Re Vassis; Ex parte Leung - [1986] FCA 19

Re: BASIL WILLIAM VASSIS
Ex Parte: LEO LEUNG
No. P608 of 1984
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
Burchett J.

CATCHWORDS

Bankruptcy - creditor's petition - "Ordinarily resident in Australia" - Whether solicitor who had committed defalcations and fled to Greece for two years before returning was ordinarily resident in Australia during a period after his departure - Whether he was carrying on business in Australia not having wound up his practice and paid all its obligations - Admissibility of tender of paragraphs of opponent's affidavit as admissions - Whether debtor remained out of Australia with intent to defeat or delay his creditors - Defence that he left in fear of his life - Whether liability of solicitor as a trustee to account for monies entrusted to him and misapplied gave rise to a liquidated sum due in equity - Whether proceeds of forged mortgages gave rise to a debt - Effect of partial security for petitioning creditor's debt - Whether petitioning creditor was a secured creditor.

Bankruptcy Act 1966, s.5(1), s.40(1)(c)(i), s.43(1)(b)(i) and (iii), s.44.

Legal Profession Practice Act 1958 (Vic), s.104GA(8)

Price v. Hayman (1848) 4 M. & W. 8; 150 E.R. 1321

Wimpole v. McIlwraith (1923) VLR 553

Barton v. Deputy Federal Commissioner of Taxation (1974) 131 CLR 370

Re Cook (1946) 13 ABC 245

Re Smith; Ex parte Kern Corporation Ltd., Pincus J., unreported, 19/6/85.

Re Cohen (1950) 2 All E.R. 36

Commissioners of Inland Revenue v. Lysaght (1928) AC 234

Akbarali v. Brent London Borough Council (1983) 2 AC 309

Re: Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256

Mann v. Hulme (1961) 106 CLR 136

Emma Silver Mining Co. v. Grant (1880) 17 Ch.D. 122

Re Dawson (dec'd); Union Fidelity Trustee Co. Ltd. v. Perpetual Trustee Co. Ltd. (1966) 2 NSWR 211

Re O'Leary; Ex parte Bayne (1985) 61 ALR 674

In re Small; Westminster Bank v. Trustee (1934) 1 Ch. 541

HEARING

SYDNEY

#DATE 10:2:1986

ORDER

A sequestration order be made against the estate of the debtor.

The costs (including reserved costs) of the petitioner taxed and paid according to the Act.

A draft of this order be delivered to the Registrar within seven days in accordance with Rule 124(2).

NOTE: Settlement and entry of orders is dealt with in Rule 124

of the Bankruptcy Rules.

JUDGE1

This is a creditor's petition under the Bankruptcy Act 1966 on the ground provided by s.40(1)(c)(i) that the debtor, within six months before the presentation of the petition, remained out of Australia with intent to defeat or delay his creditors. The petitioning creditor is the receiver of certain property of the debtor, appointed by an order of Gobbo J. of the Supreme Court of Victoria, made 19 January 1983. He claims, pursuant to s.104GA(8) of the Legal Profession Practice Act 1958 (Vic), to be subrogated to the rights and remedies against the debtor, who was a solicitor, of a large number of former…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1986] FCA 19
Decision Date: 10 FEBRUARY 1986

CaseChat Overview and Summary

In the Federal Court of Australia, the case of Re Vassis; Ex parte Leung involved a creditor's petition for the sequestration of the estate of a debtor, who was a solicitor. The primary issue was whether the debtor, who had committed defalcations and fled to Greece for two years before returning, was ordinarily resident in Australia during a period after his departure. Another issue was whether he was carrying on business in Australia without having wound up his practice and paid all its obligations. The court also needed to determine the admissibility of tender of paragraphs of the opponent's affidavit as admissions, whether the debtor remained out of Australia with intent to defeat or delay his creditors, and if his defence that he left in fear of his life was valid.

The court examined whether the liability of the solicitor as a trustee to account for monies entrusted to him and misapplied gave rise to a liquidated sum due in equity. It also considered whether the proceeds of forged mortgages gave rise to a debt and the effect of partial security for the petitioning creditor's debt. The court concluded that the petitioner was a secured creditor. The reasoning of the court was that the debtor's actions indicated a lack of intent to return to Australia and a desire to avoid his creditors. The court found that the debtor was not ordinarily resident in Australia during the period after his departure, and that he was carrying on business in Australia without having wound up his practice and paid all its obligations. The court also found that the debtor's defence that he left in fear of his life was not valid.

The court found that the liability of the solicitor as a trustee to account for monies entrusted to him and misapplied did give rise to a liquidated sum due in equity. The court also found that the proceeds of forged mortgages did give rise to a debt. The court concluded that the partial security for the petitioning creditor's debt did not affect the petitioner's status as a secured creditor. The court made a sequestration order against the estate of the debtor and ordered that the costs of the petitioner be taxed and paid according to the Act. The court also ordered that a draft of the order be delivered to the Registrar within seven days in accordance with Rule 124(2) of the Bankruptcy Rules.

Orders

Orders of the court

A sequestration order be made against the estate of the debtor.

The costs (including reserved costs) of the petitioner taxed and paid according to the Act.

A draft of this order be delivered to the Registrar within seven days in accordance with Rule 124(2).

NOTE: Settlement and entry of orders is dealt with in Rule 124

of the Bankruptcy Rules.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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