Hockings, Christopher v Metrotorque Pty Ltd (t/as Metro Ford) [1998] FCA 761

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QP 632 of 1996

rE: Christopher HOCKINGS

Applicant

ex parte: METROTORQUE PTY LTD (trading as Metro Ford)

Respondent

JUDge: SPENDER J

DATE OF ORDER: 1 MAY 1998

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. A sequestration order be made against the estate of the debtor, Christopher Hockings. 2. The applicant creditor's costs, including reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QP 632 of 1996

rE: Christopher HOCKINGS

Applicant

ex parte: METROTORQUE PTY LTD (trading as Metro Ford)

Respondent

JUDGE: SPENDER J

DATE: 1 MAY 1998

PLACE: BRISBANE

REASONS FOR JUDGMENT This is a contested creditor's petition which arises out of a failure to comply with the bankruptcy notice for the princely sum of $2,589.49. The essence of the opposition by Mr Hockings ('the debtor') to the making of a sequestration order, is a contention on his part that in truth and reality there is not a debt in that amount owed by him at all, notwithstanding that a judgment in the Magistrates Court was entered against him for that amount. The essence of the complaint is the familiar one that the debt, which is for work and materials in respect of repairs and maintenance to a motor vehicle, was not the debt of Mr Hockings nor a debt which he had guaranteed, but was in fact a debt by a company of which he was a director, namely Inpeck Pty Limited. It is true that before a Court makes an order for sequestration of a person's estate it has to be satisfied pursuant to s 52 of the Bankruptcy Act 1966 (Cth) ('the Act') that there is in truth and reality a debt which founds the bankruptcy proceedings where a judgment is obtained by default. A Court is anxious to be satisfied of the requirements of s 52(1). However, the circumstances of the present case are not such as to provide a reasonable basis for thinking that in truth and reality there is not a debt above the statutory amount owed by Mr Hockings to Metrotorque Pty Limited trading as Metro Ford. What occurred was this. Work was done on a motor vehicle whose registration number was CIH 00, a personalised number plate of Mr Hockings. The invoices in respect of that work were sent to a company, Colour In-House Pty Limited, which was a company of which Mr Hockings was director and in respect of which he had signed a guarantee to be personally liable for work done on the motor vehicle by the judgment creditor in respect of the motor vehicle. The work was done and invoices were sent to Colour In-House. It appears that the vehicle is registered in Mr Hockings' name and, as I say, had his personal number plates, but the vehicle was in fact leased from CBFC and the lessor was Colour In-House Proprietary Limited. Notwithstanding the deregistration of this company, a fact unknown to the judgment creditor and not the subject of any communication by the debtor to the creditor, Colour In-House continued to be the entity named as the lessee on the lease of the vehicle and there was never, at any stage, any assignment of, or inheritance of the obligations under the lease, by Inpeck Proprietary Limited, Mr Hockings, or anybody else. No doubt because of the deregistration of Colour In-House Proprietary Limited, it came about that the petitioning creditor sought judgment against Inpeck Proprietary Limited and the debtor in the Magistrates Court for the cost of servicing the car. The circumstances make it plain that the work was done in circumstances where the judgment creditor was of the belief, a belief not disabused by Mr Hockings, that the work done on the vehicle was subject to the personal guarantee of the debtor should the company in respect of whom the primary obligation was paid, not discharge the primary debt. In those circumstances, it is not surprising that there was judgment entered against not only Inpeck Proprietary Limited, but also the debtor for the costs of car servicing. An application was made by Mr Hockings to the Magistrates Court, to have that judgment set aside. The matters to which I have just referred were canvassed before the Magistrate, Ms Fingleton, who declined to set aside the judgment. There has been no application seeking leave to appeal from the decision of the Magistrate. In those circumstances, there has been an inquiry as to the justice and merits of the debt which founds the Bankruptcy Notice and, in my view, no good reason has been shown why the Court, exercising jurisdiction in Bankruptcy, should revisit that matter and go behind the judgment against Mr Hockings, which founds these proceedings. It is a matter of regret that a debt of the sort with which I am concerned has led to these quite extensive proceedings. I say no more about that. I am satisfied of the act of Bankruptcy alleged in paragraph 4 of the petition. I am satisfied of the other matters in which the Act requires proof. I make a sequestration order against the estate of Christopher Hockings and I order that the costs of and incidental to the petition, including reserved costs, be taxed and paid in accordance with the Act. I make orders in terms of the draft minute, which I initial, date and place with the papers. I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.