Pietropaoli, Ricardo v Travel Compensation Fund [1998] FCA 1774

FEDERAL COURT OF AUSTRALIA

bankruptcy – practice and procedure – adjournment application refused and sequestration order made at discretion of primary judge – on appeal extensive additional evidence tendered by appellant as to his continuing illness and all relevant submissions made – no basis for sequestration order to be resisted.

House v The King (1936) 55 CLR 499

Re McMaster; Ex p McMaster (1991) 33 FCR 70

RICARDO Pietropaoli v travel compensation fund

VG 632 of 1997

TAMBERLIN, MARSHALL & NORTH JJ

MELBOURNE

103 NOVEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VG 632 of 1997

BETWEEN: RICARDO PIETROPAOLI

AppELLant

AND: TRAVEL COMPENSATION FUND

Respondent

JUDGES: TAMBERLIN, MARSHALL AND NORTH JJ

DATE OF ORDER: 13 NOVEMBER 1998

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The respondent's costs of the appeal be costs in the appellant's bankruptcy having the same priority as its costs on the petition. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VG 632 of 1997

BETWEEN: RICARDO PIETROPAOLI

AppELLAnt

AND: TRAVEL COMPENSATION FUND

Respondent

JUDGES: TAMBERLIN, MARSHALL AND NORTH JJ

DATE: 13 NOVEMber 1998

PLACE: MELBOURNE

REASONS FOR JUDGMENT

THE COURT: This is an appeal from the judgment of Northrop J, the primary judge, given on 27 October 1997 in which his Honour was satisfied that, on the material before him, the appellant, Mr Pietropaoli, had committed an act of bankruptcy. The primary judge made a Sequestration Order against Mr Pietropaoli's estate. Before making the Sequestration Order his Honour refused an adjournment application made by Mr Pietropaoli. Before doing so he made the following observations: "Today the debtor has appeared in person and has sought an adjournment of the hearing of the petition based essentially on two grounds; the first ground being because of his medical condition he is not in a fit position to defend the petition, and secondly, because of possible defects in the obtaining of the judgment, which was a default judgment in the County Court, claiming he was not served with the proceedings in the County Court, and also claiming there were defects in proof, if that was necessary in the County Court, of the deed by which the Travel Compensation Fund was created. In the course of his submissions, the debtor also stated he is a pensioner, has no assets and no income apart from his pension. He is undergoing medical treatment and must have further medical treatment in hospital, having had operations in the past. One has a lot of sympathy for the debtor, but in cases of this kind before an adjournment is granted normally there must be some material before the Court as to the financial position of the debtor seeking the adjournment. There is no such material before the Court, apart from the unsworn statement of the debtor that he has no assets." On appeal Mr Pietropaoli again represented himself. Mr J Nolan, of counsel, also appeared for the respondent. Mr Pietropaoli informed the Court that on the day he appeared before the primary judge he had suffered a panic attack. At the hearing before us he produced medication and other evidence of depression. Mr Pietropaoli also informed the Court about the nature of his continuing illness, that is, major depression and panic disorder anxiety. He also addressed the Court, at some length and in detail as to the grounds of his appeal and a number of other matters. He was given a full opportunity to ventilate his case. In addition he furnished to the Court a considerable amount of further documentary material. This was admitted without objection by the respondent, who was permitted to tender further evidence in response. The Court took this unusual course because Mr Pietropaoli appeared in person and his obvious anxiety, resulting from his illness, called for the Court to ensure that he had the fullest chance to voice his grievances. This application by Mr Pietropaoli to set aside the orders of the primary judge faces major difficulties. It is an application brought against a discretionary judgment and it also involves a question of practice and procedure; namely, the refusal to grant an adjournment. Ordinarily an appeal court will not interfere with a primary judge's refusal to grant an adjournment unless it can be shown that the wide discretion given to the primary judge has miscarried in a significant and substantial respect: see House v The King (1936) 55 CLR 499, at 504-505. We have had regard to the extensive additional material and to the submissions made to us by Mr Pietropaoli and Mr Nolan. Taking into account all such evidence and submissions we are not persuaded that there is any basis for interfering with the orders made by the primary judge. In particular, we are not persuaded that if an adjournment had been granted to Mr Pietropaoli for a reasonable period he would have been able to present his case to the Court any more effectively. Although Mr Pietropaoli was, as we have observed, anxious about the case, we are satisfied that he comprehensively put to the Court all the relevant submissions which could be advanced. Furthermore, having regard to the earlier history of this matter, prior to the hearing before the primary judge, we are satisfied that it was reasonably open to his Honour to refuse the application for an adjournment and to proceed to hear the matter. A primary submission by Mr Pietropaoli was that he was incorrectly alleged to be indebted to the respondent as a result of his directorship of a particular company, Bevan and Singhe Pty Ltd, when there was no proof that he was a director of that company. The additional evidence tendered by the respondent addressed this issue. Mr Nolan also pointed out that there was no evidence before the Court to establish that Mr Pietropaoli was in fact solvent. We accept Mr Nolan's submission that this additional evidence establishes that Mr Pietropaoli had been a director of the company until his resignation on 10 May 1995. On 10 August 1993, Mr Pietropaoli signed a document indicating his consent to be a director of Bevan and Singhe Pty Ltd and on 22 March 1994 he signed an Australian Securities Commission document in his capacity as a director of Bevan and Singhe Pty Ltd. In addition, in an affidavit, sworn on 29 August 1997, Mr Pietropaoli accepted that he had been a director of the company. In the absence of evidence in support of it, we are not prepared to accept his submission that the signatures appearing on those documents are forgeries. It is unfortunate that Mr Pietropaoli finds himself in a position where he is faced with a Sequestration Order at a time when he is experiencing severe illness. However, we do not see any basis upon which a Sequestration Order can be properly resisted by Mr Pietropaoli in this matter. On the evidence, we accept Mr Nolan's submission that Mr Pietropaoli was, at all material times, a director of Bevan and Singhe Pty Ltd and thus liable to the respondent for the debt alleged in the bankruptcy petition. Mr Pietropaoli advised the Court that if the Sequestration Order was set aside he would apply to the County Court to set aside the judgment debt, the subject of his bankruptcy. He was somewhat equivocal as to when he might be in a position to apply to the County Court to set aside its order. Mr Pietropaoli also put in issue the question of the service upon him of the County Court writ. We accept Mr Nolan's submission that the Court should not go behind the affidavit of service filed by the respondent, which indicates that the writ was served on Mr Pietropaoli. The Court is naturally concerned that the proceedings cause Mr Pietropaoli as little anxiety as is possible in the circumstances. To this end, we point out that the modern law of bankruptcy is designed to enable a debtor to be freed from the burden of accumulated debts in order to allow the debtor to make a fresh start: cf Re McMaster; Ex p McMaster (1991) 33 FCR 70 at 72-73 per Hill J. This is to be contrasted with the law in earlier periods, which was concerned with punishment of debtors and did not provide for a release from their debts. In all the circumstances, we consider that the appropriate order is that the appeal be dismissed and that the respondent's costs of the appeal be costs in the appellant's bankruptcy having the same priority as its costs on the petition. I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Court.