Re Wolff, B.S. v Ex parte Donovan, D

[1991] FCA 2

JUDGMENT No. ..... 2 ...... j . . . 9? . 1. :

I N THE FEDERAL COURT OF AUSTRALIA)

GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF THE	) N o . P 4 5 5 of 1990
STATE OF OUEENSLAND	1

RE :	BERNARD SIMON WOLFF
EX PARTE:	DONALD DONOVAN

MINUTES OF ORDER

JUDGE MAKING ORDER:	SPENDER J.
DATE OF ORDER:	9 JANUARY 1991
WHERE MADE:	BRISBANE  I
THE COURT ORDERS THAT:

I :  1.:

1. T h e C o u r t makes a sequest ra t ion order against t h e I ,

estate o f t he debtor,	S i m o n B e r n a r d Wolff.	/
, -:

2. T h e costs of t he p e t i t i o n i n g creditor of and

inc iden ta l t o t h i s p e t i t i o n , including reserved

costs, t o be paid i n accordance w i t h t h e B a n k r u ~ t c y

1966.

-

.	,
I '

124 o f t h e B a n k r u p t c y R u l e s .

NOTE:  Se t t lement and en t ry o f orders i s dealt w i t h i n R u l e

IN THE FEDERAL COURT OF AUSTRALIA	1	I
GENERAL DIVISION	1
BANKRUPTCY DISTRICT OF THE	1	No. P455 of 1990
STATE OF OUEENSLAND	1

RE :  BERNARD SIMON WOLFF

EX PARTE: DONALD DONOVAN

CORM: SPENDER J.

PLACE: BRISBANE

W: 9 JANUARY 1991

REASONS FOR JUDGMENT

This is a contested creditor's petition for a

sequestration order.

The act of bankruptcy relied on in the petition is the alleged failure by Mr. Bernard Simon Wolff, within six months of the presentation of the petition, to comply with the requirements of a bankruptcy notice served on him on 1 February, 1990.

Paragraph 2 of the affidavit verifying the petition

states :

"The d e b t o r i s j u s t l y and t r u l y indeb t ed t o t h e

P e t i t i o n i n g ~ r e d i tor i n t h e S-m of EIGHTY-FIVE

THOUSAND HUNDRED AND FORTY-ONE DOLLARS AND

EIGHTEEN CENTS ($85,241.18) b e i n g t h e amount

due under t h e f i n a l judgment ob ta ined i n t h e

Dis t r ic t Court a t Kyogle i n New South Wales on

24 th J u l y , 1987."

The judgment is somewhat aged. An earlier petition
no. 1091 of 1988 based on it lapsed on 9 August, 1989. The

p r e s e n t p e t i t i o n was p r e s e n t e d on 11 A p r i l , 1990 . N o a t t e m p t

h a s been made t o set the judgment a s i d e .

Notice o f intent ion t o o p p o s e the p e t i t i o n was f i l e d

by M r . W o l f f on 16 May, 1990 and M r . W o l f f c l a i m e d t h a t :

". . . the judgment i n the D i s t r i c t C o u r t o f New

S o u t h W a l e s for C a s i n o d a t e d the 2 4 t h d a y o f

J u l y , 1987 was:-

( a ) A judgment e n t e r e d by d e f a u l t w i t h o u t the

k n o w l e d g e o f the judgment d e b t o r ;

(b) Based upon a c l a i m w i t h o u t s u b s t a n c e i n

f a c t and w i t h o u t a n y b a s i s i n l a w a g a i n s t

the judgment d e b t o r ;

( c ) Based upon a c l a i m for m o n i e s a l l e g e d l y

owed by the judgment d e b t o r b u t not so

owed, and i n f a c t owed and i n c u r r e d by

H a r r y R o y Hopes, i n r e l a t i o n t o whom the

judgment c r e d i t o r had p r i o r t o the 2 4 t h

d a y o f J u l y , 1987 e l e c t e d t o p r o c e e d and

o b t a i n judgment i n r e s p e c t o f the c l a i m . "

He a l s o s a i d t h a t there was other s u f f i c i e n t c a u s e t h a t a

s e q u e s t r a t i o n o r d e r o u g h t n o t be made.

The a p p l i c a t i o n for the issue o f a b a n k r u p t c y notice

was accompanied b y a C e r t i f i c a t e o f Judgment . I t was headed

" I n the D i s t r i c t C o u r t o f New S o u t h W a l e s a t K y o g l e " . A g a i n s t

the n o t a t i o n " T i t l e o f s u i t and d a t e o f commencement" a p p e a r s

" S t a t e m e n t o f L i q u i d a t e d C l a i m 22nd December 1986 P l a i n t No.

39 o f 1986". A g a i n s t the n o t a t i o n "Form or n a t u r e o f s u i t "

a p p e a r s "Money d u e and o w i n g p u r s u a n t t o a timber a g r e e m e n t " .

I t i d e n t i f i e s the p a r t y i n whose f a v o u r judgment was g i v e n or

made a s the p e t i t i o n i n g c r e d i t o r , and names M r . W o l f f a s the

p a r t y o r d e r e d t o pay money. T h e d a t e o f judgment i s s t a t e d t o

be 24 J u l y , 1 9 8 9 , and a g a i n s t the d e s c r i p t i o n " A b s t r a c t o f

judgment s t a t i n g amount ( i f any) ordered t o be paid, t h e r a t e

o f i n t e r e s t (if any) payable thereon , and the d a t e from which

it i s payable, and p a r t i c u l a r s o f any a c t ordered t o b e ' d o n e

or not t o be done" appears "Claim $84,853.93	Cos t s $387.25
To ta l $85,241.18".	The Certificate of Judgment indicates that

there was no trial and the judgment was by default.

This is to be contrasted with the nature of Mr. Donovan's claim in the plaint no. 39 of 1986 which set out his cause of action as:

"Money due and payable from t h e

Defendant	t o the P l a i n t i f f
pursuant	t o a t imber agreement
dated 9 t h December,	1983 between

t h e P l a i n t i f f and H a r r y Roy

Hopes,	t h e par tner o f t h e
Defendant for and on b e h a l f	o f Hopewood Tlmbers, and i n
p a r t i c u l a r for payments due
from May, t o December, 1986 $55,672.90
Money due and payable from the Defendant t o t h e P l a i n t i f f
pursuant t o a Deed o f Guarantee
dated 17 th March, 1986 between
t h e p l a i n t i f f and Harry Roy
Hopewood Timbers, a par tnersh ip
Hopes, for and on b e h a l f o f
between t h e Defendant and t h e
s a i d H a r r y Roy Hopes, wherein
t h e s a i d Harry Roy Hopes was on
16th September, 1986 declared
bankrupt $26,342.07
Money due and payable from t h e Defendant t o t h e P l a i n t i f f i n
r e s p e c t o f t h e charging o f
i t e m s suppl ied by Hast ings
Derring P t y . l i m i t e d t o Hopewood Timbers on t h e
P l a i n t i f f s account i n May,
A court of bankruptcy is concerned to inquire

whether there are substantial reasons for questioning whether behind the judgment there was "in truth and reality" a debt due: Wren v. Mahony (1972) 126 C.L.R. 212 at 224.

It was submitted by Mr. Eliadis for Mr. Wolff that in truth and reality there is no debt owing by the judgment debtor to the petitioning creditor and that there was no consideration for the judgment debt. It was further submitted in the alternative that if there was something of the order of $2,800 owing, having regard to the circumstances of the amount claimed in the bankruptcy notice as being due and the marked difference in what might be thought the true amount owing, sufficient cause had been shown as to why the sequestration order ought not be made.

The evidence shows that Mr. Donovan had dealings

with a Mr. Harry Roy Hopes concerning the felling of timber on

Mr. Donovan's property. Mr. Donovan said that he was first	introduced to Mr Hopes in May or June 1983 when Hopes came to
his Killarney property seeking the rights to fell and mill timber from some of his property. Hopes returned in approximately September or October of 1983 and again raised the proposition concerning the felling and milling of timber on Mr. Donovan's property. Mr. Donovan instructed his solicitors to prepare a timber agreement between himself as

5   I

registered proprietor of the property and Harry Roy Hopes as

purchaser. He says:

" A t t h a t s t a g e Hopes had made no i n d i c a t i o n t o

m e nor had I suspec t ed t h a t he was a c t i n g o t h e r

than on h i s own b e h a l f " .

On 9 December, 1983, a deed was executed between Donald Donovan on the one part and:

"Harry Roy Hopes o f 6 Boomi Creek Road,

Woodenbong, Timber Con t rac to r ( h e r e i n a f t e r

c a l l e d	' t h e	purchaser'	which	expres s ion	s h a l l
i n c l u d e	t h e	purchaser 's	succes sor s	and	a s s i g n )

o f t h e o t h e r p a r t " .

The price for all the millable hardwood timber with some specified exceptions was $540,000, to be paid by a large number of small instalments. The document was prepared by Mr. Donovan's solicitors and executed in the presence of both Mr. Donovan and Mr. Hopes and their respective solicitors in Mr. Hopes1 solicitors' office.

A bill of sale was prepared but was never executed in respect of a loan of $8,000 being part of the first	instalment to be paid under the timber agreement. The bill of
sale was to be over a Caterpillar tractor.
There were delays in payment of the instalments and the payments that were made by Hopes were quite irregular, although from time to time the arrears were made up. By February or March 1986, according to Mr. Donovan, Hopes had:

" . . . g o t h i m s e l f i n t o a s i t u a t i o n i n r e l a t i o n t o

the t i m b e r agreemen t t h a t he was f o u r payments

b e h i n d o w i n g me a t t h a t s t a g e i n round f i g u r e s

a n amount o f a p p r o x i m a t e l y $25,000".

A bill of sale was executed dated 17 March, 1986 from Harry Roy Hopes to Donald Donovan. The indenture recites that it was made between:

"HARRY ROY HOPES o f 6 Boomi C r e e k Road,

Woodenbong ( h e r e i n a f t e r c a l l e d the Mor tgagor )

whose b u s i n e s s or o c c u p a t i o n i s T i m b e r

C o n t r a c t o r and who r e s i d e s a t 6 Boomi C r e e k

Road, Woodenbong and who c a r r i e s on or i n t e n d s

t o c a r r y on b u s i n e s s u n d e r the u s u a l name or

style	o f	'Hopewood	Timbers '	a t Kangaroo	F l a t
and	DONALD	DONOVAN	o f	K i l l a r n e y	( h e r e i n a f t e r

c a l l e d the Mor tgagee ) . . . " .

The indenture recites that the mortgagor is possessed of or well entitled to the personal chattels described in the schedule and recites that the mortgagor had applied to the Commonwealth Bank of Australia to lend him the sum of $16,000, and continues, somewhat enigmatically:

" w h i c h sum t o g e t h e r w i t h a n y f u r t h e r sums t h a t

the	Bank	i n i t s a b s o l u t e d i s c r e t i o n m a y advance
t o	the Mortgagor	a r e h e r e i n a f t e r d e s i g n a t e d	and

i n c l u d e d	i n the	expression	' the p r i n c i p a l	sum'
and	wh ich p r i n c i p a l	sum	i s lent	upon h a v i n g the

repaymen t	thereof	w i t h interest	s e c u r e d	by	the
l o a n b e i n g made	i n the	j o i n t	names	o f	the

m o r t g a g o r and the mor tgagee" .

A t the same time, a guarantee was executed between

Harry Hopes as " g u a r a n t o r " and Donald Donovan as " m o r t g a g e e " .

The deed recited:

" WHEREAS :

( a )	The mortgagee owns l a n d a t White Swamp and h a s e n t e r e d i n t o an agreement w i t h the'
guarantor f o r the guaran tor t o remove
t i m b e r from the l a n d .
(b)	To e n a b l e the guaran tor t o have carry -on
f i n a n c e the mortgagee h a s consen t ed t o a
l o a n b e i n g made by the Commonwealth Bank
o f A u s t r a l i a Kyvg le Branch t o the
guarantor i n the j o i n t names o f the

guaran tor and the mortgagee."

At the same time as the execution of the bill of sale and the guarantee, Mr. Donovan says that:

"Hopes then pa id me the amount due t o me from a

cheque account which was opened f o r h im then
and there by the Bank. H e was f u r n i s h e d w i t h a

two hundred l e a f cheque book which I unders tood

t o be i n r e s p e c t o f a n account opened i n the

name o f Hopewood T imbers" .

Mr Donovan says that no payments were made between May and July/August of 1986. He says that:

"On the 7 t h August 1986 the C a t e r p i l l a r T r a c t o r

went m i s s i n g from m y p roper t y . When I f i n a l l y

go t t o speak t o Hopes abou t it he e x p l a i n e d

t h a t Bernie	W o l f f had	t a k e n	a	f ew	weeks	o f f
from	h i s job.	H e	t o l d me	t h a t Bernie	was	a

mechanic and he was t a k i n g the t r a c t o r t o Esk

t o r e p a i r i t so i t c o u l d move b a c k t o m y Trough

Creek p r o p e r t y t o c o n t i n u e the job."

He says that:

" A t the same t i m e i n this month I was t r y i n g t o

b r i n g p r e s s u r e to b e a r on Hopes who had r u n u p

purchases on my account wi th Hastings Deering.

The purchases were approxima t e ly $2,800.00 and

I c o n t i n u e d t o p r e s s h im t o make good these

payments" .

Mr. Donovan says that on 16 August, 1986 he received

information that Hopes had disappeared. On 16 September, 1986 Mr. Harry Hopes became bankrupt as the result of the presentation of a debtor's petition. The Official Trustee wrote to Mr. Donovan on l1 November, 1986 saying in part:

"I understand t h a t you h o l d a bill o f s a l e over

a D717A c a t e r p i l l a r b u l l d o z e r , s e r i a l number

4011, the proper ty o f the par tnersh ip b u s i n e s s ,

o f Hopewood	Timbers, o f which t h e bankrupt was
a member".

In the Bill of Sale, Mr. Hopes had represented that he personally was beneficially entitled to the D717A Caterpillar dozer, but Mr. Wolff swears that the Caterpillar was the property of his father and on his father's death was part of his father's estate. It seems to me probable that this claim is true.

On 16 April, 1987, Mr. Wolff was interviewed by a Detective Senior Sergeant Michael Sullivan, of the Criminal	Investigation Branch at Casino in connection with inquiries
being made by Detective Sullivan. Mr. Wolff was not the subject of those inquiries. In the course of that statement, Mr. Wolff said that " i n May 1984" he had:

"s igned t h i s par tnersh ip and paid $15,000 into

t h i s par tnersh ip . I was then to be a silent

par tner i n the par tnersh ip i n t h e b u s i n e s s

t r a d i n g as	Hopewood	Timbersu .
Whether t h e correct year	i s 1983 ' o r 1984	i s n o t

immed ia t e l y c l e a r .	Having	regard	t o the	chrono logy	nar ra t ed
b y m.	W o l f f , it	seems	t o me	l i k e l y t h a t the per iod	was May

1983. Immedia te ly f o l l o w i n g h i s s t a t e m e n t a s t o the payment

o f the $15,000 and his becoming a s i l e n t par tne r i n the

p a r t n e r s h i p	b u s i n e s s	t r a d i n g	a s	"Hopewood	Timbers"	M r	W o l f f
c o n t i n u e d :

" A t t h a t p a r t i c u l a r t i m e Harry Hopes was c u t t i n g

t i m b e r i n Yabbra S t a t e F o r e s t i n New S o u t h

Wales . S h o r t l y a f t e r j o i n i n g t h i s p a r t n e r s h i p ,

due t o the size o f the l o g s b e i n g sn igged by

Harry Hopes it became n e c e s s a r y t o a t t e m p t t o

o b t a i n a l a r g e r d o z e r for th is work. On the 30

May 1983 I went w i t h m y f a t h e r and Harry Hopes

t o Fogar ty ' s	Earthmoving	C o n t r a c t o r s	a t	Browns
P l a i n s	i n Br i sbane .	There m y	f a t h e r	purchased

a D 7 C a t e r p i l l a r T r a c t o r comp le t e w i t h a

l o g g i n g winch. M y f a t h e r pa id the sum o f

$16,500	f o r th is d o z e r which we were	t o u s e ,	or
Harry was	t o u s e	i n h is	l o g g i n g e n t e r p r i s e w i t h

"Hopewood T imbers" . M y f a t h e r was t o r e t a i n

owver sh ip	o f	th i s	b u l l d o z e r	and	e v e n t u a l l y	the
p a r t n e r s h i p	was	t o	r e p a y	t h i s	money	t o m y
f a t h e r .	However	u n t i l	th is	was	comple ted	m y

f a t h e r was t o remain the owner o f th is machine.

The b u l l d o z e r , a f t e r purchase was then conveyed t o New S o u t h Wales where Harry used it i n the

Timber e n t e r p r i s e .

When Harry Hopes was c u t t i n g t i m b e r i n Yabbra

S t a t e Forest there was a d i s p u t e w i t h the

F o r e s t r y which l e d t o Harry b e i n g t o l d t o l e a v e

the forest. About t h a t t i m e Harry then began

t o c u t t i m b e r on a p r o p e r t y owned by M r Don

Donovan. T h i s p r o p e r t y was a l s o i n New Sou th

Wales . Harry Hopes set u p a sawmil l on Mt Don

Donovan's p r o p e r t y and I v i s i t e d the sawmil l

from t i m e t o t i m e . Up t o t h i s t i m e I

cons ide red that I was c o n s u l t e d and k e p t

i n fo rmed	o f	the	t r a n s a c t i o n s	and	b u s i n e s s
c a r r i e d	o u t	by	the	p a r t n e r s h i p	'Hopewood

Timbers ' . "

T h i s accoun t , i n my o p i n i o n , makes it p l a i n t h a t Mr

Hopes and Mr W o l f f were i n p a r t n e r s h i p i n t h e t i m b e r f e l l i n g

10   I

and milling business prior to the execution of the timber
agreement on 9 December 1983.

In his statement to Detective Sullivan, Mr. Wolff said that he had no knowledge of Mr. Hope's executing a Bill of Sale in respect of the bulldozer which had been purchased by his father nor had he any idea that Hopes had obtained money from the Commonwealth Bank at Kyogle. He said:

" I was a f u l l 50% owner o f the p a r t n e r s h i p

'Hopewood Timbers' and I cons ide red t h a t I

shou ld have been t o l d o f a n y ma jor t r a n s a c t i o n s

concern ing the p a r t n e r s h i p " .

On 7 September, 1987, solicitors on behalf of Mr. Donovan gave notice of breach of covenant addressed to Harry Hopes and forwarded it to the solicitors who had acted for him in respect of the timber agreement dated 9 December, 1983. The notice stated, inter alia:

" W i t h reference t o the deed be tween Donald Donovan

and Harry Roy Hopes, da t ed 9 December, 1983 and the

covenant by Harry Roy Hopes	t o pay the purchase
p r i c e and the breach by Harry Roy Hopes o f t h a t
covenan t ,	the vendor hereby g i v e s notice o f same".

On 26 August, 1986, solicitors on behalf of Mr Donovan wrote to solicitors acting for Mr. Wolff. That letter said in part:

" W e n o t e t h a t your client Mr. Bernard W o l f f i s a

p a r t n e r o f Mr. Hopes. A t p r e s e n t o u r cl ient 's

d e b t appears t o be w i t h hi-. Hopes, though we

can p rov ide n o guarantee t h a t proceed ings w i l l

n o t be t a k e n a g a i n s t y o u r client a s a p a r t n e r

o f Hopewood T imbers" .

And later said:

" I n a d d i t i o n we note t h a t it i s a l l e g e d by you@

client t h a t the D 7 c a t e r p i l l a r b u l l d o z e r was

n o t owned by Mr. Hopes n o r your client b u t

r a t h e r your cl ient 's l a t e f a t h e r . Could you

p l e a s e forward documentat ion showing proo f o f

ownersh ip	w i t h i n	seven	d a y s	o f	the	d a t e
hereof".

The response by solicitors for Mr. Wolff set out his assets and liabilities, the assets totalling $3,800 and the liabilities $94,000. The liabilities included various trade creditors in relation to Hopewood Timbers estimated at $50,000. The letter said:

" W e unders tand t h a t there a r e more l i a b i l i t i e s

o f Hopewood Timbers which we believe c o u l d

t o t a l a n o t h e r $50,000, however, o u r client i s

unaware o f d e t a i l s o f same.

The f a c t s su r round ing o u r client's i nvo l vemen t

have a l r e a d y been e x p l a i n e d t o you.

Our c l i e n t was t o t a l l y unaware o f the b u s i n e s s

d e a l i n g s o f hY. Hopes. Our client was, i n

f a c t , a s i lent p a r t n e r , and a n y f u r t h e r a c t i o n

brought by your c l i e n t s would n o t improve your

cl ient 's	c l a i m	a t	a l l .	Should	you,	y o u r
clients	and	other	c r e d i t o r s	which	[sic] to

pursue and [sic] a c t i o n a g a i n s t o u r cl ient , we

w i l l a d v i s e o u r c l i e n t t o l o d g e a d e b t o r ' s

p e t i t i o n " .

On 19 November, 1986, solicitors on behalf of Mr. Donovan, wrote to the solicitors for Mr. Wolff and stated, inter alia:

"We note that M r . Hopes was p r e v i o u s l y t r a d i n g

i n p a r t n e r s h i p , a s Hopewood Timbers , w i t h your

client	M r .	Bernard	W o l f f .	As	p r e v i o u s l y
i n d i c a t e d ,	o u r	c l i e n t	i s	an	o u t s t a n d i n g

c r e d i t o r o f the p a r t n e r s h i p .

Our c l ient h a s t h r e e o u t s t a n d i n g m a t t e r s w i t h

Hopewood Timbers . These a r e :

1 .        A timber agreement da t ed 9 t h December 1983

be tween o u r client and Mr. Hopes a c t i n g

f o r and on b e h a l f o f Hopewood Timbers. To

d a t e , the amounts o u t s t a n d i n g pursuan t t o

t h e Agreement, i n c l u d i n g a payment f o r

November 1986, i s $55,672.90.

2 .	A Deed o f Guarantee was s i g n e d by o u r
client i n r e s p e c t o f a l o a n t a k e n o u t by

M r . Hopes on 1 7 t h March 1986. Pursuant t o t h e Deed o f Guarantee , the payments on the l o a n were t o be made by Hopewood Timbers .

To t h e best o f o u r cl ient 's i n f o r m a t i o n ,

knowledge and b e l i e f , when the Deed o f

Guarantee was s i g n e d , h e b e l i e v e d t h a t Mr.

Hopes was a c t i n g f o r and on b e h a l f o f t h e

p a r t n e r s h i p .

3 .	Hopewood Timbers had v a r i o u s amounts
charged t o o u r client ' S Has t i ngs Deering
P t y . L i m i t e d account i n May 1986 f o r work
and r e p a i r s performed on t h e DC6
b u l l d o z e r , i n t o t a l $2,838.96.
I t	i s o u r	o p i n i o n	t h a t	the	p a r t n e r s h i p	be tween

Mr. W o l f f and M r . Hopes was n o t t e rm ina t ed

u n t i l 1 6 t h September 1986. Accord ing l y , it i s

o u r o p i n i o n t h a t y o u r client i s j o i n t l y and

s e v e r a l l y	l i a b l e	t o o u r	client	f o r	the	above
o u t s t a n d i n g	d e b t s .	The	t o t a l	amount	due	i s
$84,843.93."

There is an element of evidence making in this

letter in relation to the statement in paragraph 1 that Hopes

was " a c t i n g f o r and on b e h a l f o f Hopewood Timbers" and the

statement in paragraph 2 that " t h e payments on the l o a n were t o be made by Hopewood Timbers" and that M r . Donovan " b e l i e v e d

t h a t M r . Hopes was a c t i n g for and on b e h a l f o f the

p a r t n e r s h i p " , as well as the statement that "Hopewood Timbers

had various amounts charged t o o u r c l ient ' s Has t i ngs Deer ing

13   \

Pty. Limited account". I think it likely that the claimed

knowledge of the capacity in which Mr. Hopes was acting was a direct response to the knowledge that Mr. Hopes had lodged a debtor's petition.

On 2 December, 1986, solicitors on behalf of Mr.

Wolff replied, inter aliar

"We note that our client is impecunious. We note that we are not prepared to make any admissions in relation to the content of your

letter. "

There is a further letter of 11 December, 1986 and on 14 July, 1987. In the later communication solicitors for Mr. Donovan advised Mr. Wolff's solicitors that default judgment had been entered. There was further correspondence and on 16 September, 1987, solicitors for Mr. Wolff indicated that they had no further instructions in relation toD the matter.

So far as the registration of business names is concerned, the business name of "Hopewood Timbers Boonah" which was registered on 20 March, 1984 with the nature of the business being sawmilling is, according to the certificate, said to have commenced on 21 February, 1984 and ceased on 20 March, 1987. Mr. Hopes and Mr. Wolff are shown as the persons carrying on the business from 21 February, 1984 and the date of cessation for Mr. Wolff is shown as 11 August, 1986 and for

Mr. Hopes, 20 March, 1987. There is no evidence as to who

14   L

supplied this information. It conflicts with Mr. Wolff's
account to Detective Sullivan, which I prefer.

It is an incident of a partnership relationship that every partner is an agent of the firm and of his other partners for the business of the partnership. Further, every partner in a firm is liable jointly with other partners for all debts and obligations of the firm while he is a partner. In my view, the judgment debtor was the partner of Hopes in the sawmilling business. The statement of Mr. Wolff to Detective Sullivan confirms the nature of the relationship between Mr. Hopes and Mr. Wolff, and when it began.

I am satisfied that when Hopes entered into the timber agreement of 9 December 1984, he did so on behalf of the partnership of himself and Mr. Wolff. Mr. Wolff, though he be a silent partner, whose existence was undisclosed to Mr. Donovan, was liable for the debts and obligations under the timber agreement. In my view, Mr. Nolff was also liable in

Hastings Deering account for the Caterpillar bulldozer used in	respect of the parts supplied by Mr. Donovan through the
the timber felling and milling business. The use of this machine was an integral part of carrying on the business, and the maintenance of its operational capacity would be part of the usual carrying on of that business. The obligations under the timber agreement continued after Hopes had decamped in August 1986.

In Teheran-Euro~e Co. Ltd. v. S.T. Belton (Tractors)

Ltd. [l9681 2 Q.B. 545 at 552, Lord Denning, M.R. said:

" I t i s	a	w e l l	e s t a b l i s h e d	r u l e	o f	E n g l i s h	l a w
t h a t	a n	u n d i s c l o s e d	p r i n c i p a l	c a n	s u e	and	be

s u e d	upon	a	C o n t r a c t ,	even	t h o u g h h i s name	and
even	his	existence	i s	u n d i s c l o s e d ,	s a v e	i n

those c a s e s where the t e r m s o f the C o n t r a c t

e x p r e s s l y or i m p l i e d l y confine it t o the

p a r t 1 es t o it" .

And Lord Diplock at p.555 said:

"Where a n a g e n t h a s s u c h a c t u a l a u t h o r i t y and

enters	in to	a	C o n t r a c t	w i t h	a n o t h e r	p a r t y
i n t e n d i n g t o d o	so	on	b e h a l f	o f	h is	p r i n c i p a l ,

i t m a t t e r s not w h e t h e r he d i s c l o s e s t o the

other p a r t y the i d e n t i t y o f his p r i n c i p a l , or

even t h a t he i s c o n t r a c t i n g on b e h a l f o f h i s

p r i n c i p a l , or even t h a t he i s c o n t r a c t i n g on

b e h a l f o f a p r i n c i p a l a t a l l , i f the other

p a r t y i s w i l l i n g or l e a d s the a g e n t t o believe

t h a t he i s w i l l i n g t o t r e a t a s a p a r t y t o the

C o n t r a c t anyone on whose b e h a l f the a g e n t m a y

h a v e been	a u t h o r i s e d	t o c o n t r a c t .	In	the	c a s e
o f	a n	o r d i n a r y	commercial	c o n t r a c t	s u c h
w i l l i n g n e s s	o f	the	other	p a r t y m a y be	assumed

by the a g e n t u n l e s s either the other p a r t y

m a n i f e s t s	h i s	u n w i l l i n g n e s s	or	there	a r e	other
c i r c u m s t a n c e s	wh ich	s h o u l d	l e a d	the	a g e n t	t o

r e a l i s e	t h a t	the	other	p a r t y	was	not	so
w i l l i n g " .

The issue in this case is whether or not the logging agreement was an act of carrying on in the usual way the business of the kind carried on by the firm of which Hopes was a member. It does not matter that the other party was not aware that there was in fact a partnership.

The use of the D7 Caterpillar tractor and the
commencement of logging on the petitioning creditor's property
were all matters known to Mr. Wolff. They were matters which
were part of the activities that Mr. Wolff knew the firm was
engaging in at the relevant time. The liability under the
logging agreement was a liability of the firm. The liability
for the parts supplied through Hastings Deering was within the
scope of a managing partner's authority to incur.

The claim in respect of the guarantee is much more conjectural. Even accepting that the borrowing of money for the purpose of discharging what was a partnership obligation might be something within the scope of a managing partner's authority, it seems to me to be otherwise where the borrowing is in respect of a chattel which the partners, or either of them, do not own. At present, I do not see how the events in which Mr. Hopes participated on 17 March, 1986 can be said to be acts within his authority as partner, and for the consequences of which Mr. Wolff is liable.

Here, no notice was given pursuant to s.41(5) of the bankruptcy notice was overstated. I am satisfied that Mr.	Bankru~tcv Act 1966, asserting that the amount in the
Wolff is indebted to Mr. Donovan, at least to the extent of $58,511.86, being the sum of the first and third elements of the District Court plaint.

In Re Bedford: Ex Parte H.C. Sleiah IOueenslandI

Ptv. Ltd. (1967) 9 F.L.R. 497 , Gibbs J. held that failure

17                    I

to comply with a bankruptcy notice given upon an irregular judgment entered for an amount exceeding the amount actually due at the time of judgment is an act of bankruptcy upon which the judgment creditor is entitled to proceed in bankruptcy.

There, the bankruptcy notice was for the amount of £4,227 17s. 8d. and Gibbs J. concluded that the petitioning creditor's debt was £3,927 17s. 8d. Here, the discrepancy is greater, but that does not seem to me to be a material consideration. Gibbs J. said, at 499:

" T h e company i n the p r e s e n t c a s e h a s ob ta ined a

f i n a l judgment which h a s n o t been set a s i d e and

which, a l t hough i r r e g u l a r , i s n o t n u l l . M y

i n q u i r y h a s shown t h a t the judgment was founded

on	a	r e a l	d e b t .	A	b a n k r u p t c y notice	i n the
p r e s c r i b e d	form	was	s e r v e d .	The	amount	s t a t e d

i n t h e notice was excessive b u t th i s d o e s not

i n v a l i d a t e t h e notice ( p r o v i s o ( i i ) t o 8 - 5 3 o f

the Bankrup tcy A c t ) . The a c t o f b a n k r u p t c y

s p e c i f i e d i n s . 5 2 ( j )	o f	t h e Bankrup tcy A c t	h a s
therefore been proved" .

In my view, a similar conclusion obtains here in

this case.

I am satisfied of the act of bankruptcy alleged in paragraph 4 of the petition, and of the other matters of which the Bankru~tcv Act 1966 requires proof. I make a sequestration order against the Estate of Bernard Simon Wolff. I note that a registered trustee, Desmond William Knight, has consented to act as trustee in the event of a sequestration order being made. I order that the costs of the petitioning

cred i tor o f and inc idental t o t h i s p e t i t i o n , including

reserved c o s t s , be paid i n accordance with the A c t .

p certify [I,-[ ,'.I- r-. ' 8';t. 17 l~:.-zzciing

pegcs arc! a frr, ? , . - l	t .	'. -. y-?.2ns	for
judgmc:,! I,.;i--c	!	!S,;	I If. )...:r
Mr. Jus!ice Spzndc:
B---	E	'	Associate

Dated f - - ! - T - - ~ Iclq I