Re Poss, M. v Ex parte Cyrens Holdings P/L

[1994] FCA 566

RE: MARTIN POSS
EX PARTE: CYRENS HOLDINGS PTY LIMITED, PETER ROBIN WILLIAM SMITH and WENDY
ABBOTT DANFORTH
No. P14 of 1994
FED No. 566/94
Number of pages - 3
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
BANKRUPTCY DISTRICT OF NEW SOUTH WALES
GENERAL DIVISION
LINDGREN J

CATCHWORDS

Bankruptcy - Generally - application to adjourn the hearing of the petition - adjournment sought to allow the Debtor to seek advice whether to appeal an earlier judgment in this matter - whether adjournment should be granted.

Bankruptcy Act 1966 (Cth)

Ahern v Deputy Commissioner of Taxation - (Qld) (1987) 76 ALR 137
Adamopoulos v Olympic Airways SA (1990) 95 ALR 525

HEARING

SYDNEY, 16 August 1994
#DATE 18:8:1994

M. R. Aldridge of counsel instructed by Price and Company appeared for the Debtor

A. J. O'Brien of counsel instructed by Peter D. Irving appeared for the Creditors

ORDER

THE COURT ORDERS THAT:
1. The application for the adjournment sought be refused.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

LINDGREN J In these proceedings which were before me for hearing on Tuesday 16 August 1994, the Debtor applied for an adjournment of the hearing of the Creditors' petition until 30 August 1994, a period of 14 days. The ground of the application was that the Debtor wished to take advice as to whether he should appeal against a judgment given in the proceedings on 5 August 1994 by Davies J. The proceedings were called on late in the day and because I wished to study that judgment, I adjourned the proceedings and the application for adjournment after hearing the latter to to-day, Thursday 18 August 1994.

1. By their petition, the Creditors seek a sequestration order against the estate of the Debtor founded upon an act of bankruptcy consisting of his failure to comply with a bankruptcy notice which was served on him on 7 July 1993 and which referred to a claim by the Creditors of $195,505.28 together with interest making a total amount of $310,953.46 due to them under a final judgment obtained by them against him in this Court on 15 October 1992.

2. The petition first came on for hearing on 25 March 1994 and was adjourned on that date and on 26 April 1994, 10 May 1994 and 17 May 1994 the adjournment on this last date being to 31 May 1994. On 30 and 31 May 1994 certain events occurred which the Debtor was to contend had produced the result that the debt had ceased to be owing to the Creditors. On 31 May 1994 the hearing of the petition was adjourned by the Registrar to 14 June 1994 with a direction that if any further adjournment was to be sought, an affidavit in support was to be filed and served on or before 14 June 1994. On 14 June 1994 directions were made for the filing of affidavits and the proceedings were adjourned to 28 June 1994.

3. By an application filed in the proceedings on 21 June 1994, the debtor applied for, inter alia, a declaration that on 31 May 1994 the Debtor and the Creditors had entered into a binding agreement which included terms to the effect that the Debtor would pay to the Creditors $30,000 by two instalments of $15,000 each, the first forthwith and the second on or before 30 September 1994 in full and final satisfaction of the Creditors' claim in the proceedings against the Debtor, and that in consideration of the payments totalling $30,000 the Creditors would execute Terms of Settlement releasing the Debtor from further liability as well as executing Short Minutes of Orders resulting in dismissal of the Creditors' Petition, each party paying his or their own costs. By the same application, the Debtor sought an order in the nature of specific performance of that alleged agreement.

4. On 28 June 1994 the hearing of the Creditors' Petition and of the Debtor's application were adjourned to Friday 9 July 1994 before his Honour.

5. On that date his Honour heard the Debtor's application. The parties were represented by counsel. The evidence was on affidavit and there was cross-examination.

6. His Honour delivered judgment on 5 August 1994. His Honour held that the case for the Debtor failed because it had not been shown that one of the Creditors, Peter Robin William Smith ("Mr Smith") had had authority from the other Creditors, his wife Wendy Abbott Danforthy, and Cyrens Holdings Pty Ltd which was apparently under their control, to settle the matter with the Debtor on the terms propounded by the Debtor. A second ground for his Honour's finding against the Debtor was that he held that a certain statement by Mr Smith to the Debtor did not amount to a purported settlement on behalf of all three Creditors. On the contrary, his Honour held that the statement was consistent with Mr Smith's meaning that he himself was prepared to accept the Debtor's offer.

7. Before me on 16 August 1994 Mr A. J. O'Brien of counsel appeared for the Creditors and Mr M R. Aldridge of counsel appeared for the Debtor.

8. The period for filing and serving any notice of appeal to institute an appeal from his Honour's judgment is 21 days from 5 August 1994 that is to say, a period ending on 26 August 1994. At the time of the hearing of the application for adjournment before me on Tuesday 16 August 1994, a period of 11 days had elapsed in which the Debtor's legal advisers might have identified possible grounds of appeal. The debtor was represented before me by experienced counsel who did not identify any particular ground of appeal which might exist. The Debtor's submission was that he desired to have the benefit of the full period of 21 days allowed for the filing of a notice of appeal in which to be advised and decide whether to appeal and that in the absence of any suggestion of prejudice to the Creditors a proper exercise of my discretion would be to grant the adjournment.

9. Mr Aldridge referred me to two authorities of the Full Court of this Court said to be relevant to the exercise of my discretion, namely Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137 at 148 and Adamopoulos v Olympic Airways SA (1990) 95 ALR 525 at 531-532 in which the former case was cited. The two cases to which I have referred establish that generally, and subject to exceptions, where an appeal based on genuine arguable grounds is pending against the judgment relied on as the foundation of the bankruptcy proceedings, the court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of the debtor. Clearly, and as Mr Aldridge acknowledged, that principle is not, in terms, applicable to the facts here. Here, there is no appeal pending at all, and further the judgment of Davies J did not constitute the final judgment or order on which the present bankruptcy proceedings are founded. Rather, the Debtor, in the application before Davies J, propounded a contract by which it was said that the debt founding the bankruptcy proceedings had been released or agreed to be released.

10. It is clear that I have a discretion as to whether to grant the adjournment sought. The period sought is short (only 10 days from the hearing before me on 16 August). The Debtor says that an adjournment will cause no prejudice to the Creditor, but this is an inadequate way of stating the position. As between the parties to litigation each is entitled to a hearing on the date fixed for it. It is incumbent on a party seeking an adjournment to make out a case for it, and although lack of prejudice to the other party is to be taken into account, it does not alone discharge that onus. In any event, an adjournment usually involves some prejudice in the form of the additional costs associated with the further appearance made necessary by the adjournment.

11. Without saying that he wishes to appeal, and without venturing any criticism of the judgment of Davies J which might suggest a ground of appeal, the Debtor says no more than that he wishes to have more time to seek legal advice on the prospects of an appeal. I am not satisfied that there is a genuine and arguable ground of appeal against the judgment of Davies J given in these proceedings on 5 August last. In my view, a case for further adjourning the hearing of the Petition has not been made out, and a proper exercise of my discretion is to decline the application for the adjournment until 30 August 1994. I do so, and the hearing of the Petition will proceed.