& . "Peat fA Sea ee leu ce ey IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) QLD P864 of 1986 BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND ) RE: FRANK CAMPAGNA Debtor EX PARTE: CLIMAX ELECTRIC PTY. LTD. Creditor MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: i DECEMBER 1986 WHERE MADE: BRISBANE THE COURT ORDERS THAT: l. The petition be dismissed. 2. The petitioning creditor pay the debtor's costs of and incidental to the hearings of 12 November and 1 December 1986, to be taxed. Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISTON ~ QLD P864 of 1986 BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND ) Re: FRANK CAMPAGNA Debtor Ex parte: CLIMAX ELECTRIC PTY. LTD. Creditor PINCUS J. 1 DECEMBER 1986 EX TEMPORE REASONS FOR JUDGMENT This is a petition for sequestration of the estate of Frank Campagna based upon a bankruptcy notice issued on 30 June 1986 in respect of a default judgment in the District Court of 2 May 1986. The petitioning creditor is associated with another company, the name of which is Salchlor Pty. Ltd., and the point which has been taken is that, assuming that there 1s any debt owed by the judgment debtor in truth, it is not owed to the petitioning creditor. Salchlior Pty. Ltd. was incorporated on 10 December 1984. The debt upon which judgment was obtained was incurred about April 1985 to March 1986, that is, after the incorporation of Salchlor Pty. Ltd. During the relevant period there were two forms of guarantee by the judgment debtor in force. One was dated 3 April 1985, and signed by, inter alia, the judgment debtor; it guarantees payment of Precise Pool Products' account in favour of Salchlor. Mr. Applegarth, on behalf of the judgment debtor, has pointed to the fact that there was a registered business name, Salchlior, which registration ceased on 31 October 1984, and asked me to infer that the guarantee was probably intended for Salchlor Pty. Ltd. Counsel for the judgment creditor made no further submissions. On 9 August 1985 a further guarantee was given by Mr. Campagna in favour of Salchlor Pty. Ltd. The case is plainly one in which it is right to go behind the judgment debt; there 1s no doubt about that. A more difficult question 1s whether there "in reality" is a debt, One possible view of the facts is that despite the cessation of the registration, the judgment creditor in fact continued to carry on business in the business name, Salchlor, after that name ceased to be registered, and that therefore the guarantee dated 3 April 1985 is in favour of the judgment creditor. That guarantee might have survived the execution of the subsequent guarantee dated 9 August 1985. Another possible view of the facts is that the first guarantee was in favour of the judgment creditor and that ceased to have effect on 9 August 1985, being superseded by that bearing that date. A third possible view is that the first guarantee was intended to be in favour of Salchlor Pty. Ltd., as was the second. The question is whether there is a debt, and if so of what amount, and depends upon which of those three views is correct. For example, if it is correct that the guarantee dated 3 April 1985 should be read as being in favour of the petitioning creditor, then at least part of the debt claimed, and for which judgment was obtained, must have been due. The evidence is rather scanty, and I must do the best I can with it, keeping in mind that it is, in a sense, up to the petitioning creditor and its associated company to explain the discrepancies in the facts, because one would not expect the judgment creditor to know in detail the intricacies of the internal arrangements of these companies. Starting from the proposition, which there is no reason to doubt, that the goods were supplied by the judgment creditor, the most difficult point is the construction of the guarantee of 3 April 1985. It is certainly arguable that that guarantee should be read as being one in favour of Salchlor Pty. LUtd., which had been incorporated some four months before it was given if, indeed, it should not simply be treated as a nullity. I think the better view is not to presume any illegality, but take the view that the guarantee was intended for that company. On that basis, then, both the guarantees should be taken to be in favour of Salchlor Pty. Ltd., and there is no guarantee in favour of the petitioning creditor. I therefore hold that there is no debt. The petition will be dismissed with costs. The costs will be limited to costs of and incidental to the hearing of 12 November 1986 and today's hearing. The order of Spender J. for costs will, of course, stand. } certify that this and the 3 preceding pages are a true copy of the reasons for judarrent herein of His Honour Mr Justice Pincus Z , pene g Asséciate Dated / phecer her 1986.