Re Rowley, G.

[1991] FCA 90

JUDGMENT No. 70. /.....?L

IN THE FEDERAL COURT OF AUSTRALIA )

SOUTH AUSTWIA DISTRICT REGISTRY ) 1

) No. SP 346 of 1990

GENERAL DIVISION	1
1
BANKRUPTCY DISTRICT OF THE STATE	)
1

TH AUSTRALIA 1

Re : GRAHAM ROWLEY

RECEIVED	,-	Ex Parte: RANDLE & TAYLOR
HDERI\L COURT OF

EX TEMPORE REASONS FOR JUDGMENT

4 March 1991

Messrs Randle and Taylor petition the court for a sequestration order against the estate of the debtor. The act of bankruptcy upon which the petitioning creditors rely is the return of "no effects" on a warrant of execution against the debtor's goods issued out of the Local Court of Adelaide. The underlying judgment debt was initially for the amount of $1,558.46 to which has been added $331.60 costs and some interest.

He claims that he asked his solicitors to confine their work to an amount of $500 which he paid in advance. He ultimately received a bill for about $2,000 and the amount of the judgment debt is for the difference. It is clear that there was some other work involved beyond that which the solicitors were initially asked to perform, but nevertheless he takes the view, which he seems to hold very strongly, that he ought not have been required to pay the amount he was ultimately charged. There was a proceeding in the Small Claims Court of the Local Court of Adelaide, and a contested hearing. In the end, judgment was given against the debtor. He now says that as a continuing mark of protest he does not choose at this time to pay. He says, however, that he will in due course pay. He does not indicate when this might be, but presumably he may do so if the petitioning creditors are able to bring sufficient pressure to bear on him either by bankruptcy proceedings or by other process.

The debt was one incurred for legal fees. It is clear having heard the parties today that the debtor holds the strong view that he was overcharged in the circumstances for the preparation of some commercial documents and for other work whilst he was associated with a partnership business styled Teldex in 1989.

The sole ground upon which the debtor opposes the

sequestration order is that within the meaning of s.52(2) of

topic affidavit evidence has been relied on, and M r Rowley has the Bankru~tcv Act 1966 he is able to pay his debts. On that	given evidence in support of his assertions as to the extent
of his assets.
The effect of a statement of affairs, prepared with the assistance of a chartered accountant, which the debtor has filed is that he owns a house property jointly with his wife which is encumbered by mortgage to the Hindmarsh Adelaide Building Society. He owns a car in his own name which is not

encumbered, and he has money which is jointly held in a bank account with his wife. Objection was taken to the proof offered by the debtor of his opinion as to the value of the house and the car, an objection which in the circumstances I was obliged to uphold even though the amount involved barely warrants the costs which are likely to be incurred if valuers were called on those items. However, a valuation certificate was led into evidence in the form of a rates notice from the relevant local council district which shows the capital value for rating purposes of the house property at $87,000 whereas the mortgage is in the order of $54,000, leaving a significant surplus. That, of course, is a joint asset held with his wife.

The evidence also satisfies me that there is a sum of $2,580 odd in a joint account with the Hindmarsh Adelaide Building Society.

The ownership of the motor vehicle has been adequately proved by the presentation of the registration certificate. It is registered in the name of the debtor only and under the Motor Vehicles Act that is prima facie proof of ownership by him. I have no reason to doubt that it is the debtor's motor vehicle even though the bailiff, for reasons that are not properly established, declined to seize it in satisfaction of the warrant of execution. The debtor says this was because the bailiff apprehended that the vehicle would be subject to a charge. This statement by the debtor is not challenged by the petitioning creditors, but no admissible evidence to explain the bailiff's conduct has been adduced. The vehicle is a 1984 Mazda station wagon. A value of $10,000 was asserted for the vehicle in the statement of affairs. That is not proof of the value. On the other hand it would be quite unrealistic, particularly in light of the circumstances of this case, to assign no value at all to the vehicle. Clearly it is worth some thousands of dollars and I take that into account.

It is argued on behalf of the petitioning creditors that it is not proved that the vehicle is readily realisable. Again, common sense dictates that vehicles can be sold without undue delay. The lower the price, the quicker they are sold. In my view, the ownership of that car indicates that the debtor has an asset worth some thousands of dollars which could be realised promptly.

As to the liability of the debtor, the statement of reference, secured over the house property, and four unsecured	affairs shows a secured debt to which I have already made
debts, the biggest of which is owed to the petitioning creditors, and the next biggest of which is owed to the Australian Tax Office.
Cross-examination of the debtor suggests that he has an additional liability of $500 which he owes to a financial adviser. That debt was initially $1,000. He has paid $500 of
it but his former partner has not paid the other $500. The debtor has a joint liability in respect of that amount. Adding that debt to the ones disclosed on the statement of affairs for unsecured creditors, the total amount involved is approximately $4,000. The debtor was cross-examined about other debts that he might owe. I am not satisfied that any other liability exists.

In my view the debtor has established that he is able to

pay debts. He chooses however, not to do so at this stage.

The petitioning creditors argue that even if I find that the debtor is able to pay his debts, there nevertheless is a residual discretion in the court to proceed to make a sequestration order notwithstanding that finding. The Full Court decisions in Sarina v. Council of the Shire of Wollondilly (1980) 48 FLR 372 and in Troian v. Cor~oration of Hindmarsh (1987) 16 FCR 37, establish that there is a residual discretion. However that discretion is not to be exercised as

not to pay even though he has the ability to do so.	a mark of disapproval against the debtor who simply chooses
In the circumstances of this case, and at this stage in the ongoing disagreement between the parties, I am not prepared to exercise the discretion against the debtor. That is not to say, however, that if he comes back before the court on another occasion on a creditor's petition issued in respect of the same debt the discretion will necessarily be exercised

the same way.

I therefore dismiss the creditors' petition.

There will be an order that the petitioning creditors

recover from the debtor their costs up to but not including

today:  cf re 7 Sarina-

Wollondillp (1980) 43 FLR 163 at 166. There will be no order as to the costs of today.

I certify that this and the

7 preceding pages are a

true copy of the Reasons for Judgment of Mr Justice von Doussa

Associate:  &L , i f ~~ /h~b~ /L

Counsel for the petitioning

creditor	: Mr A Randle
Solicitor for the petitioning
creditor	: Randle & Taylor
Debtor appeared for himself
Date of hearing	: 4 Karch 1991