Re Thurwood, Frank

[1997] FCA 872

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA	VP 218 of 1996

RE

FRANK THURWOOD
JUDGMENT DEBTOR

EX PARTE:

GIO WORKERS COMPENSATION (VICTORIA) LIMITED
(ACN 060 346 509)
AUTHORISED AGENT FOR THE VICTORIAN WORKCOVER
AUTHORITY
JUDGMENT CREDITOR

DEPUTY COMMISSIONER OF TAXATION OF THE
COMMONWEALTH OF AUSTRALIA
SUPPORTING CREDITOR

W A FREIGHTLINES PTY LTD
SUPPORTING CREDITOR

FIRST FOR FINANCE PTY LTD (ACN 056 452 245)
SUPPORTING CREDITOR

JUDGE:

RYAN J

DATE:

25 AUGUST 1997

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

HIS HONOUR:  This petition was last before the court on 28 February 1997 when orders were made, amongst others:

1.That the period at the expiration of which the petition shall lapse shall be 24 months expiring on 18 March 1998.

2.That the hearing of the petition be adjourned to a date to be fixed not earlier than 5 May 1997.

The reasons for that order included this passage:

The debtor was cross-examined as to his financial affairs by Mr Nolan of Counsel for the petitioning creditor.  That cross-examination was necessarily curtailed because of the limited time which the Court was able to afford the application for an adjournment on 26 February 1997 and at 9.30am yesterday morning.  By pointing to liabilities which have been conceded by the debtor and others which the debtor was unable to refute unequivocally, Mr Nolan was able to demonstrate to my reasonable satisfaction that, even if the debtor succeeds in his action against the receiver and manager, his assets are unlikely to exceed his liabilities.

Accordingly, if my discretion were confined to an assessment of the probability of the debtors establishing solvency at an adjourned hearing after 29 April 1997, I would be constrained to refuse an adjournment.  Such a refusal would be impelled by the consideration that if it is almost certain that a sequestration order will be made on a creditor’s petition, the petition should be heard without delay so that if a sequestration order is made a trustee in bankruptcy can, amongst other things, make a detached assessment of the utility of continuing to prosecute a pending action.

However, the discretion is not so confined, see e.g. Field v Commercial Banking Co of Sydney Ltd (1978) 22 ALR 403.  In exercising it in the unfettered way suggested by the language of s 33(1)(a) of the Act, I have decided on balance, and not without hesitation, to accede to the debtor’s application for an adjournment.  In coming to that conclusion I have not been unmindful that the petitioning creditor strongly supported by the Deputy Commissioner has pressed for an immediate sequestration order.

I have also had regard to the fact that almost 12 months have now elapsed since the issue of the petition.  However, the consequences for the creditors of that fact can be mitigated by an order which I propose to make renewing the petition.  In the same context, it is to be borne in mind that in the latter half of 1996 adjournments totalling in the order of 6 months were allowed to the debtor apparently with a view to his prosecuting to a conclusion his action against the receiver and manager.  That conclusion in the light of the fixture of the trial for 28 April this year will occur in the foreseeable future.

And to similar effect it was observed at p 8 of the reasons:

The debtor, I infer, has already invested a considerable amount of time and costs in that action.  Even if it fails entirely there is not likely to be a significant diminution of the debtor’s distributable estate.  In all the circumstances therefore, I consider, on balance, that the debtor should be allowed an opportunity to see his action at first instance through to the end.

The proceedings there referred to as having been fixed for trial were numbered VG 343 of 1996 and were entitled Thurwood v First for Finance Pty Ltd and McVeigh.  Mr McVeigh had been appointed receiver and manager of the assets of Mr Thurwood at the instance of First For Finance Pty Ltd pursuant to the terms of a hire purchase agreement.

The relevant clause pursuant to which First For Finance Pty Ltd as mortgagee appointed Mr McVeigh was apparently cl. 2 of a Deed of Charge.  The action to which I had referred in my earlier reasons proceeded before Northrop J and after a five day hearing his Honour delivered extensive reasons for judgment on 27 June 1997.  On 18 July 1997 a notice of appeal against his Honour’s order dismissing the debtor’s application was filed and an appointment has been made to settle the contents of the appeal book.  Against that background Counsel for the debtor has applied for a further adjournment of the petition to permit the hearing and determination of the appeal.

That application has been opposed by the petitioning creditor and by supporting creditors including the Deputy Commissioner for Taxation, W A Freightlines Pty Ltd and First For Finance Pty Ltd which, it will be recalled, was the company which had procured the appointment of Mr McVeigh as a receiver.  On behalf of those opposing a further adjournment of the petition it has been pointed out that there is now no power in the court further to renew the petition so that for any utility to be achieved by the proposed appeal it would have to be heard and determined before 18 March 1998.

In my view it would not be a proper exercise of the Court’s discretion to accede to the request further to adjourn this petition.  I am not persuaded that the impression which I formed in February this year, which is referred to in my earlier reasons for judgment, that even if the debtor were to succeed completely on the hearing of his appeal his assets, including the fruits of that appeal, would exceed his undisputed liabilities.

The basis of the earlier granting of the adjournment was, as I indicated in the passage quoted from my reasons, the consideration that the application against First For Finance Pty Ltd and Mr McVeigh was on the point at which the trial was to commence, and there was a real doubt whether a trustee in bankruptcy could have made the necessary assessment of the debtor’s prospects of success in that action and, if that assessment were favourable, could have effectively prosecuted it to a satisfactory conclusion.

However, I also made it clear that the facility which I thought should be made available in the special circumstances which prevailed was dictated by the need to allow the debtor an opportunity to see his action at first instance through to the end.  That opportunity has been afforded the debtor.  He has had what appears to have been a comprehensive and exhaustive examination of the points which were thought appropriate to argue at first instance and those issues have been resolved against him. In those circumstances I consider a further adjournment would entail real detriments to the creditors of the debtor in addition to the prospect that the petition might lapse before the hearing and determination of the appeal.

Those detriments would include the expenditure of further costs on the appeal assuming, that is, that the trustee in bankruptcy would not be persuaded to prosecute the appeal.  That discretion remains open to the trustee and it is not appropriate that I pre-empt it by anything that I should say in these reasons.  In the circumstances, therefore, the application for adjournment of the petition, even for a limited time, is refused.

I shall order:

1. that a sequestration order be made against the estate of the debtor;

1. that the petitioning creditor’s costs of and incidental to the petition and the costs of the Deputy Commissioner of Taxation and W A Freightlines Pty Ltd as supporting creditors, including any reserved costs, together with the costs of First For Finance Pty Ltd of this day, be taxed and paid in accordance with the statute;

1. that there be a stay of proceedings on the sequestration order for a period of 21 days from this day.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment of the Honourable Justice Ryan.

Associate:

Dated:             25 August 1997

Counsel for the Debtor:	Mr P K Searle
Solicitors for the Debtor:	Nevett Ford
Counsel for the Petitioning Creditor:	Mr J Nolan
Solicitors for the Petitioning Creditor:	Mills Oakley
Counsel for Supporting Creditor: (Deputy Commissioner of Taxation of the Commonwealth of Australia)	Mr P Frost
Solicitors for Supporting Creditor: (Deputy Commissioner of Taxation of the Commonwealth of Australia)	Australian Government Solicitor
Counsel for Supporting Creditor: (W A Freightlines Pty Ltd)	Mr D Taylor
Solicitors for Supporting Creditor: (W A Freightlines Pty Ltd)	Ward Taylor Solicitors
Counsel for Supporting Creditor: (First For Finance Pty Ltd)	Mr I Jones
Solicitors for Supporting Creditor: (First For Finance Pty Ltd)	Hardham Dalton & Sundberg
Date of Hearing:	25 August 1997
Date of Judgment:	25 August 1997