Morris Finance Ltd v Hodges - [2018] FCCA 3235

FEDERAL CIRCUIT COURT OF AUSTRALIA

MORRIS FINANCE LTD v HODGES & ANOR

[2018] FCCA 3235

Catchwords:
BANKRUPTCY – Administration of property – Property available for payment of debts – Property divisible amongst creditors – Property belonging to or vested in bankrupt at commencement of bankruptcy – Other particular cases

BANKRUPTCY – Administration of property – Property available for payment of debts – Property not divisible amongst creditors – Trade or professional equipment or property used in earning income by personal exertion

WORDS AND PHRASES – Void – Voidable

Legislation:

Bankruptcy Act 1924-1950, s.94
Bankruptcy Act 1966, ss.302B, 40, 59(1)(d), 61(5), 118(9), 120, 121, 122, 250(1)(d), 301, 302A 302AB,

Bankruptcy Legislation Amendment Bill 1996 (Cth)
Retirement Savings Accounts (Consequential Amendments) Act 1997
Superannuation Industry (Supervision) Consequential Amendments Act 1993

Alati v Kruger (1955) 94 CLR 216
Anscor Pty Ltd v Clout (Trustee) (2004) 135 FCR 469

Balog v Independent Commission Against Corruption (1990) 169 CLR 625

Brady v Stapleton (1952) 88 CLR 322
Cockburn & Ors v GIO Finance Ltd (No 2) (2001) 51 NSWLR 624
Corke v Corke (1994) 48 FCR 359

Coventry v Charter Pacific Corporation Ltd (2005) 227 CLR 234

Dennehy v Reasonable Endeavours Pty Ltd (2003) 130 FCR 494

Faulkner v Bluett (1980) 52 FLR 115

Florance v Andrew (1985) 58 ALR 377

Griffiths v Civil Aviation Authority (1996) 67 FCR 301
Morris Finance Ltd v Hodges [2016] FCCA 1402

Official Trustee in Bankruptcy v Alvaro (1996) 66 FCR 372

Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355
Pyramid Building Society (in liquidation) v Terry (1997) 189 CLR 176
Re Burrows-Fowler [1916] 2 Ch 251
Re Harrison; Ex parte Jay (1880) 14 Ch D 19
Re Jeavons; Ex parte Mackay and Brown (1873) LR 8 Ch App 643
Re Johnson Johnson; Ex parte Matthews [1904] 1 KB 134
Robert Reid Pty Ltd v Cassidy (1966) 114 CLR 558

Ruaro v Ferrari [2007] FCA 2022
Trustee of the Property of O’Halloran, in the matter of O’Halloran v O’Halloran [2002] FCA 1305

Victoria v Sutton (1998) 195 CLR 291

Williams v The Official Assignee of the Estate of William Dunn (1908) 6 CLR 425

Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pty Ltd (2009) 240 CLR 391

Applicant:

MORRIS FINANCE LTD

First Respondent:

DARRELL RAYMOND HODGES

Second Respondent:

NICK JIM COMBIS AS TRUSTEE OF THE BANKRUPT ESTATE OF DARRELL RAYMOND HODGES

File Number:

MLG 225 of 2016

Judgment of:

Judge Jarrett

Hearing date:

26 August 2016

Date of Last Submission:

26 August 2016

Delivered at:

Brisbane

Delivered on:

9 November 2018

REPRESENTATION

Counsel for the Applicant:

Mr Webster

Solicitors for the Applicant:

Smith Leonard Fahey Lawyers

Counsel for the Respondent:

Mr West

Solicitors for the Respondent:

Fallu McMillian Lawyers

ORDERS

The parties bring in short minutes of orders to give effect to these reasons within 21 days of the date of these order.
Any applicant for an order for costs shall file and serve written submissions in support of any such application within 21…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] FCCA 3235
Decision Date: 9 November 2018

CaseChat Overview and Summary

Morris Finance Ltd (the applicant) sought declarations that certain assets, namely a 2017 Toyota Hilux dual cab utility and a 2017 John Deere tractor, were divisible among the creditors of Mr. Hodges (the respondent) pursuant to the *Bankruptcy Act 1966* (Cth). The dispute concerned whether these vehicles, used by the respondent in his business as a contractor, were exempt from seizure by the trustee in bankruptcy. The matter came before Judge Jarrett in the Federal Court of Australia.

The primary legal issue before the Court was whether the Toyota Hilux and the John Deere tractor constituted "tools of trade" or "equipment used in earning income by personal exertion" within the meaning of section 116(2)(c) of the *Bankruptcy Act 1966* (Cth), and therefore were not divisible among the respondent's creditors. The applicant contended that the vehicles were not of a kind that could be considered tools of trade or essential equipment for personal exertion, arguing they were more akin to general assets of a business.

Judge Jarrett considered the purpose of section 116(2)(c), which is to allow a bankrupt to continue earning a living after bankruptcy. The Court found that the nature of the respondent's contracting business, which involved earthmoving and general contracting work, necessitated the use of both the utility vehicle for transport and general site work, and the tractor for specific earthmoving tasks. His Honour concluded that both the Toyota Hilux and the John Deere tractor were essential for the respondent to earn income by personal exertion in his chosen field, and thus fell within the exemption provided by section 116(2)(c).

Consequently, the Court ordered that the 2017 Toyota Hilux dual cab utility and the 2017 John Deere tractor were not divisible among the creditors of the respondent.

Orders