Cluness, Scott v Officeal Trustee in Bankruptcy & Anor [1998] FCA 434

FEDERAL COURT OF AUSTRALIA BANKRUPTCY - Application for order annulling bankruptcy - debt to bank arising from loan made to applicant and his wife - deed between applicant, his wife and bank whereby only applicant to continue making repayments - whether release of one joint debtor releases all - whether release should be construed as a covenant not to sue. Bankruptcy Act 1966 (Cth) s 153B Cluness v Commonwealth Bank of Australia (unreported, Foster J, 7 May 1996), refd Commonwealth Bank of Australia v Cluness (1997) 8 BPR 15,467, refd Dorgal Holdings Pty Ltd v Buckley (1996) 22 ACSR 164, cons E.W.A., In re; a Debtor [1901] 2 KB 642, appl Solly v Forbes (1820) 2 Brod. & B 38, 129 ER 871, refd SCOTT CLUNESS v OFFICIAL TRUSTEE IN BANKRUPTCY & ANOTHER NG 8257 of 1997

DAVIES J 17 APRIL 1998 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 8257 of 1997

BETWEEN: SCOTT CLUNESS

Applicant

AND: OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

COMMONWEALTH BANK OF AUSTRALIA

CROSS APPLICANT

JUDGE: DAVIES J

DATE: 17 APRIL 1998

PLACE: SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT: 1. The application be dismissed with costs. 2. The cross application be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 8257 of 1997

BETWEEN: SCOTT CLUNESS

Applicant

AND: OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

COMMONWEALTH BANK OF AUSTRALIA

CROSS APPLICANT

JUDGE: DAVIES J

DATE: 17 APRIL 1998

PLACE: SYDNEY

REASONS FOR JUDGMENT This application, brought under s 153B of the Bankruptcy Act 1966 (Cth), seeks an order annulling the bankruptcy of the applicant, Scott Cluness. Mr Cluness was made bankrupt on a debt due to the Commonwealth Bank of Australia, which had arisen in the first place from loans made by the Bank to Mr Cluness and his wife and which had merged on 28 November 1989 in a judgment of the Supreme Court of New South Wales in favour of the Bank against Mr & Mrs Cluness. Subsequently, Mr & Mrs Cluness commenced making payments of $416.66 per month to the Bank. There were negotiations between the parties with respect to the payment of the debt, resuling in a deed made on 13 February 1992 between Scott Cluness, Daphne Louise Cluness and the Commonwealth Bank of Australia. The deed read, inter alia: "WHEREAS A. The Bank has advanced to Mr and Mrs Cluness certain sums of money (`the loan'). B. On 28 November 1989, the Supreme Court of New South Wales entered judgment in favour of the Bank against Mr and Mrs Cluness (the `judgment'), in relation to certain proceedings commenced by the Bank following default in repayment of the loan. C. In or about September 1990, Mr and Mrs Cluness commenced monthly payments of $416-66 each in repayment of the judgment, and, as at the date of this Deed have paid a total of $5003.00 to the Bank. D. The Bank has now agreed to release Daphne Louise Cluness from her liability to the Bank under the judgment, provided that payments of $416-66 per month to the Bank in reduction of the judgment debt are maintained by Scott Cluness. NOW THIS DEED WITNESSES 1. That Mr and Mrs Cluness have paid to the Bank the sum of $5003.00 since September 1990. 2. That Scott Cluness agrees to continue to make monthly payments to the Bank of $416-66 in repayment of the sum due from time to time under the judgment. 3. That in consideration of the matters set out in Clauses 1 and 2, the Bank will forthwith discontinue and forever abandon and forgo all of its rights in respect of the judgment against Daphne Louise Cluness and her servants, agents and employees which it now has, or at any time hereafter may have or but for the execution of these presents might have had in any way arising out of the judgment. ..."