Re Carver, P.G.S. v Ex Parte Joyce, B.M.

[1990] FCA 798

JUDGMENT NO. 7 .... 96/.9.0-.*

1     No. W2143 of 1990

1  

RE:

Applicant/Debtor

EX PARTE: BRIAN

Respondent/Creditors RECEIVED

a:  HILL J FEDERALCOURTOF

m: SYDNEY AUSTRALIA

: 3 DECEMBER 1990 PRINCIPAL REDISTRY

The applicant, Mr Carver, who is a solicitor of the Supreme Court of New South Wales applies to the court for an order that a sequestration order made against his estate by Sweeney J on 13 November 1990 be set aside and for such other

orders as the court may think fit.

The application is made not under 8.154 of the -tcv Act 1966 but pursuant to 8.37 of that Act which empowers the court to rescind, vary or discharge an order made, save that in the case of a sequestration order rescision or suspension of the operation of that order shall not be made once the order has been signed and sealed. I am advised from the bar table that the order has not yet been signed or sealed.

When the matter was last before me, I granted to the

J

applicant a stay of the sequestration order for a period expiring on Tuesday, 4 December 1990 to enable the applicant to file further evidence should he so desire as to his financial situation, including evidence of valuation of assets which had been briefly referred to in an affidavit sworn by the applicant on 14 November 1990.

The application is made in essence on two grounds, the first is that the applicant has lodged an appeal for leave to appeal to the High Court against a judgment of the Court of Appeal on 6 November 1990. Evidence has been led before me as to the procedings which to date have culminated in the Court of Appeal decision and which, of course, concern the judgment debt which was the foundation of the bankruptcy notice and subsequent petition.

The proposed basis of the application for special

leave is that the Court of Appeal should not have rejected

certain fresh evidence which was sought to be tendered before	it. It would be inappropriate for me to comment upon the
prospects of success of such an application. It is sufficient for present purposes to say that the correct legal position is that unless and until an application for special leave is granted there is no appeal pending against the judgment of the Court of Appeal.
It may well be that the applicant could have sought from the Court of Appeal a stay of the judgment but at least so far as the evidence before me is concerned there appears no suggestion that such an application has been made and certainly no suggestion that a stay has been granted, either by the Court of Appeal or by the High Court.
The second matter which is sought to be advanced in support of the application, is the applicant's current financial position. The evidence before me discloses that the applicant has a house at Padstow having a value of approximately $172,000, a 1982 Datsun 280ZX coupe car having a value of $18,990, goodwill of a legal practice having a valuation as set out by his accountant in evidence that has not been contradicted. In addition the applicant deposes to having other assets which include a fibreglass runabout boat which he assesses as having a value of $2500, furniture in his house which he values at $30,000 and which is insured for this amount, a law library which he estimates at $22,000, work in
dissects in his affidavit, outstanding fees of $8000, office progress which he estimates is worth $104,000 and which he
equipment which he estimates to be worth $20,000 and an insurance claim in proceedings which he has commenced against Advance Bank Insurances and which proceedings are defended which he values at $25,000. He concedes in addition to the petitioning creditors debt that he has liabilities totalling $293,000.
It is difficult, in the absence of independent valuations, to accept the applicant's assessment of the valuation of a number of the so called assets to which I have referred. In saying that, I do not suggest that they have no value, it is just that in the absence of some expert valuation it is difficult to form a view as to what that valuation is. I am prepared to accept, for the purposes of the proceedings, that the law library has a considerable value and that his estimate of $22,000 may not be far from the mark. It is difficult to take into account work in progress as an asset in the case of a solicitor's practice where, in the ordinary case the contract is for the performance of the entire work and there is no entitlement to be paid unless and until that entire work is completed. Of course, in certain circumstances, a solicitor may be entitled on a quantum meruit basis to be paid. Nevertheless, the reasons which are discussed in part in the judgment of the High Court in p e d e a

ner of Taxation v Henderson (1943) 68 CLR 29, would

strongly suggest that it would be improper to take into

consideration work in progress as an asset.

If one merely takes those assets in respect of which a valuation has been given, plus the law library, it can be seen that the applicant's assets amount to $292,990. Even if additional amounts are added for furniture, office equipment and the like there is not a great surplus of assets over liabilities albeit that there is a marginal surplus. In

particular, it does not seem to me appropriate to treat a claim against an insurance company in respect of which no evidence has been adduced and which is defended as having a value, which I assume to be the face value of the claim.

The present is not a case where there is such a large excess of assets over liabilities that one could clearly say that a sequestration order should not have been made.

A further matter has been put by the applicant who says that he intends to apply to serve as a magistrate, there being a vacancy now being advertised, and further intends to stand for parliament for the State seat of East Hills as he did, presumably unsuccessfully, in the last state elections. There is no doubt, at least as regards holding a seat in State Parliament that bankruptcy would put an end to his possibilities. I am prepared to assume that the same is so in the case of an application to hold office as a magistrate in

this State, however, I am not satisfied that the applicant has

adduced evidence which would persuade me to set aside the

sequestration order which has already been made.

The sequestration order made by Sweeney J was made in the absence of the applicant so that he did not have the opportunity at that hearing of putting before Sweeney J the matters which have now been put before me.

Assuming, without deciding it, that it is appropriate in considering an order for rescision to consider the same matters as would have been considered in a case such as the present by a judge making a sequestration order where the applicant has the opportunity of making submissions, the present does not seem to me to be a case where, as a matter of discretion, if the matter were for me I would have refused to make an order sequestrating the estate. In my view none of the matters raised afford sufficient ground for setting aside the sequestration order, rather it seems to me that should it be the case that the High Court grant special leave to appeal and that appeal be ultimately successful, then of course, the applicant can apply for an annulment of the bankruptcy on the basis that the order should not have been made which effectively and subject to the provisions of 8.154 of the m ~ t c v && 1966 will restore the applicant to his previous

position.

Accordingly, I would dismiss the application. I order that the applicant bankrupt pay the respondent petitioning creditor's costs of the application. I further order that the costs of the application be paid out of the estate of the bankrupt as if they were costs of the petitioning creditor on the petition.

I certify that this and the
preceding five (5) pages
are a true copy of the Reasons

Associate :

Counsel and Solicitors	M.M. Hilbery
for Applicant:	instructed by Messrs Star Carver

& Co.

Counsel and Solicitors	Sally Nash & Co.
for Respondent	r

Dates of Hearing:	20 November & 3 December 1990
Date Judgment Delivered:	3 December 1990