Westpac Banking Corporation v Paras - [2020] FCCA 1156

FEDERAL CIRCUIT COURT OF AUSTRALIA

WESTPAC BANKING CORPORATION v PARAS & ANOR

[2020] FCCA 1156

Catchwords:
BANKRUPTCY – Creditor proceeding with petition in 2017 – proceeding leading to deed of settlement – debtors not complying with deed of settlement – whether deed amounted to an accord executory or accord and satisfaction – whether creditor entitled to proceed to petition on basis of judgment debt allegedly compromised by deed of settlement – whether creditor precluded by its allegedly unconscionable conduct from proceeding to bankrupt debtors – debtors’ criticisms not made out – sequestration orders made.

Legislation:

Bankruptcy Act 1966 (Cth), ss.52, 245.

Cases cited:

Cain v Whyte (1933) 48 CLR 639

DCT v Hadidi (1994) 123 ALR 48

Harman v Secretary of State for Home Department [1983] 1 AC 280

McDermott v Black (1940) 63 CLR 161

Re A Debtor (1909) 16 Manson 205

Re Feast (1887) 4 Morr 37

Re HB (1904) 1 KB 94

Re Lomax ex parte City Bank (1892) 3BC (NSW) 66

Re Vogel; ex parte East Anglo Eastern Contract Company (1913) 10 LT 325

Applicant:

WESTPAC BANKING CORPORATION

First Respondent:

JOHN PARAS

Second Respondent:

STEPHEN MATTHEW APPERLY

File Number:

MLG 2563 of 2019

Judgment of:

Judge Burchardt

Hearing date:

17 April 2020

Date of Last Submission:

17 April 2020

Delivered at:

Melbourne

Delivered on:

22 May 2020

REPRESENTATION

Counsel for the Applicant:

Mr Brown

Solicitors for the Applicant:

DLA Piper

Counsel for the Respondents:

Mr McEwen

Solicitors for the Respondents:

Patrick & Associates

ORDERS

The parties are directed to confer and forward Minute of Orders to give effect to these Reasons for Judgment within 14 days.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 2563 of 2019

WESTPAC BANKING CORPORATION

Applicant

And

JOHN PARAS

First Respondent

STEPHEN MATTHEW APPERLY

Second Respondent

REASONS FOR JUDGMENT

In this proceeding the applicant bank seeks sequestration orders. In respect of the first respondent, who tragically died during the currency of the proceeding, an order is sought against his estate pursuant to section 245 of the Bankruptcy Act 1966 (Cth) (“the Act”). In respect of Mr Apperly a sequestration order is also sought. The applicants submit, and this is not controversial, that the formal matters in section 52(1) are satisfied, and that the respondents have not put forward any evidence of solvency.
This is not, however, where the controversy ends, rather it is where it starts. The respondents (counsel appeared on behalf of both the estate of Mr Paras and Mr Apperly) submit that there are two bases upon which the respondents resist the making of sequestration orders. Although not articulated in terms, they seem to fall as a matter of analysis within section 52(2) of the Act and to amount to “other sufficient cause a sequestration order not be made”.
Although the matter has been expressed in a somewhat scattergun way from time to time by the respondents, they appear to me to advance two central matters which are:
(a)The judgment debt upon which the bankruptcy notice…

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.

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Details

Case: [2020] FCCA 1156
Decision Date: 22 May 2020

CaseChat Overview and Summary

Westpac Banking Corporation (the creditor) sought to proceed with a bankruptcy petition against the debtors in 2017, following a prior proceeding that had led to a deed of settlement. The debtors had failed to comply with the terms of this deed. The matter came before Judge Burchardt.

The court was required to determine whether the deed of settlement constituted an accord executory or an accord and satisfaction, and consequently, whether the creditor was entitled to pursue the bankruptcy petition based on a judgment debt allegedly compromised by the deed. Further, the court had to consider whether the creditor's conduct was so unconscionable as to preclude it from proceeding with the bankruptcy petition.

Judge Burchardt found that the debtors' criticisms of the creditor's conduct were not made out. The court determined that the deed of settlement did not prevent the creditor from proceeding with the bankruptcy petition. The legal principles applied focused on the nature of accord and satisfaction and the circumstances under which a creditor might be precluded from pursuing bankruptcy proceedings due to unconscionable conduct.

Ultimately, sequestration orders were made against the debtors.

Orders