Re Marshall, J.G. v Ex parte James Hardie & Coy Pty Ltd

B.4MKRUFTCY - golnq

behlnd ~udgment - default

51strlct Cot2t-t

Iudqment

- unsuccessful

a p p l l c a t l o n

to set

a s ~ 4 e

In Illstt-lct

Court.

ESTOFFEL - Buslness Names	Act (Old) - effect of reqlstratlm
thereunder.

FRACTICE - Judqmerit against two defendants where m l y one c m be

liable, but not both - invalld.

RE:	JOHN GFtATTkN MMSHALL

EX FARTE:

JAWS HARDIE & COY FTY LT@

CL@ PET 262 OF 1485

P?NCTJS J .

BRISBANE

8 JULY 1985

IM THE FEDERAL COURT OF A U S T F AU

)

GENERAL D

IV I

S I0

)

OLD PET 267 of 1 9 8 5

BANKRUFTCY DISTRICT CIF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND )

RE: JOHN GRATTAN MARSI-IALL

EX FARTE:

J P E S HARDIE & COY PTY LTD

PINCUS J.

8 JTJLY 1385

REASONS FOR JUDGMENT

This is a contested creditor’s petltlon In xhlcb. a

judqmrr,t deljtcr, John

Grattan Marshall. seeks tcm ha-.^ th1.s CGurt

go behlnd th? !u.igment

debt relied on in the Fctltlsn of James

Hardle

Coy Pty Lt,i, the petltionlng creditor.

The clrcumstances are, perhaps, somexhdt urusua’. 117 that after lssue of thc? petitlon,

based

on the ]ud~m?nt, an

unsuccessful appllcatlon was made to

the Distrlct Cour t

to set

the Judgment ?tslde. The grounds of that

appllcatlon Included

allegations placed before this Court and dealt wlth below. To

that extent, then, the determlnatlon of the issue here 1n:iolves a

re-conslderatlon Gf a. matter specifically raised in the Ijlstr1ct

Court.	The Distrlct Court heard some	cross-exanln3t1on, I ‘nav-.
not.

2 .

29 March

1963 the

~udyment debtor applled

C O the

petitlonlng creditor for the openlng

of a "credlt ledger account"

In tne name

"Tocmsvllle Pumping & Hydraullcs".

A credlt ledger

account had the effect

allowinq the proprietor of the f ~ r m

pay f o r qoods supplled on order up to "the end of the month followlng (the) month of dellvery". The appllc2tlon form alsG contalned thls c l a u + e : "I/We agree that I f , ajrter ayproval of

credlt, th?re 1 s a change of name or ownershlp o r the D L I S ~ ~ ~ S S

lncorpocated as a

company the credlt

faclllt:? shall be deemed

cancelled tunless and until James Hardl? h Coy P t y Ltd are notifled in wrltlnq of such change and approve of sane". Afcer che appllcatlon Tor a credlt facillty was accepted, the debtor ordered goods from the petitioning credrtor on an order fo rm whlch he or an evployee of hls prepared. The form contalned,

Inter alla, the 3bslness name at

the top and was

slgnFml

by the

debtor at the foot. Goods were supplled

13 accordanc? wlth the

orders, and credit	was given in accordance wlth the credlt
faclllty agreement.

The debtor says, and it is not dlspxted, that the Iudgment debt relates to goods bought

from the crealtsr between

January 1984

and A p r l l 1984;

he says, and It

1 s dlspluted, !kt

the goods were bouqht

by a company named Marshtall Irr13aticn

F t y

Ltd and not by him.

It is common ground that tte mqoGd5 were

nrderec: In the name "Townsvllle Pumplng & Hydraulic .';c-rvlces" and

the ~udgment

d . - b ~ n r had told the credltor.

:he

3ppilcat;m

form referred to above, that he traded

In that name; the cr?dltor

has therefore argued that

it was entltled to

assume, unl-11

distlnctly told tc the

contrary, thar: orders recelved

111 that

3 .

name could be put to the account of the debtor. ?r?sunabl:l the foundatlon of thar: arqument 1s that 111 the absence af clear

notice of

the chanue, the debtor

1 s estopped from denyln? the

contlnulng truth of Lhe assertlon

In the application

form. 'T3

meet that, the debtor relles

on a number of c~rcumstances.

1. The

reglster kept by the

Cornmissloner f o r Corporate

Affalrs, who keeps the records under the Buslness Names

Act 1962

of the State

of Queensland records that

on 13 J u l y 1'383 the

debtfir ceas?d to

carry on buslness under

he name "Townsvllle

Pumplng and

Hydraulics Servlces" and that the company, Marshall

Irrigatlon Pty Ltd, commenced to carry on buslness on that adate,

under

the

same

name.

There

1 s

evldencr

2 s

to when

the

Comm1ssloner was told of

these alleged changes, but

I as5ume for

present purposes

that notlce was glven to n ~ s

offlce bpfor- the

qoods In questlon were ordered. Counsel for the debtor sGbmltted

that tne entry In the reglster showed that the colupany traded In

the name ln cruestlon at the relevant dates. The evidence of the

contents of the reqlsLer

1 s suggestive rather

t h a n concluslve.

It is

improbable, In view

of the content of the ieg1st?r, that

the debtor owned the business In questlon durlng zhe perlod the goods were orrler?d, January 1984 to Aprll 1984. But he may have done; there 1 s no evldence of any asslgnment ~7f chattels or other

assets to the company, nor that any employee, from July

15183, was

paid by the company rather than the debtor.	The FffrcE of this
reglstratlan 1 s dealt wlth further, below.

2. The debtor says that on 30 Apr l l 1984 a part-payment

of the debt

of "Townsvllle Pumplng and Hjrdr3ullc

Servlces" was

made by r;he

company; this 1s Irrelevant, ln - J ; ~ w of

Its date.

More generally,

the debtor has sworn that "a

payments made by

the flrm Townsvllle

Pumplng

and

Hydraulic

Serv1cc.s t n che

~udgment

credltor have been on cheques recording that the drawer

1 s 'Marshall Irrlqatlon Pty

Ltd trading as Townsvllle Pumplng and

Hydraulic Servlces"'.

That is

most unllkely to be true, In vlew

of the admltted fact that the buslness name was belnq used

by the

debtor personally before July

1983.

Perhaps the debtor meant to

say that

all such payments slnce July

1983 were made by cheques

drawn

the

company, but I am

dislncllned

make

that

assumption In favour

of the debtor, slnce hls affidavlte contaln

akgumentatlve and loose materlal, suggestlve

of a lack of c3ie ln

thelr preparation.

It should have been a simple matter to show,

lf that was the fact, that before or durlnq the perlnd when the goods were ordered the credltor got cheques from the cnmparty; In the absence of speciflc evldence to that eff+:.ct, I do not p r o p s ? to take the assertion mentioned, that payments were made DY company cheques, Into account In favour of the debtor-.

3 . The debtor says that the

goods i n ques'lrn

xer?

ordered on forms settlng out the name

of the company and that was

done by stamp~ng on

the form, In ink, the

words "Marshall

Irrlgatlon FLty

Ltd (Inc. In Qld.) trading as T'vllle Pumplny f~

Eydraullc

Servlces

3 / 2 4 1

Inyham Road, Garbutt,

4814, Qld.

sample of the stamp is produced

and It shows that the company's

name 1s in small p ~ ~ n t , much smaller than the busmess name; however, depending on the degree of care wlth whlch the stamp %as

applled, the former would have been leglble.

The credltor does

not deny thls evldence,

Its credlt manager

say11-q In paragraph 6

of hls affldavlt of 15 May 1985 that it was "not clear from the

order form" that the company was 1nvrJlved and that "the prominent

wordlng was 'Townsvllle Plumbing and Hydraulic Services' and that

was the only account whlch

had been arranged with my company".

1s odd that there

1 s

no expllclt evldence that those who

recelved the orders on behalf of the creditor contlnued to

rely

on the mformatlon In

the appllcatlon form referred to

above, or

that they falled to notlce

the stamp.

In response to this

material, the credltor advances some

evidence about dlscusslon

whlch, it 1 s suggested. led It to

believe that the debtor continued to trade In the firm name; that evldence is too vague to be worthy of conslderatlon. To better effect, the credltor r e l l e s upon a telex sdmlttedly sent by the debtor's sollcltor, Mr C.J. Turnbull, dated 4 Fe-nruary i9R5.

Thls unequlvocally sets out that Mr Turnbull act5 for the

clcbtor

and seeks an extension of time to pay.

Mr Turnbull has sworn

that the

"nffer" In the telex was on behalf

of the

company but

that 1 s

lnconslstent with the plain terms of the

dccument. The

credltor also relles upon the inference

whlch may be drawn from

the fact that its actlon was undefended.

The debtor says that he

does not recall being served with the Dlstrlct Court plalnt but

hls

Honour

Judae McCracken,

before

whom

the

debtor

wa5

cross-examined, has found

that

he was and thls Court should

accept that fmdlng. It follows that the debtor's €allure to respond to the plalnt, particularly when consld?red wlth the telex lust referred to, welghs agalnst hlm.

. . I

On the other

hand, there 1s no reason to douk,t the

existence of the company nor

the fact that, at least close to the

relevant tlme, lt had a cheque book.

It seems reasonabin to

lnier that In

mid-13133 the debtor declded, to put

It In the

vernacular, to "trade as a company" and took steps

to that encl.

Something was

sought to be made, in LLhe course of

addresses, of the reglstratlon under the Euslness Names Act 1962

of the State of Queensland.

In this case, the t-eTlstratlon is

relevant In favour of the	debtor lnsofar as ~t increases the
probablllty that the orders	In questlon were In fact, whatever

may have been the posltion ostenslbly,

given on behalf

of the

company, slnce

they

were

given some

months

after

the

date

recorded in the re9lrlster as that on whlch the company commenc?d tradlng in the name "Townsvllle Pumping and tlydrauilc Services".

The authorlties show

that in some clrcumstances reglstratlon may

he put forward as conztltuting a representatlon which

nay or may

not

support

?stoppel,

dependlng

upon

-;hether the

party

asserting

che

stnppei

relied

upon

the

representation:

Mathers

( 1 3 2 7 )

V.L.R.

3 2 6 ;

Johnson;

parte

Greendale

Enqineerlns and Cables Pty. Ltd.	( 1 9 5 7 ) 11 F.L.R. 335: and Alkman
v . Brown ( 1 3 7 3 ) 1 A.C.T.R. 121.	Here, there 1s no evldence that

the creditor either relled on the lnltlal reglstratlon	o r	was
aware of tyre change In the reglstration.

On thc. whole. I am satisfied that the

allegation that

there 1 s no real debt LS made bona flde, In that It has some documentary support. I have recently consldered the approprlate

test to be appiled In deciding whether or not to qo beh~nd

1 .

default ~udgment,

In Re V. & J. Removals; ex parte Earl and

Williams (unreported; 21 June 1985).

The

Court need not always

go behlnd a default

~udgment

even if a bona frde allegation

of no

real debt 1 s made.

Rather, there must be substantial rzasons

f o r

questionlng whether

there 1 s a debt

In truth and reallty

(see

Barwlck C.J.

In Wren v. Mahonv (1972) 136

C.L.R. 212 at pp.222,

224-225) and that principle applies, m my view, In all cases,

both	default Iudgnents and others; however the Court should

regard default Iudqments

with more susplclon. In thls

case,

although the

2udgment

arose

default, It wa5

sense

confirmed upon an appllcation to have It set aslde. The fact of the fallure of the applicatlon does not preclude this icjurr from going behlnd the ludgment (Re Johnson; ex parte Greendale

Enqineerlnq and Cables Pty. Ltd.

( 1 9 6 7 ) 11

F.L.R. 335 at p.341)

and the prlnclple enunclated above

15, I thlnk, uppllcable.

I have not found it easy to determine what course to

take. The debtor's position is an mherently unsttractlve one, In that, taklnq hls case at its besc, he dld

not clearly draw the

attention Qf the credltor

to the Important change whlch had

occurred.

do not thlnk the clause mentloned above

ln the

appllcatlon form, by

vhlch the debtor agreed that %he credlt

faclllty would be cancelled unless the credltor were advlsed

of a

chanqe of the ownership of

the busmess, has any real bearlng on

the questlon whether the debtor can

be heard to say that he dld

not order the goods. Yet it seems scarcely honest for the debtor to have taken no step to inform the creditor, so far as the evidence shows, other than by use of a stamp In whlch the

company's name ?aoeared

in tiny prlnt.

I have, however, come to the conclusion that I should exerclse my dlscretlon In favour of the

~udgment

debtor. The

factor which tips the balance is that, in my respectful oplnlon,

the ~udgment entered by

the District Court was on any vlew

incorrect. Whether the goods were ordered by the company

or by

the debtor and whether

or not the debtor

1 s estopped from

asserting the former, a ~udgment in

favour

cf the

credltor

agalnst both John Grattan Marshall and "Townsville Fumplng and Hydraulic Servlces" cannot be right. There

1 5 a famt suggestlon

that the debtor should be treated as

guarantor. In an affl.davlt

by Mr Cairns, but otherwise there is

no reason to thlnk that both

the debtor and the

company, Marshall Irrigation Pty Ltd, are

llable for the sum

question. Yet chat

appears to be the

effect of the

Distrlct

Court

judgment.

The name

"Townsville

Pumping and Hydraullc

Servlces" in the tltle

cannor: refer to Mr

Marshall hmself, who 1s defendant

in his own name and must be

taken to identlfy the

company, which is reglster-ed In the

offlce

of the Commlssloner for Corporate Affalrs

as tradlng in the

business name.

No doubt the creditor searched before issuing

proceedings, in August 19R4, and ascertalned that, I f not already aware of the fact. In very slmllar circumstances, admittedly not

in a case of hlgh

authorlty,

it has been held

111 Canada that

:udgment cannot

go agalnst both the lndlvidual and the company:

M. & M. Insulation Ltd. v. Brown (1967) 60 W.W.R. 115.

The conclusion to which I have come,

then, 1 s that the

application to

behind the judgment must succeed and the

Iudgment debtor 1 s entitled to an

investigatlon of the questlon

whether

the debl; exists "in truth and reality". Smce,

. , e

. I

resrettably, that cannot adequately be determined

on the wrLtten

materlal I have, I must hear counsel as

to the procedu?al orders

whlch should be made to achieve a resolutlon

af the matter.

FEDERAL LAW COURTS

DATACOM INFORMATION SYSTEMS

[1985] FCA 304

8 Jul 1985