Re Waldron, J. and R.J. Ex Parte Matheson Investments Pty Ltd

[1992] FCA 244

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT

OF THE STATE OF OUEENSLAND

No. OB 2403 1991

RE: JAMES WALDRON and ROBYN JOY WALDRON

Debtor

EX PARTE: MATHESON INVESTMENTS PTY. LTD.

T/A FRAM-A-PIX

MINUTES OF ORDER

JUDGE MAKING ORDER:	Cooper J
DATE OF ORDER:	7 April, 1992
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:

1.        The sequestration orders made on 22 October, 1991 be annulled.

1. No order as to costs.

Note:  Settlement and entry of orders is dealt with in Rule
124 of the Bankruptcy Rules.

AUSTRALIA

7 MAY 1992

FEDERAL COURT OF

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT

OF THE STATE OF OUEENSLAND

No. OB 2403 1991

RE: JAMES WALDRON and ROBYN JOY WALDRON

Debtor

EX PARTE: MATHESON INVESTMENTS PTY. LTD.

T/A FW-A-PIX

CORAM:	Cooper J
DATE :	7 April, 1992
PLACE :	Brisbane

EX TEMPORE REASONS FOR JUDGMENT

This is an application pursuant to section 154 of the Bankru~tcv Act by James Waldron and Robyn Joy Waldron to annul their bankruptcy. The bankrupts were declared bankrupt on the petition of Matheson Investments Pty. Ltd. trading as Fram-a-Pix, in respect of a default judgment debt.

In material lodged in support of the application a number of grounds are taken, but the two principal grounds are these: firstly, that the bankrupts were not trading in any personal capacity, and the debt with the petitioning creditor was contracted by a company, and the company, in fact, carried on the business known as Waldron Studios. Secondly, conduct on the part of the petitioning creditor inducing the bankrupts to take no action on the bankruptcy notice.

The material discloses that a shelf company by the name of Dyldrange Pty. Ltd. was acquired by the bankrupts not later than 14 March, 1988 when they became directors of that company. The material also discloses that the female bankrupt made application to the relevant authority in New South Wales

'to reserve the business name Waldron Studios, and that it was her intention to reserve that name in the name of the company which the parties intended would carry on business of picture framer studio operators and the like.

In filling in the form, however, the female bankrupt included the individuals names as the proprietors of the business name and not the name of the company. The company established and carried on a bank account with the National Mutual Royal Bank at Lismore, and filed tax returns in the company's name. The bankrupts filed personal tax returns, which indicated that in relation to part of the business the applicants were employees of the company.

There was a further business, a business Slumberland Picture Frames, which was carried on in partnership by the applicants, although it appears to be unrelated to the judgment debt which founded the original petition. The applicants have filed a statement of affairs that the report of the Official Receiver indicates demonstrates a substantial confusion on the part of certain of the creditors, and on the part of the applicants, as to the difference between company debts, company assets, and the personal assets and debts of the applicants.

Their principal asset is a house property in their names which is mortgaged to the bank, and that property is presently on the market for sale. It is not possible, perusing all the material, to say whether at the end of the day when the debts which are properly those of the applicants, and the debts which are properly those of the company are ascertained, the applicants will be solvent, although the applicants in their material assert that any surplus from the house sale ought to be sufficient to pay out their personal creditors.

Notice of this application was given to a number of creditors. Counsel for the applicants advises me that to the best of his knowledge and instructions all creditors who have sought to prove in the estate of the bankrupts have been given notice, and that no creditor has indicated an intention to appear and oppose, or indeed to oppose the order sought. An

petitioning creditor whereby the debt which was relied upon to	arrangement has been entered into by the applicants with the
found the petition will be paid out in some manner within a reasonably short period of time, and that the costs of the Official Receiver in relation to the administration of the estates to this point in time will be paid by the applicants. In those circumstances the petitioning creditor does not oppose the orders sought by the bankrupts today.
There is no material from the petitioning creditor to assert that its debt was, as a matter of fact, truly incurred by the applicants as opposed to the company. It may
be that because of the arrangement which has been entered into, the petitioning creditor does not see it as in its interests to assert the correctness of the judgment. However, beyond the sworn statements of the applicants that the debt was truly that of the company, there is sufficient surrounding material to satisfy me that the business of Waldron Studios was, in fact, carried on by the company, and that on the balance of probabilities the debt incurred to the petitioning creditor was incurred by the company and not by the applicants personally.
In those circumstances the application, in my view, falls within the general statement of principle of Mr. Justice Pincus, as he then was, in Re McCollum (1987) 71 A.L.R. 626.
There was a further ground argued that there was bankrupts to believe that provided that they made payments conduct on the part of the petitioning creditor which led the
from time to time no action would be taken in relation to the debt prior to Christmas trading 1991.
I am not satisfied that the material clearly establishes this ground, although I concede that it is arguable that on one view of the conversation the male bankrupt may have been led to that view. I prefer to base my decision on the basis that the sequestration orders ought not to have been made because there was, as a matter of probability, no existing debt then due by the bankrupts to the petitioning creditor. In the circumstances, I order that the sequestration orders made on 22 October, 1991 be annulled.
Having regard to the advice that I have received from the Official Receiver that no orders are necessary to protect his position in relation to costs, having regard to undertakings given today, I do not propose to make any orders in that regard.

I certify that this and the four ( 4 )

preceding pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Cooper.

Date: 7 April, 1992.

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