Re Hunt, I.

[1992] FCA 55

JUDGMENT No. ..s~.../.-~~

IN THE FEDERAL COURT OF AUSTRAtIA ) No. NB 3279 of

GENERAL DIVISION	)	1991
I

~ U P T C Y	DISTRICT OF THE STATE o ~ j
NEW SOUTII WALES	)

RE :	IANHUNT
Debtor
EX PARTE:	ATTORNEY GENERAL FOR
NEW SOUTH WALES
Petitioning Creditor

C O W :	WILCOX J
PLACE :	SYDNEY
DATE :	31 JANUARY 1992

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.        A Sequestration Order be made against the Estate of the Debtor.

2 .        The costs of the Petitioning Creditor be paid out of the estate of the Debtor.

REGISTRY

Note:  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

2 5 FEB 1992

FEDERAL COURT OF

AUSTRALIA

PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA ) No. NB 3279 of

GENERAL DIVISION	1	1991
\

NEW SOUTE WALES 1 BANKRUPTCY DISTRICT OF TBE STATE OF^

RE: 

=HUNT

Debtor

EX PARTE: 

ATPORNEY GENERAL FOR	I
NEW SOUTH WALES	i
Petitioning Creditor	l

CORAM:	WILCOX J
PLACE :	SYDNEY
DATE :	31 JANUARY 1992

EXTEMPORE REASONS FOR JUDGMENT

i

WILCOX J: This is an unusual case. A sequestration order was	1 i
i
made against the debtor, Ian Hunt, on 5 November, 1991 by	I
Deputy Registrar Hedge. An application was made shortly
being that he had been prevented by misadventure from thereafter by Mr Hunt to annul the bankruptcy, his reason	attending court on the date on which the sequestration order
was made. That application came before me on 5 December. For the reasons which I gave on that occasion I acceded to the application and annulled the bankruptcy. This meant that the petition remained extant.

On 5 December there was some discussion about the

be given to a particular company which had been named as a
judgment creditor of the debtor.

The matter came back before the Court on 19 December when, in addition to counsel for the petitioning creditor who

--

is the Attorney General for New South Wales, there were
appearances on behalf of the Law Book Company, which claimed
to be a creditor in the sum of some $3,300, and Citicorp
Australia Limited, which claimed to have two default judgments
against the debtor in the sums of $16,112.93 and $52,134.36
respectively. These were default judgments obtained in July
1989. In addition there was an appearance on behalf of a
barrister who claimed that the debtor, a former solicitor, was
personally liable to him for a sum of about $33,000 being
counsel's fees and interest thereon. The basis of the claim
was that the debtor had received money from the lay client, on

account of counsel's fees, but had not passed it on to the

barrister. It was said that, under those circumstances, the

debtor was personally liable; even though, as a solicitor

merely instructing a barrister, he would not have been

personally liable for counsel's fees.

A number of the matters which were raised on 19

December were controversial. In particular, it appeared that an application had been made to set aside the default

judgments obtained by Citicorp.	M r Hunt had a solicitor
acting on his behalf.	I was told that the application to set

aside had come before the District Court on 17 December when the solicitor appeared on behalf of Mr Hunt and informed the Court that he had no instructions on the matter despite having

written to Mr Hunt, and a subsequent telephone conversation

with Mr Hunt's daughter. In the circumstances the application

to set aside the judgments was dismissed.

. - W

When this statement was made on 19 December Mr Hunt

said he had no knowledge of these events and that he desired
to speak to the solicitor, as he had thought that the
application to set aside the judgments would not be on until a
later date. There was also a question about the moneys owing
to the barrister, Mr Hunt denying that he had received any

money on behalf of the barrister. In addition there was some

question as to the total amount owing to the Attorney General.

It appears that the claim which gave rise to the

bankruptcy notice, and to the petition of the Attorney
General, was in respect of $1,348.88, apparently arising as a

result of the delivery of transcript to the debtor. In

addition, however, there was a sum of $679.94 for costs and

interest, so that the total amount referred to in the

bankruptcy petition was $2,028.82. Of this, $2,000 was paid

in December, 1991. It was, however, said on behalf of the

Attorney General that there were other claims against Mr Hunt for transcript. Mr Hunt said that he was not aware of those claims, at least in the amounts that were mentioned, and said that he would like the opportunity of reconciling his understanding with that of the people instructing counsel for the Attorney General.

In view of all these unresolved matters, I adjourned

the further hearing of the petition until today. Before
adjourning, I emphasised to Mr Hunt the desirability of his

- .. - .

..

sorting out hi= financial position and reducing the summary to
affidavit form so that the Court could be precisely informed
of his debts and his assets. I suggested to him that it would
be in his interest to obtain professional assistance, either
by an accountant examining his affairs and assisting him in
preparing his affidavit, or by his obtaining legal

representation.

When the matter came on for hearing today, Mr Hunt

again appeared on his own behalf. No affidavit was tendered.
Counsel for the Attorney General submitted that I should
proceed to make a sequestration order. The amount that is
unpaid in relation to the bankruptcy petition is only $28.82.

As a matter of power, I do not think that this fact would

preclude the making of a sequestration order. Section 44(1)
of the Bankru~tcv	Act 1966 provides:

presented against a debtor unless - "(1) A creditor's petition shall not be

there is owing by the debtor to

(a) the petitioning creditor a debt
that amounts to $1,500 or two or
more debts that amount in the
aggregate to $1,500, or, where
two or more creditors join in
the petition there is owing by
the debtor to the several
petitioning creditors debts that
amount in the aggregate to
$1,500;"

This condition was of course fulfilled in the

present case. The petition claimed a debt of $2,028.82, and	. .
.-	-.

it is conceded that this amount was in fact due and owing.

Section 52(1) of the Bankruptcy Act states that:

"At the hearing of the creditor's petition, the
court shall require proof [inter alia] of ...
(c) the fact that the debt or debts on which

the petitioning creditor relies is or are still

owing" .

No authority has been referred to either by counsel

for the petitioning creditor or by Mr Hunt, but I interpret
this section as merely requiring that the debt which is

referred to in the petition has not been wholly paid. I do

not think that the paragraph means that the petition must be

dismissed if any part of the debt which is referred to in the

petition has been paid.	It is not uncommon for a debtor to
make a part payment during the pendency of proceedings.

In the present case the debt, the subject of the

petition, has not been wholly paid; there is still $28.28
outstanding. Consequently, as a matter of power, it seems to
me that the Court is in a position to make a sequestration
order. Mr Hunt did not challenge this view of the case. But
he submitted that, as a matter of discretion, I should not
make a sequestration order.

If the only relevant fact here was that $28.28 was owing to the petitioning creditor by way of a balance of the debt referred to in the petition, it is highly unlikely that I

would make a sequestration order. However, it is apparent

that there are significant debts owing by M r Hunt.	I leave
..-,-	a. L

1-

out of account the claim by the barrister because there is no
evidence to establish that Mr Hunt in fact received funds from
his client by way of barrister's fees. So far as the evidence
before me establishes, the only circumstances are that fees
which were earned by the barrister in the course of appearing
at a criminal trial on the instructions of M r Hunt remain

unpaid. If the facts were limited to those circumstances, the

barrister would not have a legally enforceable claim against
Mr Hunt. Indeed that is conceded by his solicitor. It may
well be that there are other relevant facts; but there is no
proof of them. Consequently, I think I should leave that
particular claim out of account. Similarly, although
reference has been made to other claims by the Attorney
General, there is no evidence before me as to those claims.

Whatever may be the true position, I would not be justified in

taking into account allegations from the bar table that there

are other debts by Mr Hunt to the Attorney General.

On the other hand, it is conceded by M r Hunt that he owes money to the Law Book Company. The figure he gave me in

making that concession was approximately $2,800, which is a
sum less than that alleged by the solicitor for the Law Book
Company on 19 December. There is no means today to establish
the true position. Accordingly I limit my consideration of
that claim to the amount which is conceded by Mr Hunt, that is
approximately $2,800.

In addition, there is an affidavit sworn by M r J T

Johnson, who is now a barrister but was until recently a solicitor. He deposes that in October 1990 he obtained judgment in the Local Court against Mr Hunt in the sum of $1,631.03, being for work done by him as a solicitor on behalf of M r Hunt. Annexed to his affidavit is a copy of the judgment in the Local Court from which it appears that the original claim was $1,374. The difference between that figure and the sum of $1,631.03 represents interest and costs.

Mr Johnson's affidavit was sworn on 19 December. It

has not been brought up to date, but M r Hunt conceded today that he "had no recollection" of having paid Mr Johnson any money since 19 December. I think that, if he had made any

payment, it would have been very clearly in his mind, given

his financial pressures and the fact that the period involved

is only some six weeks.

Perhaps more significantly, the claims by Citicorp are still outstanding. The default judgments themselves add up to some $68,200 and no doubt interest has accrued on those

judgments in the period of two and a half years which has

elapsed since they were entered. On 19 December I was

reluctant to take any decisive step which was based upon those

claims, because of Mr Hunt's stated confusion as to what had

happened in the application to set aside the judgments. It

was because of that stated confusion, and his stated desire to

ascertain the position with his solicitor, that I took the

step of adjourning the matter until today. At least that was

v .

the primary reason, perhaps not the only reason. As I have said, there is no affidavit from Mr Hunt to explain what he has done. But he said from the bar table that three days ago,

and I emphasise how long he left to check out the matter, he contacted the solicitor whom he had instructed. He was told that as he, Mr Hunt, had not put the solicitor in funds he had

not been able to proceed with the matter.

This version is a little different from that which

was told to the District Court. I do not think it much

matters. The end result is that there is no present
application before the District Court to set aside these
judgments, despite the fact that it must have been painfully

apparent to Mr Hunt over the last six weeks that the existence

of these judgments was a major obstacle to his obtaining a

dismissal of the petition.

Under all the circumstances, it seems to me that the proper exercise of my discretion is in favour of making a

sequestration order. I emphasise that I am not proposing to

make a sequestration order simply because there is $28.28
owing to the Attorney General; but rather because, upon
examination of the totality of the position, or at least so
much of the situation as is disclosed in the evidence, it
seems apparent that Mr Hunt is unable to pay his debts.

It is notable that Mr Hunt chose not to file any

affidavit setting out his position, despite the very clear

. a .

suggestion that I made to him in respect of that matter on the

last occasion. I think that the only inference that can be

dcawn from the picture, as I have it, is that Mr Hunt is
insolvent, and that the appropriate course, therefore, is to
exercise my discretion in favour of making a sequestration
order.

I find the act of bankruptcy alleged in the

petition, namely that the debtor within six months before the
presentation of the petition failed on or before 4 March 1991,
either to comply with the requirements of a bankruptcy notice
served on him on 11 February 1991 or to satisfy the Court that
he had a counter claim, set off or cross demand equal to or

exceeding the amount specified in the bankruptcy notice to be

proved.	I find that part of the debt upon which the
petitioning creditor relies is still owing.	I make a

sequestration order against the estate of the debtor, Ian

Hunt. I order that the costs of the petitioning creditor be

paid out of the estate of the debtor.

I certify that this and the preceding eight (8) pages
are a true copy of the Reasons for Judgment

of the Honourable Justice Wilcox.

Associate: a

Dated:  31 January 1992

APPEARANCES

The Applicant :	Appeared in person
Counsel for the Respondent:	P I Lakatos
Solicitors for the Respondent:	Crown Solicitor
Date(s) of hearing:	31 January 1992