McCormack, E. v The Bankrupt

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U JUDGMENT No. .!.%3...:/...%--

IN THE FEDERAL COURT OF AUSTRALIA 1 QIn E871 of 1989

GENERAL DIVISION 1 1
BANKRUPTCY DISTRICT OF THE SOUTHERN 1
DISTRICT OF THE STATE OF OUEENSLAND 1

RE : EDWARD McCORMACK
EX PARTE: THE BANKRUPT

MINUTES OF ORDER

JUDGE MAKING ORDER: PINCUS J.
DATE OF ORDER: 6 APRIL 1990
WHERE MADE: BRISBANE
THE COURT ORDERS THAT:
1. the bankruptcy be hereby annulled subject to the condition that the terms of the reasons of his Honour M r Justice Pincus of 6 April 1990 be explained personally by the solicitors acting for Mr McCormack (viz. Primrose, Couper, Cronin and Rudkin) and he must be given a copy of those reasons.

NOTE: Settlement and entry of orders is dealt with in Rule 124 of
the Bankruptcy Rules.

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IN THE FEDERAL COURT OF AUSTRALIA 1 QLD E871 of 1989 .I:
GENERAL DIVISION 1
BANKRUPTCY DISTRICT OF THE SOUTHERN 1
DISTRICT OF THE STATE OF OUEENSLAND 1

RE: EDWARD McCORMACK
EX PARTE: THE BANKRUPT

PINCUS J. 6 APRIL 1990

REASONS FOR JUDGMENT

This is an application made on behalf of one Edward
McCormack to have annulled a bankruptcy achieved by filing a
debtor's petition on 3 October 1989. The reason for the

McCormack which says, in effect, that at the time when he became application for annulment appears from an affidavit of M r
bankrupt he had an accident and discussed it with his
solicitors, and I quote:
"My solicitor told me that an alternative open to me was to present my own petition in bankruptcy if I did not have any reasonable expectation of being able to pay the amount of the third parties

claim. "

Thd debtor goes on to say that he did not think he had any defence at that time. He presented his own petition because of the claim, which was for $22,000-odd. Then he goes on to say that he is actively defending the claim against him. He does not suggest that the opinion he has of his prospects of success is any different. M r Logan, who has appeared for him today, has been good enough to obtain the pleadings for me which have been tendered and marked Exhibit 1.
The defence is, I suppose, unhelpful, because it does not even admit that any collision occurred; but ignoring that, it seems that what happened is that the bankrupt's car ran into the back of another vehicle and damaged it severely, and he was subsequently fined. In those circumstances, his prospects of succeeding completely in the case would seem to be very slim indeed.
Mr Logan points out that he may succeed in having liability reduced, on the ground of contributory negligence.

the defence other than a bald assertion. There is no suggestion There is no specific allegation of contributory negligence in

that there was anything in particular that the vehicle in front did, which caused the collision. The exercise of defending the case seems to me to be a waste of time and money, on the face of it, including the court's time. It is my opinion that nothing is likely to be achieved, on the facts as placed before me, other than for the lawyers; that is, money is going to be wasted, which is a pity.

The argument which Mr Logan (who was helpful, as usual) put forward was that the petition ought not to have been presented, because at the time, on the information available, the debtor was solvent. It seems to me that there is something in that, although, as Mr Logan admits, the Court still has a discretion. What I have decided to do is to make an annulment subject to a condition, and the condition is that the terns of'

my reasons just given must be explained personally by the solicitors acting for M r McCormack, who are Messrs Primrose, Couper, Cronin and Rudkin. They must be explained personally to
Mr McCormack, and he must be given a copy of my reasons to
consider them.
[Mr Logan gave an undertaking that that would be

done. ]

Very well, I make an order annulling the bankruptcy. -..:
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I certify that this and the two preceding pages are a i ,
true copy of the reasons for judgment herein of His f 8 ,

Honour Mr Justice Pincus. i : j
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A - 7 . .

C - -L-- j.,

Dated 6 April 1990 AssOciat,/

The case of McCormack v The Bankrupt involved a petition for annulment of a bankruptcy order filed by Edward McCormack. The Federal Court of Australia, General Division, Bankruptcy District of the Southern District of the State of Queensland, heard the matter on 6 April 1990. Mr Justice Pincus was the judge presiding over the case. The primary legal issue before the court was whether the bankruptcy should be annulled, based on the circumstances surrounding the debtor's petition and the subsequent defence against a third-party claim.

Mr McCormack had filed a debtor's petition for bankruptcy on 3 October 1989, prompted by an accident that had resulted in a third-party claim for damages. He presented the petition as he believed he had no reasonable expectation of being able to pay the amount of the claim. However, he subsequently decided to defend the claim, albeit with slim prospects of success. The court considered whether the petition was appropriately filed and whether annulment was warranted. The judge acknowledged that while the petitioner was solvent at the time of filing the petition, the court still had discretion over the matter.

In his judgment, Mr Justice Pincus concluded that the bankruptcy should be annulled, subject to certain conditions. The court required the solicitors acting for Mr McCormack to personally explain the reasons for the annulment and provide him with a copy of the judgment. This was intended to ensure that Mr McCormack fully understood the implications of his actions and the court's decision. The annulment was granted, reflecting the court's view that the bankruptcy was not appropriately filed given the available information at the time.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

IN THE FEDERAL COURT OF AUSTRALIA	1	QIn E871 of 1989
GENERAL DIVISION	1	1
BANKRUPTCY DISTRICT OF THE SOUTHERN	1
DISTRICT OF THE STATE OF OUEENSLAND	1

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	6 APRIL 1990
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

IN THE FEDERAL COURT OF AUSTRALIA	1	QLD E871 of 1989	.I:
GENERAL DIVISION	1
BANKRUPTCY DISTRICT OF THE SOUTHERN	1
DISTRICT OF THE STATE OF OUEENSLAND	1

McCormack which says, in effect, that at the time when he became	application for annulment appears from an affidavit of *M r*
bankrupt he had an accident and discussed it with his solicitors, and I quote:

the defence other than a bald assertion. There is no suggestion	There is no specific allegation of contributory negligence in
that there was anything in particular that the vehicle in front did, which caused the collision. The exercise of defending the case seems to me to be a waste of time and money, on the face of it, including the court's time. It is my opinion that nothing is likely to be achieved, on the facts as placed before me, other than for the lawyers; that is, money is going to be wasted, which is a pity.
The argument which Mr Logan (who was helpful, as usual) put forward was that the petition ought not to have been presented, because at the time, on the information available, the debtor was solvent. It seems to me that there is something in that, although, as Mr Logan admits, the Court still has a discretion. What I have decided to do is to make an annulment subject to a condition, and the condition is that the terns of'
my reasons just given must be explained personally by the solicitors acting for *M r* McCormack, who are Messrs Primrose, Couper, Cronin and Rudkin. They must be explained personally to
Mr McCormack, and he must be given a copy of my reasons to
consider them.

I certify that this and the two preceding pages are a	i ,
true copy of the reasons for judgment herein of His	f 8 ,