Re Thompson, K.G. Ex parte Farrow Mortgage Services P/L (In Liquidation) ACN 006 125 757

[1993] FCA 871

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"Attention:  Judgments Clerk" ' <. -

Please find enclosed herewith
copy judgment of Cooper J. in
the matters Thompson v. Farrow
Mortgage Cred. Pet 2213 and 2214
of 1993. Disk is also enclosed.
This judgment is for limited

distribution. It is an extempore

judgment.

With /hanksi

JUDGES' CHAMBER

FEDERAL COUFS OF AUSTRALIA

119 NORTH QUAY

BRISBANE 4000	- -	*
AUSTRALIA	. .	.,
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871 93

JUDGMENT No. ........ .,....,.,. I .., ........ .

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DrVISION
BANKRUPTCY DISTRICT

OF THE STATE OF QUEENSLAND	Cred. Pet. No. 2213 of 1993
RE:

KENNETHGRAEMETHOMPSON

Debtor

EX PARTE:

FARROW MORTGAGE SERVICES PTY. LTD.
/IN LIQUIDATION)

ACN 006 125 757

Creditor

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DMSION
BANKRUPTCY DISTRICT OF THE

STATE OF OUEENSLAND	Cred. Pet. No. 2214 of 1993
-	RE:

WILLIAM BERRY THOMPSON

Debtor

EX PARTE:

FARROW MORTGAGE SERVICES PTY. LTD.

LIN LIQUIDATION)

acn 006 125 757

Creditor

I I

JUDGE MAKING ORDER:  Cooper J.

!	WHERE MADE:	Brisbane
DATE OF ORDER:	15 November, 1993

RECEIVED

MINUTES OF ORDER '2 DEC 1993

FEDERAL COUm OF

THE COURT ORDERS:	AUSTRALIA	PRINCIPAL
REGISTRY

1.                    That each of the applications is dismissed.

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2.                  In relation to each application, that the applicant pay the respondent's

costs of and incidental to the application to be taxed.

l	I
I	m Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy
I	Rules.

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DMSION
BANKRUPTCY DISTRICT

OF THE STATE OF QUEENSLAND	Cred. Pet. No. 2213 of 1993
RE:

KENNETH GRAEME THOMPSON

Debtor

EX PARTE:

FARROW MORTGAGE SERVICES PTY. LTD.

lIN LIQUIDATION)

ACN 006 125 757

Creditor

- RE:

WILLIAM BERRY THOMPSON

Debtor

EX PARTE:

FARROW MORTGAGE SERVICES PTY. LTD.

(IN LIQUIDATION)	7
acn 006 125 757

Creditor

CORAM:  Cooper J.

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I	PLACE:	Brisbane
I	DATE:	15 November, 1993

EXTEMPORE REASONS FOR JUDGMENT

This is an application on the part of Kenneth Graeme Thompson and

William Berry Thompson that creditor's petitions numbered respectively 2213 of 1993

and 2214 of 1993 due to be heard on Thursday 18 November, 1993 as contested
petitions have the allocated hearing dates vacated.

The applicants seek a further or alternative order that the venue for the

hearing of the contested creditors petitions be transferred from Brisbane to

Melbourne.

The material filed by each of the applicants is in identical form. Each

applicant deposes that the amount claimed by the petitioning creditor, Farrow Mortgage Services Pty. Ltd. (In Liquidation) relates to a claim under a guarantee of debt incurred by a company Meown Pty. Ltd. This company borrowed monies from

Farrow Mortgage Services Pty. Ltd. on security of land in Queensland and the

applicants personally guaranteed the borrowing.

In paragraph 4 of the afidavits each of the applicants deposes that on

12 November, 1993 each appointed John Brook of Brook Bird Accountants to be a

controlling trustee under Part X of the Bankruutcv Act. The appointment of Mr.

trustee under Part X. The reason given as an excuse for not proceeding with the	Brook was made in accordance with section 188 of the Act. that the creditor was informed in about January, 1993 of his intention to appoint a Each applicant deposes
appointment at that time was that the position in relation to the ANZ Bank, each of the applicant's largest creditor, had to be formalised.

The affidavit material simply states that the applicant in each is "desirous

of the petitiorz herein being tran.$erred for lrearilrg in Yictoria". Further, each applicant -

deposes, 'Y am desirous of the lzearing being adjounzed to allow my creditors to c o r d e r

a proposal cuder Part X of tlze Banknivtcv Act". In paragraph 3 each of the deponents

swears that he is, "Not in a filzat~cial posifio~z to attend court hearings itt Brisbane". It is

to be noted that each of the applicants resides in Victoria.

So far as the application to adjourn the hearing of the petitions is concerned, based upon the appointment of a controlling trustee, I note that such appointment comes on Friday last, 12 November, 1993, after it was clear that the contested petitions had been granted a hearing date m Brisbane on 18 November, 1993.

I have been handed a copy of a judgment of French J. in Re Powell ex

parte Dorsett, No. B16 of 1990, Unreported, Perth 14 August, 1990, wherein his

Honour points out at page 629 of the judgment:

"That tlze making of a sequestration order does not prevent tlze putting of a

proposal to tlze creditors wllicll, if acceptable to the creditors, would lead to tlze

an~zulment of tlze bankncptcy order"!

I have no material before me indicating the extent of the creditors of

the applicants, nor that there is likely to be any acceptance or otherwise of any

proposal which is put by each applicant.

I do not have before me the formulation of any proposal, so that at the

present time, the adjournment is merely sought on the basis of what I consider to be a late appointment of a controlling trustee. There is no prejudice to either of the applicants in having the contested petition proceed. If the petition results in a sequestration order, then the applicants may, nohnthstanding that order, proceed to put a proposal to the creditors if they so wish and if accepted, would lead to an

annulment of the bankruptcy orders. Alternatively, if the applicants are successful in their defence on the petition hearings the controlling trustee can still call a meeting of creditors, which may or may not include the emstmg petitioning creditor depending upon the outcome of the petition hearings, and put forward any proposal the applicant wishes to put to their creditor. Therefore, I do not propose to adjourn the hearing of the petitions on the basis that a controlling trustee was appointed by each

of the applicants on 12 November, 1993.

I turn now to the question of the proposed change of venue for the

contested creditor's petition.

The applicants, as I understand from the submissions of their counsel,

intend to defend the proceedings on two bases. The first 1s that the petitioning

creditor, in the exercise of its security nghts in relation to the land negligently sold it

at an undervalue, such that there remained due a sum of money from the principal	debtor which sum of money falls within the terms of the guarantee and which founded
the judgment relied upon in the b a h p t c y proceedings. The second basis of the defence is that there is an allegation that representations were made kom an officer
of Farrow Mortgage Services Pty. Ltd. that the guarantee would not be enforced by bankruptcy. Thus, it is alleged that an estoppel arises against Farrow Mortgage
Services Pty. Ltd. to prevent it from prosecutmg the bankruptcy proceedings.

The relevant land was land at Airlie Beach. The relevant valuation

evidence, so far as concerns the petitioning creditor, comes from Queensland valuers and real estate agents. There is nothing in the material before me to indicate whether or not the applicants intend to put on any valuation evidence, but one would assume that if they do, the likelihood is that that valuation evidence would also come from Queensland. The applicants essentially wish the hearing to be transferred to Victoria because they are resident there and because they contend that they are not

in a financial position to attend court heanngs in Brisbane.

On balance, the principal relevant witnesses, save for the applicants, are

in Queensland and so far as I can ascertain will be available for the hearing on the 18 November, 1993. The only relevant witnesses in Victoria are the applicants if they

are required for cross-examination on the affidavit matenal which they have filed. Each of the applicants appears by solicitor and counsel today. Importantly, if I am to

take at face value that the applicants deslre to put a proposal to their creditors in a meeting of creditors, one would expect that the proposal would be of some worth. That is, that the proposal would result in some moneys being available to creditors. If	that is the case, then I am not persuaded, in the absence of detailed material as to the	financial situation of the applicants, that they cannot attend for court hearings in
Brisbane if required on their affidavits.

I am not persuaded that the applicants have made out the requirements

necessary the requirements to satisfy me in the proper exercise of my discretion that the proceedings should be transferred to Victoria. It seems to me that to transfer them to Victoria will create difficulties with present Queensland witnesses and involve substantial additional costs in bringing relevant Queensland witnesses to Victoria.

In the circumstances, each of the applications is dismissed.

In relation to each application, THE COURT ORDERS that the

applicant pay the respondent's costs of and Incidental to the application to be taxed.

I certify that this and the preceding &e (5) pages are a true copy of the extempore reasons for judgment herein of

his Honour Mr. Justice Cooper.

Date: 15 November, 1993 d~ mtUd f i , # i b G u

Associate

Counsel for the Applicant:	Mr. Daubney
Solicitors for the Auplicant:	.

Deacon & Milani

Counsel for the Res~ondent:	Mr. M. Kent
Solicitors for the Res~ondent:	Nicol Robinson & Kidd
Date of Hearincr:	15 November, 1993
Place of Hearinv:	Brisbane
Date of Ektern~ore	Reasons
for Judmnent:	15 November, 1993