Worrell, in the matter of Tantner (Bankrupt) v Issitch
[1999] FCA 1336
•24 SEPTEMBER 1999
FEDERAL COURT OF AUSTRALIA
Worrell, in the matter of Tantner (Bankrupt) v Issitch [1999] FCA 1336
BANKRUPTCY – judgment by default – application for annulment – discrepancy between judgment and bankruptcy notice – whether invalid – power of court to go behind judgment – whether valid defence – whether two-stage inquiry process
Bankruptcy Act 1966 (Cth)
Re Beesley; Ex parte Beesley v Official Receiver [1975] 1 WLR 568
Corney v Brien (1950-1951) 84 CLR 343
Wolff v Donovan (1991) 29 FCR 480
Olivieri v Stafford & Ors (1989) 91 ALR 91
Re Riviere; Ex parte Original Mont de Piete Ltd (1919) 20 SR (NSW) 77
Re Longo; Ex parte Longo (1995) 57 FCR 523SIGFRIED TANTNER, EX PARTE: IVOR WORRELL v LUDMILLA ISSITCH aka LUDMILLA TANTNER-ISSITCH and HILARIO RICABLANCA and GREGORIA RICABLANCA
QG 7007 of 1996DOWSETT J
24 SEPTEMBER 1999
BRISBANE
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 7007 OF 1996
BETWEEN:
SIGFRIED TANTNER
BankruptEX PARTE: IVOR WORRELL
ApplicantAND:
LUDMILLA ISSITCH aka LUDMILLA TANTNER-ISSITCH
RespondentHILARIO RICABLANCA AND GREGORIA RICABLANCA
Cross-RespondentsJUDGE:
DOWSETT J
DATE OF ORDER:
24 SEPTEMBER 1999
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1. The cross-claim be dismissed.
2. The application filed 31 August 1998 be dismissed.
3.The respondent pay the applicant’s and the cross-respondents’ costs of the cross-claim including reserved costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 7007 OF 1996
BETWEEN:
SIGFRIED TANTNER
BankruptEX PARTE: IVOR WORRELL
ApplicantAND:
LUDMILLA ISSITCH aka LUDMILLA TANTNER-ISSITCH
RespondentHILARIO RICABLANCA AND GREGORIA RICABLANCA
Cross-Respondents
JUDGE:
DOWSETT J
DATE:
24 SEPTEMBER 1999
PLACE:
BRISBANE
REASONS FOR JUDGMENT
This is a complex matter. It is therefore desirable that I outline in detail the surrounding circumstances. The bankrupt was born on 20 August 1905 and so was 84 years of age in 1989. He owned a house situated at 97 Heather Street, Wilston. On 21 December 1989 he executed a deed to which the cross-respondents were also parties. Pursuant thereto, the cross-respondents undertook to provide “24 hour home care and also provide meals” for the bankrupt and to “do his washing and ironing of his clothes”. The bankrupt agreed to pay to each of the cross-respondents the sum of $200 per week in consideration of their providing such services. The moneys were not to be payable until the house was sold or the death of the bankrupt. It was further agreed that if the cross-respondents were still providing the relevant services at the date of death, he would transfer all of his right, title and interest in the property to them in full satisfaction of any claims which they might have. The actual mechanics of this procedure were not identified. The bankrupt also agreed to pay $50 per week for the purchase of food and other household supplies on his behalf and to pay all rates, electricity, telephone accounts and maintenance in connection with the residence. The cross-respondents were to reside at the premises. They agreed that in the event of their ceasing to provide full-time home care, they would vacate the property within seven days. If they were unable to continue providing such service at the Heather Street property, they would be paid their remuneration, “as from the eleventh day of November 1989” on the death of the bankrupt.
The bankrupt was also entitled to terminate their appointment if he became dissatisfied with the standard of care he was receiving. In that case, the cross-respondents were each to be paid at the rate of $200 per week from 27 November 1989 until the date of receipt of notice. This again was to be paid on the bankrupt’s death. It seems that the parties resided together until late 1992, save for certain periods when the bankrupt was in hospital and for one period when the male cross-respondent returned temporarily to the Philippines to visit his family. In late 1992, the bankrupt entered a nursing home where he remained until he died. On 22 February 1993 he gave notice requiring the cross-respondents to vacate the premises within two weeks. At some time after he entered the nursing home, the bankrupt met the respondent whom he married on 11 April 1993. He subsequently gave her authority to sell the premises at Heather Street for the purpose of constructing a new home on property owned by her. He also gave her a power-of-attorney.
On 15 July 1993 the bankrupt commenced proceedings in the District Court at Brisbane claiming recovery of possession of the Heather Street premises and the return of certain chattels which he alleged were missing, apparently attributing their loss to the cross-respondents. He also claimed unspecified damages and damages for distress. In his statement of claim, he referred to the deed of 21 December 1989. Although he did not deny signing it, he denied that it was binding upon him, claiming that the circumstances were such “as to allow the plaintiff to plead non est factum”. There was also an allegation of unconscionable conduct and/or undue influence. He claimed that the agreement was therefore void. Alternatively, the bankrupt claimed to have determined the deed, either because the cross-respondents had ceased to provide full-time care for him or because he was not satisfied with the standard of care. This appears to have been a reference to the notice to quit to which I have previously referred, although it may have been a reference to subsequent solicitors’ correspondence. He relied upon his admission to hospital as justifying the allegation that they had ceased to care for him. As to the allegation that the cross-respondents’ services had been unsatisfactory, he merely alleged that they had failed to provide care from the beginning of the arrangement. There were no further particulars of this allegation.
The cross-respondents defended the proceedings, relying upon the deed, alleging that it was executed by the bankrupt with the benefit of independent legal advice and that they had performed their obligations pursuant thereto. There was a counter-claim said to be “in the event that the deed … is declared to be void or unenforceable …”. This is a claim for remuneration for work done for the bankrupt and at his request. In his reply and answer the bankrupt effectively denied the facts alleged in the counter-claim.
At some time thereafter, the bankrupt recovered judgment for possession of the subject premises, and they were sold. Part of the current proceedings involves an assertion by the applicant (the trustee of the bankrupt’s estate) that the proceeds effectively found their way to the respondent, either by way of a settlement made in her favour by the bankrupt (which is allegedly void as against the applicant) or by way of misappropriation by the respondent. She claims that prior to the sale, the bankrupt had transferred to her an equitable half-interest in the property and that she was therefore entitled to half of the proceeds of sale. As to the balance she says that she dispersed them in accordance with directions given by the bankrupt or to meet debts owed by him.
The District Court proceedings continued in respect of the counter-claim. I am not sure whether the balance of the bankrupt’s claim was also pursued. At some stage it was thought desirable to record the evidence to be given by the bankrupt, and so evidence was taken de bene esse on 21 December 1993 before a Commissioner. The bankrupt’s evidence shows some disorientation, particularly as to dates, and a great deal of hostility towards the cross-respondents. He alleged that they had failed to look after him. He also gave evidence concerning the arrangements made between himself and the cross-respondents. The effect of that evidence was that he had not agreed to pay them any money in return for services to be provided, but that he had agreed that they could have his house when he died. He seems to have believed that this was conditional upon his not remarrying. He agreed that he had paid them $50 per week for groceries.
On 24 May 1994 the action came on for trial in the District Court before Judge Pratt. Some days prior to that hearing, the bankrupt’s solicitors had filed the relevant documentation indicating that they had ceased to act for him, although it seems that this had occurred in December 1993. In those circumstances, a question arose as to whether the bankrupt was aware that the matter was listed for hearing on that day. A letter had been sent to him following a callover on 25 March, but it had been addressed to 97 Heather Street, which property he had by then sold. He was, at that time, in the nursing home. A registry clerk swore that she had sent the letter to the Heather Street address because she thought that the bankrupt had signed a certificate of readiness and was acting for himself. It seems, however, that his residential address on the court file was at the nursing home. Presumably, his address for service was still at the office of his former solicitors. The clerk also said that on the previous day, that is 23 May, she had telephoned the bankrupt at his nursing home and asked him if he was aware that his trial was to commence on the following day. He said that he had not been so aware and seemed confused.
Pursuant to sub-rule 229(1) of the District Court Rules:-
If at the time so appointed, or upon an adjournment of the court or of the action, the defendant does not appear, the Judge, upon proof of service of the plaint (whereof the filing of an entry of appearance and defence should be sufficient proof) shall give judgment for the plaintiff, if the plaint discloses a sufficient cause of action.
Although I was not directed to any particular rule providing that the rules relating to claims should apply mutatis mutandis to counter-claims, it is reasonable to infer that this is the practice in the District Court, particularly as I note that the title to the action includes, in respect of the counter-claim, a reference to the present cross-respondents as being “plaintiffs by counter-claim” and to the bankrupt as being “defendant by counter-claim”. The reference to “the time so appointed” in r 229 appears to be a reference back to r 228(1) which refers to “the time appointed for the hearing”. Rules 228 and 229 presumably assume notice to the parties of the date of hearing, but do not require proof of such notice as a condition precedent to proceeding against a party in his or her absence. Nonetheless, had there been no notification to the bankrupt of the date of hearing, I would have been much more inclined to question the judgment than I am, knowing that he was given some notice. It is true that the registry clerk who gave evidence thought that he seemed somewhat confused at the time, but it is difficult to see how the District Court or the present cross-respondents could have done any more in the circumstances. There was sworn evidence to the effect that the bankrupt was informed of the date of hearing. The learned District Court Judge gave judgment in favour of the present cross-respondents in the amount of $68,000 with interest totalling $5,300, being calculated at 10 per cent per annum. There was also an order for costs.
It is difficult to understand the precise nature of the claim upon which judgment was given. As I have said, a plea for remuneration for services provided was made in the counter-claim, but that was upon the basis that the deed might be found to be invalid. One wonders why the cross-respondents did not add a claim for moneys due under the deed. It is true that such moneys were not payable until the bankrupt’s death or sale of the premises, but the latter event had occurred at the date of hearing. There may be some doubt as to whether there could have been a claim upon a quantum meruit if the deed were valid. It appears from the transcript of proceedings that the matter was put to his Honour as a claim on a quantum meruit (see ts 6 at l 12). It is also there described as a claim for “unliquidated damages”. In any event, the bankrupt was challenging the enforceability of the deed, and the cross-respondents were entitled to proceed on that basis. There has been no suggestion in these current proceedings that in those circumstances, the cross-respondents were not entitled to succeed on a “quantum meruit” claim.
The cross-respondents sought to quantify their claim in two ways. It was alleged that the cross-respondents had cared for the bankrupt for 170 weeks at the rate of $200 each per week specified in the agreement. There was also evidence from a domestic agency suggesting that for 24 hour care, a very much larger figure was appropriate. His Honour seems to have accepted the lower figure based upon what was in the agreement. There was no reason why his Honour should not have used the figure in the deed as giving some indication of a reasonable rate. There is a further complication in that it was suggested to his Honour that the cross-respondents had not received any other moneys in the course of their time with the bankrupt. They were, in fact, receiving “carer’s pensions” from the Department of Social Security. It might be thought that the court was misled. In the end, it is a question of whether or not the carer’s pensions were relevant to the assessment of a reasonable sum as appropriate compensation on the quantum meruit. I will deal with that matter later. His Honour was aware of the weekly payments of $50.
On either 18 or 19 July 1994 a bankruptcy notice was issued against the bankrupt, claiming $68,000 plus interest in the amount of $6,073.42, totalling $74,073.42. This reflected the terms of the formal judgment although, as appears above, Pratt DCJ had awarded a lesser sum by way of interest, namely $5,300. There has been no explanation of this discrepancy. In any event, pursuant to subss 41(5) and (6) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”):-
(5) A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he disputes the validity of the notice on the ground of the misstatement.
(6) Where the amount specified in a bankruptcy notice exceeds the amount in fact due and the debtor does not give notice to the creditor in accordance with subsection (5), he shall be deemed to have complied with the notice if, within the time allowed for payment, he takes such action as would have constituted compliance with the notice if the amount due had been correctly specified in it.
The bankrupt neither gave notice pursuant to subs 41(5) nor complied with it pursuant to subs (6). On 30 August 1994 the cross-respondents presented a petition in bankruptcy, alleging failure to comply with the bankruptcy notice on or before 17 August 1994. The attached notice showed that the petition was to be heard on 29 September 1994. On that day a sequestration order was made. On 12 December 1994 the bankrupt made application for annulment of the bankruptcy. On 8 February 1995, however, he was found to be incompetent to manage his own affairs, and control thereof passed to the Public Trustee. The Public Trustee chose not to continue with the proceedings.
At this stage I will say something about the medical evidence as to the bankrupt’s condition. It is to be found in exs 8, 17 and 18. Exhibit 8 is a report from the Royal Brisbane Hospital dated 30 August 1993. He was first admitted on 12 December 1990 following a collapse, although there had been a previous cerebrovascular incident in 1988. There is no suggestion in the report that he was other than capable of managing his affairs as at the date of his discharge in April 1991.
Exhibit 17 is a report by Dr Maurice Stevens dated 22 March 1994. Dr Stevens had been attending the bankrupt since 25 November 1992 when he entered the Autumn Lodge Nursing Home. As to his mental state Dr Stevens said:-
Whilst he has days when he is quite lucid there are more days when he is irrational, unreasonable and making statements that are quite outlandish and these suggest that he is out of touch with reality at these times.
Exhibit 18 is a report from Dr H D Eastwell, a psychiatrist, to Dr Stevens, dated 18 April 1994. Dr Eastwell said:-
I thought his memory was passable for an 89 year old, although he got time sequences out of order, and showed some other patchy memory loss. He remembered the main constituents of the present social conflict of which he is the central character. I doubt if deficits of memory alone would rule him out of deciding a proper disposal of his assets. He seems to favour the public curator handling his affairs.
On the other hand he is out of touch with reality as it is consensually validated. This is shown by his desire to enter a ‘diplomatic school’ so he can become an ambassador, because of his knowledge of European language. He also has some unrealistic memories of Hitler and the Third Reich, and fancies he could write a book on the subject. These unrealistic ideas are not by any means delusional and yet they are inappropriate and add up to a gross misreading of his present plight and his dependent situation. On these grounds alone he might not be able to give a reasoned opinion as to the disposal of his assets.
These reports cause some concern as to the capacity of the bankrupt to look after his affairs during 1994, but they do not prove such incapacity.
On 29 March 1995 the applicant commenced the current proceedings against the respondent for orders concerning property and money said to be in her possession. Points of claim and points of defence and cross-claim were delivered. By way of cross-claim the respondent sought annulment of the bankruptcy. The cross-respondents were joined in respect of that application. This cross-claim was delivered on 11 August 1995, although a further notice seeking annulment was filed on behalf of the respondent on 28 August 1998. The delay in determining this question is most regrettable and is also difficult to understand. In exercising the discretion as to annulment, I should keep in mind that the application for annulment was first made in 1995.
At the hearing, a question arose as to the respondent’s standing to seek annulment. Section 153B provides:-
If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or it ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.
The section was in a slightly different form in 1995, but was materially the same. At that time, the bankrupt was still alive, although the Public Trustee was handling his affairs. It may be doubted whether the respondent then had appropriate standing. When the matter was raised before me, little was said as to any justifiable basis for her bringing the application. Eventually, it emerged that she had at one time been executor and principal beneficiary under a will, but there was a later will, dated 16 June 1996, appointing one Wally Osad to be executor and providing as follows:-
I express a wish without creating any binding trust or legal obligation that if anyone who wishes to contest this will should receive one dollar ($1.00).
I express a wish without creating any binding trust or legal obligation that my entire estate and monies plus any interest accrued thereon is to be paid to Wally Osad.
The effect of this document is not clear, but it must be accepted that there may be no valid disposition of the estate. The respondent, as the bankrupt’s widow, would presumably take some benefit upon intestacy. For that reason I indicated that I consider her to have appropriate standing. As I understand it, counsel for the applicant does not now contest that proposition. I should say that it is clear from the decision in Re Beesley; Ex parte Beesley v Official Receiver [1975] 1 WLR 568 that a spouse is not entitled to bring such an application merely because of his or her status as such.
When this matter came on for hearing it was assumed, perhaps unwisely, that the two applications would proceed together. For that reason, counsel for the applicant commenced. After a relatively short time I realized that this was inappropriate for two reasons. Firstly, there was no real overlap between the evidence relevant to the application for annulment and the evidence relevant to the claim against the respondent. Secondly, should the application for annulment be successful, it will not be possible to proceed with the other application. It therefore seemed appropriate to determine the application for annulment before considering the other matters.
The cases are surprisingly uninformative as to the proper approach to an application for annulment and as to relevant considerations. They do not, however, support the view that as a matter of course, an applicant is entitled to re-litigate the issues upon which the relevant judgment debt was founded. It is a condition precedent to an order under s 153B that the Court be satisfied that the sequestration order ought not to have been made. This seems to invite a reconsideration of the orders made pursuant to s 52, including the question of whether the petitioning creditor was a creditor for the purposes of the Bankruptcy Act and whether there was an available act of bankruptcy. It is well-established that in some circumstances the Court, on the hearing of a petition, may go behind the judgment debt. It is clear, however, that the Court will not always do so.
In Corney v Brien (1950-1951) 84 CLR 343 at 347-8, Dixon, Williams, Webb and Kitto JJ said:-
Under this provision the Court of Bankruptcy has undoubted jurisdiction to go behind a judgment obtained by default or compromise or where fraud or collusion is alleged and inquire whether the judgment is founded on a real debt … . In Re: A Debtor ([1929] 1 Ch 125 at 127) Astbury J said ‘True it is that the Bankruptcy Court may, upon a prima facie case being shown, go behind a judgment for the purpose of satisfying itself that the debt enforceable thereunder was a real debt.’
Similarly, Fullagar J said at 357:-
But, wherever the judgment in question is a judgment by default, it appears that the Court will always ‘go behind’ the judgment if there is what it regards as a bona fide allegation that no real debt ‘lay behind’ the judgment.
The question whether the judgment is to be re-opened or ‘gone behind’ at all will, of course, often involve some preliminary investigation of the merits of the attack on the judgment but, when once the court decides that it will ‘go behind’ the judgment, the cases which I have cited show, in my opinion, that the whole matter is open. When once it is considered proper to ‘re-open’, the only question will be whether there was, in fact and in law, a debt which could legally found the judgment – whether there was in ‘Truth and Reality’ an obligation not of record before there was an obligation of record.
In Wolff v Donovan (1991) 29 FCR 480 this two-step approach was adopted. See 482 (per Davies J) and 486-7 (per Lee and Hill JJ). In some circumstances, a Judge will be asked to revisit this exercise for the purposes of an application pursuant to s 153B. There is, of course, also a wider discretion to be exercised in determining an application for annulment under that section.
In some of the cases concerning annulment, the debt had been paid. See, for example, Re Wilkinson (1970) 16 FLR 414. Re Deriu (1970) 16 FLR 420 was an application for rescission of a sequestration order. Gibbs J (as his Honour then was) held that the debtor had never been indebted to the petitioning creditor, although the circumstances do not appear from the report. His Honour concluded that it was appropriate to make an annulment order rather than to rescind the original decree. Gibbs J referred to the decision of the High Court in Cameron v Cole (1944) 68 CLR 571. That was a case in which a decree was annulled upon the basis that the debtor was not given notice of the adjourned date of the hearing of the petition. In Re Anasis;Ex parte Total Australia Ltd (1985) 63 ALR 493, a bankruptcy was annulled, again for failure to serve the debtor with notice of the adjourned date of hearing. In Re Gollan; Ex parte Gollan (1992) 40 FCR 38 a debtor sought review of a sequestration order or annulment because he was at all times solvent. In Re McCollum; Ex parte The Bankrupt (1987) 71 ALR 626 judgment was obtained by default for the price of goods sold and delivered. The debtor’s true liability was as guarantor of the purchaser’s debt. On an application for annulment of a subsequent bankruptcy, there was “no dispute as to the factual point on which the judgment debtor relies, namely that he was never indebted for goods sold and delivered.” Pincus J considered that the defect was fatal to the bankruptcy.
Two other cases require brief consideration. One is the decision of the Full Court in Olivieri v Stafford & Ors (1989) 91 ALR 91. That was an appeal from a refusal to set aside a bankruptcy notice, but it is relevant for present purposes because in the judgment of Gummow J at 109, his Honour quotes with approval the following extract from the judgment of Owen AJ in Re Riviere; Ex parte Original Mont de Piete Ltd (1919) 20 SR (NSW) 77 at 84:-
At the same time I think it is equally clear that the Court will only reconsider the judgment in order to ascertain whether the petitioning creditor’s debt, on which the bankruptcy proceedings have been founded, should be struck out altogether. … The Court does not reconsider the judgment merely with a view to seeing whether the judgment debt should be reduced, but in order to ascertain whether the creditor has a debt upon which the bankruptcy proceedings can be founded.
Gummow J then continued:-
In my view the force of Owen AJ’s reasoning is by no means diminished if it is applied to the present legislation and to the situation with which this appeal is concerned. As Sweeney ACJ pointed out in argument, although there will be no act of bankruptcy for the purposes of s 40(1)(g) where the debtor satisfies the Court that he has a counter-claim, set-off or cross-demand, this will avail the debtor only if it is equal to or greater than the amount of the judgment debt … .
That passage was cited by Cooper J in Re Longo; Ex parte Longo (1995) 57 FCR 523 at 530. That case was also an application to set aside a bankruptcy notice. Owen AJ was speaking of the approach to be taken on the hearing of a petition. His Honour’s observations are therefore more opposite in the present case than they were in either Olivieri or Longo.
It is appropriate to record the evidence as to the status of the estate. This appears from the affidavit of Mr Lane. He records that the trustee has not called for proofs of debt as there are no funds. He is aware of the debt of $73,000 allegedly owed to the cross-respondents. There is also an amount claimed by the Official Solicitor on behalf of the Public Trustee in the amount of $3,710. The following other amounts are owing:-
Trustee’s remuneration $20,465.00
Legal fees owing to Whitman & Co (approx) $ 6,000.00
Fees owing to Baker Johnson Lawyers $26,933.33Fees owing to Baker Johnson Lawyers with respect to
annulment of bankruptcy $ 3,208.65
Petitioning creditors’ costs $ 2,181.90As I understand it, the only possible asset is represented by the claim against the present respondent which, in one form, is for the sum of $110,000 plus interest, which may total $60,000. There is also the possibility that the applicant may be able to establish an interest in the house constructed by the respondent, allegedly with funds provided by the bankrupt, and take advantage of any increase in value of that property.
Apart from the applicant as trustee, the legal advisers and the Public Trustee, the only persons interested in the administration of this estate are the respondent and the cross-respondents. The respondent’s interest primarily arises because she is being pursued for estate assets. There is also her interest in any surplus in the estate on an intestacy, but this will only be the case if the applicant recovers something from her. The cross-respondents’ interest is, of course, in satisfying their judgment. When the matter is seen in this fairly stark way, there is much to be said for administration in insolvency. Little or no legitimate advantage will flow from annulling the bankruptcy. Presumably, the present disputes would merely be conducted in the administration of the estate, assuming that somebody is willing to prove the will or take letters of administration. In any event, it will be essential that some independent third party be responsible for adjudicating the claims of the respondent and cross-respondents. It is a little difficult to see why that cannot be most effectively done in the existing bankruptcy administration.
I turn to consider the bases upon which the respondent asserts that the bankruptcy should be annulled. They are as follows:-
· that the agreement was not enforceable against the bankrupt because of the non est factum rule, or because of unconscionable conduct, or for some such similar reason;
· that any agreement was not accurately reflected in the deed;
· that the actual amount owing was erroneously calculated for a number of reasons with which I will deal in a moment;
· that there were irregularities in process, namely:
°the discrepancy between the amount in the bankruptcy notice and the amount of the judgment pronounced in court;
°the question of notice to the bankrupt of the hearing date in the District Court;
As to the first point, there is simply no evidence to suggest that as at the end of 1989 the bankrupt was other than competent to manage his own affairs. In those circumstances it is difficult to see any basis for a claim of unconscionable conduct or any associated or similar defence. As to the second point, rectification was not claimed. In any event, as I have demonstrated, the judgment really assumes that the deed was not enforceable. There has been no attempt, before me, to suggest that a cause of action on a quantum meruit was not available, nor that it could not have succeeded. In those circumstances I see no basis for challenging the judgment in so far as it recognizes an obligation to pay for services rendered. See Pavey & Matthews Pty Ltd v Paul (1986-87) 162 CLR 228.
As to the procedural irregularities, it is true that the bankruptcy notice appears to show a greater amount than the amount awarded in court, although the notice reflects the amount shown in the perfected order. Whatever the significance of this, the problem for the purposes of bankruptcy is dealt with by subss 41(5) and (6). The bankrupt chose not to comply with those provisions. In the circumstances there is no basis for asserting that the bankruptcy notice was invalid. I have already dealt with the question of notice of the trial date in the District Court. That leaves for consideration only the correctness of the assessment made by the learned District Court Judge. As I have said, this is attacked upon a number of different bases which I will now consider.
Firstly, it is pointed out that the calculation was based upon an assertion that the cross-respondents continued to provide services to the bankrupt after he entered the nursing home in November 1992. As I understand it, it is accepted for present purposes that an adjustment of $4,800 should be made in this regard. It is then pointed out that the male cross-respondent was absent from Australia for a month. It is also accepted that an adjustment for four-and-a-half weeks should be made in this regard. That is a further reduction of $900. The bankrupt was in hospital on three occasions, on two occasions for one week, and on the third, for a month. It is accepted for present purposes that there may be a rebate for those periods of say, $2600. These sums total $8,300.
A number of other claims are made. Firstly, it is said that nursing attention and meals were supplied by the Blue Nurses and Meals on Wheels respectively. However there is no evidence sufficient to establish that meals were supplied other than occasionally although the bankrupt, in his evidence, claimed otherwise. It seems that the Blue Nurses attended to provide nursing care. That was not within the competence of the cross-respondents, nor had they agreed to provide it. In the end, as I understand it, the solicitor for the respondent did not press these matters. It is, in any event, difficult to see their relevance.
There is also a claim for rent allegedly owing by the cross-respondents from 25 November 1992 until 9 August 1993, being the period from the date upon which the bankrupt went into the nursing home until the date upon which the cross-respondents vacated the premises. The sum of $4,060 is claimed, based upon valuation evidence. I very much doubt the validity of this claim, although it may be that there could be a claim for rent from the date of the notice to quit (22 February 1993). It is not clear that when the bankrupt went into the nursing home it was known that he would not be returning. It may well have been within the contemplation of the parties that the cross-respondents remain in the premises until such time as it became clear that such was the case.
It is said that the bankrupt paid $8,500 to the cross-respondents and implied that this may have been for the domestic services in question It was pointed out in the course of argument that under the terms of the deed, and according to his own evidence, the bankrupt paid $50 per week for groceries. Clearly enough, the amount of $8,500 would be little more than the amount payable over a period of three years at the rate of $50 per week. It is not possible now to ascertain whether or not the sum of $8,500 was largely made up of such payments. It is also not possible to infer that any other relatively small sum paid by the bankrupt to the cross-respondents was necessarily in consideration of the provision of services. In a domestic relationship extending over three years, there could be any number of reasons why relatively small amounts would be paid from time to time.
Finally, it is pointed out that there is evidence that the appropriate Carer’s Pension in 1989 for a married couple was $111.35 each per week. This increased to $127.65 each per week by November 1992. There is also evidence that for the year from 1 July 1991 to 30 June 1992, each cross-respondent received a gross pension of $6,632. It may be assumed for present purposes that they received similar sums in the other years during which they were caring for the bankrupt, subject to variations in the relevant rates. The respondent submits that these amounts should have been taken into account in calculating a reasonable sum by way of recompense for the services provided to the bankrupt by the cross-respondents. Alternatively it is submitted that the figures themselves provide a better basis for calculating a reasonable sum than that used by the learned District Court Judge. I reject both arguments. It is clear from ex 12 that the Carer’s Pension ought to have been reduced to reflect moneys received from the bankrupt. That exhibit, which is a letter from the Department of Social Security, states:-
In addition to that information it should be noted that the Department of Social Security would need to review the rate payable to a couple if a court made a decision that the caree had made a legally supportable agreement with the carers to provide payment for services. The carers would have been required to advise the Department of Social Security of the amount agreed to and have had the rate of pension adjusted accordingly. Social Security might need to consider recovery action.
In those circumstances, it cannot be maintained that such sums should be taken into account in calculating what was reasonable compensation for the services provided. In any event, I would have thought that the proper basis for calculating that sum would generally be market value, having regard to any other benefits conferred by the person receiving care upon the persons providing it. However it is not necessary to consider that matter further. As to the second argument, I see no reason to infer that the amount paid by the Department of Social Security gives any reasonable indication of reasonable remuneration.
To the extent that the calculation of the quantum of the award is open to attack, the effect of the arguable bases of criticism is relatively small. In those circumstances, it is difficult to see how anybody’s legitimate interests would be served by allowing funds to be spent on a further investigation of the amount owing by the bankrupt to the cross-respondents. The matter should be left to the applicant to work out in the course of administration of the bankrupt estate. The observations of Owen AJ, cited by Gummow J in Olivieri support refusal of the application for annulment on this ground alone.
A further relevant consideration is that the estate has been in bankruptcy since 1994. Although the delay is by no means entirely attributable to the respondent or to the bankrupt, one cannot overlook the passage of such a long period of time. It is important that the respondent be treated justly, but it is also important that the cross-respondents be similarly treated. There is nothing about their conduct of the proceedings, either in the District Court or in the bankruptcy, which would suggest that they have done anything other than seek to enforce a claim which they genuinely believe to be valid. Without concluding that the claim is valid, it is necessary to keep in mind this fact in determining whether or not they should now be faced with the prospect of litigating the claims which they sought to litigate in 1994.
Finally, there is the fact that this is, in reality, a dispute between the respondent, the trustee and the cross-respondents. It seems most appropriate that it be fought out in the context of bankruptcy administration. The application for annulment is refused.
Addendum
When the above reasons were delivered in the course of the hearing, I indicated that I might edit them. I have now done so. I also wish to make three points which are implicit in the reasons but should be expressly stated. They are:-
·The respondent did not seek to rely upon the bankrupt’s assertion that the cross-respondents had failed to care for him adequately or at all, although the evidence about the Blue Nurses and Meals on Wheels may have gone to this issue. The bankrupt’s evidence established that the cross-respondents had provided some services, although he certainly claimed to be dissatisfied with them. It is unlikely that such an argument could be successfully mounted at this stage.
·The various attacks upon the validity of the 1989 deed are, in the end, irrelevant because the cross-respondents’ judgment assumed that there was no valid deed.
·Even if the circumstances leading to the judgment in the District Court involved an irregularity, it would not now be appropriate to intervene in the absence of any substantial defence to the bulk of the claim.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.
Associate:
Dated: 30 September 1999
Counsel for the Applicant:
Mr M Martin
Solicitor for the Applicant:
Baker Johnson
Solicitor for the Respondent:
Mr Andrew P Abaza
Date of Hearing:
20-23 September 1999
Date of Judgment:
24 September 1999