Re Viney, Ian David Ex Parte Australia and New Zealand Banking Group Ltd

[1996] FCA 1026

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE
OF VICTORIA  No. VP 582 of 1996

RE:IAN DAVID VINEY

Judgment Debtor

EX PARTE:AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

(A.C.N. 005 357 522)

Petitioning Creditor

CORAM:MERKEL J

PLACE:MELBOURNE

DATE:25 SEPTEMBER 1996

REASONS FOR JUDGMENT

HIS HONOUR:   In this matter, the petitioning creditor, the Australia and New Zealand Banking Group Limited has presented a creditor's petition based upon a judgment debt obtained by the petitioning creditor against Mr Viney, the judgment debtor. 

The judgment was a final judgment obtained in the Magistrate's Court of Victoria at Melbourne, on 8 July 1994, pursuant to an order made by consent.  Mr Viney had given notice of intention to oppose the proceeding in the Magistrates' Court but prior to the final hearing, the parties reached agreement to settle the proceeding. This resulted in an order by consent for judgment for the amount claimed to be due. However, Mr Viney in the course of the negotiations for the settlement achieved two important concessions;  it was agreed that he be liable for only 60 per cent rather than all of the costs of the proceeding and he obtained agreement to a stay of execution on the order of 18 months.

The 18 months expired. The petition was issued in reliance on the failure of Mr Viney to pay the amount due pursuant to the judgment being the amount the subject of the bankruptcy notice. This led to the
service of a bankruptcy notice. The non payment of the amount due led to an act of bankruptcy on 11 June 1996. 

The first occasion on which an issue was raised as to Mr Viney's capacity to enter into the settlement agreement which resulted in the consent order, was during the bankruptcy proceedings.  Mr Viney has relied on two medical certificates which suggest that at the relevant time, he was suffering from chronic alcoholism and that the combination of alcohol dependence and medication that he was taking, impaired his ability to make decisions. Dr Sherman stated that during this time Mr Viney's ability to make decisions would have been adversely effected.

The main difficulty arising on the material before me is that I could not be satisfied that Mr Viney did not understand the effect of what he was agreeing to do at the relevant time, or that when he executed the documents, he, for some reason or another, not only did not understand their content but lacked the requisite legal capacity by reason of his alcohol dependence or the sedatives he was taking.  The documents were signed by him personally, as well as in his capacity as director and secretary of his company. This occurred in the presence of a witness who is not identified.  The absence of any supporting evidence that he was unable to appreciate the effect of the document, or lacked legal capacity in regard to the document, together with the absence of any corroborative evidence by any witness as to his failure to appreciate those matters, together with the delay in raising any issue concerning the terms of settlement until well into the bankruptcy proceedings, (which were over 18 months later), strongly suggest to me that there is no sufficient reason shown on the material for suggesting that I ought to go behind the judgment to find that in truth and reality the debt was not due.

Mr Viney has not denied executing the guarantee which gave rise to the claims of the petitioning creditor in the Magistrates' Court. It seems to me that in all the circumstances this is simply not a case where I should exercise the discretion to go behind the judgment in accordance with the principles of Wren v Mahoney (1972) l26 CLR 212 at 224. For the same reason, it seems to me that I should not exercise the discretion to dismiss the petition under section 52(2)(b) of the Bankruptcy Act.  In regard to both matters, I should add that it is of some importance that no proceedings have been taken, nor have any been suggested by Mr Viney, to challenge the order that was made by consent.

It would not be a proper exercise of my discretion to go behind the judgment or exercise the power I have under section 52(2)(b) of the Act.

Mr Viney has also raised in an affidavit a number of other objections in opposition to the petition. He took objection to certain formal matters in the petition, but I am satisfied, now that leave to amend has been granted, that the petition does accurately record the matters that it is required to record.  Mr. Viney's second ground related to impairment on the ground of alcohol dependence, and has already been addressed by me.

I should add however that he has failed to substantiate in any detail that he was unable to appreciate what he was doing, but instead referred to difficulties he had at a pre-trial conference. However, this is not the date on which he executed the agreement to sign orders by consent. 

He raised in his third objection certain matters concerning the guarantee, but in view of the fact that he does not dispute that he has signed it, and it was the subject of the consent order pursuant to the settlement agreement, in substance, those matters were largely superseded by the consent order. If it counts, I should say that there is no material before me which would sufficiently raise a doubt of the kind that I would need to have before me to look behind the judgment on the ground that the guarantee was ineffective.

The fourth objection also raised issues about the guarantee. However, for the reasons I have indicated, they are not sufficient to attract the necessary discretion. Finally, the fifth objection raises certain allegations against the solicitor for the petitioning creditor. I should add that this only reinforces my concern that when issues were raised by Mr Viney with the Bank about the judgment debt and payment of it Mr Viney, on the evidence before me, did not raise an issue with the solicitors or with the bank that he was unable to understand what he was doing or lacked legal capacity.

No adjournment was sought before me to file any further material, notwithstanding the fact that I raised specifically with Mr Viney the difficulties I had on the adequacy of the material that he was relying upon.  In all the circumstances, no ground has been shown for the court to dismiss the petition.  In those circumstances, it is appropriate that a sequestration order be made on the creditor's petition. The requisite matters having been established I make the following orders:

1. The estate of Ian David Viney be sequestrated;

1. The petitioning creditor's costs including any reserved costs be taxed and paid in accordance with the Bankruptcy Act 1966.

I certify that this and the preceding pages are a true copy of the Reasons for Judgment of the Honourable Justice Merkel as corrected

Associate:

Date:

Heard:25 September 1996

Place:Melbourne

Judgment:25 September 1996

Appearances:  Mr. I. Viney appeared in person as the judgment debtor

Mr. J. Nolan instructed by Dunhill Madden Butler appeared for the petitioning creditor