Ch AUSTRALIA. Lesh Xa. Vey a JUDGES' CHAMBERS FEDERAL COURT OF AUSTRALIA 119 NORTH QUAY BRISBANE AUSTRALIA JUDGMENT No. sonst sal exctatin CATCHWORDS Bankruptcy - creditor's petition Bankruptcy Act 1966 Section 52.(1) Wren v. Mahoney (1971-2) 126 CLR 212 RECEIVED 30 NOV 1994 FEDERAL COURT OF AUSTRALIA / PRINCIPAL fo REGISTRY No. QP1968 of 1994 Kiefel J.. Brisbane: 22 N ber 1994 GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF QURENSLAND No. QP1968 of 1994 RE: HASHEM SOLIMAN Debtor EX PARTE: G_JAMES EXTRUSION COMPANY PTY LTD AND G JAMES SAFETY GLASS PTY LTD Creditors JUDGE MAKING ORDER: Kiefel J DATE OF ORDER: 22 November 1994 WHERE MADE: Brisbane MINUTES OF ORDER THE COURT ORDERS THAT: 1. A sequestration order be made against the estate of the debtor Hashem Soliman. 2. The petitioning creditor's costs of and incidental to the petition in this matter, including reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966. & 3. we The date of the commission of act of the bankruptcy is 24 June 1994. 'Sf OA." "raat yeu : , , Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy ' Rekes. ' STATE OF QUEENSLAND No. OP 1968 of 1994 CORAM: _Kiefel J DATE: 22 November 1994 PLACE: Brisbane REASONS FOR JUDGMENT The judgment creditors obtained a judgment from the Magistrates Court against the debtor on 12 April 1994 in the sum of $6902.86. It remained unsatisfied and a bankruptcy notice was served on 27 May 1994. That notice was not complied with. It is not sought by the debtor to show that there exists any set-off, counter-claim or cross demand or otherwise that the debt may be satisfied. What Mr Soliman, who appeared for himself, has attempted to do is to show that the judgment ought be ignored or gone behind. The matter came before me yesterday and it appeared to me that Mr Soliman was attempting to argue that there was at the date of delivery of the goods in question by the judgment creditors to the company, Panorama Home Improvements Proprietary Limited, no subsisting guarantee given by him with respect to those goods. Mr Soliman was, it appears from records of the Australian Securities Commission, a director of that company although he has submitted that he has not in fact had any real connection with it. He was however a signatory to a guarantee to the judgment creditor which in terms provides that in consideration of the judgment creditor providing goods, materials or services to Panorama Home Improvements, that Mr Soliman and one other director of the company undertook to be responsible for the due payment by the company for those goods, materials or services. Mr Soliman's point was that he had attended at the Campbelltown offices of the judgment creditors and spoken to a Mr Sharpley in November 1992 and orally advised that he would no longer be a guarantor. An adjournment was provided to Mr Soliman at that point since he contended that he had a witness, a Mr Chahine, who was able to testify that conversation had occurred. Mr Sharpley for his part has sworn an affidavit that he has never met Mr Chahine and that no such meeting had occurred and that he had not at any time received instructions from the debtor to the effect that he had removed or withdrawn his personal guarantee. The goods were in fact delivered in February and March and when payment was not made by the company, the proceedings issued. They were not defended by Mr Soliman and a judgment in default of appearance or defence obtained. As I have said, judgment was then entered on 12 April 1994. Mr Soliman took no step to defend those proceedings or have the judgment set aside although it appears from Mr Carrington's affidavits, Mr Carrington being the national credit Manager of the judgment creditors, that there was a meeting with Mr Soliman in May 1993 at which an agreement was reached whereby Mr. Soliman could pay the amount owing over a period of time, but the agreement was not kept and as a result the bankruptcy notice issued. Importantly, there was no mention, Mr Carrington says, by Mr Soliman of any allegation that the guarantee had been withdrawn or revoked. I should also add that in the terms of the guarantee itself, it could only be revoked by one month's Notice in writing, and this stands as an additional difficulty for Mr Soliman's argument. The first question is whether there are substantial reasons for questioning whether behind the judgment there is in truth and reality a debt; see Wren v. Mahoney (1971-2) 126 CLR 212. There has not here been a determination on the merits in the Magistrates Court, and as I have said, judgment was entered by default. 'Whilst it may be thought more than curious that the point now taken with respect to the guarantee was not taken in the proceedings itself, or any step taken shortly thereafter, taken by themselves these matters do not stand as a bar to a consideration as to whether in reality such a debt exists. If the creditors petition is to succeed, the Court would need to have the requisite level of satisfaction required by section 52(1). The court will not, in all cases, necessarily then determine disputed questions of fact m a final way, and the course taken by this Court, were it not to have that level of satisfaction, would be not to permit the petition to proceed and then to allow those questions to be determined. Here the debt depends for its exstence upon the guarantee which is said by the bankrupt to have been revoked orally and informally. There are here then questions principally of fact, but also of law, at least in the sense that the revocation upon which he relies was not as required by the document itself, and I cannot for the moment see how it is contended that the judgment creditors would be bound by an informal acknowledgment, an informal revocation, save that I suppose it could be said if it had expressly agreed to it, it may have waived that requirement. But it seems to me that the critical question here is whether I consider that in all the circumstances I have outlined above that the allegation now raised by Mr Soliman 1s one made bona fide. Whilst as I have said the court will not always and need not determine ultimate questions, it can, I consider in a case such as this, determine whether the case put forward is a credible one. In that respect, the court may have regard to the time when the allegation first arose, and the opportunity the debtor has had to raise such an allegation, not only in court proceedings but to appropriate officers of the creditor itself. It seems to me that the first occasion on which these allegations arose were in these proceedings themselves, and there is nothing to support the judgment debtor's allegation of an acceptance of an informal revocation of his guarantee. He has no documentation to support such an assertion, and no witness to the event. Mr Sharpley has denied the allegation, and the yudgment debtor has never mentioned the matter, it seems to Mr Carrington. An appropriate time for that to have occurred was at the meeting which took place in May 1993. I do not consider it 1s a credible account of events. In these circumstances, I do not consider that the allegation, made so late, 1s one made bona fide and such as to overcome the prima facie effect of the judgment. I am satisfied that there exists in reality a debt due under the terms of the guarantee. The orders will then be that a sequestration order be made against the estate of the debtor Hashem Soliman and that the petitioning creditors costs of and incidental to the petition in this matter including reserved costs be taxed and paid in accordance with the Bankruptcy Act 1966. The date of the commission of the act of bankruptcy is 24 June 1994. I certify that this and the preceding four pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel. Date: 22 Ni ber 1994 ate te jovember MM a 'ond. Associate Solicitors for the applicant: Blake Dawson & Waldron Respondent appeared in person Date of Hearing: 21, 22 November 1994 Place of Heanng: Brisbane Date of Judgment: 22 November 1994