426 83 IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF Nos. P1453/4 of 1982 NEW SOUTH WALES AND THE wee ewe ew wD ne AUSTRALIAN CAPITAL TERRITORY Re: SAMUEL THEOQPHIL ROHDE Ex Parte: HAZEL ROHDE ORDER JUDGE MAKING ORDER: Lockhart J. WHERE MADE: Sydney DATE: 15 July 1983 999 FEDERAL COUAT OF AUSTRALIA PRINCIPAL REGISTRY THE COURT ORDERS THAT: l. The period at the expiration of which the petitions will elapse be 16 November 1983: tw The hearing of the petitions be adjourned until further order; 3. Each party be at liberty to restore the petitions to the list on 7 days notice; 4. The debtor pay the petitioning creditor's costs of the proceedings before this Court on 20 June, 1 July, 14 July and today. IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION NEW SOUTH WALES AND THE ) ) ) ) BANKRUPTCY DISTRICT OF THE STATE OF ) Nos. P1453/4 of 1982 ) ) ) ) AUSTRALIAN CAPITAL TERRITORY Re: SAMUEL THEOPHIL ROHDE Ex Parte: HAZEL ROHDE CORAM: Lockhart J. 15 July, 1983 EX TEMPORE REASONS FOR JUDGMENT LOCKHART J: This is an application by Samuel Thecphil Rohde, the debtor, for an adjournment of two bankruptcy petitions presented against him by the petitioning creditor, Hazel Rohde, who is his former wife. The debt on which petition No. P1453 of 1982 is based arises from an order made by the Family Court of Australia on 12 March 1982 that the debtor pay the petitioning creditor's solicitors the sum of $10,000 on account of her costs of the proceedings between them in that court, together with interest at the rate of 15 percent per annum from 1 May 1982. The second petition (No. P1454 of 1982) arises from another order of the Family Court also made on 12 March 1982 that the debtor pay the petitioning creditor on or before 30 April 1982 the sum of $115,000 and a consequential order for payment of interest on that sum also from 1 May 1982. The petitions were presented on 17 November 1982 and first came before the Court for hearing on 22 February 1983. They were adjourned on various occasions and were specially fixed for hearing yesterday. The debtor filed a notice of intention to oppose each petition on the grounds that he is solvent and able to pay his debts. Pursuant to leave granted by the Court in April this year the debtor filed an amended notice of intention to oppose each petition basing his opposition on three grounds, the first being the one to which 1 have already referred, the second being that the debts constituted by the judgments or orders against the debtor are not final judgments or final orders within the meaning of para. 40(1)(g) of the Bankruptcy Act 1966 and finally that a sequestration order ought not to be made in the exercise of the Court's discretion. Counsel for the debtor informed me yesterday that the debtor abandoned the ground of opposition that he is able to pay his debts. The debtor seeks an adjournment of the petitions until certain proceedings in the Family Court are determined. The petitioning creditor opposes that application and seeks to proceed forthwith for a sequestration order. The debtor adduced evidence in support of his application and was cross-examined by counsel for the petitioning creditor. It is necessary to mention the facts relevant to the application for adjournment in some detail, including the curial history of the dispute between the parties both in this Court and in the Family Court. The petitioning creditor and the debtor were married on 9 April 1965 at Inverell. There are two children of the marriage, both boys aged 16 and 13. The parties separated on 5 February 1972, the marriage was dissolved and the decree became absolute on 2 July 1977. The petitioning creditor applied to the Family Court for a: order under s.79 of the Family Law Act 1975. The application was heard by Watson J. on 22, 23 and 24 June 1981. His Honour gave judgment on 12 March 1982. He said in his reasons for judgment: "Essentially she seeks one half of the financial resources within the possession or control of the husband. " His Honour also said: "When the hearing concluded on 24 June, 1981 I invited counsel to submit written submissions. These submissions were not received by me until early February, 1982. Although the case began by application filed on 6 December, 1977 and as. 96 conference was appointed as early as 19 May 1978, the parties did not hold such conference until 5 November, 1980. Thereafter it was not until 27 April, 1981 that I was approached in chambers to fix a hearing, which I did for 22, 23 and 24 June, 1981. If either of the parties has suffered because of the delay in judgment in this matter, the primary responsibility for such delay does not rest with the Court." His Honour preferred the evidence of the petitioning creditor to that of the debtor on any issue involving credit. He reviewed the evidence concerning the financial position of the parties which I need not refer to in detail. His Honour said: "The husband has the ownership of ""Karloo" which he valued in December, 1980 at $272,000. He has other assets totalling approximately $45,000 on his valuation as at 23 June, 1951 (sic). Against this he has a mortgage and creditors of about $22,000. I have left out 'loans' in those calculations. They appear to relate to various internal arrangements including a trust where one major intention is to reduce taxation liability. I find the husband has capital resources totalling approximately $295,000. A substantial part of the wife's claim relates to moneys to which she is commercially entitled. When such a claim arises I doubt if 'financial resources' need to be scrutinised so carefully. However, it is clear that the husband has the resources to meet the proposed order of the court. If at 58 he is not able to carry on the management of the property at '"Karloo", he will have sufficient to re-establish himself even if he chooses semi-retirement." His Honour later made the following orders: "A. The husband is to pay to the wife on or before 30 April, 1982 the sum of $115,000; B. The husband is to pay to the wife's solicitors on or before 30 April, 1982 the sum of $10,000 on account of the wife's costs; C. The amounts payable under orders A and B are to bear interest at 15 percent per annum as from l May, 1982; D. The husband is restrained from further encumbering or charging any real property owned by him until the sum ordered in A is paid, unless the moneys received from such encumberance or charge are paid to the wife." No appeal was lodged from those orders. There is an abundance of evidence before me given by the debtor and by his solicitors relating to the passage of time from the delivery of the Family Court's judgment and the filing by the debtor, on 17 June 1983, in the Family Court of an application by him for the following orders: 1. That the debtor be permitted to appeal against the orders of Watson J. made on 12 March 1982 notwithstanding that the appeal is out of time; 2. That pending the determination of that appeal the orders of Watson J. be stayed; 3. That in the alternative the court exercise powers under section 79A of the Family Court Act by setting aside orders A, B, C and D made by Watson J. and in substitution therefor make an order that the debtor pay the petitioning creditor $40,000 on or before 30 September 1983; 4. Pending determination of that alternative application the orders of Watson J. be stayed. I do not propose to refer to this evidence in any detail. It suggests that the debtor wished to appeal from the Family Court's order, but did not do so due to legal advice received by him, non-payment of his solicitor's costs and other matters. There is evidence from the debtor as to unsuccessful endeavours by him to reorganise his financial affairs so that he could meet at least part of his commitment to the petitioning creditor arising out of the Family Court's orders. The debtor has also given evidence that prior to the hearing of the Family Court proceedings before Watson J. in June 1981 he had been negotiating with two companies, Australian Guarantee Corporation Limited ("AGC") and Avokah Irrigation Pty. Limited (""Avokah") for the supply by Avokah of irrigation equipment and the financing of that supply, the equipment to be installed and operated on his property "Karloo". The primary lender of funds for that project was to be AGC. The debtor alleges that he informed his solicitors and counsel who acted for him in the Family Court proceedings of all matters relevant to those negotiations. Yet at no time during the hearing before Watson J. were the negotiations referred to. The debtor says that, following completion of the hearing in June 1981, but before judgment in March 1982, the negotiations were completed, AGC advanced him $242,000 and Avokah advanced him $24,160 with mortgages being given to both companies over "Karloo" as security for the borrowings. The loans were, of course, interest bearing loans. The mortgage to AGC was a third .mortgage and the mortgage to Avokah a fourth mortgage. The debtor asserts that prior to the delivery of judgment on 12 March 1982 he informed his solicitor that he had entered into these mortgages which had been registered on the title of "Karloo". He says that, at the time Watson J. gave judgment (March 1982), his Honour would not have known of these mortgages to AGC and Avokah or of the fact that his indebtedness under those mortgages was approximately $300,000, representing the initial advances to him together with accrued interest. The Family Court adjourned the debtor's application filed on 17 June 1983 to 21 July next for the purpose of hearing so much of the application as seeks an order in effect enlarging the time in which to appeal from Watson J.'s order of 12 March 1982. No date has yet been fixed by the Family Court for the hearing of the residue of the application. It is in these circumstances that the debtor seeks an adjournment of the petitions until the Family Court proceedings have been determined. He offers to this Court through his counsel an undertaking to the Court that he will prosecute the application of 17 June 1983 in the Family Court with all due expedition and diligence. Counsel for both parties have fully argued the relevant issues involved in the application for adjournment. Although I will only mention some of the matters referred to in argument, I will have taken them all into account. It is plain from the evidence before me that the debtor's financial position changed considerably between the conclusion of the hearing before Watson J. in June 1981 and the delivery of his Honour's judgment in March 1982. I do not propose to express any view about the debtor's explanation as to why this important material was not placed before Watson J. before he gave judgment. I have reached a firm view that this Court should not hear the petitions until the application of 17 June has been determined. The two petitions are brought by a former wife against her former husband. The debts on which they are based arose from orders of the Family Court. There are other creditors of the debtor but none have appeared before this Court to support or oppose the petition. The debtor's evidence about his financial transactions between June 1981 and March 1982, and his reasons for not bringing those matters to the Family Court's attention before judgment was given on 12 March 1982, may be laid before the Family Court and it may or may not admit that evidence. Late though it is, the debtor has in recent months, acting on legal advice, taken steps to ask the Family Court to adjust the financial rights and liabilities of himself and his former wife to accord with what he says the true facts were in March 1982. Whether he does this by seeking an enlargement of time in which to appeal to the Family Court from its orders of 12 March 1982 and, if successful, prosecuting that appeal or by seeking an order under s. 79A of the Family Court Act justice requires, in my opinion, that he be given the opportunity by this Court to pursue those avenues of relief. When those proceedings in the Family Court have come to an end, this Court will then review the position on the hearing of the petitions. Late in the day though the application before the Family Court is, I am satisfied on the evidence before me that the debtor bona fide seeks to appeal against or set aside the orders of the Family Court made in March last year. I note the undertaking which he proffers to the Court. If it is not adhered to the petitioning creditor may restore the petitions to the list for hearing. I realise that by being required to abide the result of litigation in the Family Court the petitioning creditor may feel aggrieved. She has the benefit of an order made in March 1982 for payment of a substantial sum of money; yet she has received no money from the debtor pursuant to those orders. The proceedings between the parties which gave rise to the two bankruptcy petitions before this Court have their origins in the Family Court proceedings. It is best that their respective rights and liabilities be finally sorted out there before the petitions are heard. The result of the Family Court proceedings will doubtless have a real bearing on the outcome of the proceedings in this Court. The petitions will expire in November 1983. In case the Family Court proceedings have not been determined by then and this petition heard and determined one way or the other, it is 10. desirable that its life be extended for the maximum period allowed by the Bankruptcy Act. As to costs, the petitioning creditor, although having unsuccessfully resisted the application for an adjournment, asks that her costs of and relating to the application for adjournment, including the costs of the appearances on 20 June and 1 July as well as today's costs and yesterday's costs, should be paid by the debtor in any event. The debtor resists that order and asks that costs of both parties be reserved. Although the debtor has succeeded in his application for adjournment he is seeking a substantial indulgence from this Court in circumstances where he is solely responsible. Through no fault of the petitioning creditor the application was not filed in the Family Court until 17 June this year, many months after the making of the initial orders of Watson J. in March 1982. In all the circumstances I think it is proper that the debtor pay the petitioning creditor's costs. Upon the debtor by his counsel undertaking to the Court that he will prosecute his application filed in the Family Court of Australia on 17 June 1983 with all due expedition and diligence, the Court orders:- l. That the period at the expiration of which the petitions will elapse be 16 November 1983; 2. That the hearing of the petitions be adjourned il. until further order; That each party be at liberty to restore the petitions to the list on 7 days notice; That the debtor pay the petitioning creditor's costs of the proceedings before this Court on 20 June, 1 July, 14 July and today. pan. os ae nee pa at 8