Re Price, J.E. Ex Parte Impact Systems Ltd v Price, J.E.
[1992] FCA 946
•25 Jun 1992
JUDGMENT No. ..5,.k6../ .,.?,&.
) &
llANKRUPTCY DISTRICT IN THE STATE ) NO NG 1449 of 1990
OF NEW SouTA W W S 1 RE: JOHN ERNEST PRICE
Debtor
EX PARTE: IMPACT SYSTEMS LIMITED
(RECEIVER APPOINTED) f IN LIOUIDATION~
Creditor/Applicant
AND: JOHN ERNEST PRICE
| • | First Respondent |
10 DEC 1992 AND: CHARLES PHILIPPE LOUIS NILANT
Second Respondent
EX TEWPORE JUDGMENT
EINFELD J SYDNEY 25 JUNE 1992 The amended application before the Court today seeks a number of orders. The first is that the application be heard immediately. The eecond is that a Deed of Assignment made on 22 June 1992, by which the assets of John Ernest Price were transferred to Charles Philippe Louis Nilant, be set aside or declared void on a number of grounds. This was approved by a meeting of creditors held on that day under Part X of the
or declaged void. Bankruptcy Act. A third is that a deed of 9 October 1987 between Mr Price and Votraint No 205 Pty Limited be set aside
This amended application was before the Court today in
succession to an application brought before the Court two days
ago. The original application on 23 June also sought the
immediate return of the application and the voiding of the
Deed of Assignment, and in addition sought orders for leave to
issue and serve on short notice a subpoena on Votraint by way
of facsimile transmission. These last mentioned orders were
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intended to permit the issue of a summons torvo;raint under
the Bankruptcy Act 1966 to produce certain documents to the •
Court. . . I,
During the course of argument on 23 June, it' became cleg;r that
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the applicant wished to argue a number of matters, obtside the
ambit of the application then before the Court. I therefore
made orders at that time, including for the filing of an
amended application and for written outlines of submissions,
which were designed to ensure that as many relevant parties as
possible, including creditors present at the Part X meeting
and the Court, were informed of the applicant's intentions, a matter to 2.15 pm today. The reason for the urgency was that and the applicant and the Court of theirs, and adjourned the the petition presented in this matter will become stale at the end of business tomorrow, 26 June 1992 and apparently .cannot be extended. In my absence yesterday, the applicant obtained from Justice Heerey an ex parte order varying my orders for service so as to permit service on the proxies who attended
the Par- meeting for the creditors. The amended application names Mr Price as the first respondent and Mr Nilant as the second respondent. Both of these persons live in Perth and both were supplied by the applicant creditor with an air ticket to come to Sydney for the hearing today. This meant leaving Perth on a plane at 1.00 am this morning. Mr Price attended Court today although he claims that only $10 in conduct money was provided to enable him to take taxis at the Perth and Sydney ends of the flight, a quite insufficient amount.
Mr Nilant is not present today but has communicated an
affidavit to the Court by facsimile and photocopy in which he says that it was simply impossible for him to get here in such a short time. He only obtained a copy of the amended application yesterday and his other engagements make it impossible for him to be present today. He says that he wishes to consider his position in relation to the application, including the possibility of seeking independent legal advice. He also wants to consider the submissions he
might wish to make and any evidence that he might wish to bring. The general tenour of his affidavit suggests that he may well oppose the application brought by the applicant.
As a consequence of all this urgency, the applicant has today effectively thrown before the Court a considerable volume of material, not particularly well put together or in any particula_rly logical form. Mr Price has been cross-examined briefly. I agree with counsel for the applicant that a number of matters arise in relation to the circumstances of this case which warrant close attention and examination. The applicant's submissions include that the liquidator of the applicant was not notified of the meeting which approved the Part X assignment, that the Deed of Assignment is void, that Votraint, which was admitted to vote at the meeting and voted in favour of the assignment, should not have been allowed to vote, and some other matters as well.
For his part Mr Price is represented by counsel who has applied for two orders. One is that if the application is made immediately returnable, it should be adjourned. The second is that the venue of the hearing should be transferred to Perth. The adjournment is opposed on the basis that the petition will expire tomorrow. The change of venue is opposed on the grounds that the main parties are before the Court in Sydney today and are represented. Of course Mr Nilant has been made a party by the applicant but is not present today.
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The matter seems to have been in the Sydney Registry only because the application for a sequestration order was lodged here by the creditor. Otherwise there seems to be no connection at all between this matter and the Sydney Registry of the Court. When the applicant creditor was a functioning company not in liquidation, it was apparently based in Sydney, but thediquidator is a chartered accountant of Melbourne and the two respondents are from Perth.
As the applicant's counsel announced that she only had short evidence to offer on the amended application, I ruled early in today's hearing that the sensible and most expeditious way to approach the matter was to allow provisionally the amended application to be returnable immediately and to hear the application itself and the application for adjournment and change of venue together. This would at least enable me to obtain an idea of the dispute and form an impression of what
| • | was involved. | |||
| Having heard or read the evidence, it is impossible at present to make definitive findings of fact. The applicant suggested that the first respondent, Mr Price, may have engaged in calling the Part X meeting with a view to avoiding bankruptcy. I agree but by itself that says little as that is what all Part X meetings are designed to do. | ||||
| There is also some support for the suggestion that some matters associated wlth the calling and conduct of the meeting | ||||
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| the Act. However, there is provision in the Act for that contravention to be waived or overlooked. If the failure to serve was committed by the second respondent as chairman of the meeting of creditors and trustee of the Part X deed, he would be the person who would ordinarily be likely to make such an application. | ||||
| Thus far, however, he has not had an opportunity even to know what the applicant's submissions in this connection are. This is because the evidence brought to support that part of the applicant's attack on the Part X meeting was read very late in these proceedings today. Not only is it nowhere mentioned in the amended application but it was not mentioned when the matter was before the Court on 23 June. The consequence is that until about 10 minutes ago, I did not know, and therefore Mr Nilant could not possibly have known, that this submission 0 | ||||
| was to be made. | ||||
| On the little material that I have so far been able to consider in the matter, there are some reasons for questioning the claimed debt of Votraint and the entitlement of that company to have voted on the deed of assignment, but these matters cannot be dealt with in an instant as they raise very serious matters indeed. Votraint represented as proxy a number of the creditors at the meeting. Cross-examination was opened up today to suggest that Votraint was a company | ||||
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| the meeting was improperly "stacked" by Mr Price and that its deliberations should accordingly be set aside. There are many other matters of a similar kind that arise here, including the whole structure of the Part X meeting and the coincidence that most, perhaps all, of the creditors were apparently represented by people in some way associated with Mr Price. | ||||
| I can well see how the position of Votraint and the conduct of | ||||
| the meeting call for careful scrutiny but it cannot be done late in the afternoon of the day before the petition expires, nor can it reasonably be done without permitting the people concerned to be heard, including Mr Nilant. If it is going to be suggested that Mr Cranston was in some way involved in a serious move to defraud the applicant as a proper creditor of its legal rights, no such finding could conceivably be contemplated unless he was notified that the allegation was going to be made and an opportunity given to him to be heard upon it. When serious allegations are raised, they must be dealt with in proper and orderly proceedings. | ||||
| In all the circumstances I have no option but to grant the adjournment. It is also appropriate in my view that this matter be heard at a place where it is sensibly based, not in Sydney where no parties and no witnesses reside except solicitors proving formal aspects of the matter. I therefore change the venue of the matter to Perth. The parties may | ||||
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| My remarks regarding the inadequate presentation of the evidence did not relate to the fact that Mr Price was the first and only witness who actually entered the witness box. He had flown from Perth on the 1 am plane and arrived here early this morning. He was anxious to return home on a plane this afternoon at 4.45 pm. As it became quite clear to me during this afternoon that the matter could not conceivably be concluded in all its aspects today, I therefore acceded to his counsel's request that if he was to be cross-examined at all, the cross-examination take place immediately so as to permit him to catch that flight. Mr Price's evidence was therefore taken out of the ordinary turn, and only part of the cross examination could take place. This occurrence by itself did not cause any particular inconvenience. | ||||
| When I spoke about orderly evidence, I was referring to what had happened because of the applicant's attempt to bludgeon a serious case through in an hour or so. When the hearing commenced, the applicant creditor was asked to identify the affidavits upon which reliance would be placed. I read those affidavits and heard and ruled on objections. To assist the applicant in its desire for urgency, I took a pragmatic view on the objections and allowed all or most of the affidavits |
ramifications of the case became clear. subject to relevance and renewed objection later when the full At the time the first respondent's counsel rose to read his affidavits, he asked which matters were before the Court. I then pointed out again that there were three matters being heard together. One was the confirmation of the provisional order for the immediate return of the amended application; the second was his application for an adjournment and a change of venue; the third was, to cover the event that the first application was granted and the second one refused, the matters of substance raised in the amended application. The first respondent's counsel then read his affidavits and drew particular attention to evidence on all these matters. The first respondent's counsel expressly said that he was willing for the substance of the amended application to be heard and determined because the applicant had brought no evidence to
| • | support it. | |
| After hearing this evidence and the cross-examination of Mr Price, and after Mr Price was permitted to leave to return to Perth, counsel for the applicant commenced to argue for the relief sought. During the course of argwnent, she suddenly sought to read additional evidence, including three affidavits going to, amongst other things, the question of whether adequate notice was given to the liquidator. If this was a matter of substance on this application, those affidavits | ||
| a | should have been read earlier. Even though it meant the very | |
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| affidavits had not previously been adumbrated or notified on 23 June or today meant that Mr Nilant could not possibly have had any knowledge of the case which the applicant wished to make in this respect. Yet it was his supposed default in this respect that was being put under attack. |
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It is true that in the written submissions of the applicant, which I ordered to be prepared, and served on Mr Nilant and creditors, there is a summary reference to the affidavits added on the re-opening, including two affidavits of Mr Price of 3 and 8 June, an affidavit of Mr Nilant of 3 June, and an affidavit of a Mr Hodgson which is not dated. As can be seen from their dates, they related to an earlier phase of this dispute.
However, in my opinion, no person receiving those written submissions, especially a non-lawyer, could within less than 24 hours after receiving them reasonably be expected to get hold of all the affidavits concerned, become familiar with and consider them, consult lawyers, make wrltten submissions on them, and be able to meet cross-examination on their subject matter, especially when a considerable part of that time had to be spent in plane travel through the night. That requires too much of any individual and I would not require it of Mr Nilant or anyone elee.
As I see the position, it is not possible to ask a Court to resolve cases urgently which involve not just factual matters but suggestions of substantial impropriety, possibly even fraud, on the part of certain persons, without giving these people proper particulars and a fair opportunity to answer the allegations and be heard on them. At least some of the relief now souat arises from matters known by or notified to the applicant several days ago. It cannot now expect the Court to
ride roughshod over people's rights because of an urgency at least partly of its own making. It is not the way the Court conducts its activities and would not comply with even the most elementary criteria of justice, no matter how reprehensible the actions concerned may turn out to be.
In the circumstances therefore, I will hear what counsel have to say about a date in Perth and costs.
RECORDED NOT TRANSCRIBED The matter will be fixed for directions in Perth on 7 July 1992 when I will be sitting there. I order that the applicant pay the first respondent's costs of today.
I 2 true copy of the ,'ur12;c E,al'. J
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