Re O'Brien, T.T.

[1994] FCA 997

JUDGMENT NO. .,,.,aae.eo.o,.ea* 997 / 9Y "enna-

IN THE FEDERAL COURT OF AUSTRALIA	)
1
VICTORIA DISTRICT REGISTRY	1 No. VP 958 of 1994
)
GENERAL DIVISION	)

RE: TERENCE THOMAS O'BRIEN

Judgment debtor

EX PARTE: PUBLIC TRANSPORT CORPORATION

Judgment creditor

JUDGE :	Heerey J
m:	30 November 1994
PLACE :	Melbourne

EX TEMPORE REASONS FOR JUDGMENT

I have decided that this application for an adjournment

be refused. I will give my reasons.

The petitioning creditor obtained a judgment on 1 July 1991 for rent due in respect of premises leased to the debtor for use as an office in connection with his practice as a solicitor. The amount of the judgment was $24,841.94. The judgment creditor obtained the issue of a bankruptcy notice on 15 November 1991, and the subsequent petition came on for hearing on 20 July 1992. A compromise was negotiated between counsel for the petitioning creditor and the debtor himself, on terms that the debtor would pay within 14 days the amount sought in the bankruptcy notice, that is, $24,841.94, together with interest of $3726.29 and costs of $2250, amounting to a total of $30,819.23, and if that amount was not paid the client would be at liberty to commence further bankruptcy proceedings.

Sonia,

Lrnended judgments as requested-

plus diskette

JUDGES CHAMBEKS, - I

FEDERAL COURT OF AUSTRALIA,

450 LITTLE BOURKE STREET,

MELBOURNE 3000

It was a-further term of the agreement for compromise that if payment of $15,000 was received within 14 days, along with a commitment to provide the balance of the money owing within a further 14 days, the creditor "would be prepared to entertain further indulgence."

The petition was by consent dismissed. It appears that counsel for the petitioning creditor recognised that there was a flaw in the bankruptcy notice. It may be, as the debtor now says, that that was not revealed to him, but it does not seem to me that that fact invalidates the compromise that was reached.

Clearly enough, on the basis of the principles discussed in

In the event, the debtor paid no money under the compromise. the creditor accepted a promise in satisfaction of its debt.

The petitioning creditor then issued the further bankruptcy notice on 17 May 1994. The petition came on for hearing

before Deputy Registrar Agnew on 7 November. The debtor was

represented by counsel. An adjournment was sought. It was

said that the grounds of opposition to the petition would be,

first, that the debtor was solvent, and, secondly, reliance on

the compromise reached in 1992. The Deputy Registrar granted

the adjournment to today, gave directions that the debtor file

material by 21 November, and the petitioning creditor file any

material in reply by 23 November.

It was apparently said at the hearing on behalf of the debtor that he could arrange his affairs in the meantime, and the Deputy Registrar remarked that it was desirable that the debtor get independent legal advice. The debtor did not comply with those directions. He did retain an accountant, a

Mr Shilton, who on 23 November spoke to Mr Delcho Bobeff of

the petitioning creditor's solicitors and said that he had made up as follows:

been instructed by the debtor to provide advice in relation to

the proceedings, and sought a further extension for his client

to "put his affairs into order". Mr Bobeff told M r Shilton

that he had been given specific instructions by the

petitioning creditor to proceed with the bankruptcy

application on 30 November, and that due to the debtor having

failed to honour any of the past undertakings given by him,

the petitioning creditor would not enter into any further

negotiations with the judgment debtor. Mr Bobeff informed Mr

Judgment debt, $24,841.94, mterest to 15 November 1994,

$10,708.55, add~t~onal outstand~ng rent from the date of

judgment to the date of re-entry, $25,431.99, and rates o w m g

to Melbourne Water and the City of Oakle~gh	under the lease,
$13,901.97.

Mr Bobeff had earlier directly advised the judgment debtor of

those details.

The debtor swore an affidavit today in which he set out his assets disclosed as follows: Home at 5 Rothesay Avenue, East Malvern, $380,000, subject to first mortgage, $200,000, and second mortgage, $40,000, interest owing, $5000, leaving an

equity of $135,000. He deposed that further assets were cash at bank, $2000, house furniture, $10,000, and debtors, $4000, work in progress, $10,000, a total of $26,000. He stated that

his liabilities were: Transport Commission, $24,841.94, obvious reason why those creditors would not want payment.

arrears of rent estimated at $30,000, arrears of rates

estimated at $12,000, and various miscellaneous creditors

totalling $5300, a total of $72,141.94. He deposed that his

miscellaneous creditors were not requesting payment of their

debts, an assertion which, I interpolate, may perhaps be

doubted, since his miscellaneous creditors included Telecom

He further deposes that yesterday at 5.40 p.m. he was telephoned by M r Ellis of counsel, retained in the matter by him, and advised that he, M r Ellis, would be unable to appear on his behalf in these proceedings. Mr Ellis told him that he had been advised by counsel for the judgment creditor that affidavit material would be filed on the morning of the hearing of the petition, and that "the contents of the affidavit precluded Mr Ellis from appearing on my behalf." Despite numerous Inquiries the debtor says he has been unable to procure and adequately Instruct counsel to appear on his behalf today.

The genesis of that complaint by the debtor's counsel would appear to be in an affidavit of Susan Mary Phillips sworn yesterday on behalf of the judgment creditor, which deposed

that she had been informed by Mr Bobeff and believed that the

debtor said to Mr Bobeff that he had been "let down by his

barrister", and would be unable to file and serve the

affidavit material which was required by 21 November.

To return to the affidavit of the debtor, he states that during the period of the adjournment since 7 November he has been unable to give concentrated attention to arrange his finance because his 9 year old son has been suffering from severe sinusitis and severe headaches, and that he himself as a result of this and the stress that he has been under as a result of having to contend with the petition, has been in poor health. He seeks an adjournment to the first date convenient in the New Year, which, of course, will be in February, for the purpose of arranging and instructing counsel to represent him to make "further attempts to determine all details of my indebtedness to the judgment creditor, and, if necessary, take the necessary action to oblige the judgment creditor to reveal full details of its clam and costs", and, upon obtaining details of his indebtedness, obtain the necessary mortgage loan upon the security of his home.

An indication of the factors that should be taken into account on an application for adjournment of a creditor's petition, although not, of course, an exclusive one, is contained in the judgment of Sweeney J when a member of the Full Court in Field v Commercial Banking Company of Sydney Ltd 22 ALR 403 at 411. The power to adjourn a petition is conferred by s 33(l)(a) of

the Bankruptcy Act 1966 (Cth). The factors that strike me as

pointing strongly towards the refusal of the adjournment are

that the original debt of the judgment creditor seems to be

undisputed. The very nature of it, a claim for rent, is

inherently likely to be not in dispute. There is no

suggestion of any counterclaim, set-off, or cross-claim which might affect the judgment itself. That amount has been owing for almost 3% years, and, as has been seen, a substantial

further amount has accrued in the meantime. Further, there was

a compromise to which the debtor agreed two years ago, and

which he has not honoured.

All of this tends to show, in my opinion, both that the solvency of the debtor may be seriously doubted, and it also goes to show that the petitioning creditor is not acting unreasonably in opposing this request for an adjournment. Also, I think the debtor has acted in a cavalier fashion in dealing with the directions that were glven in this Court for the further hearing of the matter. He only obtained an adjournment on 7 November as an indulgence by applying on the day of the hearing. The obligations on him to comply with those directions were not onerous. The defences that he foreshadowed were not complex, and there is no good reason, to my mind, why he could not have adequately complied with those directions in the meantime.

I am not satisfied that his complaint about inadequate knowledge of the amounts claimed by the petitioning creditor

is genuine. It seems that M r Bobeff provided him the details,

and, in any event, he well knew of the amount of the judgment

debt. Further, there does not seem to be any reasonable

prospect of him successfully defending the petition even if he

obtain the adjournment sought, and obtained legal

representation. The details he gives in his affidavit do not

present the full picture. In particular, there is no

indication of his income and capacity to meet debts as they

fall due. The fact that he notes $5000 is owing on interest

on his house indicates that he is not able to meet those

commitments out of current income. As I have stated earlier,

I do not see any reasonable prospect of him resisting the

claim on the ground that the judgment debt was compromised in

1992.

The personal circumstances of the debtor, a member of the legal profession, excite understandable sympathy, and I recognise that a consequence of a sequestration order would be that he would have to surrender his practising certificate, but I do not think that, fairly, that should stand in the way of the judgment creditor's right to timely hearing of the petition.

The court orders that a sequestration order be made against the estate of the debtor. The petitioning creditor's costs of and incidental to the petition in this matter, including reserved costs, shall be taxed and paid in accordance with the

Bankruptcy Act 1966. The date of commission of the act of

bankruptcy is 21 June 1994. I order that Robert William

Norton be appointed trustee of the estate of the bankrupt.

I certify that this and the

preceding 7 (seven) pages

are a true copy of the

reasons for judgment of his

Honour Mr Justice Heerey.

A~~earanceS

Counsel for the judgment debtor: In Person Solicitor for the judgment debtor: In Person Counsel for the judgment creditor: T McLean

Solicitor for the judgment creditor: Corrs Chambers Westgarth

Date of hearing: 30 November 1994