Commonwealth Bank of Australia v Healey [1999] FCA 833

FEDERAL COURT OF AUSTRALIA Commonwealth Bank of Australia v Healey [1999] FCA 833

COMMONWEALTH BANK OF AUSTRALIA v GREGORY HARRISON HEALEY NG 7928 OF 1998 EMMETT J SYDNEY 16 JUNE 1999

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 7928 OF 1998

BETWEEN: COMMONWEALTH BANK OF AUSTRALIA

ACN 123 123 124

Applicant

AND: GREGORY HARRISON HEALEY

Respondent

JUDGE: EMMETT J

DATE OF ORDER: 16 JUNE 1999

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. A sequestration order be made against the Estate of the respondent, Gregory Harrison Healey. 2. The applicant's costs, including reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966.

THE COURT NOTES THAT: 3. Maxwell William Prentice has consented to be appointed as trustee of the estate of the respondent, Gregory Harrison Healey, pursuant to s156A of the Bankruptcy Act 1966. 4. The date of the act of bankruptcy is 14 August 1998. 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 7928 OF 1998

BETWEEN: COMMONWEALTH BANK OF AUSTRALIA

ACN 123 123 124

Applicant

AND: GREGORY HARRISON HEALEY

Respondent

JUDGE: EMMETT J

DATE: 16 JUNE 1999

PLACE: SYDNEY

EX TEMPORE REASONS FOR JUDGMENT 1 On 11 March 1999, I adjourned the creditor's petition to 8 June 1999 on terms that the debtor consent to the appointment of Maxwell William Prentice as receiver, manager and controller of the debtor's property pursuant to section 50 of the Bankruptcy Act 1966 ('the Act"). In the reasons which I gave on 10 March 1999 for foreshadowing those orders, I indicated that my intention was to give the debtor the opportunity of pursuing his application for special leave to appeal to the High Court from the judgment of the Court of Appeal dismissing the debtor's appeal from the decision of Rolfe J directing the entry of judgment against the debtor in favour of the petitioner. 2 The date of 8 June 1999 was chosen for no particular reason other than that it was thought that, by that stage, the timing of the hearing of the application for special leave would be known. The matter came before the Registrar on 8 June 1999 when the petitioner indicated that it desired to have the hearing of the petition brought on notwithstanding that the leave application had not yet been heard. I am informed that the leave application has been fixed for September of this year. 3 I restored the matter for directions on Friday 11 June 1999 at which time I indicated that I would hear today the question of whether or not I should further adjourn the hearing of the petition until after the date fixed for the hearing of the special leave application. When the matter came on today, I heard further evidence on the question of adjournment consisting of evidence from the debtor and evidence from Mr Ronald Lewis Mead who claims to be a creditor of the debtor. 4 Further adjournment was opposed by the petitioner on the basis that to adjourn the hearing of the petition would be futile since, even if leave were granted and some orders were ultimately made by the High Court along the lines sought by the debtor, the debtor is in any event insolvent because of the debt owing to Mr Mead and his wife. 5 It is necessary to say something about the circumstances giving rise to the debt which appears to be owing by the debtor to Mr and Mrs Mead ("the Meads"). The Meads owned a business comprising a caravan park which was conducted at or near the confluence of the Colo and Hawkesbury Rivers. On 26 March 1986, the Meads sold that business to Piaski Holdings Pty Limited ("Piaski"), for the price of $825,000. 6 The sale price was to be paid as to $325,000 in cash, and the balance was to be lent by the Meads to Piaski on the security of a second mortgage over the property which was the subject of the sale. The first mortgage was to secure the sum of $325,000 intended to be advanced by the State Bank. The obligation of Piaski to pay the balance outstanding of $500,000 was to be guaranteed by the debtor and Mr Robert Grace, barrister, who were apparently principals of Piaski. 7 It appears that default occurred on the part of Piaski in the payment of the balance of the price of $500,000. There were disputes between the Meads, Piaski and Mr Grace and the debtor that resulted in a compromise between the parties evidenced by an instrument dated 15 August 1994. By that instrument, which was subsequently confirmed by a deed bearing the date 17 August 1994, the parties acknowledged the existence of the sale agreement and the second mortgage. The instrument also recited a dispute as to the amount outstanding under the mortgage and representations alleged to have been made by the Meads to Piaski at the time of execution of the sale agreement (which representations were alleged to have induced Piaski to enter into the agreement and to have induced Mr Grace and the debtor to enter into the alleged guarantee). The instrument also recited a dispute as to the effectiveness of the alleged guarantee contained in the second mortgage document. 8 By the instrument of 15 August 1994, amongst other things, it was agreed that, in consideration of the payment to the Meads by the debtor of $125,000, the Meads agreed to release the debtor from all liabilities, whether existing or contingent, which the debtor may have pursuant to the sale agreement or the mortgage. 9 The instrument also provided, in effect, that if any default occurred in payment of amounts to be paid by the debtor and such default remained outstanding for three calendar months, then the debtor was to be deemed to be in default. In that event, the Meads had the option of either pursuing alleged rights arising from the sale agreement and the second mortgage or enforcing the payments due under the instrument. 10 By Schedule 2 to the instrument, the terms upon which the debtor was to pay the sum of $125,000 were specified as being by 84 calendar monthly instalments paid monthly in advance. The first instalment was to be $1,496, payable within three months of the date of the instrument and thereafter, instalments at the rate of $1,488 per month were to be paid, the first payment payable within four calendar months of the date of the instrument. It appears that there was default on the part of the debtor in the payment of those instalments. 11 On 29 October 1997, the Meads commenced proceedings against the debtor in the District Court of New South Wales at Bega. In the statement of liquidated claim, the Meads sought to recover from the debtor, pursuant to the guarantee in the second mortgage, the sum of $688,510. That sum was calculated as follows: · Amount of principal outstanding as at 20 June 1991: $500,000.00