Re Evans, J.D. v Ex parte Evans, J.D.
[1989] FCA 253
•19 MAY 1989
Re: JOHN D. EVANS
Ex Parte: JOHN D. EVANS
And: THE HEATHER THIEDEKE GROUP PTY LTD
No. QLD BN443 of 1989
FED No. 253
Bankruptcy
COURT
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Pincus J.(1)
CATCHWORDS
Bankruptcy - Bankruptcy Notice - application to set aside notice - going behind judgment of Supreme Court - judgment upheld by Full Court of Supreme Court - all evidence not before trial judge or Full Court - Full Court critical of trial judge but did not allow appeal - whether in truth and reality debt due to petitioning creditor - question of credibility of witness - circumstances in which Court can go behind judgment.
Bankruptcy Act 1966
HEARING
BRISBANE
#DATE 19:5:1989
ORDER
1. the application to set aside the bankruptcy notice be dismissed;
2. the time for compliance with bankruptcy notice no. 443 of 1989 be extended to 13 June 1989;
3. the costs of the application be the petitioning creditor's costs in the petition if and when one is issued.
NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
JUDGE1
This is an application in relation to bankruptcy notice no. 443 of 1989, which was issued at the instance of the judgment creditor on 4 April 1989, based upon a judgment of the Supreme Court of Queensland on 24 December 1987. There is another bankruptcy notice, no. 236 of 1988, which is based upon the same judgment debt, and which has also been the subject of contested hearings in this Court.
The bankruptcy notice in no. 236 of 1988 was attacked by the judgment debtor, Mr Evans, unsuccessfully, before Spender J. His Honour held against the debtor. The judgment of Spender J., which was given on 30 April 1989, is the subject of an appeal to the Full Court of this Court, which was filed on 4 May 1989.
Mr Evans, who appeared for himself before me, argued that I should await the outcome of that appeal. I determined not to do so, for two reasons. One is that this bankruptcy notice, although based upon the same judgment debt, is, in fact, a different notice. The reason it was issued was, presumably, that the first bankruptcy notice had been issued and served such a long time ago that no petition could be based on it. The six month time limit had expired. The second bankruptcy notice is different in that it claims a different amount, because of the interest which has accrued. Despite that, it might be that the judgment of Spender J. raises an issue estoppel against the debtor. However, it seems to me that I should not treat the matter in that fashion, because I have not any precise account of the reasons which his Honour gave; secondly, the creditor did not raise any plea of estoppel, orally or otherwise.
Therefore, I have approached the case on the basis that I should consider it afresh, having no regard to the views which might have been expressed by Spender J. One satisfactory aspect of proceeding in that way is that a ground of appeal, in the attack made by the debtor on Spender J.'s judgment, is that the judge did not give Mr Evans, the debtor, a proper opportunity to be heard.
Mr Evans claims that he was not given a fair hearing by Spender J. He may say, ultimately, that he has not been given a fair hearing by me, but I have done the best I can to understand the points he wishes to raise, which he has put forward with considerable persuasive ability.
The essence of the matter is that Williams J. delivered a judgment in the Supreme Court of Queensland in which he accepted the evidence of a Mr Heather, a representative of the plaintiff, an architectural company, against that of Mr Evans, the debtor. The matter went to the Full Court of the Supreme Court, which gave consideration to the points raised by senior counsel, Mr Fryberg, Q.C., who appeared for the appellant, and is a counsel of experience and ability.
The Full Court of the Supreme Court, in a number of respects, was less than happy with the case which was presented against the debtor, Mr Evans, and accepted by the primary judge, and although not all of these matters have been relied upon by Mr Evans, I think I should mention some of them, at least. Firstly, whereas the primary judge had come to the conclusion that the only terms of the contract between the parties were those contained in particular correspondence mentioned at p 4 of the reasons, the Full Court was of the view that that correspondence could not contain all the contract, and that nothing in it could have precluded a finding that the contract contained a term along the lines alleged by the debtor, particularly a term that the units in question would be built within certain cost constraints. Secondly, the Full Court expressed the view that there was no inherent improbability in the appellant's seeking to have financial constraints on the architect's work, having regard to matters mentioned on p 6 of the reasons. Thirdly, the Full Court implicitly criticized the view taken by the learned primary judge that the fact that budget estimates were obtained and discussed went a long way to negating the contention advanced by the appellant. It was also implicitly critical of other mattters relied on by the primary judge, such as that the average unit price was to be increased to $78,000 from $70,000, and that the appellant had examined the feasibility of the project based upon the sale price of $85,000.
Perhaps most importantly, the reasons contained an expression of opinion by the Full Court that where a client conveys to a design architect a desire to limit costs in a particular way, that would ordinarily be a term of the retainer, so that if the restraint cannot be complied with, the contract either goes off or is modified.
Nevertheless, despite the criticisms, express and implicit, which the Full Court made of the primary judge's reasons, it felt unable, in the end, to reverse the ultimate conclusion at which he arrived. It felt so unable, although it was particularly critical (as I read the Full Court's reasons) of the reasons which the primary judge gave for holding that a certain meeting, alleged to have taken place with the debtor present on 12 November 1984, had occurred.
The occurrence of that meeting has been the subject of some cogent submissions made by the debtor before me. He points to the fact that exhibit 1 tendered in this Court (and, it is common ground, tendered in the Supreme Court also) dated 6 November 1984, commences:
"Following our initial meeting on 14 November 1984, and subsequent site visit on 21/22 November, we are now close to completion of our conceptual design proposal . . ."
It was signed by Mr Heather. Secondly, he refers to the diary note of Mr Crisp, who was a witness called before Williams J., which, if authentic, strongly supports the contention which the debtor makes that he was not present at the meeting of 12 November, and that was a meeting at which he was represented by Mr Crisp.
I should add that Mr Evans informs me that an attempt was made to have the diary note accepted as an exhibit in the Full Court. Mr Hastie, for the creditor, is unsure of that, but suggests that perhaps it was not attempted to be adduced in evidence, but rather a point was made about it in the notice of appeal. That difference does not seem to me to be of any great significance, because it is common ground that the diary note was not before the Full Court. It is also clear that it does tend to support Mr Evans' case.
Then, Mr Evans has taken me to the notes said to have been made by Mr Heather at the meeting of 12 November and has referred me to the remarks made in the Full Court of the Supreme Court about them. The Full Court's remarks, which do not need repetition, appear on p 8 of the reasons, and I respectfully agree with them; I do not wish to say anything further about that. The concern which the Full Court felt is shared by me.
Perhaps I should quote precisely what they said. This is a set of reasons written by Connolly J., which became the reasons of the Court. His Honour remarked, at p 9, after referring to the difficulty of accepting Heather's case about the meeting of 12 November:
"I must say that this occasions me some concern but at the end of the day I cannot persuade myself that it is a sufficient reason for this Court, which did not have his Honour's advantage in seeing and hearing the critical witnesses, refusing to accept his preference for Mr. Heather, rather than the appellant and Mr. Crisp."
The Court went on to refer to other matters which they suggested were confirmatory of the case put forward by Mr Heather.
The reasons of the primary judge have thus been subjected to some criticism by the Full Court, and to that extent, Mr Evans, the judgment debtor, in attacking the judgment debt before me, has more than usual strength on his side.
The principles upon which I have acted in the past in most of these cases are those mentioned in the High Court in Wren v. Mahony (1972) 126 CLR 212. The then Chief Justice, Sir Garfield Barwick, said at p 224, referring to remarks made in the English case of Re Flatau; Ex parte Scotch Whisky Distillers Ltd (1888) 22 QBD, at pp 85-86:
". . . he was pointing out that the Bankruptcy Court could in general accept a judgment debt as sufficient proof of that debt particularly where it resulted from a fully heard contest between parties but that it always had the power to go behind the judgment and if the case was a proper one, should do so."
His Honour went on to say:
". . . the Bankruptcy Court may accept the judgment as satisfactory proof of the petitioning creditor's debt. In that sense that court has a discretion. It may or may not so accept the judgment. But it has been made quite clear by the decisions of the past that where reason is shown for questioning whether behind the judgment or as it is said, as the consideration for it, there was in truth and reality a debt due to the petitioning creditor, the Court of Bankruptcy can no longer accept the judgment as such satisfactory proof."
I emphasize particularly his Honour's reference to there being a judgment in truth and reality. Windeyer and Owen JJ. agreed with the Chief Justice's reasons.
However, as a perusal of the cases will show, and as is pointed out by Menzies J. at p 233, the rule in question is applied most readily where judgment has gone by default. It is unusual to have a judgment attacked after a full hearing with the debtor represented by independent counsel selected by him. It is even more unusual, I think, where the points (with one exception) which have been taken in this Court, are of the same general character as those which are taken in the Full Court of the Supreme Court.
It is true, as the applicant, Mr Evans, implies, that the Court has jurisdiction to go behind the judgment even in those circumstances and it may do so if there is evidence of fraud. The evidence of fraud is identified, apart from Mr Evans' address, by his affidavit which was filed in this matter on 4 May. That contends, in para.6, that the evidence of Heather was fraudulent, and was intentionally misleading to the trial judge, and was, in all the circumstances, significant in obtaining the trial judgment. In short, whereas Williams J. in substance believed Mr Heather, Mr Evans says that he should not have done so, but should have treated his evidence as a conscious attempt to mislead the Court.
It appears to me that this case is one where the critical aspect has to be the document which, it is common ground, was not in evidence before the Supreme Court, and that is the diary note of Mr Crisp which I have already mentioned, referring to the alleged meeting of 12 November 1984. The diary note, as Mr Evans remarks, provides a strong element in support of his case that he was not present at the meeting of 12 November.
But the factor which has impressed me most in this case is that the Full Court itself seemed very doubtful of the strength of the considerations that were put forward in support of the trial judge's conclusion on that aspect of the matter, and it appears to me that on a reading of the reasons as a whole, that they did not decide the case on the assumption that the learned primary judge was correct about that. They seemed to have thought, whether or not he was right about the meeting, there was sufficient in the case to support his judgment, or to put it the other way around, there was just sufficient to prevent them from interfering with his Honour's conclusion on the matter of credit.
In essence, with the one exception I have mentioned, the same sort of appeal is made to me. I said to Mr Evans during the course of the hearing - speaking, perhaps, too broadly - that this is, in effect, akin to an appeal to the Federal Court from the Full Court of the Supreme Court, since he has failed to obtain leave to go to the High Court. I do not see any ground upon which I could sensibly disagree with the views of the Full Court as to the findings of Williams J. although I share their Honours' unease about the evidence of Heather.
I hold that it is only in a very unusual case that a Court exercising bankruptcy jurisdiction will go behind a judgment of the Supreme Court, upheld on appeal, concerning matters of credit.
I will dismiss the application made by the debtor to set aside the bankruptcy notice.
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