Re Wong, Sam Ling; Ex Parte Wong, Sam Ling v Boardwalk Regency Corporation
[1996] FCA 99
•27 FEBRUARY 1996
CATCHWORDS
BANKRUPTCY - Application to set aside warrant issued under s78 of the Bankruptcy Act 1966 (Cth) - existence of warrant deterring debtor's return to Australia - prejudice to debtor and his company - not advancing purposes of creditor - defeating purpose for which issued - set aside on conditions.
BANKRUPTCY - Bankruptcy notice - application for extension of time for compliance - proceedings to set aside judgment not bona fide and not being prosecuted with due diligence - time not extended.
Bankruptcy Act 1966 (Cth) s41(6C), s78
Ex parte Crispin (1873) 8 Ch App 374 - Cited
Ex parte Gutierrez (1879) 11 Ch D 298 - Cited
Re Sam Ling Wong; Ex parte Sam Ling Wong v Boardwalk Regency Corporation
No. QN1696 of 1995
Cooper J, Brisbane, 27 February 1996
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND
No QN1696 of 1995
RE: SAM LING WONG
EX PARTE: SAM LING WONG
Applicant
AND: BOARDWALK REGENCY CORPORATION
Respondent
JUDGE MAKING ORDER: Cooper J
WHERE MADE: Brisbane
DATE OF ORDER: 27 February 1996
MINUTES OF ORDER
THE COURT ORDERS THAT:
Upon the debtor Sam Ling Wong filing in court a written authority, or sending to the court by facsimile a copy of such written authority pending filing of the same, authorising Flower & Hart solicitors of Brisbane to accept service of any bankruptcy proceedings issued by the creditor Boardwalk Regency Corporation against the debtor under the Bankruptcy Act 1966 (Cth), the warrant for the arrest of the debtor issued on 1 February 1996 be set aside.
The application to extend the time for compliance with the bankruptcy notice until twenty-one days after the hearing and determination of an application in the Supreme Court of Queensland to set aside the judgment of the creditor be dismissed.
The order of 19 February 1996 be vacated.
The time for compliance with the bankruptcy notice served 21 January 1996 be extended to 4.30 pm 28 February 1996.
The debtor pay the creditor's costs of and incidental to the application, including the costs of the appearance on 27 February 1996, to be taxed if not agreed.
Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND
No. QN1696 of 1995
RE: SAM LING WONG
EX PARTE: SAM LING WONG
Applicant
AND: BOARDWALK REGENCY CORPORATION
Respondent
CORAM: Cooper J
PLACE: Brisbane
DATE: 27 February 1996
REASONS FOR JUDGMENT
On 7 November 1995 a bankruptcy notice issued out of this court directed to the debtor. On 9 November 1996 the debtor applied to the Supreme Court of Queensland to set aside the judgment upon which the bankruptcy notice was issued. The ground of the application was that he had never been served with the writ of summons filed in the Supreme Court. The application came on for hearing on 24 November 1995, 21 December 1995 and 24 January 1996. On the first occasion it was said that the debtor was overseas and not available for cross-examination on his affidavit. On the second and third occasions it was said that the debtor was overseas and a key witness was also overseas and unavailable to give evidence or be cross-examined. On 24 January the debtor's application for a further adjournment was refused and the application was dismissed.
On 25 January 1996 the debtor was served with the bankruptcy notice in
Brisbane. On 29 January 1996 the debtor's secretary advised the letting agent of Unit 57, Moreton View Tower, Kangaroo Point, Brisbane that the debtor would be going overseas within a few days and wanted to give the unit at Kangaroo Point up. On 31 January 1996 the debtor told the agent he was going to Singapore immediately and on that date the agent, Ms Rochelle Coward, swore an affidavit to that effect.
The creditor on 1 February 1996 applied ex parte for the issue of a warrant for the arrest of the debtor pursuant to s78 of the Bankruptcy Act 1966 (Cth) ("the Act"). Section 78, so far as is relevant, provides :-
"78(1)Where it is made to appear to the Court:
(a)that a debtor against whom a bankruptcy notice has been issued or a petition has been presented has absconded, or is about to abscond, with a view to avoiding payment of his debts or to preventing or delaying proceedings against him under this Act;
.....
the Court may issue a warrant for the arrest of the debtor or bankrupt, as the case may be, and his committal to such gaol as the Court appoints until the Court otherwise orders and may, by the same warrant, order that any property and books in the possession of the debtor or bankrupt be seized and delivered into the custody of such person as the Court appoints.
78(2) Any property and books delivered into the custody of a person in pursuance of an order under subsection (1) shall be retained by him until the Court makes an order as to their disposal.
78(3) Paragraphs (1)(a), (b) and (c) apply in relation to a debtor whether or not he has become a bankrupt and whether, in the case of a debtor against whom a petition has been presented, the petition was a creditor's petition or a debtor's petition."
On 1 February 1996, Kiefel J ordered the issue of a warrant for the arrest of the debtor.
On 12 February 1996 the debtor filed an application in the Supreme Court of Queensland returnable on 28 March 1996 seeking an order to set aside the judgment in favour of the creditor.
On 13 February 1996 the debtor filed an application in this court which in part read :-
"APPLICATION is made to the Court on behalf of SAM LING WONG of 42-6 Amorsolo Street, San Lorenzo Village, Makati, Metro Manila in the Philippines for the following orders:
1. That the order of Justice Kiefel of 1st February 1996 that a warrant issue for the arrest of Sam Ling Wong be vacated that the warrant for the arrest of the said Sam Ling Wong dated 1st February 1996 that issued consequent upon such order be set aside.
2. That the time for compliance with Bankruptcy Notice No 1696 of 1995 by Sam Ling Wong be extended until 21 days after the hearing and determination of an application to the Supreme Court of Queensland brought by the said Sam Ling Wong to set aside the judgment in respect of which the Bankruptcy Notice was issued, pursuant to s41(6A) or s41(6B) of the Bankruptcy Act.
3.Alternatively, that the said Bankruptcy Notice be set aside.
4.Such further or other orders as to the Court or Registrar may seem meet."
The application as to the relief in paragraphs 1 and 2 was heard by the court on 19 February 1996.
In support of the application the debtor filed an affidavit of the letting agent, Ms Coward in which she deposed :-
"4. On 31 January 1996, I swore a further Affidavit in the said action in the Supreme Court of Queensland. In paragraph 9 of that said Affidavit, I referred to a conversation I had had with Dr Sam Ling Wong on 31
January 1996.
5. On 31 January 1996, the said Dr Sam Ling Wong visited my office in the company with a younger man who remained silent during my conversation with the said Dr Sam Ling Wong.
6. During that conversation, the said Dr Sam Ling Wong and I discussed a notice in form 11 given by me previously under the Residential Tenancies Act requiring the payment of rent or, alternatively, indicating that the tenancy of Unit 57 at Dockside Apartments would be terminated. During the conversation, Dr Sam Ling Wong told me that the tenancy of the said Unit 57 would not be continued as the tenant's material had been removed from the Unit. I recall telling him that I would require to be paid rent up to the time when I could re-let the said Unit 57 and the said Dr Sam Ling Wong told me that he had not brought a cheque book with him whereupon I asked him whether he could get me a cheque later that day and he replied that he could not as he was leaving for Singapore immediately. He then told me that he would be back in Brisbane soon. I can not recall whether he gave any precise indication as to when he would return however my recollection is that it was to be sooner rather than later, possibly within one or two weeks. He did say to me that he would get a cheque to me on his return. If he had not indicated to me that he was to be back in Brisbane within the near future, I would not have let him leave my office without making other arrangements for the payment of rent.
7. I started working with Dockside Central Realty Pty Ltd in August or September last year and on several occasions, I telephoned and spoke to Jennifer Caswell who is the secretary of Dr Sam Ling Wong. On these occasions, I would tell her that rent was late in respect of the said Unit 57 and the said Jennifer Caswell each time told me that she would pass on the information to Dr Sam Ling Wong and, on one or two occasions, told me that the said Dr Sam Ling Wong was overseas and would be back soon.
8. From these conversations and from my conversations with the said Dr Sam Ling Wong, I formed the view that Dr Sam Ling Wong travelled into and out of Australia regularly."
To counter the assertion that the departure from Brisbane was within the ordinary course of affairs of the debtor the creditor filed a number of affidavits. Mr Ian Reid, a licensed private investigator engaged by the creditor's solicitors and with whom the debtor had been in contact deposed that he met with the debtor at the debtor's request on 29 January 1996. Mr John Adam, a bailiff of the Supreme Court, deposed that he
attended at the office of the debtor's company Golden Arrow (Group) Aust Pty Ltd at about 2.30 pm on 31 January and asked to see the debtor. The debtor not then being available, Mr Adam left a business card and was rung by the debtor later that afternoon. The debtor was informed that Mr Adam had a warrant of demand. After some statements as to the enforceability of an American debt in Australia, the debtor advised Mr Adam that Mr William Hart of Flower & Hart, solicitors was acting on his behalf. Mr Adam made contact with Mr Hart on 31 January to set up a meeting with Mr Hart and the debtor to execute the warrant.
In response to Mr Adam's affidavit, Mr Hart deposed :-
"3. I say that I had a telephone conversation with Dr Sam Ling Wong on Wednesday 31 January 1996 following which I telephoned the said John McLean Adam and he told me that he had a warrant of execution which he wanted to serve on the said Sam Ling Wong at my office. I told him that I had no instructions in relation to the execution of the said warrant of execution but that I will attempt to obtain those instructions and, if I received instructions to arrange a meeting for the service of the warrant of execution in my office, I would telephone the said John McLean Adam so that an appropriate appointment could be made. I asked the said John McLean Adam what time would suit him best for me to telephone him tomorrow morning and he suggested 10.30 am. I have examined my diary relating to the said conversation and the said diary which is in my handwriting and which was made later on the said 31st January 1996 from notes made contemporaneously and such diary reads :-
`I rang there & Adams is a SUPCt Bailiff & had a writ of Fi Fa. He says he can execute in my office & it is simple to say no assets and then he can return it as nulla bona & that will be the end & no big deal. I am to ring him to arrange a time of my instns are the same at amount 10.30 am tomorrow.'
4. On Thursday 1st February 1996, I received a telephone massage [sic] to ring the said John McLean Adam and did so at approximately 12.08 pm and he asked when he could execute the warrant of execution and I said that I was still waiting for a telephone call from the said Dr Sam Ling Wong and I should be able to ring the said John McLean Adam by mid afternoon on that day, assuming I receive a telephone call from the said Dr Sam Ling Wong. I told him that I had told sources close to the said Dr
Sam Ling Wong that I was waiting for a telephone call from the said Dr Sam Ling Wong. The information I gave to the said John McLean Adam on the said 1st February 1996 was accurate in every respect.
5. On Friday 2nd February 1996, I received a message to telephone the said John McLean Adam and did so at approximately 10.15 am and told him that I am not able to contact the said Dr Sam Ling Wong but that I am still awaiting a telephone call from him. The said John McLean Adam then asked me to ring him if I am able to make contact with the said Dr Sam Ling Wong to which I did not respond."
Ms Coward in a further affidavit deposed that the debtor telephoned her on 5 February 1996 and advised that he was then in Indonesia. However, she says that she was told on 6 February 1996 by the debtor's secretary that the debtor was not overseas but in Australia at that time. There was also evidence that the debtor rang Mr Berman, the creditor's attorney in New York, on 6 February 1996 (New York time) and advised that he was calling from Jakarta, Indonesia.
It was submitted on behalf of the debtor that the material filed established that he was not domiciled in Australia, had no dwelling in Australia and did not carry on business in Australia although his company, Golden Arrow (Group) Aust Pty Ltd, did carry on business here which necessitated frequent visits but that the majority of the debtor's time was spent out of Australia. Accordingly, it was submitted that as the debtor was a non-resident foreign national, no inference could or should be drawn from the fact of his departure and absence from Australia that he had absconded with a view to avoiding payment of his debts or to prevent or delay proceedings against him under the Act (Ex parte Crispin (1873) 8 Ch App 374 at 381 - 382; Ex parte Gutierrez (1879) 11 Ch D 298 at 301 - 302). It was further submitted that having regard to the evidence of Ms Coward it could not be said that the debtor's departure was outside the ordinary
pattern of the debtor's affairs.
In my view, the circumstances surrounding the statements made by the debtor and his conduct on 29 and 31 January 1996, particularly the apparent cessation of communication with his solicitor when he knew a Supreme Court bailiff wished to serve him with process with a view to satisfying the judgment, point to his departure from Australia having been with the requisite intent to avoid payment of the creditor's debt and to delay the bankruptcy proceedings served upon him on 25 January 1996.
The existence of the warrant did not prevent the debtor from leaving the jurisdiction and thereby ensuring that he was amenable to the provisions of the Act and in particular to service of a petition to have him made bankrupt on the judgment debt. The existence of the warrant is now operating to hinder the bankrupt's freedom to travel to Australia and to conduct the business of Golden Arrow (Group) Aust Pty Ltd in this country. The warrant is presently acting as a powerful deterrent against the debtor's return to the country and is to that extent defeating the object with which it was issued, namely to make him amenable to the jurisdiction and process of this court in its bankruptcy jurisdiction. The use of the power to arrest under s78 of the Act should be seen as being aimed at ensuring the proper administration of the bankruptcy laws in respect of persons and their property where the necessary circumstances specified in the section have been made out. The power should not be used to frustrate the freedom to travel and financial interests of persons not declared bankrupt who wish to return to the jurisdiction and so expose themselves to due process of the bankruptcy laws in the ordinary way.
It was submitted on behalf of the creditor that I ought to be satisfied that the debtor only seeks to return to Australia to complete a business transaction and that he will thereafter abscond in order to avoid further bankruptcy proceedings against him. In those circumstances, it was submitted, the warrant should not be set aside and the debtor should be forced to submit to arrest and bail as the price of returning to Australia to act in the interests of his company. In that way his continued presence in the jurisdiction would be ensured so as to enable further bankruptcy proceedings to be taken.
Even if the circumstances set forth in s78 of the Act are made out, the issue or maintenance of a warrant remains an exercise of a discretionary judgment. In my view, the warrant should be set aside because its existence is operating prejudicially to the debtor and his company and not advancing the purposes of the creditor in seeking to exercise rights under the Act. Other orders may be made to protect the interests of the creditor without the necessity to maintain the warrant in place. In this case the setting aside of the warrant should be conditioned upon the debtor filing a written authority authorising his solicitors, Flower & Hart, to accept service of any further proceedings instituted by the creditor under the Act. In this way the departure of the debtor from Australia cannot prejudice the creditor in bringing further proceedings.
I turn now to the application to extend the time for compliance with the bankruptcy notice.
The creditor opposes the application to extend the time on the basis that the new application in the Supreme Court to set aside the judgment was not bona fide and
was not being prosecuted with due diligence. Accordingly, it was submitted that the court is bound to refuse the application for extension of time (s41(6C)) of the Act).
The basis of the application to set aside the judgment is that the debtor was never served with the writ of summons and that a different Mr Wong was erroneously served at the unit at Kangaroo Point. It is this Mr Wong the debtor claims who was sick and unable to attend the Supreme Court in December 1995 and January 1996 and who could not travel to Australia until after the Chinese New Year (19 February 1996). A medical certificate dated 18 January 1996 from the Second Municipal Hospital of Tianjin, Peoples Republic of China was exhibited to an affidavit of Mr Hart. The translation stated that Mr Wong was suffering from contagious Asian flu and needed rest for a month. For the application to have any prospect of success, Mr Wong is a material and necessary witness. The debtor is otherwise faced with evidence of Ms Coward that he admitted to her on 21 September 1995 service of the court documents on him at around midnight on Friday 15 September 1995 at unit 57. Mr Samuel Lo Wong in a written statement says that he was resident in unit 57 on 15 September 1995 and that court papers were left outside the unit at about 8.00 - 9.00 pm on that date. He states in the documents that he will testify in court in Australia in March.
The only evidence as to why 28 March 1996 was chosen as the return date for the application to set aside the judgment appears in the affidavit of Mr Hart who deposed :-
"34. On 12th February 1996, I caused to be filed in the Supreme Court of Queensland in the said action an application to set aside the said judgment. Now produced and shown to me marked with the letter "D" is a true copy of the said application filed
today12 February 1996. The said
application is returnable on Thursday 28th March 1996. The said Sam Ling Wong has told me and I verily believe that the said Samuel Lo Wong will be well and able and willing to visit Brisbane to give evidence before the Supreme Court of Queensland on behalf of the said Sam Ling Wong on Thursday 28th March 1996 and that arrangements are now being made for the travel by the said Samuel Lo Wong to Brisbane for that purpose.
35. The said Sam Ling Wong has told me and I verily believe that celebrations for the Chinese New Year which is to occur on 19th February 1996 will go on for some week or more and that there is a real risk that the said Samuel Lo Wong would not come to Brisbane to give evidence on behalf of the said Sam Ling Wong after the said 19th February 1996 and prior to the said 28th March 1996."
Allowing until the end of February for Mr Samuel Lo Wong's health to return and for the Chinese New Year celebrations to be concluded, there is no explanation why the application could not have been heard at the beginning of March. There was no material filed before me to indicate that Mr Samuel Lo Wong would not recover or was unwilling to come to Australia before 28 March 1996. Nor was there any attempt to bring the Supreme Court application forward in order to have it disposed of without any delay. The debtor does not, on the material before the court, dispute that the debt is due to the creditor. I am satisfied on the whole of the material that the debtor is seeking to delay as long as is possible the payment of such sum as is due to the creditor. I am further satisfied that the application to set aside the judgment is not being prosecuted with due diligence. In those circumstances the application to extend the time for compliance until the expiration of twenty-one days after the hearing and determination of the application to the Supreme Court of Queensland to set aside the judgment is refused.
I will vary my order of 19 February 1996 so that the time for compliance with the bankruptcy notice will expire at 4.30 pm tomorrow, 28 February 1996.
In my opinion the need for the application to set aside the warrant was brought about by the circumstances of the debtor's departure from Australia. He was aware that the creditor was seeking to press the recovery of the judgment debt and that a Supreme Court bailiff was attempting to serve him with process. In the absence of any prior warning to the creditor that he intended to leave Australia for a short period, his sudden and unexplained departure left it open to draw the inference that he intended to abscond with the requisite intention. Although the debtor has had the warrant set aside it has been set aside on a condition, and, having regard to his failure on the application to extend time for compliance with the bankruptcy notice, he should pay the costs of the application including the costs of 27 February 1996 when an expedited judgment was sought by him.
THE COURT ORDERS THAT:
Upon the debtor Sam Ling Wong filing in court a written authority, or sending to the court by facsimile a copy of such written authority pending filing of the same, authorising Flower & Hart, solicitors of Brisbane to accept service of any bankruptcy proceedings issued by the creditor Boardwalk Regency Corporation against the debtor under the Bankruptcy Act 1966 (Cth), the warrant for the arrest of the debtor issued on 1 February 1996 be set aside.
The application to extend the time for compliance with the bankruptcy notice until twenty-one days after the hearing and determination of an application in the Supreme Court of Queensland to set aside the judgment
of the creditor be dismissed.
The order of 19 February 1996 be vacated.
The time for compliance with the bankruptcy notice served 21 January 1996 be extended to 4.30 pm 28 February 1996.
The debtor pay the creditor's costs of and incidental to the application, including the costs of the appearance on 27 February 1996, to be taxed if not agreed.
I certify that this and the preceding eleven (11) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper.
Date:27 February 1996
Associate
Counsel for the Applicant: Mr P R Dutney QC
Solicitors for the Applicant: Flower & Hart
Counsel for the Respondent: Ms M A Wilson QC
Solicitors for the Respondent: Power & Power
Date of Hearing: 19 and 27 February 1996
Place of Hearing: Brisbane
Date of Judgment: 27 February 1996
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