Re Heufel, Joan Ex Parte Page, Peter

[1980] FCA 60

f I

I N THE	FEDERAL	COURT	OF	AUSTRALIA	)
l

NEIY SOUTH	WALES	D I S T R I C T	R E G I S T R Y	)	No.	W	616	of	I 9 7 7
l
GENERAL	D I V I S I O N	1

RE: J O A N IJEUFEL

Debtor

PARTE: PETER EX PAGE

C r e d i t o r

REASONS FOR JUCGMENT

- -

JUDGE MAKING ORDER:	LOCKHART J.
SYDNEY
-	DATE OF ORDER:	7 ?.;AY I 9 7 9

THE COURT ORDERS THAT:

l . The a p p l i c a t i o n be dismissed.

2. The bankrup t pay t he cos t s of t h e p e t i t i o n i n g c r e d i t o r

of this application except t h e c o s t s of t h e h e a r i n g

be fo re R i l ey J. on 14 h n e 1978.

1

I N THE FEDERAL COURT nF AUSTRRLTA	1 1
NEW SOUTH WALES DISTRICT REGISTRY	) No. W 616 o f I 9 7 7
1
GENERAL DIVISION	1

l	--
l
l

I	RE:	JOAN HEUFEL
I

Debtor

EX PARTE: PETER PAGE

C r e d i t o r

,-.

1 - i

7 May I979 LOCKHART J.

REASONS FOR JUDGMENT

This i s an appi ica t ion by Joan Heufe l ( " the

I bankrupt") f o r the annulment o f her bankruptcy . The ground

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

-

no t o have been made f o r t h e r e a s o n s t h a t h e b a n k r u p t I

was s o l v e n t w h i c h t h e p e t i t i o n i n g c r e d i t o r c l a i m e d a t the t ime it was made and t h a t t h e d e b t ,

t o be due t o him

by the bankrupt and which was t h e s u b j e c t o f a judgment

s igned by t h e p e t i t i o n i n g c r e d i t o r a g a i n s t t h e b a n k r u p t

i n t h e District Court of New South Wales, was never due

by the bankrupt t o t h e p e t i t i o n i n g c r e d i t o r .

The a p p l i c a t i o n f o r annulment was f i l e d on I 6

May I 9 7 8 and heard by the l a te Mr. J u s t i c e R i l e y on

I4 June I 9 7 8 when h i s Honour r e s e r v e d h i s d e c i s i o n . His

Honour died before giving judgment . The a p p l i c a t i o n c a n e

. . . / 2

I

- 2 -

i

;	on	f o r	h e a r i n g	b e f o r e	me	on	2 0	Apr i l	1979.	I t
I

was agreed by a l l p a r t i e s -. namely the bankrupt , the

p e t i t i o n i n g c r e d i t o r , a n d t h e O f f i c i a l R e c e i v e r - t h a t

t h e h e a r i n g b e f o r e me should be a re -hear ing de novo of

t h e a p p l i c a t i o n as t h e r e s u l t o f i t would turn on t h e

c r e d i b i l i t y o f t h e b a n k r u p t a n d o f t h e p e t i t i o n i n g c r e d i t o r ,

The Off ic ia l R e c e i v e r p l a y e d n o a c t i v e r o l e i n t h e

p roceed ings be fo re me i n view of the g round o f t he app l i ca t ion .

The 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

bankrupt on 2 5 September 1977. She l i v e s a n d t h e n l i v e d

a t I 1 7 T e r r i t o r y . J lcKel lar Crescent , Cook i n t h e A u s t r a l i a n C a p i t a l

The on ly asset d i s c l o s e d b y t h e b a n k r u p t i n h e r

s ta tement of affairs was a motor vehicle which she

desc r ibed as fo l lows : - - 7

Sedan "Datsun $ 4 , 1 0 0 . 0 0

,	Less
amount p u r c h a s e a g r e e m e n t owing under h i r e

t o

Indus t r ia l Acccptance Corp .

Limited 3 2 0 . 0 0

$3,760.00

- ,I

The only money b r o u g h t t o t h e c r e d i t o f t h e e s t a t e

account was t h e d e p o s i t p a i d on t h e p e t i t i o n o f $ 2 0 . 0 0 .

The only unsecured c red i to r d i sc losed by the

bankrupt i n h e r s t a t e m e n t o f a f f a i r s was t h e p e t i t i o n i n g

c r e d i t o r f o r a deb t of $ 3 0 0 . 0 0 . The a p p l i c a n t a l s o r e f e r r e d

t o I n d u s t r i a l A c c e p t a n c e C o r p o r a t i o n L i m i t e d , t h e h i r e

p u r c h a s e	c r e d i t o r .	I ts	deb t	was	subsequen t ly	r epa id	by	t he
bankrupt .

I

I

1 The o n l y c r e d i t o r who lodged a claim i n t h e

e s t a t ; is t h e p e t i t i o n i n g c r e d i t o r f o r $ 9 1 4 . 0 0 . That

I

claim h a s n o t b e e n a d m i t t e d t o p r o o f b y t h e O f f i c i a l

Receiver . I

j Am amount of $214.65 i s owing t o t h e o f f i c i a l !

r e c e i v e r i n r e s p e c t o f fees i n c u r r e d i n t h e c o u r s e o f

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

The bankrupt i s a	s i n g l e	l a d y .	She	is and was	,-,
' ;
1

a t t h e d a t e of her bankruptcy employed as a s u p e r v i s o r a t

t h e "Quamby" C a p i t a l T e r r i t o r y . Remand S h e l t e r , Red Hill i n t h e A u s t r a l i a n

The bankrupt and the p e t i t i o n i n g c r e d i t o r e n t e r e d

in to an a r r angemen t in I 9 7 5 whereby the bankrupt would

s e l l r i n g s made b y t h e p e t i t i o n i n g c r e d i t o r f o r w h i c h s h e

would be allowed a commission on sales. - This arrangement

-

ceased some t i m e i n 1 9 7 6 .

!

The	p e t i t i o n i n g	c r e d i t o r	s u b s e q u e n t l y	s u e d	t h e	-
: ! ' d

bankrupt by o rd ina ry s t a t emen t o f claim i n t h e

District Court of New South Wales a t Sydney claiming

$ 1 , 2 6 2 . 0 0 and cos ts . The p e t i t i o n i n g c r e d i t o r p l e a d e d ' h i s

cause of a c t i o n i n t h e s t a t e m e n t o f c l a i m as fo l lows : -

11 I . That he Defendant obtained from t h e

P l a i n t i f f h i s goods namely:-

6 ye l low go ld r ings wi th wh i t e so l id s (9c t ) $395 .60

$263.00	r ings	opal	9 dark
I aquamar i r i ng imi t a t ion e 4 .0@ $ 6 8 2 . 0 0
And t h e P l a i n t i f f claims t h e r e t u r n of t h e s a l e
goods o r t h e i r v a l u e . I

. . . / 4

- 4 -

2. T h a t t h e P l a i n t i f f f u r t h e r claims t h e

m f S i x h u n d r e d d o l l a r s ($600.00) f o r

money payable by the Defendan t t o the

P l a i n t i f f f o r money had and received by

t h e D e f e n d a n r f o r t h e u s e o f t h e P l a i n t i f f .

1

AND t h e P l a i n t i f f claims t h e sum o f $1282.00.''

The bankrup t d id no t de fend the p roceed ings .

Judgment was o b t a i n e d b y t h e p e t i t i o n i n g c r e d i t o r a g a i n s t

the bankrupt on 6 A p r i l I977 i n t h e s e terms:-

I

" I T IS THIS DAY ADJUDGED THAT:

I . The p l a i n t i f f r e c o v e r a g a i n s t t h e

defendi$I.OI8.00 beinrr S 4 I S . 0 0 as va lue

of goods detained and $6;0;00 f o r d e b t ,

p l u s c o s t s o f $160.00.

2 . The defendant pay $I,I7S.00 t o the

R e g i s t r a r	f o r t h w i t h .
3 .	On d e l i v e r y t o h e p l a i n t i f f a n d

acceptance by him af the fol lowing goods:

-

6 yel low gold r ings, vaTued a t $395.00

. and t h ree da rk opa l r i ngs , va lued a t $ 2 3 . 0 0

(- on o r b e i o r e t h e 4 t h May, 1977, the

j udgmen t deb t sha l l deemed t o be s a t i s f i e d t o t h e

e x t e n t o f $418.00.''

The p e t i t i o n i n g c r e d i t o r a p p l i e d f o r t h e issue

of a bankrup tcy no t i ce on 20 May 1977. The b a n k r u p t n o t i c e

was i s sued on 27 May I977 ancl serlred on the bankrupt on 2 June

1977. The b a n k r u p t i a i l e d t o comply with the requirements

o f t he bankrup tcy no t i ce o r t o t a k e a n y s t e p s t o s a t i s f y

t h e c o u r t t h a t s h e h a d a c o u n t e r - c l a i m , s e t - o f f o r c r o s s

dcmand	e q u a l t o	o r exceed ing- the	sum	s p e c i f i e d i n	t h e b a n k r u p t c y
n o t i c e .

. . ./S

- 5 -

In the r e su l t she commi t t ed an ac t of bankruptcy.

She made bankrup tcy no t i ce . no a p p l i c a t i o n t o t h e c o u r t t o se t a s i d e t h e

The p e t i t i o n i n g c r e d i t c r p r e s e n t e d a p e t i t i o n

1

t o t h e c o u r t on I 9 July I977 which came on f o r h e a r i n g

on 2 8 September I 9 7 7 when 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 e s t a t e o f t h e b a n k r u p t . The b a n k r u p t d i d n o t

appear on t h e h e a r i n g o f t h e p e t i t i o n o r f i l e a n o t i c e o f

o p p o s i t i o n t o t h e p e t i t i o n o r o t h e r w i s e o p p o s e it.

The power t o a n n u l a bankruptcy i s confer red by

S. I 5 4 ( I ) o f t h e Act. T h a t s e c t i o n p r o v i d e s t h a t w h e r e

t h e c o u r t is s a t i s f i e d , i n t e r a l i a , t h a t a s e q u e s t r a t i o n

order o u g h t n o t t o h a v e been made, t h e c o u r t may make an

o rde r annu l ing t he bankrup tcy . The re a r e two matters f o r

t h e c o u r t t o c o n s i d e r u n d e r t h e s e c t i o n : f irst , whether

-

a s e q u e s t r a t i o n o r d e r o u g h t n o t t o h a v e Z e n made and

secondly, i f t h e c o u r t i s s a t i s f i e d as t o t h a t , w h e t h e r i n

annulmem4, 0 -.

t h e e x e r c i s e o f t h e c o u r t ' s d i s c r e t i o n t h e o r d e r of

ough t t o bemade. See Delph Sing v . Wood - (1918) 25 C.L.R. 4 9 7

a t p.	498;	Re	Williams	(1968)	I 3 F.L.R.	I 0 a t p .	23;	Re
-

Deriu (1970) I6 F.L.R. 420.

The bankrupt concedes tha t it i s f o r h e r , a s t h e

a p p l i c a n t f o r a n n u l m e n t , t o s a t i s f y t h e c o u r t t h a t t h e

seques t r a t ion o rde r ouEh t no t t o have been made: See Re S c o t t

(1975) G A.L.R. 558; Re Calderon (an unrepor ted dec is ion of

R i l e y J. , judgment del ivered 31 May 1977).

In de te rmin ing whe the r t he seques t r a t ion o rde r ough t

n o t t o h a v e b e e n made t h e c o u r t may c o n s i d e r n o t o n l y t h e

-6-

evidence as d i s c l o s e d a t t h e t i m e t h e o r d e r was made,

b u t a s it w o u l d h a v e b e e n d i s c l o s e d h a d a l l t h e t r u e facts

been be fo re the cour t on t h e making of the seques t ra t ion

order: See Re Cook (1946) I3 A.B.C. 245 a t p . 259.

T h i s c o u r t h a s j u r i s d i c t i o n t o go behind the judgment

of the whether it was founded cour t where the judgment was s i g n e d a n d t o i n q u i r e

on a r ea l deb t : See Corney v. Brien

(1951) 84 C . L . R . 343 and Wren v. Mahony (1971-1972) I26 C.L.R.

212; Boaler v. Power (1910) 2 K.B. 229.

If t h e c o u r t is s a t i s i i e d t h a t t h e s e q u e s t r a t i o n o r d e r

ought no t to have been madc it i s no t bound to annu l t he o rde r ;

b u t m u s t c o n s i d e r i n t h e l i g h t o f a l l t he c i r cums tances of t h e

case whether the bankruptcy ought to be annul led: See Delph

Sing v. Wood (supra) a t pp. 498-499; Re Lawson (1939) I1 A . B . C .

I37 a t p . 139; Re Wiiliams (supra). a t p . 23.

-

I t u r n t o t h e f i r s t ques t ion , whFther , on the ev idence ,

t h e b a n k r u p t h a s s a t i s f i e d t h e c o u r t t h a t t h e s e q u e s t r a t i o n

o rde r ough t no t t o have been made.

I € i n d t h e facts as fo l lows :-

The p e t i t i o n i n g c r e d i t o r i s a n i n v a l i d p e n s i o n e r who

a t all m a t e r i a l t i m e s h a s made j e w e l l e r y i n c l u d i n g o p a l r i n g s

i n h i s s p a r e t i m e . He f i r s t met the bankrupt i n I973 o r I974

through her mother who l i v e d a t Punchbowl, New South Wales. The

two met a t t h e m o t h e r ' s home on a few occasions. They e n t c r e d

i n t o a j e w e l l e r y f r o m t h e p e t i t i o n i n g c r e d i t o r f o r s a l e a n d , f r o m vcrba l a r rangement whereby the banrkupt would take

the p roceeds o f s a l e , she wou ld be pa id a sum o f money a s

commission. It was e n v i s a g c d t h a t s h e w o u l d s e l l t h e j e w e l l e r y

among people i n Canberra hospi ta l where she was then v o r k i n g .

. . ./7

-7-

The b a n k r u p t g a v e t h e p e t i t i o n i n g c r e d i t o r

s i x o r d e r s f o r j e w e l l e r y on t h e f o l l o w i n g d a t e s : -

F i r s t o r d e r : a b o u t 7 J u l y 1974.

Second order : 21 October I974

T h i r d o r d e r : 30 June I975

Four th o rde r : 5 J u l y I975

F i f t h o r d e r : 3 November I975

o r d e r :

S i x t h

I7 November

1975.

A

l	\
5,	I

v

The bankrup t pa id fo r t he j ewe l l e ry compr i sed

i n t h e received payment f i r s t f o u r o r d e r s . The p e t i t i o n i n g c r e d i t o r h a s n o t

f o r any of t h e j e w e l l e r y c o m p r i s e d i n t h e

f i f t h a n d s i x t h o r d e r s .

On 3 November I975 t h e p e t i t i o n i n g c r e d i t o r a n d t h e

bankrupt met a t t h e Punchbowl home of	the bankrupt ' s mother ,
a n d t h e p e t i t i o n i n g c r e d i t o r a s k e d t h e	- bankrupt i f she

-

would l i k e t o t a k e t h e money t h e n f r o m e a r l i e r s a l e s b y way

o f commission t o wh ich she r ep l i ed "No, d o n ' t g i v e t h e money,-, <,

Pu t i t towards t ha t s apph i re r i ng wh ich I will take". There-.

was a s h e w i s h e d t o b u y , a n d t h e p e t i t i o n i n g c r e d i t o r r i n g a t t h e f l a t be ing a sapph i re r ing wh ich she ind ica t ed

t h e n h e l d i t on

h e r b e h a l f . On 3 November I975 the bankrupt gave an o r d e r ( t h e

f i f t h o rde r ) t o t h e p e t i t i o n i n g c r e d i t o r f o r t h e f o l l o w i n g

j e w e l l e r y : -

I

I whi te ye l low gold opa l $ 85.00

I	whi te ye l low gold opa l	85.00
I	whi te ye l low gold opa l	75.00 I I

3 white yel low gold o p a l s a t $50.00 ea . 150.00

I dark opal r i h g 20.00

I

. . . / 8

i

-8 -

r i n g o p a l I d a r k $25.00

2 d a r k o p a l r i n g s a t $19.00 ea. 38.00

5 dark opa l r i ngs a t $40.00 ea. 200.00

I i m i t a t i o n r a q u a n g r i n e 4 . 0 0

$G82.00

The b a n k r u p t s a i d t o t h e p e t i t i o n i n g c r e d i t o r : -

"I am going back to Canberra tomorrow morning, can

/ -	you	b r ing	them down	and	have	them	the re	i n	the	morn ing?" .
l ,

'The p e t i t i o n i n g c r e d i t o r s a i d : -

c "Yes I will do tha t " .

The f o l l o w i n g d a y t h e p e t i t i o n i n g c r e d i t o r t o o k t h e

j e w e l l e r y down t o C a n b e r r a t o g e t h e r w i t h a book, being a form

of order book, and asked her t o s i g n i t t o acknowledge rece ip t

o f t h e j e w e l l e r y was s i x t e e n r i n g s c o m p r i s e d i n t h e o r d e r . S h e d i d t h i s . The

then handed t o he r . - -

The f o l i o o € t h e o r d e r book s igned by the bankrupt i s

a t f o l i o 1 4 .

On I7 November I975 t h e p e t i t i o n i n g c r e d i t o r s e n t t o t h e

bankrupt, by means o f Comet Overnight Transport ("Comet") t h e

jewel le ry compr ised in a s i x t h o r d e r b e i n g : -

r i n g s 6 o p a l a t $45.00 ea . $270.00

pcndants 7 opal a t $6.50 ea . 115.50

a t r i n g I o p a l $80.00 whi te 80.00

r i n g s 5 o p a l a t $25.00 ea . 125.00

2 s a p p h i r e a t r i n g s $130.00 ea. 260.00 $780.50

The order appcars on f o l i o I5 o f the o rder book. Comet

p icked up t h e j e w e l l e r y f r o m t h e p e t i t i o n i n g c r e d i t o r i n Sydney

I

'	I
i

I !

-9-

I

about 3.00 p.m. I t was a l l wrapped and bound. Comet

s i g n e d a t h e p e t i t i o n i n g c r e d i t o r c a n n o t f i n d docket acknowledging receipt of the goods but

it al though he has

s e a r c h e d f o r it and made i n q u i r i e s f r o m Comet i t s e l f .

Comet c o u l d n o t f i n d a r e c o r d o f t h e d e l i v e r y a s it was

in the p rocess o f sh i f t i ng p remises and adop t ing compute r

programmes a t t h e t i m e o f t h e i n q u i r y . No payment was

r e c e i v e d b y t h e p e t i t i o n i n g c r e d i t o r f r o m t h e b a n k r u p t f o r	-
8 ' I
'J

t h e j e w e l l e r y c o m p r i s e d i n t h e f i f t h a n d s i x t h o r d e r s , n o r

was t h e i n s t r u c t e d h i s s o l i c i t o r s j e w e l l e r y c o m r p i s e d t h e r e i n r e t u r n e d t o him; s o he

t o wri te a l e t t e r t o t h e b a n k r u p t ,

whichthey d id on 29 March 1976. T h a t l e t t e r r e q u e s t e d t h e

r e t u r n o f t h e j e w e l l e r y , b e i n g t h e j e w e l l e r y c o m r p i s e d i n

t h e f i f t h l e t t e r a s k e d t h e b a n k r u p t t o r e t u r n t h o s e r i n g s w i t h i n t e n	o r d e r	a n d	h a v i n g	a	n	i n v o i c e	v a l u e	o	f	$ 6 8 2 . 0 0 .	The
- -

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

i n s t i t u t e d . - b e w o u l d

- 1

The b a n k r u p t d i d n o t r e t u r n a n y j e w e l l e r y t o t h e

p e t i t i o n i n g c r e d i t o r n o r d i d s h e make any payments of

money t o him o r g e t i n t o u c h w i t h him o r h i s s o l i c i t o r s .

The s o l i c i t o r s f o r t h e p e t i t i o n i n g c r e d i t o r i s s u e d an

o rd ina ry s t a t emen t o f c l a im ou t o f t he District Court o f

New South Wales a t Sydney on I7 September I976 c la iming

$ 1 2 8 2 . 0 0 f rom the bankrupt . I have a l ready s e t o u t t h e

mater ia l t e rms of tha t document . The s t a t emen t o f c l a jm

was served b a n k r u p t s a y s t h a t upon the bankrupt by a p r o c e s s s e r v e r . The

t h e p r o c e s s s e r v e r s a i d t o h e r : -

"Have you s t i l l g o t t h e r i n g s ? " .

To which she said:

. . ./I0

I

- 1 0 -

"Yes, b u t I o b j e c t e d t o t h e claim f o r t h e

e x t r a $600.00. I d o n ' t know w h a t t h a t ' s f o r " .

To which he rep l ied :

"Why don ' t you ju s t s end back the r ings" .

The bankrupt denies that she had any knowledge a t any

time o f a claim f o r $600.00.

The p e t i t i o n i n g c r e d i t o r s a y s t h a t t h e l e t t e r

from h i s s o l i c i t o r o f 29 March I976 con ta ined an e r r o r i n

t h a t it d e s c r i b e d 3 r i n g s a s h a v i n g a va lue o f 504 each,

whereas i n f a c t i t should have been $50.00 each, thus making

a c o r r e c t t o t a l o f $682.00.

The p e t i t i o n i n g c r e d i t o r s a y s t h a t t h e claim

f o r $ 6 0 0 . 0 0 i s t h e v a l u e o f t he j ewe l l e ry compr i s ing the

s i x t h o r d e r less $ 1 8 0 . 0 0 be ing the f ina l commiss ion which

he says c o m p r i s e d i s d u e t o t h e b a n k r u p t f o r a l l t h e j e w e l l e r y -

i n t h e f i f t h a n d s i x t h o r d e r s . He d e n i e s t h a t h e

i s indeb ted to the bankrup t f o r any commission whatever.

There was a hea r ing by the District Court a t Sydney on

6 A p r i l c r e d i t o r . I977 a s t o the damages c la imed by the pe t i t ion ing

The b a n k r u p t d e c i d e d t o r e t u r n c e r t a i n r i n g s t o

t h e p e t i t i o n i n g c r e d i t o r . She r e t u r n e d , b y c e r t i f i e d m a i l

f rom Canberra to Sydney, seven r ings comprised in the

f i f t h o r d e r a n d h a v i n g an i n v o i c e v a l u e o f $264.00. Thesc

w e r e d i r e c t e d t o t h e p e t i t i o n i n g c r c d i t o r a t a n a d d r e s s w h i c h

was n o t b r o u g h t t h e p a r c e l t o t h e p e t i t i o n i n g c r e d i t o r ' s h i s b u t c l o s e t o it. Someone, perhaps a neighbour ,

home one

evening some fcw days a f t e r t hey had been sen t by t h e

. . ./I1

. I

I -11-

I	I
i

bankrupt f rom Canberra by post . A t t h e h e a r i n g b e f o r e

I

t h e l e a r n e d District Cour t - j udge , c r ed i t was g i v e n t o t h e

b a n k r u p t i n t h e sum o f $264.00 a g a i n s t h e c l a i m €or $682.00 ,-

i n t h e s i g n e d a g a i n s t f irst c o u n t , w i t h t h e r e s u l t t h a t t h e j u d g m e n t was

t h e b a n k r u p t f o r $418.00 on t h e f i r s t count and

$GOO.OO "€or d e b t " p l u s c o s t s o f $160.00, a t o t a l o f $1178.00.

No j e w e l l e r y h a s b e e n r e t u r n e d by t h e b a n k r u p t t o

t h e p e t i t i o n i n g c r e d i t o r s u b s e q u e n t l y .

,..

I

By l e t t e r d a t e d 24 February I978 f r o m t h e O f f i c i a l -

<	R e c e i v e r t o t h e b a n k r u p t h e s a i d t o h e r t h a t h e h a d i s s u e d i n s t r u c t i o n s t o " C e n t r a l A u c t i o n s t o t a k e p o s s e s s i o n o f y o u r
motor vehic le . You a r e t o c o - o p e r a t e w i t h a d u l y a u t h o r i s e d
r e p r e s e n t a t i v e o f t h e company when he ca l l s t o t ake posses s ion .
o f t h e v e h i c l e " .

I t was t h e s e n d i n g o f t h a t l e t t e r a n d t h e t h r e a t t o

-

r e p o s s e s s h e r m o t o r c a r t h a t i n my o p i n z n c a u s e d t h e

b a n k r u p t t o a p p l y t o t h e c o u r t on I 6 May I978 f o r an o r d e r

- \

annu l l ing he r bankrup tcy . -

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

the e v i d e n c e o f t h e p e t i t i o n i n g c r e d i t o r .

Doubtless i t would be s u f f i c i e n t f o r me t o s a y

t h a t it is f o r t h e b a n k r u p t t o p r o v e t o t h e c o u r t ' s sa t is-

f a c t i o n t h a t h e s e q u e s t r a t i o n o r d e r o u g h t n o t t o have been I 1

made, and t h a t s h e h a s n o t d i s c h a r g e d t h a t o n u s , w h i c h i n

my op in ion she has no t . However, I have reached a firm view

I

as t o bankrupt , be ing t h e r e l i a b i l i t y o f t h e p e t i t i o n i n g c r e d i t o r a n d t h e

the two w i t n e s s e s who have ev idence in the

case, and I p r e f e r t o d e a l w i t h t h e c a s e o n t h a t b a s i s .

. . . /I2 I

I

I	-12-
I
1
I

I	There is a c o n f l i c t o f e v ~ ~	idence between	the
!

p e t i t i o n i n g c r e d i t o r a n d t h e b a n k r u p t on important

q u e s t i o n s o f	fac t	i n	t h e	case.	Ne i the r	w i tnes s	had	a
7

v c r y c k a r r e c o l l e c t i o n o f some o f t h e r e l e v a n t e v e n t s ,

and there are i n c o n s i s t e n c i e s i n the ev idence of each o f

them. However, I have r eached t he conc lus ion t ha t t he

evidence of t h e p e t i t i o n i n g c r e d i t o r is t o b e p r e f e r r e d t o

t h a t o f the bankrupt . I a c c e p t t h e p e t i t i o n i n g c r e d i t o r

c- as a t o t h a t o f t h e b a n k r u p t w h e r e t h e y c o n f l i c t . wi tnes s oi accuracy and t ru th and I p r e f e r h i s e v i d e n c e

The bankrupt was e m p h a t i c i n h e r e v i d e n c e t h a t t h e

j e w e l l e r y d e l i v e r e d t o h e r i n C a n b e r r a b y Comet was the

j e w e l l e r y c o m p r i s e d i n t h e f i f t h , n o t t h e s i x t h o r d e r ;

t h a t s h e knows n o t h i n g w h a t e v e r a b o u t t h e s i x t h o r d e r o r

t h e j e w e l l e r y c o m p r i s e d i n it; a n d x h a t - w h e n s h e r e t u r n e d

j e w e l l e r y t o t h e p e t i t i o n i n g c r e d i t o r , by c e r t i f i e d m a i l on

l-

28 March p e t i t i o n i n g c r e d i t o r i n h e r p o s s e s s i o n a n d t h a t t h e y w e r e 1977, she r e tu rned a l l t h e r i n g s o b t a i n e d f r o m t h e

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

j i f f y bag. These are some o f t h e p r i n c i p a l areas o f c o n f l i c t

!

be tween the ev idence o f t he two w i t n e s s e s .

Although I have reached my conclus ion as t o t h e

r e l i a b i l i t y of t h e w i t n e s s e s t o some e x t e n t on t h e i r

demeanor and manner of g iv ing ev idence in the wi tness box ,

I h a v e r e l i e d a l s o on the contemporaneous and object ive

circumstances and documents. I t i s t o t h e s e t h a t I now t u r n .

F i r s t , n o t w i t h s t a n d i n g t h a t t h e b a n k r u p t r e c e i v e d

t h e l e t t e r o f dcmand f r o m t h e p e t i t i o n i n g c r e d i t o r ' s s o l i c i t o r

. . . / I 3

~_C____C_..I	-__-	--I ._-.-----_"-----.-I-.	~ .....---	, --*---C--	~	.-.
-13-

da ted 29 March I976 r e q u i r i n g t h e r e t u r n of j ewe l l e ry and

,-

th rca t en ing l ega l p roceed ings un le s s t hey were r e tu rned , she

d id no th ing abou t i t . .A District Cour t s ta tement of c la im

was se rved on he r l a te r . Again she d i d n o t h i n g a b o u t it

u n t i l she r e c e i v e d some n o t i f i c a t i o n p r o b a b l y a n o t i f i c a t i o n

f rom the registrar o f t h e D i s t r i c t C o u r t t o h e r t h a t t h e

a c t i c n was s e t down f o r the assessment o f damages. What she

r- .

t h e n d i d was t o r e t u r n c e r t a i n o f t h e r i n g s i n her possess iL , l

i n March 1977. She d i d n o t d e f e n d t h e p r o c e e d i n g s

n o r d i d s h e s u b s e q u e n t l y	make	a n a p p l i c a t i o n t o s e t a s i d e t h e
judgment .

The bankrup tcy no t i ce was served upon her on 2 June

1077, y e t s h e d i d n o t h i n g a b o u t it. The p e t i t i o n was se rved

on h e r on 2 8 J u l y 1977. Again , no th ing was done by her by

way of p e t i t i o n o r o therwise . a p p e a r i n g , f i l i n g a n o t i c e o f - o p p u s i t i o n t o t h e

I t was n o t u n t i l t h e Official

-

Rece ive r t h rea t ened t o t a k e p o s s e s s i o n of h e r v e h i c l e , I I

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

of the annulment. p e t i t i o n i n g c r e d i t o r b y f i l i n g t h e a p p l i c a t i o n f o r

Evidence was led tha t she was n o t a woman who had

I ’

r e c e i v e d f o r m a l e d u c a t i o n t o a n a d v a n c e d l e v e l , a n d t h a t

from February I974 u n t i l March I97G she was preoccupied and

d is t ressed by mat r imonia l p roblems and proceedings which were I

then pend ing i n t he Fami ly Cour t of Canberra. She l e f t h e r

husband in February I974 in harrowing circumstances and

towards the middle of I974 began t o s u f f e r a severe form of

. . ./I4 !

-14-

migraine headaches and was rece iv ing medica l t rea tment f rom

a Canberra neuro logis t . She was a d m i t t e d t o h o s p i t a l f o r

t rea tment in October and November 1975. She was g r a n t e d a

d iv roce i n the Family Court of Canberra on I1 March 1976.

She says tha t wi th the problems o f h e r m a r r i a g e a n d h e a l t h

the q u e s t i o n o f t h e r i n g s s l i p p e d h e r m i n d . S h e s a y s t h a t

during the months of September, October and November I976

she had a recur rence of the headaches and aga in rece ived

t rea tment f rom the Canberra neuro logis t .

Th i s i s n o t a case where the bankrupt says t h a t

because of her matr imonial problems and s ickness during

the r e l evan t pe r iod , she s impl ' y pa id no r ega rd wha teve r

t o t h e p e t i t i o n i n g c r e d i t o r . R a t h e r s h e s a y s t h a t s h e

thought "once the wheels of mot ion had s ta r ted , I had

r e t u r n e d t h e r i n g s a n d I thought once th-e wheels of motion

h a d s t a r t e d t h e y h a d t o c o m p l e t e t h e i r c y c l e S e f o r e it could

be taken o u t aga in ... once you had s ta r ted a p r o c e e d i n g l i k e

Mr. Page had t o h a v e me dec la red bankrup t , I t h o u g h t t h a t it

had to be comple ted before i t could be d i scharged ." So she

was a t p e t i t i o n i n g c r e d i t o r a g a i n s t h e r a n d t h o u g h t a b o u t t h e m . l e a s t a w a r e t h a t p r o c e e d i n g s h a d b e e n t a k e n b y t h e

N o t w i t h s t a n d i n g t h e s e m a t t e r s , a n d t h e f a c t t h a t

some people , when s e r v e d w i t h l e g a l p r o c e s s , f e e l a t a l o s s

and do n o t know how t o cope with i t , I do n o t a c c e p t t h a t

the s posses s ion o f he r i lence f rom the bankrupt , which remained unt i l the

car was t h r e a t e n e d i n F e b r u a r y 1978, is

exp la ined by the ma t t e r s t o wh ich she r e fe r r ed .

Secondly, the relevant contemporaneous records upport .

t h e case o f the pe t i t ion : .ng- c red i tor . He k e p t h i s o r d e r book

. . . / I5

I

I - .

-15-

i

which ! recorded , amongs t o ther th ings , o rders lodged by

i

the bankrup t w i th h i m . I t i s a somewhat informal book,

I

n o t t h e s o r t o f book t h a t would be kept by someone i n

/-

I

b u s i n e s s ; b u t t h e p e t i t i o n i n g c r e d i t o r was a man who made

r i n g s a n d o t h e r j e w e l l e r y as a form of occupat iona l therapy

i n h i s s p a r e t i m e a f t e r h e became an i n v a l i d p e n s i o n e r . I t

r eco rds on f o l i o 1 4 , the lodgment of the order on 3 November

I975 by the bankrupt . I t a l so records the acknowledgment b1-1 1-1

< h e r o f h e r r e c e i p t o f t h o s e r i n g s . . I t r e c o r d s t h e o r d e r

lodged on I 7 November I975 f o r j e w e l l e r y h a v i n g a n i n v o i c e

value of $780.00. The r e l e v a n t d o c k e t on f o l i o I 5 r e c o r d s

t h a t t h e r e was a r u s h o r d e r by Comet, p icked up a t 3 . 0 0 p.m.

Although some a t t a c k was made o n t h e a u t h e n t i c i t y o f t h e s e

order forms , contemporaneous I am s a t i s f i e d t h a t t h e y a r e r e l i a b l e

documents record ing t -he re levant o rders . For

t h e b a n k r u p t ’ s c a s e t o s u c c e e d I would h a v e t o b e s a t i s f i e d

t h a t t h e o r d e r r e c o r d e d as being lodged on I7 November 1975,” :

1

( t h e s i x t h o r d e r ) was a f a b r i c a t i o n b y t h e p e t i t i o n i n g

c r e d i t o r . I n my op in ion , t he ev idence does no t war ran t such a

conclus ion .

I t i s t r u e t h a t t h e b a n k r u p t d i d n o t s i g n t h e o r d e r

fo rm acknowledg ing r ecc ip t o f t he s ix th o rde r ; bu t I accep t

t h e p e t i t i o n i n g c r e d i t o r when h e s a y s t h a t t h i s was s e n t as

a rush o rde r perhaps t o Canber ra by means o f Comet. Although it i s

a	l i t t l e	c u r i o u s	t h a t	t h e r e	w e r e	no	documents	from	!
, I

Comet t e n d e r e d i n e v i d e n c e , r e c o r d i n g - t h e d e l i v e r y t o t h e

b ankrup t i n Canber ra , t he ev idence a s t o Comet l e a v i n g w i t h

t h e p e t i t i o n i n g c r e d i t o r t h e d o c k e t book r e c o r d i n g t h e r e c e i p t

of the goods by Comt was g i v e n b y t h e p e t i t i o n i n g c r e d i t o r a n d

. . ./I6 !

-16-

I accep t p e t i t i o n i n g c r e d i t o r i t as t r u t h f u l i n c l u d i n g t h e e v i d e n c e of t h e

as t o h i s i n a b i l i t y t o f i n d t h e Comet

docket book. I t i s t r u e t h a t , on the ev idence o f t h e

p e t i t i o n i n g c r e d i t o r , h e w a n t e d t o ob ta in f rom the bankrupt

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

I ,

more than one reason; ye t he ob ta ined no s u c h s i g n e d r e c e i p t

from h e r when t h e s i x t h o r d e r was d e l i v e r e d a b o u t a f o r t n i g h t

la ter . I n my o p i n i o n t h i s i s exp la ined by t h e p e t i t i o n i n g

c r e d i t o r ' s e v i d e n c e as t o t h e o r d e r b e i n g a rush o rde r .

Thi rd ly , t he bankrup t was e m p h a t i c t h a t s h e r e t u r n e d

a l l t h e r i n g s i n h e r p o s s e s s i o n b y c e r t i f i e d m a i l on 28 March

1977 , t ha t i n t o t h e s l o t s i n t h e b o x e s a n d t h e r e t hey were in two boxes , t ha t t he r ings were p l aced

was a f l o a t i n g r i n g i n

each box r ings . Ye t t he bankrup t cou ld no t i den t i fy because there were not enough s lo ts for each of the

- a n y p a r t i c u l a r

r i n g o r swear t o t h e fac t t h a t t h e r i n g s c o m p r i s e d i n t h e

f i f t h o r d e r w e r e n o t t h e o n e s c o m p r i s e d i n t h e s i x t h o r d e r .

Her exp lana t ion i s t h a t s h e is c e r t a i n t h a t she never a t any

c. time r e c e i v e d j e w e l l e r y c o n s i s t i n g o f an opal pendant or

s a p p h i r e r i n g s , t h e s e b e i n g i n c l u d e d i n t h e s i x t h o r d e r .

The p e t i t i o n i n g c r e d i t o r , when asked by t h e p o s t m a s t e r

o f t h e Bankstown p o s t o f f i c e a b o u t t h e p a r c e l w h i c h was s e n t

t o him by the bankrupt , wrote a l e t t e r s a y i n g t h a t what he

r e c e i v e d on about 30 March 1977 , w e r e s e v e n r i n g s t o t h e

v a l u e o f $ 2 6 4 . 0 0 . This ev idence is c o n s i s t e n t w i t h t h e n o t e

made by t h c p e t i t i o n i n g c r e d i t o r on the yel low copy of f o l i o I3

acknowledging receipt on 30 :ilarch I 9 7 7 of s even r i ngs . A l so ,

when the assessment of damages came b e f o r e t h e l e a r n e d Districr

Court judge on 6 A p r i l 1 9 7 7 , t h e p e t i t i o n i n g c r e d i t o r g a v e

. . . / I 7

-17-

I

e v i d e n c e t o t h e e f f e c t t h a t h e h a d r e c e i v e d t h o s e r i n g s f r o m

I

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

I

from	$ 6 8 2 . 0 0	t o	$ 4 1 8 . 0 0 ,	a	d i f f e r e n c e o f	$ 2 6 4 . 0 0 .
I

I	Fourthly,	the	bankrupt	acknowledged	a t t h e
I

commencement of the proceedings before me t h a t s h e was

indeb ted t o some e x t e n t i n r e s p e c t o f the f i f t h o r d e r , b u t

n o t t o a n e x t e n t s u f f i c i e n t t o f o u n d a s e q u e s t r a t i o n o r d e r

-

( $ 5 0 0 . 0 0 ) .	This	acknowledgment	i s	i n c o n s i s t e n t	w i t h	e r	;	;
L

v e r s i o n o f t h e facts , b e c a u s e s h e s a y s t h a t s h e r e t u r n e d

t o t h e p e t i t i o n i n g c r e d i t o r on 2 8 March I 9 7 7 a l l t h e r i n g s

i n h e r p o s s e s s i o n w h i c h s h e h a d n o t s o l d a n d t h a t s h e owed him

n o t h i n g t h e r e a f t e r .

Notwithstanding her acknowledgment of some

i n d e b t e d n e s s t o t h e p e t i t i o n i n g c r e d i t o r i n r e s p e c t of t h e

f i f t h o r d e r , s h e h a s made n o o f f e r t o p a - i t , a l t h o u g h i n

h e r a i f i d a v i t s w o r n on 2 May I 9 7 8 she deposed t o t h e fac t

t h a t h e r s o l i c i t o r s p r e s e n t l y h o l d t h e	sum	o f	$ 1 5 0 0 . 0 0	i n	t k i r	. I
L.--'
t r u s t a c c o u n t .

These are t h e p r i n c i p a l o b j e c t i v e m a t t e r s w h i c h I

r e l y upon to found my c o n c l u s i o n t h a t it i s the ev idence o f

t h e p e t i t i o n i n g c r e d i t o r t h a t I p r e f e r t o t h a t o f t he bankrup t .

I s h o u l d a d d t h a t t h e p e t i t i o n i n g c r e d i t o r was c r o s s

examined a s t o why t h e l e t t e r o f demand i r o m h i s s o l i c i t o r

o f 29 March I 9 7 6 and the District Cour t s ta tement of c la im make

no' r e f e r e n c e t o t h e r i n g s c o m p r i s i n g t h e s i x t h o r d e r , y e t t h e

s t a t emen t o f claim c la ims $ 6 0 0 . 0 0 a s b e i n g "money payable by

t h e d e f e n d a n t t o t h e p l a i n t i f i f o r money had and received by

t h e d e f e n d a n t f o r t h e w e o f t h e p l a i n t i f f " . It. was suggested

t o t h e p e t i t i o n i n g c r e d i t o r t h a t t h i s was i n c o n s i s t e n t w i t h

. . . / I 8

-18-

w i t h h i s claim t h a t t h e r e was a s i x t h o r d e r a n d t h a t t h e

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

a n d n o t r e t u r n e d b y h e r t o him. The ev idence of the

p e t i t i o n i n g c r e d i t o r i n e x p l a n a t i o n o f t h i s was n o t

e n t i r e l y s a t i s f a c t o r y . A t o n e p o i n t i n h i s c r o s s

examinat ion he sa id tha t he unders tood from conver sa t ions

w i t h t h e b a n k r u p t t h a t t h e r i n g s " h a d b e e n s e n t a n d l o s t

i n t h e t r u c k " a n d " s h e t o l d me they go t l o s t " . Ye t he

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

him t h a t s h e h a d a cheque f o r $ G O O . O O which

s h e t o l d c r e d i t o r s a i d t h a t h e him h a d g o t l o s t i n t h e t r u c k . The p e t i t i o n i n g

l e f t the ques t ion o f wha t shou ld be

demanded from the bankrupt and recovered f rom her in cour t

t o h i s s o l i c i t o r . No doub t t he re is more than one

- -

e x p l a n a t i o n as t o why t h e l e t t e r o f demand and the s ta tement

of c l a i m i n t h e District Cour t were d ra f t ed the way t h e y

7'

were; and c r e d i t o r ' s e v i d e n c e a s probably i t i s c o n s i s t e n t w i t h t h e p e t i t i o n i n g

t o t h e l o s t c h e q u e t h a t t h e y w e r e

so d r a f t e d . f o r d e t e n t i m A l s o t h e r e i s i n t h e e v i d e n c e a n o t i c e o f demand

of goods issued out of the Bankstown Court of

Pe t ty Sess ions on beha l f o f t he bankrup t on I 6 August I976

c l a i m i n g d e l i v e r y up o f "the undermentioned goods, t o w i x : -

6 y e l l o w g o l d r i n g s w i t h w h i t e s o l i d s (9ct) .

9	dark opa l	r i ngs
I	imi ta t ion	aquamar ine r ing

$ 6 0 0 . 0 0 i n c a s h I'

Al though th i s a spec t o f t he case t roub led ne t o

some e x t e n t , I am s a t i s f i e d t h a t t h e p e t i t i o n i n g c r e d i t o r

has a t a l l ma te r i a l t imes demanded from t h e b a n k r u p t , n o t

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

. . . / I 9

-19-

o r d e r , b u t $ 6 0 0 . 0 0 i n c a s h ; a n d t h a t t h i s i s c o n s i s t e n t !

with the banrkupt having told him, and she h a s n o t d e n i e d

it, t h a t s h e h a d s o l d t h e r i n g s t h e s u b j e c t o f t h e s i x t h

o r d e r a n d t h a t a cheque for $ 6 0 0 . 0 0 h a d b e e n l o s t .

The p e t i t i o n i n g c r e d i t o r e x p l a i n e d t h e sum of

$600 .00 , i n r e l a t i o n t o t h e sum o f $780.00 t h e s u b j e c t

o f t h e s i x t h o r d e r , on t h e b a s i s t h a t it r e p r e s e n t e d

-

t h e sum o f $780.00 l e s s t he commiss ion to wh ich she was

>-/'

< e n t i t l e d on t h e f o o t i n g t h a t s h e s o l d t h e r i n g s . Hence

h e a l l o w e d i n h e r f a v o u r a c r e d i t o f a di f fe rence of $180.00

n o t w i t h s t a n d i n g t h a t t h e r e i s n o r e f e r e n c e t o t h e sum o f

$180.00 commission i n h i s i n v o i c e b o o k .

I t fol lows from what I h a v e s a i d t h a t I am

s a t i s f i e d t h a t t h e s e q u e s t r a t i o n o r d e r was p r o p e r l y made.

If I h a d r e a c h e d t h e c o n c l u s i o n t h a t t h e F

s e q u e s t r a t i o n o r d e r o u g h t n o t t o have been made, and were

I

t h e n t o e x e r c i s e o f t h e c o u r t ' s d i s c r e t i o n t h e b a n k r u p t c y s h o u l d c o n s i d e r t h e s e c o n d q u e s t i o n , w h e t h e r i n t h e I-.

I

_,

c. be annuled, i t would have been necessary to cons ider

a l l t h e c r e d i t o r s c i r c u m s t a n c e s o f t h e c a s e , t h e i n t e r e s t s o f t h e

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

the bankrupt has been gui l ty of any misconduct s ince the

making of t h e s e q u e s t r a t i o n o r d e r a l t h o u g h s h e d i d f i l l i n

h e r s t a t e m e n t o f a f f a i r s i n a c c u r a t e l y in c e r t a i n r e s p e c t s .

I am s a t i s f i e d t h a t h e r e x p l a n a t i o n as t o why t h a t o c c u r r e d

i s t r u t h f u l .

I am s a t i s f i e d t h a t t h e b a n k r u p t was s o l v e n t when

. . ./20

-20 -

t h e s e q u e s t r a t i o n o r d e r was made and t h a t s h e i s s o l v m t

now. Al though t he app l i ca t ion f o r annulment f i l e d by the

b a n k r u p t s t a t e s t h e s o l v e n c y o f t he bankrup t as one o f t h e

reasons why the seques t r a t ion o rde r ough t no t t o have been

made, t h e a r p m e n t b e f o r e me p r o c e e d e d o n t h e b a s i s t h a t

solvency was r e l e v a n t t o t h e e x e r c i s e o f a n y d i s c r e t i o n t o

annu l t he bankrup tcy r a the r t han to the ques t ion whe the r

t h e s e q u e s t r a t i o n o r d e r ough t no t t o have been made.

If I were to have reached a c o n c l u s i o n t h a t

t h e s e q u e s t r a t i o n o r d e r o u g h t n o t t o h a v e b e e n made,

I would h a v e b e e n s u b j e c t t o a n o r d e r p r o t e c t i n g t h e have annul led the bankruptcy , a l though tha t would

Official

Receiver f o r t h e f e e s owing t o him i n r e s p e c t o f a c t i o n

t aken unde r the seques t r a t ion o rde r and sub jec t t o an

a p p r o p r i a t e o r d e r f o r c o s t s i n f a v o u r . o f t h e p e t i t i o n i n g ?

c r e d i t o r o f t h e p e t i t i o n a n d o f t h i s a p p l i c a t i o n .

F o r - t h e s e r e a s o n s , i n my o p i n i o n t h e a p p l i c a t i o n

should be dismissed. I o r d e r t h a t t h e a p p l i c a t i o n b e

d i smis sed and tha t t he bankrup t pay the cos t s o f t he

p e t i t i o n i n g c r e d i t o r o f t h i s a p p l i c a t i o n e x c e p t t h e c o s t s

o f t h e h e a r i n g b e f o r e R i l e y J. on I4 June 1978 . Otherwise

I make n o o r d e r a s t o c o s t s .