Re Burrow, Phillip Robert Thomas & Anor Ex Parte Kirk, William Arthur

[1977] FCA 56

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NSW 180 of IS73

I n t h e matter of TEIE BAXRXJPTCY ACT -.

1966

APPLICATION TO EXPUNGE PROOF

OF DEZT RE -

Ex p a r t e : P7illiam Ar thur K l r k

R i l ey J.

2 Septenber 1 9 7 7

Sydney

The a p p l i c a t i o n be d ismisscd

and -che a p p l i c a n t p q the taxed

costs of the r e s p o n d a t E r i i t l l

S h e i l a M a r j o r i e Crcer of mc3.

inciden-cal KO t h e a p p l i c e t l o n .

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CATCHWORDS

Bankruptcy - Application by trustee for expungement of admitted proof oE debt.

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A s e q u e s t r a t i o n o r d e r was made a g a i n s t t h e estates of

Ph i l ip Robert Thomas Burrow and h i s wife Bet ty Joan Eurrow on

1 5 Thy 1973. bir TIT. A. Kirk is t h e t r u s t e e of t h e i r estates.

On 6 November 1973 Mrs Creer, who i s I.Lrs Eurrow's mother, lodqec;

a prooz of d e b t p a r t i c u l a r s o f w h i c h vere, acco rd ing t o h e r

accompany ing a f f idav i t , as fo l lows:

" 1 9 6 1 Dec 31 Ou t s t and ing r en t on p r o p e r t y

"Essendean" 2 , 1 2 0 . 1 7

1 9 6 8 Aug 1 9 Moneys loaned 7,186.95

1969 Mar	24 L e s s repaid	844.91	6 ,342.04	-	i
$8,462.21"	I

The t r u s t e e on 1 6 January 1975 admi t ted p roof o f debt in the

sum of $6,342.04, t h a t i s , as t o t h e moneys l e n t and not rep- l jd .

By h i s a p p l i c a t l o n d a t e d 7 !larch 1977, as amended, he seeks ar.

o r d e r t h a t t h e p r o o f so admitted be expunged. The a p p l i c a t l o n

i s opposed by P l r s Creer.

On 1 9 November 1973 Mrs Creer's s o l i c i t o r s , Messrs

W i l t s h i r e B r i t t o n & Dun wrote t o t h e t r u s t e e a s f o l l o w s :

"With reference t o t h e Proof of Debt of Mrs Creer

(which was forwarded t o you on the 9 t h i n s t ) we would

a d v i s e t h a t t h i s f i r m i s i n a p o s i t i o n t o s u p p o r t h e r

claim - so f a r as t h e amount of $6,342.04 is concerned.

Through our Trust Account on 19th August 1968

Mrs Creer loaned P. R. T. and b i r s B. 2 . Burrow che

t o t a l amount of $7 ,186 .95 : a l so t h rough oc r T rus t

Account, P. R. T. and Mrs B. J. Burrow r e p a i d t o Nrs

Creer on 26th March 1969 t h e amount of $844.91.

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Th i s l e f t an ou t s t and ing deb t of $6,342.04".

The t r u s t e e w r o t e t o Mrs Creer on 20 November 1973

acknowledging rece ip t of h e r p r o o f o f d e b t a n d a s k i n g h e r t o

answer n ine ques t ions " t o assist m e ir, g i v i n g p r o p e r c o n s i d e r a t i o n ,

as t o w h e t h e r t h i s clalm may be admi t t ed i n t he Bankrup tcy" ,

Q u e s t i o n s I t o 6 i n c l u s i v e s t r i c t l y r e l a t e d o n l y t o t h e claim f o r

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r e n t ; butd i n r e s p o n s e to q u e s t i o n s 3 , 5, and 6 , Elrs Creer

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vo lun tee red as t o h e r clalm f o r moneys l e n t a n d n o t r e p a i d t h a t

" t h e s e moneys were loaned by me t o b i r and Mrs Burrov: a t thelr

r e q u e s t a n d r e c o r d e d i n t h e Trust Account of Messrs N l l t s h i r e

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B r i t t o n & Dun i n v e r e l l . . . . Mr and Elrs Burrow i n August 1968

r eques t ed m e t o l o a n t o them t h e sum of $7,186.95 t o meet c e r t a i n

of t h e i r d e b t s a n d t h i s I d i d . It was a g r e e d t h a t , i f ae any

time I s h o u l d r e q u i r e t h i s money, i t would be r e p a i d t o me".

Quest ions 7 , 8 and 9 and (so far as they concerned the moneys

l e n t ) m s Creer' S answrei-s t o them were as follows:-

"7. ( Q ) To whom was the cash repayment of $844.91 made?

(a) The amount of $ 8 4 4 . 9 1 was r e p a i d t o me by M r ar?d Mrs I

Burrow on 24th March 1969 a t my reques t . These moneys^

were p a i d t o my s o l l c i t o r s Messrs. W i l t s h i r e B r i t t o n ,

G Dun who pald cer-cain debts on my b e h a l f .

8 . (Q) Have you had any acknovledgement of any kind reapec

of t h e d e b t for r e n t o r t h e moneys loaned?

(A) M r and Mrs Burrow acknowledged i n August 1 9 68 t h a t

t hey were i n d e b t e d t o me in the abovement ioned JrnmnT;.'

9 . ( Q ) What ac t ion have you taken to ob ta in payment of

t hese accoun t s?

(A) Again I h a v e r e p e a t e d l y r e q u e s t e d t h a t t h i s d e b t

be r epa id . The fac t t h a t it vas owing t o m e

reduced the Pens ion I was r e c e i v i n g . "

On 29 September 1975 I 4 r W i l t s h i r e , of the abovementioned

firm, who has been Mrs Creer's s o l i c i t o r f o r some twen ty yea r s ,

was examined under S. 8 1 of the Bankrupmy A c t 1 9 6 6 I n

r e l a t ion t o t h e a f f a i r s of t he bankrup t s . I n pa rag raph 7 of h l s

a f f i d a v i t of 1 7 January 1977 (re-sworn on 25 February 1 9 7 7 )

f i l e d i n s u p p o r t of h l s a p p l i c a t i o n , t h e t r u s t e e set o u t p a r t o f

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the ev idence then g iven by Mr. W i l t s h i r e , r e a d i n g as fo l lows:

"Q. Can you t e l l u s how it i s thac Mrs. Creer 'S claim

a g a i n s t t h e estate is made?

A. It is a f a i r l y l o n g a n d c o m p l i c a t e d s t o r y b u t t h e

p o s i t i o n i s t h a t t h e l a t e Nr. Creer i n December,

1956 agreed to g ive P. R. Burrow & Co. a licence

over Essendean t o r e t u r n f ive years f rom 1 January

1557 arid tha t ag reemen t was f a l r l y slmllar t o t h e

o t h e r s . S u b s e q u e n t l y I n 1 9 6 2 , which from memory I

t h i n k vas t h e d e a t h of t h e l a t e Mr. Creer, it was

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a g r e e d t h a t	Mrs.	Creer	would	s e l l t h e p r o p e r t y	f o r
622 pe:c acre.

Q. To whom?

A. It vas a g r e e d t h a t when P e t e r ( t h e e l d e s t s o n )

a t t a i n e d 1 6 , he would t ake the p roper ty . A t .chat

stage t h e l i c e n c e a g r e e d was cont inued and It vas

a g r e e d t h a t t h e b a n l c r u p t s would l e n d i!r.s. Creer

cer ta in funds, which would be taken as p a r t 02 t h e

p u l c h a s e p r i c e .

To p r o t e c t t h e p o s i t i o n , t h e r e vas a mortgage taken

over Essendean from Nrs- Creer t o t h e Burrows and

t h i s a r r a n g e m e n t was a verbal one. Subsequent ly tne

house and Essendean , a f te r th i s a r rangement was made, ,

and the insurance a r rangement were made by the

purchasers and subsequent ly the house and Essendean

was burnt . The proceeds of t h a t were taken by Tirs.

Creer and they were c red i t ed t owards t he pu rchase .

I n 1 9 6 2 , when t h i s a r r a n g e m e n t was e n t e r & i n t o , t h e

amount due under the 1956 l i cens ing agreement was

known and the agreement was v i r t u a l l y t o t h i s e f fec t

t h a t P. R. Burrow & Co. would pay a l l s h i r e a n d P. P.

rates and a l l North West County Council charges, hecaus'

t h e r e v a s some d i s p u t e whec the hcuse was b u r n t down,

t h e N o r t h West County Council wanted t o charge f o r

e l e c t r i c i t y and a l l crown r e n t s . I t h i n k t h e r e was

a small amount of arrears d u e u n d e r t h a t l l c e n c e

agreement which were to be brought up-to-date and,

as a form o f ag i s tmen t fee, they were t o pay interest

on i=2,050. a t 6%; and Mrs. Creer had J. house and t h a t

$2,050 was t h e amount she owed on her house a n d t h a t

17as t h e amount of I n t e r e s t she was paying so t hey

were t o pay lnterest on & 2 , 0 5 0 a t 68, or whatever

rate she had t o pay on the mortgage; and they were

t o p a y i n t e r e s t o n t h e b a l a n c e a t 4%. That 17as

t he ag reemen t v i r tua l ly wh ich con t inued i n e x i s t e n c e

un t i l Essendean was sold.

It was s o l d l a te r f o r s l i g h t l y less t h a n t h e g 2 2 an

acre so t h e d i f f e r e n c e had t o b e made up by b5rs . Burrow

t o get back t o t h e o r i g i n a l p r i c e t h e y h a d a g r e e d t o '

pay Mrs. Creer.

Q. But the agreement was n o t r e d u c e d t o w r i t i n g ?

A. The agreement for purchase from Mrs. Creer were n o t

r e d u c e d t o w r i t i n g .

Q. So t h e r e was the d i f f e rence be tween $22 p e r acre

for P. R. Burrow 6 Co. i n s a t x s f a c t l o n o f , what would

b e d e s c r i b e d as, a moral commitment r a t h e r t h a n a

legal one?

A. Yes.

Q.	And i n f a c t Mrs.	Creer had	no	legal r i g h t t o c a l l f o r
t h a t money?

A. No."

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In , h i s pa r . zy raph 9 t h e t r u s t e e s a i d " I n l i g h t of the evidel icc

given by IG- V7j l t shire t n v r h l c h T have referred i n paragraph 7

h e r e o f , I am o f t h e o p i n i o n t h e P r o o f of Debt of i>Irs Creer

was wrongly admitted by m e " .

Wiien M r W i l t s h i r e g a v e t h a t e v i d e n c e , t h e trustee had

r ece ived Mrs Creer's sworn procf of d e b t a n d t h e letters from

h e r a n d h e r s o l i c i t o r t o which I have r e fe r r ed , and had admi t t ed '

t h e p r o o f o f d e b t f o r r h e a m o u n t a l l e g e d i n t h o s e d o c u m e n t s t o

be owing as moneys l e n t t o the bankrup t s and no t r epa ld . Fu r the r ,

he knew t h a t on 1 7 March 1975 Mr Burrow when examined under S . G9

had g iven t h i s ev idence :

"I b e l i e v e Mrs. Creer claims t o h a v e l e n t you $7186.95

on 1 9 P-ugust 1 9 6 8 - do ~ G U recal l that?---I would

s a y I r e c a l l it b u t I do n o t know y h e t h e r t h e

amount i s correct.

Would it be approximate ly cor rec t? - - - I should th ink so,

o the rwise	it	would	no t have been fu rn i shed by t ha t
source .

What d i d you use the loan for?- - -Main ta in ing tha t p ropercy

and runnj-ng it - - -

Which property?---Essendean. I'

The t r u s t e e now s a y s , i n effect , t h a t M r W i l t s h i r e ' s

evidence of 2 9 September 1975 made him change h i s d e c i s i o n t o

admi t t he p roo f of d e b t . H i s c o u n s e l p o i n t e d o u t t h a t , i n t h e

p o r t i o n of h i s e v i d e n c e t o w h i c h t h e t r u s t e e refers, when asked

how h l r s Creer's claim a g a i n s t t h e es ta te was made up,

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YE W i l t s h i r e made no mention of a loan. That i s t r u e ; b u t tiiere 1 s

no ev idence tha t on 29 September 1975 Mr. Wi l t sh i r e gave no o the r

ev idence as t o the composi t ion of K r s Creer's claim, o r t h a t

i n t h e p a s s a g e q u o t e d by t h e t r u s t e e h e was g i v i n g a completc

answer t o the open ing ques t ion ; i ndeed , it is by no means apparent

t h a t t h a t q u e s t i o n r e f e r r e d o n l y t o t h e a d m i t t e d p o r t i o n of

Nrs Creer's claim. Counsel f o r t h e t r u s t e e a l so r e l i e d o n

Mr Tqi l t sh i re ' s agreement in t h e q u o t e d p a s s a g e t o the p r o p o s j t i o n

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t h a t " i n fact Xrs. Creer had no legal r i g h t t o c a l l f o r t h a t

money", vhich he submitted meant t h a t tir Wiltshire regarded

h e r as not b e i n g l e g a l l y e n t i t l e d t o r e c o v e r t h e money which it was

a l l e g e d s h e h a d l e n t . I n my o p i n l o n t h a t i n t e r p r e t a t i o n o f

those words i s n o t r e a s o n a b l e I n t h e c o n t e x t a n d t h e y are3 n o t

capab le of a i d i n g the t r u s t e e ' s a p p l i c a t i o n . They obvious1.y r e f e r

back t o " t h e d i f f e r e n c e b e t w e e n $22 per acre ".. ", which

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I t r W i l t s h i r e i n h i s a f f i d a v i t of 15 Augnsc 1977 exp la ined a s being

t h e d i f f e r e n c e b e t w e e n t h e price a t which IvIlrs Creer had agreed t o

sell "Essendean" ko Peter Burrow ( t h e s o n of the bankrup t s ) and

t h e p r i c e	at	which she even tua l ly	sold	"Essendean"	t o	ano the r
purchaser .

I n my op in ion the ev idence sxbmi t ted by the t r u s t e e d o e s

n o t s u p p o r t h i s a p p l i c a t i o n for an order expunging the admi t ted

proof of t h e d e b t a l l e g e d b y I t r s Creer. PSr W l l t s h i r e g a v s

ev idence be fo re m e p o s i t i v e l y s u p p o r t i n g t h e e x l s t e n c e o f t h e

d e b t . I n p a r t i c u l a r he produced a copy of a s t a t emen t of account

of Messrs P. R. Burrow & Company w i t h h i s f i l m w h i c h showed a loan

from Mrs Creer of $7,186.95 as o u t s t a n d i n g on 19 h g u s t 1 9 6 8 ,

and bore a t its f o o t a n o t e "Loan repayable on demand" slgned

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by P. R. Burrow.

I t!lerefore d i s n i s s t h e t r u s t e e ' s a p p l i c a t i o n a n d o r d e r

him t o pay Nrs. Creer's taxed costs of a n d i n c i d e n t a l t o t h e

a p p l i c a t i o n e I

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