JUDGMENT No. suet 17, OF enedecssscee IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) No. VP 958 of 1994 ) ) GENERAL DIVISTON RE TERENCE THOMAS O'BRIEN Judgment debtor EX PARTE: PUBLIC TRANSPORT CORPORATION JUDGE : Heerey J DATE: 30 November 1994 PLACE: Melbourne EX TEMPORE REASONS FOR JUDGMENT I have decided that this application for an adjournment should be refused. I will give my reasons. The petitioning creditor obtained a judgment on 1 July 1991 for rent due in respect of premises leased to the debtor for use as an office 1n connection with his practice as a solicitor. The amount of the judgment was $24,841.94. The judgment creditor obtained the issue of a bankruptcy notice on 15 November 1991, and the subsequent petition came on for hearing on 20 July 1992. A compromise was negotiated between counsel for the petitioning creditor and the debtor himself, on terms that the debtor would pay within 14 days the amount sought in the bankruptcy notice, that is, $24,841.94, together with interest of $3726.29 and costs of $2250, amounting to a total of $30,819.23, and if that amount was not paid the client would be at liberty to commence further bankruptcy proceedings. - SOUAT ne FEDEF' & ayy! SE Sonia, fmended judgments as requested- plus diskette With the Gompliments of Ma fiatie PC. Sowoy (200 -2F }008 -9S7 \ 1003 GG JUDGES CHAMBERS, FEDERAL COURT OF AUSTRALIA, 450 LITTLE BOURKE STREET, MELBOURNE 3000 It was a-further term of the agreement for compromise that if payment of $15,000 was received within 14 days, along with a commitment to provide the balance of the money owing within a further 14 days, the creditor "would be prepared to entertain further indulgence." The petition was by consent dismissed. It appears that counsel for the petitioning creditor recognised that there was a flaw in the bankruptcy notice. It may be, as the debtor now says, that that was not revealed to him, but it does not seem to me that that fact invalidates the compromise that was reached. In the event, the debtor paid no money under the compromise. Clearly enough, on the basis of the principles discussed in McDermott v Black (1940) 63 CLR 161 this was not a case where the creditor accepted a promise in satisfaction of its debt. The petitioning creditor then issued the further bankruptcy notice on 17 May 1994. The petition came on for hearing before Deputy Registrar Agnew on 7 November. The debtor was represented by counsel. An adjournment was sought. It was said that the grounds of opposition to the petition would be, first, that the debtor was solvent, and, secondly, reliance on the compromise reached in 1992. The Deputy Registrar granted the adjournment to today, gave directions that the debtor file material by 21 November, and the petitioning creditor file any material in reply by 23 November. It was apparently said at the hearing on behalf of the debtor that he could arrange his affairs in the meantime, and the Deputy Registrar remarked that it was desirable that the debtor get independent legal advice. The debtor did not comply with those directions. He did retain an accountant, a Mr Shilton, who on 23 November spoke to Mr Delcho Bobeff of the petitioning creditor's solicitors and said that he had been instructed by the debtor to provide advice in relation to the proceedings, and sought a further extension for his client to "put his affairs into order". Mr Bobeff told Mr Shilton that he had been given specific instructions by the petitioning creditor to proceed with the bankruptcy application on 30 November, and that due to the debtor having failed to honour any of the past undertakings given by him, the petitioning creditor would not enter into any further negotiations with the judgment debtor. Mr Bobeff informed Mr Shilton that the debtor owed the judgment creditor $74,884.45 made up as follows: Judgment debt, $24,841.94, interest to 15 November 1994, $10,708.55, additional outstanding rent from the date of judgment to the date of re-entry, $25,431.99, and rates owing to Melbourne Water and the City of Oakleigh under the lease, $13,901.97. Mr Bobeff had earlier directly advised the judgment debtor of those details. The debtor swore an affidavit today in which he set out his assets disclosed as follows: Home at 5 Rothesay Avenue, East Malvern, $380,000, subject to first mortgage, $200,000, and second mortgage, $40,000, interest owing, $5000, leaving an equity of $135,000. He deposed that further assets were cash at bank, $2000, house furniture, $10,000, and debtors, $4000, work in progress, $10,000, a total of $26,000. He stated that his liabilities were: Transport Commission, $24,841.94, arrears of rent estimated at $30,000, arrears of rates estimated at $12,000, and various miscellaneous creditors totalling $5300, a total of $72,141.94. He deposed that his miscellaneous creditors were not requesting payment of their debts, an assertion which, I interpolate, may perhaps be doubted, since his miscellaneous creditors included Telecom Australia, $1800, and members of the Bar, $1000. There is no obvious reason why those creditors would not want payment. He further deposes that yesterday at 5.40 p.m. he was telephoned by Mr Ellis of counsel, retained in the matter by him, and advised that he, Mr Ellis, would be unable to appear on his behalf in these proceedings. Mr Ellis told him that he had been advised by counsel for the judgment creditor that affidavit material would be filed on the morning of the hearing of the petition, and that "the contents of the affidavit precluded Mr Ellis from appearing on my behalf." Despite numerous inquiries the debtor says he has been unable to procure and adequately instruct counsel to appear on his behalf today. The genesis of that complaint by the debtor's counsel would appear to be in an affidavit of Susan Mary Phillips sworn yesterday on behalf of the judgment creditor, which deposed that she had been informed by Mr Bobeff and believed that the debtor said to Mr Bobeff that he had been "let down by his barrister", and would be unable to file and serve the affidavit material which was required by 21 November. To return to the affidavit of the debtor, he states that during the period of the adjournment since 7 November he has been unable to give concentrated attention to arrange his finance because his 9 year old son has been suffering from severe sinusitis and severe headaches, and that he himself as a result of this and the stress that he has been under as a result of having to contend with the petition, has been in poor health. He seeks an adjournment to the first date convenient in the New Year, which, of course, will be in February, for the purpose of arranging and instructing counsel to represent him to make "further attempts to determine all details of my indebtedness to the judgment creditor, and, if necessary, take the necessary action to oblige the judgment creditor to reveal full details of its claim and costs", and, upon obtaining details of his indebtedness, obtain the necessary mortgage loan upon the security of his home. An indication of the factors that should be taken into account on an application for adjournment of a creditor's petition, although not, of course, an exclusive one, is contained in the judgment of Sweeney J when a member of the Full Court in Field v Commercial Banking Company of Sydney Ltd 22 ALR 403 at 411. The power to adjourn a petition is conferred by s 33(1)(a) of the Bankruptcy Act 1966 (Cth). The factors that strike me as pointing strongly towards the refusal of the adjournment are that the original debt of the judgment creditor seems to be undisputed. The very nature of it, a claim for rent, is inherently likely to be not in dispute. There is no suggestion of any counterclaim, set-off, or cross-claim which might affect the judgment itself. That amount has been owing for almost 3% years, and, as has been seen, a substantial further amount has accrued in the meantime. Further, there was a compromise to which the debtor agreed two years ago, and which he has not honoured. All of this tends to show, in my opinion, both that the solvency of the debtor may be seriously doubted, and it also goes to show that the petitioning creditor is not acting unreasonably in opposing this request for an adjournment. Also, I think the debtor has acted in a cavalier fashion in dealing with the directions that were given in this Court for the further hearing of the matter. He only obtained an adjournment on 7 November as an indulgence by applying on the day of the hearing. The obligations on him to comply with those directions were not onerous. The defences that he foreshadowed were not complex, and there is no good reason, to my mind, why he could not have adequately complied with those directions in the meantime. I am not satisfied that his complaint about inadequate knowledge of the amounts claimed by the petitioning creditor is genuine. It seems that Mr Bobeff provided him the details, and, in any event, he well knew of the amount of the judgment debt. Further, there does not seem to be any reasonable prospect of him successfully defending the petition even if he obtain the adjournment sought, and obtained legal representation. The details he gives in his affidavit do not present the full picture. In particular, there is no indication of his income and capacity to meet debts as they fall due. The fact that he notes $5000 is owing on interest on his house indicates that he is not able to meet those commitments out of current income. As I have stated earlier, I do not see any reasonable prospect of him resisting the claim on the ground that the judgment debt was compromised in 1992. The personal circumstances of the debtor, a member of the legal profession, excite understandable sympathy, and I recognise that a consequence of a sequestration order would be that he would have to surrender his practising certificate, but I do not think that, fairly, that should stand in the way of the judgment creditor's right to timely hearing of the petition. The court orders that a sequestration order be made against the estate of the debtor. The petitioning creditor's costs of and incidental to the petition in this matter, including reserved costs, shall be taxed and paid in accordance with the Bankruptcy Act 1966. The date of commission of the act of bankruptcy is 21 June 1994. I order that Robert William Norton be appointed trustee of the estate of the bankrupt. I certify that this and the preceding 7 (seven) pages are a true copy of the reasons for judgment of his Honour Mr Justice Heerey. 7) 30 Nov er 1994 Associate ected Appearances Counsel for the judgment debtor: In Person Solicitor for the judgment debtor: In Person Counsel for the judgment creditor: T McLean Solicitor for the judgment creditor: Corrs Chambers Westgarth Date of hearing: 30 November 1994