Re Course, M.J. Ex parte Commonwealth Bank of Australia (ACN 123123125)

[1993] FCA 789

78C1 q 3

JUDGhENT No. ........ ........ .. I ........ ,...

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF THE	)
STATE OF VICTORIA	) No. VP 401 of 1992

Re: MAXWELL JOHN COURSE

A Debtor

EX Parte: COMMONWEALTH BANK OF AUSTRALIA

A.C.N. 123 123 125
(the successor in law of the

STATE BANK OF VICTORIA)

Petitioning Creditor

Coram:	Olney J
Place:	Melbourne
Date:	10 September 1993

CORRIGENDA

Amendment to the Minute of Orders of Olney J delivered 10

September 1993:

Flle No. should read VP 401 of 1992.

REGISTRY

7K9 93

K& KATE ALSTERGREN v'"

Associate to Justice Olney

10 December 1993. 13 DEC 1993

FEDERAL COURT OF
AUSTRALIA

JUDGMENT No. ........ ........ . J .....,.,....

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF THE	)
STATE OF VICTORIA	) No. VG 401 of 1992

Re: MAXWELL JOHN COURSE

A Debtor

Ex Parte: COMMONWEALTH BANK OF AUSTRALIA

A.C.N. 123 123 125
(the successor in the law of the

STATE BANK OF VICTORIA)

Petitioning Creditor

Coram:	Olney J
Place:	Melbourne
Date:	10 September 1993

FEDERAL COURT OF

AUSTRALIA

MINUTE OF ORDERS PRINCIPAL

THE COURT ORDERS THAT:

1.    A sequestration order be made against the estate of the debtor.

2. The petitioning creditor's costs of the petition

including any reserved costs be taxed and paid in

accordance with the Statute.

NOTE :	The act of bankruptcy was committed on 20 March 1992.
NOTE:	Settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) ,

GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF THE	)
STATE OF VICTORIA	) NO. VG 401 of 1992

Re: MAXWELL JOHN COURSE

A Debtor

EX Part€?: COMMONWEALTH BANK OF AUSTRALIA

A.C.N. 123 123 125 - - - - - - - - -

(the successor in the law of the

STATE BANK OF VICTORIA)

Petitioning Creditor

Coram:	Olney J
Place:	Melbourne
Dat_e:	10 September 1993
THE PETITION

On 14 April 1992 the petitioning creditor presented a bankruptcy petition seeking an order for the sequestration of

the estate of the debtor. The petition alleges that at the date on which the debtor	committed the act of bankruptcy referred to hereunder he was
personally present in Australia, and that the debtor is justly and truly indebted to the petitioning creditor (the successor in law of the State Bank of Victoria) in the sum of $490,610.37 under a final judgment obtained by the petitioning creditor against the debtor in the Supreme Court at Melbourne on 20 June 1991, being a final judgment, the execution of which has not been stayed. The petitioning credltor asserts that it does not, nor does any person on its behalf, hold any security over the property of the debtor or any part of lt for payment of the said amount.
The act of bankruptcy relied upon is that within 6 months before the presentation of the petition the debtor failed on or before 20 March 1992 either to comply with the requirements of a bankruptcy notice deemed to have been served on him on 28 February 1992 or to satisfy the Court that he had a counter- claim, set-off or cross demand equal to or exceeding the sum specified in the bankruptcy notice, being a counter-claim, set-off or cross demand that he could not have set up in the
action in which the judgment was obtained. -
The contents of the first three paragraphs of the petition were verified by the affidavit of Peter John Shepard, the general manager of the petitioning creditor sworn 10 April
1992. The commission of the alleged act of bankruptcy is
referred to in detail below.
On 8 April 1993, the Court ordered that the period at the expiration of which the petition will lapse be extended for a period of 24 months from 14 April 1992.
After a number of adjournments, the petition was heard on 6 September 1993. The petitioning creditor was represented by
counsel. The debtor appeared in person. After hearing the
evidence and subm~ssions I reserved my decision.
PROOF OF THE ACT OF BANKRUPTCY
The bankruptcy notice referred to in the petition was issued on the application of the petitioning creditor on 29 July
1991. It required payment of the sum of $490,610.37 being the amount of a default judgment obtained in the Supreme Court of Victoria by the petitioning creditor against the debtor on
20 June 1991. The debtor was required to comply within 21
days after service.
By order made on 24 January 1992 the period within which the
-	bankruptcy notice was to be served was extended to 30 July
1992. By the same order, personal service was dispensed with and an order made that service be effected by posting a letter stating the date of posting and enclosing a copy of the bankruptcy notice signed and stamped by the Registrar and a copy of the order by ordinary mail addressed to the debtor at
addressed to the judgment debtor containing a copy of the 2 Orchid Close, Park Orchards 3114 and by placing a letter
bankruptcy notice signed and stamped by the Registrar and a copy of the order in the letter box at the said address. The order further provided that if the two events last referred to occurred before the expiration of 21 days of the date of the order, service be deemed to have been effected on 28 February I am satisfled from affidavit evidence flled on behalf of the pet~tloning creditor that the two events referred to in the order made on 24 January 1992 occurred within the time rnentloned and that accordingly, the bankruptcy notice was deemed to have been served on the debtor on 28 February 1992.
The debtor did not, within 21 days after the deemed service of the bankruptcy notice, pay the sum referred to in the notice to the petitioning creditor nor did he secure the payment of same to the satisfaction of the Court or the judgment creditor or compound the said sum to the satisfaction of the judgment credltor . Nor did the debtor within the time limited for compliance with the bankruptcy notice flle an affidavit to the effect that he had a counter-claim, set-off or cross demand of the type referred to in paragraph 40(l) (g) of the Bankruptcy
A c t .
I am satisfied that the debtor committed an act of bankruptcy on 20 March 1992.
SERVICE OF THE PETITION
By order made on 7 August 1992 personal service of the petition was dispensed with. In lieu of personal service an order was made authorising service by posting an official copy of the petition and a copy of each affidavit verifying it and a copy of the order by ordinary mail addressed to the debtor at 2 Orchid Court, Park Orchards and by handing a letter addressed to the debtor containing copies of the documents referred to above to a person apparently residing at the sald address. The order provided that service be deemed to have been effected after the expiration of 7 days from the
happening of the latter of the two events referred to.
By affidavit sworn 14 September 1992 Todd Douglas Harding, an officer employed by the petitioning creditor, deposed to having on 18 August 1992 posted copies of the documents referred to in the order made on 7 August 1992 by pre-paid mail in an envelope addressed to the debtor at 2 Orchid Court, Park Orchards 3114.
In affidavits sworn 23 September 1992 and 1 December 1992 Peter De Angelis, a licensed process server deposed to the following:

(a) On Saturday 19 September 1992 at 2.00pm he handed the documents referred to in the order made on 7 August 1992 to a person apparently residing at 2 Orchid Court,

Park Orchards.

(b) On the same day he had first attended at 2 Orchid Court, Park Orchards at about 9.45a.m when he knocked on the front door of the house a number of times. No person answered the door in response to his knocking and he left the premises.

(c) He then went to the house next door where he spoke to an elderly man who answered the door in response to his knocking. He asked this man if the debtor lived next door and was told that he dld.

(d) He then returned to 2 Orchid Court and again knocked on the front door.	There was no response and he
left the premises.
(e) At about 2.00pm on the same day he returned to Orchld Court in his motor car.	As he was approaching 2

Orchid Court he saw a male person aged about 40 to 45 years, about 5 feet 10 lnches tall, with darklsh brown halr and of medium build in the front yard at 2 Orchid court.

(f) He parked his car outside 2 Orchld Court and got walk quickly towards the front door of 2 Orchld Court. out. As he did so he saw the male person commence to

up with him and walked alongside him but slightly to his	(9) He walked quickly towards the male person, caught
rear on his left side. As the male person approached the front door of the house the deponent asked him if he was Maxwell John Course but received no reply. He then asked "Do you live here?", to which the male person said "Yeah".
(h) The deponent then placed the documents referred to above in the left hand of the male person who allowed them to drop onto the floor of the porch at the front door. The male person then opened the front door, which had been slightly ajar, entered the house and the door was closed.
(i) After the door was closed the deponent looked through lead llght panels and saw the male person standing at the other side of the door. The deponent said "The documents I handed you were for Max Course".
There was no reply.
(j) After a few minutes the deponent left the premises.

He left the documents on the front porch and returned to

his car. After about 2 minutes he drove away.

In his notice of intention to oppose the petition the debtor denies service of the petition pursuant to the order for

with.	substituted service, which order he says was not complied
The debtor supported this aspect of his opposition to the petition by affidavits of himself sworn 17 November 1992 and of Robyn Adele Course (the debtor's wife) sworn 17 November 1992, Gwenda Mann, sworn 19 December 1992 and Craig Rawson, sworn 8 December 1992.
The debtor sald that at 2.00pm on 19 September 1992 he was horse riding wlth his daughter Flona at Coldstream; that his wife was with his daughter Natalie at a dlving competition at Ringwood and his son Benlamin was at a friend's house at Doncaster. He said further that no other person was in residence at 2 Orchid Court. Mrs Robyn Course deposed to having read the relevant portion of the debtor's affidavit and verified the contents of same.
MS Mann deposed to having since about 1987 agisted Fiona Course's ponies at her property in Wonga Park. She said that on Saturday 19 September 1992 the debtor and his daughter attended at her property to collect Fiona's pony at lunch time. Further, since 5 September 1992 there was a standing arrangement that every Saturday Fiona and the debtor would collect the pony and travel to a training centre at Coldstream for private horse riding tuition. She said that the debtor and Fiona would leave her property around 2.00pm and return around 4.30pm. If for any reason the standing arrangement
was to be varied the debtor would ring and advise her of the
change. During September 1992 there were no such changes.
Craig Rawson deposed to being a horse riding instructor and coach. In mid-August 1992 the debtor arranged for him to give lessons to his daughter Fiona. The lessons commenced on Saturday 5 September 1992 and continued weekly thereafter throughout September 1992. The designated time for the
lesson was 3.00pm. He confirmed that on 19 September 1992
the debtor and hls daughter were at hls property for Fiona's lesson.
The debtor, Mrs Course, MS Mann and Rawson were cross-examined by counsel for the petitioning creditor. De Angelis was cross-examined by the debtor.
The debtor said that it would take him about 20 to 30 mlnutes to drive from his home to MS Mann's property to pick up the pony, another 20 to 30 minutes to load the pony into the float, and a similar time to drive to Coldstream where the lesson took place. He could not recall when he left Orchid Court on 19 September 1992 nor the time he arrived at MS Mann's property, but he thought that it would have taken about one hour from the time he left home until he arrived at Coldstream.
MS Mann had no clear recollection of the actual time the debtor arrlved at her property on 19 September 1992 nor when

he left there. Her evidence was based upon what she said

normally happened. She fixed the debtor's departure time at no later than 2.00pm because of her belief that the lesson was scheduled for 2.30pm. I do not think any weight can be given to MS Mann's evidence.

Rawson recalled that on 19 September 1992, the debtor and his daughter were late for the lesson which did not commence until 3.30pm. He understood that the debtor had had trouble with

his car or the horse float. He agreed in re-examination that

he had been told the float had had a flat tyre. He is familiar with the location of MS Mann's property and estimated that it would take from 30 to 45 minutes to drive from there to Coldstream depending on the route taken.

Mrs Course was able to recall some details of the events of the morning of 19 September 1992. She said that she and the debtor had taken their daughters to play netball, leaving home at 9.00am and returning at about 11.45 to 11.50am. After a hurried lunch she left at 12.15pm to take her daughter Natalie to Ringwood. In the course of re-examination the debtor asked a question which I ruled did not arise out of cross- examination but the witness nevertheless volunteered that she and the debtor had driven out of the driveway together at about 12.15pm to go their separate ways.

The debtor cross-examined De Angelis at some length, challenging with a degree of vigour his credibility. When

gave responses similar to the description of the male person	Invited to describe the debtor's height and hair colour he
referred to in his affidavit. He explained that he had not seen this person's face on 19 September 1992 and when the debtor turned around with his back to the witness, the latter said that his appearance was familiar but he was not able to positively identify the debtor as the person in whose hand he had placed the papers on 19 September 1992.

- l0 -

The debtor dld not challenge Rawson on his evidence that the lesson on 19 September 1992 was delayed because of the debtor's late arrival. Indeed, in hls re-examination of Rawson, the debtor appeared to accept it to be the fact and suggested the reason was a flat tyre on the horse float. Counsel for the petitioning creditor cross-examined the debtor in detail as to the route he had taken first from 2 Orchid Court to MS Mann's property and then from that property to Coldstream. He was asked to estimate the time taken for each stage of the journey. It is incredible that an event such as the horse float having a flat tyre did not rank a mention in the debtor's own evidence. There is no evidence to suggest

when the flat tyre occurred. The failure of the debtor to

raise the matter himself leads me to the conclusion that he - deliberately concealed the fact of his late arrival at Coldstream, and I draw the inference that he did not tell the whole story as it would not have assisted his case. The probability is that he did have a flat tyre on the horse float that day but that it did not occur on the way from his home to

departed from home, thus delaying his departure. on any	Coldstream. The inference is that it occurred before he
estimate of the time it would have taken to drive from his home to Coldstream, via MS Mann's property, there was ample time for him to have made the trip and still to have been at home at the time De Angelis was there at about 2.00pm. In the light of Rawson's testimony, Mrs Course's evidence that she and the debtor left home at the same time about 12.15pm lacks credibility and I reject it. There is simply no
explanation as to why the overall trlp took the debtor more
than 3 hours.
De Angelis was thoroughly tested in cross-examination and impressed me as being a truthful witness. I accept that he handed the relevant documents to a male person who entered the front door of 2 Orchid Court at about 2.00pm on 19 September 1992 and that this person had, in reply to a direct question, acknowledged that he lived at that address. De Angelis had reason to believe that the person in question apparently resided at 2 Orchid Court. On the balance of probabilities the person who De Angells encountered was the debtor but for present purposes it is enough to find that the documents were given to a person apparently residing at 2 Orchid Court.

-

I find that the two events referred to in the order made on 7 August 1992 were duly complied with. Service of the petition is deemed to have been effected 7 days after 19 September 1992, that is on 26 September 1992.

THE JUDGMENT DEBT

The petitioning creditor issued a writ against the debtor and another in the Supreme Court of Victoria on 9 August 1992 claiming $489,755.37 said to be owing to the petitioning creditor pursuant to separate guarantees in writing signed by the defendants on or about 28 July 1988. The debtor did not enter a defence and on 20 June 1991 judgment was obtained against him by default for the sum claimed and $825 for costs

On a date which does not appear from the evidence, the debtor made application to the Supreme Court to set aside the ludgment . The application came before an Acting Master of

the Supreme Court on 19 December 1991.	The debtor appeared
in person.	The application was dismissed.

The debtor made a second application to set aside the judgment

by summons issued in the Supreme Court on 1 September 1993.

In an affidavit filed in support of his application the debtor

said that when he signed the guarantee the subject of the

petitioning creditor's claim, the same was in blank and in

particular the amount of the guarantee had not been filled in.

-

He said further that prior to him signing the guarantee he had been told by the head of the corporate lending section of the petitioning creditor that the amount of the guarantee was to be $40,000. The summons was heard by a Master of the Supreme

Court on 2 September 1993.	The debtor was represented by a
September 1993 and on that day dismissed the application with	solicitor. The Master reserved his decision until 3
costs. The Master found that the debtor had no defence on the merits of the claim and that the delay by the debtor in making his second application to set aside the judgment was gross and inexcusable.
In his notice of intention to oppose the petition the debtor claims that the judgment relied upon by the petitioning creditor is not based on a real debt. This assertion is particularised as follows: The judgment is based on a debt in relation to a guarantee which the debtor signed in blank wlthout the amount of the guarantee having been fllled in.
The debtor had been informed by the head of the corporate lending section of the petitioning creditor that the amount of the guarantee was to be $40,000 which was the overdraft limit granted to the principal debtor at or about the time the guarantee was signed.
In his evidence, the debtor agreed that he was liable to the
petitioning creditor under the guarantee in the sum of $40,000
but no more.

. .. .

The debtor's assertion that there is no real debt behind the Supreme Court judgment is without substance. Nor is there any other reason to go behind the judgment. On two occasions almost two years apart he made application to set aside the judgment. On each occasion the basis of his application was

attempts to set up in these proceedings, a matter of a few	the same and on each occasion his application failed. He now	days after his most recent unsuccessful Supreme Court application, the same argument based upon the same evidence. It would be a rare case in these circumstances that this Court would seek to go behind the Supreme Court judgment, but that is not to say that in a proper case it would not do so.
I have before me the same material as did the respective Masters of the Supreme Court on the two applications to set aside ] udgment . On the face of the documents there does not appear to be any basis for the debtor's claimed defence to the writ save his assertion that the guarantee had been signed in blank which was denied on affidavit by officers of the petitioning creditor. I do however have an advantage over both of the Masters who dealt with the debtor's applications in the Supreme Court in that I have heard the debtor cross- examined and have been able to form a view as to his credit.
The view I have formed is that the debtor is not a witness whose testimony can be relied upon and in those circumstances I reject his assertion that the guarantee was signed in blank and that it was agreed by the bank that his liability would
not exceed $40,000. . .
In any event, the debtor concedes that he is liable to the petitioning creditor to the sum of at least $40,000.
OTHER MATTERS
matters required to be proved by r 21 of the Bankruptcy Rules. The petitioning creditor has filed affidavits proving the
No challenge has been made to this evidence.
CONCLUSION
I am satisfied that the petition was duly served and that there is no basis for this Court to go behind the judgment debt upon which the petltion is based. All other formalities prerequisite to the making of a sequestration order have been complied with.
I order that a sequestration order be made against the estate
of the debtor. I note that the act of bankruptcy was committed on 20 March 1992.

I certify that this and the

preceding 14 pages are a true copy of the Reasons for Judgment of the Honourable Mr Justice Olney

Associate: K6+*p

Dated: 10 CdCp -be/ 1793

Mr A.W. Ellis (instructed by I.F. Purbrick) appeared for the petitioning creditor.

The debtor appeared in person.
Date of Hearinq:	6 September 1993
Place:	Melbourne

Judment : 10 September 1993