Shaw, George Thomas v Crichton, John - [1998] FCA 922

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 927 of 1997

BETWEEN:

GEORGE THOMAS SHAW
FIRST APPLICANT

LEILA SHAW
SECOND APPLICANT

AND:

JOHN CRICHTON
FIRST RESPONDENT

NEIL CRICHTON
SECOND RESPONDENT

JUDGES:

EINFELD, LINDGREN AND FINKLESTEIN JJ

DATE:

9 JULY 1998

PLACE:

SYDNEY

REASONS FOR JUDGMENT
(ex tempore)

THE COURT:

This is an appeal from sequestration orders made by Branson J against the debtors George Thomas Shaw and Leila Shaw on 23 October 1997. It is not in dispute that the debtors were indebted to the petitioning creditors in the sum of $10,046.73 on account of costs of litigation that was unsuccessfully maintained by the debtors, nor is there any question whether the debtors committed an act of bankruptcy. Here the complaint is that the trial judge should have exercised her discretion to refuse to make the sequestration orders and that we should now do so in her place.

The debtors appeared for themselves before this Court. With their consent and in their presence, their son spoke for them. With the leave of Justice Branson he had also spoken on their behalf in the Court below. It has therefore not been easy for the Court to articulate with precision the grounds upon which it is said that the trial judge's discretion miscarried. The absence of evidence makes it even more difficult to understand the basis upon which the debtors say that the sequestration orders should not have been made.

Perhaps impermissibly taking into account statements of alleged fact made during the course of the hearing but doing the best we can, the position seems to be as follows. Ramza Crichton made a will naming the debtors as beneficiaries. Upon her death the debtors sought a grant of probate of the will. The petitioning creditors opposed the grant on the basis that when the testatrix had made her will she lacked testamentary capacity. The debtors were unsuccessful in obtaining a grant of probate at trial and on appeal. Special leave to appeal to the High Court was refused. The debt owed to the petitioning creditors is the taxed costs of the application for special leave which the debtors were ordered to pay. Today we have been informed that they have also not paid the costs of the earlier hearings and that the amount involved is now substantial.

Once a petitioning creditor has established the commission of an act of bankruptcy and the existence of the required debt and the other matters referred to in s52(1) of the Bankruptcy Act 1966, there is a prima facie right to a sequestration order. The burden then lies on the debtor to establish circumstances why such an order should not be made: Re Hissink; Ex parte Deputy Commissioner of Taxation [1970] ArgLR 580 at 582 per Gibbs J citing Rozenbes v Kronhill (1956) 95 CLR 407 at 414, 419.

In Cain v Whyte (1933) 48 CLR 639 the High Court approved the statement of Henchman J at first instance, fully set…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Shaw, George Thomas v Crichton, John and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [1998] FCA 922
Decision Date: 9 JULY 1998

CaseChat Overview and Summary

The case of Shaw, George Thomas v Crichton, John, heard in the Federal Court of Australia, concerns an appeal against sequestration orders made against George Thomas Shaw and Leila Shaw by Branson J on 23 October 1997. The debtors had been found to owe $10,046.73 to the petitioning creditors, John Crichton and Neil Crichton, due to costs incurred from an unsuccessful litigation. The central issue before the Court was whether the trial judge should have exercised her discretion to refuse the sequestration orders, as argued by the debtors, who contended that the legal principles applied in their previous litigation were unjust. The debtors contended that these legal principles led to their failure in obtaining a grant of probate for a will, which resulted in the debt for costs. They argued that the sequestration order should not be made as it would lead to the loss of their worldly possessions.

The Court considered the debtors' contention that the legal principles concerning the burden of proof in probate applications were unjust, specifically the requirement that the person propounding a will must establish that the deceased was of sound mind when the will was made. The Court noted that this legal principle has remained unchanged for almost 150 years, and the debtors were aware of it when they applied for special leave to appeal to the High Court. The Court found that even if the legal principles were considered unjust, they were not in a position to change the law, especially given the High Court's refusal of special leave to appeal, indicating unwillingness to review the position. The Court concluded that the debtors' failure to satisfy the onus of proof and their subsequent failure in litigation leading to costs did not justify displacing the creditors' right to a sequestration order. The Court found that the trial judge's decision was correct and dismissed the appeal with costs.

The final orders of the Court were to dismiss the appeal and award costs to the respondents, John Crichton and Neil Crichton. The Court's decision was that the trial judge's exercise of discretion in making the sequestration orders was appropriate, and the debtors' argument regarding the alleged injustice of the legal principles did not provide grounds for overturning the orders.

Orders