Walker, A.L. v Ex parte Stockton Timber Products P/L

[1991] FCA 532

IN TAE PEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY	1	No. VP 79 of 1991
)
BANKRUPTCY DIVISION	1
BETWEEN:

AIAN LAWRENCE W m R

EX Parte:  STOCKTON TIMBER PRODUCTS PTP LTD

IN TIIE FEDERAL COURT OF AUSTRALIA )

1

VICTORIA DISTRICT REGISTRY	1	No. VP 80 of 1991
BANKRUPTCY DIVISION

1

BETWEEN:

LEONARD KEITH W m R

EX Parte:  STOCKTON TIMBER PRODUCTS PTY LTD

IN TBE FEDERAL COURT OF AUSTRALIA )

1

VICTORIA DISTRICT REGISTRY	1	No. VP 81 of 1991
1
Ei?WKRUPTCY DIVISION	1
BETWEEN:

\

ROGER KENNETH TIMMS

EX Parte:  STOCKTON TIMBER PRODUCTS PTY LTD

IN THE FEDERAL COURT OF AUSTRALLA	)
VICTORIA DISTRICT REGISTRY	j
EMJRRUPTCY DIVISION	1
BETWEEN:

MICHAEL BRUCE TIMMS

Ex Parte:  STOCKTON TIMBER PRODUCTS PTY LTD '

JIIDGE:	Heerey J.
PLACE :	Melbourne
DATE :	12 August 1991

EX TEMPORE REASONS FOR JCmGMENT

I have decided to grant the adjournment sought. The matters I

have taken into account are as follows. Firstly, as to delay, there has, without doubt, been a substantial delay in the course of the prosecution of the debtors' complaint against the petitioning creditor. However, a large part of that period in 1990 was taken up by negotiation between the parties and it seems to follow that for this period at least there was a period which it suited the petitioning creditor to take no action to enforce the judgment.

There was then the fortuitous event resulting from the conflict of interest on the part of the second set of solicitors retained by the debtors. That is something for which they cannot be blamed. The third set of solicitors, Messrs Rigby and Cooke, proceeded with reasonable diligence in the light of the complexity of the matter with which they had to deal. In the overall scheme of things, I do not see the delay that has occurred as being of itself sufficient to

As to the delay which will occur from now on, in contrast with	disqualify the debtors from the relief which they seek, that is to say, this adjournment.
what was the position when the matter was before Jenkinson J, there has now been a date fixed for hearing in the commercial list in the Supreme Court and I think I can taken cognisance of the fact that cases in that list have a reasonable prospect of proceeding on the date fixed or within a day or two thereafter. In the event of a significant event which would render that forecast incapable of achievement, then of course it is open to the petitioning creditors to come back to this court.
As to the merits of the case, it is indeed a complex one.
There is force in a number of the attacks made by M r
Fajgenbaum QC on behalf of the petitioning creditor, but I
think in the circumstances all I can say is that the case of
the debtors is not a hopeless one. Perhaps one way of looking
at it, if one leaves aside questions of insolvency, is to ask 1 1

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whether the petitioning creditor could have got summary i

judgment for the defence.	I think such an eventuality would	l
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be unlikely. I think the case raises complex questions of law and factual disputes which warrant investigation at trial.	i
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It is fair to say, I think,xthat the debtors' case for an	!

adjournment depends on a contingency on a contingency. If the I

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New Zealand project gets the approval of the New Zealand	I.
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government and proceeds, they will be able to fund the Supreme	I .

Court trial which succeed and wipe out the debt of the I

petitioning creditor and, as I remarked in argument, perhaps	[
there is an irony in the fact that this is a case where the	c ,
debtors seek time not to pay or reach an accommodation with
the petitioning creditor but to attempt to wipe out that	I .
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creditor's debt. I

Nevertheless, I heard sufficient from Dr Walker in evidence to

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be satisfied that the New Zealand project is in the realms of	4:-
real possibility, to put it at its lowest, and also that he	has made arrangements with one other major creditor, Lloyds
NZA Bank Limited, and it appears that there is at least some prospect of a reasonable accommodation being reached with the
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other major creditor, the Commissioner of Taxation.
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My greatest reservation, I must say, is whether, even if
things work out according to plan from the debtors' point of
view, they would have enough to fund their Supreme Court case
and live on in the meantime. As has been made clear, in this
proceeding they have only been in funds to have legal
representation for the purpose of this adjournment	l ~
application. But, when all is said and done, I am influenced by the fact that the delay until the case is heard in the	,-
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Supreme Court is not great and the debtors ought not to be	b
shut out of the prospect of raising a substantial complex case
in an appropriate court with professional representation and,
if successful, stave off bankruptcy.	l -:

I also take into account the question of prejudice.	On that	, .
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score, I am influenced by the fact that there is in reality no	I
continuing business which might run the risk of further	i-
deterioration, thereby making the petitioning creditor's position worse than it is at the moment. It was said that appropriate undertakings would- be given to the court to
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safeguard the petitioning creditor's position against any	c I-;
disposal of assets and I will hear counsel as to the	I I
appropriate way in which those should be given to the court.
Liberty to apply on 7 days notice.	i
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I certify that this and the

preceding three (3) pages	f I
are a true copy of the	i
Reasons for Judgment of the	I
Honourable Mr Justice	j.
Heerey	t

ADpearances

Counsel for the Creditor:	M r J I Fajgenbaum QC with Mr S A Rosenzweig
Solicitors for the Creditor:	Phillips Fox
Counsel for the Debtors:	Mr S P Whelan
Solicitors for the Debtors:	Rigby & Cooke
Counsel for the Deputy Commissioner
of Taxation (Supporting Creditor):	MS S Koetsveld
Solicitors for the Supporting
Creditor:	Australian Government
.	Solicitor