Turco v HP Mercantile Pty Ltd; Marinelli v HP Mercantile Pty Ltd; Turco v HP Mercantile Pty Ltd

[2009] NSWCA 88

New South Wales

Court of Appeal

CITATION:

Turco v HP Mercantile Pty Ltd; Marinelli v HP Mercantile Pty Ltd; Turco v HP Mercantile Pty Ltd [2009] NSWCA 88

HEARING DATE(S):

20 April 2009

 
JUDGMENT DATE: 

20 April 2009

JUDGMENT OF:

Giles JA

EX TEMPORE JUDGMENT DATE:

20 April 2009

DECISION:

Orders in accordance with short minutes handed up, as amended, initialled and dated 20 April 2009.

CATCHWORDS:

PROCEDURE - application for stay of execution pending appeal - stay to preclude act of bankruptcy - stay refused on respondent's undertaking to consent to adjournment of hearing of creditor's petition.

TEXTS CITED:

Shephard v Chiquita Brands (South Pacific) Ltd (2001) FCA 1394.

PARTIES:

In proceedings No 40348/08:
Mario Turco - Applicant
H P Mercantile Pty Ltd - Respondent

In matter No 40349/08:
Dominic Marinelli - Applicant
HP Mercantile Pty Ltd - Respondent

In matter No 40350/08:
Victor Turco - Applicant
HP Mercantile Pty Ltd - Respondent

FILE NUMBER(S):

CA 40348/08; 40349/08; 40350/08

COUNSEL:

M Neil QC & F Salama - Applicants in all matters
R Margo SC - Respondent in all matters

SOLICITORS:

Galic & Co, Northbridge, WA - Applicants in all matters
Versace McKenzie Lawyers - Respondent in all matters

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 5593/02; DC 4413/02; DC 5594/02
LOWER COURT JUDICIAL OFFICER:	Rolfe DCJ
LOWER COURT DATE OF DECISION:	28 July 2008

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40348/08

CA 40348/08

CA 40350/08

DC 5593/02
DC 4413/02
DC 5594/02

GILES JA

MONDAY 20 APRIL 2009

MARIO TURCO v HP MERCANTILE PTY LTD

DOMINIC MARINELLI v HP MERCANTILE PTY LTD

VICTOR TURCO v HP MERCANTILE PTY LTD

JUDGMENT - on applications for a stay

1 HIS HONOUR: The applicants suffered judgments in the District Court, for over $500,000 in the case of the Messrs Turco and for a slightly lesser sum in the case of Mr Marinelli. The claims against them were brought by the respondent as assignee from an original creditor. The applicants appealed on the sole ground that evidence to prove assignment was given by a Mr Andrew Purcell and Mr Purcell has subsequently admitted lying in his evidence. That is a very brief summary of what was explained to me, and the applicants intend to apply for leave to adduce in the appeals further or fresh evidence of Mr Purcell’s subsequent admissions.

2 These are applications for stays of enforcement of the judgments until the hearing of the appeals. Bankruptcy notices have been issued against the applicants. The times for compliance have been extended, most recently until 1 May next. In the circumstances which I will shortly explain, the issue on the applications is whether stays should be granted whereby the applicants are not now required to comply with the bankruptcy notices.

3 That statement of the issue reflects the way in which the applications have been conducted, for which I thank senior counsel for the extremely helpful way in which they have explained matters to me, confined the issue, and put their respective submissions with limited need to refer to the rather forbidding heap of papers. Whether there is a right of appeal or leave is required has been sidelined, and I have not been asked to enter upon whether the further or fresh evidence might be admitted in the appeals or whether, if admitted, it would so undermine the judgments that the appeals might be allowed. I am proceeding on the basis, therefore, that there is an arguable case for appeal. Matters concerning security for costs and use of due diligence in the appeals by the applicants had become common between the parties, and the respondent did not seek to enforce the judgments by levying execution.

4 The issue arose because the respondent wished that the bankruptcy proceedings should continue to the point of acts of bankruptcy and filing of creditors petitions, but upon the respondent’s undertaking to consent to any application for adjournment of the creditors petitions until the resolution of the appeals. The essential difference between the parties was whether, as the applicants sought, this should be precluded by stays.

5 The considerations on each side were very helpfully outlined.

6 Taking the respondent’s position first, it said that it had findings by the trial judge that the applicants had obstructed and unreasonably delayed the proceedings, including the maintenance of multiple defences later abandoned. It referred to evidence in an affidavit of Mr Mario Turco indicating that he had some current matrimonial difficulties. It is said, and there is undoubtedly some support for that in the history of the appellate proceedings, that there had been default on the part of the applicants in disclosing their financial positions. What this came down to, in the respondent’s submission, was that there was a basis for concern that, in what had been a lengthy dispute in which the applicants had not shown willingness to see the force of the respondent’s claim, the commencement of any bankruptcy at an earliest point of time should be available to them should a sequestration order be made, in the interests of creditors of whom they could be taken to be the major creditor.

7 Going then to the applicants’ position, through his affidavit Mr Mario Turco spoke of his concern about the likely embarrassment and effect that the commission of an act of bankruptcy might have on his professional standing and reputation, he being an accountant, particularly if his clients were to find out about it. The same no doubt can be said of Mr Victor Turco, who is also an accountant. Precisely the same concern might not be evident in relation to Mr Marinelli, who is said to be a businessman in the tyre business, but no doubt he would also not find welcome in his business endeavours knowledge that the had committed an act of bankruptcy.

8 The Messrs Turco in particular drew attention to the rules of the Society of Practising Accountants, of which they are members, the effect of which is that commission of an act of bankruptcy can trigger disciplinary proceedings against a member. The force of this, however, is significantly cut down by correspondence elicited by the respondent which indicates that, depending upon the explanation of the member, the matter may (emphasis in original) be referred to a committee for disciplinary consideration, but that where there was an appeal on foot the investigation would be put on hold pending the outcome of any appeal. The letter in which this last matter is stated is not entirely clear about whether the writer was referring to an appeal such as the appeal which the applicants are prosecuting, but in my view the sense of the letter would quite clearly extend to this situation.

9 Mr Mario Turco refers in his affidavit to registration as a tax agent and his membership of the Taxation Institute and of the Australian Institute of Management, but the evidence is quite imprecise as to any impact of commission of an act of bankruptcy in relation to those positions.

10 The respondent has referred to Shephard v Chiquita Brands (South Pacific) Limited (2001) FCA 1394. That was not an identical case to the present. The question was extension of time for compliance with a bankruptcy notice pending an appeal against the decision of a Federal Magistrate refusing to set the bankruptcy notice aside.

11 Allsop J, as the President was in that Court, recognised that commission of an act of bankruptcy was undoubtedly a serious matter, but balanced the concern for protection of creditors through an earlier rather than later commencement of a bankruptcy against the position of the debtor. It does not appear that there was evidence similar to the evidence concerning the effect on the Messrs Turco as practising accountants, but his Honour decided that an extension of time should be refused upon an undertaking by the petitioning creditor that, subject to expeditious prosecution of the appeal, it would consent to the adjournment of any hearing of the petition until the appeal had been determined. His Honour said at [13] that this would protect the debtor from a change of status before the determination of the appeal, but would also protect the creditors in relation to the date of commencement of the bankruptcy should the appeal ultimately fail.

12 It seems to me that the same approach can, if appropriate, be taken in relation to the stay of enforcement of a judgment on which a bankruptcy notice is founded. In my view it is appropriate in the present case. As I have said, I proceed on the basis that there is an arguable case for an appeal, but there are it seems to me grounds for concern for the protection of creditors and of the respondent as major creditor. The applicants say that they have no other creditors of significance, which if correct means that the prospect of a creditor not bound by the undertaking to be given by the respondent taking up the act of bankruptcy can as a practical matter be put aside, but the interests of the respondent seem to me to warrant the course which it proposes on the basis of Shephard v Chiquita Brands (South Pacific) Limited. It should not be forgotten that, as is often said, the successful party at a trial is entitled to the fruits of the victory unless reason be shown for a stay of enforcement. It seems to me that a similar principle is material when what is involved is bankruptcy proceedings: that is, the successful party at the trial can with some force submit that it should be able to proceed towards bankruptcy, provided that the ultimate result is not inflicted upon the unsuccessful party until the appeal is resolved and provided also that for other reasons such as the effect on conducting business that would not impose an undue hardship on the unsuccessful party.

13 Accordingly, I propose to decline to grant a stay but on terms which include the undertaking proposed by the respondent, and in the orders to take up other matters which are essentially agreed between the parties.

[Discussion concerning the orders]

14 I make the orders in the short minutes as amended in manuscript which I will initial and date 20 April 2009.

oOo