Re Bride, E.J. & Anor Ex Parte Stewart, B.g

[1990] FCA 756

Re: EDWARD JAMES BRIDE and WENDY MARGARET BRIDE
Ex parte: BRYAN GUTHRIE STEWART
No. P356 of 1990
FED No. 756
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

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

CATCHWORDS

Bankruptcy - Creditor's Petition - adjourned to enable bankrupts to satisfy creditors - failure of bankrupts to satisfy or compromise their debts - pending application for leave to apply out of time for special leave to High Court from decision giving rise to judgment debt - relevance in relation to Court's discretion whether to make sequestration order - guarantee proffered by relatives of bankrupts - guarantee not a tender - sequestration order made.

McDonald Henry and Meek, Australian Bankruptcy Law and Practice 5th Edition

Re King; Ex parte Commercial Bank of Australia Limited (No. 2) (1920) VLR 490

HEARING

PERTH

#DATE 6:11:1990

Mr E.J. Bride appeared on behalf of the Bankrupts.

Mr K. Dundo appeared on behalf of the petitioning creditor.

ORDER

A sequestration order be made against the estates of Edward James Bride and Wendy Margaret Bride.

Anthony Douglas Brown of Messrs. Horwath and Horwath, 11th Floor, Australia Place, 11-15 William Street, Perth, be appointed trustee of the estates.

The petitioning creditor's costs of and incidental to the petition be taxed and paid out of the estates of the first-named debtor and the second-named debtor.

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

JUDGE1

The history of this matter has already been set out in my reasons for judgment of 6 August, 1990, when I adjourned the petition until today. I referred in those reasons to evidence relating to assets in the possession of the judgment debtors and the reasonable possibility that they might be disposed of for a price which would enable the judgment debt to be satisfied, without prejudice to the generality of the creditors. I said then of Mr Bride that his failure to satisfy or compromise the debt to that point arose principally, in my opinion, out of a misguided belief that he should not do so as a matter of principle. I noted that the bankruptcy notice had issued and a petition had been filed a considerable time after the debt upon which they were based, and in circumstances in which the petitioning creditor had taken no steps to resort to the usual enforcement procedures. It was also a matter of some relevance as I then noted, that there was continuing litigation between the debtor and the creditor, although, as I observed from the note in McDonald Henry and Meek, Australian Bankruptcy Law and Practice 5th Edition, there is no authority for the proposition that even if some ulterior motive exists on the part of the creditor, such as a desire to stifle pending litigation, an order for sequestration should not be refused, if apart from such motive the creditor would be entitled to the order. In that regard I refer to Re King; Ex parte Commercial Bank of Australia Limited (No. 2) (1920) VLR 490.

1. I was also referred at that time to the pending application for leave to seek special leave to appeal out of time in the High Court against the judgment of the Full Court of the Federal Court, which in turn had dismissed an appeal from my judgment striking out Mr Bride's action, the costs on which judgment form the basis for the judgment debt here. At the time I expressed the view, and I do not now depart from that, that I am not prepared to regard the pendency of the application to the High Court as a factor which should be given any significance in relation to this Court's discretion to decline to make a sequestration order or to adjourn. The application is still pending and it is now some 21 months or more out of time. I note again, by reference to McDonald Henry and Meek, that there is authority for the proposition that the mere fact that an appeal is pending from the judgment is not a sufficient ground for staying the proceedings on the petition, although there is also authority for the proposition that if an appeal appears to be bona fide, the hearing of the petition ought to be adjourned. If the appeal is evidently frivolous, a sequestration order ought to be made notwithstanding its pendency. The mitigating impact of a pending appeal may well have applied to the appeal to the Full Court. One cannot give it the same weight, in fact, I am not inclined to give it any weight at all in relation to the application to seek special leave out of time from the High Court.

2. On the last occasion I noted that, in the circumstances, it seemed to me that the public interest would not be served by immediately responding to the petition with a sequestration order. But as I said then, if the Brides could not make appropriate arrangements to meet their obligations there would seem little alternative but to make the order which was sought. And I adjourned the petition for a period of three months on the basis that this was a realistic period within which Mr Bride could make the necessary steps to satisfy the claim by Mr Stewart and also that of the Australia Bank Limited, that intervened in the proceedings the last time they were before this Court.

3. The matter has come back today. Mr Bride has filed an affidavit and it is apparent from that and common ground, that the judgment debt remains outstanding. There is exhibited to the affidavit, a memorandum signed by a Mr and Mrs Cameron - I understand them to be his sister and brother-in-law - who offer to guarantee to pay the amount of up to $10,000 to cover costs awarded to Stewart and the Australia Bank against the Brides. The signatories to the letter say they understand the debtors have an appeal before the High Court of Australia in relation to the costs awarded and assure the Court of their intention to execute the guarantee in the creditors' favour on instructions from the Court or the failure of the appeal to the High Court by the debtors at a date to be set. They understand, evidently, that the moneys would be refunded to themselves by the judgment debtors by way of proceeds from other legal actions and/or a verbal guarantee from another person by the name of Adamson. Mr Bride has also exhibited other material to his affidavit indicating the progress of his application to the High Court.

4. The delay in that progress arose by virtue of the requirement for legal representation and a pending application for legal aid to the Legal Aid Commission of Western Australia, which is subject to internal appeal within that body and an application for legal aid to the office of Legal Aid and Family Services within the Attorney-General's Department. Unfortunately these matters, in my opinion, do not evidence any material change in the position since I adjourned the petition on 6 August. A guarantee is not a tender and even if it were, the petitioning creditor might have serious cause to consider whether it might not constitute a preference at this stage in relation to other creditors. It would not be a proper exercise of my discretion to further adjourn the petition and in the circumstances the only course that is open to me, in my opinion, is to make the order that is sought.

5. I now make an order in terms of the minute which has been tendered by Mr Dundo:
   1. That a sequestration order be made against the estates of
   

Edward James Bride and Wendy Margaret Bride.

2. Anthony Douglas Brown of Messrs. Horwath and Horwath,

11th Floor, Australia Place, 11-15 William Street, Perth, be appointed trustee of the estates.

3. The petitioning creditor's costs of and incidental to the

petition be taxed and paid out of the estates of the first-named debtor and the second-named debtor.