Re Howard M.J. v Ex parte Gall Stanfield & Tiley [1995] FCA 198

CATCHWORDS BANKRUPTCY - creditor's petition - whether fictitious amount claimed - whether petition properly served Bankruptcy Act 1966 Re M J Howard; Ex parte: Gall Stanfield and Tiley No QP 1941 of 1994 Kiefel J Brisbane 29 March 1995

IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND No. QP 1941 of 1994 RE: MICHAEL J HOWARD Debtor EX PARTE: GALL STANFIELD AND TILEY Creditor JUDGE MAKING ORDER: Kiefel J. DATE OF ORDER: 29 March 1995 WHERE MADE: Brisbane MINUTES OF ORDERS THE COURT ORDERS THAT: 1. A sequestration order be made against the estate of the debtor. 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. Date of Commission of Act of Bankruptcy: 4 August 1994 NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND No. QP 1941 of 1994 RE: MICHAEL J HOWARD Debtor EX PARTE: GALL STANFIELD AND TILEY Creditor CORAM: Kiefel J. DATE: 29 March 1995 PLACE: Brisbane REASONS FOR JUDGMENT I propose to make an order for sequestration for the following reasons. The petition is founded upon a judgment issued out of the Magistrates Court for the sum of $1775.24 for legal services rendered but which has deducted from that sum instalments of $250 paid, leaving the sum of $1525.24 as the debt with which I am concerned. Mr Howard, who appeared for himself, did not dispute the majority of that debt, but says that a separate and distinct account of $160 which was included in the total fees sued for was a fictitious account. This matter was, it seems, first raised in these proceedings. I do not accept, however, that that is so. Mr Howard is unable to point to anything which would support such an assertion save that it was said to be connected with voting rights in the event he presented his own petition. But this does not make sense, given the then existing indebtedness of Mr Howard to the solicitor's firm. In the event of any arrangement or sequestration they would have had voting rights, in any event. It seems to me at the very least that there is a level of confusion in Mr Howard's mind as to what was discussed about this account, and it may be that he has drawn the conclusion he does from the mere fact that it relates to advices concerning Part X arrangements although how this may be done is not apparent to me. Additionally, it appears that Mr Howard signed an acknowledgment of debt not long after the judgment was obtained. He says that that document is unreliable since he was not given essential advice. The advice that he says was critical to his execution of it was advice that he was not then liable for the petitioning creditor's costs to date which costs were included in the sums listed in the acknowledgment. In any event those costs do not form part of the debt upon which this petition was founded. Perhaps more relevantly for my purposes, it is clear that whilst Mr Howard commented to his then solicitor that he was reluctantly "going along" with the process in an attempt to avoid sequestration, he did not distinctly challenge any item of the account and in particular the sum of $160 to which he now refers. The petition was, I consider, properly served. It was served in a circumstance where the person serving was unable, by reason of the actions of Mr Howard, to place the documents in his hand. They were, however, left on the doorstep of Mr Howard's unit after an explanation of their nature. Indeed, Mr Howard does not dispute this. His point was that there was necessarily involved a trespass, which however overlooks that the rules to the Bankruptcy Act 1966 require personal service of a petition on a debtor and for that purpose authorise entry. Mr Howard also pointed to what he says are continuing breaches of oral agreements. He says the solicitors firm promised that they would not proceed or to stay the firm's hand. I do not however accept that the bankruptcy notice or the judgment on which it was founded were obtained in circumstances where the firm was obliged not to do so. The history of the matter deposed to by Mr Smith is given in some detail and stands as contrary to those assertions. What does emerge is that there has been a great deal of latitude given by the firm and negotiations for payment over a period of many years, which may have created in Mr Howard's mind the belief that in reality the firm would not proceed. The firm does, however, proceed. It does not accept an offer made very recently, this morning, to pay the debt by instalments. It would appear that Mr Howard is unable to pay his debts as they fall due. In these circumstances, I am satisfied that there is a debt of the requisite amount owing and in all the circumstances that it is proper to make an order for sequestration. I certify that this and the preceding two pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel. Associate Date: 29 March 1995