McBride v State of Victoria (No 2)
[2003] FMCA 31
•26 February 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PROVAN v PEAKE | [2003] FMCA 31 |
| BANKRUPTCY – Annulment application – judgement debt disputed – no going behind judgment debt. Bankruptcy Act 1966, s.153B Re Deriu (1970) 16FLR 420 |
| Applicant: | GEORGE ALEXANDER PATERSON PROVAN |
| Respondent: | RUSSELL GRAEME PEAKE (AS TRUSTEE OF THE PROPERTY OF GEORGE ALEXANDER PATERSON PROVAN – AS BANKRUPT) |
| File No: | MZ 462 of 2002 |
| Delivered on: | 26 February 2003 |
| Delivered at: | Melbourne |
| Hearing date: | 28 June 2002 |
| Judgment of: | Phipps FM |
REPRESENTATION
| The applicant appearing in person. |
| Counsel for the Respondent: | Mr Galvin |
| Solicitors for the Respondent: | Deacons Solicitors |
| Counsel for the Creditor: | Mr Morrison |
| Solicitor for the Creditor: | Messrs Ward Taylor |
ORDERS
THAT the application be dismissed.
THAT the applicant pay the costs for the trustee and the petitioning creditor of this application including any reserved costs, such costs to be taxed in accordance with Order 62 of the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 462 of 2002
| GEORGE ALEXANDER PATERSON PROVAN |
Applicant
And
| RUSSELL GRAEME PEAKE (AS TRUSTEE OF THE PROPERTY OF GEORGE ALEXANDER PATERSON PROVAN – AS BANKRUPT) |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant was made bankrupt by a sequestration order made by the Federal Court of Australia at Melbourne on 11 July 2000. The applicant now applies to annul that bankruptcy.
Rule 35.03 of the Federal Magistrates Court Rules 2001 requires the applicant to give notice of the application to each person known to the applicant to be a creditor of the bankrupt. The applicant appears for himself. There are no affidavits of service of notices. The applicant gave oral evidence of some communications he had with some creditors. Rule 35.03 has not been complied with. The hearing proceeded notwithstanding. The trustee has been served and as required by rule 35.04 has prepared a report.
Background
The sequestration order was made on the application of a creditor. The Distribution Group Ltd trading as Laurence and Hanson. It had obtained a default judgment in the Melbourne Magistrate's Court against the applicant for $17,111.96, interest of $1833.75 and costs of $2010.
A bankruptcy notice requiring payment of the amount of the judgment debt was issued on 17 November 1999 and served on the applicant. On 1 March 2000 the sequestration application was filed relying on an act of bankruptcy committed on the 17th December 1999, being a failure to comply with the bankruptcy notice.
The application for a sequestration order was listed for hearing on
20 April 2000. It was served on the applicant. The solicitor for the creditor filed an affidavit in opposition to the application in this court. That affidavit sets out the history of proceedings in relation to the application for the sequestration order. The sequestration application was initially adjourned pending a decision of a Full Court of the Federal Court. Pending that decision it appears there was doubt about validity of certain bankruptcy notices. The applicant at that point was represented by solicitors. An appearance, notice of intention to oppose the application and affidavit in support were filed by the applicant. The decision of the Full Court of the Federal Court upheld the validity of bankruptcy notices signed in the name of a firm of solicitors acting for a creditor and so the sequestration application against the applicant was able to proceed. It was listed for hearing on 30 May 2000 when the applicant was represented by counsel. The creditor’s solicitor consented to an adjournment to enable the applicant to pursue negotiations. It was adjourned to 11 July 2000. On that date there was no appearance for the applicant. The creditor was represented and the application proceeded undefended and an order for sequestration of the estate of the applicant was made.
The creditor's solicitor’s affidavit shows that the applicant, through his solicitors and counsel had notice of the hearing on 11 July 2000. Nothing in the solicitor’s affidavit was disputed by the applicant. Consequently, the validity of the bankruptcy notice, service of the notice and of the application for the sequestration order and the fact of adequate notice of the hearing date is not disputed. What the applicant does dispute is the debt.
Application for annulment
Annulment is provided for in section 153B of the Bankruptcy Act 1966. It provides:
If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy
What the court has to consider is firstly, should the sequestration order have been made and secondly should the court in its discretion annul the bankruptcy. Re Deriu (1970) 16 FLR 420. The affidavit of the creditor's solicitor shows that the creditor claimed for goods sold and delivered to a firm trading as T. T. S. Exhibited to the solicitor’s affidavit is an application for credit which gives the trading name as T.T.S. and the traders name and private address as George Provan,
45 Geelong Road Torquay. The applicant alleges that it is not his debt. He alleges that somebody else ordered and obtained the goods. He has made inquiries but has not been able to find out who it was. He has reported the matter to the police but they have found nothing.
The applicant filed an affidavit in support of the application. It had a police report attached to it but otherwise no evidence. Attached to the application for annulment is a handwritten statement which, in part, says this:
I George Alexander Paterson Provan has been wrongly mistaken by Lawrence and Hanson in obtaining goods in my name and an old business name, Torquay Thai Silk which was finished about nine years ago. I have been trying and trying to find out the person who fraudulently used my name and business to obtain goods from Lawrence and Hanson.
The creditor's solicitor’s affidavit sets out the history of both the Magistrate's Court proceedings and the Federal Court proceedings. The applicant was represented by solicitors for a time in both proceedings. A notice of defence was filed in the Magistrate's Court proceedings and as already stated notice of appearance, notice of intention to oppose the application and affidavit in support were filed in opposition to the application for a sequestration order.
The Magistrate's Court proceedings went to a pre-hearing conference on 26 October 1999. There was no appearance for the applicant and the defence was struck out and subsequently default judgment was entered. No application has been made to set aside the default judgment.
As already described when the application for sequestration eventually came on for hearing, there was no appearance by the applicant debtor in that proceeding.
The applicant had notice of the pre-hearing conference in the Magistrate's Court. The default judgment then followed as a matter of course through the application of that court’s rules. Therefore the judgment was regularly obtained.
The applicant had notice of the date upon which the sequestration order was made. The previous date, when the application was adjourned, he was represented by counsel.
The applicant filed a statement of affairs in his bankruptcy. It lists the judgment debt as a debt but describes it as a ‘debt incurred in my name illegally by another person.’ Another debt, to Rexel Australia Ltd is similarly described. A handwritten record of the oral examination of the applicant conducted at the Geelong Magistrate's Court on the 23rd March 2001 records the judgment debt as an unpaid court order.
The applicant gave oral evidence in support of his application. So far as the judgment debt is concerned he said that somebody else used his name to purchase goods. In cross-examination he claimed that somebody else signed the application for credit.
I consider that the approach I should adopt is to consider whether on the evidence available to me, the court making the sequestration order should have gone behind the default judgment if an application to that effect had been made at the time. See Worrell v. Issitch [1999] FCA 1336. This is normally a two step process. It involves a preliminary investigation of the merits of the attack on the judgment and once the court decides that it will go behind the judgment, the whole matter of the existence of the debt is open – Corney v Brien (1950-1951) 84 CLR 343, Fullager J at 357, Wolff v Donovan (1991) 29 FCR 480 Davies J at 482, Lee and Hill JJ at 486-7 4.
The disputed application for credit is dated 13 August 1997. It has a telephone number and fax number of the business. It has a business address. It gives the private address, date of birth and drivers licence number purportedly of the applicant. It provides names and addresses and contact names for three referees. It sets out a statement assets and liabilities of the business, states that the type of business is wholesaler, has been established for eight years and has three employees. It gives estimated monthly purchases of $8000.00–$10,000.00 dollars and it gives the name and address of the business bank.
The applicant gave no evidence about this document other than to say it was not his signature. He therefore gave no explanation of the accuracy or otherwise of all of the details contained in that document. The document contains considerable detail, both private and personal. Even allowing for the fact that the applicant was unrepresented, to simply state that the signature is not his is inadequate. The residential address the applicant gives in his statement of affairs is the same as that in the credit application. The home and work telephone number in the statement of affairs is the same as the telephone number in the credit application. The document has an appearance of regularity about it. It does not have an appearance of forgery.
There was no attempt by the applicant to produce an example of his own signature for comparison. There was no expert handwriting evidence. There was no explanation for the delay in making the application. It seems that the applicant was prompted to apply my steps being taken to realise property.
At the very least, the applicant needs to show that there is some prospect of his being able to prove on the balance of probabilities his claim that the signature was not his and that the credit application was a forgery. He has not done that. He has done no more than make an assertion. Therefore, he does not pass the threshold of persuading the court that it should go behind the default judgment and investigate its merits. I am not persuaded that there is evidence which shows that the court making the sequestration order should have gone behind the default judgment and investigated its merits.
The trustee’s report shows creditors of the bankrupt totalling approximately $194,520.00. There are no assets. The applicant has made no attempt to persuade the court that he was able to pay his debts at the time sequestration order was made. The material contained in the trustee’s report suggests that it would be unlikely that he could. There is no basis for saying that the sequestration order ought not to have been made.
Conclusion
The applicant has failed to establish that the sequestration order ought not to have been made. It is unnecessary to consider discretionary matters. If they had to be, significant matters would be delay in making the application, the financial position of the bankrupt estate, and various unsatisfactory aspects of the applicant's conduct as described in the trustee’s report. Since the application is to be dismissed, it is of no consequence that creditors have not been given notice as required by rule 35.03 of the Federal Magistrates Court Rules 2001. It follows that the application must be dismissed.
I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate:
Date:
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