DATE OF ORDER. IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY No. VG 17 of 1980 GENERAL DIVISION BETWEEN: JOUN RUSSELL WOOLLEY Appellant AND: THE OFFICIAL RECEIVER FOR BANKRUPTY Respondent ORDER JUDGES MAKING ORDER: Deane, McGregor and Lockhart JJ. Thursday 31 July, 1980 WHERE MADE: Melbourne THE COURT ORDERS THAT: "e The appeal be dismissed with costs. IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY No. VG 17 of 1980 Nee GENERAL DIVISION BETWEEN: JOHN RUSSELL WOOLLEY Appellant AND: THE OFFICIAL RECEIVER FOR BANKRUPTY Respondent ORDER JUDGES MAKING ORDER: Deane, McGregor and Lockhart JJ. DATE OF ORDER: Thursday 31 July, 1980 WHERE MADE: Melbourne THE COURT ORDERS THAT: The appeal be dismissed with costs. IN THE FEDERAL COURT OF AUSTRALIA VG 17 of 1980 ) } VICTORIAN DISTRICT REGISTRY ) NO. ) ) GENERAL DIVISION BETWEEN: JOHN RUSSELL WOOLLEY Appellant AND: THE OFFICIAL RECEIVER FOR BANKRUPTCY Respondent CORAM: Deane, McGregor and Lockhart Jd. Thursday 31 July, 1980 REASONS FOR JUDGMENT DEANE J: This 18 an appeal from a judgment of a single judge of this court (Mr. Justice Smithers) dismissing an application by the appellant, John Russell Woolley, for annulment of his bankruptcy, pursuant to the provisions of s.154 of the Benkruptcy Act, 1966. The sequestration crder in respect of the appellant's estate had been made on 9 December, 1976, pursuant to a petition presented by Adriano Umberto Frigo. The act of bankruptcy alleged against the appellant and found to have been committed by him was failure to comply with the requirements of a bankruptcy notice based upon a default judgment against the appellant in Mr. Frago's favour. The basis of the application for annulment before Mr. Justice Smithers was that the debt in respect of which the relevant judgment had been obtained was in truth owing to Mr. Erigo not by the appellant but by a company, Fisher and Fisher Proprietary Limited ("the Company"), with which the appellant was associated. Mr. Justice Smithers considered "the evidence placed before him and decided that the appellant had failed to satisfy him that the relevant debt was a debt owing by the company and not by the appellant personally. Accordingly, his Honour dismissed the application for annulment and ordered that the appellant pay the Official Receiver's costs. The notice of appeal 18 singularly uninformative as to the ground on which the appeal is brought. It samply asserts "That his Honour Justice Smithers has errored at law". It specifies as the order sought, "Annulment of the Appellants Bankruptcy and or consent for a special case to the High Court of Australia". This Court does not possess power to state a special case in this matter for the opinion ef the High Court of Australia, and it 1s unnecessary to refer further to that suggested course of action. Both the appellant and Mr. Frigo gave evidence before Mr. Justice Smithers. Examination of their evidence discloses that in so far as the question whether the relevant debt was owing by the appellant or by the company was concerned, there was sharp conflict between them. The appellant gave evidence to the effect that the services of Mr. Frigo had been employed by the company, which was a building company, since 1971 to do certain contract jobs on sites owned by the company. Mr. Frigo gave evidence "that his services had always been employed by the appellant personally. The appellant stated that he originally introduced himself and a Mr. Gargano as directors of the company and explained that their role was that of supervising building activities by the company. Mr. Frigo gave evidence that the company was not mentioned at that tame. The appellant gave evidence that all work performed by Mr. Fraigo was for the company. Mr. Frigo gave evidence that the appellant had told ham that he himself was responsible for paying him. The appellant said that all payments were made by cheque drawn by the company. Mr. Frigo said that this was not so and that cheques had been drawn both by the company and the appellant personally. The appellant gave evidence that the work relevant to the judgment debt had been done on behalf of the company. Mr. Frigo gave evidence that, so far as he was concerned, the work was done for the appellant. According to Mr. Frigo when the appellant suggested that he should loeok to the company for payment he said to the appellant: "as far as I know my contract was with you and no one else". To this the appellant, "1n the end", replied: "I will fix you, no worries". _ The above contrast between the evidence of the appellant and the evidence of Mr. Frigo tends to over~simplify the issue before Mr. Justice Smithers in that 1t may imply that their respective accounts of relevant facts were marked by a degree of clarity and consistency which was, in truth, not present at all. There are some internal contradictions in the evidence of Mr. Frigo, and there are some passages in his evidence which could properly be seen as supporting the appellant's contention that the work was done by Mr. Frigo under a contract with the company. Mr. Frigo''s command of English was plainly somewhat deficient. His knowledge of the significance and nature of a company was plainly meagre. At times, as he himself explained under cross-examination by the appellant, he was "so confused". The question whether internal inconsistencies in his evidence were to be explained by a degree of confusion was very much a matter to be determined by reference to seeing and hearing him give his evidence. On the other hand, the appellant's claim that no part of the debt was owlng by him was not assisted by parts of his evidence or, on occasion, his questioning of Mr. Frigo. For example, in the course of his cross~examination of Mr. Frigo he asked a series of questions which were, apparently, intended to suggest that $200, being part of the judgment debt, was owed by the appellant personally to Mr. Frigo for "putting a septic tank and some drains at my personal home". In these circumstances, his Honour''s finding that he was not satisfied that the debt in respect of which judgment had been obtained was owed by the company and not by the appellant was largely based upon his assessment of both the appellant and Mr. Frigo as witnesses. He expressed substantial acceptance of the evidence of Mr. Fraigo, regarding him as a "genuine man" and "the sort of witness who earries conviction". The appellant: has falled to persuade me that the conclusion of Mr. Justice Smithers that he was not satisfied that the relevant debt was owing by the company and not by the appellant was affected by any identifiable error of principle or mistake or misapprehension of fact. In these circumstances, his Honour's decision, to the extent to which it was based on his opinion of the trustworthiness of the witnesses and the impression he formed from seeing and hearing them give evidence, should only be interfered with by an appellate court if the appellate court 1s convinced that the decision was wrong. On the other hand, to the extent to which his Honour's decision can properly be said to be based on inferences drawn from the established facts, this court 1s under a duty to examine the question for itself while giving respect and weight to the conclusion of the trial judge. In the present case, 1t appears to me that, for the reasons which I have mentioned, the conclusion of Mr. Justice Smithers that he was not satisfied that the relevant debt was not owing by the appellant personally was based largely on his assessment of the appellant and Mr. Frigo as witnesses and that hrs conclusion as to the overall effect of the evidence of Mr. Frigo was, to no small extent, based on ebserving and hearing Mr. Frigo give his evidence. It 1s, however, not necessary in the present case to attempt to draw the line between findings of fact based upon the trial \judge's ampression of witnesses and inferences drawn from such findings of primary fact. Even if the appropriate approach were to be accepted as being to examine the question for ourselves while giving due respect and weight to the conclusion of the trial judge, I am quite unpersuaded that any ground has been shown for interfering with the conclusion of Mr. Justice Smithers that he was not satisfied that the debt was not owing by the appellant. os The appellant also submitted that there were grounds for saying that the amount of the judgment debt may, in any event, not correspond with the amount which was in truth owing. There 1s nothing un this submission which would warrant interference by this court with the order made by Mr. Justice Smithers. Indeed, in the course of this submission, the appellant, at one stage, speculated that the amount properly owing may exceed the amount of the judgment debt. In the circumstances, 1t 1S unnecessary for me to "express or to form any view on the question whether his Honour was correct in the circumstances of this case in going behind the judgment which had already been the subject of an unsuccessful application to set 1t aside and which underlay the act of bankruptcy found to have been committed on the hearing in 1976 of the bankruptcy petition, in pursuance of which the sequestration order was made. I would dismiss the appeal with costs. 1 certify that this and lhe preceding pages are @ irue copy of the reasons for Judgmont hereln af His Honour Mr. Justice Deano. . 'ASSOCIATE ise. 7 - FEO e IN THE FEDERAL CQURT OF AUSTRALTA ) VICTORI/N DISTRICT REGISTRY No. VG 17 ofl1980 GENERAL DLVISION ) BETWEEN: JOHN RUSSELL WOOLLEY Appellant AND: THE OFFICAL RECEIVER FOR BANKRUPTCY Respondent CORA: DEANE, McGREGOR and LOCKHART JJ Thursday 31 July 19380 REASONS FOR JUDGMENT McGREGOR J: I agree with what has fallen from the learned residing judge. For myself, I would just wish to add this; that before the learned judge from which this appeal is brought, the substantial question argued was whether the debt, the subject of the petition, was owed not by the appellant but by a compeny of which he was a director, namely, Fisher & Fisher Pty. Limited. His Honour, after hearing Getarled evidence from both creditor and from the appelicnt and cross-examination of both parties and making his own assessment of them, concluded that he was not satisfied that the contract out of which the debt was said to arise vas between Ir. Frigo and the company. That same issue was attempted to be raised before His Nonour Judge Gorman, who heard an application we are told in chambers to set aside the gudgment. His Honour refused thet anpolication, the precise grounds of his refusal have not beea the SUD3 ett 0 2. argument or discussion, though there is reference in the transcript to that hearing. The evidence which we have read for ourselves and to which extensive reference has been made by the appellant is well capable of bearing the consLruction that the contract, or contracts out of which the gudgment then arose, was between the appellant and Mr, Frigo. Thus, the gudgment creditor was entitled to and indeed could only have sued the judgment debtor, essuming that there was evadence of a contract between them. In my view, no reason has been shown in law or in fact to interfere with the gudgment appealed upon, f certify that this and the is preceding pages ars a true copy of the Reesers for Indgmeat larem cf fas Honour Mr. Jusucs MeGregor. ay . Vy 4 y) 4 {i isd l bau Ae ' . Associate IN THE FEDERAL COURT OF AUSTRATTA eee eee VICTORIAN DISTRICT REGISTRY NO. VG 17 of 1980 GENERAL DIVISION BETWEEN: JOHN RUSSELL WOOLLEY Appellan . AND: THE OFFICIAL RECEIVER FOR BANKRUPTCY Responde CORAM: DEANE, McGREGOR and LOCKHART JJ. Thursday 31 July, 1980 REASONS FOR JUDGMENT LOCKHART J: I agree with what has been said by the other members of the Court and would add only a few words for myself The appellant conaucted his own appeal before this Court. He analysed the evidence before the learned trial Judge carefully and fully. He sought to establish, in particular, that there were many inconsistencies in the evidence of Mr. Frigo; but the same may be said of the evidence of the appellant himself. However, some of the alleged inconsistencies are examples of equivocation rather than inconsistency. The learned trial Judg considered all the evidence and preferred the evidence of Mr. Frigo to that of the appellant. His Honour concluded that he was not satisfied that the debt was owed by the company. In my opinion, it has not been established that his Honour erred in reaching this conclusion; accordingly there is no warrant for interferring with his Honour's decision. In determining the question whether a sequestration order ought .--/2 not to have been made, the Court looks at the facts as they existed at the date when the sequestration order was made: see Re Scott (1975) 6 A.L.R. 558. To ascertain those facts the Court is not confined to the case disclosed to the Court when the sequestration order was made, but may consider the case that would have been disclosed if all the facts had beer before the Court when the sequestration order was made. Thi: was the course taken, and in my opinion, correctly, by the learned trial Judge. Even if the Court 1s satisfied that a sequestration order ought not to have been made, it is not bound as a matter of course to annul the bankruptcy; but must consider all the circumstances of the case and decide whether, in the exercise of its discretion, the bankruptcy ovght to be annul: see Delph Sing v_ Wood (1918) 25 C.L.R. 497 and Re Willian. (1968) 13 F.L.R. 10. This question does not arise for consideration in the present case, as it has not been established that the sequestration order ought not to have been made. I agree that the appeal should be dismissed with costs. Il cort'y that ts and tho precce ry pots are a tua cacy cf tho Moasers {2° Sucguest fere.y of bis Hencur 13 Juchee Loon art "C Cok arch Ags nate Pace. 3] July 1989