Woolley, John Russell v The Offical Receiver for Bankruptcy

[1980] FCA 121

IN THE FEDERAL COURT OF AUSTRALIA	) )
VICTORIAN DISTEICT REGISTRY	) No. VG 17 of 1980
)
GENERAL DIVISION	)

i

BETWEEN : JOHN RUSSELL VIOOLLEY

A p p e l l a n t

__ AND : TIIE OFFICIAL RECEIVER

FOR BANKRUPTY

R e s p o n d e n t

ORDER

JUDGES M A K I N G ORDER: Deme, McGrcgor a n d L o c l c h a r t JJ

DATE OF ORDER.	T h u r s d a y	31 J u l y ,	1980
\BIIERE MADE :	M e l b o u r n e
TIIE COURT ORDERS THAT:

. T h e appeal be dismissed w i t h ,costs.

I

IN THE	FEDERAL	COURT	O F AUSTRALIA	)
1

VICTORIAN DISTRICT REGISTRY	)	No. VG 17 of 1980
)
GENERAL DIVISION	1

BETWEEN. JOHN RUSSELL WOOLLEY

Appellant

- AND :

THE OFFICIAL RECEIVER

FOR BANKRUPTY

Responden t

ORDER

JUDGES MAKING ORDER: Deane , McGregor a n d L o c k h a r t JJ.

DATE OF ORDER: T h u r s d a y 31 J u l y , 1980

WHERE MADE : Melbourne

THE COURT ORDERS THAT:

T h e appeal be disrnlssed with costs.

I

IN THE FEDEPAL COURT OF AUSTRALIA	)
1

VICTORIAN DISTRICT REGISTRY 1 NO. VG 17 of l980

GENERAL DIVISION I

BETWEEN: JOHN RUSSELL WOOLLEY

Appellant

-	AND :	THE OFFICIAL
RECEIVER FOR
BAMKRUPTCY

Respondent

CORAM: Deane, McGregor and Lockhart JJ.

Thursday 31 July, 1980

REASONS FOR JUDGMENT

DEANE J: “his 1s an appeal from a judgment of a slngle

judge of thls court (Mr. Justlce Emlthers) dlsmlsslng an

appllcatlon by the appellant, John Russell Woolley, for

annulment of hls bankruptcy, pursuant to the provlslons of

S .l54 of the BPnPruptcy Act, 1966. The sequcstrntloc crc?er

ln respect of the appellant’s estate had been made on 9 December, 1976, pursuant to a petition presented by Adrlano

Umberto Frlgo. The act of bankruptcy alleged agalnst the

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appe l l an t and found t o have been committed by h i m was f a l l u r e

t o comply wi th the requl rements o f a bankruptcy not lce based

upon a d e f a u l t judgment a g a i n s t t h e a p p e l l a n t i n M r . F r lgo ' S

favour .

The b a s l s of the app l i ca t lon fo r annu lmen t -be fo re

Mr. Jus t lce Smi thers was t h a t t h e d e b t i n r e s p e c t of whlch

t h e r e l e v a n t judgment had been obtalned was i n t r u t h owlng t o

Mr. Esigo not by the a p p e l l a n t b u t by a company, F l she r aria

F lsher Propr le ta ry L lml ted ( " the Company"), with whlch the

appe l l an t was a s s o c l a t e d . Mr. J u s t l c e Smmlthers consldered

the evldence placed before him and d e c l d e d t h a t t h e a p p e l l a n t

had f a l l e d t o s a t l s f y him t h a t t h e r e l e v a n t d e b t was a deb t

owlng by A c c o r d l n g l y , t h e company and no t by t h e a p p e l l a n t p e r s o n a l l y .

h l s H o n o u r d i s m i s s e d t h e a p p l i c a t l o n f o r

annulment and o rde red t ha t t he appe l l an t pay t he Of f l c l a l

Receiver ' S	c o s t s .
The n o t l c e of appeal 1 s singularly uninformatlve

a s t o t h e ground on whlch the appea l i s brought. I t slmply

a s s e r t s "Thar hls Honour Jus t l ce Sml the r s has e r ro red a t

lair". It specifies a s the order sought , "Annulment o f t h e

Appellants Bankruptcy and o r consen t fo r a s p e c l a l c a s e t o

t h e High Court of Australia". This Court does not possess

power t o s t a t e a spec la l ca se I n t h l s m a t t e r f o r t h e o p l n l o n

of the Flgh Court of Austral ia , and it 1 s unnecessa ry t o

r e f e r f u r t h e r t o t h a t sugges t ed course o f ac t lon .

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Both t h e a p p e l l a n t and Mr. Frlgo gave evidence

before M r . J u s t l c e Smlthers. Examlnatlon of t he l r evldence

d l s c l o s e s t h a t m so fa r a s t h e q u e s t l o n w h e t h e r t h e r e l e v a n t

deb t was owing b y t h e a p p e l l a n t or by the company was

concerned, there was sharp conf l l c t between them.

The appel lant gave evldence t o t h e e f fec t t h a t t h e

s e r v i c e s of Mr. F r lgo had been employed by the company, whlch

w a s a b u i l d l n g company, s i n c e 1 9 7 1 t o d o c e r t a l n c o n t r a c t

jobs on si tes owned by t he company. Mr. Frlgo gave evldence

t h a t h i s s e rv l ces had always been employed by t h e a p p e l l a n t

p e r s o n a l l y . The a p p e l l a n t s t a t e d t h a t h e o r l g l n a l l y

introduced hlmself and a Mr. Gargano as dlrectors of t h e

company and explalned that t h e l r role was t h a t of superv ls lng

b u l l d l n g a c t i v l t l e s b y the company. Mr. Frlgo gave evldence

t h a t t h e company was no t mentloned a t t h a t tlme. The

appe l l an t gave ev ldence t ha t a l l work performed by Mr. Fr lgo

was for the company. Mr. Fr lgo gave ev idence t ha t t he

appe l l an t had t o ld h l m t h a t h e hlmself was r e s p o n s l b l e for

paylng hlm. The a p p e l l a n t s a i d t h a t a l l payments were made

by cheque drawn by the company. M r . drawn both F r l g o s a l d t h a t t h l s was

not so and that cheaues had been by the company

and the appe l l an t pe r sona l ly . The appel lan t gave ev ldence

t h a t t h e work r e l e v a n t t o t h e Judgment debt had been done on

behalf of the company. Mr. Fr lgo gave ev ldence tha t , so f a r

a s he was concerned, the work was done f o r t h e a p p e l l a n t .

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According t o Mr. Fr lgo when the appe l l an t sugges t ed t ha t he

should look t o the company for payment he s a l d t o t h e

appe l l an t : "as far a s I know my c o n t r a c t was w l t h you and no

one e l se" . To th l s t h e a p p e l l a n t , "m the end", replled: "I

will f i x you, no worries".

The above contrast between the evldence of t h e

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a p p e l l a n t a n d t h e e v l d e n c e of Mr. F r i g o t e n d s t o

over -s lmpl l fy the i s sue before Mr. J u s t l c e Smlthers i n t h a t

It may were marked imply t h a t t h e l r r e s p e c t l v e a c c o u n t s of r e l e v a n t facts

by a degree of c l a r i t y and conslstency whlch was,

I n t r u t h , n o t p r e s e n t a t al?.. There are some I n t e r n a l

con t r ad lc t lons In t he ev idence o f M r . F r lgo , and t h e r e are

some p a s s a g e s i n h l s e v l d e n c e which could p rope r ly be seen as

suppor t ing the appel lan t ' s con 'centmn that the work was done

by Mr. Frlgo under a c o n t r a c t wlth t h e company. Mr. Fr lgo ' S

command of Engl lsh was p l a l n l y somewhat d e f l c i e n t . HI S

knowledge of the s l g n i f l c a n c e and n a t u r e of a company was

p la ln ly meagre . A t tlmes, as he hlmself explalned under

cross-examlnatlon by the a p p e l l a n t , h e was "so confused".

The ques t ion whe the r i n t e rna l l ncons l s t enc le s In h l s e v l z e n c e

were t o be explalned by a degree of confusion was ve ry much a

mat te r t o be determlned by reference t o seelng and hearlng

hlm g l v e h l s evldence.

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On the other hand , t he appe l l an t ' S claim t h a t no

part of the deb t w a s owlng by h l m was no t asslsted b y p a r t s

o f h l s ev ldence or , on occaslon, h ls ques t lon lng of Mr.

Frlgo. For example, I n the course of h ls c ross -examlnat lon

of Mr. Fr lgo he asked a serles o f ques t lons whrch w e r e .

apparent ly , Intended t o s u g g e s t t h a t $200, b e l n g p a r t of t h e

judgment d e b t , was owed by t h e a p p e l l a n t p e r s o n a l l y t o Mr.

F r l g o f o r " p u t t l n g a sept lc tank and some d r a l n s a t my

personal home".

I n these c i rcumstances , h is Honour ' s f lnd lng tha t

he was n o t sa t lsf led t h a t t h e d e b t I n respect of whlch

judgment had been obtalned was owed by the company and not by

t h e a p p e l l a n t was l a rge ly based upon h l s a s ses smen t of bo th

t h e a p p e l l a n t and Mr. F r l g o a s w l t n e s s e s . H e expressed

s u b s t a n t l a l a c c e p t a n c e of t h e e v l d e n c e of M r . F r l g o , regardlng hlm as a "genuine man" and "the sort of w l t n e s s who

carrles convlc t lon" .

The appel lant . has fal led t o persuade me tha t t h e

concluslon of M r . J u s t l c e Smmlthers tha t h e was n o t s a t i s f l e d

t h a t t h e r e l e v a n t d e b t w a s orvlng b y t h e company and not by

t h e a p p e l l a n t w a s a f f e c t e d b y a n y l e e n t l f l a b l e error of

p r l n c l p l e or mlstake or mlsapprehenslon of f a c t . I n t h e s e

&.ircumstances, hls Honour ' s dec l s lon , t o the e x t e n t t o whlch

It was based on h l s opin lon of the t rus twor th lness of t h e

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witnesses and the lmpression he formed from seelng and

hear lng them glve ev idence , should on ly be l n t e r f e r e d w i t h by

an appe l l a t e cou r t i f the a p p e l l a t e c o u r t 1s convlnced tha t

the dec l s ion was wrong. On t h e o t h e r h a n d , t o t h e e x t e n t t o

whlch ins Honour' S decls lon can proper ly be sald t o be based

on lnferences drawn from the e s t a b l i s h e d facts , t h l s c o u r t 1 s

I

under	a	d u t y t o	examlne	the	quest lon	for	l t s e l f	whl le	g lv lng
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respect and weight t o the conclus lon of the t r l a l j u d g e .

I n t h e p r e s e n t case, It appears t o m e t h a t , for

the reasons whlch I have ment ioned, the conclusion of Mr.

J u s t l c e Smmlthers t h a t he was n o t s a t l s f l e d tha t the r e l e v a n t

debt w a s n o t owlng by the appe l l an t pe r sona l ly was based

l a r g e l y on hls assessment of t h e a p p e l l a n t and M r D F r l g o as

wltnesses and tha t hxs conclus ion as to > h e o v e r a l l e f fec t of

the evldence of M r . Frlgo was, t o no smal l ex ten t , based on

observlng and hear lng M r . F r lgo g lve h l s ev idence D It X ,

however , no t necessary in the p resent case t o attempt t o draw

the	l i n e between	f lndlngs	of f ac t based upon the trlal
\	I

judge 's lmpresslon of wl tnesses and Inferences drawn from

such f lndlngs of prlmary f ac t . Even lf t h e a p p r o p r l a t e

approach were t o be accepted as belng to examlne the ques t lon

for ourse lves whl le g lv lng due respect and welght t o t h e

concluslon of the trlal ~ u d g e , I am g u l t e unpersuaded that

any ground has been shown for l n t e r f e r l n g wlth the conc lus lon

of M r . Jus t lce Smithers t h a t h e was n o t s a t l s f l e d t h a t t h e

deb t was no t owlng by the a p p e l l a n t .

. .

. . -7-

The a p p e l l a n t a l s o s u b m l t t e d t h a t t h e r e were

grounds for s a y m g t h a t t h e amount of t h e judgment debt may,

I n any event, not correspond w i t h t h e amount whlch w a s I n

truth owlng. There i s n o t h l n q i n thls submlsslon whlch would

warran t In te r fe rence by thls c o u r t with t h e order made by M r .

-

J u s t l c e	Smmlthers.	Indeed ,	i n	t he	cou r se	of	t h i s	s u b m i s s l o n ,
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t h e a p p e l l a n t , a t one s t age , specu la t ed t ha t the amount

properly owing may exceed the amount of t h e judgment debt .

I n the clrcumstances, it 1 s unnecessary for me to

'express or t o form any vlew on the q u e s t i o n w h e t h e r h l s

Honour w a s c o r r e c t i n t h e c i r c u m s t a n c e s of' t h i s case In gorng

behlnd the judgment which had already been the s u b j e c t of an

unsuccess fu l app l l ca t ion t o set It a s l d e and whlch underlay

t h e a c t pf bankruptcy found t o have been commltted on the

hea r ing In 197G of the bankruptcy pe t i t ion , In pursuance of

.

I

- AND :

Respondent

COR.UI: DEPJJE, NcGREGOR and LOCIUfART JJ

I	Thursday 31 J u l y l980
McGREG0.S J: I agree with what has fa l len f rom the learned
res id ing Judge . For myself, I would J u s t w i sh t o add This:
tha t be€ore the l earned judge from v~l?lch t h i s appeal. i s
brought , the subs tan t la l ques t ion a rgued was whe-cher t h e

.-

d e b t , t h e s u b J e c t o f t h e p e t l t i o n , was owed n o t by t h e

eppe l l an t bu t by a compeny of which he was a d i r e c t o r , namely,

F l s h e r 8. Fisher Pty. Limited. His Konour, af ter hear ing

de ta l l ed ev ldence from both c r e d i t o r and f rom the appel lcnt

and cross-exammation o f bo th pa r t i e s and making h i s own

assessment of them, concluded t h a t he was n o t s a t i s f i e d t h a t

the c o n t r r x t o u t o f IrhLch t h c dc?lt was s a i d t o a r i s e vas

between 131~. Frigo ,and t h e compmy, That same i s s u e was

a t tempted to be ra l sed before His Honour Judge Gormn,

wl?o hen:-d an a p p l i c e t i o n ire a r e t o l d I n chanbers t o s e t

a s i d e t h e p Q m e n t . HLS HOIIGXI, r e f u s e d t h s t anTlic ,c t ion, -

t h e prec?.sc ,~rounf i s o f h r s r c f u s : d h r ~ e n o t beer1 t h e ci)bj3,.L

h

L.

argument or 'discussion, though Lmre j.s r e f e r e n c e i n khr.

transcript t o t h a t h e a r i n g . The c n d c n c e which we have

read f o r ou r se lves and t o l ihlch extensive rcfcrence has been

made by the appel lan t i s well capaille o f bear ing tht .

cons lructlon t h a t t h e c o n t r a c t , o r c o n t r a c t s o u t o f which

t he Judgmsnl; then arose, ?'!as beCween the zppel lan t m d

F!r. Frigo. Thus, the Judgwnt credj.-r;or was e n t i t l e d t o znd

indeed could only have sued the Judgment debtor, zssuming

that t h e r e was evldence o f a contract between them, I n rny

view, no reason has been shown In l aw o r i n f a c t t o i n t e r f e r e

wl th t h e Judgment appealed upon.

c

IN THE FEDERAL COURT OF AUSTRAT,TA

r

VICTORIAN DISTRICT REGISTRY NO, VG 17 of 1980

DIVISION GENERAL 1

I

BETWEEN: JOHN RUSSELL WOOLLM

Appellan

--	AND:	THE OFFICIAL RECEIVER FOR
BANKRUPTCY -

Responde:

CORAM: DEANE, McGREGOR and LOCKHART JJ.

I

Thursdav 31 July, 1980

REASONS FOR JUDGPENT

LOCIU-LNT J: I agree with what has been sald by the other

members of the Court and would add only a few words for myself

The appellant conciucted his own appeal befo-e this Court. He

analysed the evidence before the learned trial Judge carefully

and fully. He sought to estabhsh, in particular, that there

were many inconsistencies in the evldence of Mr. Frigo; but

the same may be said of the evldence of the appellant himself.

However, some of the alleged inconsistencies are examples of

equivocatlon rather than inconsistency. The learned trlal Judp

considered all the evidence and preferred the evidence of Mr.

Frigo to that of the appellant. His Honour concluded that he

was not satisfied that the debt was owed by the company.

In my opinion, it has not been established that his

Honour erred in reaching this concluslon; accordingly there	1s
no warrant for interferrmg with his Honour's declsion. In

determming the questlon whether a sequestration order ough-c

. . . /2

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r

not to have been made, the Court looks at the facts as they

existed at the date when the sequestratlon order was made:

see Re Scott (1975) 6 A.L.R. 558. To ascertain those €acts

the Court is not confined to the case disclosed to the Court

when the sequestration order was made, but may consider the

case that would have been disclosed If all the facts had beer

before the Court when the sequestration order was made. Thi;

was the course taken, and	in my opinion, correctly, by the
learned trial Judge.

Even if the Court 1s satisfied that a sequestration

order ought not to have been made, it is not bound as a

matter of course to annul the bankruptcy; but must consider

all the circumstances of the case and decide whether, in the

exerclse of its discretion, the bankruptcy ought to be annul:

see Delph Slng v Wood (1918) 25 C.L.R. 497 and Re Mlllam.

(1968) 13 F.L.R. 10. This questlon does not arise for

consideration in the present case, as it has ndt been

establlshed that the sequestration order ought not to have

been made. I agree that the appeal should be dismissed

wlth costs.

l 1