Re Rohde, Samuel Theophil Ex Parte Rohde, Hazel

[1983] FCA 426

IN THE FEDERAL	COURT OF AUSTRALIA	)
)

GENERAL DIVISION

!

BANKRUPTCY DISTRICT OF THE STATE OF	)	Nos. P1453/4 of 1982
)
NEW SOUTH MALES AND THE
1

AUSTRALIAN	CAPITAL	TERRITORY	)
Re: SAMUEL THEOPHIL ROHDE
Ex Parte: HAZEL HOHDE

JUDGE MAKING ORDER:	Lockhart J.
WHERE MADE:	Sydney
DATE :	115 Juiy 3.983
THE COURT ORDERS THAT:

1. The period at the expiration of which the petitions will

elapse be 16 November 1983:

2.	The hearing	of	the petitions be adjourned until further
order:

3.	Each party be at liberty	to restore	the petitions to the
list on 7 days notice;

4. The debtor pay the petitioning creditor's costs of the

proceedings before this Court on 20 June, 1 July, 14 July

and today .

IN THE FEDERAL COURT OF AUSTRALIA	) )
GENERAL DIVISION	1
)

BANKRUPTCY DISTRICT OF THE STATE OF 1 Nos. P1453/4 of 1982

NEW SOUTH WALES AND THE	1
)
AUSTRALIAN CAPITAL TERRITORY	)
Re: SAMTJEL THEOPHIL ROHDE
Ex Parte: HAZEL HOHDE
CORAM: Lockhart J.
15 July, 1983

EX '.IEM!?ORE REASONS FOR JUDGMENT

LOCKHART J: This is an application by Samuel Theophil Rohde, the

debtor, f o r an adjournment of two bankruptcy petitions presented

against him by the petitioning creditor, Hazel Rohde, who is his

former wife. The debt on which petition No. P1453 of 1982 is based

arises from an order made by the Family Court of Australia on 12 March

1982 that the debtor pay the petitioning creditor's solicitors the sum of $10,000 on account of her costs of the proceedings between them in

that court, together with interest at the rate of 15 percent per annum

from 1 May 1982. The second petition (No. P1454 of 1982) arises from another order of the Family Court also made on 1 2 March 1982 that the debtor pay the petitioning creditor on or before 30 April 1982 the sum

2 .

of $115,000 and a consequential order for payment of interest on that

sum also from 1 May 1982.

The petitions were presented on 17 November 1982 and first

came before the Court for hearing on 22 February 1983. They were

adjourned on various occasions and were specially fixed for hearing

yesterday.

The debtor filed a notice of intention to oppose each

petition on the grounds that he is solvent and able to pay his debts.

Pursuant to leave granted by the Court in April this year the debtor

filed an amended notice of intention to oppose each petition basing

his oppGsltion on three qrounds, the first being the one to which 1.

have already referred, the second being that the debts constituted by

the judgments or orders against the debtor are not final judgments or

final orders within the meaning of para. 40(l)(q) of the Bankruptcv

A& 1966 and finally that a sequestration order ouqht not to be made

in the exercise of the Court’s discretion.

Counsel for the debtor informed me yesterday that the debtor

abandoned the ground of opposition that he is able to pay his debts.

The debtor seeks an adjournment of the petitions until

certain proceedings in the Family Court are determined. The

petitioning creditor opposes that application and seeks to proceed

forthwith for a sequestration order. The debtor adduced evidence in

support of his application and was cross-examined by counsel f o r the

3 .

petitioning creditor.

It is necessary to mention the facts relevant to the

application for adjournment in some detail, including the curial

history of the dispute between the parties both in this Court and in

the Family Court.

The petitioning creditor and the debtor were married on 9

April 1965 at Inverell. There are two children of the marriaqe, both boys aged 16 and 13. The parties separated on 5 February 1972, the

marriage was dissolved and the decree became absolute on 2 July 1977.

The petitioning creditor applied to the Family Court f o r a.!

order under s.79 of the Family Law Act 1975. The application wa%,

heard by Watson J. on 22, 3 and 24 June 1981. His Honour gave

judgment on 12 March 1982. He said in his reasons f o r judgment:

"Essentially she seeks one half of the financial

resources within the possession or control of the

husband. I'

His Honour also said:

"When the hearing concluded on 24 June, 1 9 8 1 I

invited counsel to submit written submissions.

These submissions were not received by me until

early February, 1982. Although the case beqan by

application filed on 6 December, 1977 and a S. 96

conference was appointed as early as 19 May 1978,

the parties did not hold such conference until S

November, 1980. Thereafter it was not until 27

April, 1981 that I was approached in chambers to

fix a hearing, which I did for 22, 23 and 24 June,

1981. If either of the parties has suffered

because of the delay in judgment in this matter,

the primary responsibility for such delay does not

rest with the Court. 'l

4.

His Honour preferred the evidence of the petitioning

creditor to that of the debtor on any issue involving credit. He

reviewed the evidence concerning the financial position of the

parties which I need not refer to in detail. His Honour said:

"The husband has the ownership of "Karloo" which he

valued in December, 1980 at $272,000. He has

other assets totalling approximately $45,000 on

his valuation as at 2 3 June, 1951 (sic). Against this he has a mortgage and creditors of about

$22,000. I have left out 'loans' in those

calculations. They appear to relate to various

internal arrangements including a trust where one

major intention is to reduce taxation liability.

I find the husband has capital resources totalling

approximately $295,000.

A substantial part of the wife's claim relates to

moneys t.o which she is commercially entitled.

When such a claim arises I doubt if 'financial resources' need to be scrutinised so carefully. However, it is clear that the husband has the

resources to meet the proposed order of the court.

If at 58 he is not able to carry on the management

of the property at "Karloo". he will have

sufficient to re-establish himself even	if	he
chooses semi-retirement."

His Honour later made the following orders:

" A . The husband is to pay to the wife on or before 30

April, 1982 the sum of $115,000;

B.	The husband is to pay to the wife's solicitors on
or before 30 April, 1982 the sum of $10,000 on

account of the wife's costs;

C .	The amounts payable under orders A and B are to
bear interest at 15 percent per annum as from 1

May, 1982;

D.	The husband is restrained from further
encumbering or charqing any real property owned
by him until the sum ordered in A is paid, unless
the moneys received from such encumberance or
charqe are paid to the wife."

5.

No appeal was lodged from those orders. There is an

abundance of evidence before me given by the debtor and by his solicitors relating to the passage of time from the delivery of

the Family Court's judgment and the filing by the debtor, on 17

June 1983, in the Family Court of an application	by him for the
following orders:

1. That the debtor be permitted to appeal against

the orders of Watson J. made on 1 2 March 1982

notwithstanding that the appeal is out of time;

2 .	That pending the determination	of that appeal the
orders of Watson J. be stayed;

3 . That in the alternative the court exercise powers under section 79A of the Family Court Act by

setting aside orders A , B, C and D made by Watson

J. and in substit-ution therefor make an order

that the debtor pay the petitioning creditor

$40,000 on or before 30 September 1983;

4. Pending determination of that alternative

application the orders of Watson J. be stayed.

I do not propose to refer to this evidence in any

detail. It suggests that the debtor wished to appeal from the

Family Court's order, but did not do so due to legal advice

received by him, non-payment of his solicitor's costs and other matters. There is evidence from the debtor as to unsuccessful

endeavours by him to reorganise his financial affairs so that he

could meet at least part of his commitment to the petitioning

creditor arising out of the Family Court's orders.

The debtor has also given evidence that prior to the

hearing of the Family Court proceedings before Watson J. in June

6.

1981 he had been negotiating with two companies, Australian

Guarantee Corporation Limited ("AGC") and Avokah Irrigation Pty.

Limited ("Avokah") for the supply by Avokah of irrigation equipment and the financing of that supply, the equipment to be installed and operated on his property "Karloo". The primary lender of funds f o r that project was to be AGC.

The debtor alleges that he informed his solicitors and

counsel who acted for him in the Family Court proceedings of all

matters relevant to those negotiations. Yet at no time during

the hearing before Watson J. were the negotiations referred to.

The debtor says that, following completion of the hearing in June

1981, but before judgment in March 1982, the negotiations were

completed, AGC advanced him $242,000 and Avokah advanced him

$24,160 with mortgages being given to both companies over

"Karloo" as security for the borrowings. The loans were, of

course, interest bearing loans. The mortqaqe to AGC was a third

mortgage and the mortgage to Avokah a fourth mortgaqe.

The debtor asserts that prior to the delivery of

judgment on 12 March 1982 he informed his solicitor that he had

entered into these mortqages which had been registered on the

title of "Karloo". He says that, at the time Watson J. gave

judgment (March 19821, his Honour would not have known of these

mortgages to AGC and Avokah or of the fact that his indebtedness

under those mortgages was approximately $300,000, representing the initial advances to him together with accrued interest.

7 .

The Family Court adjourned the debtor's application

filed on 1 7 June 1983 to 2 1 July next for the purpose of hearing

so much of the application as seeks an order in effect enlarging

the time in which to appeal from Watson J.'s order of 12 March

1982. No date has yet been fixed by the Family Court for the hearing of the residue of the application.

It is in these circumstances that the debtor seeks an

adjournment of the petitions until the Family Court proceedings

have been determined. He offers to this Court through his

counsel an undertaking to the Court that he will prosecute the application of 17 June 1983 in the Family Court with all due expedition and diligence.

Counsel for both parties have fully argued the relevant

issues involved in the application for adjournment. Although I

will only mention some of the matters referred to in argument, I

will have taken them all into account.

It is plain from the evidence before me that the

debtor's financial position changed considerably between the

conclusion of the hearing before Watson J. in June 1981 and the

delivery of his Honour's judgment in March 1982. I do not

propose to express any view about the debtor's explanation as to

why this important material	was	not placed before Watson	J.
before he gave judgment.

8 .

I have reached a firm view that this Court should not

hear the petitions until the application of 17 June has been

determined. The two petitions are brought by a former wife

against her former husband. The debts on which they are based

arose from orders	of the Family Court. There are other creditors
of the debtor but	none have appeared before this Court to support

or oppose the petition.

The debtor's evidence about his financial transactions

between June 1981 and March 1982, and his reasons for not

bringing those matters to the Family Court's attention before

judgment was given on 12 March 1982, may be laid before the

Family Court and it may or may not admit that evidence.

Late though it is, the debtor has in recent months,

acting on legal advice, taken steps to ask the Family Court to adjust the financial rights and liabilities of himself and his

former wife to accord with what he says the true facts were in

March 1982. Whether he does this by seeking an enlargement of

time in which to appeal to the Family Cour t from its orders of 12

March 1982 and, if successful, prosecuting that appeal or by

seeking an order under S. 79A of the Family Court Act justice

requires, in my opinion, that he be qiven the opportunity by this

Court to pursue those avenues of relief. When those proceedings

In the Family Court have come to an end., this Court will then

review the position on the hearing of the petitions.

9.

Late in the day though the application before the Family

Court is, I am satisfied on the evidence before me that the

debtor bona fide seeks to appeal against or set aside the orders

of the Family Court made in March last year. I note the

undertaking which he proffers to the Court. If it is not adhered

to the Petitioning creditor may restore the petitions to the list

for hearing.

I realise that by being required to abide the result litigation in the Family Court the petitioning creditor may feel of

aggrieved. She has the benefit of an order made in March 1982

for payment of a substantial sum of money; yet she has received

no money from the debtor pursuant to those orders.

The proceedings between the parties which gave rise to

the two bankruptcy petitions before this Court have their

origins in the Family Court proceedings. It is best that their

respective ricJhts and liabilities be finally sorted out there

before the petitions are heard.

The result of the Family Court proceedings will

doubtless have	a real bearing on the outcome of the proceedings
in this Court.

The petitions will expire in November 1983. In case the

Family Court proceedings have not been determined by then and

this petition heard and determined one way or the other, it is

10.

desirable that its life be extended	for	the maximum period
allowed by the Bankruptcy Act.

As to costs, the petitioning creditor, although having

unsuccessfully resisted the application for an adjournment, asks

that her costs of and relating to the application for

adjournment, including the costs of the appearances on 20 June

and 1 July as well as today's costs and yesterday's costs, should

be paid by the debtor in any event. The debtor resists that

order and asks that costs of both parties be reserved.

Although the debtor has succeeded in his application for

adjournment he is seeking a substantial inclulqence frcm this

Court in circumstances where he is solely responsible. Through

no fault of the petitioning creditor the application was not

filed in the Family Court until 17 June this year, many months

after the making of the initial orders of Watson J. in March

1982. In all the circumstances I think it is proper that the

debtor pay the petitioning creditor's costs.

Upon the debtor by his counsel undertaking to the Court

that he will prosecute his application filed in the Family Court

of Australia on 17 June 1983 with all due expedition and

diligence, the Court orders:-

1. That the period at the expiration of which the

petitions will elapse be 16 November 1983;

2. That the hearing of the petitions be adjourned

11.

until further order;

3. That each party be at liberty to restore the

petitions to the list on 7 days notice;

4. That the debtor pay the petitioning creditor’s

costs of the proceedings before this Court on 20

June, 1 July, 14 July and today.