Hannouf, Mustafa v Hedwan, Roger [1998] FCA 225

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - application to set aside bankruptcy - allegation by bankrupt of negligent failure of his legal representation to appear at hearing of creditor's petition - sequestration order made ex-parte - nature of jurisdiction under s 153 Bankruptcy Act 1966 - must be real question to be tried as to whether, in substance, the sequestration order ought not to have been made

Bankruptcy Act 1966 (Cth), s 153B

Re Anasis; Ex Parte Total Australia Ltd (1985) 63 ALR 493, referred

Taylor v Taylor (1979) 143 CLR 1, applied

MUSTAFA HANNOUF v ROGER HEDWAN

NG 7863 oF 1997

MADGWICK J

SYDNEY

13 FEBRUARY 1998

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 7863 of 1997

BETWEEN: MUSTAFA HANNOUF

Applicant

AND: ROGER HEDWAN

Respondent

JUDGE(S): MADGWICK J

DATE OF ORDER: 13 FEBRUARY 1998

WHERE MADE: SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The application to annul the bankruptcy and set aside the sequestration order be dismissed. 2. The bankrupt is to pay the costs of the petitioning creditor including the reserved costs. 3. The trustee's costs (including reserved costs) are to be paid as an expense of the estate.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 7863 of 1997

BETWEEN: MUSTAFA HANNOUF

Applicant

AND: ROGER HEDWAN

Respondent

JUDGE(S): MADGWICK J

DATE: 13 FEBRUARY 1998

PLACE: SYDNEY

EX-TEMPORE REASONS FOR JUDGMENT (revised from transcript) HIS HONOUR: This is an application under section 153B of the Bankruptcy Act 1966 (Cth) by the bankrupt to annul his bankruptcy and to set aside the sequestration order made against him on 27 June 1997. The application was made on 28 July 1997 and is said to have been made on the grounds set out in an affidavit dated 25 July 1997 and filed in proceedings in the New South Wales Supreme Court. Difficulties with lawyers: version 1 In that affidavit the applicant bankrupt, Mr Hannouf, indicated that in or about June 1996 he had instructed solicitors known as Ayoubi & Associates (then trading as Leslie Abboud, Solicitors) to defend the summons filed against him in the Equity Division of the Supreme Court. Mr Hannouf claimed that on or about 9 July 1997 he had received a letter from the Insolvency & Trustee Service Australia telling him that the sequestration order had been made against him on 27 June. He said he proceeded to the offices of Ayoubi & Associates and asked Mr Ayoubi what was going on. The latter replied that he had briefed a barrister to appear on Mr Hannouf's behalf to set aside the judgment obtained in the Supreme Court proceedings and also to appear in the bankruptcy proceedings. Mr Hannouf asserted indignantly that he was unaware that judgment had been obtained against him and that he was about to be made bankrupt. Mr Hannouf said Mr Ayoubi told him that everything would be "fixed up" by the barrister. Mr Ayoubi then handed him a copy of the brief which Mr Ayoubi said he had given to the barrister. Mr Hannouf's affidavit annexed a copy of the brief to appear, addressed to a well-known member of the Bar. The observations to counsel were about 15 lines long. They indicated that counsel was briefed with the summons and supporting affidavit against Mr Hannouf in the Supreme Court, and with a further affidavit of Mr Hedwan, the plaintiff in those proceedings and the petitioning creditor. Mr Ayoubi told the barrister that judgment had been entered against Mr Hannouf on 4 March 1997, but that that had not been brought to his (Mr Ayoubi's) attention until Mr Hannouf had brought in the bankruptcy notice and creditor's petition. Counsel was asked to draft the necessary documentation to have the judgment set aside and to attend the bankruptcy hearing on 27 June in order to adjourn the proceedings so that the judgment might be set aside. Counsel was asked to contact Mr Ayoubi on receipt of the brief. There is no indication of when, if ever, these documents may have been delivered to the barrister concerned. It is to be noted that, in that affidavit, aimed at persuading the Supreme Court to set aside the judgment, there was no suggestion that Mr Hannouf had any difficulty in comprehending written English; indeed, the inferences from the affidavit are that he understood perfectly well and with alarm what the letter from the Insolvency and Trustee Service was saying to him, and that he accordingly repaired in a hurry to his solicitor.