Re Hunter, Laurence Amos ex Parte Winchcombe Carson Ltd v Kahlefeldt, Brian Henry

[1978] FCA 115

I N THE FEDERAL COURT OF AUSTRALIA 1

GENERAL D I V I S I O N 1

BANKRUPTCY DISTRICT OF THE STATE OF 1 No. NSW 339 of 1 9 7 6

NEW SOUTH WALES AND THE AUSTRALIAN )

CAPITAL TERRITORY 1

I n t h e matter of -

THE BANKRUPTCY ACT 1 9 6 6

And i n t h e m a t t e r of -

AN APPLICATION TO REVERSE

DECISION OF TRUSTEE RE -

L A U M N C E

- AMOS HUNTER

ex p l r t e : Winchcombe Carsor, Ltd.

App1icar.t

Br ian Henry XahleEeldt

Respondent

JUDGE MAKING ORDER: R i l e y J.

DATE OF ORDER:	23 May 1978
WHERE MADE:	Sydney

O R D E R

THE COURT 0rU)ERS:

1. That tk,.: d e c i s i o n of t h e t rus tee of the bankrup t es ta te c f

Laurenc? Amos Hunter t o wholly re ject the p roof of d e b t J n

t h e sun: of $5,506.97 sworn on 2 8 September 1 9 7 6 and lodgcd

by t h e a p p l i c a n t b e v a r i e d so as t o a d m i t t h e s a i d p r o o f

t o t h e 3xten t of	$5,296.52	and	re ject It to t h e ex ten t of
$210.45.

2. T h a t t h e t rus tee p a y t h e a p p l i c a ? t ' s t a x e d costs of and

inc iden ; t o t h e a p p l i c a t i o n o t h e r t h a n c o s t s c o n n e c t e d w i t h

t h e a f f l d a v i t o f B r u c e R o d g e r	Buscombe	sworn	on	1 7 November
1977.

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KEADNOTE

nk: ruptcy - R :ejection of proof of debt - Application to review -

Bankruptcy Act 1966, S. 104.

!

REASONS FOR JUDGMENT

Th i s is an app l i ca t ion unde r S. 1 0 4 of the Bankruptcy

A c t 1 9 6 6 by Winchcombe Carson L i m i t e d ( " t h e Company") for a review

of t h e d e c i s i o n by Mr. B. H. X a h l e f e l d t , t h e t r u s t e e of t h e

bankrupt estate of Laurence Amos Hunter, t o reject t h e Company's

proof of deht .

The a p p l i c a t i o n was da ted 18 November 1 9 7 7 and

presumably vas f i l e d on t h a t day. It appeared a t f i r s t t h a t t h e

d e c i s i o n t c reject t h e p r o o f was made on 26 October 1 9 7 7 , and

therefore t h e p r e l i m i n a r y q u e s t i o n a r o s e w h e t h e r t h e a p p l i c a t i o n

was "made wi th in twenty-one days f rom the da te on which the

d e c i s i o n was made". If it w a s no t , t hen , "sub)ect t o t h e power

of the Cour t t o ex tend the time", the Cour t was prevented by

S. 104(3) f rom hear ing it. However, it emerged from evldencr

s u b s e q u e n t l y p r e s e n t e d t h a t a l l t h e t rus tee d i d on 26 October was

t o prepare i n a n t i c i p a t i o n , a n d d a t e , a n o t i c e o f r e ~ e c t l o n s u c h

as i s r e q u i r e d by S. l O Z ( 2 ) a n d t h a t it was n o t until 7 November,

after having had on t h a t day an in te rv iew wi th the bankrupt which

he had expected to have on 26 O c t o b e r , t h a t h e f i n a l l y d e c i d c d t o

reject t h e proof and posted the n o t i c e w i t h o u t a l t e r i n g L t s d a t e .

Accord ing ly , t he app l i ca t ion was made w i t h l n t h e p e r i o d

s p e c i f i e d by S . 104(3). Had t h e d e c i s i o n b e e n made on 26 October ,

i n t h e c i r c u m s t a n c e s o f t h e c a s e a n d d e s p i t e some d i l a t o r i n e c s on

t h e p a r t of t h e Company.1 would have ex tended t he t i m e p u r s u a n t t o

S.	33 (1)	(c)	.
The Company' S proof o f debt (Exhib i t l ) , which was

sworn t o by i t s s e c r e t a r y o n 28 September 1976 and superseded

an earlier one, claimed t h a t when Mr. Hunter became a bankrupt

on 28 J u l y 1976 he was indebted t o t h e Company i n t h e sum of

$5,506.97. Par t icu lars cons i s t ed o f an annexed s t a t emen t , add res sed

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t o Mr. Hunter, of account between the company and hlm for t h e

per iod f rom 1 2 June 1973 t o 28 J u l y 1 9 7 6 . Mr. R. T. Kenny, an

accountant engaged by the t rus tee t o i n v e s t i g a t e w i t h t h e Company -

whose accounts were made available t o him - c e r t a i n matters raised

by t he bankrup t ' s sol ic i tors as t o t h e a c c u r a c y o f t h o s e a c c o u n t s ,

swore on 11 May 1978 an a f f idavi t f rom which emerges a n a s s e r t i o n

t h a t t h e s t a t e m e n t a n n e x e d t o the p roo f of deb t (Exh ib i t 1) does

n o t p u r p o r t t o be a copy of M r . Hunter ' s l edger account bu t i s a

summary w h i c h c o n t a i n s o n l y t h o s e e n t r i e s n e c e s s a r y t o s u p p o r t

t h e Company S claim. H e a d d e d t h a t it d o e s n o t i n c l u d e c o n t r a

e n t r i e s a n d o f f s e t s , b u t a s tudy of it i n d i c a t e s t h e c o n t r a r y .

However t h a t may b e , it does show a ba lance of $5,506.97 i n t h e

Company's f a v o u r a s a t 28 J u l y 1 9 7 6 . Copies of e x t r a c t s f r o m

I Mr. Hunter ' s l edger account are in ev idence . There is n o t much

t o choose between them f o r i l l e g i b i l i t y , and one i s more corq' lete

t h a n t h e o t h e r s ; b u t it i s a p p a r e n t t h a t , as t h e s o l i c i t o r f o r

t h e Company also t o l d m e , t h e o r i g i n a l d o e s n o t n e c e s s a r i l y

reflect i d e n t i c a l l y t h e amount claimed in t he s t a t emen t annexed

to the p roof of deb t . The d i f f e rences be tween t he ba l ances t hey

show as a t earlier d a t e s a n d t h e amount of $5,506.97 which is

c la imed as a t 28 July 1976 can I t h i n k b e m o s t l y a t t r i b u t e d t o

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

annexed t o t h e p r o o f of d e b t ( E x h i b l t 1).

Mr. Buscombe, t h e c r e d i t c o n t r o l l e r of t h e Company,

swore i n a n a f f i d a v i t of 8 May 1978 tha t the ba lance o f $5 ,506 .97

was made up as fo l lows ( I have numbered t h e items f o r c o n v e n i e n c e ) :

..

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" A d v e r t i s i n g c h a r g e s i n c u r r e d i n r e s p e c t

t o proposed sale o f t he bankrup t ' s

p r o p e r t y - 1,372.91

?m amount of $1,608.11 paid i n error

b y t h e a p p l i c a n t t o the bankrupt on

11 A p r i l 1 9 7 4 - 1,608.11

Purchase of 2 7 0 ewes a t Bourke on

1973 22 February - 675.00

Merchandise purchases from 1 2 June

1973 t o 26 A p r i l 1 9 7 4 - 458.21

I n t e r e s t c h a r g e d on o u t s t a n d i n g b a l a n c e s

a t t h e a p p l i c a n t ' s a p p l i c a b l e rates

t o 28 J u l y 1976 - 1,392.74 $5,506.97"

notice of r e j e c t i o n o f proof o f d e b t s t a t e d t h a t

t h e Company's claim was r e j e c t e d on the ground "Bankrupt claims

t h i s amount i s n o t owing". The r e a s o n s f o r t h e r e j e c t i o n a p p e a r

more fu l ly and he lp fu l ly f rom an Bf f idav i t sworn on 11 May 1578

by Edna Marle McNeil, an a c c o u n t a n t i n t h e employ of the t r u c t e e .

They were as follows.

In 1975 the Company i n s t i t u t e d p r o c e e d i n g s i n t h e

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District Court of New South Wales a g a i n s t Mr. Hunter claiminq

$ 4 , 8 6 8 . 1 2 f o r g o o d s s o l d a n d d e l i v e r e d a n d f o r i n t e r e s t t o

22 February 1975. On 11 November 1975 it ob ta ined a d e f a u i t

judgment. On 1 2 March 1976 the judgment was set a s ide and tbLe

defendant was l e t i n t o d e f e n d a n d o r d e r e d t o f i l e a v e r i f i e c

defence wi th in four teen days . On sone da te wh ich does no t appea r ,

he f i l e d a d e f e n c e v e r i f i e d by a n a f f i d a v i t s w o r n on 2 1 December

1975. In it he pu t whol ly o r p a r t l y i n i s s u e e a c h o f t h e Items

(1) - (5) set out above so f a r as they were r e f l e c t e d i n the

s t a t emen t o f claim. Bankruptcy intervened, and the District Court

I

proceedings were never heard .

F u r t h e r , the b a n k r u p t ' s s o l i c i t o r s h a d p r o d u c e d t o

t h e trustee a l e t t e r f rom the Company to a Mr. L. W. Hunter which

s a i d t h a t no f u r t h e r act ion would be taken under a gua ran tee

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. . c

he had given the Company of advances made t o M r . L. A. Hunter ,

and acknowledged "that a l l monies owing under same have been

pa id and tha t y o u a r e r e l i e v e d of a n y c o n t i n g e n t l l a b i l i t i e s

a r i s i n g t h e r e f r o m " . T h i s matter n e e d s n o f u r t h e r c o n s i d e r a t i o n ,

as it is now clear t h a t t h a t a d m i s s i o n is n o t r e l e v a n t : a l l

guaranteed advances	were	repaid and the amount	of	$5,506.97 claimed
does no t i nc lude any .

I s h a l l now d e a l w i t h i t ?ms (1) - ( 5 ) .

(1) Advert is ing: $1,372.91. The amounts for

a d v e r t i s i n g d e b i t e d t o Mr. Hunter i n f ac t to t a l on ly $1 ,352 .91 .

Mr. Hunter :n h i s s t a t e m e n t o f d e f e n c e s a i d t h a t t h e amount agreed

on by t he Cempany and him for a d v e r t i s i n g t h e p r o p o s e d a u c t i o n

sale of h i s p r o p e r t y was approximately $1,000, t h a t it was f u r t h e r

a g r e e d t h a t a n y sum due for adver t i s ing would no t be due and payable

by him until t h e p r o p e r t y was s o l d , a n d t h a t t h e p r o p e r t y h a d n o t

been s o l d wllen he swore h i s de fence .

Mr. Buscombe s a y s t h a t h e was p r e s e n t a t a meet ing of

c r e d i t o r s 0 x 1 1 4 July 1977 a t w h i c h t h e t r u s t e e t o l d t h e c r e d i t o r s

t ha t t he p rope r ty had been so ld . Mrs. McNeil says t h a t t h e p r o p e r t y

was s o l d on 12 September 1977. Whichever date i s c o r r e c t , It i s

no t d i s p u t e d t h a t t h i s payment was d u e only on sale. Therefore

it was n o t due , b u t was o n l y c o n t i n g e n t , o n t h e d a t e o f t h e

bankruptcy and when the p roo f of d e b t was lodged: but it was a

p rovab le deb t and , t he con t ingency hav ing occu r red , i n my op in ion

it should be a l lowed a t $1,352.91.

( 2 ) Payment i n error: $1,608.11. M r . Hun te r i n h i s

s t a t e m e n t o f d e f e n c e s a i d t h a t t h i s amount should not have been

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

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e n t e r e d as a d e b i t a n d as a c r e d l t . The ev idence be fo re me shows

what happened. On 11 December 1973 t h e company c r e d i t e d M r . Hunter

w i th $2 ,930 .58 r ep resen t ing t he p roceeds o f a sale of sheep

and, a f t e r d e b i t i n g him wi th cha rges of $13.50, it s e n t him on

1 3 December 1973 a cheque for t h e n e t proceeds, $2,917.08. The

j o u r n a l e n t r y r e l a t i n g t o t h a t payment was no t pos t ed t o h i s

l e d g e r a c c o u n t u n t i l a f t e r 11 Apri l 1974. In the meant ime, i:

appea red f rom the l edge r t ha t on 31 March 1 9 7 4 M r . Hunter had a

c r e d i t b a l a n c e o f $ 1 , 6 0 8 . 1 1 , f o r whi:h amount t h e company

a c c o r d i n g l y s e n t him a cheque on 11 4 p r i l 1 9 7 4 . Had t h e j o u r n a l

en t ry been g rompt ly pos t ed , t he l edge r wou ld have r evea led t ha t

on 31 March 1 9 7 4 Mr. Hunter was i n f a c t i n d e b i t t o t h e Company,

and the cheque would never have been sent. In my o p i n i o n t h e

claim f o r t b i s amount should be a l lowed.

(3) Purchase of ewes: $675.00. M r . Hunter i n h i s

s t a t emen t of d e f e n c e d i d n o t d i s p u t e t h i s d e b i t , b u t a l l e g e d

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

of a f lock of sheep sold by it for him.

I n a l e t t e r da ted 18 Apr i l 1978 t o t h e b a n k r u p t ' s

solicitors, t h e sol ic i tor f o r t h e t r u s t e e r e f e r r e d t o t h e

r e l evan t pa rag raph o f t he s t a t emen t o f de fence and s a id as t o it

" t h e r e i s i n f o r m a t i o n t o h a n d t h a t t h e no way o f a s c e r t a i n i n g f r m r e c o r d s o r f rom any other

Company d isposed of t h i s mob of

sheep on behalf of the bankrupt . It is t h e r e f o r e up t o t h e

bankrupt t o show to t h e t r u s t e e t h e d a t e a (s ic) p l a c e of sucn

s a l e " . The r e p l y o f 1 9 A p r i l d i d n o t refer to t h i s matter. ;fr.

Buscombe s a y s t h a t t h e b a n k r u p t h a s n e v e r g i v e n t h e Company d e t a i l s

of any f lock of sheep a l l eged ly so ld on h l s b e h a l f a n d n o t c r e d i t e d .

On May 1978 t he sol ic i tor f o r t h e Company wrote , and had del ivered

by hand, t h e r e were t o t h e s o l i c i t o r f o r t h e t r u s t e e a l e t t e r ask ing whether

a n y s u c h d e t a i l s . No rep ly has been g iven .

-.~- - . _ _ . - . - _- ~ - _ _ - .- - . .. I -_ .

I	-6-
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I There is no ev idence to suppor t Mr. Hunter' 8

a l l e g a t i o n , a n d	i n my	o p i n i o n t h i s	claim	should be a l lowed In
f u l l .

( 4 ) Merchandise purchases: $458.21. M r . Hun te r i n

h i s statement of defence said t h a t h i s a c c o u n t h a d b e e n " d e b i t e d i n

I

t h e sum of $353.06 for merchandise pnrchased from"the Company

b u t t h e Comllany had n o t c r e d i t e d him " f o r t h e p a y m e n t s i n r e s p e c t

of such merchandise". A s w i th i ten (3 ) , no i n fo rma t ion as t o

omission of credits has been for thcoming f rom the bankrupt . Mr.

Buscombe says he has s ea rched t he Company's records and found no

record of any payment made by the bankrupt no t having been c red l ted

t o Mr. Hunter 's account .

The s ta tement annexed t o the p roo f o f deb t (Exh ib i t 1)

and t he l edge r	account	show	o n l y t h e f o l l o w i n g d e b i t s f o r
merchandise:

Merchandise 52.10 ?.7.73 Harden

,I

20.8.73 " 32.00

12.60 Parkes ?.10.73

I,

13.12.73

,I 3.06

306.00 Harden 27.12.73

II I

28.12.73 86.40

,I I,

28.12.73 4 9 . 4 0

,I I,

1. 1 . 7 4 68.40

,I I,

4 . 1 . 7 4 136.80

,I I t

?. 4 . 74 9 .00

Total 755.76

and t h e f o l l o w i n g c r e d i t s :

27.12.13 Cash: Ex Harden 306.00

3 . 2.74 .Gene ra l c r ed i t s :

Refund merchandise 7 6 . 0 0

Total 382.00

BALANCE $373.76

The c r e d i t f o r $ 3 0 6 . 0 0 c l e a r l y l e a d s t o t h e i n f e r e n c e t h a t t h e

merchandise debi ted a t $306.00 on 27 December 1973 was p a i d for

i n c a s h o n t h e same day. Subtract ing $306.00 f rom the t o t a l of

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i . :

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$755.76 deb i t ed fo r merchand i se leaves a ba lance of $449.76.

! If f u r t h e r a l l o w a n c e i s made f o r t h e c r e d i t of $76.00 f o r

"refund merchandise", the balance becomes $373.76. It does no t

seem p o s s i b l e t o a r r i v e a t e i t h e r M r . Hunter ' s t o t a l of $353.06

i or M r . Buscornbe's o f $458.21: and the l a t t e r seems t o b e s i m p l y

t h e r e s u l t of s u b t r a c t i n g from $5,506.97 t h e to ta l s of items

1, 2, 3, and 5 as a l l e g e d by Mr. Buscombe. Doing t h e best I can

wi th t he i n fo rma t ion	p u t	b e f o r e	me,	1 t h i n k t h i s	item	should	be
allowed a t $373.76.

(5) I n t e r e s t : $1,392.74. Mr. Hunter i n h i s

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statement of defence said t h a t t h e Company had deb i t ed h l s ac2oun t

w i t h i n t e r e s t i n t h e sum of $561.29, and t h a t i n t e re s t was n o t

payable as " a l l purchases from ( t h e Company) for t h a t p e r i o d

were cash purchases" . There i s no explana t ion of how h e a r r i v e d

a t t h a t f i g u r e , a n d the period and cash payments t o which he

refers are n o t i d e n t i f i a b l e : b u t t h e e v i d e n c e i s tha t he had a

running account wi th the Company on wh ich deb i t ba l ances ca r r i ed

i n t e r e s t . The sum claimed by t h e Company is a c c u r a t e l y r e f l c c t e d

i n t h e s t a t e m e n t a n n e x e d t o t h e p r o o f of debt ( E x h i b i t 1).

Mr. Buscombe s a y s t h a t i n t e r e s t was charged a t t h e Company's

a p p l i c a b l e	rates.	I n	my	o p i n i o n	t h i s	item shou ld	be	a l lowed	i n
f u l l .

The r e su l t $0 f a r i s t h a c t h e items s a i d t o make

up the Compeny's claim for $5,506.97 s h o u l d i n my opin ion be

admi t ted as fo l lows: .

Item (1) 1,352.91

(2) 1,608.11

(3) 675.00 (4) 373.76

(5) 1,392.74 5,402.52

. .- . ~ - ----

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The Company agreed, however, that from i ts t o t a l

claim of $5,506.97 as ca l cu la t ed by Mr. Buscombe the re shou ld be

deducted an amount of $106 d e b i t e d t o M r . Hun te r fo r a payment

by the Company on h i s b e h a l f f o r f e r t i l i z e r s . Mr. Hunter

!

main ta ined tha t he had been debi ted twice f o r t h i s amount, but

had received only one consignment of f e r t i l i z e r and had pa id for

it i n c a s h . W i t h o u t a d m i t t i n g t h e v a l i d i t y o f h i s claim, which

t h e r e is no evidence t o s u p p o r t , t h e Company agreed t o concede

t h a t amount and so reduced i t s claim of $5,506.97 by $106.00 t o

I

$5,400.97. As I have de t e rmined t ha t t he claim of $5,506.97

shou ld fo r o the r r ea sons be r educed to $5,402.52 I s h a l l r e d u c e

t h e la t ter amount by $106 t o $ 5 , 2 9 6 . 5 2 a n d s h a l l v a r y t h e t r n s t e e ' s

dec i s ion acco rd ing ly .

The Company h a s s u b s t a n t i a l l y s u c c e e d e d i n i t s

app l i ca t ion and shou ld have i t s c o s t s , s u b j e c t t o one matter.

A t t he hea r ing confus ion was caused and cons iderable time was

was ted i n a t t empt s a t r e c o n c i l i a t i o n of e v i d e n c e u n t l l it was

d i s c o v e r e d t h a t an annexure t o M r . Buscombe's a f f l d a v i t of

17 November 1977 was n o t , as it was a l l e g e d t o b e , a copy of the

r e l e v a n t p r o o f of d e b t b u t w a s an incomplete copy of an ear l ie r

and superseded proof of debt f o r a d i f f e r e n t amount. Anothel

annexure , purpor t ing t o be a copy of a l e t t e r , was v i r t u a l l y

meaningless because documents t o which the l e t te r r e f e r r e d a - 3

which were enc losed wi th it were n o t made p a r t of the annexure .

I n an a f f i d d v i t o f 8 May 1978 M r . Buscombe had t r i e d ( w i t h

l i m i t e d s u c c e s s ) , b y a paragraph of no l i t t l e obscur i ty and

annexures whose p h y s i c a l c l a r i t y was f a r f r o m s a t l s f a c t o r y , t o

remedy t h e la t ter d e f i c i e n c y i n h i s ear l ier a f f i d a v i t . The Company

shou ld no t have t he costs o f t h e e a r l i e r a f f i d a v i t . I add

t h a t a f f i d a v i t s g e n e r a l l y were n o t a b l e for careless i d e n t i f i c a t i o n

a n d c o l l a t i o n o f a n n e x u r e s a n d f o r t h e p o o r q u a l i t y of photocopying~

-9-

The o r d e r s I make are:

1. That t h e d e c i s i o n of t h e t r u s t e e of t h e

bankrupt es ta te of Laurence Amos Hunter t o wholly r e ~ e c t t h e proof of d e b t l n t h e sum

of $5,506.97 sworn on 28 September 1976

and lodged by the a p p l i c a n t be v a r i e d so as

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

I	$5,296.52	and	re lect	It	t o t h e e x t e n t o f
$210.45.

I 2. T h a t t h e trustee p a y t h e a p p l i c a n t ' s t a x e d

costs of and inclden'- t o t h e a p p l i c a t l o n

o t h e r t h a n costs c o n n e c t e d w i t h t h e a f f i d a v i t

of Bruce	Rodger	Buscornbe	sworn	on	1 7	November
1977.

l

I

Re: LAULLE.:S:I: J i O S HUBTER

Applicant: Winchcoabe Carson Ltd.

Respondent: j r l m lienry Kah le fe ld t

CORAM : R l l ey J.

HJLWING DATZS : 1 3 t h December, 1.377;

14th Lecember, 1977;

7th I*lmch, 1978;

17th Larch, 1978;

28th hlarch, 1578;

15th day , 1978.

JUUGXENT :	23rd May, 19-18.
COUlJSEL r'OH 23PLICANT:	N. G. Cassln.

INSTHUCTING SOLIC ITOXi : N. G. Cassim, s o l i c i t o r , Sydney.

Mr. Kely.

bk, R. P. 3rownette.

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