NOT FOR DISTRIBUTION oO IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKPUPTCY DISTRICT OF No. NSW W.643 of 1986 THE STATE OF NEW SOUTH WALES AND wwe we wee we ve Sw THE AUSTRALIAN CAPITAL TERRITORY & MICHAEL THOMAS SEYMOUR Bankrupt EX PARTE: DEPUTY COMMISSIONER OF TAXATION Petitioning Creditor CORAM: WILCOX J PLACE: SYDNEY DATE: 6 JUNE 1986 MINUTES OF ORDER THE COURT ORDERS THAT: 1. A Sequestration Order be made against the estate of the debtor. NOTE The petitioning creditor's costs of the petition including reserved costs be taxed and paid in accordance with the Act. Settlement and entry of orders is dealt with by Bankruptcy Rule 124. a in i ne —- - - - oe see ee NOT FOR DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF No. NSW W.643 of 1986 THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY RE: MICHAEL THOMAS SEYMOUR Bankrupt EX PARTE: DEPUTY COMMISSIONER OF TAXATION «a Petitioning Creditor CORAM: WILCOX J PLACE: SYDNEY DATE: 6 JUNE 1986 EXTEMPORE REASONS FOR JUDGMENT The matter before the Court is the hearing of a creditor's petition against Michael Thomas Seymour. On 20 March 1986 the debtor filed a Notice of Opposition on two grounds. The second of those grounds has been abandoned and wore oto ee a ae et rr ae ere Se ee eee eeneee oe ewe oe anes See nn ee ne ee ere ; 7 z ine ' ' . vet the only issue before the Court is whether or not the act of bankruptcy, alleged in para.4 of the petition, was committed as alleged. That issue in turn depends upon whether the debtor was served with a bankruptcy notice on Thursday, 15 August 1985, as alleged in an affidavit sworn by Judith Vickery on 27 August 1985. There was, at that time, in existence an order for substituted service. But the evidence of Ms Vickery, which has been given today, indicates that she served a person whom she believed at the time to be Mr Seymour himself. In an affidavit, sworn on 12 May 1986, she identified the person served by reference to a photograph which is exhibit A before me. It is now' conceded that the person in the photograph is in fact the debtor, Michael Thomas Seymour. Ms Vickery has been cross-examined at some length as to the matters surrounding the alleged service. I found her an impressive witness and I accept her evidence without any qualification. I am encouraged to accept her evidence by the fact that Mr Seymour has not seen fit to file any affidavit denying that he was served. He did file an affidavit sworn by his estranged wife, who is apparently now living in Canada. The petitioning creditor indicated that it would oppose the affidavit of Mrs Seymour being read unless she was available for cross-examination. No steps were taken to have her made available for cross-examination, or otherwise to provide an PO cee ae ed eee ee eo ee eee ew moe = ee ee an nn ree mae opportunity of testing her evidence, and in the result I refused to grant leave to the debtor to read her affidavit. If there was a serious contest as to service I should have thought that an affidavit from Mr Seymour in relation to which he could be cross-examined would have been the most effective way of contesting what is said by Ms Vickery. However, notwithstanding the lack of an affidavit, as I say, Ms Vickery has been cross-examined and I have no hesitation in accepting what she says. I find that service was effected as alleged in the petition and I resolve the ground of opposition against the debtor. There being no other grounds of opposition and the documents being otherwise in order, I propose to make a sequestration order. I find that the debtor committed the act of bankruptcy alleged in the petition, namely that he failed on or before 5 September 1985 either to comply with the requirements of the bankruptcy notice served on him on 15 August 1985 in accordance with the orders of a District Registrar made on 30 July 1985 or to satisfy the Court that he had a counter-claim, set-off, or cross-demand equal to or exceeding the sum specified in para.A of the bankruptcy notice, wee eee enemies re eee ree os I am satisfied of the other matters to which 3.52 of the Bankruptcy Act requires proof. I note that William John Widden, a registered trustee. has consented to act as trustee of the estate of the debtor. I make a sequestration order ayainst the estate of the debtor. I order that the costs of the petitioning creditor including reserved costs be costs in the administration of the estate. I direct that the petitioning creditor file a draft order pursuant to rule 124(2) within 7 days. I certify that this and the four (4) preceding pages are a true copy of the Reasons for Judgment of his Honour Mr Justice Wilcox. Associate: honne A Hettorw Date: 1 July 1986 Counsel for the bankrupt: Mr WA Lowe Solicitors for the bankrupt: Messrs A R Conolly & Coa Counsel for the petitioning creditor: Mr MR Aldridge Solicitors for the . petitioning creditor: Australian Government Solicitor Date(s) of hearing: sO 6 dune 1986 — > ' 19. I therefore hold that there was no breach of par.(a) of $s.135(1). In the result, the applicants succeed under pars.(f) and (g) of $.135(1) only. As explained above, it has been agreed that questions arising under s.135(4) are to be determined, if necessary, in a later hearing. It is convenient, also, to reserve the question of costs for future determination. It may conduce to clarity if I summarise the legal views set out above: (a) As to s.58(3), the continuation of an action against the bankrupt without leave does not vitiate a compromise of the action, to which the trustee was a party. (b) As to s.60(2) and (3), the failure of a trustee (on notice having been given) to elect to continue a counterclaim, at least to the extent that it does not exceed the plaintiff's claim, does not deem the counterclaim to have been abandoned. (c) As to s.135(1)(a), the sale of shares ina private company is within the provision only if their commercial or market value is more than $20,000, whatever the value of the "underlying assets". (d) As to s.135(1)(f) and (g), where abandonment of a claim and counterclaim, each for more than $20,000, forms part of a compromise of an action, that is such a compromise as is , " 20. lage ia ®eferred to in each of these paragraphs. It does not matter "nat the difference between claim and counterclaim is less yan $20,000. There will be a declaration that on or about 28 ,¥, 1985 the then trustee, the fourth respondent, made a i. ~emise in respect of a claim exceeding $20,000 within the meaning of par.(f) of s§.135(1) of the Bankruptcy Act, and a compromise with a creditor or a person claiming to be a creditor in respect of a debt provable or claimed to be provable in the bankruptcy and claimed to exceed $20,000 within the meaning of par.(g) of the said subsection. Otherwise, the matter will be adjourned for further hearing at a date to be fixed. i certify that this and the /9 precedin2 Pages are a true copy of the reasons for judgment herein of His Honcur Mr. Justice Pincus GA Kgs Associate Dated i¢-2-¢6