405 JUDGMENT No. ofS 8, CATCHWMORDS BANKRUPTCY - finality of judgment - petitioning creditor declining to accept tender of payment - no requirement to accept tender - sequestration order made. RE: FRANK GEARY EX PARTE: FEEZ RUTHNING AND CO. QLD NO. P 404 OF 1984 SPENDER J. BRISBANE 16 AUGUST 1984 IN THE FEDERAL COURT OF AUSTRALIA ) GENBRAL DIVISION ) QLD NO. P 404 of BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND ) RE: FRANK GEARY EX PARTE: FEEZ RUTHNING AND Co. ORDER JUDGE MAKING ORDER: SPENDER J. DATE OF ORDER: 16 AUGUST 1984 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The Court makes a sequestration order against the estate of the debtor, Frank Geary. 2. The petitioning creditor's costs of and incidental to this petition be taxed and paid in accordance with the Act. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) QLD No. P 404 of 1984 BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND ) o RE: FRANK GEARY EX PARTE: FEEZ RUTHNING AND CO SPENDER_J. 16 AUGUST 1984 EXTEMPORE REASONS FOR JUDGMENT This is an application for a sequestration order against the estate of Frank Geary. The material before me is convincing evidence of what I would term the humbug of Mr Geary and the lengths to which he has gone in playing "legal games". When I first saw this material on Monday, 13 August, I was concerned because an affidavit by Mr Geary dated 11 May 1984 had annexed to it a notice of application to the Magistrates Court under r.289(6) of the Magistrates Court Rules (Q1d) applying to the Magistrates Court to set aside the judgment entered on 20 March 1984, which judgment founds the present proceedings. That notice says that the application will be made on 19 April, which day is crossed out, and 24 May is written in, which in turn has been crossed out, and 4 December 1984 written in. I was anxious as to the finality of the judgment debt which founded the creditor's petition: see Bayne v. Baillieu (1907) 5 C.L.R. 64; In re Rhodes; ex parte Heyworth 14 Q.B.D. 49; In re Flatau; ex parte Scotch Whisky Distillers Limited 22 Q.B.D. 83. The matter was adjourned from 13 August to today, to enable further material to be put before me. The further material before me indicates that somebody, at present unidentified, has made that change on that notice. No such change was made by the Magistrates Court or any officer thereof. I am satisfied that a bill of costs in respect of certain work performed by the petitioning creditor on behalf of Mr Geary was served on him on 18 August 1983. No appointment for taxation for the bill of costs was made; nor was there any request by Mr Geary to have the bill of costs taxed. On 15 March 1984 at the hearing of a judgment summons in respect of the amount of the bill of costs, there was no appearance by Mr Geary. Mr O'Donnell of counsel appeared at the Magistrates Court on that day, and judgment was obtained pursuant which is the foundation of the present application. An application by Mr Geary to have that judgment set aside was served on Messrs. Feez Ruthning and Co on 6 April 1984. The date set down for hearing of the application was 24 May 1984. On 17 May 1984 a Mr Trickett, a clerk in the employ of Messrs Feez Ruthning and Co., delivered a letter to the office of Frank Geary and Co. at 333 Queen Street, Brisbane, a letter which is contained in annexure "J" to the affidavit of Reginald James Kleidon. That letter, dealing with the application by Mr Geary to set aside the judgment which had been obtained on 15 March 1984, dealt with the provisions that ought to be followed by a person seeking to set aside a judgment and, in particular, drew attention to the obligation to serve affidavit material in support of the application prior to the hearing. On 24 May 1984, Mr O'Donnell appeared on behalf of Messrs Feez Ruthning and Co at the hearing of the application by Mr Geary to set aside the judgment. There was no appearance by Mr Geary. A search of the Court file showed that the date of the hearing written in the Court file copy of the application had been altered from 24 May 1984 to 4 December 1984. No explanation was able to be obtained as to how that alteration had been made. It was submitted to the Magistrate and accepted by hin that the application had not been adjourned by the Court or by agreement between the parties. The Magistrate ruled that the application had not been adjourned to 4 December 1984 (as the notice exhibited to Mr Geary's affidavit of 11 May 1984 before this Court seemed to indicate) and on 24 May 1984 the Magistrate proceeded to hear the application to set aside the judgment obtained on 15 March 1984. He heard that application on its merits and ruled that it be dismissed. Pry No notice of appeal has been filed by Mr Geary against that decision of the Magistrate on 24 May 1984. A Leslie James Pitman swears that on 9 July 1984, he served Frank Geary personally with a copy of a letter dated 5 June 1984, That letter provided in part: "Further to our letter of 16th May, 19864, we advise that on 24th May, 1984 we appeared at the Magistrates Court Brisbane by our Counsel to oppose the making of the order sought in your application dated 30th March, 1964. Whilst we are under no obligation to communicate with you in any way whatsoever in regard to the proceedings that day, we do note that you were not in attendance at the Court to support your application. Further, we do not want it to be said by you at some future time that you do not know of the order made by the Court in respect of your application, and it is for that reason that we advise you that the Magistrate proceeded to hear the matter in your absence, considered the matter on its merits and dismissed your application with costs. If you are in any doubt as to the validity or otherwise of the dismissal of your application, we suggest that you take legal advice on the matter immediately." When these proceedings were called on on Monday 13 August 1984, Mr Geary appeared in Court, and Messrs. Feez Ruthning and Co., the petitioning creditor, were again represented by Mr O'Donnell. Mr Geary tendered a bank cheque in the sum of $3075.00, being the amount of the judgment debt, with some small amount of over-estimation. The petitioning creditor declined to accept the tender of that amount. In the light of the material which I have just recited, there is no merit in the assertions made by Mr Geary in the various applications and correspondence to which I have referred, and the tender by him of the bank cheque for the amount greater than the judgment debt, in my view, is an acknowledgment of his indebtedness, which merely reinforces his failure to contest by way of appeal or otherwise the judgment and further matters which have been determined against him. I can, on seeing this material, appreciate how the patience of the petitioning creditor has been sorely tried in their dealings with Mr Geary and appreciate further why they choose not to accept the tender offered by him. In relation to that tender, the principle is clear. In Re Kathleen Conomo (1958) 18 A.B.C. 174 Clyne J. at p.176 said: "When a creditor presents a petition for the sequestration of a debtor's estate, he does so not only for his own benefit, but also, though he is not always conscious of the fact, for the benefit of the debtor's creditors." Later at p.177 he said: "AR brief reference to authority will illustrate the policy and object of the bankruptcy law upon the question now being considered. It is well established that a tender of payment by a debtor after the presentation of a petition need not 'be accepted by the creditor. (See In re Whalley; Ex parte Boss (1874), L.R. 18 Eq. 375, and In re Brigstocke; Ex parte Brigstocke (1876-77) 4 Ch.D. 348. In In re Lowe; Ex parte Lowe, 7 Mor. 25 at p.28, Cave J. said: 'T have had occasion more than once to tell people from the Bench that they ought not to take money from a man who has committed an act of bankruptcy until the three months during which a petition may be presented have elapsed'." And at p.178, he said: "It is not now illegal as it once was fora petitioning creditor to accept from his debtor payment of his debt: but now if he does so, he incurs the risk of having to hand over the money received to an official receiver or trustee of the debtor's estate." More recently, in Re Buckley; ex parte James Hardie and Co. Pty Ltd (1976) 27 P.L.R. 496 at p.501, Riley J. said: "It is well established that a petitioning creditor need not accept a tender of payment made by a debtor after the presentation of a petition (Re Conomo (1958) 18 A.B.C. 174, at p.-177) and I see no reason why the same principle should not apply to one who seeks to be substituted for the petitioning creditor. To hold that it does not would seem to be 'quite contrary to the spirit of the Bankruptcy Act': McIntosh v. Shashoua (1931) 46 C.L.R. 494, at p.508, per Starke dg." In In re Gentry [£1910] 1 K.B. 825 at pp.830-831, Phillimore J. stated: "It is no doubt well settled that a creditor cannot in the ordinary way be required,to accept payment of his debt after he has presented a bankruptcy petition, the reason being that if he were to accept payment he would, in the event of other bankruptcy proceedings, have to repay the money and he would be limited to his proof inthe bankruptcy, possibly under worse circumstances than if he had proceeded with his original petition. On the other hand a creditor may, if he chooses to run that risk, accept payment of his debt after a bankruptcy petition has been presented." On appeal from the judgment of Phillimore J., while a different conclusion was reached, there was no doubting the validity of the general principle. And finally, in McIntosh v. Shashoua (1931) 46 C.L.R. 494 in the joint judgment of Gavan Duffy C.J. and Dixon J., as he then was, at p.505, their Honours say: "The fact that after the presentation of the petition the debtor tendered payment of the assigned debt and the tender was refused cannot in this case affect the result. A petitioning creditor is entitled to refuse payment and proceed with the petition (In re Gentry £19101 1K.B. 9825). The refusal of the tender in this case is consistent with the conclusion, if it does not strengthen it, that the petitioner truly desired to obtain a sequestration order." On the evidence before me, I find the act of bankruptcy alleged in paragraph 4 of the petition. I am satisfied of proof of the other matters of which the Act requires proof. I make a sequestration order against the estate of the debtor, Frank Geary. ' » I order that the petitioning creditor's costs of and incidental to this petition be taxed and paid in accordance with the Act. ti 7 | certify that th 3 end iy pres oding pages areatias: | cF ng oy Judgment her. a1 { Mr. Justice Spence Dated BO UU. Fy Awy ciaie