Wolff, B.S. v Donovan, D - [1991] FCA 290

Re: BERNARD SIMON WOLFF
And: DONALD DONOVAN
No. G13 of 1991
FED No. 290
Bankruptcy
29 FCR 480

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Davies(1), Lee(2) and Hill(2) JJ.

CATCHWORDS

Bankruptcy - bankruptcy notice based on default judgment - debts incurred by partner in a partnership where debtor only "silent partner" - whether partnership in existence at time debts incurred - whether trial judge determined preliminary question of whether the present was an appropriate case to investigate whether true debt existed or determined the question whether bankruptcy notice based on true debt - no formal request for trial judge to decide preliminary question of existence of judgment debt - whether failure to call full evidence can ground an appeal - circumstances in which court will go behind judgment debt - onus of proving existence of debt - whether creditor required to prove existence of entire debt upon which judgment founded.

Partnership Acts 1891-1965 (Qld.) s.8

HEARING

BRISBANE

#DATE 30:5:1991

Counsel and Solicitors Mr M. Eliadis instructed by
for Appellant: H. Drakos and Co.

Counsel and Solicitors Mr G. Gibson QC and Mr P. Eastion
for Respondent: instructed by Anderson and Bone

ORDER

The appeal be dismissed.

The appellant pay the respondent's costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

I have had an opportunity to read the reasons for judgment prepared by my brothers Lee and Hill JJ. I agree with them but would add a few words of my own.

It is clear that, in an appropriate case, a bankruptcy court both may and should go behind a judgment to ascertain that the debt relied upon is a good debt, a debt due in truth and reality. The issue has been discussed by the High Court of Australia in Corney v. Brien (1951) 84 CLR 343, Ross-Ireland v. Tour Finance Limited (1965) 39 ALJR 49 and Wren v. Mahony (1972) 126 CLR 212. The principle has been applied in many judgments of this Court, including by Full Courts in Olivieri v. Stafford (1989) 91 ALR 91 and Ahern v. Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137. Views in which I joined were set out in Ahern's case at 147-8. At 148, the Court stated the general principle as follows:-

"These cases rest on the broad principle that before a person can be made bankrupt the court must be satisfied that the debt on which the petitioning creditor relies is due by the debtor and that if any genuine dispute exists as to the liability of the debtor to the petitioning creditor it ought to be investigated before he is made bankrupt. Bankruptcy is not mere inter partes litigation. It involves change of status and has quasi penal consequences."

In the present case, the petition relied upon a judgment obtained by default. The bankruptcy court will go behind such a judgment debt provided that a…

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 Wolff, B.S. v Donovan, D

Details

AGLC: Wolff, B.S. v. Donovan, D. [1991] FCA 290 (29 FCR 480)
Case: [1991] FCA 290
Decision Date: 30 MAY 1991

CaseChat Overview and Summary

In the matter of Wolff, B.S. v Donovan, D, the Federal Court was tasked with determining the validity of a bankruptcy notice issued against the appellant, Wolff. The respondent, Donovan, sought the notice on the basis of a default judgment obtained against a partnership. The central issue was whether the debts claimed were indeed owed by Wolff, who had only been a silent partner in the partnership at the time the debts were incurred. The court had to decide whether the trial judge correctly assessed the preliminary matter of whether there was a true debt or whether the notice was based on a valid debt. Additionally, the court needed to address whether the absence of full evidence in the appeal could serve as a ground for it and whether the creditor needed to prove the entire debt upon which the judgment was founded.

The court held that the trial judge did not explicitly decide the preliminary question of the existence of the judgment debt. The court found that no formal request was made for the trial judge to decide this preliminary matter. The court further explained that the onus of proving the existence of a debt rested with the creditor, but it was not necessary for the creditor to prove the entire debt upon which the judgment was founded. The court found that the creditor only needed to prove that some portion of the debt was owed. The appeal was dismissed, and the appellant was ordered to pay the respondent's costs of the appeal.

Orders

Orders of the court

The appeal be dismissed.

The appellant pay the respondent's costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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