Spry, F.A.B v Francis, S.M - [1994] FCA 833

833 9Y

JUDGMENT No. ........ . .. .... J ..U.WII

IN THE FEDERAL COURT OF AUSTFWLIA )
l

VICTORIA DISTRICT REGISTRY

No. VN 1632 of 1994 No. VN 1616 of 1994

GENERAL DIVISION 1
B E T W E E N :

RE: F A B SPRY Judgment Cebtor
EX PARTE: S M FRANCIS. N FRANCIS

and L FRANCIS Judgment Creditors

JUDGE : Heerey J
m: 19 October 1994
PLACE : Melbourne

EX TEWORE REASONS FOR JUDGMENT

This application concerns two bankruptcy notices numbered 1616 and 1632 of 1994, issued on 8 and 13 July 1994 respectively against the judgment debtor Francls Allan Bruce Spry (Mr Spry). The judgment creditors are Mr Spry's sister, Mrs Susan Francis, and her children, Mr Nicholas Francis and MS Louise Francis.

M r Spry seeks to satisfy the Court that within the meaning of

Francis, were trustees. The trusts were established by deeds dated 15 May 1965. The beneficiary of the first trust was
Nicholas and of the second Louise. Both trusts were discretionary trusts under which the income could be applied at the discretion of the trustee for the benefit of the beneficiaries during their lifetime and upon their death by appointment.
As far as the evidence discloses, the trust property of the trusts was a large block of flats at 57 Darling Street, South Yarra.
In 1986 proceedings were commenced in the Supreme Court of Victoria. Mrs Francis obtained $120,000 as money lent to the trustees of the trusts. Nicholas and Louise alleged that breaches of trust had been committed by Mr Spry. The breaches alleged included speculative share trading, the transfer of a trust asset into Mr Spry's name and the refusal to permit the other trustee and beneficiaries access to records and a number of other matters. Mr Kendall Francis, as cc-trustee, was a defendant in the proceedings but effectively supported the

plaintiffs.
On 21 August 1991 the case was listed for hearing before Murphy J. Settlement was reached between counsel. However, there was subsequently a failure by the parties to reach agreement as to the recording of the settlement in written form. As a consequence the plaintiffs issued a summons which resulted in terms of settlement being executed by the parties, including Mr Spry, on 5 March 1992. One of the provisions of those terms was that Mr Spry should pay $25,000 towards the plaintiffs' solicitors for their costs. This amount was pald shortly afterwards. However, other terms of the settlement which required Mr Spry to execute transfers of some of the flats were not performed by him.
In August 1992 the plaintiffs issued a summons to compel Mr Spry to carry out the terms of settlement. That summons was the subject of a contested hearing before Beach J on
7 December 1993. His Honour made orders that, amongst other
things, the terms of settlement dated 5 March 1992 be specifically performed. There were various directions made about the execution of transfers and the discharge of mortgages and also…

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.

Continue reading Spry, F.A.B v Francis, S.M

Details

AGLC: Spry, F.A.B v Francis, S.M [1994] FCA 833
Case: [1994] FCA 833
Decision Date: 19 Oct 1994

CaseChat Overview and Summary

The Federal Court of Australia, presided over by Justice Heerey, heard the case of Spry, F.A.B v Francis, S.M. The matter involved two bankruptcy notices issued against the judgment debtor, Francls Allan Bruce Spry (Mr Spry), by the judgment creditors, Mrs Susan Francis and her children, Nicholas and Louise Francis. The bankruptcy notices were issued due to Mr Spry's alleged failure to comply with terms of a settlement reached in a previous Supreme Court case. Mr Spry sought to challenge the validity of the bankruptcy notices, arguing that he had a counter-claim, set-off, or cross demand against the judgment creditors that could potentially nullify the notices.

The central legal issue the court had to address was whether Mr Spry's alleged counter-claim, set-off, or cross demand met the criteria under s.40(l)(g) of the Bankruptcy Act 1966 (Cth) to invalidate the bankruptcy notices. This section allows for the invalidation of a bankruptcy notice if the judgment debtor has a counter-claim, set-off, or cross demand against the judgment creditor that is equal to or exceeds the amount of the judgment debt and that could not have been set up in the original action or proceeding. The court needed to determine if Mr Spry's claimed costs incurred in the administration of the trusts could be considered a valid counter-claim against the judgment creditors.

The court ruled that Mr Spry's claimed counter-claim, set-off, or cross demand did not satisfy the requirements of s.40(l)(g). Firstly, the court found that Mr Spry's claim was not against the judgment creditors in the same capacity. Instead, his claim was potentially against the continuing trustee, Mr Kendall Francis, who was not a judgment creditor. Secondly, the court determined that Mr Spry's counter-claim could have been raised in the original proceedings, which meant it did not meet the requirement of being a claim that could not have been set up in the original action. Consequently, the court dismissed Mr Spry's application to challenge the bankruptcy notices and ordered that he pay the judgment creditors' costs.

Orders