Re Beckett, G.L. v Ex Parte Putnin, B

[1990] FCA 442

Re: GRAHAM LESLIE BECKETT
Ex parte: BERNARD PUTNIN as TRUSTEE under a COMPOSITION for GRAHAM LESLIE
BECKETT and BEAUREPAIRES FOR TYRES
No. 144 of 1987/X
FED No. 442
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA
GENERAL DIVISION
French J.(1)

CATCHWORDS

Bankruptcy - preference - trustee's case deficient - no admissible evidence of insolvency - application dismissed.

Bankruptcy Act 1966 Part X, s.122, s.231

HEARING

PERTH

#DATE 16:8:1990

Counsel for the applicant: Mr M.J. Hawkins

Solicitors for the applicant: Robertson

Counsel for the respondent: Mr A. Fenbury

Solicitors for the respondent: Kay and Lafferty

ORDER

The application is dismissed.

The applicant is to pay the respondent's costs of the application.

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

JUDGE1

On 13 November 1987, Graham Leslie Beckett executed a deed of assignment under Part X of the Bankruptcy Act 1966. The Trustee under the deed is Bernard Putnin. By an application filed on 23 November 1989, Putnin sought an order against an organisation called Beaurepaires for Tyres for the payment of $1,700 and the costs of the application. A supporting affidavit filed at the same time and sworn by Putnin set out, that at the time of execution of the deed, Beckett was sole proprietor of a transport firm, Bentley Transport. Under that name he traded with Beaurepaires for Tyres on "an ongoing basis" and purchased goods and services between 13 and 25 March 1987 (erroneously stated in the affidavit as 1989) in the sum of $1,755. Alstatement under the letterhead Beaurepaires for Tyres which was identified therein as "a division of Sasine Pty Ltd (Inc. in ACT)" was exhibited to the affidavit. The statement, made out to Bentley Transport, showed three invoices for $775, $950 and $30 respectively had been issued on 13, 24 and 25 March and that a balance of $1,755 was due for payment.

1. According to the affidavit, Beckett purchased further goods on 13 May 1987. A copy of the statement for that month showed purchases of $32, which added to the then outstanding debit balance of $1,755, making a total of $1,787. On or about late May or early June 1987, Beaurepaires' credit manager sent Bentley Transport a notice of intention to sue in the following terms:
   

"Take Notice that BEAUREPAIRES FOR TYRES Intends to issue a SUMMONS, through the COURT for the recovery of $1,787 for goods supplied and delivered and with COSTS added if the amount is not paid into this OFFICE by 13/6/87. This is a Final Notice and there will be no further correspondence from this office. Be advised to attend to this matter

immediately and so avoid embarrassment and further expense.

........ ........ ...

Credit Manager"

1. On 29 June 1987, Beckett paid to Beaurepaires the sum of $500 by cheque drawn on the National Australia Bank. On 15 July $600 was paid and on 31 July a further $600. Putnin offered in his affidavit conclusions about the nature of the payments which he said were derived from the documentation supplied to him and from unspecified "discussions I have had with the debtor". The evidence (contained in para 13 of the affidavit) was argumentative and inadmissible and I so ruled at the hearing.

2. The respondent filed an affidavit by its State Manager, David Charles Hale, and this was relied upon by Putnin's counsel as part of his case. It was not particularly helpful to it however. In the affidavit Hale said that Beckett opened a 30 day trading account with the respondent in March 1986 and traded with it until about August 1987. It was at all times a running account. There was no dispute that as at 31 March 1987, he was indebted to Beaurepaires in the sum of $1,755. Hale said that Beaurepaires did not at any time have any knowledge or reason to suspect that Beckett was unable to pay his debts as and when they fell due. If it had been aware that Beckett was insolvent it would not have continued trading with him. Between June 1986 and August 1987 Beckett's payments were made well outside the normal 30 day trading terms of the respondent. The only months that he made payments within that time were March 1986 to May 1986 inclusive. The payments made between March 1987 and July 1987 were consistent with his past trading recording. It was not regarded as unusual or suspicious that Beckett should make round figure payments during that period. They were substantial and Beckett continued to trade.

3. By a supplementary affidavit Putnin referred to various statements of account from Beaurepaires to Beckett exhibited to Hale's affidavit. In summary these indicated that:
   

1. The sum of $556 remained outstanding for 60 days in November 1986.

2. That sum was not paid until 4 December 1986.

3. As at January 1987 the sum of $805 had been outstanding for 90 days.

4. As at February 1987 the sum of $490 was outstanding for 90 days.

5. The sum of $1,755 was outstanding for 60 days as at 31 May 1987.

He also referred again to the payments by which that last outstanding account was satisfied.

1. The application is brought under s.122 of the Bankruptcy Act 1966 as applied by s.231 of the Act to the case where a debtor has executed a deed of assignment. It is contended that the payments made to Beaurepaires in June and July 1987 had the effect of giving it a preference, priority or advantage over other creditors in circumstances whereby they are recoverable under s.122. The payments were made less than 6 months before the execution of the deed of assignment.

2. The trustee must establish as part of his case that Beckett was at the time unable to pay his debts as they became due from his own money. He must also show that the payment in question had the effect of giving Beaurepaires a preference, priority or advantage over other creditors.

3. In this case the creditor elected to call no evidence. Indeed the affidavit to the creditor's representative having been relied upon by the trustee, he hardly needed to. The trustee's case was in any event deficient. He did not establish that Beckett was insolvent at the relevant date or that the payments had the effect of creating a preference. The uncontradicted evidence of the creditor's representative tended to support a defence under s.123 of the Act in any event. In the circumstances however, it is unnecessary to move to a consideration of that defence for the trustee has simply failed to prove his case. The application is dismissed with costs.