Patullo, D.W. v J.i. Case Credit Corporation of Australia

Re: DESMOND WILLIAM PATULLO and INES RENATA TERESA PATULLO
And: J.I. CASE CREDIT CORPORATION OF AUSTRALIA
No. QG 56 of 1989
FED No. 464
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION

CATCHWORDS

Bankruptcy - petition - application for adjournment of hearing - application refused - appeal - appeal dismissed

HEARING

BRISBANE

#DATE 27:7:1989

Counsel for applicant: A. Heyworth-Smith

instructed by: Grasso Searles & Romano

Counsel for respondent: J.F. Curran

instructed by: Hewlett & Co.

ORDER

Appeal dismissed.

Appellants to pay respondent's costs.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is an appeal against orders made by Spender J. in bankruptcy proceedings instituted by the respondent against the appellants.

The Notice of Appeal refers to two quite separate sets of orders made by the learned judge. The first set of orders was made on 15 May 1989. Those orders are referred to in para. 1 of the Notice of Appeal. The time for appeal against those orders had expired before the Notice of Appeal was filed and hence the appeal, to that extent, is incompetent.
However, nothing of real consequence depends on this as the matters of substance which the appellants rely upon have been urged in support of their appeal against the second set of orders. Those orders are referred to in para. 2 of the Notice of Appeal. They include orders that a Notice of Intention to Oppose the Petition be struck out, an order refusing the appellants leave to read any material on the application, an order refusing an adjournment of the application and, most importantly, sequestration orders made against the estates of both the appellants.
In order to understand the appellants' case on the appeal it is necessary to refer to some of the history of the matter preceding the making of the sequestration orders on 2 June 1989.
On 23 July 1985 a District Court plaint was served on the appellants. The plaint related to the debt which ultimately gave rise to the making of the sequestration orders.
On 15 July 1987 a defence, which was a general denial of the plaint, was filed in the District Court.
On 10 December 1987, the District Court set down the trial of the action for 5 January 1988. On that day, a firm of solicitors (which, by that time, was the third firm of solicitors which had been retained by the appellants), successfully applied for the case to be adjourned.
On 21 January 1988, the action was set down for hearing on 24 March 1988. Thereafter the third firm of solicitors acting for the appellants ceased to act for them.
On 24 March 1988, the first appellant appeared in person before his Honour Judge Row and sought an adjournment of the action. Judge Row adjourned the trial to 20 June 1988 and made orders, inter alia, that the defendants in the action pay $5000 into court by 24 May 1988 and that in default of such payment the plaintiffs in the action should have liberty to enter judgment.
On 9 June 1988, notice was given to the appellants of the respondent's intention to apply for judgment at 9.30 am on 16 June 1988. On that day there being no appearance for the defendants in the District Court - although it is fair to say there had been some oral communication between the first appellant and the respondent's solicitors - the District Court ordered that judgment be entered against the defendants for $40,000 together with costs.
On 25 July 1988 the bankruptcy notice was issued against the appellants. It was served on 19 August 1988.
On 19 September 1988 the appellants filed an application to set aside the bankruptcy notice. By this time yet another firm of solicitors was then acting for them.
On 13 October 1988 an application was made to Judge Row to set aside the District Court judgment. That application was dismissed with costs.
On 18 October 1988 and 3 November 1988, Pincus J. heard an application to set aside the bankruptcy notice. He gave his decision on 23 February 1989 dismissing the application and ordering the judgment creditor's costs to be costs in the petition.
The petition was presented on 28 February 1989.
On 22 March 1989 the Notice of Intention to Oppose the Petition was filed. On 6 April 1989, directions were given by Registrar Ramsey including a direction that affidavits be filed by the appellants by 20 April 1989.
On 15 May 1989, the creditors petition came on for hearing. The first appellant sought an adjournment for a fortnight. The judge hearing the matter on that occasion was Spender J. He adjourned the matter until 2 June 1989 and made the orders which are the first set of orders to which I have already referred. One of those orders was that affidavits were to be filed by the appellants no later than 31 May 1989.
On 2 June 1989 the appellants appeared by counsel and sought a further adjournment of the petition. That application was refused and the orders to which I have already referred were made.
The affidavits which were required to be filed in Court by 31 May were available in Court on 2 June. Rather than take time to consider whether his Honour's ruling in refusing to allow the affidavits to be read was correct, we decided when the appeal was called on for hearing to read what was in the affidavits so as to determine whether, if they had been before his Honour, it would have been proper for him to either dismiss the petition or stand it over.
We had some opportunity to consider the contents of those affidavits on the bench yesterday but, because we wished to satisfy ourselves that we were completely cognizant of all the matters which the appellants wished us to take into account, we stood the appeal over until to-day to have a better opportunity to consider the contents of the affidavits.
In substance, the case which the appellants would have sought to make to Spender J in reliance upon the affidavits was that, in terms of s.52(2)(b) of the Bankruptcy Act 1966, there was "other sufficient cause" why a sequestration order should not have been made.
According to Mr Heyworth-Smith, who carefully put every possible argument in support of his clients' case (and, we might say, at very short notice) there are two bases upon which that submission could have been put. The first was that there was a collateral oral term of the chattel lease agreement relating to certain plant leased by the respondent to the appellants. It was said that the effect of the term was that if the appellants could not meet rental payments under the lease the respondent would, in effect, not insist on its contractual rights.
The second basis upon which the case could have been put, so it was suggested, was that the appellants had a claim for relief under the Trade Practices Act 1974 in respect of conduct relating to the entry into the lease agreement and certain representations said to have been made at about the time the lease was signed.
We should say at once that any claim under the Trade Practices Act would be met by the insuperable difficulty that it would be barred by the time limitation on the bringing of such claims.
Having considered all the material which would have been before Spender J (and we stress that we have read it separately and carefully overnight), we do not think it was sufficient to make out a case that the petition should have been adjourned and that sequestration orders should not have been made.
Accordingly, there being abundant evidence before his Honour which otherwise justified the making of the sequestration orders, we think that the appeal must fail. The appeal is dismissed. The appellants must pay the respondent's costs.

[1989] FCA 464

27 JULY 1989