Whiteford v Bailey

[1994] QCA 426

IN THE COURT OF APPEAL	[1994] QCA 426
SUPREME COURT OF QUEENSLAND

Appeal No. 55 of 1991

Brisbane

Before Fitzgerald P.
McPherson J.A.
Derrington J.

[Whiteford v. Bailey]

BETWEEN

BEDE NORTON WHITEFORD

Appellant

AND

WILLIAM BAILEY Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered the 24th day of October 1994

In November 1990 William Bailey issued a plaint out of the District Court at Southport claiming from the defendant Bede Whiteford various forms of relief including $100,605.94 pursuant to a contract, and an order that the defendant indemnify him against liability under a guarantee of the defendant's indebtedness to a Bank. On 3 January 1991 the plaintiff obtained judgment in the action in default of defence. A certificate of the judgment was filed in the District Court at Grafton in New South Wales with a view to its enforcement there, which was where the defendant was then residing or thought to be present. On 30 January 1991, the defendant applied to a District Court judge at Southport for an order setting aside the default judgment. After an initial adjournment, the application was heard by Newton DCJ and dismissed by him on 14 June 1991.

On 16 July 1991 the defendant filed a notice of appeal, which was, however, not served until 5 August 1991. Nothing further has been done to bring the appeal to a hearing, and application is now made to dismiss the appeal for want of prosecution, or on the alternative or additional ground that the appeal was not instituted within the time allowed in that behalf. There is no dispute that the notice of appeal was neither filed nor served in time. Under O.90, r.6, this Court has power to extend the time for appealing from the District Court (Jiminez v. Jayform Contracting Pty. Ltd [1993] 1 Qd.R. 610), but would exercise its discretion to do so only if the circumstances were such as to justify that course.

Far from that being so, the appeal in this case is one that ought properly to be dismissed for want of prosecution : cf. Moto v. Faul [1980] V.R. 26. It is not necessary to state the sequence of events in any detail in order to say that, throughout the course of the litigation, the conduct of the defendant has shown himself to be extremely dilatory.

No cogent explanation has been offered for his failure to institute the appeal in time, or for his omission to prosecute it during the period of three years or more that has elapsed since the notice of appeal was filed.

In addition, there is a real risk of serious, if not fatal, prejudice if the appeal were to succeed. In that event, the judgment would be set aside and the action would proceed to trial. In the meantime, however, the plaintiff has died. The agreement on which the plaint is founded is alleged to have been made between the parties in December 1988 and to have been oral. The plaintiff's death in October 1992 has deprived the executors of the critical witness needed to prove the claim. To set aside the judgment now would, in a practical sense, therefore be tantamount to dismissing the claim altogether. In the meantime, the continued existence of the litigation is preventing administration of the plaintiff's estate from being brought to a conclusion.

The only argument which has been advanced against dismissing the appeal is that at the time the default judgment was given on 3 January 1991 the defendant was a bankrupt. The sequestration order was made on 1 August 1988 and he was not discharged from bankruptcy until 2 August 1991. The action in the District Court was therefore commenced, and the application for judgment was made, when the defendant was already bankrupt, which, it was submitted, was contrary to s.58(3)(b) of the Bankruptcy Act 1966 (Cth.). If that were so, it might be necessary to decide whether the judgment was a nullity. The question is one on which there are conflicting authorities both here and in Canada. See Howe v. McDougall (1939) 13 W.C.R. (N.S.W.) 180, 181; cf. Re White [1961] A.L.R. 331; and compare Keating v. Graham (1895) 26 O.R. 361 and Re Rossmere Construction Ltd (1967) 10 Can. B.R. (N.S.) 47, 52.

Section 58(3)(b) provides that, except with leave of the Court, a creditor is not competent to commence any legal proceedings or to taken any fresh step in such a proceeding after a debtor has become bankrupt. To attract the operation of the provision, the proceedings must be "in respect of a provable debt". By s.5(1) a "provable debt" is a debt or liability that is, under the Act, provable in the bankruptcy. Under s.82(1), the only debts and liabilities provable in the bankruptcy of a bankrupt are those to which he is subject at the date of the bankruptcy, or to which he may become subject before his discharge by reason of an obligation that was incurred before that date. On the only reliable material now before the Court, the claim in respect of which the plaintiff obtained judgment does not satisfy this test. The first moment at which the defendant incurred any relevant obligation to the plaintiff was when the agreement was made between the parties in December 1988, or at the earliest in September of that year, which was after the defendant had become bankrupt in August 1988. Until then, the plaintiff was not even a contingent creditor of the defendant in respect of the liability for which judgment was obtained in 1991 : cf. Community Development Pty. Ltd v. Engwerda Construction Company (1969) 120 C.L.R. 455, 459.

The defendant appears to have obtained credit from the plaintiff without, so far as can be gathered, disclosing that he was an undischarged bankrupt. Doing so constitutes an offence under s.269(a) of the Bankruptcy Act, and there is authority to the effect that the contract by which such credit is obtained is not enforceable by the bankrupt. See De Choisy v. Hynes [1937] 4 All E.R. 54. There is, however, nothing here to suggest either that the plaintiff knew of the bankruptcy or that, being ignorant of it, the agreement is unenforceable at his instance. The matter is one which, if it is relevant at all, should have been raised by the defendant at the latest on the application to set aside the judgment in 1991.

In this state of affairs, there is no justification for allowing the appeal to remain in existence. The appeal should be dismissed with costs to be taxed, including the costs of the motion to dismiss.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 55 of 1991

Brisbane
[Whiteford v. Bailey]

BETWEEN

BEDE NORTON WHITEFORD

Appellant

AND

WILLIAM BAILEY Respondent

Fitzgerald P.
McPherson J.A.

Derrington J.

Judgment delivered 24/10/94

Reasons for judgment by the Court

APPEAL DISMISSED WITH COSTS TO BE TAXED, INCLUDING THE COSTS
OF THE MOTION TO DISMISS.

CATCHWORDS PRACTICE - DISMISSING ACTION - Want of prosecution - Notice of appeal filed to appeal from decision not to set aside default judgment -Failure to prosecute over 3 years - Original plaintiff now deceased - Whether bankruptcy of defendant at time of default judgment relevant.

Counsel:	M. Halliday for the applicant/respondent E. Morzone for the respondent/appellant
Solicitors:	R.J. Webster, Solicitor, for the
applicant/respondent
Bernard Ponting & Co., Solicitors, for the respondent/appellant

Hearing Date: 17 October 1994