41T) enigiwal ee IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) No. NSW 553 of 1977 APPLICATION FOR ANNULMENT RE - MARIA CHRISTINA PIEPER THE BANKRUPT Applicant PAUL BERNARD CUMMINS Respondent JUDGE MAKING ORDER: Riley J. DATE OF ORDER: 25 November 1977 WHERE MADE: Sydney ORDERS 1. That the bankruptcy be annulled. 2. That the respondent pay the applicant's taxed costs of and incidental to the application for annulment and her taxed costs (if any) of and incidental to the petition for a sequestration order. te ta ce a et tt a a A Ht ne " REASONS FOR JUDGMENT . This is an application by Mrs. Maria Christina Pieper for annulment of her bankruptcy, primarily on the ground that the sequestration order ought not to have been made. The applicant divorced her husband. He was ordered to pay her costs, assessed and agreed at $750, to her or her solicitor. He then did pay $700 to the solicitor who was acting for her when the decree nisi was made. A second solicitor, a former partner of the first, later recovered a default judgment against Mrs. Pieper for $703.78 in respect of the same costs. On that judgment he founded the creditor's petition on which the applicant was made bankrupt. He said in evidence before me, "It is a situation that I do not like, but it is the situation"; and he opposes her application for annulment. Mrs. Pieper is a Spanish lady who came to Australia, unable to speak English, in 1960. Today her command of English is competent but not excellent. Not unnaturally she does not trust herself to deal unaided with a legal document ("I did not know actual words what it means") and takes the sensible course of handing it to a solicitor for advice and necessary action. In 1963 she married John Pieper. The marriage did not prosper, and she sought legal advice. Her first solicitor was Mr. L. B. Feeney, who conducted a matter for her in the Children's Court in 1970. [In about July 1971 Mr. Feeney was joined in partnership, under the name of Bond & Bond, by Mr. P. B. Cummins. (Later there was a third partner, Mr. M. B. Clare, who died some time ago and who played no part in this story.) Mr. Feeney introduced Mrs. Pieper to Mr. Cummins. On 14 December 1972 Bond & Bond on Mrs. Pieper's behalf filed in the Family Law Division of the Supreme Court of a ee a -2- - New South Wal © . petition for dissolution of her marriage. From a file of papers produced on subpoena by Mr. Feeney and admitted in evidence on behalf of the applicant without objection it appears that the petition was signed by Mr. Cummins and a certificate relating to reconciliation was given by him, the address for service being shown as Bond & Bond. Mrs. Pieper does not properly understand the concept of partnership ~- when asked whether she knew what a partner was, she replied "Yes, work together"; but I am satisfied that she knew that the name Bond & Bond had some connection with her proceedings for divorce. She paid the firm $20 on 7 December 1972 and was given one of the firm's receipts. There is no doubt on the evidence that both Mr. Feeney and Mr. Cummins advised her and acted for her in the proceedings for her divorce, though she regarded Mr. Feeney as her solicitor and Mr. Cummins as someone who worked with and for Mr. Feeney and, when Mr. Feeney was absent, took his place. I am of the opinion that for all work done on her behalf up to 31 March 1973 she was a client of Bond & Bond and became indebted for that work to the partnership, and that the conducting of the divorce proceedings was a partnership transaction. On 30 March 1973 Messrs. Feeney, Cummins and Clare entered into a deed of dissolution of partnership. The deed provided that the partnership of Bond & Bond should be dissolved as at 31 March 1973. Clause 2 read as follows: "All the right title and interest of LAWRENCE BERNARD FEENEY and MAURICE BRIOT CLARE in the partnership to the following, the name of Bond & Bond, the goodwill of Bond & Bond, the Lease of Bond & Bond, the files and registers of Bond & Bond, the furniture of Bond & Bond, the library of Bond & Bond, the outstanding debts of Bond & Bond and the work and (sic) progress in Bond & Bond, excepting one chair, one book-case, two pictures and one table is hereby assigned to Cummins". It was agreed that as from 1 April 1973 Mr. Cummins should carry on the practice of Bond & Bond, under that name, alone. It was -3- also provided that Mr. Feeney should remove the files relating to certain scheduled matters (which did not include Mrs. Pieper's matter), complete those matters, and on completion account to "the partners of Bond & Bond" for the profit costs. On 13 July 1973 Mr. Cummins wrote to Mrs. Pieper "Re your divorce" asking for $50 on account of the costs of Bond & Bond to date. On 8 August the respondent husband filed an answer. On 10 August a reply was filed, signed by Mr. Cummins. Mr. Feeney had gone overseas for a while after the dissolution of the partnership; but he had returned by about August, when he received instructions - of which he told Mr. Cummins - from Mrs. Pieper about trying to settle the divorce. On 30 August Bond & Bond wrote to Mrs. Pieper saying that a valuation of her property would have to be obtained for the hearing (which was due on 12 September) and asking whether evidence had been given in the Metropolitan Children's Court hearing in September 1970. These matters had no doubt been overlooked in the conference which Mr. Cummins had had with Mrs. ° Pieper on 27 August. On 6 September Mr. Cummins telephoned Mrs. Pieper. She told him she was going to get Mr. Feeney to act for her because, he says, "She did not like me in the sense I was too cold about the matter". (Mrs. Pieper says that Mr. Feeney had telephoned her earlier to say that her case was coming on and that he would finish it for her.) Mr. Cummins expostulated, saying amongst other things that he had arranged a conference with counsel for 10 September, and asked her to telephone him on 9 September as to her intentions. She did not do so, and in the meantime on 6 September, unbeknown to Mrs. Pieper, Mr. Feeney filed a notice of change of solicitor and stated that he, "of Meagher De Coek solicitors", ae aaa -4- was now the solicitor acting for Mrs. Pieper. Mr. Cummins received that notice on 9 September and on 10 September Bond & Bond wrote to Meagher De Coek telling them the state of preparation for the case, saying that Bond'& Bond exercised a lien on their file "because of your previous conduct in respect of costs", and that Bond & Bond would send their account to Mrs. Pieper shortly. On 12 September a deed of settlement was entered into between the husband and wife. Mrs. Pieper's signature was witnessed by Mr. Feeney. On the same day a decree nisi for dissolution of the marriage was made. The court ordered inter alia "5. That the costs of the wife assessed and agreed at the sum of seven hundred and fifty dollars ($750.00) be paid by the husband to the wife or to the solicitor for the wife on or before 3lst December 1974" On 12 September Bond & Bond wrote to Mrs. Pieper enclosing an account for costs and disbursements which showed that the total amount said to be due was, after allowing for $20 already paid, $369.14. The particulars began with costs of arranging a conference and taking instructions at that conference on 4 December 1972 and ended with an attendance at court on 12 September 1974 and a conference with counsel. On 18 September Meagher De Coek wrote to Bond & Bond saying that the letter of 12 September had been referred to them and that Mrs. Pieper "instructs us that she requires you to tax her bill". On 23 September 1974 John Pieper wrote to Mr. Feeney as follows: "Further to our telephone conversation of even date enclosed please find my cheque for $700 in full settlement on account submitted in respect of divorce and transfer of Unit 4/11 Manion Avenue, Rosebay". The telephone conversation referred to was one between Mr. Pieper and Mr. Feeney, during which they agreed that if Mr. Pieper made cae = ne RE he -5- - r an immediate 1 payment of $700 Mr. Feeney would accept that amount in fuli satisfaction of his wife's costs of the divorce and conveyancing costs to be incurred in the transfer of Mr. Pieper's interest in the family unit, which had been provided for in the deed of settlement, the deed having been approved by the Supreme Court. Mr. Pieper had got in touch with Mr. Feeney in an endeavour to comply with the court's order and in the belief that Mr. Feeney, whom he had seen in court on 12 September, was Mrs. Pieper's solicitor. It is not suggested that Mr. Feeney did not receive the $700. Mr. Cummins says that he himself has received no part of that amount. On 26 September Bond & Bond wrote to Meagher De Coek. Mr. Cummins had learned, from Messrs. White Murray & Carew, Mr. Pieper's solicitors, of the payment of $700 to Mr. Feeney. The letter referred to the account for $389.14 rendered to Mrs. Pieper on 12 September (in fact it was an account for $369.14) and, obviously by subtracting that amount from $750, arrived at the assumption that Mr. Feeney intended "to make (sic) $360.86 for the work done by you since 6th September 1974", It then mentioned Mrs. Pieper's expressed intention to return to Spain to live, and said that if she did so it would be difficult to find her, serve her, and recover money from her. It then said: "As you have collected the moneys already in respect of the work performed by this firm we would like to know whether you are prepared to pay from the amounts retained by you of our costs of say $300.00, as we are confident that on taxation our costs will exceed the sum of $389.14. We also wish to know whether you will hold the sum of $389.14 in your trust account - rather than have those moneys paid to Mrs. Pieper so that we can ensure that we will get our costs." It was to this letter that the following questions and answers during the cross-examination of Mr. Cummins before me related: "Q. You, in fact, were prepared at one stage to accept a sum considerably less- than that which you subsequently sought to recover from Mrs. Pieper? a $e oe a et Ch, a cnet eae a a ce ~6~' A. That is correct. Q. And in fact, at one stage I suggest you were prepared to split what Mr. Feeney had recovered more or less down the middle? . A. That is correct, so we would not be here today". Nothing further happened (except that on 4 November Bond & Bond wrote to Meagher De Coek complaining that the letter of 26 September had not been answered and making various threats) until 31 January 1975. On that date Bond & Bond wrote to Mrs. Pieper as follows:- "Pursuant to section 12 of the Conveyancing Act 1919 as amended and other Acts, you are hereby notified that the partnership of Lawrence Bernard Feeney, Paul Bernard Cummins and Maurice Briot Clare trading as Bond & Bond was dissolved from the lst April 1973. The partnership assigned all its rights and interest to Paul Bernard Cummins trading as Bond & Bond. You are hereby notified that your debt to this firm as shown on the attached account incurred during the duration of the old firm of-Bond & Bond and the new firm of Bond & Bond is due and payable. We look forward to payment of the said account at your earliest convenience". Mr. Cummins identified "the attached account" in evidence before me: it is part of Exhibit D. It was dated 30 January 1975 and covers work done in connection with Mrs. Pieper's divorce suit from an unspecified date in December 1972 earlier than 12 December up to and including 9 September 1974. It stops there and does not include, as did the account dated 12 September 1974, items up to and including 12 September 1974. Otherwise, the two documents cover the same work, though the earlier one gives more particulars and in some cases different dates. The charges made by the two documents may be analysed as follows: a lt me 12 Sept. 74 30 Jan. 75 Disbursements . 39.14 42.82 ' Costs "exceeding but say" ' 350.00 : Costs ) 336.14 ' Percentages added 283.82 Total 389.14 662.78 Amount paid to date 20.00 20,00 Amount due " $369.14 $642.78 It was probably about this time (though her best recollection is that it was in or about December 1974) that Mrs. Pieper took the account she had received from Bond & Bond to an officer of the Family Law Division of the Supreme Court. He said it appeared to be too large in view of the amount already paid by Mr. Pieper, and advised her to seek to have it adjusted between Bond & Bond and Mr. Feeney's firm. She accordingly took : it to Mr. Feeney, who told her "not to worry, that he would fix everything". On 3 March 1975 Bond & Bond wrote to Mrs. Pieper demanding payment of $642.78 within seven days and threatening proceedings. On 9 June 1975 Mr. Cummins wrote again. This letter referred to previous demands and went on "As you are aware, the debt relates to work done and moneys paid during the period from December 1972 to September 1974, when you apparently withdrew this firm's instructions and presumably you instructed Mr. L. B. Feeney to act on your behalf in the proceedings against your then husband. As you are also ,aware,the legal practice and business known as Bond & Bond is and has been since Ist April 1973 carried on by Mr. P. B. Cummins only. Prior to that date the business had been carried on by Messrs. L. B. Feeney, M. B. Clare and P. B. Cummins, who by agreement made 30th March 1973 absolutely assigned to Mr. P. B. Cummins, ali of their respective right title and interest in the said business, including all debts due to the firm and such right, title and interest as they may have had in or in respect to the said work done and moneys paid and such debt then owing by you to the firm. You have previously been given notice of that assignment, and you are hereby given further notice of such assignment, pursuant to tte et nce RRR ft ne -8- - sé on 12 of the Conveyancing Act 1919 (as amended) an. .ou are required to pay the debt to Mr. Cummins. It =s our contention that he is ,the only person entitled to payment of the sum of $642.78 including such debt and the only person who can give you a valid receipt for its payment." It then said that as "the debt due by you to Mr. Cummins" remained unpaid, action would be commenced withour further notice. Mrs. Pieper did nothing about that letter, for two reasons: she relied on Mr. Feeney's assurance that "he would fix everything", and she was urgently arranging to visit her mother, who was seriously ill, in Spain. Before she left for Spain, she got in touch with Mr. Feeney but got no definite information from him - though he did ask whether she had paid Bond & Bond anything and, on being told she had paid them $50, soundly advised her to pay them no more. (She maintains that she has paid them $50, but other evidence of her having paid more than $20 is lacking.) She arranged with her former husband that during her absence he would attend to any matters that arose through his own solicitors, White, Murray & Carew. After Mrs. Pieper returned from Spain a summons for the alleged debt was served on her. On the advice of her former husband she instructed his solicitor, Mr. Murray of White, Murray & Carew, to act on her behalf. When subsequent documents such as a bankruptcy notice were served on her she gave them to Mr. Murray, believing that he was attending to the matter and that she herself need do nothing. There is no evidence as to how it came about that the next event was that she was accordingly disagreeably surprised on about 14 September 1977 to receive a telegram from the Official Receiver informing her that a sequestration order had been made against her. Mr. Cummins, it is true, said in his affidavit of 6 October 1977 that on 9 November 1976 he wrote direct.to Mrs. Pieper telling her he was going to sign judgment if the money was not paid within seven days; but the a -9— letter itself was not produced, and Mr. Cummins on 22 December 1976 signed an application for the issue of a bankruptcy notice in which he stated, as the accompanying certificate of. judgment showed, that judgment had been obtained by him in the District Court on 15 October 1976. It was a default judgment for $642.78 on the plaintiff's claim and $61.00 costs, making a total of $703.78. The course of the proceedings in bankruptcy was as follows: a bankruptcy notice dated 23 December 1976 requiring the payment of $715.35 (i.e. $703.78 plus $11.57 interest) was duly served on Mrs. Pieper on 21 January 1977; a creditor's petition by Mr. Cummins returnable on 9 August was duly presented on 21 March, alleging a debt of $715.35 and an act of bankruptcy consisting of failure to comply on or before 4 February with the bankruptcy notice; the petition was duly served on Mrs. Pieper on 5 April; on 9 August Mrs. Pieper did not appear and was not represented, but the petitioning creditor was unable to prove service of the petition and I adjourned the further hearing to 8 September; and on that date, there being again no appearance for Mrs. Pieper, though she had been duly served with my order of adjournment, and Rule 22 having been complied with, Franki J.,who had before him only the evidence the effect of which I have summarized in this paragraph, made a sequestration order. Mr. Cummins has taken proceedings against Mr. Feeney in respect of other matters, but not in respect of any part of the $700. He was advised by counsel to sue Mrs. Pieper instead, and so began the proceedings which led to her bankruptcy. In his affidavit of 6 October 1977 Mr. Cummins stated his claim thus: -10- "I say that I am entitled to moneys pursuant to the deed of dissolution of the ... partnership ... and that the debt has been validly assigned to me and that ... Feeney has no legal interest whatsoever in the costs and disbursements of the applicant due to the firm of Bond & Bond, solicitors, of which I am the sole practitioner". In his letter of 31 January quoted above he wrote to Mrs. Pieper of "your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond". The attached account shows that the costs charged for work done "during the duration of the old firm of Bond & Bond", i.e. before 1 April 1973, amounted to $144.63 or, if the appropriate 75% is added, $253.10. Again, in the letter of 9 June 1975, from which also I have quoted above (and in which the provisions of clause 2 of the deed of dissolution of partnership are mis~-stated), he referred to "the sum of $642.78 including such debt" and the words "such debt" appear to mean the debt owing by Mrs. Pieper to Bond & Bond at the date of the deed of dissolution. In evidence, Mr. Cummins said that he became entitled to the debt owed to the "old firm" of Bond & Bond under clause 2 of the deed of dissolution. Clause 2 assigns the "outstanding debts" of Bond & Bond and the "work and (scil. in) progress" of Bond & Bond. According to the account for $642.78 attached to the letter of 31 January 1975, Mrs. Pieper's outstanding debt for costs as at the date of dissolution was $253.10 and the balance ($389.68) was attributable to work in progress or, in the words of s. 38 of the Partnership Act (N.S.W.) 1892, a transaction begun but unfinished at that date. On 23 September 1974 Mr. Pieper had paid Mr. Feeney: $700 in the circumstances I have described. That payment of "the costs of the wife" was clearly made by Mr. Pieper, in pursuance of the order of the Supreme Court, on behalf of Mrs. Pieper. No notice of the -ll- + :the assignment. . fected by clause 2 of the deed of dissolution had then been given to him or to her. Mr. Cummins admitted in evidence that the same costs were covered by the $700 as were covered by the $642.78, though the former sum may also have covered conveyancing costs arising after the decree nisi. The payment to Mr. Feeney discharged Mrs. Pieper from the debt to the partnership: Lindley on Partnership, 13th edn, 173, 251; King v. Smith (1829), 4 Car. & P. 108; 172 E.R. 629. If it be argued that it only discharged her from the debt of $253.10, leaving the balance of $389.68 as a debt still owing to the "new" firm, then the latter debt would not entitle Mr. Cummins to present a creditor's petition: Bankruptcy Act 1966, s.44(1) (a). In my opinion a sequestration order ought not to have been made and it would not have been made had the learned judge who made it been aware of the actual state of affairs as they appear from the evidence which has been put before me: In re Dunn, (1949) Ch. 640, 646. I-should add that on the date of the sequestration order Mrs. Pieper owed a debt secured on the matrimonial home, an unsecured debt of $100, and no other debts apart from the alleged debt to Mr. Cummins. There is evidence that the unsecured debt has been paid and that payments are up to date on the mortgage account, which in the mortgagee's opinion has been maintained satisfactorily. Her former husband has written to her present solicitors that, if the alleged debt is really payable to Bond & Bond, he will pay it. The Official Receiver's report contains nothing adverse to Mrs. Pieper. In my opinion this bankruptcy should be annulled and there is no reason why in my discretion I should decline to annul it. I order that the bankruptcy be annulled, and that the CR NN el rn ter -12- respondent Paul Bernard Cummins pay the applicant's taxed costs of and incidental to the application and her taxed costs (if any) of and incidental to the petition for a sequestration order. PY Cdn eee Min. TUSlice Frente \ $ull9779 IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) No. NSW 553 of 1977 APPLICATION FOR ANNULMENT RE - MARIA CHRISTINA PIEPER THE BANKRUPT Applicant PAUL BERNARD CUMMINS Respondent JUDGE MAKING ORDER: Riley J. DATE OF ORDER: 25 November 1977 WHERE MADE: Sydney ORDERS That the bankruptcy be annulled. That the respondent pay the applicant's taxed costs of and incidental to the application for annulment and her taxed costs (if any) of and incidental to the petition for a sequestration order. -—™~ REASONS FOR JUDGMENT This is an application by Mrs. Maria Christina Pieper for annulment of her bankruptcy, primarily on the ground that the sequestration order ought not to have been made. The applicant divorced her husband. He was ordered to pay her costs, assessed and agreed at $750, to her or her solicitor. He then did pay $700 to the solicitor who was acting for her when the decree nisi was made. A second solicitor, a former partner of the first, later recovered a default judgment against Mrs. Pieper for $703.78 in respect of the same costs. On that judgment he founded the creditor's petition on which the applicant was made bankrupt. He said in evidence before me, "It is a situation that I do not like, but it is the situation"; and he opposes her application for annulment. Mrs. Pieper 1s a Spanish lady who came to Australia, unable to speak English, in 1960. Today her command of English is competent but not excellent. Not unnaturally she does not trust herself to deal unaided with a legal document ("I did not know actual words what it means") and takes the sensible course of handing it to a solicitor for advice and necessary action. in 1963 she married John Pieper. The marriage did not prosper, and she sought legal advice. Her first solicitor was Mr. L. B. Feeney, who conducted a matter for her in the Children's Court in 1970. In about July 1971 Mr. Feeney was joined in partnership, under the name of Bond & Bond, by Mr. P. B. Cummins. (Later there was a third partner, Mr. M. B. Clare, who died some time ago and who played no part in this story.) Mr. Feeney introduced Mrs. Pieper to Mr. Cummins. On 14 December 1972 Bond & Bond on Mrs. Pieper's behalf filed in the Family Law Division of the Supreme Court of -2- New South Wales a petition for dissolution of her marriage. From a file of papers produced on subpoena by Mr. Feeney and admitted in evidence on behalf of the applicant without objection it appears that the petition was signed by Mr. Cummins and a certificate relating to reconciliation was given by him, the address for service being shown as Bond & Bond. Mrs. Pieper does not properly understand the concept of partnership ~ when asked whether she knew what a partner was, she replied "Yes, work together"; but I am satisfied that she knew that the name Bond & Bond had some connection with her proceedings for divorce. She paid the firm $20 on 7 December 1972 and was given one of the firm's receipts. There is no doubt on the evidence that both Mr. Feeney and Mr. Cummins advised her and acted for her in the proceedings for her divorce, though she regarded Mr. Feeney as her solicitor and Mr. Cummins as someone who worked with and for Mr. Feeney and, when Mr. Feeney was absent, took his place. I am of the opinion that for all work done on her behalf up to 31 March 1973 she was a client of Bond & Bond and became indebted for that work to the partnership, and that the conducting of the divorce proceedings was a partnership transaction. On 30 March 1973 Messrs. Feeney, Cummins and Clare entered into a deed of dissolution of partnership. The deed provided that the partnership of Bond & Bond should be dissolved as at 31 March 1973. Clause 2 read as follows: "All the right title and interest of LAWRENCE BERNARD FEENEY and MAURICE BRIOT CLARE in the partnership to the following, the name of Bond & Bond, the goodwill of Bond & Bond, the Lease of Bond & Bond, the files and registers of Bond & Bond, the furniture of Bond & Bond, the library of Bond & Bond, the outstanding debts of Bond & Bond and the work and (sic) progress in Bond & Bond, excepting one chair, one book-case, two pictures and one table is hereby assigned to Cummins". It was agreed that as from 1 April 1973 Mr. Cummins should carry aon the nrewstlnan -f on 2 et bad ee ra al- - -3~ also provided that Mr. Feeney should remove the files relating to certain scheduled matters (which did not include Mrs. Pieper's Iatter), complete those matters, and on completion account to "the partners of Bond & Bond" for the profit costs. On 13 July 1973 Mr. Cummins wrote to Mrs. Pieper "Re your divorce" asking for $50 on account of the costs of Bond & Bond to date. On 8 August the respondent husband filed an answer. On 10 August a reply was filed, signed by Mr. Cummins. Mr. Feeney had gone overseas for a while after the dissolution of the partnership; but he had returned by about August, when he received instructions ~ of which he told Mr. Cummins - from Mrs. Pieper about trying to settle the divorce. On 30 August Bond & Bond wrote to Mrs. Pieper saying that a valuation of her property would have to be obtained for the hearing (which was due on 12 September) and asking whether evidence had been given in the Metropolitan Children's Court hearing in September 1970. These matters had no doubt been overlooked in the conference which Mr. Cummins had had with Mrs. Pieper on 27 August. On 6 September Mr. Cummins telephoned Mrs. Pieper. She told him she was going to get Mr. Feeney to act for her because, he says, "She did not like me in the sense I was too cold about the matter". (Mrs. Pieper says that Mr. Feeney had telephoned her earlier to say that her case was coming on and that he would finish it for her.) Mr. Cummins expostulated, saying amongst other things that he had arranged a conference with counsel for 10 September, and asked her to telephone him on 9 September as to her intentions. She did not do so, and in the meantime on 6 September, unbeknown to Mrs. Pieper, Mr. Feeney filed a notice of change of solicitor and stated that he, "of Meagher De Coek solicitors", ~4- was now the solicitor acting for Mrs. Pieper. Mr. Cummins received thet notice on 9 September and on 10 September Bond & Bond wrote to Meagher De Coek telling them the state of preparation for the case, saying that Bond & Bond exercised a lien on their file "because of your previous conduct in respect of costs", and that Bond & Bond would send their account to Mrs. Pieper shortly. On 12 September a deed of settlement was entered into between the husband and wife. Mrs. Pieper's signature was witnessed by Mr. Feeney. On the same day a decree nisi for dissolution of the marriage was made. The court ordered inter alia "5. That the costs of the wife assessed and agreed at the sum of seven hundred and fifty dollars ($750.00) be paid by the husband to the wife or to the solicitor for the wife on or before 31st December 1974" _ On 12 September Bond & Bond wrote to Mrs. Pieper enclosing an account for costs and disbursements which showed that the total amount said to be due was, after allowing for $20 already paid, $369.14. The particulars began with costs of arranging a conference and taking instructions at that conference on 4 December 1972 and ended with an attendance at court on 12 September 1974 and a conference with counsel. On 18 September Meagher De Coek wrote to Bond & Bond saying that the letter of 12 September had been referred to them and that Mrs. Pieper "instructs us that she requires you to tax her bill". On 23 September 1974 John Pieper wrote to Mr. Feeney as follows: "Further to our telephone conversation of even date enclosed please find my cheque for $700 in full settlement on account submitted 1n respect of divorce and transfer of Unit 4/11 Manion Avenue, Rosebay". The telephone conversation referred to was one between Mr. Pieper and Mr. Feeney, during which they agreed that if Mr. Pieper made -5- an immediate cash payment of $700 Mr. Feeney would accept that amount in full satisfaction of his wife's costs of the divorce and conveyancing costs to be incurred in the transfer of Mr. Pieper's interest in the family unit, which had been provided for in the deed of settlement, the deed having been approved by the Supreme Court. Mr. Pieper had got in touch with Mr. Feeney in an endeavour to comply with the court's order and in the belief that Mr. Feeney, whom he had seen in court on 12 September, was Mrs. Pieper's solicitor. It is not suggested that Mr. Feeney did not receive the $700. Mr. Cummins says that he himself has received no part of that amount. On 26 September Bond & Bond wrote to Meagher De Coek. Mr. Cummins had learned, from Messrs. White Murray & Carew, Mr. Pieper's solicitors, of the payment of $700 to Mr. Feeney. The letter referred to the account for $389.14 rendered to Mrs. Pieper on 12 September (in fact it was an account for $369.14) and, obviously by subtracting that amount from $750, arrived at the assumption that Mr. Feeney intended "to make (sic) $360.86 for the work done by you since 6th September 1974". It then mentioned Mrs. Pieper's expressed intention to return to Spain to live, and said that if she did so it would be difficult to find her, serve her, and recover money from her. It then said: "As you have collected the moneys already in respect of the work performed by this firm we would like to know whether you are prepared to pay from the amounts retained by you of our costs of say $300.00, as we are confident that on taxation our costs will exceed the sum of $389.14. We also wish to know whether you will hold the sum of $389.14 in your trust account rather than have those moneys paid to Mrs. Pieper so that we can ensure that we will get our costs." It was to this letter that the following questions and ansvers during the cross-examination of Mr. Cummins before me related: "Q. You, in fact, were prepared at one stage to accept a sum considerably less than that which you subsequently sought to recover from Mrs. Pieper? -6- A. That is correct. Q. And in fact, at one stage I suggest you were prepared to split what Mr. Feeney had recovered more or less down the middle? A. That is correct, so we would not be here today". Nothing further happened (except that on 4 November Bond & Bond wrote to Meagher De Coek complaining that the letter of 26 September had not been answered and making various threats) until 31 January 1975. On that date Bond & Bond wrote to Mrs. Pieper as follows:- "Pursuant to section 12 of the Conveyancing Act 1919 as amended and other Acts, you are hereby notified that the partnership of Lawrence Bernard Feeney, Paul Bernard Cummins and Maurice Briot Clare trading as Bond & Bond was dissolved from the lst April 1973. The partnership assigned all its rights and interest to Paul Bernard Cummins trading as Bond & Bond. You are hereby notified that your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond is due and payable. We look forward to payment of the said account at 'your earliest convenience". Mr. Cummins identified "the attached account" in evidence before me: it is part of Exhibit D. It was dated 30 January 1975 and covers work done in connection with Mrs. Pieper's divorce suit from an unspecified date in December 1972 earlier than 12 December up to and including 9 September 1974. It stops there and does not include, as did the account dated 12 September 1974, items up to and including 12 September 1974. Otherwise, the two documents cover the same work, though the earlier one gives more particulars and in some cases different dates. The charges made by the two documents may be analysed as follows: 12 Sept. 74 30 Jan. Disbursements 39.14 42.82 Costs "exceeding but say" 350.00 Costs 336.14 Percentages added 283.82 Total 389.14 662.78 Amount paid to date 20.00 20.00 Amount due $369.14 $642.78 It was probably about this time (though her best recollection is that it was in or about December 1974) that Mrs. Pieper took the account she had received from Bond & Bond to an officer of the Family Law Division of the Supreme Court. He said 1t appeared to be too large in view of the amount already paid by Mr. Pieper, and advised her to seek to have it adjusted between Bond & Bond and Mr. Feeney's firm. She accordingly took it to Mc. Feeney, who told her "not to worry, that he would fix everything". On 3 March 1975 Bond & Bond wrote to Mrs. Pieper demanding payment of $642.78 within seven days and threatening proceedings. On 9 June 1975 Mr. Cummins wrote again. This letter referred to previous demands and went on "As you are aware, the debt relates to work done and moneys paid during the period from December 1972 to September 1974, when you apparently withdrew this firm's instructions and presumably you instructed Mr. L. B. Feeney to act on your behalf in the proceedings against your then husband. As you are also ,aware,the legal practice and business known as Bond & Bond is and has been since Ist April 1973 carried on by Mr. P. B. Cummins only. Praor to that date the business had been carried on by Messrs. L. B. Feeney, M. B. Clare and P. B. Cummins, who by agreement made 30th March 1973 absolutely assigned to Mr. P. B. Cummins, all of their respective right title and interest in the said business, includ all debts due to the firm and such right, title and interest as they may have had in or in respect to the said work done and moneys paid and such debt then owing by you to the firm. You have previously been given notice of that assignment, and you are hereby given further notice of such assignment, pursuant to ing -8- section 12 of the Conveyancing Act 1919 (as amended) and you are required to pay the debt to Mr. Cummins. It is our contention that he is the only person entitled to payment of the sum of $642.78 including such debt and the only person who can give you a valid receipt for its payment." It then said that as "the debt due by you to Mr. Cummins" remained unpaid, action would be commenced withour further notice. Mrs. Pieper did nothing about that letter, for two reasons: she relied on Mr. Feeney's assurance that "he would fix everything", and she was urgently arranging to visit her mother, who was seriously ill, 1n Spain. Before she left for Spain, she got 1n touch with Mr. Feeney but got no definite information from him - though he did ask whether she had paid Bond & Bond \ anything and, on being told she had paid them $50, soundly advised her to pay them no more. (She maintains that she has paid them $50, but other evidence of her having paid more than $20 is lacking.) ' She arranged with her former husband that during her absence he would attend to any matters that arose through his own solicitors, White, Murray & Carew. After Mrs. Pieper returned from Spain a summons for the alleged debt was served on her. On the advice of her former husband she instructed his solicitor, Mr. Murray of White, Murray & Carew, to act on her behalf. When subsequent documents such as a bankruptcy notice were served on her she gave them to Mr. Murray, believing that he was attending to the matter and that she herself need do nothing. There is no evidence as to how it came about that the next event was that she was accordingly disagreeably surprised on about 14 September 1977 to receive a telegram from the Official Receiver informing her that a sequestration order had been made against her. Mr. Cummins, it 1s true, said in his affidavit of 6 October 1977 that on 9 November 197 he wrote direct to Mrs. Pieper telling her he was going to sign -~9~ letter itself was not produced, and Mr. Cummins on 22 December 1976 signed an application for the issue of a bankruptcy notice in which he stated, as the accompanying certificate of judgment showed, that judgment had been obtained by him in the District Court on 15 October 1976. It was a default judgment for $642.78 on the plaintiff's claim and $61.00 costs, making a total of $703.78. The course of the proceedings in bankruptcy was as follows: a bankruptcy notice dated 23 December 1976 requiring the payment of $715.35 (i.e. $703.78 plus $11.57 interest) was duly served on Mrs. Pieper on 21 January 1977; a creditor's petition by Mr. Cummins returnable on 9 August was duly presented on 21 March, alleging a debt of $715.35 and an act of bankruptcy consisting of failure to comply on or before 4 February with the bankruptcy notice; the petition was duly served on Mrs. Pieper on 5 April; on 3 August Mrs. Pieper did not appear and was not represented, but the petitioning creditor was unable to prove service of the petition and I adjourned the further hearing to 8 September; and on that date, there being again no appearance for Mrs. Pieper, though she had been duly served with my order of adjournment, and Rule 22 having been complied with, Franki J.,who had before him only the evidence the effect of which I have summarized in this paragraph, made a sequestration order. Mr. Cummins has taken proceedings against Mr. Feeney in respect of other matters, but not in respect of any part of the $700. He was advised by counsel to sue Mrs. Pieper instead, and so began the proceedings which led to her bankruptcy. In his affidavit of 6 October 1977 Mr. Cummins stated his claim thus: -10- "I say that I am entitled to moneys pursuant to the deed of dissolution of the ... partnership ... and that the debt has been validly assigned to me and ' that ... Feeney has no legal interest whatsoever in ' the costs and disbursements of the applicant due to the firm of Bond & Bond, solicitors, of which I am the sole practitioner". In his letter of 31 January quoted above he wrote to Mrs. Pieper of "your debt to this firm as shown on the attached account incurred during the duration of the old fixm of Bond & Bond and the new firm of Bond & Bond". The attached account shows that the costs charged for work done "during the duration of the old firm of Bond & Bond", 1.e. before 1 April 1973, amounted - to $144.63 or, if the appropriate 75% is added, $253.10. Again, in the letter of 9 June 1975, from which also I have quoted above (and in which the provisions of clause 2 of the deed of dissolution of partnership are mis-stated) , he referred to "the , sum of $642.78 including such debt" and the words "such debt" appear to mean the debt owing by Mrs. Pieper to Bond & Bond at the date of the deed of dissolution. In evidence, Mr. Cummins said that he became entitled to the debt owed to the "old firm" of Bond & Bond under clause 2 of the deed of dissolution. Clause 2 assigns the "outstanding debts" of Bond & Bond and the "work and (scil. in) progress" of Bond & Bond. According to the account for $642.78 attached to the letter of 31 January 1975, Mrs. Pieper's outstanding debt for costs as at the date of dissolution was $253.10 and the balance ($389.68) was attributable to work in progress or, in the words of s. 38 of the Partnership Act (N.S.W.) 1892, a transaction begun but unfinished at that date. On 23 September 1974 Mr. Pieper had paid Mr. Feeney $700 in the circumstances I have described. That payment of "the costs of the wife" was clearly made by Mr. Pieper, in pursuance of the order of the Supreme Court, on behalf of Mrs. Pieper. No notice of the -1li- the assignment effected by clause 2 of the deed of dissolution had then been given to him or to her. Mr. Cummins admitted in evidence that the same costs were covered by the $700 as were covered by the $642.78, though the former sum may also have covered conveyancing costs arising after the decree nisi. The ' payment to Mr. Feeney discharged Mrs. Pieper from the debt to the partnership: Lindley on Partnership, 13th edn, 173, 251; King v. Smith (1829), 4 Car. & P. 108; 172 E.R. 629. If it be argued that it only discharged her from the debt of $253.10, leaving' the balance of $389.68 as a debt still owing to the "new" firm, then the latter debt would not entitle Mr. Cummins to present a creditor's petition: Bankruptcy Act 1966, s.44(1) (a). In my opinion a sequestration order ought not to have been made and it would not have been made had the learned judge who made it been aware of the actual state of affairs as they appear from the evidence which has been put before me: In re Dunn, (1949) Ch. 640, 646. I should add that on the date of the sequestration order Mrs. Pieper owed a debt secured on the matrimonial home, an unsecured debt of $100, and no other debts apart from the alleged debt to Mr. Cummins. There is evidence that the unsecured debt has been paid and that payments are up to date on the mortgage account, which in the mortgagee's opinion has been maintained satisfactorily. Her former husband has written to her present solicitors that, if the alleged debt is really payable to Bond & Bond, he will pay it. The Official Receiver's report ne contains nothing adverse to Mrs. Pieper. In my opinion this bankruptcy should be annulled and there is no reason why in my discretion I should decline to annul it. I order that the bankruptcy be annulled, and that the ere -12- respondent Paul Bernard Cummins pay the applicant's taxed costs of and incidental to the application and her taxed costs (if any) of and incidental to the petition for a sequestration order. ! y nace nati . oe ma i LON . . CeNata BVA N-sw- $3 of 141 Ppphicatior Fo pwulLaent Ae Mana Chestimt Preper : Ae Bawlfeupr — bb hice Paul Reew Hep Cox urmrS Resexnert | ' . 5 at | TJ UNGE ma Kine oeDeER®. BoB RE i | Nate oF Crace Ast NevEerbe 149) | Wileee mrdé , S) we]. WS ag Do-to-147)- Bf a7 Date of Hemerve | . qe tt 147 | Coussel For FUbp Lecce | —B. Gles | SAY NX shi n a's ~ Dd. € Rakhi we wt -(-0° - Roe h) - < vi INSAueting Golierues Bova» Raw ~ Ike Carlen Gao Sr sf rer een a . ORIG iInAe . ee mt IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) "No. NSW 553 of 1977 APPLICATION FOR ANNULMENT RE ~ MARIA CHRISTINA PIEPER THE BANKRUPT Applicant PAUL BERNARD CUMMINS Respondent JUDGE MAKING ORDER: Riley J. DATE OF ORDER: 25 November 1977 WHERE MADE: Sydney ORDERS 1. That the bankruptcy be annulled. 2. That the respondent pay the applicant's taxed costs of and incidental to the application for annulment and her taxed costs (if any) of and incidental to the petition for a sequestration order. REASONS FOR JUDGMENT This is an application by Mrs. Maria Christina Pieper for annulment of her bankruptcy, primarily on the ground that the sequestration order ought not to have been made. The applicant divorced her husband. He was ordered to pay her costs, assessed and agreed at $750, to her or her solicitor. He then aid pay $700 to the solicitor who was acting for her when the decree nisi was made. A second solicitor, a former partner of the first, later recovered a default judgment against Mrs. Pieper for $703.78 in respect of the same costs. On that judgment he founded the creditor's petition on which the applicant was made bankrupt. He said in evidence before me, "It is a situation that I do not like, but it is the situation"; and he opposes her application for annulment. Mrs. Pieper is a Spanish lady who came to Australia, unable to Speak English, in 1960. Today her command of English is competent but not excellent. Not unnaturally ste does not trust herself to deal unaided with a legal document ("I did not know actual words what it means") and takes the sensible course of handing it to a solicitor for advice and necessary action. In 1963 she married John Pieper. The marriage did not prosper, and she sought legal advice. Her first solicitor was Mr. L. B. Feeney, who conducted a matter for her in the Children's Court in 1970. In about July 1971 Mr. Feeney was joined in partnership, under the name of Bond & Bond, by Mr. P. B. Cummins. (Later there was a third partner, Mr. M. B. Clare, who died some time ago and who played no part in this story.) Mr. Feeney introduced Mrs. Pieper to Mr. Cummins. On 14 December 1972 Bond & Bond on Mrs. Pieper's behalf filed in the Family Law Division of the Supreme Court of ~2- New South Wales a petition for dissolution of her marriage. From a file of papers produced on subpoena by Mr. Feeney and admitted in evidence on behalf of the applicant without objection it appears that the petition was signed by Mr. Cummins and a certificate relating to reconciliation was given by him, the address for service being shown as Bond & Bond. Mrs. Pieper does not properly understand the concept of partnership - when asked whether she knew what a partner was, she replied "Yes, work together"; but I am satisfied that she knew that the name Bond & Bond had some connection with her proceedings for divorce. She paid the firm $20 on 7 December 1972 and was given one of the firm's receipts. There is no doubt on the evidence that both Mr. Feeney and Mr. Cummins advised her and acted for her in the proceedings for her divorce, though she regarded Mr. Feeney as her solicitor and Mr. Cummins as someone who worked with and for Mr. Feeney and, when Mr. Feeney was absent, took his place. I am of the opinion that for all work done on her behalf up to 31 March 1973 she was a client of Bond & Bond and became indebted for that work to the partnership, and that the conducting of the divorce proceedings was a partnership transaction. On 30 March 1973 Messrs. Feeney, Cummins and Clare entered into a deed of dissolution of partnership. The deed provided that the partnership of Bond & Bond should be dissolved as at™31 March 1973. Clause 2 read as follows: "All the right title and interest of LAWRENCE BERNARD FEENEY and MAURICE BRIOT CLARE in the partnership to the following, the name of Bond & Bond, the goodwill of Bond & Bond, the Lease of Bond & Bond, the files and registers of Bond & Bond, the furniture of Bond & Bond, the library of Bond & Bond, the outstanding debts of Bond & Bond and the work and (sic) progress in Bond & Bond, excepting one chair, one book-case, two pictures and one table is hereby assigned to Cummins". It was agreed that as from 1 April 1973 Mr. Cummins should carry on the practice of Bond & Bond, under that name, alone. It was eee Fa et ot -3- - also provided =< Mr. Feeney should remove the files relating to certain schedul.d matters (which did not include Mrs. Pieper's matter), complete those matters, and on completion account to "the partners of Bond & Bond" for the profit costs. On 13 July 1973 Mr. Cummins wrote to Mrs. Pieper "Re your divorce" asking for $50 on account of the costs of Bond & Bond to date. On 8 August the respondent husband filed an answer. On 10 August a reply was filed, signed by Mr. Cummins. Mr. Feeney had gone overseas for a while after the dissolution of the partnership; but he had returned by about August, when he received instructions - of which he told Mr. Cummins - from Mrs. Pieper about trying to settle the divorce. On 30 August Bond & Bond wrote to Mrs. Pieper saying that a valuation of her property would have to be obtained for the hearing (which was due on 12 September) and asking whether evidence had been given in the Metropolitan Children's Court hearing in September 1970. These matters had no doubt been overlooked in the conference which Mr. Cummins had had with Mrs. Pieper on 27 August. On 6 September Mr. Cummins telephoned Mrs. Pieper. She told him she was going to get Mr. Feeney to act for her because, he says, "She did not like me in the sense I was too cold about the matter". (Mrs. Pieper says that Mr. Feeney had telephoned her earlier to say that her case was coming on and that he would finish it for her.) Mr. Cummins expostulated, saying amongst other things that he had arranged a conference with counsel for 10 September, and asked her to telephone him on 9 September as to her intentions. She did not do so, and in the meantime on 6 September, unbeknown to Mrs. Pieper, Mr. Feeney filed a notice of change of solicitor and stated that he, "of Meagher De Coek solicitors", Fhe ~4- was now the solicitor acting for Mrs. Pieper. Mr. Cummins received that notice on 9 September and on 10 September Bond & Bond wrote to Meagher De Coek telling them the state of preparation for the case, saying that Bond & Bond exercised a lien on their file "because of your previous conduct in respect of costs", and that Bond & Bond would send their account to Mrs. Pieper shortly. On 12 September a deed of settlement was entered into between the husband and wife. Mrs. Pieper's signature was witnessed by Mr. Feeney. On the same day a decree nisi for dissolution of the marriage was made. The court ordered inter alia "5. That the costs of the wife assessed and agreed at the sum of seven hundred and fifty dollars ($750.00) be paid by the husband to the wife or to the solicitor for the wife on or before 31st December 1974" On 12 September Bond & Bond wrote to Mrs. Pieper enclosing an account for costs and disbursements which showed that the total amount said to be due was, after allowing for $20 already paid, $369.14. The particulars began with costs of arranging a conference and taking instructions at that conference on 4 December 1972 and ended with an attendance at court on 12 September 1974 and a conference with counsel. On 18 September Meagher De Coek wrote to Bond & Bond saying that the letter of 12 September had been referred to them and that Mrs. Pieper "instructs us that she requires you to tax her bill". On 23 September 1974 John Pieper wrote to Mr. Feeney as follows: "Further to our telephone conversation of even date enclosed please find my cheque for $700 in full settlement on account submitted in respect of divorce and transfer of Unit 4/11 Manion Avenue, Rosebay". The telephone conversation referred to was one between Mr. Pieper and Mr. Feeney, during which they agreed that if Mr. Pieper made ~5- an immediate cash payment of $700 Mr. Feeney would accept that amount in full satisfaction of his wife's costs of the divorce and conveyancing costs to be incurred in the transfer of Mr. Pieper's interest in the family unit, which had been provided for in the deed of settlement, the deed having been approved by the Supreme Court. Mr. Pieper had got in touch with Mr. Feeney in an endeavour to comply with the court's order and in the belief that Mr. Feeney, whom he had seen in court on 12 September, was Mrs. Pieper's solicitor. It is not suggested that Mr. Feeney did not receive the $700. Mr. Cummins says that he himself has received no part of that amount. On 26 September Bond & Bond wrote to Meagher De Coek. Mr. Cummins had learned, from Messrs. White Murray & Carew, Mr. Pieper's solicitors, of the payment of $700 to Mr. Feeney. The letter referred to the account for $389.14 rendered to Mrs. Pieper on 12 September (in fact it was an account for $369.14) and, obviously by subtracting that amount from $750, arrived at the assumption that Mr. Feeney intended "to make (sic) $360.86 for the work done by you since 6th September 1974". It then mentioned Mrs. Pieper's expressed intention to return to Spain to live, and said that if she did so it would be difficult to find her, serve her, and recover money from her. It then said: "As you have collected the moneys already in respect of the work performed by this firm we would like to know whether you are prepared to pay from the amounts retained by you of our costs of say $300.00, as we are confident that on taxation our costs will exceed the sum of $389.14. We also wish to know whether you will hold the sum of $389.14 in your trust account rather than have those moneys paid to Mrs. Pieper so that we can ensure that we will get our costs." It was to this letter that the following questions and answers during the cross-examination of Mr. Cummins before me related: "QO. You, in fact, were prepared at one stage to accept a sum considerably less than that which you subsequently sought to recover from Mrs. Pieper? ne a i ey ol a -6- - A. -hat is correct. Q. And in fact, at one stage I suggest you were prepared to split what Mr. Feeney had recovered more or less down the middle? A. That is correct, so we would not be here today". Nothing further happened (except that on 4 November Bond & Bond wrote to Meagher De Coek complaining that the letter of 26 September had not been answered and making various threats) until 31 January 1975. On that date Bond & Bond wrote to Mrs. Pieper as follows:- "Pursuant to section 12 of the Conveyancing Act 1919 as amended and other Acts, you are hereby notified that the partnership of Lawrence Bernard Feeney, Paul Bernard Cummins and Maurice Briot Clare trading as Bond & Bond was dissolved from the Ist April 1973. The partnership assigned all its rights and interest to Paul Bernard Cummins trading as Bond & Bond. You are hereby notified that your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond is due and payable. We look forward to payment of the said account at your earliest convenience". Mr. Cummins identified "the attached account" in evidence before me: it is part of Exhibit D. It was dated 30 January 1975 and covers work done in connection with Mrs. Pieper's divorce suit from an unspecified date in December 1972 earlier than 12 December up to and including 9 September 1974. It stops there and does not include, as did the account dated 12 September 1974, items up to and including 12 September 1974. Otherwise, the two documents cover the same work, though the earlier one gives more particulars and in some cases different dates. The charges made by the two documents may be analysed as follows: 12 Sept. 74 30 Jan. 75 Disbursements 39.14 42.82 Costs "exceeding but say" 350.00 . Costs 336.14 Percentages added 283.82 Total 389.14 662.78 Amount paid to date 20.00 20.00 Amount due ° $369.14 $642.78 It was probably about this time (though her best recollection is that it was in or about December 1974) that Mrs. Pieper took the account she had received from Bond & Bond to an officer of the Family Law Division of the Supreme Court. He said it appeared to be too large in view of the amount already paid by Mr. Pieper, and advised her to seek to have it adjusted between Bond & Bond and Mr. Feeney's firm. She accordingly took it to Mr. Feeney, who told her "not to worry, that he would fix everything". On 3 March 1975 Bond & Bond wrote to Mrs. Pieper demanding payment of $642.78 within seven days and threatening proceedings. On 9 June 1975 Mr. Cummins wrote again. This letter referred to previous demands and went on "As you are aware, the debt relates to work done and moneys paid during the period from December 1972 to September 1974, when you apparently withdrew this firm's instructions and presumably you instructed Mr. L. B. Feeney to act on your behalf in the proceedings against your then husband. As you are also ,aware,the legal practice and business known as Bond & Bond is and has been since lst April 1973 carried on by Mr. P. B. Cummins only. Prior to that date the business had been carried on by Messrs. L. B. Feeney, M. B. Clare and P. B. Cummins, who by agreement made 30th March 1973 absolutely assigned to Mr. P. B. Cummins, all of their respective right title and interest in the said business, including all debts due to the firm and such right, title and interest as they may have had in or in respect to the said work done and moneys paid and such debt then owing by you to the firm. You have previously been given notice of that assignment, and you are hereby given further notice of such assignment, pursuant to teeters ais a a ee ee me Re ee -8- section 12 of the Conveyancing Act 1919 (as amended) and you are required to pay the debt to Mr. Cummins. It is our contention that he is the only person entitled to payment of the sum of $642.78 including such debt and the only person who can give you a valid receipt for its payment."' It then said that as "the debt due by you to Mr. Cummins" remained unpaid, action would be commenced withour further notice. Mrs. Pieper did nothing about that letter, for two reasons: she relied on Mr. Feeney's assurance that "he would fix everything", and she was urgently arranging to visit her mother, who was seriously ill, in Spain. Before she left for Spain, she got in touch with Mr. Feeney but got no definite information from him - though he did ask whether she had paid Bond & Bond anything and, on being told she had paid them $50, soundly advised her to pay them no more. (She maintains that she has paid them $50, but other evidence of her having paid more than $20 is lacking.) She arranged with her former husband that during her absence he would attend to any matters that arose through his own solicitors, White, Murray & Carew. ' After Mrs. Pieper returned from Spain a summons for the alleged debt was served on her. On the advice of her former husband she instructed his solicitor, Mr. Murray of White, Murray & Carew, to act on her behalf. When subsequent documents such as a bankruptcy notice were served on her she gave them to Mr. Murray, believing that he was attending to the matter and that she herself need do nothing. There is no evidence as to how it came about that the next event was that she was accordingly disagreeably surprised on about 14 September 1977 to receive a telegram from the Official Receiver informing her that a sequestration order had been made against her. Mr. Cummins, it is true, said in his affidavit of 6 October 1977 that on 9 November 197€ he wrote direct to Mrs. Pieper telling her he was going to sign judgment if the money was not paid within seven days; but the a ee ee ee ee Ah alle at ete IO sl eke et -~9- letter itself ~~. not produced, and Mr. Cummins on 22 December 1976 signed an upplication for the issue of a bankruptcy notice in which he stated, as the accompanying certificate of judgment showed, that judgment had been obtained by him in the District Court on 15 October 1976. It was a default judgment for $642.78 on the plaintiff's claim and $61.00 costs, making a total of $703.78. The course of the proceedings in bankruptcy was as follows: a bankruptcy notice dated 23 December 1976 requiring the payment of $715.35 (i.e. $703.78 plus $11.57 interest) was duly served on Mrs. Pieper on 21 January 1977; a creditor's petition by Mr. Cummins returnable on 9 August was duly presented on 21 March, alleging a debt of $715.35 and an act of bankruptcy consisting of failure to comply on or before 4 February with the bankruptcy notice; the petition was duly served on Mrs. Pieper on 5 April; on 9 August Mrs. Pieper did not appear and was not represented, but the petitioning creditor was unable to prove service of the petition and I adjourned the further hearing to 8 September; and on that date, there being again no appearance for Mrs. Pieper, though she had been duly served with my order of adjournment, and Rule 22 having been complied with, Franki J.,who had before him only the evidence the effect of which I have summarized in this paragraph, made a sequestration order. Mr. Cummins has taken proceedings against Mr. Feeney in respect of other matters, but not in respect of any part of the $700. He was advised by counsel to sue Mrs. Pieper instead, and so began the proceedings which led to her bankruptcy. In his affidavit of 6 October 1977 Mr. Cummins stated his claim thus: ~10- "I say that I am entitled to moneys pursuant to the deed of dissolution of the ... partnership ... and that the debt has been validly assigned to me and that ... Feeney has no legal interest whatsoever in the costs and disbursements of the applicant due to the firm of Bond & Bond, solicitors, of which I am the sole practitioner". In his letter of 31 January quoted above he wrote to Mrs. Pieper of "your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond". The attached account shows that the costs charged for work done "during the duration of the old firm of Bond & Bond", i.e. before 1 April 1973, amounted to $144.63 or, if the appropriate 75% is added, $253.10. Again, in the letter of 9 June 1975, from which also I have quoted above (and in which the provisions of clause 2 of the deed of dissolution of partnership are mis-stated), he referred to "the sum of $642.78 including such debt" and the words "such debt" appear to mean the debt owing by Mrs. Pieper to Bond & Bond at the date of the deed of dissolution. In evidence, Mr. Cummins said that he became entitled to the debt owed to the "old firm" of Bond & Bond under clause 2 of the deed of dissolution. Clause 2 assigns the "outstanding débts" of Bond & Bond and the "work and (scil. in) progress" of Bond & Bond. According to the account for $642.78 attached to the letter of 31 January 1975, Mrs. Pieper's outstanding debt for costs as at the date of dissolution was $253.10 and the balance ($389.68) was attributable to work in progress or, in the words of s. 38 of the Partnership Act (N.S.W.) 1892, a transaction begun but unfinished at that date. On 23 September 1974 Mr. Pieper had paid Mr. Feeney $700 in the circumstances I have described. That payment of "the costs of the wife" was clearly made by Mr. Pieper, in pursuance of the order of the Supreme Court, on behalf of Mrs. Pieper. No notice of the -li- the assignment effected by clause 2 of the deed of dissolution L had then been given to him or to her, Mr. Cummins admitted in evidence that the same costs were covered by the $700 as were covered by the $642.78, though the former sum may also have covered conveyancing costs arising after the decree nisi. The payment to Mr. Feeney discharged Mrs. Pieper from the debt to the partnership: Lindley on Partnership, 13th edn, 173, 251; King v. Smith (1829), 4 Car. & P. 108; 172 E.R. 629. If it be argued that it only discharged her from the debt of $253.10, leaving ' the balance of $389.68 as a debt still owing to the "new" firm, then the latter debt would not entitle Mr. Cummins to present a creditor's petition: Bankruptcy Act 1966, s.44(1) (a). In my opinion a sequestration order ought not to have been made and it would not have been made had the learned judge who made it been aware of the actual state of affairs as they appear from the evidence which has been put before me: In re Dunn, (1949) Ch. 640, 646. I should add that on the date of the sequestration order Mrs. Pieper owed a debt secured on the matrimonial home, an unsecured debt of $100, and no other debts apart from the alleged debt to Mr. Cummins. There is evidence that the unsecured debt has been paid and that payments are up to date on the mortgage account, which in the mortgagee's opinion has been maintained satisfactorily. Her former husbhand has written to her present solicitors that, if the alleged debt is really payable to Bond & Bond, he will pay it. The Official Receiver's report contains nothing adverse to Mrs. Pieper. In my opinion this bankruptcy should be annulled and there is no reason why in my discretion I should decline to annul it. I order that the bankruptcy be annulled, and that the ne a -12- respondent Pau. Bernard Cummins pay the applicant's taxed costs of and incidental to the application and her taxed costs (if any) of and incidental to the petition for a sequestration order. [NW iTe fedeeal Co +) wt "Au veRAEIE ; Ge Metal ywisie TJ uh Ge ma Kr we oO R2OER. ' WHA nia dé ' Nae of Heareevt : Z NMRudind Sele. " Gusscel Por R as ' Ny STRUCH wb Coolie 1ESJomdengT S4}17 Nsw S32 of 141) Abbh tation! poe 19 wee Lun ra ut Riz Maru Grice rt Pieper tte Baw! (Rupr —Abpl SiScis ee Pau Beew neo Camus Aesbvnert - BR Riley asd Mevernb& 1977 spdvep NS" ! Ao -te -1472- ee le TET, Fed 147) 8. Coles Rakhi we jo, Com Bailes Wea Cort ows ooh, N-& w/ S. go Leemes Ibo Castlereagh Sr 84 / wy : ORIG oe Ad —_— oo IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) No. NSW 553 of 1977 APPLICATION FOR ANNULMENT RE - MARTA CHRISTINA PIEPER ! THE BANKRUPT Applicant le PAUL BERNARD CUMMINS a Respondent \J a y ' JUDGE MAKING ORDER: Riley d. . DATE OF ORDER: 25 November 1977 | WHERE MADE: Sydney |ORDERS t 1. That the bankruptcy be annulled. 2. That the respondent pay the applicant's taxed costs : of and incidental to the application for annulment and her taxed costs (if any) of and incidental to the petition for a sequestration order. REASONS FOR JUDGMENT This is an application by Mrs. Maria Christina Pieper for annulment of her bankruptcy, primarily on the ground that the sequestration order ought not to have been made. The applicant divorced her husband. He was ordered to pay her costs, assessed and agreed at $750, to her or her solicitor. He then did pay $700 to the solicitor who was acting for her when the decree nisi was made. A second solicitor, a former partner of the first, later recovered a default judgment against Mrs. Pieper for $703.78 in respect of the same costs. On that judgment he founded the creditor's petition on which the applicant was made bankrupt. He said in evidence before me, "It is a situation that I do not like, but it is the situation"; and he opposes her application for annulment. Mrs. Pieper is a Spanish lady who came to Australia, unable to speak English, in 1960. 'Today her command of English is competent but not excellent. Not unnaturally she does not trust herself to deal unaided with a legal document ("I did not know actual words what it means") and takes the sensible course of handing it to a solicitor for advice and necessary action. In 1963 she married John Pieper. The marriage did not prosper, and she sought legal advice. Her first solicitor was Mr. L. B. Feeney, who conducted a matter for her in the Children's Court in 1970. In about July 1971 Mr. Feeney was joined in partnership, under the name of Bond & Bond, by Mr. P. B. Cummins. (Later there was a third partner, Mr. M. B. Clare, who died some time ago and who played no part in this story.) Mr. Feeney introduced Mrs. Pieper to Mr. Cummins. On 14 December 1972 Bond & Bond on Mrs. Pieper's behalf filed in the Family Law Division of the Supreme Court of -2- - + rh New South Wal ° petition for dissolution of her marriage. From a file of papers produced on subpoena by Mr. Feeney and admitted in evidence on behalf of the applicant without objection it appears that the petition was signed by Mr. Cummins and a certificate relating to reconciliation was given by him, the address for service being shown as Bond & Bond. Mrs. Pieper does not properly understand the concept of partnership - when asked whether she knew what a partner was, she replied "Yes, work together"; but I am satisfied that she knew that the name Bond & Bond had some connection with her proceedings for divorce. She paid the firm $20 on 7 December 1972 and was given one of ¢ the firm's receipts. There is no doubt on the evidence that : both Mr. Feeney and Mr. Cummins advised her and acted for her in the proceedings for her divorce, though she regarded Mr. Feeney as her solicitor and Mr. Cummins as someone who worked with and for Mr. Feeney and, when Mr. Feeney was absent, took his place. I am of the opinion that for all work done on her behalf up to 31 March 1973 she was a client of Bond & Bond and became indebted for that work to the partnership, and that the conducting of the divorce proceedings was a partnership transaction. On 30 March 1973 Messrs. Feeney, Cummins and Clare entered into a deed of dissolution of partnership. The deed provided that the partnership of Bond & Bond should be dissolved as at 31 March 1973. Clause 2 read as follows: "All the right title and interest of LAWRENCE BERNARD FEENEY and MAURICE BRIOT CLARE in the partnership to the following, the name of Bond & Bond, the goodwill of Bond & Bond, the Lease of Bond & Bond, the files and registers of Bond & Bond, the furniture of Bond & Bond, the library of Bond & Bond, the outstanding debts of Bond & Bond and the work and (sic) progress in Bond & Bond, excepting one chair, one book-case, two pictures and one table is hereby assigned to Cummins". It was agreed that as from 1 April 1973 Mr. Cummins should carry on the practice of Bond & Bond, under that name, alone. It was ~3- also provided that Mr. Feeney should remove the files relating to certain scheduled matters (which did not include Mrs. Pieper's matter), complete those matters, and on completion account to "the partners of Bond & Bond" for the profit costs. On 13 July 1973 Mr. Cummins wrote to Mrs. Pieper "Re your divorce" asking for $50 on account of the costs of Bond & Bond to date. On 8 August the respondent husband filed an answer. On 10 August a reply was filed, signed by Mr. Cummins. Mr. Feeney had gone overseas for a while after the dissolution of the partnership; but he had returned by about August, when he received instructions - of which he told Mr. Cummins - from Mrs. Pieper about trying to settle the divorce. On 30 August Bond & Bond wrote to Mrs. Pieper saying that a valuation of her property would have to be obtained for the hearing (which was due on 12 September) and asking whether ' evidence had been given in the Metropolitan Children's Court hearing in September 1970. These matters had no doubt been overlooked in the conference which Mr. Cummins had had with Mrs. \ Pieper on 27 August. On 6 September Mr. Cummins telephoned Mrs. Pieper. She told him she was going to get Mr. Feeney to act for her because, ' he says, "She did not like me in the sense I was too cold about the matter". (Mrs. Pieper says that Mr. Feeney had telephoned her earlier to say that her case was coming on and that he would finish it for her.) Mr. Cummins expostulated, saying amongst other things that he had arranged a conference with counsel for 10 September, and asked her to telephone him on 9 September as to her intentions. She did not do so, and in the meantime on 6 September, : unbeknown to Mrs. Pieper, Mr. Feeney filed a notice of change of solicitor and stated that he, "of Meagher De Coek solicitors", i i tt es rn patent -4— was now the solicitor acting for Mrs. Pieper. Mr. Cummins received that notice on 9 September and on 10 September Bond & Bond wrote to Meagher De Coek telling them the state of preparation for the case, saying that Bond'& Bond exercised a lien on their file "because of your previous conduct in respect of costs", and that Bond & Bond would send their account to Mrs. Pieper shortly. On 12 September a deed of settlement was entered into between the husband and wife. Mrs. Pieper's signature was witnessed by Mr. Feeney. On the same day a decree nisi for dissolution of the marriage was made. The court ordered inter alia "5. That the costs of the wife assessed and agreed at the sum of seven hundred and fifty dollars ($750.00) be paid by the husband to the wife or to the solicitor for the wife on or before 31st December 1974" On 12 September Bond & Bond wrote to Mrs. Pieper enclosing an account for costs and disbursements which showed that the total amount said to be due was, after allowing for $20 already paid, $369.14. The particulars began with costs of arranging a conference and taking instructions at that conference on 4 December 1972 and ended with an attendance at court on 12 September 1974 and a conference with counsel. On 18 September Meagher De Coek wrote to Bond & Bond saying that the letter of 12 September had been referred to them and that Mrs. Pieper "instructs us that she requires you to tax her bill". On 23 September 1974 John Pieper wrote to Mr. Feeney as follows: "Purther to our telephone conversation of even date enclosed please find my cheque for $700 in full settlement on account submitted in respect of divorce and transfer of Unit 4/11 Manion Avenue, Rosebay". The telephone conversation referred to was one between Mr. Pieper and Mr. Feeney, during which they agreed that if Mr. Pieper made Na ke tt en ne . ~5- - an immediate \ payment of $700 Mr. Feeney would accept that amount in full satisfaction of his wife's costs of the divorce and conveyancing costs to be incurred in the transfer of Mr. Pieper's interest in the family unit, which had been provided for in the deed of settlement, the deed having been approved by the Supreme Court. Mr. Pieper had got in touch with Mr. Feeney in an endeavour to comply with the court's order and in the belief that Mr. Feeney, whom he had seen in court on 12 September, was Mrs. Pieper's solicitor. It is not suggested that Mr. Feeney did not receive the $700. Mr. Cummins says that he himself has received no part of that amount. On 26 September Bond & Bond wrote to Meagher De Coek. Mr. Cummins had learned, from Messrs. White Murray & Carew, Mr. Pieper's solicitors, of the payment of $700 to Mr. Feeney. The letter referred to the account for $389.14 rendered to Mrs. Pieper on 12 September (in fact it was an account for $369.14) and, obviously by subtracting that amount from $750, arrived at the assumption that Mr. Feeney intended "to make (sic) $360.86 for the work done by you since 6th September 1974". It then mentioned Mrs. Pieper's expressed intention to return to Spain to live, and said that if she did so it would be difficult to find her, serve her, and recover money from her. It then said: "As you have collected the moneys already in respect of the work performed by this firm we would like to know whether you are prepared to pay from the amounts retained by you of our costs of say $300.00, as we are confident that on taxation our costs will exceed the sum of $389.14. We also wish to know whether you will hold the sum of $389.14 in your trust account rather than have those moneys paid to Mrs. Pieper so that we can ensure that we will get our costs." It was to this letter that the following questions and answers during the cross-examination of Mr. Cummins before me related: "QO. You, in fact, were prepared at one stage to accept a sum considerably less- than that which you subsequently sought to recover from Mrs. Pieper? -6-" A. That is correct, \ Q. And in fact, at one stage I suggest you were prepared to split what Mr. Feeney had recovered more or less down the middle? . A. That is correct, so we would not be here today". Nothing further happened (except that on 4 November Bond & Bond wrote to Meagher De Coek complaining that the letter of 26 September had not been answered and making various threats) until 31 January 1975. On that date Bond & Bond wrote to Mrs. Pieper as follows:- "Pursuant to section 12 of the Conveyancing Act 1919 as amended and other Acts, you are hereby notified that the partnership of Lawrence Bernard Feeney, Paul Bernard Cummins and Maurice Briot Clare trading as Bond & Bond was dissolved from the lst April 1973. The partnership assigned all its rights and interest to Paul Bernard Cummins trading as Bond & Bond. You are hereby notified that your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond is due and payable. We look forward to payment of the said account at your earliest convenience". Mr. Cunmins identified "the attached account" in evidence before me: it is part of Exhibit D. .It was dated 30 January 1975 and covers work done in connection with Mrs. Pieper's divorce suit from an unspecified date in December 1972 earlier than 12 December up to and including 9 September 1974. It stops there and does not include, as did the account dated 12 September 1974, items up to and including 12 September 1974.. Otherwise, the two documents cover the same work, though the earlier one gives more particulars and in some cases different dates. The charges made by the two documents may be analysed as follows: — 12 Sept. 74 30 Jan. 75 . Disbursements . 39.14 42.82 Costs "exceeding but say" , 350.00 ' Costs , 336.14 . Percentages added 283.82 Total 389.14 662.78 Amount paid to date 20.00 20.00 , Amount due $369.14 $642.78 It was probably about this time (though her best recollection is that it was in or about December 1974) that Mrs. Pieper took the account she had received from Bond & Bond to an officer of the Family Law Division of the Supreme Court. He said it appeared to be too large in view of the amount already paid by Mr. Pieper, and advised her to seek to have it adjusted between Bond & Bond and Mr. Feeney's firm. She accordingly took it to Mr. Feeney, who told her "not to worry, that he would fix everything". On 3 March 1975 Bond & Bond wrote to Mrs. Pieper demanding payment of $642.78 within seven days and threatening proceedings. On 9 June 1975 Mr. Cummins wrote again. This letter referred to previous demands and went on "As you are aware, the debt relates to work done and moneys paid during the period from December 1972 to September 1974, when you apparently withdrew this , firm's instructions and presumably you instructed Mr. L. B. Feeney to act on your behalf in the proceedings against your then husband. As you are also .aware,the legal practice and business known as Bond & Bond is and has been since Ist April 1973 carried on by Mr. P. B. Cummins only. Prior to that date the business had been carried on by Messrs. L. B. Feeney, M. B. Clare and P. B. Cummins, who by agreement made 30th March 1973 absolutely assigned to Mr. P. B. Cummins, ali of their respective right title and interest in the said business, including all debts due to the firm and such right, title and interest as they may have had in or in respect to the said work done and moneys paid and such debt then owing by you to the firm. You have previously been given notice of that assignment, and you are hereby given further notice of such assignment, pursuant to ; et apt tl leat A eA pe ~8- - ' sc mn 12 of the Conveyancing Act 1919 (as amended) an. "ou are required to pay the debt to Mr. Cummins. It -s our contention that he is ,the only person entitled to payment of the sum of $642.78 including such debt and the only person who can give you a valid receipt for its payment." It then said that as "the debt due by you to Mr. Cummins" remained unpaid, action would be commenced withour further notice. Mrs. Pieper did nothing about that letter, for two reasons: she relied on Mr. Feeney's assurance that "he would fix everything", and she vas urgently arranging to visit her mother, who was seriously ill, in Spain. Before she left for Spain, she got in touch with Mr. Feeney but got no definite information from him ~- though he did ask whether she had paid Bond & Bond anything and, on being told she had paid them $50, soundly advised her to pay them no more. (She maintains that she has paid them $50, but other evidence of her having paid more than $20 is lacking.) She arranged with her former husband that during her absence he would attend to any matters that arose through his own solicitors, White, Murray & Carew. After Mrs. Pieper returned from Spain a summons for the alleged debt was served on her. On the advice of her former husband she instructed his solicitor, Mr. Murray of White, Murray & Carew, to act on her behalf. When subsequent documents such as a bankruptcy notice were served on her she gave them to Mr. Murray, believing that he was attending to the matter and that she herself need do nothing. There is no evidence as to how it came about that the next event was that she was accordingly disagreeably surprised on about 14 September 1977 to receive a telegram from the Official Receiver informing her that a sequestration order had been made against her. Mr. Cummins, it is true, said in his affidavit of 6 October 1977 that on 9 November 197€ he wrote direct to Mrs. Pieper telling her he was going to sign judgment if the money was not paid within seven days; but the a a a eR Ne -9— letter itself was not produced, and Mr, Cummins on 22 December 1976 signed an application for the issue of a bankruptcy notice | in which he stated, as the accompanying certificate of- judgment showed, that judgment had been obtained by him in the District Court on 15 October 1976. It was a default judgment for $642.78 on the plaintiff's claim and $61.00 costs, making a total of $703.78. The course of the proceedings in bankruptcy was as follows: a bankruptcy notice dated 23 December 1976 requiring the payment of $715.35 (i.e. $703.78 plus $11.57 interest) was duly served on Mrs. Pieper on 21 January 1977; a creditor's petition by Mr. Cummins returnable on 9 August was duly presented on 21 March, alleging a debt of $715.35 and an act of bankruptcy i consisting of failure to comply on or before 4 February with the bankruptcy notice; the petition was duly served on Mrs. Pieper on 5 April; on 9 August Mrs. Pieper did not appear and was not represented, but the petitioning creditor was unable to prove service of the petition and I adjourned the further hearing to 8 September; and on that date, there being again no appearance for Mrs. Pieper, though she had been duly served with my order of adjournment, and Rule 22 having been complied with, Franki J.,who had before him only the evidence the effect of which I have summarized in this paragraph, made a sequestration order. Mr. Cummins has taken proceedings against Mr. Feeney in respect of other matters, but not in respect of any part of the $700. He was advised by counsel to sue Mrs. Pieper instead, and so began the proceedings which led to her bankruptcy. In his affidavit of 6 October 1977 Mr. Cummins stated his claim thus: - iptiscisieata! - . - terete ene hh ee £ Ange Ae -10- "I say that I am entitled to moneys pursuant to the deed of dissolution of the ... partnership ... and that the debt has been validly assigned to me and that ... Feeney has no legal interest whatsoever in the costs and disbursements of the applicant due to the firm of Bond & Bond, solicitors, of which I am the sole practitioner". In his letter of 31 January quoted above he wrote to Mrs. Pieper of "your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond". The attached account shows that the costs charged for work done "during the duration of the old firm of Bond & Bond", i.e. before 1 April 1973, amounted to $144.63 or, if the appropriate 75% is added, $253.10. Again, in the letter of 9 June 1975, from which also I have quoted above (and in which the provisions of clause 2 of the deed of , dissolution of partnership are mis-stated), he referred to "the sum of $642.78 including such debt" and the words "such debt" appear to mean the debt owing by Mrs. Pieper to Bond & Bond at the date of the deed of dissolution. In evidence, Mr. Cummins said that he became entitled to the debt owed to the "old firm" of Bond & Bond under clause 2 of the deed of dissolution. Clause 2 assigns the "outstanding debts" of Bond & Bond and the "work and (scil. in) progress" of Bond & Bond. According to the account for $642.78 attached to the letter of 31 January 1975, Mrs. Pieper's outstanding debt for costs as at the date of dissolution was $253.10 and the balance ($389.68) was attributable to work in progress or, in the words of s. 38 of the Partnership Act (N.S.W.) 1892, a transaction begun but unfinished at that date. On 23 September 1974 Mr. Pieper had paid Mr. Feeney $700 in the circumstances I have described. That payment of "the costs of the wife" was Clearly made by Mr. Pieper, in pursuance of the order of the Supreme Court, on behalf of Mrs. Pieper. No notice of the t ~11- the assignment fected by clause 2 of the deed of dissolution had then been given to him or to her. Mr. Cummins admitted in evidence that the same costs were covered by the $700 as were covered by the $642.78, though the former sum may also have covered conveyancing costs arising after the decree nisi. The payment to Mr. Feeney discharged Mrs. Pieper from the debt to the partnership: Lindley on Partnership, 13th edn, 173, 251; King v. Smith (1829), 4 Car. & P. 108; 172 E.R. 629. If it be argued that it only discharged her from the debt of $253.10, leaving the balance of $389.68 as a debt still owing to the "new" firm, then the latter debt would not entitle Mr. Cummins to present a creditor's petition: Bankruptcy Act 1966, s.44(1) (a). In my opinion a sequestration order ought not to have been made and it would not have been made had the learned judge who made it been aware of the actual state of affairs as they appear from the evidence which has been put before me: In re Dunn, (1949) Ch. 640, 646. I'should add that on the date of the sequestration order Mrs. Pieper owed a debt secured on the matrimonial home, an unsecured debt of $100, and no other debts apart from the alleged debt to Mr. Cummins. There is evidence that the unsecured debt has been paid and that payments are up to date on the mortgage account, which in the mortgagee's opinion has been maintained satisfactorily. Her former husband has written to her present solicitors that, if the alleged debt is really payable to Bond & Bond, he will pay it. The Official Receiver's report contains nothing adverse to Mrs. Pieper. In my opinion this bankruptcy should be annulied and there is no reason why in my discretion I should decline to annul it. I order that the bankruptcy be annulled, and that the a Jenene ame « -12- respondent Paul Bernard Cummins pay the applicant's taxed costs of and incidental to the application and her taxed costs (if any) of and incidental to the petition for a sequestration order. » IN a fi Ea fe deeal Court oF fu A Rik ; Cement Dw ton TJ unGE mA Kiwe ORDER. NitE& oF CRAG Counsel Fort App bre, swt N Ruch vu S elie te ,28 Counsel or Reslomde st WSRucting Galierrnes "Paul Beew wed Cu mire N-Sw SS3 of 117) Nbphieefiod for fivvu boa (= we QE Mada CHeetiwt Pisber: y THe B Aw Meus. _ Hbb Licacts. . t RR. R.Ley asd Noverbe?® 1997 gydee} NS 2Qo-ts -1472- ber [he 14977. _ G-- 149) 8. Coles . . BD. 6G Rilbinuton' Com WALL Ace Wp" CHatsuce e 2oo7 N-& W S. Loomes Bonn? Roa - Itc Craler eg eho or S74. wee RSE tem ae HST onic pdt _— IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) No. NSW 553 of 1977 APPLICATION FOR ANNULMENT RE - MARIA CHRISTINA PIEPER THE BANKRUPT Applicant PAUL BERNARD CUMMINS Respondent JUDGE MAKING ORDER: Riley J. DATE OF ORDER: 25 November 1977 WHERE MADE: Sydney ORDERS 1. That the bankruptcy be annulled. 2. That the respondent pay the applicant's taxed costs of and incidental to the application for annulment and her taxed costs (if any) of and incidental to the petition for a sequestration order. are RE el alc lente mre errs thier Venere a nh a Ae ete tt REASONS FOR JUDGMENT This is an application by Mrs. Maria Christina Pieper for annulment of her bankruptcy, primarily on the ground that the sequestration order ought not to have been made. The applicant divorced her husband. He was ordered to pay her costs, assessed and agreed at $750, to her or her solicitor. He then did pay $700 to the solicitor who was acting for her when the decree nisi was made. A second solicitor, a former partner of the first, later recovered a default judgment against Mrs. Pieper for $703.78 in respect of the same costs. On that judgment he founded the creditor's petition on which the applicant was made bankrupt. He said in evidence before me, "It is a situation that I do not like, but it is the situation"; and he opposes her application for annulment. Mrs. Pieper is a Spanish lady who came to Australia, unable to speak English, in 1960. Today her command of English is competent but not excellent. Not unnaturally ste does not trust herself to deal unaided with a legal document ("I did not know actual words what it means") and takes the sensible course of handing it to a solicitor for advice and necessary action. In 1963 she married John Pieper. The marriage did not prosper, and she sought legal advice. Her first solicitor was Mr. L. B. Feeney, who conducted a matter for her in the Children's Court in 1970. In about July 1971 Mr. Feeney was joined in partnership, under the name of Bond & Bond, by Mr. P. B. Cummins. (Later there was a third partner, Mr. M. B. Clare, who died some time ago and who played no part in this story.) Mr. Feeney introduced Mrs. Pieper to Mr. Cummins. On 14 December 1972 Bond & Bond on Mrs. Pieper's behalf filed in the Family Law Division of the Supreme Court of wa eK -2- ' New South Wales a petition for dissolution of her marriage. From a file of papers produced on subpoena by Mr. Feeney and admitted in evidence on behalf of the applicant without objection it appears that the petition was signed by Mr. Cummins and a certificate relating to reconciliation was given by him, the address for service being shown as Bond & Bond. Mrs. Pieper does not properly understand the concept of partnership ~- when asked whether she knew what a partner was, she replied "Yes, work together"; but I am satisfied that she knew that the name Bond & Bond had some connection with her proceedings for divorce. She paid the firm $20 on 7 December 1972 and was given one of the firm's receipts. There is no doubt on the evidence that both Mr. Feeney and Mr. Cummins advised her and acted for her in the proceedings for her divorce, though she regarded Mr. Feeney as her solicitor and Mr. Cummins as someone who worked with and for Mr. Feeney and, when Mr. Feeney was absent, took his place. I am of the opinion that for all work done on her behalf up to 31 March 1973 she was a client of Bond & Bond and became indebted for that work to the partnership, and that the conducting of the divorce proceedings was a partnership transaction. On 30 March 1973 Messrs. Feeney, Cummins and Clare entered into a deed of dissolution of partnership. The deed provided that the partnership of Bond & Bond should be dissolved as at 31 March 1973. Clause 2 read as follows: "All the right title and interest of LAWRENCE BERNARD FEENEY and MAURICE BRIOT CLARE in the partnership to the following, the name of Bond & Bond, the goodwill of Bond & Bond, the Lease of Bond & Bond, the files and registers of Bond & Bond, the furniture of Bond & Bond, the library of Bond & Bond, the outstanding debts of Bond & Bond and the work and (sic) progress in Bond & Bond, excepting one chair, one book-case, two pictures and one table is hereby assigned to Cummins". It was agreed that as from 1 April 1973 Mr. Cummins should carry on the practice of Bond & Bond, under that name, alone. It was an ae fe ane Se ee Lees Ce also provided that Mr. Feeney should remove the files relating to certain scheduled matters (which did not include Mrs. Pieper's Matter), complete those matters, and on completion account to "the partners of Bond & Bond" for the profit costs. F On 13 July 1973 Mr. Cummins wrote to Mrs. Pieper "Re your divorce" asking for $50 on account of the costs of Bond & Bond to date. On 8 August the respondent husband filed an answer. On 10 August a reply was filed, signed by Mr. Cummins. Mr. Feeney had gone overseas for a while after the dissolution of the partnership; but he had returned by about August, when he received instructions - of which he told Mr. Cummins - from Mrs. Pieper about trying to settle the divorce. On 30 August Bond & Bond wrote to Mrs. Pieper saying that a valuation of her property would have to be obtained for the hearing (which was due on 12 September) and asking whether evidence had been given in the Metropolitan Children's Court hearing in September 1970. These matters had no doubt been overlooked in the conference which Mr. Cummins had had with Mrs. Pieper on 27 August. . On 6 September Mr. Cummins telephoned Mrs. Pieper. She told him she was going to get Mr. Feeney to act for her because, he says, "She did not like me in the sense I was too cold about the matter". (Mrs. Pieper says that Mr. Feeney had telephoned her earlier to say that her case was coming on and that he would finish it for her.) Mr. Cummins expostulated, saying amongst other things that he had arranged a conference with counsel for 10 September, and asked her to telephone him on 9 September as to her intentions. She did not do so, and in the meantime on 6 September, unbeknown to Mrs. Pieper, Mr. Feeney filed a notice of change of 5 solicitor and stated that he, "of Meagher De Coek solicitors", -4- was now the s stor acting for Mrs. Pieper. Mr. Cummins received that -tice on 9 September and on 10 September Bond & Bond wrote to Meagher De Coek telling them 'the state of preparation for the case, saying that Bond & Bond exercised a lien on their file "because of your previous conduct in respect of costs", and that Bond & Bond would send their account to Mrs. Pieper shortly. On 12 September a deed of settlement was entered into between the husband and wife. Mrs. Pieper's signature was witnessed by Mr. Feeney. On the same day a decree nisi for dissolution of the marriage was made. The court ordered inter alia "5. That the costs of the wife assessed and agreed at the sum of seven hundred and fifty dollars ($750.00) be paid by the husband to the wife or to the solicitor for the wife on or before 3lst December 1974" On 12 September Bond & Bond wrote to Mrs. Pieper enclosing an account for costs and disbursements which showed that the total amount said to be due was, after allowing for $20 already paid, $369.14. The particulars began with costs of arranging a conference and taking instructions at that conference on 4 December 1972 and ended with an attendance at court on 12 September 1974 and a conference with counsel. On 18 September Meagher De Coek wrote to Bond & Bond saying that the letter of 12 September had been referred to them and that Mrs. Pieper "instructs us that she requires you to tax her bill". On 23 September 1974 John Pieper wrote to Mr. Feeney as follows: "Further to our telephone conversation of even date enclosed please find my cheque for $700 in full settlement on account submitted in respect of divorce and transfer of Unit 4/11 Manion Avenue, Rosebay". The telephone conversation referred to was one between Mr. Pieper and Mr. Feeney, during which they agreed that if Mr. Pieper made -—5- an immediate cash payment of $700 Mr. Feeney would accept that amount in full satisfaction of his wife's costs of the divorce and conveyancing costs to be incurred in the transfer of Mr. Pieper's interest in the family unit, which had been provided for in the deed of settlement, the deed having been approved by the Supreme Court. Mr. Pieper had got in touch with Mr. Feeney in an endeavour to comply with the court's order and in the belief that Mr. Feeney, whom he had seen in court on 12 September, was Mrs. Pieper's solicitor. It is not suggested that Mr. Feeney did not receive the $700. Mr. Cummins says that he himself has received no part of that amount. On 26 September Bond & Bond wrote to Meagher De Coek. Mr. Cummins had learned, from Messrs. White Murray & Carew, Mr. Pieper's solicitors, of the payment of $700 to Mr. Feeney. The letter referred to the account for $389.14 rendered to Mrs. Pieper on 12 September (in fact it was an account for $369.14) and, obviously by subtracting that amount from $750, arrived at the assumption that Mr. Feeney intended "to make (sic) $360.86 for the work done by you since 6th September 1974". It then mentioned Mrs. Pieper's expressed intention to return to Spain to live, and said that if she did so it would be difficult to find her, serve her, and recover money from her. It then said: "As you have collected the moneys already in respect of the work performed by this firm we would like to know whether you are prepared to pay from the amounts retained by you of our costs of say $300.00, as we are confident that on taxation our costs will exceed the sum of $389.14. We also wish to know whether you will hold the sum of $389.14 in your trust account rather than have those moneys paid to Mrs. Pieper so that we can ensure that we will get our costs." It was to this letter that the following questions and answers during the cross-examination of Mr. Cummins before me related: "Q. You, in fact, were prepared at one stage to accept a sum considerably less than that which you subsequently sought to recover from Mrs. Pieper? I tlt i al sn -6- A. That is correct. Q. And in faot, at one stage I suggest you were prepared to split what Mr. Feeney had recovered more or less down the middle? A. That is correct, so we would not be here today". Nothing further happened (except that on 4 November Bond & Bond wrote to Meagher De Coek complaining that the letter of 26 September had not been answered and making various threats) until 31 January 1975. On that date Bond & Bond wrote to Mrs. Pieper as follows:- "Pursuant to section 12 of the Conveyancing Act 1919 as amended and other Acts, you are hereby notified that the partnership of Lawrence Bernard Feeney, Paul Bernard Cummins and Maurice Briot Clare trading as Bond & Bond was dissolved from the lst April 1973. The partnership assigned all its rights and interest to Paul Bernard Cummins trading as Bond & Bond. You are hereby notified that your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond is due and payable. We look forward to payment of the said account at your earliest convenience". Mr. Cummins identified "the attached account" in evidence before me: it is part of Exhibit D. It was dated 30 January 1975 and covers work done in connection with Mrs. Pieper's divorce suit from an unspecified date in December 1972 earlier than 12 December up to and including 9 September 1974. It stops there and does not include, as did the account dated 12 September 1974, items up to and including 12 September 1974. Otherwise, the two documents cover the same work, though the earlier one gives more particulars and in some cases different dates. The charges made by the two documents may be analysed as follows: 12 Sept. 74 30 Jan. 75 Disbursements . 39.14 42.82 Costs "exceeding but say" 350.00 Costs , 336.14 Percentages added 283.82 Total 389.14 662.78 Amount paid to date 20.00 20.00 Amount due . $369.14 $642.78 It was probably about this time (though her best recollection is that it was in or about December 1974) that Mrs. Pieper took the account she had received from Bond & Bond to an officer of the Family Law Division of the Supreme Court. He Said it appeared to be too large in view of the amount already paid by Mr. Pieper, and advised her to seek to have it adjusted between Bond & Bond and Mr. Feeney's firm. She accordingly took it to Mr. Feeney, who told her "not to worry, that he would fix everything". On 3 March 1975 Bond & Bond wrote to Mrs. Pieper demanding payment of $642.78 within seven days and threatening proceedings. On 9 June 1975 Mr. Cummins wrote again. This letter referred to previous demands and went on "As you are aware, the debt relates to work done and moneys paid during the period from December 1972 to September 1974, when you apparently withdrew this firm's instructions and presumably you instructed Mr. L. B. Feeney to act on your behalf in the proceedings against your then husband. As you are also ,aware,the legal practice and business known as Bond & Bond is and has been since lst April 1973 carried on by Mr. P. B. Cummins only. Prior to that date the business had been carried on by Messrs. L. B. Feeney, M. B. Clare and P. B. Cummins, who by agreement made 30th March 1973 absolutely assigned to Mr. P. B. Cummins, all of their respective right title. and interest in the said business, including all debts due to the firm and such right, title and interest as they may have had in or in respect to the said work done and moneys paid and such debt then owing by you to the firm. You have previously been given notice of that assignment, and you are hereby given further notice of such assignment, pursuant to -8- - section 12 of the Conveyancing Act 1919 (as amended) ' and you are required to pay the debt to Mr. Cummins. It is our contention that he is the only person entitled to payment of the sum of $642.78 ineluding such debt and the only person who can give you a valid receipt for its payment." Tt then said that as "the debt due by you to Mr. Cummins" remained unpaid, action would be commenced withour further notice. Mrs. Pieper did nothing about that letter, for two Be ee ee + reasons: she relied on Mr. Feeney's assurance that "he would fix \ . everything", and she was urgently arranging to visit her mother, who was seriously ill, in Spain. Before she left for Spain, she got in touch with Mr. Feeney but got no definite information a a a from him - though he did ask whether she had paid Bond & Bond anything and, on being told she had paid them $50, soundly advised her to pay them no more. (She maintains that she has paid them $50, but other evidence of her having paid more than $20 is lacking.) She arranged with her former husband that during her absence he would attend to any matters that arose through his own solicitors, White, Murray & Carew. a After Mrs. Pieper returned from Spain a summons for , the alleged debt was served on her. On the advice of her former husband she instructed his solicitor, Mr. Murray of White, Murray & Carew, to act on her behalf. When subsequent documents such as a bankruptcy notice were served on her she gave them to Mr. Murray, believing that he was attending to the matter and that she herself need do nothing. There is no evidence as to how it came about that the next event was that she was accordingly telegram from the Official Receiver informing her that a ' sequestration order had been made against her. Mr. Cummins, it is true, said in his affidavit of 6 October 1977 that on 9 November 197€ he wrote direct to Mrs. Pieper telling her he was going to sign | disagreeably surprised on about 14 September 1977 to receive a judgment if the money was not paid within seven days; but the on v.. Re ee NN a nl -9- letter itself was not produced, and Mr. Cummins on 22 December 1976 signed an application. for the issue of a bankruptcy notice in which he stated, as the accompany ing certificate of judgment showed, that judgment had been obtained by him in the District Court on 15 October 1976. It was a default judgment for $642.78 on the plaintiff's claim and $61.00 costs, making a total of $703.78. The course of the proceedings in bankruptcy was as follows: a bankruptcy notice dated 23 December 1976 requiring the payment of $715.35 (i.e. $703.78 plus $11.57 interest) was duly served on Mrs. Pieper on 21 January 1977; a creditor's petition by Mr. Cummins returnable on 9 August was duly presented on 21 March, alleging a debt of $715.35 and an act of bankruptcy consisting of failure to comply on or before 4 February with the bankruptcy notice; the petition was duly served on Mrs. Pieper on 5 April; on 9 August Mrs. Pieper did not appear and was not represented, but the petitioning creditor was unable to prove service of the petition and I adjourned the further hearing to 8 September; and on that date, there being again no appearance for Mrs. Pieper, though she had been duly served with my order of adjournment, and Rule 22 having been complied with, Franki J.,who had before him only the evidence the effect of which I have summarized in this paragraph, made a sequestration order. Mr. Cummins has taken proceedings against Mr. Feeney in respect of other matters, but not in respect of any part of the $700. He was advised by counsel to sue Mrs. Pieper instead, and so began the proceedings which led to her bankruptcy. In his affidavit of 6 October 1977 Mr. Cummins stated his claim thus: ~10- - "T . that I am entitled to moneys pursuant to the dec of dissolution of the ... partnership ... and thar the debt has been validly assigned to me and that ... Feeney has no legal interest whatsoever in the costs and disbursements of the applicant due to the firm of Bond & Bond, solicitors, of which I am the sole practitioner". In his letter of 31 January quoted above he wrote to Mrs. Pieper of "your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond". The attached account shows that the costs charged for work done "during the duration of the old firm of Bond & Bond", i.e. before 1 April 1973, amounted to $144.63 or, if the appropriate 75% is added, $253.10. Again, in the letter of 9 June 1975, from which also I have quoted above (and in which the provisions of clause 2 of the deed of dissolution of partnership are mis-stated), he referred to "the sum of $642.78 including such debt" and the words "such debt" appear to mean the debt owing by Mrs. Pieper to Bond & Bond at the date of the deed of dissolution. In evidence, Mr. Cummins said that he became entitled to the debt owed to the "old firm" of Bond & Bond under clause 2 of the deed of dissolution. Clause 2 assigns the "outstanding debts" of Bond & Bond and the "work and (scil. in) progress" of Bond & Bond. According to the account for $642.78 attached to the letter of 31 January 1975, Mrs. Pieper's outstanding debt for costs as at the date of dissolution was $253.10 and the balance ($389.68) was attributable to work in progress or, in the words of s. 38 of the Partnership Act (N.S.W.) 1892, a transaction begun but unfinished at that date. On 23 September 1974 Mr. Pieper had paid Mr. Feeney $700 in the circumstances I have described. That payment of "the costs of the wife" was clearly made by Mr. Pieper, in pursuance of the order of the Supreme Court, on behalf of Mrs. Pieper. No notice of the -l1~ r the assignment effected by clause 2 of the deed of dissolution had then been given to him or to her. Mr. Cummins admitted in evidence that the same costs were covered by the $700 as were covered by the $642.78, though the former sum may also have covered conveyancing costs arising after the decree nisi. The payment to Mr. Feeney discharged Mrs. Pieper from the debt to the partnership: Lindley on Partnership, 13th edn, 173, 251; King v. Smith (1829), 4 Car. & P. 108; 172 E.R. 629. If it be argued that it only discharged her from the debt of $253.10, leaving the balance of $389.68 as a debt still owing to the "new" firm, then the latter debt would not entitle Mr. Cummins to present a creditor's petition: Bankruptcy Act 1966, s.44(1) (a). In my opinion a sequestration order ought not to have been made and it would not have been made had the learned judge who made it been aware of the actual state of affairs as they appear from the evidence which has been put before me: In re Dunn, (1949) Ch. 640, 646. I should add that on the date of the sequestration order Mrs. Pieper owed a debt secured on the matrimonial home, an unsecured debt of $100, and no other debts apart from the alleged debt to Mr. Cummins. There is evidence that the unsecured debt has been paid and that payments are up to date on the mortgage account, which in the mortgagee's opinion has been maintained satisfactorily. Her former husband has written to her present solicitors that, if the alleged debt is really payable to Bond & Bond, he will pay it. The Official Receiver's report contains nothing adverse to Mrs. Pieper. In my opinion this bankruptcy should be annulled and there is no reason why in my discretion I should decline to annul it. I order that the bankruptcy be annulled, and that the respondent Paul Bernard Cummins pay the applicant's taxed costs of and incidental to the application and her taxed costs (if any) of and incidental to the petition for a sequestration order. TFuUKcE mMaliws ofDE. Dawe OF ole [77 lew De pwwulnent RE Mr Cues wit Preper — bP hi core TUE aw lfeupr "Past QRerw #20 Ca menren's Re sfo wpe . RB. Riley asd ovembe® 1977 S77 dive '| MoS Qu -lo -1477- le~ th 1977: - Ye i - 149) 2. Qles Db. G6 R:, rare oe aw WL Lgec wep Hotewssn. 2067 i' S. Lcomes Bona ° [2 Oalt Ibo Can lect Ho <r §-/4 aU ee eve MOST OSH 9 - OnICWAe ; eee IN THE FEDERAi: COURT OF AUSTRALIA ) GENERAL DIVISION ) "No. NSW 553 of 1977 APPLICATION FOR ANNULMENT RE - MARIA CHRISTINA PIEPER THE BANKRUPT Applicant PAUL BERNARD CUMMINS Respondent JUDGE MAKING ORDER: Riley J. DATE OF ORDER: 25 November 1977 WHERE MADE: Sydney ORDERS 1. That the bankruptcy be annulled. 2. That the respondent pay the applicant's taxed costs of and incidental to the application for annulment and her taxed costs (if any) of and incidental to the petition for a sequestration order. a REASONS FOR JUDGMENT This is an application by Mrs. Maria Christina Pieper for annulment of her bankruptcy, primarily on the ground that the sequestration order ought not to have been made. The applicant divorced her husband. He was ordered to pay her costs, assessed and agreed at $750, to her or her solicitor. He then did pay $700 to the solicitor who was acting for her when the decree nisi was made. A second solicitor, a former partner of the first, later recovered a default judgment against Mrs. Pieper for $703.78 in respect of the same costs. On that judgment he founded the creditor's petition on which the applicant was made bankrupt. He said in evidence before me, "It is a situation that I do not like, but it is the situation"; and he opposes her application for annulment. Mrs. Pieper is a Spanish lady who came to Australia, unable to speak English, in 1960. 'Today her command of English is competent but not excellent. Not unnaturally she does not trust herself to deal unaided with a legal document ("I did not know actual words what it means") and takes the sensible course of handing it to a solicitor for advice and necessary action. In 1963 she married John Pieper. The marriage did not prosper, and she sought legal advice. Her first solicitor was Mr. L. B. Feeney, who conducted a matter for her in the Children's Court in 1970. In about July 1971 Mr. Feeney was joined in partnership, under the name of Bond & Bond, by Mr. P. B. Cummins. (Later there was a third partner, Mr. M. B. Clare, who died some time ago and who played no part in this story.) Mr. Feeney introduced Mrs. Pieper to Mr. Cummins. On 14 December 1972 Bond & Bond on Mrs. Pieper's behalf filed in the Family Law Division of the Supreme Court of et tt pare eee ~2- New South Wales a petition for dissolution of her marriage. From a file of papers produced on subpoena by Mr. Feeney and admitted in evidence on behalf of the applicant without objection it appears that the petition was signed by Mr. Cummins and a certificate relating to reconciliation was given by him, the address for service being shown as Bond & Bond. Mrs. Pieper does not properly understand the concept of partnership ~ when asked whether she knew what a partner was, she replied "Yes, work together"; but I am satisfied that she knew that the name Bond & Bond had some connection with her proceedings for divorce. She paid the firm $20 on 7 December 1972 and was given one of the firm's receipts. There is no doubt on the evidence that both Mr. Feeney and Mr. Cummins advised her and acted for her in the proceedings for her divorce, though she regarded Mr. Feeney as her solicitor and Mr. Cummins as someone who worked with and for Mr. Feeney and, when Mr. Feeney was absent, took his place. I am of the opinion that for all work done on her behalf up to 31 March 1973 she was a client of Bond & Bond and became indebted for that work to the partnership, and that the conducting of the divorce proceedings was a partnership transaction. On 30 March 1973 Messrs. Feeney, Cummins and Clare entered into a deed of dissolution of partnership. The deed provided that the partnership of Bond & Bond should be dissolved as at~31 March 1973. Clause 2 read as follows: "All the right title and interest of LAWRENCE BERNARD FEENEY and MAURICE BRIOT CLARE in the partnership to the following, the name of Bond & Bond, the goodwill of Bond & Bond, the Lease of Bond & Bond, the files and registers of Bond & Bond, the furniture of Bond & Bond, the library of Bond & Bond, the outstanding debts of Bond & Bond and the work and (sic) progress in Bond & Bond, excepting one chair, one book-case, two pictures and one table is hereby assigned to Cummins". It was agreed that as from 1 April 1973 Mr. Cummins should carry on the practice of Bond & Bond, under that name, alone. It was 3 -3- - also provided =. Mr. Feeney should remove the files relating to certain schedu;.d matters (which did not include Mrs. Pieper's matter), complete those matters, and on completion account to "the partners of Bond & Bond" for the profit costs. On 13 July 1973 Mr. Cummins wrote to Mrs. Pieper "Re your divorce" asking for $50 on account of the costs of Bond & Bond to date. On 8 August the respondent husband filed an answer. On 10 August a reply was filed, signed by Mr. Cummins. Mr. Feeney had gone overseas for a while after the dissolution of the partnership; but he had returned by about August, when he received instructions - of which he told Mr. Cummins - from Mrs. Pieper about trying to settle the divorce. On 30 August Bond & Bond wrote to Mrs. Pieper saying that a valuation of her property would have to be obtained for the hearing (which was due on 12 September) and asking whether evidence had been given in the Metropolitan Children's Court hearing in September 1970. These matters had no doubt been overlooked in the conference which Mr. Cummins had had with Mrs. Pieper on 27 August. On 6 September Mr. Cummins telephoned Mrs. Pieper. She told him she was going to get Mr. Feeney to act for her because, he says, "She did not like me in the sense I was too cold about the matter". (Mrs. Pieper says that Mr. Feeney had telephoned her earlier to say that her case was coming on and that he would finish it for her.) Mr. Cummins expostulated, saying amongst other things that he had arranged a conference with counsel for 10 September, and asked her to telephone him on 9 September as to her intentions. She did not do so, and in the meantime on 6 September, unbeknown to Mrs. Pieper, Mr. Feeney filed a notice of change of solicitor and stated that he, "of Meagher De Coek solicitors", ~~ ae ee -4~ was now the solicitor acting for Mrs. Pieper. Mr. Cummins received that notice on 9 September and on 10 September Bond & Bond wrote to Meagher De Coek telling them the state of preparation for the case, saying that Bond & Bond exercised a lien on their file "because of your previous conduct in respect of costs", and that Bond & Bond would send their account to Mrs. Pieper shortly. On 12 September a deed of settlement was entered into between the husband and wife. Mrs. Pieper's signature was witnessed by Mr. Feeney. On the same day a decree nisi for dissolution of the marriage was made. The court ordered inter alia "5. That the costs of the wife assessed and agreed at the sum of seven hundred and fifty dollars ($750.00) be paid by the husband to the wife or to the solicitor for the wife on or before 31st December 1974" - On 12 September Bond & Bond wrote to Mrs. Pieper enclosing an account for costs and disbursements which showed that the total amount said to be due was, after allowing for $20 already paid, $369.14. The particulars began with costs of arranging a conference and taking instructions at that conference on 4 December 1972 and ended with an attendance at court on 12 September 1974 and a conference with counsel. On 18 September Meagher De Coek wrote to Bond & Bond saying that the letter of 12 September had been referred to them and that Mrs. Pieper "instructs us that she requires you to tax her bill". On 23 September 1974 John Pieper wrote to Mr. Feeney as follows: "Purther to our telephone conversation of even date enclosed please find my cheque for $700 in full settlement on account submitted in respect of divorce and transfer of Unit 4/11 Manion Avenue, Rosebay". The telephone conversation referred to was one between Mr. Pieper and Mr. Feeney, during which they agreed that if Mr. Pieper made ek San On NE CE Ca 3 . -5- ' an immediate cash payment of $700 Mr. Feeney would accept that amount in full satisfaction of his wife's costs of the divorce and conveyancing costs to be incurred in the transfer of Mr. Pieper's interest in the family unit, which had been provided for in the deed of settlement, the deed having been approved by the Supreme Court. Mr. Pieper had got in touch with Mr. Feeney in an endeavour to comply with the court's order and in the belief that Mr. Feeney, whom he had seen in court on 12 September, was Mrs. Pieper's solicitor. It is not suggested that Mr. Feeney aid not receive the $700. Mr. Cummins says that he himself has received no part of that amount. On 26 September Bond & Bond wrote to Meagher De Coek. Mr. Cummins had learned, from Messrs. White Murray & Carew, Mr. Pieper's solicitors, of the payment of $700 to Mr. Feeney. The -letter referred to the account for $389.14 rendered to Mrs. Pieper on 12 September (in fact it was an account for $369.14) and, obviously by subtracting that amount from $750, arrived at the assumption that Mr. Feeney intended "to make (sic) $360.86 for the work done by you since 6th September 1974", It then mentioned Mrs. Pieper's expressed intention to return to Spain to live, and said that if she did so it would be difficult to find her, serve her, and recover money from her. It then said: "As you have collected the moneys already in respect of the work performed by this firm we would like to know whether you are prepared to pay from the amounts retained by you of our costs of say $300.00, as we are confident that on taxation our costs will exceed the sum of $389.14. We also wish to know whether you will hold the sum of $389.14 in your trust account rather than have those moneys paid to Mrs. Pieper so that we can ensure that we will get our costs." It was to this letter that the following questions and answers during the cross-examination of Mr. Cummins before me related: "Q. You, in fact, were prepared at one stage to accept a sum considerably less than that which you subsequently sought to recover from Mrs. Pieper? a tN en ee PR Ne att nt er nt aE Vaan aty -6—- . A. -hat 1s correct. Q. And in fact, at one stage I suggest you were prepared to split what Mr. Feeney had recovered more or less down the middle? A. That is correct, so we would not be here today". Nothing further happened (except that on 4 November Bond & Bond wrote to Meagher De Coek complaining that the letter of 26 September had not been answered and making various threats) until 31 January 1975. On that date Bond & Bond wrote to Mrs. Pieper as follows:- "Pursuant to section 12 of the Conveyancing Act 1919 as amended and other Acts, you are hereby notified that the partnership of Lawrence Bernard Feeney, Paul Bernard Cummins and Maurice Briot Clare trading as Bond & Bond was dissolved from the lst April 1973. The partnership assigned all its rights and interest to Paul Bernard Cummins trading as Bond & Bond. You are hereby notified that your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond is due and payable. We look forward to payment of the said account at your earliest convenience". Mr. Cummins identified "the attached account" in evidence before me: it is part of Exhibit D. It was dated 30 January 1975 and covers work done in connection with Mrs. Pieper's divorce suit from an unspecified date in December 1972 earlier than 12 December up to and including 9 September 1974. It stops there and does not include, as did the account dated 12 September 1974, items up to and including 12 September 1974. Otherwise, the two documents cover the same work, though the earlier one gives more particulars and in some cases different dates. The charges made by the two documents may be analysed as follows: bee ee eee, — - 12 Sept. 74 30 Jan. Disbursements 39.14 42.82 Costs "exceeding but say" 350.00 : Costs 336.14 Percentages added 283.82 Total 389.14 662.78 Amount paid to date 20.00 20.00 Amount due $369.14 $642.78 It was probably about this time (though her best recollection is that it was in or about December 1974) that Mrs. Pieper took the account she had received from Bond & Bond to an officer of the Family Law Division of the Supreme Court. He said it appeared to be too large in view of the amount already paid by Mr. Pieper, and advised her to seek to have it adjusted between Bond & Bond and Mr. Feeney's firm. She accordingly took it to Mr. Feeney, who told her "not to worry, that he would fix everything" On 3 March 1975 Bond & Bond wrote to Mrs. Pieper demanding payment of $642.78 within seven days and threatening proceedings. On 9 June 1975 Mr. Cummins wrote again. This letter referred to previous demands and went on "As you are aware, the debt relates to work done and moneys paid during the period from December 1972 to September 1974, when you apparently withdrew this firm's instructions and presumably you instructed Mr. L. B. Feeney to act on your behalf in the proceedings against your then husband. As you are also .aware,the legal practice and business known as Bond & Bond is and has been since Ist April 1973 carried on by Mr. P. B. Cummins only. Prior to that date the business had been carried on by Messrs. L. B. Feeney, M. B. Clare and P. B. Cummins, who by agreement made 30th March 1973 absolutely assigned to Mr. P. B. Cummins, all of their respective right title and interest in the said business, including all debts due to the firm and such right, title and interest as they may have had in or in respect to the said work done and moneys paid and such debt then owing by you to the firm. You have previously been given notice of that assignment, and you are hereby given further notice of such assignment, pursuant to hone a t . -8- section 12 of the Conveyancing Act 1919 (as amended) and you are required to pay the debt to Mr. Cummins. F It is our contention that he is the only person entitled to payment of the sum of $642.78 including such debt and the only person who can give you a valid receipt for its payment." It then said that as "the debt due by you to Mr. Cummins" remained unpaid, action would be commenced withour further notice. Mrs. Pieper did nothing about that letter, for two reasons: she relied on Mr. Feeney's assurance that "he would fix everything", and she was urgently arranging to visit her mother, who was seriously ill, in Spain. Before she left for Spain, she got in touch with Mr. Feeney but got no definite information from him - though he did ask whether she had paid Bond & Bond anything and, on being told she had paid them $50, soundly advised her to pay them no more. (She maintains that she has paid them $50, but other evidence of her having paid more than $20 is lacking.) She arranged with her former husband that during her absence he would attend to any matters that arose through his own solicitors, White, Murray & Carew. After Mrs. Pieper returned from Spain a summons for the alleged debt was served on her. On the advice of her former husband she instructed his solicitor, Mr. Murray of White, Murray & Carew, to act on her behalf. When subsequent documents such as a bankruptcy notice were served on her she gave them to Mr. Murray, believing that he was attending to the matter and that she herself need do nothing. There is no evidence as to how it came about that the next event was that she was accordingly disagreeably surprised on about 14 September 1977 to receive a telegram from the Official Receiver informing her that a sequestration order had been made against her. Mr. Cummins, it is true, said in his affidavit of 6 October 1977 that on 9 November 1976. he wrote direct to Mrs. Pieper telling her he was going to sign ' judgment if the money was not paid within seven days; but the e ~9- letter itself not produced, and Mr. Cummins on 22 December 1976 signed an application for the issue of a bankruptcy notice in which he stated, as the accompanying certificate of judgment showed, that judgment had been obtained by him in the District Court on 15 October 1976. It was a default judgment for $642.78 on the plaintiff's claim and $61.00 costs, making a total of $703.78. The course of the proceedings in bankruptcy was as follows: a bankruptcy notice dated 23 December 1976 requiring the payment of $715.35 (i.e. $703.78 plus $11.57 interest) was duly served on Mrs. Pieper on 21 January 1977; a creditor's petition by Mr. Cummins returnable on 9 August was duly presented on 21 March, alleging a debt of $715.35 and an act of bankruptcy consisting of failure to comply on or before 4 February with the bankruptcy notice; the petition was duly served on Mrs. Pieper on 5 April; on 9 August Mrs. Pieper did not appear and was not representei, but the petitioning creditor was unable to prove service of the petition and I adjourned the further hearing to 8 September; and on that date, there being again no appearance for Mrs. Pieper, though she had been duly served with my order of adjournment, and Rule 22 having been complied with, Franki J.,who had before him only the evidence the effect of which I have summarized in this paragraph, made a sequestration order. Mr. Cummins has taken proceedings against Mr. Feeney in respect of other matters, but not in respect of any part of the $700. He was advised by counsel to sue Mrs. Pieper instead, and so began the proceedings which led to her bankruptcy. In his affidavit of 6 October 1977 Mr. Cummins stated his claim thus: nama tree Nae tal ee ee ee ee ee, 5 -10- "I say that I am entitled to moneys pursuant to the deed of dissolution of the ... partnership ... and that the debt has been validly assigned to me and that ... Feeney has no legal interest whatsoever in the costs and disbursements of the applicant due to the firm of Bond & Bond, solicitors, of which I am the sole practitioner". In his letter of 31 January quoted above he wrote to Mrs. Pieper of "your debt to this firm as shown on the attached account incurred during the duration of the old firm of Bond & Bond and the new firm of Bond & Bond". The attached account shows that the costs charged for work done "during the duration of the old firm of Bond & Bond", i.e. before 1 April 1973, amounted to $144.63 or, if the appropriate 75% is added, $253.10. Again, in the letter of 9 June 1975, from which also I have quoted above (and in which the provisions of clause 2 of the deed of dissolution of partnership are mis-stated), he referred to "the sum of $642.78 including such debt" and the words "such debt" appear to mean the debt owing by Mrs. Pieper to Bond & Bond at the date of the deed of dissolution. In evidence, Mr. Cummins said that he became entitled to the debt owed to the "old firm" of Bond & Bond under clause 2 of the deed of dissolution. Clause 2 assigns the "outstanding debts" of Bond & Bond and the "work and (scil. in) progress" of Bond & Bond. According to the account for $642.78 attached to the letter of 31 January 1975, Mrs. Pieper's outstanding debt for costs as at the date of dissolution was $253.10 and the balance ($389.68) was attributable to work in progress or, in the words of s. 38 of the Partnership Act (N.S.W.) 1892, a transaction begun but unfinished at that date. On 23 September 1974 Mr. Pieper had paid Mr. Feeney $700 in the circumstances I have described. That payment of "the costs of the wife" was clearly made by Mr. Pieper, in pursuance of the order of the Supreme Court, on behalf of Mrs. Pieper. No notice of the ate bee ee eee eee a ee -Li~ » the assignment effected by clause 2 of the deed of dissolution had then been given to him or to her, Mr. Cummins admitted in evidence that the same costs were covered by the $700 as were covered by the $642.78, though the former sum may also have covered conveyancing costs arising after the decree nisi. The payment to Mr. Feeney discharged Mrs. Pieper from the debt to the partnership: Lindley on Partnership, 13th edn, 173, 251; King v. Smith (1829), 4 Car. & P. 108; 172 E.R. 629. If it be argued that it only discharged her from the debt of $253.10, leaving the balance of -$389.68 as a debt still owing to the "new" firm, then the latter debt would not entitle Mr. Cummins to present a creditor's petition: Bankruptcy Act 1966, s.44(1) (a). In my opinion a sequestration order ought not to have been made and it would not have been made had the learned judge who made it been aware of the actual state of affairs as they appear from the evidence which has been put before me: In re Dunn, (1949) Ch. 640, 646. I should add that on the date of the sequestration order Mrs. Pieper owed a debt secured on the matrimonial home, an unsecured debt of $100, and no other debts apart from the alleged debt to Mr. Cummins. There is evidence that the unsecured debt has been paid and that payments are up to date on the mortgage account, which in the mortgagee's opinion has been maintained satisfactorily. Her former husband has written to her present solicitors that, if the alleged debt is really payable to Bond & Bond, he will pay it. The Official Receiver's report contains nothing adverse to Mrs. Pieper. In my opinion this bankruptcy should be annulled and there is no reason why in my discretion I should decline to annul it. I order that the bankruptcy be annulled, and that the ~12- respondent Pati Bernard Cummins pay the applicant's taxed costs of and incidental to the application and her taxed costs (if any) of and incidental to the petition for a sequestration order.