Re Walker, A Ex parte Noble Einsiedel Pty Ltd

[1992] FCA 326

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JUDGMENT ~o .32&	22	i
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IN THE FEDERAL COURT OF AUSTRALIA

EXERCISING FEDERAL JURISDICTION

IN BANKRUPTCY

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA

RE: ANTHONY WALKER I,

Judgment	Debtor	/ i
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EX PARTE: NOBLE EINSIEDEL PTY LTD

(RECEIVER AND MANAGER APPOINTED) !

Judgment Creditor 1.

NORTHROP J
MELBOURNE

15 APRIL 1992

EX TEMPORE REASONS FOR JUDGMENT,

In this matter the petitioning creditor desires to

proceed with the hearing of the petition. The debtor is
seeking an adjournment. The history of the matter is that the
petition was presented on 17 January, 1992 and served on 27
February, 1992. It is based upon an act of bankruptcy which

The reason for the adjournment being sought is that the debtor has executed an authority under s188 of the Bankruptcy

is alleged to have occurred on 19 December, 1991, being a
failure to comply with a bankruptcy notice. The judgment debt
relied upon is the balance of a debt which was obtained in the
Supreme Court in July 1991 for an amount of about $68,000 and
costs plus interest to be paid within seven days. Of that

amount $60,000 was paid, the balance, amounting to some

$12,000, has not been paid.	That is the debt upon which the
bankxuptcy notice was based.

1966 authorising a meeting of creditors to be held to

consider what should be done. It is necessary to give a brief

outline of the facts. The debtor is a solicitor and it is
quite apparent from the material before the Court that there
are substantial debts owed by him including large amounts
owing to barristers. He has debts owing to him from a large
number of persons, presumably clients, but there is grave
doubt as to whether those amounts can ever be recovered. The
proposal which the debtor suggests should be put to the
meeting of creditors is in a form which is, to say the least
of it, ambiguous and depends upon the payment of $25,000 from
a third party to the trustee to be made available to the

creditors plus the expenses of the administration of the

arrangement or composition. In any event there are two

proposals mentioned but it is not clear what is the effect of the proposals. It is accepted that at a meeting of creditors it is possible that another proposal altogether could be

accepted but in any event the report of the trustee who has

been nominated shows that there will not be much difference

really between the effect of a sequestration order being made

and what would be available to creditors, particularly having regard to the proposed amendments of the Bankruptcy Act, under the proposal made by the debtor. This is made clear from the report of the trustee which is before the Court. The proposed meeting will need to be called before 6 May of this year, less than three weeks away from now and there is some doubt about whether all the creditors would be able to be given notice since the material before the Court shows that many of the barristers are not named but that a reference is made to monies being owed to the barristers' clerks when in fact the money should be owed to the barristers themselves.

In cases of this kind it is not easy to decide what

should be done, whether the adjournment should be granted or
not. The case of Field v Commercial Bankina Companv of Svdnev
Ltd (1978) 22 ALR 403, a judgment of the Full Court of the
Federal Court of Australia, is of assistance. It does
indicate a number of factors which are relevant in considering
questions of this kind. The solicitor for the debtor urged
that in considering this matter the Court should have regard
to the prejudice resulting from either making or refusing to
grant the adjournment. He referred to the fact that if the
adjournment is not granted and the debtor is made bankrupt he
could well lose his practicing certificate to act as a
solicitor and therefore his means of livelihood could be
affected. At the present time he is acting as a sole

solicitor and therefore his whole profession could be very

adversely affected and it was argued that in those

circumstances there should be an opportunity given to the
debtor to continue with the proposal he has outlined in his
affidavit.

It appears from Field's case, and I refer to the judgment of Sweeney J at p 411, that there is no practice that the mere fact that an authority under s188 has been signed, of itself,

is sufficient to justify the granting of an adjournment. His

Honour there sets out a number of factors which it is said, could be relevant, and are factors, to be taken into account. I propose to consider a number of factors, to weigh the balance between them, and decide whether, I should grant the adjournment.

In this regard, I do give great weight to the problem of a sole practitioner solicitor becoming a bankrupt and losing

his right to practice. In the present case, the first factor

mentioned on p 411, is the course of dealings between the
parties from the time when the obligation to the petitioning
creditor is said to have arisen, to the date of the hearing.
Reference has already been made to the time when the judgment
debt was obtained, the fact that $60,000 was in fact paid, but

the balance has not been paid. Apparently there has been no

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attempt to pay that amount. Having regard to the debts of the
debtor, and his lack of assets, it is not surprising, since,
from his own story, it would appear that, to a large extent,
the debtor is insolvent. In expressing that tentative view, I

do so on the basis that it seems that the moneys owing to him

are most unlikely to be recovered, even on the debtor's own

story, and this is leaving aside the other amounts in relation

to the larger debts to the banks.

The second factor is the debtor's attitude to the

application by the petitioning creditor. Prima facie, on

proof of the matters mentioned in s52 of the Bankru~tcv	Act
1966, that the Court will proceed to make an order for

sequestration. This merely states the obvious that once the

requirements of s52(1) have been satisfied, normally the Court
should make a sequestration order subject to the debtor
establishing special reasons why no order should be made.

Third, the general financial position of the debtor. I

have already indicated that here the general financial
position of the debtor is not good, and that the debts, in my
view, greatly outweigh the amounts owing to the debtor. The
fourth is the relation between the debt of the petitioning
creditor and the total liability of the debtor. It may be
seen, for example, that the petitioning creditor's opposition

would be sufficient to defeat any special resolution proposed

at a creditor's meeting. That has no application in the

present case. The fifth factor relates to the application for

an adjournment disclosed by other creditors.	Here a number
of creditors have appeared.	Some have supported the granting

of the adjournment, some have opposed the granting of the
adjournment, but it is not at all clear as to the amounts owed
to the various creditors. It is impossible to give any weight

to this principle on the facts of this case. The sixth factor

relates to any evidence bearing upon the question of whether

it would be to the advantage of the creditors that the
debtor's affairs be administered under Part X of the Act.
Reference has been made already to the report of the trustee,
and that report, to say the least of it, is not very
enthusiastic in favour of the debtor. It appears that
creditors would not be in a better position if the proposal
was adopted. I am aware again of the fact that the proposal
could be amended to a third form even, but the general
impression one gets from reading the report and reading the

statement of affairs of the debtor is that it is unlikely that -

this is a matter where the Court could look with any
enthusiasm on a successful outcome of the proposed creditors'

meeting. The seventh factor is the likelihood that the debtor

would be able to place before a meeting of creditors, a
particular proposal or evidence of his general circumstances,
calculated to persuade them to vote for the administration of

his affairs under Part X. That really is very similar to what

I have already said in relation to the sixth factor.

There is one other matter to which I should return. That is the general attitude of the debtor in this case. This is

apart altogether from the fact of the non-payment of the

petitioning creditor's debt which, apparently, is not by any

means the largest debt owing by the debtor. During the

course of the submissions, reference was made to, and parts of
affidavits were read, in relation to the service of the

bankruptcy notice, and also the service of the petition. In

my opinion, this is a relevant factor to take into account in

considering the conduct of the debtor in relation to his

dealings with the petitioning creditor. When the bankruptcy notice was served on the debtor, the debtor was not known to the process server, but apparently he had been given a

description of the debtor. After considering the description
and saying that the person he served came within that
description, the process server sets out in his affidavit what

in fact occurred, and I quote from the affidavit:

"3. Further, I asked Anthony Walker at the time of

service -

"Are you ANTHONY WALKER the person referred to in

(a)	this document as the judgment debtor?" He replied - "No, I'm not."
(b)	the judgment creditor?"

"Do you acknowledge the amount of $12,514.34 to

He replied - "No, I don't." "Will you accept the Bankruptcy Notice or will I
(c)	have to place it at your feet?" He replied - "Go ahead drop it."

4.  As requested, I placed the said Bankruptcy Notice at Anthony Walker's feet at which time he kicked the said Notice into the gutter.

5.  Approximately thirty seconds later a person whom I believe was an employee of Anthony Walker picked up the said Bankruptcy Notice and proceeded to enter the foyer of 221 Queen Street, Melbourne following Mr Anthony Walker."

I should add that the address there was the address,

apparently, where the debtor had an office.

One can only comment one would not expect action of that kind by a solicitor. This to my mind is a factor to take into

account in the relationship between the petitioning creditor

and the debtor.

The service of the petition took place in a street. I

do not propose to read the affidavit out in detail but again,

the debtor did not admit that he was the judgment debtor.

Questions were raised during the submissions whether I

could take these facts into account or not.	In this regard
reference was made to Field v Commercial Bankina Com~anv	of

Svdney, the case referred to earlier. On my reading of that authority, it appears that at no stage before the trial judge were the affidavits there involved, being the affidavits in support of an application for substituted service, actually in evidence before the trial judge. They were not read. That was the expression used, in a case which was being heard in

New South Wales. In those circumstances, it was argued that

the trial judge could not have regard to them in coming to the

conclusion he did. The Full Court made reference to this

fact, but did not finally decide the matter, but it had no

regard to those facts at all.	In the present case, the
affidavits were read before me.	They are in evidence, and I
do give some weight to them.

In the circumstances, this is a case where, by weighing

the balance between the conflicting factors, including the

prejudice to the debtor, this is not a case where I would be

disposed to adjourn the hearing of the petition.	I refuse the
adjournment application.

I certify that this and the preceding seven (7) pages are a

true copy of the Ex Tempore Reasons for Judgment of the

Honourable Mr Justice R.M. Northrop.

Associate: G d&