Petek, K.P. v Steven Salgo (Sales) P/L

[1994] FCA 539

JUDGMENT No. ..,., ~a?,.Ja

BE: -

Debtor

p-= -&I m

Petitioning Creditor

C2U.m:	Dades J.
hs	Sydney
B&	19 July 1994

This is a petition s e e h g sequestration of the estate of the debtor, Mr Kenneth Petek. Mr Petek

opposes the petition on the grounds.-

that he is able to pay his debts and
that the judgment debt, upon which the bankruptcy notice relied and upon whicb tbe

petition is based, is not his debt but is a debt of KPP Entcrprtses Pty Limited

Th.1 statement of confcsslon was signal on 18 May 1992 and
I shall deal with the latter point first.	Counsel for Mr Petek has asked the Court to p behind

the jodgment of the Loal Court entered in May or June of 1992 There are, in my opinion, sound rca8ona why the Court should not do so. 'Ihe judgment was not the product of error or ignorance. Mr Pet& blm8elf signed a statement of confession. which is a pr- of the Local Court, and he did so in

the prcaence of an omcw of the Court.

'I, the defendant in thia action, confess the amount of $5966.61 .- the amount claimed
by the plrlntlli and due to the plaintiff from the defendant in full satisfaclion of the

phtnwll claim..

C o d for MY Pet& haa submitted that Mr Petek mnunderstood the significance of what he wan

thm doing. I reject that submission and also Mr Petek's evidence that be may not have paid sufedent attention to the form to realise that he was named as the defendant. The court documena were clear. Moreover, Mr Petek had ralaed with the managing director of the creditor, a Mr John Scotf the

contention that the debt was a debt of KPP Enterprises Pty Limited and not hi own. In the Ught of the wnvemlion with MY Scotf and in the Ught of the process that was served upon him, I am satisfied that Mr Petek was awue th.1 the creditor considered that it had dealt wth him personally and that the

pmcedh@ were bm@t against him personally.

I un aatiseed that Mr	Pet& deliberately chose to consent to judgment and to seek time to pay.
When	the pailion Bnt came before this Court in late 1993, Mr Petek raked no challenge to the

judgment The matter came before Sheppard J for a second time on 17 December 1993. Mr Pet& signed an agreement to pay oE the debt by instalments and he agreed to an order that he make payment in acc0-a with the 8igned terms. An order was made by consent that the petitton be adjourned until 30 June 1994. On lhrt occasion, Mr Petek addressed Sheppard J and gave evidence before hia

It was not until March 1994 that Mr Petek chose to adopt, in this Court, the stance that the debt

was not due by hlm. Subsequently, he made application to the Local Court to have the judgment set aside

but that applicalion was dismissed.

The h u e whether the debt was a debt due by Mr Petek or a debt duc by his anupany KPP
Entuprtcea Pty Limited in one which, if it was to be litigated and adjudicated upon, should have been

UUgatcd in the Local Court in 1992 when memories were fresh, especially as the issue primarily turna upon

CO- on1 evidcnM

In my opinion, as Mr Petek chose to adopt the m u m of consenting to the judgment, and

subsequently of a p i n g to pay the debt and seeking an adjournment of the petition, and as this CouR

acted on what he Mid and adjourned the petition, it would be wrong and unjust to the creditor to allow

the matter to be raised at this atage. For those reasons alone, I would not p behind the judgment

I should p on to say, however, that I am not satisfied that there was any error in the judgmenL
Mr Petek bad registered the business name, La Province Italian Restaurant, in March 1990 showing

himself as the pmprietor of the business. In July 1990, he approached the neditor and sought to

purdme cmckry for the restaurant business which was to be established. It is not in dispute that Mr

Petek gave the name of the restaurant and his own name and that he handed over a business card that showed the name of the restaurant and his name as host. It is aka not in dispute that, at that time, Mr Petet made no mention of KPP Enterprises Pty Limited

?be prindpal discussions with respect to the purchase and supply of the crockery took plaa

between Mr Petek and a Mr B D Lalng. The order for the aockery was placed orally just after 30 July.

Just prior thereto, Mr Petek had received two	letters from the creditor, dated 23 July and 30 July, both
of which were addressed to Mr Ken Petek, La	Province Restaurant at the post office box number which
war, given, Both commenced with the words: 'Dear Ken'.	The crockery was delivered on, or shortly after

1 November 1990, with invoices dated 1 November 1990 showing the payment terms as 30 days.

The invoka, were addressed to La Fmvince Restaurant and disclosed, amonpt other information, the information: 'Customer order Ken Petek'.

The evidence on which reliance is placed by Mr Petek is stated m paragraph 10 of his affidavit

Blcd IS July 1994. Tbat paragraph reads:-

'10. Shortly after 30 July, 1990 I confirmed the order for the go& with the Petitioning

Creditor. ney were not delivered until early November, 1990 as the mtaurant did not open until the 16th of November. Prior to Iaking delivery of the Brst supply from the Petitioning Creditor I told B r p n Laing words to the following effect The company W P Enlerp~L~ PlyMted Lc vrding as La Province and it ir payhg and will be rcspomible

b r the amunto.' In response to this advice I received a Eagimile h the Petitioning
aedltor dated 13 November, 1990. A true copy of the faa,imUe and the endosure
ndcrred U, h .nnercd hexeto and marked with the letter 'F:

The fasimlle refenwi to was a fasimile from the creditor addressed to La Province for the attention of Mr Kenneth Petek. It was dated 13 November 1990 and the message given was: Urgently require return

of Ihia credit application. A two page form of application for credit terms was attached and the front

pl~e of the f x a i d e it8cU had the word, *urgent', stamped on i t Mr Petek did not mpond to that

hchlik.

Some paymenu were made off the price of the goods. Mr Petek has given evidence that all

pymenm wae made by cheque drawn by KPP Enterprh Ply Limited which was conducting the

restaurant buainwa which o w e d on 16 November.	The first payment was made on 27 November, 1990.
Statements subsequently forwarded by the creditor were addressed to La P h c e	restaurant at the post
dew box number given	On 5 July 1991, the creditor wrote to La Province restaurant seeking payment
d	the oumtsndlag money in default of which legal proceedins would be instituted.

lk evidena given by Mr Petek has not satisfled me that hc informed Mr Laing prior to the

delivery of the gooda that the proprietor of the business was KPP Enterprises Proprietary Limited. Ccmhly he did not do so h writing and I conclude that he dld not do so in any way which brought the

nune of the company to the dear attention of the creditor. I prefer the evidence of Mr Lalng to that of

Mr Petek.

Mr Laing p evidence tbat he could not recall any mention of KPP Enterprises Proprietary

Limited. I see m, reason to reject that evidence. On the other hand, some of Mr Petek's evidence seemed to me to be untruthful, for example, his evidence that when he signed the statement of confession he may

not bavc been aware that he was the defendant I should ad4 moreover, that the d e w of the

awycraation a# ael out h paragraph 10 are so brief that I am unable to place weight upon them.

No date is given. The con-lion, if it oecumd at all, was obviously one over the telephone; but the

amtext in which lnythlne was said about KPP Enterprises Pmprietary W t e d is not stated.	We do not
know whethu it was a diseuaslon belween Mr Petek and Mr Laing as to aedft terms,	or whether it was
j o t mm offhand comment by Mr	Petek about the matter.

Mr Petek's evidence on this is very brief, limited to the one statement which is set out in

p.ng.pb 10 of h&	m v i t . Mr Petek said in paragraph 10 that the conversation with Mr Laing bmught
about the bcsimlle with the form of application for atdit terms.	Having regard to the referenced on the

fscahlk to the urgency of the matter, it would not be inconsistent with the facu that, on or about 13

November, Mr Petek did aeek extended credit terms and did mention to somebody in the a'editofs oface

that KPP Enterprim would be making the payment.

H this was the first time the company was mentioned to the creditor, the conversation would not

affect the conclusion that the dealing fmm the time of the negotiations, the placing of the order and the

delivery of the goods was such as to constitute a transaction between the creditor and Mr Petek personally.

There is no document which has emanated from the creditor which shows any knowledge of KPP
Enmpdaa Pmpriemy Limited and it is not suggested that the creditor was informed of the existena of

KPP Enterprises Pmprietq Limited save in that one conversation, the substance of which is set out in

W p h 10.

It b clear that the creditor considered itself to be dealing with a business which was bclng carded

on under the name of La Province. However, as a knew nothing of that busincss other than its contau

with Mr Petek, as the name IA Province war a registered business name and registered in the name of Mr

of the La hovince business, it seems to me that I should come to the conclusion that the dealing was	Potek, and aa the registration constituted a representation to the world that Mr Petek was the proprietor
between the aeditor and Mr Petek I am not satisfied that there was any error in the judgment of thc
Local Cwn which gave effecI to that position.
I turn now to the Brst ground, that is as to the solvency of Mr Petek and as to the discretion which the Coun haa not to make a sequestration order if a debtor is solvent. The basic faaa appear to be that tbClC b a debt which presently amounts to W57.12 Mr Pet& has come to court with all h&
pmcnt moneIary mufa. They include caah of a lit* over S4000 aad a debt and a cheque horn h&

auront employer for appmxhatcly $8M.	It appears that he is presently $1582 short of the amount due
mthcacditor.

In addition, he has furniture stored which he values at $3000 which does not seem to be presently

mall&& for the payment of debts, and clothing and personal effects. He also has a liability under a

parantea of approximately $5500 to the National Australia Bank. He is making ve~y small weekly

p f u m m off that debt, but the bank b presently acceptlog the payments and is not pressing him. Mr Pctek bas lyantly undertaken new employment as a restaurant manager at Peppers Jenolan Caves and

be-	that hia net income will be approximately $35,000 per year.
My anacdsmcnt of Mr Petek's situation is that he is in fact lnsolvenL It does not seem to me that

the arrangement with the National Australia Bank is such as to amount to an arrangement for payment

I think the position b merely that the National Australia Bank is not presently aaively pursuing Mr Petek.

But that is not to aay that Ihere has been any formal agreement for paymenL Mr Petek ia not able to pay

the creditor the amount due

In the Ught of the history of thia matter including the formal agreement which was entered into Dcamber of last year, whicb resulted in an agreement to pay monthly instalments of kW0 each and indced 8 hmnal order that thow payments be made, and in view of the failure to pay thase sums, it seems to me

that thb is not a case where any diwetion should be exercised fmurably to Mr Pet&	It is a case where
MrPeteLbrrmmeliuu4buttrdccliningtopay.

Counsel has submitted that the aeditor should now be required to have recourse to other f o m

of recovyc, but Mr Pet& Qes not posses real estate and does not for that matter have a permanent homc H11 furnltun b in store, he has moved out of Sydney and it muld very well be quite a difUcult lask m rceover any further sum from hlm through ordinary recovery pmcedhgs. Having regard to the history, to the p-t rcfunal to pay sums which are amiable for payment and to the dieaculty there woald be h maming the debt, 1 think I should not accept coulwcI's submission that the petition be

diPmigedonthcgolDndolneumlvwcg.

I omiQ that thls and the 6 precading pa are a uue copy of the rcasons for jud the Honourable Mr Justice Davits.

Date:	19 July 1994
Solidton for the petitioning creditor:	William H. Andrews Manhall, Marks, Kcnnedy
Counsel for the debtor:	James T. Johnson
Solidton for the debtor:	Roxburgh & Co.
Date of healing	19 July 1994
Date of judgment:	19 July 1994