Smith, D.W.

[1994] FCA 946

JUDGMENT No. . , q96 A , &

CATCHWORDS

BANKRUPTCY - sequestration order - Judgment debt - validity of

Judgment of Adelaide Magistrates Court

No. SP 313 of 1994

Re: - S WILTS- - S M I W

Branson J.

5 December 1994

Adelaide

FEDERAL COURT OF

AUSTRALIA

PRINCIPAL REOISTRI

COURT OF AUSTRALIA )

)

)

-	)	No. SP 313 of 1994
)

ICT OF THE	) )
)

ixBAkl:	Branson J.
r!&zE:	5 December 1994

PLAGFi: Adelaide

This is a contested application for the maklng of a sequestration order against the estate of the debtor.

The judgment creditor obtained a default judgment against the debtor in the Adelaide Magistrates Court in its Civil Division on 25 March 1993. There is nothing to suggest that the default judgment was not lawfully and properly obtained.

Application was made by the debtor to the Adelaide Magistrates Court to have the judgment set aside. The application was heard and determined by Mr Prescott SM. From what Mr Wiltshire-Smith has told me today all relevant material was apparently placed before Mr Prescott for his consideration. Mr Prescott dismissed the application. No appeal from his decision was instituted.

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The bankruptcy notice relating to the unpaid default judgment was served on the debtor on 11 August 1 9 9 4 . It called for compliance within 1 4 days, that is on or before 25 August

1994. It was not complied with within that time nor was any application made to this court within that time for an order extending the time for compliance with the bankruptcy notice.

An act of bankruptcy was thus committed by the debtor upon the

expiration of the 1 4 day period.

An application made by the debtor after the expiration of the

14 day period referred to in the bankruptcy notice sought an

order setting aside the bankruptcy notice. This application was heard by O'Loughlin J. His Honour did not construe the application as containing an application for an extension of time within which to comply with the bankruptcy notice. However, he indicated that if such an application had been made he did not regard it as appropriate to consider it. He considered the application to set aside the bankruptcy notice. He dismissed the application with costs.

Subsequently the debtor sought leave to appeal against the decision of O'Loughlin J. That application came before me and was refused.

The debtor now asks me to exercise a discretion to refuse to make a sequestration order. He asserts that the ludgment debt does not reflect a pre-existing liability in him to make payment to the judgment creditor. He asserts that he

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consulted the judgment creditor, a firm of legal practitioners, as an officer of a company Leighton Hill Pty Limited, and that this fact was known to the judgment creditor. He therefore contends that the contract for the provision of legal services was between Leighton Hill Pty Limited and the judgment creditor.

The judgment creditor, however, asserts to the contrary. It asserts that the contract was entered into by the judgment debtor personally. This issue has been ventilated and determined adversely to the debtor in his application to set aside the ludgment of the Adelaide Magistrate's Court.

As to the effect before this court of the decision of the Adelaide Magistrate's Court, I am content to refer to what was said by O'Loughlin J in his reasons for decision on the application of the debtor to set aside the bankruptcy notice. At pages 7 to 8 of his ex tempore reasons his Honour said

this :

"There is no doubt that this court is entitled to go

.

behind the Magistrates Court judgment and inquire into the validity of the debt - Petrie v Redmond ( 1 9 4 2 ) 1 3 ABC

44. For bankruptcy purposes, a judgment is only prima facie evidence of a debt - Ex parte Lennox ( 1 8 8 5 ) 1 6 QED	.
315 at 329 - but a court will not do so as a matter of
course - Wren v Marnie ( 1 9 7 2 ) 126 CLR 212 . It is not sufficient for a debtor to express dissatisfaction with

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t he r e s u l t s o f ear l i e r l i t i g a t i o n . Nor i s i t enough t o

make general accusations, such a s t he judgment cred i tors well knew that the debtor w a s merely acting as a

representative o f a l imited l i a b i l i t y company.

I share the view expressed by Just ice Pincus i n Re V & J

Removals Ex parte E a r l (unreported judgment, Federal Court, delivered 21 June 1 9 8 5 ) that Wren v Marnie (supra)

i s authority for the proposition t h a t a judgment debtor

must s a t i s f y the court that there are substantial reasons fo r questioning the v a l l d i t y o f a judgment. No

information w a s placed before the court i n these

proceedings t h a t would point t o any irregularity i n the

proceedings before M r Prescott. Although I w a s informed

from the b a r table that the magistrate d i d not give any reasons for h l s decision, no challenge has been mounted about the manner i n which he conducted the debtor ' s application t o have the judgments se t aside. I have come t o the conclusion that the debtor has fa i led t o s a t i s f y me that there are substantial reasons for questioning the

v a l i d i t y o f the judgment. "

.

I agree with the reasoning o f OrLoughlin J as s e t out i n h i s

ex tempore judgment. I am not s a t i s f i e d tha t there are

substantial reasons i n t h i s case for questioning the v a l i d i t y

o f t h e judgment o f t he Adelaide Magistrates Court.

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I make a sequestration order against the estate of the debtor.

I certify that this and the

a true copy of the Reasons 4- preceding pages are

for Judament of Justice -

Branson.

Associate:

Judgment Debtor in Person	Douglas Wiltshire-Smith
Counsel for the Petitioning

Creditor Mr T Mellor

Solicitors for the

Petitioning Creditor Mellor Olsson

Counsel for the Supporting

Creditor Mr J Taylor

Solicitors for the

Supporting Creditor Randle & Taylor

Hearing Date 5 December 1994