FEDERAL COURT OF AUSTRALIA
Ozer v Australian Liquor Marketers Pty Ltd [2000] FCA 291
BANKRUPTCY – conduct of bankrupt relevant to determining whether judicial discretion should be exercised to grant annulment of bankruptcy – “adverse conduct” of bankrupt relevant – circumstances in which exercise of discretion should be reconsidered – exercise of discretion without knowledge of all relevant facts such a circumstance
Bankruptcy Act 1966 (Cth) s153B
Crimes Act 1914 (Cth) s7(1), s269(1)(a)
Marek v Tregenza (1963) 109 CLR 1 applied
House v The King (1936) 55 CLR 499 applied
R v Scott (1996) 137 ALR 347 referred to
NAZILE OZER v AUSTRALIAN LIQUOR MARKETERS PTY LTD & ANOR
N 1230 OF 1999
FINN, MARSHALL & GOLDBERG JJ
SYDNEY20 MARCH 2000
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N1230 OF 1999
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
NAZILE OZER
APPELLANTAND:
AUSTRALIAN LIQUOR MARKETERS PTY LTD
FIRST RESPONDENTSCOTT PASCOE
SECOND RESPONDENTJUDGES:
FINN, MARSHALL AND GOLDBERG JJ
DATE OF ORDER:
20 MARCH 2000
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal be allowed.
2.The matter be remitted to the primary judge for reconsideration.
3.There be no order as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N1230 OF 1999
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
NAZILE OZER
APPELLANTAND:
AUSTRALIAN LIQUOR MARKETERS PTY LTD
FIRST RESPONDENTSCOTT PASCOE
SECOND RESPONDENT
JUDGES:
FINN, MARSHALL AND GOLDBERG JJ
DATE:
20 MARCH 2000
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The Court
This is an appeal from the judgment of the primary judge given on 15 October 1999 in which he declined to exercise his discretion under s153B of the Bankruptcy Act 1966 (Cth) (“the Act”) to annul the bankruptcy of the appellant, Ms Nazile Ozer.
Factual Background
Ms Ozer was a director of a company, Possam Holdings Pty Ltd (“Possam”), though she did not take an active role in its management. She was employed as a fulltime registered nurse at St Vincent’s Hospital in Darlinghurst.
On 22 August 1997 Ms Ozer was served with a Local Court originating process in which the first respondent, Australian Liquor Marketers Pty Ltd (“ALM”), sought judgment in the sum of $10,734.80 in respect of a debt allegedly owed to it by Ms Ozer. The alleged debt was related to a written guarantee of payment for goods supplied to Possam given inter alia by Ms Ozer on 3 January 1997. On 26 February 1998 a default judgment was entered against Ms Ozer in the above amount in the Local Court. On 12 April 1998 a Registrar made a sequestration order against Ms Ozer’s estate. By 14 April 1998 Ms Ozer had been informed of the sequestration order and that Mr Pascoe, the second respondent, had been appointed trustee of her bankrupt estate. Ms Ozer was asked to attend…
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- Case
- [2000] FCA 291
- Decision Date
CaseChat Overview and Summary
The primary legal issue in the appeal was whether the primary judge erred in his exercise of discretion to annul the bankruptcy. Ms Ozer argued that the primary judge should not have considered her conduct in seeking a loan from St George Bank without disclosing her bankruptcy status, given that the sequestration order should not have been made in the first place. The appeal court had to determine if the primary judge made an error in exercising his discretion, particularly whether he considered relevant factors such as the notice of annulment application served on the bank before Ms Ozer's loan application.
The court found that the primary judge was entitled to consider Ms Ozer's conduct in seeking the loan, as established by the High Court in Marek v Tregenza. However, the court noted that the primary judge did not consider the notice of annulment application served on the bank prior to the loan application, which was a significant oversight. The court held that the primary judge’s failure to consider this factor constituted an error in exercising his discretion. Consequently, the appeal was allowed, the matter was remitted to the primary judge for reconsideration, and there was no order as to costs.
Orders
Orders of the court
1. The appeal be allowed.
2. The matter be remitted to the primary judge for reconsideration.
3. There be no order as to costs.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
We see no reason why we should infer that the loan which Ms Ozer attempted to obtain, or which would have been obtained had the attempt succeeded, was or would have been immediately repayable. Having regard to the inadequate state of the evidence on this matter, it is not an inference we are prepared to draw from the finding of the primary judge that “the debtor sought to borrow $20,000 from the St George Bank Limited”. Given our later conclusion that the appeal must be allowed, we express no concluded view on the true character and effect of the loan applied for, be it for $20,000 or some lesser sum. That will be a matter for the primary judge on such evidence as may then be before him.Consideration of other issues The judgment of the primary judge was a discretionary decision such that it is necessary for Ms Ozer to demonstrate an error of the kind referred to by Dixon, Evatt and McTiernan JJ in House v The King (1936) 55 CLR 499, at 504-505 where their Honours said:“It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.” In exercising his discretion, it was clearly open to the primary judge to take into account what might be termed “adverse conduct” of Ms Ozer. So much was well established after Marek (supra). Ms Ozer’s complaint, nonetheless, is that excessive reliance was placed on that conduct notwithstanding that sequestration should never have occurred. The first step for the primary judge was to consider whether sequestration should not have occurred. Having so found it was not automatic that his discretion would be exercised in favour of Ms Ozer. Her “adverse conduct” was relevant and his Honour was entitled to give it considerable weight. A complaint that there was “excessive reliance” on that conduct by his Honour is not an appropriate attack on the exercise of a discretion. However, it remains a significant matter that his Honour’s attention was not drawn to the notice of annulment having been served on the bank by her solicitor prior to Ms Ozer’s loan application. The authorities establish that it is an offence not to disclose one’s bankruptcy at each dealing with another person when credit in excess of $3,000 is sought to be obtained. (See for example R v Scott (1996) 137 ALR 347 at 353 per Doyle CJ, with whom Cox and Matheson JJ agreed). The severity of that offence may be lessened when one considers the circumstances in which the bank had been informed of Ms Ozer’s bankruptcy in the previous month. The evidence, though, does not reveal whether Ms Ozer was aware prior to her loan application that her solicitor had served notice of the annulment application on the bank and, if she was so aware, what belief she entertained as to the bank’s knowledge of her bankruptcy at the time of the application.