Re Redden, B.W.
[1994] FCA 757
•18 Aug 1994
JUDGMENT No. ....." ' 57 .... -.. .i2".'.
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CT OF THE S- 1 No. SN 453 of 1994
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Re : BRUCE WILLIAM REDDEN Debtor
Ex parte:
Applicant
And : T.M. SHOPFITTING PTY LTD
Respondent Creditor
| EINFELD a | ADELAIDE | 18 AUGUST 1994 |
The judgment debtor, Bruce William Redden, orally applies for an order that a bankruptcy notice served upon him at the request of T.M. Shopfitting Pty Ltd (the creditor) be set aside. There is no filed application for that relief despite the provisions of the Act and the rules which require a written application, although the matter is raised by clear inference from the documents which have been filed. Although it is the first case that I have ever seen where somebody seeking to set aside a bankruptcy notice has not filed an application for that relief, I am prepared to proceed in this particular case on the basis that such an application has been filed and waive any breaches of the rules which have thereby occurred. It should not be thought, however, that the Court will ordinarily make orders of
| that kind. |
The bankruptcy notice was issued by the creditor on 14 June 1994 following the registration in the Adelaide Magistrates' Court, Civil Division, on 30 May 1994 of a judgment in its favour obtained in the Industrial Commission of South Australia on 3 May which carried an order that the debtor pay the creditor's costs amounting to some $11,474.35. The basis upon which the debtor seeks to set aside the bankruptcy notice is that he has a counter-claim, set-off or cross-demand as referred to in section 40(L)(g) of the Bankruptcy Act of which he gave notice on 5 July by filing it in the registry. The evidence establishes that this counter-claim or cross-demand is the subject matter of an action in the Industrial Court of South Australia which is fixed for hearing in that Court on 27, 29 and 31 October 1994.
In the claim made in the Industrial Commission which resulted in the order for costs against the debtor, the debtor was seeking damages for unfair dismissal. Although few particulars are provided in the material before this Court, it may be assumed, I think, that the substantial calculation of those damages would have been based upon claims for unpaid wages, the debtor having
| been employed by the creditor for nearly 31 years. Now in the | Industrial Court, the statement of claim alleges that the | |
| creditor owes the debtor some $65,000 on one of two bases: either by reason of his entitlements from an employer-operated superannuation deed of which he was a member whilst employed by the creditor, or for unpaid wages during the employment. There are a number of pleading inadequacies in the statement of claim and in an affidavit filed in court at the commencement of this hearing which purports to verify the statement of claim. For | ||
| present purposes I assume, however, that the statement of claim is acceptable to the Industrial Court and adequately satisfies the rules of that Court for a hearing such as proposed, such that the creditor is under no doubt or illusion as to the basis upon which it is sued and what it is sued for. | ||
| In the first of the two categories of claim, the creditor is sued as trustee of the superannuation fund, also called a retirement fund. The allegation made in this respect is of a particularly serious kind. It is that the two directors of the company, either themselves or through the company itself, caused the insurance company who carried and had custody of the funds of the retirement/superannuation fund to pay to them, upon and after the retirement or cessation of the employment of the debtor, moneys which properly belonged to him and not them. The statement of claim in fact accuses these directors, Robert and Graeme Gilbert, and their father Harold Gilbert, of having acted unconscionably, inequitably, in breach of contract between the debtor and the creditor, and in breach of trust. It is in fact an allegation of theft. In substance the applicant is alleging is that the | ||
| creditor caused, arranged or instructed the wrongful diversion | ||
| of the debtor's money to these directors. | ||
| I am in no position to make any sort of assessment as to the | ||
| chances of success of that very serious claim. The legal representative of the debtor says that a prima facie case has been made out. This is a somewhat tendentious submission because all that has really happened is that the debtor has sworn to the truth, virtually paragraph by paragraph, of the statement of | ||
| claim in the Industrial Court. It is not appropriate to describe that as a prima facie case for at least two reasons. First, the debtor has not been cross-examined on the matter and I simply have no vision of whether the allegation is corroborated or independently evidenced to any degree at all. Moreover, because the verifying affidavit was only presented to the creditor and the Court at the commencement of this hearing, there has been no opportunity to place before the Court any material in opposition to the applicant's assertions. No application to do so was made and I would have been most reluctant to permit such a development for fear that an application for the setting aside of a bankruptcy notice might have degenerated into a type of trial run of the Industrial Court proceedings. The creditor did, however, file an affidavit by one of the Messrs Gilbert annexing the amended answer to the statement of claim in the Industrial Court and stating that the company denied liability for the moneys claimed. | ||
| That situation cannot be properly described as a prima facie case in any meaningful sense. All that can be said is that the | ||
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| claim in the bankruptcy notice is about to be litigated which, if successful, would or might recover for the debtor an amount greater than that which is sought in the bankruptcy notice. I use the word "might" because there is before the Court absolutely no particularisation of this claim made by the debtor, or any corroboration that its total size is in fact $65,000. For my part, I would be quite surprised if any amount payable from a | ||
| superannuation fund would ever come to an exact even sum like $65,000. Superannuation is one of the more difficult areas of human enterprise and it must be extremely rare that a payout, especially one accumulated over many years and presumably involving interest, accruals, bonuses and the like. Hence, no conclusion can be drawn as to whether, even if the debtor is successful in his claim of breach of trust, fraud and theft, that the amount that he would recover would necessarily exceed the amount in the bankruptcy. | ||
| Nevertheless I proceed upon the basis that a counter-claim or cross-demand does exist on which some evidence could be brought which might bring the debtor some success. If that sounds highly speculative, it is because on the material presented to this Court, no possible conclusion could be drawn in favour of the debtor. If what has been presented here today is the totality of the evidence to be put before the Industrial Court, the claim will most likely fail. But assuming that there is real material which can be brought to support the claim, it might be said that | ||
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| The second basis which the debtor advances for his claim for $65,000 is that he is owed this sum for unpaid wages including interest. Here the creditor is sued as the debtor's employer. It seems that this was the same or a similar claim to that which failed in the Industrial Commission and led to the order for costs and this bankruptcy notice. The debtor's assertion is that at some stage in his employment he received an increase in his | ||
| pay of $100 a week and that he had an agreement or an arrangement with his employer that the $100 a week would be paid into the superannuation fund. The debtor says that he at no time received any such amounts either as wages or superannuationcontributions. The assertion made on behalf of the creditor in the amended answer to the Industrial Court claim as verified by the affidavit placed before this Court is that there was no such agreement. The matter is not entirely clear, but the employer may even be denying that the debtor was ever given or entitled to receive the $100 increase in wages at all, let alone that the money was to be paid into the superannuation fund. | ||
| Against that background, the debtor's claim again for the round figure of $65,000 is unintelligible. $100 per week for 6 years and 9 months would amount to $35,100. It is true that there is an unparticularised claim for adding to the amount of the bare wages "all interest that would have accrued had such sums been placed in an interest-bearing fund or such other sum as the court calculates as a fair and just accumulation of such salary". | ||
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| $65,000. How then that figure was decided on I do not know. Maybe the Industrial Court will accept a pleading of that kind but this Court would certainly not do so without further explanation or particulars. It will suffice to say that again there is not the slightest documentary or independent evidence to support the claim. In fact it strikes me that the debtor's claim for the alleged agreement would make it difficult for him | ||
| to succeed in recovering the wages. But maybe there is a piece of genius in this that I am missing somewhere. | ||
| That being said, the debtor suggests that I should, pursuant to the provisions of section 40(l)(g), conclude that the cross-demand is of such substance that the bankruptcy proceedings should be brought to an immediate halt and that he should be allowed to pursue his claim in the Industrial Court unfettered by the continuing process of bankruptcy proceedings. The debtor | ||
| submitted that if this did not occur, he may not be allowed to proceed with the Industrial Court proceedings. | ||
| It should be noted that the judgment debt is not challenged in any way. Moreover, as I mentioned in argument, the continuation of the bankruptcy proceedings at this stage will do nothing to interfere with his action. Certainly if he is made bankrupt between now and the date of the hearing in the Industrial Court, the right of action would presumably accrue to the trustee in bankruptcy and the trustee would or may decide not to proceed | ||
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| proceed with an action which may result in fully compensating the creditors. | ||
| The respondent in the Industrial Court action is the same company as the judgment creditor. It is presumably the major, and is perhaps the only, creditor of the debtor. The fact that the same respondent is being sued in two quite different capacities, one as trustee of the superannuation fund and one as the employer, | ||
| is a matter to be dealt with by the Industrial Court and by this Court when the petition comes on for hearing. Should the bankruptcy proceedings occur before the action in the Industrial Court, an opportunity will be available to submit that the hearing of the application for a sequestration order await the result of the Industrial Court proceedings. It is not for me to judge whether, if such an application is actually made, an adjournment would be given because it will depend on the submissions and circumstances at that time. But it would seem likelythat a court would hear sympathetically an application for a postponement of a sequestration order for the short time until the result of the action in the Industrial Court was known. Certainly as the bankruptcy hearing would be much closer to the Industrial Court hearing, the evidence that both parties were proposing to lead on the debtor's claims would be more closely known and understood, and the chances of success in the proceeding would be much better able to be assessed than it can be today. | ||
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| of the bankruptcy notice at this time on the ground that the debtor has a counter-claim or cross-demand of the kind referred to in the Act. I dismiss the presumed or deemed application to set aside the bankruptcy notice and order that the debtor pay the creditor's costs of the application. |
I certify that this and the
Justice Elnfeld
I Dated: 3Q
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