Freize Holdings Pty Ltd v Haggard, William Henry [1998] FCA 1047

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY qg 7659 of 1997

BETWEEN: frieze holdings pty ltd (in liquidation)

aCn 010 228 976

Applicant

AND: william henry haggard

Respondent

JUDGE: COOPER J

DATE OF ORDER: 03/08/98

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. The estate of William Henry Haggard be sequestrated. 2. The petitioning creditor's costs of and incidental to the petition, including any reserved costs, be costs in the administration of the estate and be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth). 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 QG 7659 of 1997

BETWEEN: frieze holdings pty ltd (in liquidation)

ACN 010 228 976

Applicant

AND: william henry haggard

Respondent

JUDGE: COOPER J

DATE: 03/08/98

PLACE: BRISBANE

EX TEMPORE REASONS FOR JUDGMENT This is a petition for a sequestration order in respect of the estate of William Henry Haggard. Mr Haggard was a party to a compromise agreement between Freize Holdings Pty Ltd (in liquidation) and himself in relation to an action in the Supreme Court of Queensland, whereby it was alleged that the company had suffered loss and damage as a result of a breach of fiduciary duty on the part of Mr Haggard as a director. The agreement was reduced to writing and provided for entry of a judgment in the sum of approximately a quarter of a million dollars. The agreement contained a provision which has caused me some concern. The effect of it was if trailers were immediately delivered up pursuant to an obligation to do so under the agreement, by a date specified in the agreement which, in fact, was prior to the agreement date itself, then the value of those trailers would be offset against the sum of $250,000. In the event of default under the agreement, judgment was to enter and it was also provided that there should be some valuation and appraisal done of the value of any trailers delivered up pursuant to the agreement, to be offset against the judgment sum. The material before me shows that there was no delivery up of trailers by that date. There was, however, at a later date, recovery by the company in liquidation of various trailers and componentry for trailers which, under the agreement, were acknowledged to be the property of the company. That property was ultimately sold by the liquidator who had engaged the services of a Mr Wright, a broker. There was, originally, on this application evidence given by Mr Haggard critical of the conduct of the liquidator in relation to the conduct of the liquidation to date and in the recovery and disposal of the trailers, but when his solicitors withdrew today he was not further cross-examined and therefore I am not in a position to have any regard to that evidence. On the evidence before the court, including the evidence of Mr Wright, there was extensive advertising in relation to the disposition of the trailer fleet and in the end result a gross sum in excess of that recommended by the broker was achieved. However, when one looks at the material, the costs of realisation were not insubstantial. If one gives Mr Haggard credit for the net sum realised by offsetting that amount against the $250,000, one is left with a debt still substantially in excess of the statutory minimum to support a petition. The first two grounds of the notice of objection are therefore not made out. The third ground relies generally on the discretion of the court not to make a sequestration order pending a challenge to the decision of the liquidator, either in this court, or in the Supreme Court by way of summons. Like Finn J in Capel v Caram Finance Australia Limited (unreported, QG7299 of 1997, 9 April 1998), I take the view that the time has passed where the court ought to stay its hand pending a review of the liquidator's decision in another court. There has been ample opportunity to undertake such a review during the adjournment of this petition from the last occasion, and clearly, none has taken place, and having regard to the conduct of the matter today, the likelihood is that there will be no challenge. In those circumstances, I am not persuaded that there is any discretionary basis not to make the order sought. Accordingly, I order that the estate of William Henry Haggard be sequestrated, being satisfied that the act of bankruptcy contained in the petition and supporting affidavit has been made out, and that there are no discretionary grounds for refusing to make an order. I order that the costs of the petitioning creditor be costs in the administration of the bankrupt estate and that it be accorded the priority provided for under the Bankruptcy Act 1966 (Cth) and Rules.