Re Prowse, Linden John Ex Parte The Debtor

[1981] FCA 264

I N THE COURT O F INSOLVENCY OF THE )

STATE OF SOUTH AUSTRALIA, ADELAIDE.)

E X E R C I S I N G F E D E R A L J U R I S D I C T I O N I N )

- BANKRUPTCY. 1 No. 353 of 1979

BANKRUPTCY D I S T R I C T O F THE STATE OF;

SOUTH AUSTRALIA.

1

R e : LINDEN JOHN PROWSE

Ex Parte: The D e b t o r

hPPLICATION	FOR	DISCHARGE
--

JUDGMENT

1-IONDAY, 7TH DECEhlBER 1381 WHITE: J -

-

Re : LIiTDEM JOHN PROWS

m Parte: The Debtor

White J.

<-

This i s the bsnkrupt 's second application f o r discharge

wi th in e ight months. He became a bankrupt in Play 1979. He

first applied f o r discharge on January 14 1981. Judge Rogerson

re fused tha t appl ica t ion on February 25 1981.

i In January, there was a fu l l hea r ing o f t he app l i ca t ion ,

a t which the bankrupt gave evidence, was cepresented by counsel

and had a f u l l o p p o r t u n l t y t o c a l l what other evidence he wished.

He was also offered the opportunl ty of an adJournment t o c a l l

fur ther evidence i n r e l a t i o n t o s p e c i f i c m a t t e r s .

The bankrupt now re-appl ies for a discharge upon

! .

s u b s t a n t i a l l y t h e same evidence although he does wish t o suFplexenr

tfle previous evidence with further evidence which could have beer,

c a l l e d i n t h e first application. There has beer, no chengf i n

the circumstances.

l

The present sppl lca t lon was brought i n t h e a l t e r n a t l v e

e i t h e r as a r eques t fo r an order for discharge o r f o r an order

varying Judge Rogerson's order. I am n o t s i t t i n g on appesl

Trom Judge Rogerson's order. The appeal i s to the Federa l C o u r t . But it was contended t h a t I had a power t o review Judge Eogersonls

i

order of refusal , and, on the review, to make a f resh order o r

vary the former order . Final ly , I mention tha t t he p re sen t

appl ica t ion i s not made pu r suan t t o l i be r ty to app ly .

Th i s app l i ca t ion ( in the a l t e rna t ive ) was mzde pursuant t c

i

the provis ions of sect ion 37 of t he Bankruptcy k c t 1966 which

! provides insofar as 1s relevant:-

"Subject t o sub-sections (2 ) and (3)'' which a r e i r r e l e v a n t f o r

present purposes, "the Court may rescind, vary o r discharge an

order made by it under th i s Act o r suspend the operation of

such an order.

2.

I n t h e course of t h e hearing of the f i r s t a p p l i c a t l o n ,

t h e bankrupt was a l e r t e d t o t h e hea r say na tu re of much of h i s

evldence and t o t h e n e e d f o r a d m i s s i b l e e v i d e n c e on those and

o ther mat te rs . H i s a t t empt s to p rove by inadmiss ib le ev idence

matters which could have been proved by admissible o r a l or

af f idavl t ev idence were rejected, a l t h o u g h c o n s i d e r a b l e l a t i t u d e

was extended t o him. Letters from h i s S y d n e y employer and from

h i s Sydney medlcal adv i se r as to t h e a d v e r s e e f f e c t s o f r e f u s a l

of an order of d l scha rge w e r e tepdered bu t , upon ObJcct ion, they

were no t adml t t ed in to ev idence . The bankrupt chose not t o call

h i s w i f e a s a w i t n e s s a t t he f l r s t h e a r i n g a l t h o u g h she was t h e

person who had kept the books and who could have answered the

many questlons which called fo r exp lana t ion - The bankrupt par r ied

many Important quest lons w i t h a disclaimer of knowledge of d e t a i l

because h i s wife kept the books - She could have a l so g iven much

d e t a i l a b o u t h l s d i s s l p a t l o n	of	l a r g e	sums	of	t h e	p r i n c i p a l
c r ed i to r ' S money.

A t t h a t tlme, the bankrupt rea l i sed , and h is counse l

r e a l i s e d , t h a t h l s conduct during the course of t h e c o l l a p s e of

the par tnersh lp bus iness and h l s grounds of ha rdsh ip were under

ser ious chal lenge. H e r e a l i s e d a t t he t i m e t h a t the onus of

proof was on him. And h e reallsed tha t h i s was a v e r y e a r l y

a p p l i c a t i o n f o r d i s c h a r g e i n r e l a t i o n t o an e s t a t e where t h e

J o l n t debts exceeded $ 1 0 0 , 0 0 0 , where there was s t r o n g h o s t i l i t y

between t h e p r i n c i p a l credltor and one other credi tor , on the one

hand, and the bankrup t pa r tne r s , on the o the r . I f d i scha rged ,

c r ed l to r s would have received only about 1 c e n t i n the d o l l a r -

I n a ca re fu l ly r easoned Judgment, Judge Rogerson dealt

with the above shortcommgs l n t h e a p p l i c a t i o n , and w i t h t h e

unsa t l s f ac to ry s t a t e o f t he ev ldence . H e had n o h e s i t a t i o n i n

dlsmissmg the o r l g l n a l a p p l l c a t l o n

3.

Mr. Rltchen who was counse l fo r t he bankrup t on t h e

prescnt appl ica t lon but n o t on t h e f i r s t a p p l i c a t i o n , relied

upon several Engl ish decis lons whxh had been decided under

t h e former Bankruptcy A c t 18 83 ( U . K . ) . The cases inc luded

r e Lloyd (1889) 6 Morrell's Bankruptcy Cases 297 a t 3 0 2 ; and

r e Tobias (1891) 1 Q.B. 463. Those cases were of n o h e l p as

they construed a s e c t i o n whlch Included a power of review, which

was also included i n the Austral lan Bankruptcy A c t 1924;but '

it was d e l e t e d I n 1 9 6 6 . The r eason fo r t he de l e t ion 1s q u i t e

obvious. Under t h e o ld Eng l l sh l eg l s l a t ion and unde r the

Austral ian A c t of 1 9 2 4 , bankrupkies were o f p o t e n t i a l l y u n l i m i t e d

dura t ion , un less 10 s h i l l i n g s I n t h e e1 had been pa id . There

was no f l x e d p e r i o d of automatic discharge. A r i g h t t o au tomat ic

d i s c h a r g e a f t e r f i v e y e a r s was f i r s t i n t r o d u c e d I n 1 9 6 6 ; and a t

t h e same t i m e t h e power t o revlew orders was deleted. Under t h e

o l d l e g l s l a t i o n It was necessa ry to keep o rde r s re fus ing d i scha rge

under revlew from time t o t i m e , bu t w l th the sho r t f l xed pe r iod

t h a t was no longer necessary. Of course, even under the present

l e g i s l a t l o n , o b j e c t i o n may be lodged before the end of the period,

t h e objection might be contested and an order made r e f u s i n g

d i scha rge a f t e r a hearing. There m u s t be, and is,power a t some

later s t a g e t o v a r y or d i s c h a r g e t h a t f l r s t order of r e f u s a l .

However, t h e r e must a lso be a change in c i r cums tances . A f r e s h

order made on a f r e s h set of clrcumstances is n o t an order of

review,but a d i f f e r e n t o r d e r madc a f t e r c o n s i d e r a t i o n of a

d l f f e r e n t set of facts ,somcwhat s lmllar to a f r e s h a p p l i c a t i o n

for custody of a c h l l d a f t e r an o r l g l n a l o r d e r h a s bee> made.

Wlthout a substantlal change of circumstances, a premature

rehearing would not be en ter ta lned . Repea ted appl ica t ionson the

same or very s iml la r or pd tched up s i m l l a r f a c t s would c o n s t i t u t e

an abuse of t he p rocess of t h e c o u r t . what amounts t o a change

4.

\ c

.

- - 1 of circumstances i s a matter of degree i n e a c h c a s e . I n t h e

present case, there was no change in c i rcumstances, merely a

change of h e a r t a s t o t h e e f f o r t the bankrupt was prepared t o

p u t i n t o h i s app l i ca t ion .

On the second app l i ca t ion , a f f idav i t s f rom the Sydney

medical adviser and employing company director w e r e a v a i l a b l e

t o be tendered; the d i rec tor f lew over f rom Sydney to Adelaide

to g ive ev idence and t o be cross-examined upon h i s a f f i d a v i t ;

the bankrupt ' s wi fe flew over and was a v a i l a b l e t o g ive ev idence ;

the bankrupt 's accountant had analysed the bankrupt 's books and,

together wlth t he wife, was p repa red to accoun t fo r t h e expend i tu re

of t h e l a r g e amount of money rece ived by t h e bapkrupt and h i s

wife from t h e s a l e of goods supplled by t h e p r i n c i p a l c r e d i t o r .

A l l of t h l s could have been done on t h e f irst a p p l i c a t i o n o r on

an adjourned hearing of t h e f i r s t application. An adjournment

was o f f e r e d ; b u t , by a d e l l b e r a t e e l e c t i o n , the bankrupt chanced

h l s arm, as it were, wlth the b e n e f i t o f legal adv ice , and he

received a n e g a t l v e r e s u l t .

The pol icy of the law t h a t there must be an end to

l i t i ga t ion 6oes no t app ly w l t h the same f o r c e i n j u r i s d i c t i o n s

l i k e bankrupky or custody where it is con templa t ed tha t success iv r

orders will be made and t h a t p r e v i o u s o rdenwi l l be va r i ed or

discharged. However, one aspect of t h a t p o l i c y d o e s a p p l y ,

namely, t h a t an app l i ca t ion , whether of a f i n a l o r i n t e r i m n a t u r e ,

having been once l i t i g a t e d and adludicated upon, should not be

re-opened fo r t he pu rpose of c a l l l n g o t h e r e v i d e n c e , u n l e s s t h a t

o ther ev idence en joys the qualities of genuine " f resh ev idence" .

The flrst qua l i ty o f "fresh evldace" is that it h a s come to the

knowledge of the pa r ty s e e k l n g t o re-open t h e c a s e a n d t o t e n d e r

it, s i n c e " t h e pe r ioa when he could have madeuse of it i n t he

s u l t ' and could not w i t h reasonable di l igence have been discovcrcd

sooner". Orchard v. Orchard ( 1 9 7 2 ) 3 S . A . S . R . 8 9 a t 98-99;

2.

'+

I . 3 Ventura v. Sustek (1976) 14 S.A.S.R. 395 a t 399; Ladd v. Marshal l

(1954) 1 W.L.R. 1489 a t 1 4 9 1 . I t is n o t n e c e s s a r y f o r m e t o

d iscuss the o t h e r two q u a l i t i e s of f resh evidence. This bankrupt

d id no t i n t end t o ca l l fresh evldence as such. H e wanted t o

r e - l i t i g a t e more e f f e c t i v e l y an app l i ca t ion which he chose

i n i t i a l l y t o l i t i g a t e and conclude ineffect lvely. In o t h e r words,

he wanted "a second bite of t h e same che r ry" , a c o u r s e c o n t r a r y t o

the long-es tab l i shed and sens ib le pol icy of the l a w .

S i n c e three wi tnesses had come from Sydney, I o f f e r e d

to hea r them --- de bene esse. Two witnesses did g ive ev idence ,

bu t the bankrupt ' s wi fe d id not . She w a s s a i d t o be indisposed .

I do not wish, by too much comment, t o prejudice any subsequent

hear ing, for exampie, i f ob jec t ion is lodged to automatic

dlscharge a t the end of t h e 5 yea r pe r iod . Su f f i ce it t o say

t h a t t h e e v i d e n c e which I d ld hear de bene esse fe l l s h o r t o f

the o the r r equ i r emen t s fo r "fresh evidence"; so the bankrupt

cannot complain t h a t t h l s s a l u t a r y r u l e o f l a w c a u s e d him any

i n j u s t i c e . It d l d n o t .

Appllcat ion dismissed.

Objectors' c o s t s t o b e t a x e d and p a i d o u t o f t h e

bankrupt 's estate.