Re Hutton, Lynette Denise & Anor Ex Parte

[1995] FCA 1091

IN THE FEDERAL COURT OF AUSTRALIA      )
GENERAL DIVISION  )
   No. QP 425 of 1995
BANKRUPTCY DISTRICT OF THE            )
STATE OF QUEENSLAND                   )

RE:LYNETTE DENISE HUTTON AND PETER HUTTON

Debtors

EX PARTE:BORAL MONTORO PTY LTD ACN 002 944 694 trading as BORAL ROOF TILES

Applicant

AND:QUEENSLAND WELDED MESH PTY LTD ACN 010 471 741

Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:     Spender J

DATE OF ORDER:          15 December 1995

WHERE MADE:            Brisbane

THE COURT ORDERS THAT:

(1)Boral Montoro Pty Ltd ACN 002 944 694, trading as Boral Roof Tiles, be substituted as petitioning creditor for Queensland Welded Mesh Pty Ltd ACN 010 471 741 in petition number 425 of 1995.

(2)The substituting petitioning creditor's costs of today be its costs in the petition.

NOTE:     Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA      )
GENERAL DIVISION  )
   No. QP 425 of 1995
BANKRUPTCY DISTRICT OF THE            )
STATE OF QUEENSLAND                   )

RE:LYNETTE DENISE HUTTON AND PETER HUTTON

Debtors

EX PARTE:BORAL MONTORO PTY LTD ACN 002 944 694 trading as BORAL ROOF TILES

Applicant

AND:QUEENSLAND WELDED MESH PTY LTD ACN 010 471 741

Respondent

CORAM:    Spender J
DATE:     15 December 1995
PLACE:    Brisbane

REASONS FOR JUDGMENT

This is an application for substitution of a petitioning creditor.  The material before me shows that the judgment debt on which the application for substitution is founded was obtained approximately one fortnight after the act of bankruptcy which founded the original creditor's petition.  The material shows that there are grounds for thinking that an application, only recently brought, to set aside the default judgment against the debtors, may be successful, particularly in the case of Lynette Denise Hutton.

As I understand it, the application to set aside the default judgment is to be listed early in the New Year.  A number of matters have been relied on by Mr Miller, who appeared for the debtors, in opposing the application for substitution.  It seems to me, however, that the matters to which he refers are matters which will properly be considered when the court has to consider whether to make a sequestration order on the petition.  I have been referred in that respect to a number of cases but for present purposes it is sufficient to note that a Full Court of the Federal Court constituted by Deane, McGregor and Sheppard JJ in Dean v QUF Industries Ltd (1981) 51 FLR 317, said, at 321:

"If there is a genuine dispute between the appellant and the respondent as to whether the appellant is indebted to the respondent, the appropriate order, when the petition comes on for hearing, may be that the petition be dismissed.  It was not, however, necessary that his Honour reach any conclusion in that regard on the application for substitution.  While it is necessary, as part of an application for substitution, that the person seeking substitution claim the existence of a debt of the requisite amount, it is not necessary that he should actually establish the existence of the debt at that stage. "

Cooper J in Re: Faint; Ex parte: The Shell Company of Australia and Ors (Federal Court, unreported, 26 September 1994) referred to that case and to the observations by the High Court in Hyams v Elder Smith Goldsbrough Mort Limited (1976) 133 CLR 637, where the High Court held that an order for substitution did not involve a finding that the respondent was indebted to the substituted petitioner in the requisite amount at the relevant time. Cooper J referred to the observations of Barwick CJ, with whom Gibbs and Mason JJ agreed, where the Chief Justice said, at 639:

"Although a creditor seeking an order of substitution must claim the existence of a debt of the required amount as at the date of the act of bankruptcy, it is not necessary, in my opinion, that that creditor should establish, as part of his application, that his debt was in fact in existence at that time.  Of course, if it appears on the face of the material he produces in support of his application that his debt was not in existence at the appropriate time the court should not order the substitution.  McNamara v Langford (1931) 45 CLR 267, properly understood, decides no more than that.  Whether or not the substituted petitioning creditor's debt is sufficient in point of time to support the petition will be decided when the petition is heard. "

Now, in this particular case, Mr and Mrs Hutton dispute their indebtedness to the respondent.  However, there is in existence a judgment of the Magistrates Court of 28 July 1995 evidencing the debt which the substituting petitioning creditor claims existed as at 17 July 1995, the date of the act of bankruptcy in the earlier petition.

In those circumstances, it seems to me that I should order that Boral Montoro Pty Ltd ACN 002 944 694, trading as Boral Roof Tiles, be substituted as petitioning creditor for Queensland Welded Mesh Pty Ltd ACN 010 471 741 in petition number 425 of 1995. The substituting petitioning creditor's costs of today be its costs in the petition.

I certify that this and the preceding two (2) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.

Associate
  Date: 15 December 1995

Counsel for the applicant:        Mr P. McQuade    
Instructed by:                  James Conomos    

Solicitors for the debtors:       Murrell Stephenson

Date of Hearing:                15 December 1995