Re Wheaton, Alma Joyce Ex Parte Wattyl (Queensland) Pty Ltd

[1983] FCA 134

Re: ALMA JOYCE WHEATON
Ex parte: WATTYL (QUEENSLAND) PTY. LTD.
No. Qld.P60 of 1983
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
IN THE BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND Fitzgerald J.

CATCHWORDS

BANKRUPTCY - materials supplied by the creditor to the debtor's husband for use in his business - account in joint names - bankruptcy notice based on a judgment debt obtained in the Magistrates Court relating to these materials - debtor neither authorized nor knew that her husband was opening a joint account - debtor did nothing to hold out that her husband was authorized to use her name or that she accepted responsibility for the debt - creditor's petition dismissed - debtor's attitude to Magistrates Court plaint and judgment - no order as to costs.

Bankruptcy Act 1966 (Cwlth), s.52

HEARING

BRISBANE

#DATE 30:5:1983

ORDER

1. The petition is dismissed

2. No order as to costs

JUDGE1

The petition for a sequestration order against the estates of Alma Joyce Wheaton, the debtor, and her husband was presented by Wattyl (Queensland) Proprietary Limited, the creditor, on 29 November 1982. A sequestration order has already been made against the state of the debtor's husband on the petition.

The petition alleged that the debtor and her husband were justly and truly indebted to the creditor in the sum of $2419.35, being moneys owing pursuant to a default judgment obtained by the creditor against the debtor and her husband in the Magistrates Court on 14 May 1982.

The events leading up to the bankruptcy of the debtor were a failure to comply before 21 July 1982 with the requirements of a bankruptcy notice served on her on 7 July 1982 or satisfy the court that she has a counter-claim set off or cross-demand equal to or exceeding the sum specified in the bankruptcy notice. The bankruptcy notice was based on the judgment debt obtained by the creditor in the Magistrates Court, the judgment relating to materials supplied by the creditor to the debtor's husband for use in his business. The debtor has given notice of intention to oppose the petition on the ground that she is not indebted to the creditor.

It is not really in dispute that there is power to go behind the default judgment, although the submission was made that I should not do so in view of the debtor's failure to protect her position as she might have done at an earlier stage of the proceedings.

It was the debtor's husband who at all times dealt with the creditor. His dealings were with one Graeme Gratton, a sales representative employed by the creditor at Toowoomba. The dealings commenced in 1979 and the original basis on which the husband dealt with Mr Gratton was cash on delivery. However, from the very beginning Mr Gratton used to supply the husband with materials without payment and retained the dockets "under the table" until the husband made payment.

In September 1981 the husband's payments to the creditor were overdue and it was arranged between the husband and Mr Gratton that the husband would open an account. In order to do this an application for credit had to be made and forwarded to the creditor's head office. Such an application was made out by Mr Gratton on or about 22 September 1981. Mr Gratton inserted the names of both the husband and the debtor in order to improve the husband's prospects of being permitted by the creditor to trade on a credit basis.

There is not the slightest basis for concluding that the debtor knew that her husband was opening an account in their joint names, or that she authorized him to do so, or that Mr Gratton believed that such an authority had been given.

Mr Gratton's affidavit may perhaps suggest in paragraph 5 that he believed that there was a partnership between the debtor and her husband, but there is nothing to indicate any basis for such a belief.

After the credit application had been completed Mr Gratton continued to supply the husband. He continued to hold invoices for a period of approximately one week prior to sending them to the creditor's head office in Brisbane, so that accounts could be forwarded by the creditor. All invoices and all receipts continued to show only the husband's name. However, from about October 1981, accounts were sent out in the joint names of the debtor and her husband.

The first knowledge which the debtor had that her husband had used her name was when an account in their joint names was received. According to the debtor's husband, the debtor was furious but he told her not to worry as he would pay the account. According to the debtor, she telephoned Mr Gratton and informed him that her husband had no authority from her to do as he had done and she "made it clear she would not be responsible for the payment of the debt".

Mr Gratton had a different recollection of the telephone conversation. He swore an affidavit and was cross-examined, as was the debtor. Although he was not deliberately untruthful, he was not particularly helpful. He did, however agree that further credit was extended to the debtor's husband after the debtor had asked that no further credit be extended to him. The debtor acknowledges that she observed that further monthly accounts continued to have both names on them, but she says that she was not concerned because her husband had promised to pay the account and because of the conversation she claims that she had had with Mr Gratton. She said that she did not believe that her liability would be seriously pursued.

When she was served with the Magistrates Court plaint she relied upon her husband's promise to pay the debt and did nothing. Of course, even on her own version, that does not entirely explain her failure to take steps to mount a defence in the Magistrates Court and to defend the Magistrates Court proceedings.

When the bankruptcy notice was served on the debtor, her husband contacted a solicitor and a letter was written denying the debtor was liable to the creditor and stating it was intended to appeal against the Magistrates Court decision and to defend any bankruptcy proceedings. However, no such step was taken. The Magistrates Court judgment stands.

Again, on the debtor's evidence she relied on her husband to pay the account. There are differences in the evidence of the debtor and Mr Gratton concerning when various telephone conversations took place and what was said. I do not propose to resolve those differences in detail.

In my opinion, no basis exists upon which the debtor is liable to the creditor. The debtor certainly did not know it was an account in the joint names of herself and her husband until after the receipt of an account from the creditor. It is not clear how much of the liability was incurred prior to that date, but it does not matter. The debtor did nothing to hold out that her husband was authorized to use her name or that she accepted responsibility for the debt either by act or omission.

Further, there is nothing to indicate that the creditor would not have supplied materials to the husband but for some act or omission of the debtor. Despite instructions to the contrary. Mr Gratton continued to supply goods to the husband and invoices were temporarily put "under the table", thus giving the husband credit in fact even after disputes had arisen and litigation had been commenced.

I am satisfied there is no basis for the judgment debt and that the debtor is not indebted to the creditor. I therefore propose to dismiss the petition.

However, the attitude of the debtor has been cavalier and grossly irresponsible and accordingly I propose to make no order as to costs.

The order of the court is that the petition is dismissed. No order as to costs.