Re Johnson Ex parte Equus Financial Services Ltd Phillip Arthur Hennessy Michael Joseph Dwyer Nick Russo and Alexander Robert Mackay Macintosh - [1995] FCA 715

CATCHWORDS

BANKRUPTCY - application to set aside bankruptcy notices - counter-claim set-off or corss demand against all judgment creditors - must show a prima facie case - whether loss could be established - discharge of judgment debts - duty of receivers owed to shareholders and creditors - duty of receiver owed to debtor

Bankruptcy Act 1966 s 40(1)(g), 41(2)(a)
Corporations Law ss 432, 434

Chesson v Smith (1992) 35 FCR 594 Refd
Australian Workers' Union v Bowen (1945-6) 72 CLR 575 Cons
Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 Refd
Gould v Vaggelas (1983) 157 CLR 215 Refd
Groom v Abela (1992) 37 FCR 277 Refd
Expo International Pty Ltd v Chant [1979] 2 NSWLR 820 Refd
Re Excel Finance Corporation (Receiver and Manager Appointed); Worthley v Australian Securities Commission (1993) 41 FCR 346 Cons
Re B Johnson & Co (Builders) Ld [1955] Ch 634 Refd

Re Anthony James Johnson and Re Francis Edward Johnson Ex parte Equus Financial Services Ltd Phillip Arthur Hennessy Michael Joseph Dwyer Nick Russo and Alexander Robert Mackay Macintosh
No BN 99 of 1995 and No BN 132 of 1995 and No BN 683 of 1995 and No BN 684 of 1995 and No BN 686 of 1995 and No BN 686A of 1995

Kiefel J Brisbane 7 September 1995

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND No. BN 99 of 1995
No BN 132 of 1995

No BN 683 of 1995
No. BN 684 of 1995
No BN 686 of 1995
No BN 686A of 1995

RE:ANTHONY JAMES JOHNSON

AND RE: FRANCIS EDWARD JOHNSON

Judgment Debtors/Applicants

EX PARTE:EQUUS FINANCIAL SERVICES LTD PHILLIP ARTHUR HENNESSY MICHAEL JOSEPH DWYER NICK RUSSO AND ALEXANDER ROBERT MACKAY MACINTOSH

Judgment Creditors/Respondents

JUDGE MAKING ORDER: Kiefel J.

DATE OF ORDER: 7 September 1995
WHERE MADE: Brisbane

MINUTES OF ORDERS

THE COURT ORDERS THAT:

The applications numbered BN 686 and BN 686A of 1995 be dismissed.

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

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND No. BN 99 of 1995
No BN 132 of 1995

No BN 683 of 1995
No. BN 684 of 1995
No BN 686 of 1995
No BN 686A of 1995

RE:ANTHONY JAMES JOHNSON

AND RE: FRANCIS EDWARD JOHNSON

Judgment Debtors/Applicants

EX PARTE:EQUUS FINANCIAL SERVICES LTD PHILLIP ARTHUR HENNESSY MICHAEL JOSEPH DWYER NICK RUSSO AND ALEXANDER ROBERT MACKAY MACINTOSH

Judgment Creditors/Respondents

JUDGE MAKING ORDER: Kiefel J.

DATE OF ORDER: 7 September 1995
WHERE MADE: Brisbane

MINUTES OF ORDERS

THE COURT ORDERS THAT:

The applications numbered BN 683 and BN 684 of 1995 be dismissed.

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

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND No. BN 99 of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Re Johnson Ex parte Equus Financial Services Ltd Phillip Arthur Hennessy Michael Joseph Dwyer Nick Russo and Alexander Robert Mackay Macintosh [1995] FCA 715
Case: [1995] FCA 715
Decision Date: 7 SEPTEMBER 1995

CaseChat Overview and Summary

The applicants, Anthony James Johnson and Francis Edward Johnson, sought to set aside bankruptcy notices served upon them, arguing that they had a counter-claim, set-off, or cross demand against all the judgment creditors. The notices related to costs ordered to be paid in three sets of proceedings in the Supreme Court of Queensland. The judgment creditors were Equus Financial Services Ltd, Phillip Arthur Hennessy, Michael Joseph Dwyer, Nick Russo, and Alexander Robert Mackay Macintosh, who were the defendants in the Supreme Court action. The applicants argued that Equus and Russo had breached the agreement and committed fraud by not advancing the money that had been assumed to have been loaned to Rural Finance. The applicants also claimed that the receivers were liable for failing to ascertain the true financial position of Rural Finance.

The court considered whether the applicants had made out a prima facie case against all the judgment creditors, including the receivers. The court found that the material did not disclose a case of fraud against the receivers and that the applicants had not shown a loss that would necessarily arise from the receivers' conduct. The court also found that the applicants' claims for damages against the receivers were not enforceable as they did not have the same standing as the companies in the Supreme Court action. The court further held that the receivers owed a duty to the applicants only if they had acted fraudulently, which was not shown in this case.

The court dismissed the applicants' applications to set aside the bankruptcy notices, finding that the applicants had not shown a loss that would entitle them to a discharge of the judgment debts. The court also found that the receivers were not obliged to inform the applicants of the financing by or payments by Equus and the dealings in the hold-back deposit account. The court held that the applicants' claims for damages against the receivers were not enforceable and that the receivers had not acted fraudulently. The court further held that the beneficial right to payment of the debt enured only to Equus and that the receivers were not under any equitable duty to pursue the applicants' counter-claim set-off or cross demand. The court dismissed the applications with respect to all three sets of notices.

Orders