Re Temple, N.P

[1987] FCA 30

FOR LIMITED DISTRIBUTION ONLY

IN THE FEDERAL COURT OF AUSTRALIA

)

DIVISION	GENERAL	)
)

BANKRUPTCY DISTRICT	OF NEW SOUTH	WALES	)	No. B4535 of 1986
1

AND THE AUSTRALIAN CAPITAL TERRITORY )

- RE : NEVILLE PATRICK TEMPLE

MINUTES OF ORDER

Judge maklng order:	Beaumont, J.
Date order made:	5 February 1987

Where made : Sydney

THE COURT ORDERS THAT:

1. The appllcatlon by the debtor, Mr. Nevllle Patrlck Temple, to set aslde bankruptcy notlce No. 4535 of

1986 be dismissed.

2. The time for compllance wlth such notice be

extended for a perlod of 14 days.

3 . The applicant pay the judgment creditor's costs.

Note:

Settlement and entry of orders is dealt with in

Bankruptcy Rule 124.

-..

IN	THE	FEDERAL COURT OF AUSTRALIA	1
)

GENERAL DIVISION	1
)

BANKRUPTCY	DISTRICT	OF NEW SOUTH-WALES	)	NO. B4535 Of	1986
1

AND THE AUSTRALIAN CAPITAL TERRITORY )

- RE : NEVILLE PATRICK TEMPLE

CORAM:	Beaumont, J .
DATED:	5 February 1987

REASONS FOR JUDGMENT

The applicant, Mr. Temple, has applled to set aslde a

bankruptcy notice served on hlm on 20 November 1986 by hls former

partner, Mr. Wily. Mr. Wlly clalms that the sum of $9027.25

together wlth interest	is due by the applicant to him under a
final judgment obtained	in the Dlstrict Court on 30 July 1986.

The background to the matter is as follows. By articles of

partnership dated 12 November 1984 the Judgment credltor and the applicant agreed that they had commenced to carry on business as chartered accountants in partnership as from 1 July 1984. By

clause 10 of that agreement, the applicant was entltled to

receive as his share of the profits of the partnership “such sum of money as is equal to the amount calculated in accordance wlth the formula set forth In the Schedule hereto.” By that Schedule, the share of profits payable to the applicant with

respect to the year 3 0 June 1985 ”shall be equal to the proportlon that.. .($48,000) bears to the profits as disclosed in

c

L .

[certaln] proflt and loss statements for the year ended 30 June

1984" subject to certaln specifled adjustments not here materlal.

A dlspute having arlsen as to the amount of the share of proflts

payable to the appllcant, the matter was orally referred by the partles to arbitratlon. The arbltrator, Mr. Wlnlaw, by hls award dated 28 February 1986, for the reasons he then gave, determlned that the dlvlslon of proflts payable for the relevant perlod to the appllcant and the judgment credltor respectlvely was $23,349.00 and $153,274.

The ludgment credltor sued on the award In the Dlstrict

Court and, as has been said, obtalned default judgment agalnst

the appllcant on 30 July 1986.

The appllcant now seeks to challenge the award and, In dolng so, seeks to go behlnd the default judgment. It 1s submltted on hls behalf that the award 1s llable to be set aslde for a number of errors of law said to appear on the face of the award.

The prlnclpal argument advanced on behalf of the

appllcant was that the arbltrator erred ~n law ~n falling to

write back Into the relevant proflt and loss statements certaln

amounts pald by way of salary to the ludgment creditor. In my

opinlon, no error of law has been demonstrated In this respect. The question 1s one of constructlon of the provlslons of the

Schedule. In ~ t s terms, the Schedule makes the appllcant's

3 .

entltlement dependent upon the proflts whlch were in fact

dlsclosed In the proflt and loss statement, even ~ f , as was the case, those statements were not prepared untll after 12 November

1984. There is no suggestlon here that these statements were

vltlated by fraud or colluslon or bad faith ~n any relevant

sense. It is true that the arbltrator expressed the oplnlon

that, If appropriate, he was empowered to amend the profit and loss statements so as to reflect a true and fair vlew of the affairs of the entity concerned. However, In respect of the Item

now In questlon, namely, a suggested adjustment in respect of the

~udgment creditor's salaries, the arbitrator consldered that, on the merlts, no adjustment was necessary. It follows, In my vlew,

that no relevant error of law has been demonstrated ~n thls

regard. In other words, I thlnk that as matter a of constructlon of the Schedule, the arbltrator arrived at the correct legal result, that 1s to say, that the applicant's share

of proflts was to be determlned, In the absence of bad falth, by

reference to the proflt and loss statements taken at thelr face

value.

Then It was sald that the arbitrator also erred In law by falling to deal with the questlon of costs before him wlth the result, It was argued, that the award was llable to be set aside on that ground alone. In my oplnlon, any such fallure dld not vltlate the award. The approprlate relief to be granted by the court In such a sltuation 1s not to set aslde the award but to order that the matter of costs be remltted to the arbltrator (see

4.

Commerclal Arbitration, Sharkey Dorter, at pp.256-7).

I propose to dlsmlss the appllcation but to extend tlme

for compliance wlth the	Bankruptcy notice for a further perlod of
14 days.
I certify that thls and the precedlng -Ler ( 3 ) pages are a true copy of the
Reasons for Judgment hereln of
hls Honour Mr. Justice Beaumont.
Dated: 5 February 1987

Counsel and Solicitors Mr. D.J. Russell instructed by

for Appllcant: Messrs Paul V. Waklm & Co.

Date of hearlng: 5 February 1987

Date Judgment Dellvered: 5 February 1987