least in every

case where the fact of there being a principal

was undisclosed, the secret limitation of

authority would prevail and defeat the action

of the person dealing with the agent and then

discovering that

he was an agent and had a

principal.

”

Mr Jeffrey denies that

he had any interest in the

business.

In his affidavit in opposition to the petition

I_/	said this:

“I lent substantial sums to

my wife to assist

her in setting up the bridal wear business.

never undertook however to be responsible for

my wife‘s debts and I had no interest

whatsoever in the business either by way of

capital, share of profits, management or

control. Nor did I undertake to any creditors

of my wife or persons

with whom she was

dealing in her business to pay for her

accounts.

‘I

However, other evidence emerged

in cross-examination.

Speaking about the commencement of the business, Mr Jeffrey said:

10.

When I registered the business name we

did not open that business until

afterwards and then,

you know, I could

not make dresses

so she was the person

there. We were going to open in another area so then we did not open there, we

opened across the road,

so then we put

the name

up, Elaine Guiffre Couturiere.

Q	When you say we, do	you mean you and your
wife?

A Yes.

--.	Q	And the cheque account for that business:
I L !	what name was that in? For the bridal business?
A	It was in my name.
...
Q	... cheques drawn on that cheque account
were signed by you, were they?

A Yes."

He elaborated on this evidence in answer to later questions:

See, I put to you that you were involved in the running of the business when it

was in your name in 1982 and 1983?

What

do you say to that?

I originally -- I was only involved in the business for quite, f o r a couple of

months when

I first opened the business

up and set her up

in it. That was the

only time I was involved in it.

So you say that you opened the business

up and set her and then took n further

part in it do you?

That is right.

Except for signing cheques when they

needed signing?

I did not sign very many cheques and

will check on the cheque book and give

you the exact cheques that were signed,

but there was very little.

11.

But any cheques that needed signing were

signed by you?

I do not think

so.

I am not too sure,

champ.

I will have to look in the book

and find out. Before I could commit

myself to that

I would have to get the

cheque-book

and look in it.

Was anybody else

cheque account?

a signatory to the

I was actually paying the debts and the

things and when

I opened that business

the moneys to open

that business came out

of the company account.

HIS HONOUR:

Mr Jeffrey, that is not what

you

were asked. You were asked whether

anybody else was signing cheques in the

cheque account?

A No, no.

MR BOULTBEE:

And what other things did

you

do in relation to the bridal shop

business or the bridal wear business?

I just bought the fittings and the

machinery and opened the business there

and that was the last

of it. She started

the business there and

I had nothing

do with it.

Except you had discussions with your wife

about advertising In bridal magazines, is

that correct?

I had discussions with her at the time

about any sort of advertising,

I do not

believe in it."

I take from this evidence

that the decision to

establish the business was made jointly by Mr

and s

Jeffrey. It was intended that	Mrs Jeffrey manage the
business but the project was	joint one, for which Mr

Jeffrey supplied the capital through the company

12.

controlled which operated the florist shop. He actively

assisted in the establishment of the business and was

actively involved in its operation for the first couple of

months.

The bank account was in his name and

he signed such

cheques as were issued. He maintained an interest in the

progress of the business, at least	in regard to the matter
of advertising.

It is not inconsistent with that evidence that the

business was in truth the business of Mrs Jeffrey, but that

the registration of the business name and the bank accounts

were in the name of her husband because she was

a b nkrupt.

But it is equally consistent with that evidence that Mr and Mrs Jeffrey decided that, because she was bankrupt, the business should be owned by Mr Jeffrey, although conducted

on his behalf by Mrs Jeffrey. Light could possibly have

been thrown on the matter by production of internal records

”

the business. It seems probable that production of

income tax returns would have assisted. But, although the

business was carried on over a period of almost two years

before the marital separation,	o such records were
produced.

I do not disregard the statement by Mr Jeffrey in

his affidavit that

he had no interest whatever

in the

business but I have little confidence in his uncorroborated

evidence.

I found him evasive on a number of occasions in

his testimony. In respect of three matters

he gave evidence

which I cannot accept: that he could not remember the names

of any of his staff in the florist shop, that

he would have

objected strongly if shown the advertisement proof and that he did not know what advertising his wife was arranging.

It appears to me that the evidence adduced by Jeffrey, uncorroborated and unsupported by documents, is insufficient to displace the effect of the documentary evidence -- the registration of the business name and the

Statement of Confession of Claim

-- which, if it stood

unchallenged, would sufficiently prove that e was in fact the owner of the business. I conclude that the debtor has

failed to establish a substantial reason to

go behind the

judgment and that the ground of opposition based upon his

denial of the existence of

a debt should be rejected. I

propose to make a sequestration order.

m:	7 MARCH 1986

EXTEMPORE FURTHER REASONS FOR

JUDGMENT

In this matter

I gave judgment on

2 8 February 1986,

in which

I set out reasons for rejecting the two grounds of

opposition advanced by the debtor in his Notice of Opposition. At that time I indicated an intention to

proceed to make

a sequestration order, but

I was requested

by counsel for the debtor to give to his client

a last

opportunity of payment of the debt. This was acceded to by the petitioning creditor, and I stood over the matter until today.

I have today been informed that the debt has been paid in full, together with the petitioning creditor's cost.

Under those circumstances

I will not,

of course, proceed to

make a sequestration order. The order that I make is that

on the application of the petitioning creditor and by

consent the petition is dismissed. There will be	no order
as to costs.

15.

I certify that the fourteen

(14)

preceding pages are true copies of the his Honour Mr Justice Wilcox of

28 February 1986 and 7 March 1986.

Associate: y

A4-

Date :

March 1986

Counsel

for

the

debtor:

J Hanly

Solicitors for the debtor: Messrs Heidtman	& CO
Counsel for the petitioning

creditor:

Mr J F Boultbee

Solicitors for the petitioning

creditor:

Messrs

H N Chippindall & CO

Date(s)

hearing:

February

1986

[1986] FCA 73

3 Jul 1986