( i " gupaminT No TO.) CATCHWORDS BANKRUPTCY - Ground of opposition to petition that debtor "1s able to pay his debts" - Debtor eligible beneficiary of discretionary trust which advanced to him and another jointly the amount of the debt which they both owed jointly and severally - Both debtors unwilling to pay though asserting ability to pay - Whether joint asset equal to the amount of the debt established ability to pay - Whether Court has a discretion to make a sequestration order in such circumstances even if there 1s ability to pay - After trial Judge found debtor not able to pay and adjourned for two weeks to make formal sequestration order upon filing of affidavits of debt and search, debtor applied to reopen to prove a gift from his co-debtor of her share of the joint asset - Whether debtor should be permitted to reopen at that stage - Principles relating to fresh evidence on appeal. Bankruptcy Act 1966, $s.52(2)(a) TROJAN -V- CORPORATION OF THE TOWN OF HINDMARSH SA G.86 OF 1986 Northrop, Jenkinson & Burchett JJ. Sydney 21 August 1987 IN THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY ) No. G.86 of 1986 ) ) GENERAL DIVISION ON APPEAL FROM THE HONOURABLE MR. JUSTICE FISHER BETWEEN: ERIC TROJAN Appellant AND: CORPORATION OF THE TOWN OF HINDMARSH Respondent MINUTE OF ORDER OF THE COURT Judges Making Order: Northrop, Jenkinson & Burchett JJ. Where Order Made: Sydney Date of Order: 21 August 1987 THE COURT ORDERS THAT: (1) The appeal be dismissed. (2) The appellant pay the respondent's costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY No. G.86 of 1986 eee GENERAL DIVISION ON APPEAL FROM THE HONOURABLE MR. JUSTICE FISHER BETWEEN: ERIC TROJAN Appellant CORPORATION OF THE TOWN OF HINDMARSH Respondent CORAM: Northrop, Jenkinson & Burchett JJ. PLACE: Sydney DATE: 21 August 1987 REASONS FOR JUDGMENT THE COURT: This is an appeal from a sequestration order made by Fisher J. against the appellant on 19 November 1986 on the ground of non-compliance with a bankruptcy notice. The notice of appeal, which was filed by the appellant in person, 1s a somewhat discursive document, but the grounds may be summarised as asserting error in the finding of his Honour that he was not satisfied by the debtor in terms of s.52(2) of the Bankruptcy Act 1966 that the debtor was "able to pay his debts", and as asserting that his Honour erred in refusing to permit the appellant to reopen his case, after his Honour had handed down 2. his reserved judgment and before the pronouncement of the sequestration order, to tender a further affidavit designed to show solvency. It is necessary to recount the events out of which the bankruptcy petition arose. The appellant and his de facto wife (who was formerly known as Ruth Arndell, but at some stage apparently changed her name by deed poll to the single name "Ruth") were involved in the conduct by a company of a roller skating rink upon land leased from the respondent. The company failed, and the appellant and Ruth endeavoured to organize what was described as a co-operative to take over the lease. An arrangement was entered into with the respondent under which the appellant and Ruth agreed to become tenants from 19 March 1984 at a weekly rental of $769-23 as "an interim step to enable the business to continue to trade" pending "a formal lease (to) be entered into by the parties as soon as possible and by agreement as to terms and conditions." These matters were confirmed by an exchange of letters. After about six months, no formal lease having been entered into or agreement in writing reached, the respondent made it clear that it was not prepared to allow the tenancy to continue. The appellant and Ruth insisted that it had bound itself to do so, and organized a "sit-in". In proceedings commenced on 3 January 1985 by the respondent in the Supreme Court of South Australia, an order for possession was made by Master Lunn on 18 February 1985 requiring possession to be delivered by 12 March 1985. (A previous proceeding had failed when Master Teesdale-Smith had found on 19 3. December 1984 that the appellant's and Ruth's occupation was not as tenants at will, as had been contended by the respondent, but as weekly tenants, and that the steps taken by the respondent had not been appropriate to terminate a weekly tenancy. Following that decision a notice to terminate a weekly tenancy had been served.) The proceedings in which the order of Master Lunn was made were commenced by an originating summons supported by affidavits. They were defended, and an affidavit was sworn by the appellant alleging an agreement to grant a lease for a term. The appellant and Ruth appeared before Master Lunn, initially by counsel, and subsequently in person. The Master held that the appellant and Ruth had no basis to contend that they had any interest in the premises to enable them to resist an order for possession. On the ground that the material in their affidavits did not sustain in law the claim made by them, he made the order for possession summarily. Master Lunn drew attention to the terms of the letters, each of which made it clear that the conditions of the proposed new lease were still subject to negotiation, to various aspects of uncertainty involved in the affidavit evidence filed on behalf of the appellant and Ruth, and to inconsistencies between the appellant's account in his affidavit and what he had stated in his contemporaneous letter. An appeal not having been lodged within time against the order made by the Master, a summons seeking an extension of time for appeal was filed on behalf of the appellant and Ruth on 1 March 1985. This was refused with costs by Millhouse J. on 8 March 1985, a decision against which there has been no appeal. 4. The final step in the proceedings for possession was an order for costs in the sum of $1,672-15 which was made on 25 July 1985. It was that order, also not subject to appeal, which founded the bankruptcy notice in the present matter. The bankruptcy notice was dated 22 January 1986, and it was served on both the appellant and Ruth on 3 February 1986. In the meantime, proceedings had been brought by the respondent in the Local Court of Adelaide against the appellant and Ruth claiming amounts in respect of rent from 21 October 1984 to 30 December 1984, loss of mesne profits from 30 December 1984 to 12 March 1985, and also damages, arising out of their occupation of the premises referred to. In those proceedings, defences and a counter claim were filed, which again set up the contention that a binding agreement to grant a long term lease had been entered into. In those proceedings, upon. the application of the respondent Corporation, Judge Boylan on 13 February 1986 made an order for the entry of summary judgment. By summons dated 20 February 1986 the appellant and Ruth sought leave to appeal to the Supreme Court from the order of Judge Boylan, but that summons was adjourned sine die by Matheson J. on 14 March 1986, and no further steps have at any time been taken by the appellant or Ruth in respect of it. It appears that the purpose of the adjournment was to enable consideration to be given to the proposition that it was not leave to appeal which was required, but an extension of time within which to appeal. The summons was not served on the Corporation or its solicitors, the application to Matheson J. being made ex parte, and no application for extension of time in respect of that matter has ever been lodged. Although the reasons of Master Lunn are in evidence, the terms in which Millhouse J. refused an extension of time to appeal against the order made by him are not in evidence, nor are the reasons of Judge Boylan. The respondent's petition was served on each debtor on 30 April 1986. In it they were alleged to be indebted to the respondent in the total sum of $17,510~-62, being the amount of the Supreme Court judgment for costs the subject of the bankruptcy notice, i.e. $1672-15, together with the amount of the judgment in the Local Court entered by order of Judge Boylan, i.e. $15,838-47. There has been no_ hearing in respect of the counter-claim in the Local Court. In answer to the petition, a Notice of Intention to Oppose Petition was filed and served on behalf of the appellant and Ruth, each of whom was then represented by a solicitor. The grounds stated were as follows: "1. He is able to pay his debts as they fall due. 2. The Debtor has a counterclaim against the Creditor exceeding the amount of the debt alleged in the Petition. 3. The Debtor has issued an application for leave to appeal in the Supreme Court of South Australia against the Judqment obtained by the Petitioning Creditor. 4, The Petitioning Creditor is not empowered under the Local Government Act 1934 to 1975 to issue a Creditor's Petition in Bankruptcy." At the hearing before Fisher J. qround four was abandoned. It appears that ground three was intended to relate to the stillborn application to Matheson J., which had not been revived since it had been pointed out that an extension of time was probably what was required rather than leave. It is impossible to see how ground three could be regarded as a serious ground of opposition to a sequestration order without some step being taken to pursue the ex parte application to which it referred. In any case, it provided no answer to the judgment on which the bankruptcy notice depended. At the commencement of the hearing of the petition on 8 July 1986, when the appellant had legal representation, it was announced that this ground would not be pursued. Later in the hearing, which was a lengthy one, the appellant, who was then unrepresented, said of this ground: "We would like to leave that as another door open." Fisher J. pointed out that nothing had been done over a long period, and that there was not in fact an appeal on foot. When adjourning the hearing before him for a period of three weeks, he told the appellant that unless some action was taken during the adjournment in furtherance of the so called appeal he would assume that the ground would remain abandoned. The appellant responded: "Yes, I accept that, your Honour." Nothing was done, and at the close of the evidence on 2 September 1986 Fisher J. made it clear that he did not think the ground could still he maintained. 7. With regard to the ground raised of ability to pay his debts as they fell due, the evidence of the appellant and of Ruth disclosed an unusual situation. They openly declared themselves adamantly opposed to paying any part of the debts referred to in the petition. The Court could have been left in no doubt they were prepared to go to gquite extreme lengths in order to frustrate the collection by the respondent of those debts. But, citing Sarina v. Council of the Shire of Wollondilly (1980) 48 F.L.R.« 372, they claimed to be entitled to dismissal of the petition as against each of them on the ground stated. In the case of Ruth, for whose benefit during the course of the hearing a former husband made a property settlement pursuant to proceedings in the Family Court, Fisher J. acceded to the argument. In the case of the appellant, he rejected it. The appellant swore, in an affidavit filed prior to the commencement of the hearing, that his only liability was the sum of $17,510.62 owing to the respondent pursuant to the judgments obtained in the Supreme Court and the Local Court, which he described (erroneously) as subject to an application for leave to appeal that had been adjourned to a date to be fixed. He swore that his only assets were ten shares in a company named E.J.T. Nominees Pty Ltd, valued at ten dollars. This company subsequently changed its name to Nest Egg Nominees Proprietary Limited. The appellant swore that the company acted "solely as a trustee for the Eric Trojan Investment Trust." His affidavit proceeded to assert that he was able at any time to borrow the sum of $20,000.00 from the company, and that such a loan to him had been authorized by the directors on 21 May 1986. He attached 8. a copy of the balance sheet as at 30 April 1986 of the Eric Trojan Investment Trust, according to which the Trust disposed of net assets of approximately a quarter of a million dollars, including a deposit "at twenty-four hour call" of over $50,000.00. The evidence showed that there also existed another trust, details of which were not evidenced, known as the Eric Trojan Trading Trust. The balance sheet of the Eric Trojan Investment Trust showed loans to the Eric Trojan Trading Trust in a total of $38,200.00. The evidence disclosed too that the appellant, despite the terms of his affidavit, owned a small number of shares in a public company and some personal effects, but he swore that these had very little value. There was tendered in evidence an indenture, bearing the date 26 July 1979, by which E.J.T. Nominees Pty Ltd purportedly became the trustee of the settlement called "The Eric Trojan Investment Trust". According to the provisions of the indenture, that trust required the company to stand possessed of the sum of $50.00 "and any other moneys that may be paid to the Trustee by the Settlor" (one Alan Robert Rye) upon trust to invest and to hold the investments upon the trusts therein declared. Although there is a reference to accretions to the income of the trust, the accretions to capital contemplated by the indenture seem to be limited to "other moneys that may be paid to the Trustee by the Settlor", and there is no evidence concerning the source of the considerable assets referred to in the balance sheet which has already been mentioned. (Cf£. Joyce v. Ashfield Council 9. (1967) 14 L.G.R.A. 133 affirming (1965) 12 L.G.R.A. 253.) The trust fund is declared to be held "UPON TRUST as to the income thereof for the beneficiaries or any one or more of them exclusive of the other or others in such shares and proportions as the Trustee in the absolute discretion of the Trustee may from year to year determine." There is a provision that in default of determination the income is to go to certain beneficiaries who do not include the appellant. Clauses 4 and 5 of the indenture read as follows: "4. Upon the Vesting Date the Trustee shall hold the Trust Fund UPON TRUST to pay or distribute the Trust Fund amongst such of the Beneficiaries as are then living or any one or more of them exclusive of the other or others in such' shares" and proportions as the Trustee in its absolute discretion may determine on or within a period of one month before the Vesting Date and in default of any such determination as aforesaid by the Trustee UPON TRUST for such of these Beneficiaries named in Item D of the said Schedule as shall be living at the Vesting Date and if more than one in the proportions therein set out absolutely. 5. Notwithstanding anything in the foregoing and without prejudice to the powers conferred on the Trustee by statute the Trustee may at any time and from time to time pay or advance the whole or any part of the capital of the vested or presumptive share of any person or persons entitled hereunder from time to time remaining in the hands of the Trustee to the person or persons so entitled as aforesaid in such manner and in such proportions as the Trustee may think fit and unless the Trustee at the date of such payment or advance otherwise determines any amount or amounts so paid or advanced shall be deemed to have been paid to or received by such person or persons absolutely and not by way of loan." 10. The trustee's power of investment expressly extended to any investment, whether or not authorized by law for _ the investment of trust funds, which the trustee might in its absolute and unfettered discretion determine, including' the deposit of any moneys with any individual, with or without interest, and the making of advances, whether secured or unsecured, to any person including any person that might be beneficially entitled under the indenture. It was expressly declared that the intention of the indenture was that the trustee should have the same power of investment and dealing with the trust fund as if the trustee were absolute beneficial owner thereof. The vesting date was fixed for the purposes of the indenture as the date on which should expire the period of fifty years after the execution of the indenture, or the period of twenty-one years after the death of the last survivor of the descendants then living of his late Majesty King George VI, whichever should be the shorter period; but 1t was provided that after the expiration of the period of one year the trustee might appoint an earlier date to be the vesting date. Special provision was made that at any time prior to the vesting date the trustee might, but subject to certain provisos, in its absolute and unfettered discretion vary the trusts or provisions of the indenture in any manner whatsoever. The provisos ensured that any variation should be in favour of relatives of the appellant, and should not confer a benefit on ll. the settlor or the trustee nor extend to income derived up to the date of exercise of the power. The discretionary beneficiaries named included the appellant and any child or grandchild of the appellant, and also the following: "Any charitable institution person or persons body corporate or incorporate or howsoever constituted whom the Trustee in the Trustee's absolute discretion considers worthy of receipt of funds either for charitable or educational purposes or for the relief of poverty or for religious scientific or public educational purposes in Australia including a public hospital or any hospital which 1s carried on by a_= society or association otherwise than for the purposes of profit or gain to the individual members of that society or association." There was provision for the appointment of a new trustee, to which was added a proviso as follows: "PROVIDED ALWAYS that notwithstanding anything to the contrary herein contained neither the Settlor nor any beneficiary shall at any time be eligible for appointment as a Trustee hereof." Early in the hearing, it was pointed out by Fisher J. that the ability to raise a loan from the trust could not establish the solvency of the appellant or of Ruth, since upon the making of such a loan, and assuming it was used to pay the debts owed to the petitioning creditor, they would merely be substituting one creditor for another. Also, in order to secure an adjournment which they sought, the appellant and Ruth undertook to arrange for a sum of money to be provided, initially for payment into a special account in the names of the solicitors for the parties, but ultimately to be paid into Court. It is not clear whether the terms of the payment into Court were regarded 12. by either party as corresponding to the terms upon which moneys were paid into Court in the Sarina case. However it is unnecessary to determine this question for the purposes of the present appeal. What is clear is that a variation of the arrangement in respect of the availability of a loan to the appellant and to Ruth was sought from the directors of Nest Egg Nominees Proprietary Limited. The directors of that company were the appellant himself, Ruth, Ruth's daughter Jancy, and one Stephen Barltrop. A minute of a meeting of directors of the company in 1ts capacity as trustee for the Eric Trojan Investment Trust, referring to a meeting of 14 July 1986 at which all four directors were present, signed by Mr. Barltrop and Jancy, includes the following: "ADVANCE TO E. TROJAN & RUTH: IT WAS RESOLVED: that the Trustees in their absolute and unfettered discretion, make an advance of $17510.62 to E. Trojan and Ruth, to be paid into their joint personal account at the Commonwealth Bank - Hillcrest; and approved a further advance up to $5000 on the same terms to meet any other debts or costs in the above action." (It should perhaps be pointed out, having regard to the words "Trustees" and "their absolute ... discretion", that the company was the trustee, and not only were the directors not trustees but at least one of them - the appellant himself - was ineligible to be a trustee by virtue of the proviso earlier quoted.) 13. On 16 July 1986 the sum of $17,510.62 was paid into Court and a receipt was issued recording that it was received "from Mr. E. Trojan & Ruth". On 18 July 1986 the appellant tendered in evidence the receipt for the amount paid into Court, and informed Fisher J. that the trustee had made an advance to himself and to Ruth. He explained that the beneficiaries eligible in the discretion of the trustee included, not only himself, but also Ruth as a person whom the trustee in its absolute discretion considered worthy of receipt of funds for the relief of poverty, a proposition which his Honour described as "a delightful argument". The appellant called Ruth to give evidence, in the course of which it was made clear that the $17,510.62 was paid by the trustee to the appellant and Ruth and placed in their joint banking account, an account in respect of which either had the power to sign cheques. It was paid out of that account and into Court. The terms of the appellant's submissions to Fisher J. demonstrate that what he was asserting was that the trustee had made the advance, not to him alone, but to himself and Ruth. The judgment under appeal accepts the appellant's assertion when it finds (and there was no challenge to this finding): "The position therefore as far as the debtors are concerned is that they are jointly entitled to the funds in Court which are sufficient to discharge at least the judgment debts if the 14. debtors consent to this course of action." But, during the presentation of the case before him, his Honour pointed out that on that basis there was a legal problem. The debt being joint and several, the respondent was entitled to recover it from either the appellant or Ruth in full. Since neither was willing to pay, but, 1n reliance on the Sarina case, each was setting up the joint ownership of the money paid into Court to demonstrate solvency, there was the difficulty that the equal entitlement of the other to that sum prevented either from sustaining, on the basis simply of the advance from the trustee, the claim to solvency made by both. The respondent was not bound to demand only half of the debt from each. The appellant's reply to his Honour's difficulty was to assert: "We are solvent; we have the capacity to be solvent according to whatever terms that you define as being necessary to be solvent to the amount of double the debt. It seems to me rather strange that we would have to have twice the amount of money required in order to meet it." (Emphasis added.) His Honour responded: "The safest thing really would be for each of you to have this amount of money." His Honour also pointed out that in the Sarina case the debtor "had without doubt very substantial assets. Here there are two debtors and each debtor standing alone has not necessarily sufficient to pay the debt." The reasons for judgment delivered by Fisher J. rejected the appellant's contention that he was able to pay his debts in the following terms: 15. "Mr. Trojan is only beneficially entitled to one half of the monies in Court whereas he 1s liable for the full amount of the judgment debts. The creditor was and is entitled to pursue either debtor for the full amount of the debts and the (scil. debtor) pursued is insolvent unless he or she can pay the full amount out of his or her separate assets." His Honour then considered and rejected the grounds related to the appeal and counterclaim, and concluded "that I should make a sequestration order against Mr. Trojan. This I propose to do when the petitioning creditor files the required affidavits of debt and search." (It had previously been decided to defer the filing of affidavits of debt and search until after determination of the grounds of opposition to the making of a sequestration order.) Fisher J. dismissed at that stage the petition against Ruth. It was accepted by both parties that his Honour, who had during a hearing extending with adjournments over several months given the debtors every opportunity to seek to obtain from the discretionary trust the funds necessary in order to pay out the debts, had in mind that even at the last gasp the appellant might take this course so that 1t might still be possible to avert the making of a sequestration order. However, nothing was done to effect payment of the debts. What the appellant did was to seek to reopen his case in order to tender an affidavit annexing a letter, dated some two weeks after the delivery of judgment, by which Ruth purported to make a gift to the appellant of her share of the moneys held in Court. It was made guite clear that the appellant's intention was to maintain his refusal to pay any part 16. of the debts, but to seek, if permitted to reopen his case, to show that he now had the ability to pay the precise amount of the two judgments referred to in the petition. His Honour refused to permit the case to be reopened, and made a sequestration order. At the outset of the hearing of the appeal, the appellant sought leave to rely on additional grounds of appeal, and to adduce fresh evidence. The fresh evidence sought to be adduced related to the termination of a trespass prosecution in a magistrate's court arising out of the appellant's occupation of the premises previously mentioned. The prosecution was discontinued, allegedly because of contradictions between statements appearing in an affidavit of an officer of the corporation, filed on its behalf in the Supreme Court proceedings in which the order for possession was made, and oral statements of another officer in evidence before the magistrate. It was suggested by the appellant that representatives of the corporation had been guilty of perjury. Notwithstanding the appellant's submission that the fresh evidence impeached the judgment entered in the Supreme Court, it was admitted that no further steps had been taken to seek to have that judgment set aside. Perusal of the reasons given by Master Lunn suggests it is extremely unlikely that discrepancies in the evidence given by corporation officers about the events in question could have the effect asserted by the appellant. The judgment of the Master relied heavily upon the undisputed terms of the letters exchanged for the very purpose of recording the agreement reached and, as would be expected in the 17. case of a decision to enter summary judgment, upon. the inadequacies of the affidavits filed on behalf of the appellant and Ruth. Furthermore, since neither the judgment of Master Lunn nor the ultimate order for costs was the judgment referred to in the third ground of opposition to the petition, before the admissibility of the fresh evidence could be considered in relation to an attack on the judgment which founded the bankruptcy notice, it would be necessary for the Court to give leave to the appellant to raise a new issue in opposition to the petition at this stage. The situation may be compared with that referred to in Coulton v. Holcombe (1986) 60 A.L.J.R. 470 at 473. In all the circumstances of the present matter, the appellant should not have leave to enlarge the issues upon which he chose to contest the petition. The statement in the joint judgment of the High Court in University of Wollongong v. Metwally (No. 2) (1985) 59 A.L.J.R. 481 at 483: "It 1s elementary that a party 1s bound by the conduct of his case" applies in this case too. Another matter urged in the application to adduce fresh evidence was the appellant's contention that other evidence directed to the alleged counterclaim, and to the question whether Fisher J. should have gone behind the judgment upon which the bankruptcy notice was founded, should now be permitted to be adduced, though not adduced at the hearing. His claim was that Ruth had been responsible for presenting that part of the case, 18. that she was required by doctors' orders to desist from the strain of presentation of the case, and that he had thereby been deprived of the opportunity to rely on the evidence. Precisely what other evidence would have been adduced was not made clear. But in any case, it became apparent during the argument that the alleged medical instruction was not given until after the close of evidence. As has been said, the hearing extended with adjournments over a period of months, and 1t cannot be contended that there was not an opportunity to adduce any evidence the appellant wished to have put before Fisher J. Furthermore, this aspect of the attempt to rely on fresh evidence, 1f it did constitute a valid ground to reopen the matter, arose prior to the conclusion of argument at the hearing, and would have constituted a ground to seek to reopen the case then, and perhaps a ground of appeal against his Honour's refusal to do so. There were many reasons why the matter should not have been reopened on this account, but in no sense does this aspect of the appellant's application raise a question of fresh evidence. So far as the appellant is now seeking to go behind the judgment, it is important to remember that the only ground before Fisher J. which could conceivably raise that issue was the ground related to the question of appeal, not, as has been pointed out, from the judgment in the Supreme Court founding the bankruptcy notice, but from the judgment in the Local Court of Judge Boylan. Moreover, there was in fact no appeal on foot. The ground was abandoned, and nothing effective was done to enable it to be revived and pursued. 19. In Langdale v. Danby [1982] 1 W.L.R. 1123 at 1133 the House of Lords reaffirmed the proposition that: "To justify the reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, 1f given, it would probably have an important influence on the result of the case, though it meed not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible." The High Court of Australia has stated the test in even stricter terms. In Council of the City of Greater Wollongong v. Cowan (1955) 93 C.L.R. 435 at 444 Dixon C.J. said: "Tt must be reasonably clear that if the evidence had been available at the first trial and had been adduced, an opposite result would have been produced or, if it is not reasonably clear that it would have been produced, it must have been so highly likely as to make it unreasonable to suppose the contrary. Again, reasonable diligence must have been exercised to procure the evidence which the defeated party failed to adduce at the first trial." In McDonald v. McDonald (1965) 113 C.L.R. 529 at 540 Menzies J. cited this passage, and at 532 Barwick C.J. referred to "the stringent standard required by the now settled law on this subject." Barwick C.J. went on to say: 20. "The discovery subsequent to verdict of admissible credible evidence, which could not have been sooner discovered by the exercise of reasonable diligence in the circumstances, and which is of such probative value and significance that, taken with the evidence already given at the trial, it will in all probability be decisive of the issues between the parties in a sense opposite to that of the verdict, is a ground for the granting of a new trial." At 533 of the report of McDonald's case, Barwick C.J. made it clear that the circumstance that the fresh evidence may tend to Support the conclusion that the verdict was obtained by fraud will not lessen in any respect the stringency of the rules relating to the grant of a new trial upon the ground of the discovery of fresh evidence. In Australia, these principles have been consistently applied, and s.27 of the Federal Court of Australia Act 1976 should be construed in their Light (cf. Chamberlain v. R (1983) 46 A.L.R. 493 at 498-9, 583 et seg.). For another case where their application involved also the consideration of the question of fraud in relation to the original proceeding, see Nicholls v. Carpenter [1974] 1 N.S.W.L.R. 369. For a recent discussion of them, and of the special questions arising in the case of "post trial facts" (even in that case, it was said that the principle applied that the judgment "must not be disturbed without some insistent demand of justice"), see Radnedge _v. Government Insurance Office of N.S.W. (Supreme Court of New South Wales, Court of Appeal Division, unreported, 30 April 1987). 21. It is apparent that the case presented by the appellant comes nowhere near what 1S required to satisfy the principles relating to the reception of fresh evidence upon an appeal. Apart from the questions just discussed, the appellant sought leave to rely upon additional grounds of appeal relating to: the question whether Fisher J. should have gone behind the judgment, the validity of the counterclaim, a reference in his Honour's judgment to intemperate and irrelevant statements made by the debtors (a reference which did not found any of his Honour's findings), a claim of "misdirection" by his Honour, a claim that his Honour had unduly interrupted the presentation of the appellant's case (a complaint which is entirely unsubstantiated by the transcript), and a claim that his Honour failed to enquire into the details of an alleged asset of the appellant (which the appellant had not himself put forward as an asset at the hearing). The appellant's application was opposed. Although the appellant was not legally represented after the first day of the hearing before Fisher J., he is a university graduate with considerable experience of representing himself in _ legal proceedings. In all the circumstances of this particular matter it is impossible to accept his assertion that the questions now sought to be raised were omitted from the notice of appeal as a result of medical advice received by Ruth on 8 September, some months earlier. There was a somewhat faint suggestion that a direction given by Fisher J. was responsible for a division of labour by which part of the appellant's case was presented by 22. Ruth, but examination of the transcript makes it clear that, on the contrary, to the extent that any aspect was left to her, that course was adopted at the election of the appellant, announced to his Honour just one week before the medical advice is alleged to have been received. The transcript also shows that, notwithstanding his announcement, the appellant continued to concern himself from time to time with all the issues raised by his case. In the course of his application for leave the appellant elaborated the proposed grounds at some length, and that elaboration clearly indicated that there was no substance in them. In the exercise of its discretion, the Court refused leave to rely on the additional grounds. The appeal turns on the correct construction of s.52(2) of the Bankruptcy Act which provides as follows: "If the Court ... 18 satisfied by the debtor - (a) that he is able to pay his debts; or (b) that for other sufficient cause a sequestration order ought not to be made, it may dismiss the petition." It may be noted that s.5(1) provides that: "In this Act, unless the contrary intention appears - 'debt' includes liability." 23. In Re Sarina; Ex parte Wollondilly Shire Council (1980) 30 A.L.R. 266 Deane J. was concerned with a petition, based on a failure to comply with a bankruptcy notice, which had heen brought against a debtor who could fairly be described as a millionaire. The debtor, however, was adamantly opposed to payment of the particular debt in question. At 268 Deane J. said: "The debtor's default in payment of the debt owing to the petitioning creditor is not the result of any deficiency in means. It 1s because, notwithstanding that he has the necessary funds, the debtor simply refuses to pay the relevant amounts to the petitioning creditor." The petitioning creditor in that case submitted that the word "able" in s.52(2)(a) could be read as meaning "willing and able". Deane J. reyected this argument, saying at 269: "Tt does not appear to me that it 1s possible to divine any policy underlying the provisions of the Act to the effect that a creditor should be entitled to make a recalcitrant debtor bankrupt even though the debtor satisfies the Court that he is plainly solvent and able to pay his debts. It seems to me that it may well be that' the legislative intent was to leave a creditor, in those circumstances, to the ordinary remedies by way of execution and garnishee. In the result, I find that the debtor has, for the purposes of s 52(2)(a), satisfied me that he 'is able to pay his debts'. The petitioning creditor has not suggested that, in the event of such a finding, I should do other than dismiss the petition." There was an appeal, notwithstanding his success, by the debtor against a costs order which Deane J. made against him, and a cross-appeal by the petitioning creditor. The appeal and 24. cross-appeal were each dismissed: Sarina v. Council of the Shire of Wollondilly (1980) 48 F.L.R. 372. At 376-7 in the joint judgment of Bowen C.J., C.A. Sweeney J. and Lockhart J. the law was stated as follows: "The question now arises whether, as the appellant 1s able to pay his debts, the court is bound to refuse to make a sequestration order or has a discretion to refuse to do so. This involves the construction of the word 'may' in s. 52(2) in the context 'may dismiss the petition'. The guestion 1s whether 'may' is mandatory or facultative. ... The power conferred upon the court by s. 52(2) is permissive not mandatory, although it seems that the occasions on which the discretion not to dismiss the petition might be exercised would not be frequent. It may, in a proper case, require the refusal of a sequestration order yet permit the adjournment of the petition rather than its dismissal. The variety of circumstances that may arise in particular cases renders plain the undesirability of seeking to define parameters of the exercise of the power. Counsel for the respondent submitted that notwithstanding the ability of the appellant to pay his debts within the meaning of s.52(2), the court, in the exercise of its discretion, should make a sequestration order against the estate of the appellant. The essence of the argument was that as the appellant was able to pay the debt due to the respondent but was unwilling to pay it, the court should make a sequestration order as a mark of its disapproval of such conduct. In our opinion that would not be a proper exercise of discretion on the facts of this case. This case does not fall within the ambit of the discretion conferred by s.52(2). Nor does it call for the adoption of any course except dismissal of the petition." The present case stands in some contrast to the situation revealed in the Sarina case. It cannot be said that dismissal of the petition against the appellant would have left 25. the petitioning creditor to the ordinary remedies by way of execution and garnishee against a debtor who had demonstrated ample assets and income available for the application of those remedies. The respondent was not seeking a sequestration order "as a mark of (the Court's) disapproval of such conduct" as had been shown by the appellant, but because there appeared no appropriate alternative remedy. Assuming that the property referred to in the balance sheet of the Trust belonged to the Trust (and the appellant himself asserted that this was the case), it appeared clearly that the appellant's assets were insufficient to meet the debts relied upon in the petition, which were admitted, unless his argument should be accepted that the money in Court was wholly available to him for that purpose. Even in that case, his additional obligation i1n respect of at least one costs order, as to which (the onus under s.52(2)(a) being on the appellant) 1t was not shown whether or not the costs had been taxed at the time of the hearing, would probably have had to have been left out of account for him to have been regarded as solvent. Assuming those additional costs had not been taxed, a question would still have remained, since the word "liability" (embraced by the inclusive definition of "debt") 1s a wide one which Viscount Simonds in Government of India v. Taylor [1955] A.C. 491 at 508-9 equated with obligations and claims that are legally enforceable. However, as will appear, it 1s not necessary to resolve this question. His Honour''s finding that the appellant and Ruth were jointly entitled to the money paid into Court was not disputed, and in any event was clearly open to him upon the evidence. The 26. fact that the money had passed through a joint account, which could be operated by cheques signed by either the appellant or Ruth, cannot affect the matter since the money had been withdrawn from that account and paid into Court. Even while it remained in such an account, Hirschorn v. Evans (Barclays Bank Limited Garnishees) [1938]? 2 K.B. 801 is authority for the pruposition that the debt owed by the Bank to its customers was payable to them jointly, but not to either of them alone. Neither of them had any right to the money without the other of them. See also Jones _v. Maynard [1951] 1 Ch. 572: Russell v. Scott (1936) 55 C.L.R. 440 at 450-1; Palmer v. Bank of New South Wales (1975) 133 C.Le-R. 150 at 159-160. The onus, under s.52{2), is upon the appellant to satisfy the Court that he is able to pay his debts. In order to discharge that onus, he must rely on the assets of the Trust and on the money paid into Court. So far as the assets of the Trust are concerned, they are available to him only if a discretion is exercised in his favour. The possibility of a favourable exercise of the trustee's discretion as to the utilization of trust assets is quite different from the ability to "command" cash resources "through the use of his assets" to which Barwick C.J. referred in Sandell v. Porter (1966) 115 C.L.R. 666 at 670. So far as the money in Court 1s concerned, it does not belong to him, but to him jointly with Ruth. On the whole of the evidence, it is clear (and the appellant conceded this in argument) that Ruth is united with the appellant in an adamant refusal to countenance payment of the debts owed to the respondent. Accordingly, in seeking to satisfy the Court that he was able to 27. pay his debts by the use of the moneys in Court, not only did the appellant face the problem of Ruth's legal interest in the money, but also, as a practical matter, he could not show that Ruth was prepared to permit the debts to be paid by the use of the joint property. Her share of it was simply net available to him for that purpose. The same considerations emphasize how different the situation in the present case is from that which was involved in the Sarina case. If, in the present case, the respondent had been remitted to its rights of recovery in respect of its judgments by means other than bankruptcy, it would have faced enormous difficulties in enforcing those rights so as to recover from the appellant who, so far as the respondent is concerned, 18s indebted to the full amount of the judgments. In those circumstances, as distinct from a case where ample assets were available upon which to levy execution, the principle laid down in the Sarina case would not necessarily be satisfied by a sterile demonstration of an ability to achieve a payment which was not in reality at all likely to be compelled. Section 52(2)(a) envisages a situation which will probably bear fruit in payment. It is not easy to see any other reason why the legislature saw fit to make a demonstration of ability to pay only a discretionary ground of dismissal of a petition, and not an absolute bar to its success. At all events, cases such as the present fall fairly within the reach of a proper judicial discretion of the kind conferred by the subsection. Far from being an authority in the appellant's favour, the Sarina case, when properly understood, affirms the existence of a discretion 28. which in the very different circumstances of the present case a Court could hardly contemplate exercising otherwise than in favour of the respondent. However, since his Honour rightly held that the asset in Court was not sufficient to satisfy him that the appellant was able to pay his debts, no question of the exercise of his discretion on the footing of satisfaction of the appellant's ability two pay his debts arose, The final question raised by the appeal is whether Fisher J. erred in refusing to permit the appellant to reopen his case, after the delivery of judgment but before the making of the sequestration order, for the purpose of tendering evidence that Ruth in the meantime, and following the dismissal of the petition against her partly on the basis of her interest in the money in Court, had made him a gift of that interest by writing hima letter purporting to dispose of the whole of her share of the moneys held by the Court. The question whether an effective assignment was so made (see Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 2nd ed., section 619) may be put to one side. Fisher J. refused leave to reopen upon the appellant making it clear that his intention was not to take any step which could lead to payment of the debts, but simply to make a further attempt to comply technically with the requirements of s.52(2)(a). Clearly, the Court had a discretion whether or not to permit the case to be reopened at the fifty-ninth minute of the eleventh hour, when the judge was about to pronounce the 29. sequestration order. The circumstances of the case combined to justify the exercise of that discretion in the way in which 1t was exercised. If a litigant, like Shylock, chovoses to conduct litigation according to the strict measure of the letter of the law, and that measure is meted out to him, he is not in a strong position to seek then to receive some other measure in the discretion of the Court, particularly where an exercise of discretion in his favour would be likely to prolong still further a hearing the costs of which his opponent may quite probably be unable to recover. The appellant had had ample warning, long before the conclusion of the hearing, that the Court was likely to take the view which it did take of the sufficiency of his entitlement to the moneys in Court for the purposes of the application of s.52(2)(a). He and Ruth chose to proceed without taking further steps, thus obtaining in relation to the petition against her the benefit of her interest in those moneys. Appropriately modified, what Lord Bridge of Harwich said in Langdale v. Danby (supra, at 1133) of the situation of a defendant who does not put on all his evidence at the time of an application for summary judgment applies a_ fortiori in the circumstances of the present case. His Lordship sald: "But I can see no injustice at all in requiring a defendant to use such diligence as is reasonable in the circumstances to put before the Judge on the hearing of the summons, albeit in summary form, all the evidence he relies on in defence, whereas it would be a great injustice to the plaintiff to allow the defendant to introduce for the first time on appeal evidence which was readily available at the hearing of the summons but was not produced." 30. It would have been a grave injustice to the respondent to have permitted the expenses of the hearing to be further increased by acceding to the appellant's application. Furthermore, even if the application had been allowed, the additional evidence which it was desired to tender could only have led, at best for the appellant, to Fisher J. being required to exercise his discretion under s.52(2). A proper exercise of that discretion would almost inevitably have been against the appellant. For these reasons the appeal should be dismissed with costs. I certify that this and the preceding twenty-nine (29) Pages are a true copy of the Reasons for Judgment herein of the Court. Coxx Grebe Associate Dated: 21 August 1987 Appearance for the Appellant: Mr E Trojan in Person Counsel for the Respondent: Mr W JN Wells Solicitors for the Respondent: Johnsons Date of hearing: 13 May 1987