Re Capel, E.J.

[1991] FCA 358

JUDGMENT NO. 3%.1 . ....

RE	t -
EX PARTEt	BLWH JOHN CAPE& (Applicant)

PINCUB J.

9   I A Y 1991

BRISBANE

1.       The bankerupt be discharged forthwith from the

bankruptcy consequent upon the sequoatration order

which wae made on 11 Novembsr 1988. 1 ..

K!!E'	Setclement and entry of orders i n dealt with in Rule
114 of t he Burfayjim Rulss.

REGISTRY

RECEIVED	I .	'
I

02 jfJL 1991	l. ! -
I- .

PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION	1	I
BANKRUPTCY DISTRICT OF THE	1	NO. QB 1256 of 1988
STATE OF OUEENSLAND	1

RE :	ELWYN JOHN CAPEL
EX PARTE:	ELWYN JOHN CAPEL (Applicant)

GORAM: PINCUS J.
PLACE: BRISBANE

m: 9 MAY 1991

EX TEMPORE REASONS FOR JUDGMENT

This is an application by the bankrupt, Mr. Capel, which is framed in the alternative. The application seeks an order of annulment and a stay of execution, or an order that a claim not be admitted for approval of a scheme of arrangement and an annulment, or, in the further alternative, an order for discharge and a transfer of the estate.

Insofar as an annulment is sought, the Court had such an application previously before it in 1989, and I gave

judgment on 19 May 1989 declining to annul the sequestration

order. It is unnecessary for me to fully set out the reasons which I then gave, but it seems desirable to give some account of them, not least because Mr. Capel tells me that he has never seen the reasons.

The reasons that I then gave recited the fact that a sequestration order was made on 15 November 1988 and an annulment was sought on the ground that the petition had not been served nor come to the notice of the bankrupt. The reasons went on to say that there had been a refusal to order summary judgment against Mr. Cape1 in the Supreme Court of Queensland, which refusal was reversed on appeal to a judge, that there was a further appeal to the Full Court of the Supreme Court of Queensland and the judge's decision was upheld.

The reasons say that a process server was unable to locate the bankrupt and the petition remained unserved; that the solicitors who had acted for the applicant in past proceedings would not accept service; that an order was made for extending the period during which the petition remained alive and that the process server had been unable to deliver the petition, because, as I infer, the bankrupt managed to evade him.

The reasons went on:  "Subsequent attempts to serve

him were also unsuccessful", and, as I have said, his	solicitors refused to accept service. The reasons then went
on :

"The applicant contacted his solicitors on 30
August 1988 and told them he was leaving for
the United Kingdom for a stay uncertain in
length. His affidavit says he did not become
aware of the petition having been served until
28 November 1988. There is no reason to
disbelieve that but, on the other hand, the
solicitors knew in August that the petition had
been issued and no doubt discussed that with
the applicant. They wrote to the creditor's
solicitors on 26 September 1988, saying that

the applicant had seen them, that he proposed to go to England and hoped to obtain funds there 'to make a further offer of settlement to your client'."

I then went on to discuss the authorities at some little length, and reached the conclusion that the applicant had not established the ground relied on. I expressed the opinion that had the Court been aware of the true circumstances as set out in the material before me, the Court could properly have made a sequestration order.

I said that the order for substituted service was

not attacked and that:

"the Court had power to make a sequestration order and would not have been precluded from doing so on its being shown that, although the debtor knew of the issue of the petition, he had not received a copy because he had left the country without leaving a forwarding address".

I then added this:

"Further, there is a discretion whether or not

to annul, on the statutory ground being made

out. Here, the point taken, although one of

importance, is a procedural one; the applicant

does not adduce evidence challenging the
judgment debt or suggesting that he is able or
willing to pay it".

I therefore refused an annulment. The present application deals with the matter much more elaborately, but it does not deal with it in any way which seems to me to justify an annulment with the problem that, on the face of it, there is an estoppel. That is, in my judgment of 19 May 1989, it was decided on the material which was then before me that the ground of annulment taken was not made out.

It is not the law that an applicant is entitled to apply for reconsideration of that by the Court, on other material. The law appears to be that unless the previous order which I made on 19 May 1989 is first set aside, on appeal or otherwise, it stands. The present material is much more elaborate and it challenges the proposition on which the sequestration order was made, namely that there was, in truth and reality, a debt due by Mr. Capel to the petitioning creditor. It is clear that Mr. Capel's affidavit does not accept that proposition. Nevertheless, the estoppel, which is an estoppel by judgment, seems to me to apply. Further, as a matter of discretion, one would be extremely reluctant after such a long period of time to have relitigated the question which was taken to the Full Court of the Supreme Court of Queensland: namely, whether or not there was any reasonable defence to the petitioning creditor's claim on which the

other points which seem to me to be not especially relevant,	Supreme Court gave judgment. In the affidavit, Mr. Capel also makes a number of
either to the application for annulment or to the application for discharge. If I might take one example: at paragraph 333, comment is made on Mr. Lloyd Nash, the solicitor for the petitioning creditor, in these terms:

" M r Lloyd Nash may be a very competent

solicitor but unfortunately he is a victim
of a malaise which afflicts our modern society
and his talents have been misdirected and it
saddens me that in his own blindness to be
'successful' he has compromised himself many
times in this matter".

Whether or not that is a just remark about M r . Nash's state of mind or ethical position, it seems to me, with respect to the draftsman of the affidavit, to be irrelevant. The essentially relevant point is whether or not the sequestration order was properly made, and that point was decided against Mr. Cape1 on 19 May 1989.

It is not so much that no sufficient ground has been made out to reopen the decision. Once having given the decision, it simply stands unless, as I have said, it is set aside on appeal or otherwise.

The only application which is made which can be

seriously considered appears to me to be the application for

discharge; I have had some doubt about that application. It	does not seem to me, on the face of the material, that there
is any compelling reason why a discharge should be granted rather than the normal term of three years being allowed to expire. Nevertheless, having read the report of the trustee and given consideration to the affidavit, I have decided that in my discretion I should order a discharge. My hesitation is partly due to the circumstance that one of the purposes of the three year period seems to me to be to take people out of the possibility of subsequent financial failures at least for a limited period of time.
However, as I have said, the case for discharge seems to me, on balance, to be sufficient and it will be ordered. That is, the order will be that the bankrupt be discharged forthwith from the bankruptcy consequent upon the sequestration order which was made on 11 November 1988.

I certify that this and the five preceding pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Pincus.

c-- -	Associate
,ate	4 May Iqq'