Re Thyssen, Natalie Ex Parte Maniotis, Basil
[1996] FCA 65
•15 Feb 1996
IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT
OF THE STATE OF VICTORIA No VP 666 of 1995
Re: NATALIE THYSSEN
Debtor
Ex Parte: BASIL MANIOTIS, PETER MANIOTIS
and SIXTY EIGHTH STOWAWAY PTY LTD
Petitioning Creditors
Coram: Olney J
Place: Melbourne
Judgment: 15 February 1996
Reasons 21 February 1996
published:
REASONS FOR JUDGMENT
On 15 February 1996 I made a sequestration order against the estate of the debtor on the petition of the petitioning creditor. At the time of making the order I indicated briefly the view I had formed but said that I would in due course provide full written reasons. I now publish my reasons.
THE ACT OF BANKRUPTCY
The evidence establishes that on 12 December 1994 the petitioning creditor obtained a final judgment in the Supreme Court of Victoria against the debtor for the sum of $8,289.60 (the judgment debt). On 3 March 1995 the petitioning creditor caused a bankruptcy notice to be issued in respect of the judgment debt which notice required the debtor to respond within 14 days of its service. Service was effected on 18 May 1995. The debtor did not respond to the notice in accordance with its terms nor did she make any application to set aside the bankruptcy notice or seek an extension of time within which to comply. The debtor committed an act of bankruptcy on 1 June 1995.
THE PETITION
The creditor's petition was presented on 11 July 1995. It was duly verified as required by the Bankruptcy Act. It was served personally on the debtor on 29 July 1995. The petition relies upon the act of bankruptcy committed on 1 June 1995 when the debtor failed to respond to the bankruptcy notice. The petition was returnable on 22 August 1995.
THE DEBTOR'S GROUNDS OF OPPOSITION
On 18 August 1995 the debtor filed notice of intention to appear and to oppose the petition on the ground -
That pursuant to s 52(2) Bankruptcy Act 1966 (Cth), the Court should exercise its discretion not to make a sequestration order against the debtor as the debtor has a counter-claim, set-off or cross-demand which exceeds the amount of the judgment debt which founds the Bankruptcy Notice and is claimed in the petition.
The notice of intention to appear was signed by Law Partners as solicitors for the debtor and was supported by two affidavits filed on the same day.
The first affidavit was sworn by Gene Volovich, a solicitor employed by Law Partners, on 18 August 1995. Volovich says that in January 1995 the debtor contacted his firm in relation to issuing Supreme Court proceedings to recover a debt owed to her by Basil and Peter Maniotis and the firm agreed to carry out all legal work for her on a "no win-no fee" basis.
Instructions were received from the debtor during January, February and March 1995 and counsel was instructed to prepare a statement of claim which was later received by Law Partners on 30 June 1995. On 21 July 1995 Supreme Court proceeding 6664 of 1995 was commenced. The debtor is one of three plaintiffs named in the proceeding and Basil and Peter Maniotis are two of the defendants.
The second affidavit filed on 18 August 1995 was sworn by the debtor on that day. The facts deposed to are as follows. The debtor says that the judgment relied upon in the bankruptcy notice is an order for costs made against her following the discontinuance by her of Supreme Court proceeding 5354 of 1994 issued on 7 April 1994 in which action she and Valimi Pty Ltd (Valimi) were the plaintiffs and the petitioning creditors were three of the seven defendants. The proceeding had to do with a partnership entered into between Valimi and B & P Maniotis in 1985. (A copy of the writ exhibited to the affidavit shows the proceeding number was 5357 of 1994 and the debtor was the sole plaintiff. Valimi was not a party to the proceeding). The debtor then says that on 18 May 1994 Master Wheeler ordered that the statement of claim be amended to remove Valimi as a plaintiff and granted leave to her to amend the statement of claim to exclude Valimi. (A copy of the order of Master Wheeler made on 18 May 1994 which is exhibited to the affidavit shows that the Master noted that the plaintiff (the debtor) had no standing to sue in respect of the dissolution of partnership, the proper plaintiff being Valimi). The orders made on that day were that the statement of claim against the first, second and third defendants (the petitioning creditors) be struck out with costs. The debtor was however given leave to file and serve an amended statement of claim limited to the subject matter of certain claims made by the debtor in her personal capacity.
The debtor did not exercise the leave granted to file an amended statement of claim and discontinued the proceeding on 11 August 1994. A further order for costs in favour of the petitioning creditor was made by Master Wheeler on 12 August 1994 and costs were taxed by Master Bruce on 12 December 1994 in the sum of $8,289.60.
Law Partners were engaged as solicitors for the debtor in January 1995 on a contingency fee basis. The bankruptcy notice was served on 17 May 1995 and on 21 July 1995 Supreme Court proceeding 6664 of 1995 was commenced in the name of Valimi, Con George Thyssen (the debtor's husband) and the debtor as plaintiffs and B & P Maniotis and the firm Arthur Anderson as defendants. This proceeding also relates to the former partnership between Valimi and B & P Maniotis. The only relief claimed on behalf of the debtor is against Arthur Anderson. The debtor claimed no relief against B & P Maniotis. At paragraph 7 of her affidavit the debtor says that the legal basis of her claim in the second Supreme Court proceeding, insofar as it is relevant to the present proceeding, is for recovery of a debt owed to the plaintiffs by B & P Maniotis pursuant to obligations under a partnership agreement. In paragraph 8 she says that the factual basis of her claim against B & P Maniotis is -
a)Pursuant to a partnership agreement between Valimi and B & P Maniotis, she was employed as an agriculturist and horticulturist by the partnership;
b)It was agreed between the partners that if payment for work done by her was not received, the amount accrued would be considered a debt of the partnership;
c)From 22 July 1985 until 19 January 1990 the partnership accrued a total debt to her of $413,225;
d)The debt has not been paid.
The relevance of the facts as asserted to the present proceeding is not immediately obvious. If it be the case that the debtor has a claim for wages then it is a claim against Valimi and not against B & P Maniotis.
Upon the first return of the petition on 22 August 1995 the matter was adjourned for hearing on 6 September 1995. Orders were made for the debtor to file and serve any further affidavit upon which she would seek to rely by 31 August 1995 and for the judgment creditors to file and serve any affidavit in reply by 4 September 1995.
The debtor did not file any further affidavit pursuant to the order made on 22 August 1995. At the adjourned hearing on 6 September 1995 the hearing was further adjourned to 20 September 1995 and an order was made that the debtor file and serve by 13 September 1995 an affidavit in support of her notice of opposition setting out her current financial situation with particular reference to her interest in Valimi.
On 18 September 1995 the debtor filed a further affidavit sworn by her on that day. The debtor refers to her earlier affidavit and says that the writ in the second Supreme Court action discloses that Valimi is claiming damages and other relief against B & P Maniotis and that the advice of counsel is that the quantum of damages will approximate $2,000,000. She says further that she and her husband are the sole shareholders in Valimi, each holding one of two $1 shares issued by the company, and that following completion of the Supreme Court action the value of her shareholding in Valimi will be approximately $1,000,000. The affidavit then proceeds to refer to a claim that Valimi is said to have against Sixty Eighth Stowaway Pty Ltd but that company is not a party to the Supreme Court proceeding. The debtor further asserts that the bankruptcy proceeding is an abuse of process undertaken to obstruct and prevent her pursuing her claim in the Supreme Court proceeding. She says that the judgment creditors are her only creditors and that she has a claim against them in excess of the amount of the judgment.
It is worthwhile at this stage to reflect that what the debtor is saying as at 18 September 1995 is that a company in which she is a shareholder has a claim against the judgment creditors which if successful would mean that her asset, i.e. the share in the company, would be worth more than the judgment debt. Presumably the debtor is saying that she is thereby to be regarded as being solvent. If that is her case, and it appears to be the only basis upon which it is put, several things can be said. First, she clearly cannot satisfy the usual test of solvency; second, there can be no substance in the assertion of abuse of process as the bankruptcy of the debtor would not affect the capacity of Valimi to pursue any claim that it may wish to press against the judgment creditors; and third, the debtor appears to have abandoned her earlier claim in respect of wages claimed to be due to her. She may well have such a claim against Valimi but she clearly has no such claim against the petitioning creditors.
The further adjourned hearing of the petition did not proceed on 20 September 1995. On that day counsel appearing for the judgment creditors sought an adjournment based on several grounds one being that on 21 August 1995 the defendants in the Supreme Court proceeding had made application to strike out the writ. Master Evans had reserved his decision and it was expected that a decision would be handed down in the week following. The hearing of the petition was adjourned to 18 October 1995 and later by consent to 15 November 1995. On 12 October 1995 Master Evans made orders, inter alia, striking out the claims made by Valimi against B & P Maniotis.
On 9 November 1995 the debtor filed a further affidavit which was sworn on 7 November 1995. This affidavit is almost entirely vexatious and deserves no consideration apart from establishing that the debtor had previously (in about 1991) been a bankrupt. More will be said of that fact later. The second named judgment creditor, Peter Maniotis, swore an affidavit on 13 November 1995 in reply to the debtor's last mentioned affidavit but it is not necessary to canvass its contents other than to note that it is said the debtor had previously been made bankrupt on 30 May 1991.
The hearing of the petition was again adjourned on 15 November 1995. The debtor sought the adjournment and her application was strongly opposed by counsel for the petitioning creditors. The transcript of the hearing indicates (at p 4) that the debtor (who appeared in person) said -
I had a phone call from counsel last night, who is acting in the Supreme Court. He asked me to ask your Honour for an adjournment please, because he is amending the statement of claim before the Supreme Court in the name of Valimi, who was a 50% partner in the partnership known as B and V Nurseries, with the other 50% being Peter and Basil Maniotis jointly ...
After hearing extensive argument Ryan J adjourned the hearing of the petition to 13 December 1995. In short reasons delivered at the time Ryan J said, after referring to the Supreme Court proceeding -
The ruling made by Master Evans on 12 October 1995 contemplates that the matter should return to him for consideration of an application by Valimi Pty Ltd for leave to amend its statement of claim.
I have been told by the debtor from the bar table that counsel has now formulated that application and is in a position to proceed with it. In the circumstances, which include the fact that the debtor apparently has no creditors other than the petitioning creditors, I propose to accede to the application to adjourn the petition. However, I shall do so only for a relatively short time.
Three further affidavits were filed before the matter proceeded on 13 December 1995. First, the petitioning creditors' solicitors filed an affidavit sworn by Christopher James Goddard a partner in the legal firm Blake Dawson Waldron who acted for the firm Arthur Andersen in Supreme Court proceeding 5357 of 1994. The affidavit establishes that on 18 May 1994 Master Wheeler also made a costs order against the debtor in favour of Arthur Anderson, that such costs have not yet been taxed but that a sum of $3,642.85 is claimed from the debtor in respect thereof. The debtor also filed a further affidavit which she swore on 12 December 1995. The affidavit raises no new material of any relevance. The third affidavit was sworn by Richard Anthony Harris, a solicitor employed by the judgment creditors' solicitors, on 12 December 1995. This affidavit requires some attention as it exhibits a copy of the order made by Master Evans of 21 November 1995, the full text of which is set out below:
THE COURT ORDERS THAT:
The statement of claim in so far as it relates to the claims by Valimi Pty Ltd against the first and secondnamed defendants is struck out.
Any application by Valimi Pty Ltd to file and serve an amended statement of claim raising claims against the first and secondnamed defendants be filed and served on those defendants within 14 days after this day.
The further hearing of the application in so far as it seeks security for costs from Valimi Pty Ltd be adjourned to a date to be fixed.
In the event that an application is made in accordance with paragraph 2 the application for security for costs be heard at the same time as that application.
The application against the second and thirdnamed defendants is dismissed.
The application is otherwise dismissed.
There is to be no order as to the costs of the application to date.
In the event that no application is made in accordance with paragraph 2:
(i)the proceeding by Valimi Pty Ltd against the first and secondnamed defendants be dismissed.
(ii)there is to be no order as to the costs of the proceeding.
Harris also deposes to the fact that on 7 December 1995 an application by the plaintiffs in the Supreme Court proceeding seeking, inter alia, leave to file and serve an amended statement of claim on B & P Maniotis and seeking to join Sixty Eighth Stowaway Pty Ltd as a fourth defendant resulted in the following orders being made:
(a)the application be dismissed;
(b)any further application by the plaintiffs or any of them for leave to file a further statement of claim be supported by affidavit evidence verifying the proposed causes of action;
(c)the hearing of Basil and Peter Maniotis application for security of costs made by the summons filed 9 August 1995 be heard at the same time as any further application; and
(d)that the solicitor for the plaintiffs pay the costs of Basil and Peter Maniotis of the application.
The hearing of the petition finally commenced before me on 13 December 1995. The petitioning creditors were represented by counsel. The debtor appeared in person. After hearing submissions for some time I adjourned the matter part heard until 7 February 1996. At the time I said:
This matter is not without its complexities. So far as the petitioning creditor is concerned I am satisfied that the petition has been validly issued, that there is a judgment debt owing, that an act of bankruptcy was committed as alleged, that the debt is still owing and that all other formalities required as conditions precedent to the making of a sequestration order have been established.
The debtor says that she has a claim against the petitioning creditors which exceeds the amount of the judgment debt. There have been multiple proceedings in the Supreme Court in which the petitioning creditors and the debtor have been involved. There is not at present nor indeed has there been any action in the Supreme Court to date in which the debtor has made any claim for the payment of money to her by the petitioning creditors. Although it is now asserted by her that she has an entitlement to wages due to her in the course of her employment by the partnership of which her company and the two Maniotis creditors were partners.
In ordinary circumstances I would be of the view that the debtor has simply failed to take appropriate steps in order to establish the
basis of her alleged cross claim. I recognise that she has been representing herself in these proceedings although she has lawyers acting for her in the Supreme Court. There seems to be some difference of view as between Mr Nolan for the creditors and Mrs Thyssen concerning the effect of what was ordered by Master Evans on 7 December.
Mrs Thyssen wants further time. I am not prepared to give her unlimited time to have her proceeding whatever it might be that she contemplates taking in the Supreme Court resolved. I am, however, prepared to give her some further time to put before this court in an understandable way the basis of her case that she says supports her claim that she has a cross claim or other claim against the petitioning creditors which exceeds the amount of the judgment debt.
I propose to adjourn this matter part heard until the first sitting of this bankruptcy court in the new year which will be 7 February 1996. I will proceed with the matter on that day and I give leave to the parties to file such further affidavit material as they may be advised. I would suggest that Mrs Thyssen seeks legal advice concerning the preparation of any further material she wishes to put before the Court.
At this stage I am not reaching any conclusion as to whether or not the Court should exercise its discretion not to make a sequestration order, that can be left until the matter comes before me and I have the opportunity of considering any further material that may be advanced. I direct that the costs of this day will be reserved.
Neither party took advantage of leave granted to file further evidence but when the matter was called on again on 7 February 1996 the debtor, who again appeared in person, produced an affidavit which she had sworn that day in the Supreme Court proceedings. The affidavit runs to some 30 pages of typing and has exhibited to it some 22 documents. As it appeared that the debtor sought to rely upon the affidavit in this proceeding I allowed it to be placed on the file and directed that a copy be given to the petitioning creditors' counsel. The matter was stood down until later in the day. As there was not time available for the hearing to be concluded that day I ordered that it resume on 15 February 1996. At this stage Mr Gillespie-Jones of counsel appeared at the bar table to announce that although he did not represent the debtor in the proceeding he was representing her in the Supreme Court matter and he wished to give me some information about that matter. I gather that the general thrust of what he wished to say was that the new statement of claim in the Supreme Court proceeding was almost ready. I declined to hear him any further.
It was not in my contemplation that any further evidence would be adduced between 7 February and 15 February 1996 but I was mistaken. On 13 February 1996 the debtor swore and filed yet another affidavit. A number of old and irrelevant issues are revisited but the affidavit does deserve some comment. First, it is dated 13 February 1996 and is signed by the debtor before Volovich, the solicitor who had previously acted for her in this proceeding and who has clearly continued to advise her even after Law Partners wrote to the Court on 20 September 1995 withdrawing as solicitors on the record. The affidavit refers in paragraph 2 to a document described as a directors agreement which is exhibit A. In paragraph 3 reference is made to her affidavit of 7 February 1996, a statement of claim and a summons which are all said to have been "now shown to (her) and marked" respectively B, C and D. In paragraph 4 some irrelevant correspondence is exhibited and marked E. None of the exhibits were filed with the affidavit on 13 February 1996 but on 14 February 1996 exhibits A (directors agreement), D (summons in Supreme Court action 6664/95) and E (correspondence) were filed. Exhibits B (affidavit) and C (statement of claim) were not filed. It transpires that it is intended that the document filed on 7
February 1996 should be treated as exhibit B although it was obviously not shown to the debtor at the time she swore the affidavit but exhibit C (statement of claim) simply did not exist at the time the affidavit was sworn nor indeed did it exist when the matter was before me on 15 February 1996. An even more extraordinary circumstance is that exhibit D (summons) is a document which bears the seal of the Supreme Court of Victoria and is date stamped 14 February 1996. The date on the exhibit note attached to the summons appears to have been altered from 13 to 14 February 1996. The facts to which I have just referred raise a question as to the professional integrity of the solicitor who witnessed the affidavit.
The document referred to in the debtor's affidavit as directors agreement is undated. It is a document which bears the heading of the bankruptcy proceedings presently before the Court. It is executed under the common seal of Valimi and is also signed by the directors of the company. The text of the document is:
We, George Thyssen Director and Secretary and Elene Thyssen Director of Valimi Pty Ltd whose shareholders are Con Thyssen 50% and Natalie Thyssen 50% give our authority to Natalie Thyssen as a shareholder to take such action in th (sic) Supreme and federal (sic) Courts as is deemed necessary to overturn the fraud committed agaisnt (sic) the company and it's (sic) shareholders.
I do not regard this document as having any relevance in the present proceeding.
Finally, I refer to the summons in the Supreme Court proceeding which was issued on 14 February 1996. This is a summons returnable on 29 February 1996 whereby the plaintiffs in that proceeding seek orders, inter alia, that they have leave to file and serve an amended statement of claim and that Sixty Eighth Stowaway Pty Ltd be added as a fourth defendant. The only comment called for is that nothing seems to have changed since the proceeding was first instituted on 21 July 1995.
Despite the huge volume of material placed before the Court and the multiple opportunities which have been accorded to the debtor to make out her case she has failed to provide any evidence to support her assertions that she has a claim against the petitioning creditors which exceeds the amount of the judgment. Furthermore, the state of the evidence suggests that her 50% shareholding in Valimi vested in the Official Trustee in Bankruptcy upon her becoming bankrupt on 30 May 1991 and although she has since been discharged from that bankruptcy the share remains so vested. Even if some sort of case can be made that the shareholding in Valimi has a value which could be realised, the proceeds of that realisation must necessarily be vested in the Official Trustee and not the debtor. From the outset the debtor's case has been a hopeless one. To the extent that she has acted on legal advice (which she has from time to time claimed to be the case) she has been poorly served and one cannot help but wonder whether the "no win-no fee" basis of her solicitors' engagement might in some way explain this circumstance. In any event, the debtor has pressed the system to its limit. Indeed, by having solicitors advising her in the background but not representing her in Court she has been able to exploit the goodwill normally extended to an unrepresented litigant to an unacceptable extent. She must now accept both the fact that a sequestration order has been made against her estate and the consequences that flow from such an order.
I certify that this and the preceding 14 pages are a true copy of the Reasons for Judgment of the Honourable Justice Olney
Associate:
Dated:
Heard: 13 December 1995, 7 and 15 February 1996
Place: Melbourne
Judgment: 15 February 1996
Reasons 21 February 1996
published:
Appearances:
Mr J. Nolan (instructed by Home Wilkinson & Lowry) appeared for the petitioning creditors.
The debtor appeared in person.
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