FEDERAL COURT OF AUSTRALIA Bankstown Grammar School Limited v Park (No 2) [2000] FCA 1218 BANKRUPTCY – Creditor's petition – Court not satisfied that debt owing. CONTRACT – Construction – contract to pay school fees – school erroneously thinking guardian had signed earlier contract to pay fees, having him sign acknowledgment that school entitled to cease tuition if fees not paid – whether acknowledgment itself constituted undertaking to pay fees. Bankruptcy Act 1966 (Cth) subss 52 (1)(c), (2) BANKSTOWN GRAMMAR SCHOOL LIMITED v KENNETH PARK N 7933 OF 1999 LINDGREN J 1 SEPTEMBER 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7933 OF 1999 In the matter of Kenneth Park BETWEEN: BANKSTOWN GRAMMAR SCHOOL LIMITED (ACN 003 130 630) APPLICANT AND: KENNETH PARK RESPONDENT JUDGE: LINDGREN J DATE OF ORDER: 1 SEPTEMBER 2000 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The creditor's petition be dismissed. 2. The applicant pay the respondent's costs. 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 N 7933 OF 1999 In the matter of Kenneth Park BETWEEN: BANKSTOWN GRAMMAR SCHOOL LIMITED (ACN 003 130 630) APPLICANT AND: KENNETH PARK RESPONDENT JUDGE: LINDGREN J DATE: 1 SEPTEMBER 2000 PLACE: SYDNEY REASONS FOR JUDGMENT (No 2) INTRODUCTION 1 The applicant ("the School") petitions for a sequestration order against the estate of the respondent ("Mr Park"). The act of bankruptcy relied on is non-compliance with a bankruptcy notice. The bankruptcy notice was founded on a default judgment obtained by the School against Mr Park in proceeding 6309/98 in the Local Court, Bankstown on 19 January 1999 for $17,815.72. The balance owing according to the creditor's petition was $14,126.38. The debt was said to arise from services provided by the School to a pupil named Hyung Gun Kim ("the Pupil") whose parents lived in Korea. For a time the Pupil lived with Mr Park. 2 On 29 February 2000, Mr Park filed a notice of motion in the Local Court seeking an order setting aside the judgment. By that time, this proceeding was well progressed, the creditor's petition having been filed on 17 August 1999. I heard the evidence on the petition on 10 May 2000 and made directions for the subsequent filing and service of submissions and for the hearing on 10 August 2000 of oral elaboration on them. On 23 May 2000 the judgment was set aside. 3 On 10 August 2000 I reserved my decision to a date to be advised. On 21 August 2000, while judgment was reserved, I ordered by consent pursuant to Order 35 r 7 ("the slip rule") that my order of 10 August 2000 reserving my decision to a date to be advised, be varied by the addition of an order nunc pro tunc that the period at the expiration of which the creditor's petition would lapse (by the operation of subs 52(5) of the Banktuptcy Act 1966 (Cth) ("the Act")) be extended for a period of fifteen months commencing on 17 August 1999. I delivered separate reasons for the making of that order. 4 Mr Park accepts that the setting aside of the judgment had no effect on his earlier commission of the act of bankruptcy and that at that time he was personally present and ordinarily resident in Australia. Accordingly, the Court's power to make a sequestration order against his estate given by subs 43(1) of the Act is enlivened. 5 Subsections 52(1) and (2) of the Act provide as follows: "52(1)At the hearing of a creditor's petition, the Court shall require proof of: (a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient); (b) service of the petition; and (c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing; and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor. … (2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made; it may dismiss the petition." Two issues have been argued: (1) Should I be satisfied that Mr Park owes to the School the debt on which it relies? (2) Should I be satisfied that Mr Park is able to pay his debts? chronological account of background facts 6 On 15 October 1996, Jeff Moon of International Academy of Education Pty Ltd in Sydney wrote to the School advising that he had a student named Kim Hyung Gun who wished to enrol at the School. The letter stated: "Please find a faxed application from [sic] with relevant academic document for him, who wish [sic] to enrol in your school in year 10 from Feb 1997. Currently he is studying at Universal English College in Sydney, from 22 April 96 till 20 December 96. Reviewing his academic document, please send us provisional offer letter to our office by fax as soon as possible. If you need more information please contact me any time." 7 The enclosed form of "Application for Enrolment" identified Mr Park as the Pupil's "guardian in Australia". It gave the Pupil's "Australian address" as Mr Park's address at 5G Harbourview 164 Burwood Road, Concord. According to Mr Park, the Pupil did indeed commence residing with him in late 1996. The form identified Mr Park as the Pupil's "guardian in Australia", February 1997 as the "proposed date of entry" and "year 10" as the "entry grade". Although School documents used the expression "guardian", apparently the expression was used loosely to refer to someone other than parents with whom a child resided. There is no evidence before me that Mr Park was anything more than such a person in relation to the Pupil. 8 A document attached to the Application for Enrolment was as follows (the highlighting indicates parts filled in by hand, the remainder being the standard printed form – the word "Guardian" was enclosed in a handwritten ellipse): "Name of child Kim, Hyung Gun I, Park, Seung Chan being the Parent/Guardian of the above child apply for his/her enrolment at the Bankstown Grammar School. I understand that an Enrolment Fee of $300 is necessary if this application is successful. This fee is NON REFUNDABLE. I understand that fees are to be paid twelve months in advance and invoices for all fees, presented to parents, ARE TO BE PAID WITHIN (7) days of the due date of the account, and that normal Bank Interest is charged on overdue monies. I understand a $2,000 Conduct/Attendance Bond is necessary and this amount will be refunded on completion of HSC Studies (Year 12). Dismissal from the School for any misdemeanour will result in the forfeiture of all or part of this bond and fees. I understand that one semester's notice of withdrawal is required or I MUST PAY ONE SEMESTER'S TUITION FEE in lieu thereof. I have read the School Rules (back page) and understand that it is necessary that I endeavour to ensure my child will abide by the guidelines involved. I understand, as is usual in an Independent School, that full parental support is essential to the successful progress of students through the School. SIGNED Park Seung Chan DATE: 15/10/96 WITNESS: [illegible] Moon." 9 The words "Park Seung Chan" were printed by hand, but Mr Moon's signature as a witness was in running script. Mr Park testified that he did not sign the form. He was not challenged on this denial and I accept it. The hand printing "Park Seung Chan" in the two places in the form is very similar, and I infer that Mr Moon wrote those words and all other words on the form. In the witness box Mr Park said that the correct spelling of his name was "PARK SEUNG CHUN". Mr Park would not have misspelt his own name by writing "CHAN". (Documents issued by the Universal English College attesting to the Pupil's academic performance in 1996 were enclosed with Mr Moon's letter but these are not of present importance.) 10 On 16 October 1996 the Registrar of the School wrote back to Mr Moon advising that the Pupil had been provisionally accepted into Year 10 in 1997 subject to the following conditions: · that a $1,000 bond be forwarded by 31 October 1996, to ensure retention of the place for 1997 and to be credited against fees for 1997 on payment of them; · that all fees for 1997 outlined on an attached document (not in evidence) be finalised before 30 November 1996; · that the Pupil satisfactorily complete an English language course achieving a satisfactory level of English: and · that a personal interview with the Pupil be satisfactory. The letter stated that the Pupil's commencement date at the School was 4 February 1997. 11 On 2 December 1996 Mr Moon wrote to the School enclosing a cheque in its favour for $11,350 drawn by IAP International Academy of Education Pty Ltd and signed by Mr Moon. The letter referred to the Pupil and proceeded as follows: "Please find a cheque sum of A$11,350.00 for his Tuition fee as request [sic], details as follows; Tuition fee A$ 9,500.00 Enrolment fee A$ 500.00 OSUC A$ 250.00 Conduct/Attendance Bond A$ 2,000.00 P&F Levy A$ 100.00 Total A$ 12,350.00 Less A$ 1,000.00. provisional acceptance payment A$ 11,350.00 Please let me know how to purchase the uniform and text book, and send A/A form to our office as soon as possible. If you need more information please contact me any time." I infer that Mr Moon has been put in funds by the Pupil's parents. Apart from this letter, there is no evidence that the $1,000 bond had been paid. 12 Clearly the financial arrangements for the Pupil to study at the School had been made between Mr Moon, the School, and, I infer, the Pupil's parents in Korea. Certainly Mr Park did not participate at all in the making of the arrangements. 13 The Pupil commenced year 10 at the School on 4 February 1997. According to Mr Park, on that day the Pupil brought home from the School a form for signature. Mr Park and his wife signed it and returned it to the School. In my view of the case, it is on this document that the School's claim against Mr Park succeeds or fails. I will set out the document in full, highlighting those parts which were handwritten or hand printed (the word "guardians" , in two places in the expression "parents/guardians", and the personal pronoun "I" in the expression "I/We" where that expression last appears were enclosed in a handwritten ellipse): "BANKSTOWN GRAMMAR SCHOOL LIMITED ACCEPTANCE OF OFFER OVERSEAS STUDENT I/We Kenneth & Kay Park_________________________________ (full name of both parents/guardians) of guardians _________________________________________ do hereby accept the offer of a place at Bankstown Grammar School, as follows:- Name of Child Hyung Gun Kim_________________________ Point of Entry ______________ Year of Entry 10_________________ I/We acknowledge that this offer of a place is subject to the conditions of entry and retention of a place as outlined below and also subject to any other conditions which the School may impose from time to time: CONDITIONS OF ENTRY AND RETENTION OF A PLACE 1. Students are expected to be regular and punctual with their attendance and to attend all prescribed classes, functions and sporting activities. 2. Students must abide by the School Rules. 3. Students are to wear FULL school uniform on all School occasions. 4. Students must complete the work set by their teachers. 5. Parents are expected to support the School and co-operate with the School in its work with students. 6. The School reserves the right to discipline, suspend or expel any student whose attitude or behaviour is not conducive to the School's welfare. 7. One full term's notice is to be given in writing if a student is to be withdrawn from the School, otherwise one full term's fees are payable in lieu of such notice. 8. School fees are to be paid one year in advance. 9. The School charges a $2,000 Conduct/Attendance Bond which is refunded when the student finishes his/her HSC studies. 10. Dismissal from the School for any misdemeanour will result in the forfeiture of all or part of the Conduct/Attendance bond and fees. I/We understand that the Enrolment Fee is non-refundable. Signature of BOTH parents/guardians Kenneth Park Date 04/02/97 Dr Kay Park Date 04/02/97 Witness [illegible signature] Date ________ " 14 In early 1997 the Pupil ceased residing with Mr Park and began residing elsewhere in Sydney with some friends, although he continued to attend the School. Mr Park testified orally that he did not know where the Pupil went to live. According to Mr Park, the Pupil had lived with him for a total of approximately six months (beginning in late 1996 as noted earlier). The evidence does not reveal the circumstances in which the Pupil had come to reside with Mr Park, but I infer that Mr Park was a friend of the Pupil's parents and that the parents had requested Mr Park to accommodate their son. 15 On 30 April 1997 a letter was written to the School beginning "Dear teacher" and notifying the School that the Pupil's non-attendance from 28 to 30 April was due to illness. It was purportedly signed by Kenneth Park but in oral evidence Mr Park testified that none of the writing on the document was his. A postscript noted that the Pupil's address had changed from Mr Park's Burwood address to a stated address in Strathfield. Although it is not necessary for me to reach a concluded view, it is a real possibility that the letter was written by the Pupil himself. 16 On 17 November 1997 Mrs Park wrote to the School as follows: "I am sorry to advise you that Hyung-Gun will not continue studying at your school for year 11 and year 12. He applied to Mamre Christian College and was accepted to finish year 10. The reasons for the change are lower school fees and closer location to our new address to be. Please arrange appropriate procedures for Hyung-Gun and notify me. Yours Sincerely [illegible signature] (K. PARK B.D.S)" Mrs Park did not give evidence. The letter bears a handwritten notation, no doubt by a member of the School's staff, but not illuminated by any other evidence: "Not leaving now 28/11/97" In cross-examination, Mr Park stated that he did not know that the Pupil was to leave the School and "did not get along well with" the Pupil, but agreed that the note was in the handwriting of his wife. 17 Since Mr Moon had paid the fees for 1997 (year 10) in advance, the first occasion on which an issue would arise concerning payment of further fees would be in relation to 1998 (year 11). 18 On 2 April 1998 the School sent an account to the Pupil himself, addressed "Mr H G Kim 5/28 Morwick Street Strathfield" for a sum of $5,900, being $5,880 for tuition fees for Terms 1 and 2 of 1998 and a $20 English book hire fee. Mr Park did not live at Strathfield and had not told the School that he did. So far as the School knew, he still lived at 5G/164 Burwood Road, Concord, as he in fact did. 19 On 17 June 1998, the School sent an account to "Mrs K Park", the wife of Mr Park, addressed: "Mrs K Park 5G/164 Burwood Road Concord" The account was for a total sum of $11,780 which included the amount of $5,900 for Terms 1 and 2 of 1998 and a further sum of $5,880 for tuition for Terms 3 and 4 of 1998. 20 On 2 September 1998, the School wrote to Mr Park at 5G/164 Burwood Road, Concord as follows: "Hyung Gun Kim, of which [sic] you are the guardian, is attending Year 11 at the School. You have received an account for his fees for Semester 1 for $5,900 and Semester 2 for $5,910. To-date the School has not received any payment, only a note dated June 1 asking if periodical payments could be made until the funds are forwarded from Korea. As there is an amount of $11,810 outstanding, a substantial amount needs to be paid prior to September 14 and some commitment entered into as to the remainder of fees, otherwise I may be forced to suspend Hyung Gun from further studies and take legal steps to recover the debt." In fact no accounts had been issued to Mr Park in respect of 1998. The present letter was the first communication between the School and Mr Park since he had signed and returned the form of "Acceptance of Offer Overseas Student" document on 4 February 1997. The "note dated June 1 asking if periodical payments could be made until the funds [were] forwarded from Korea" referred to in the School's letter is not in evidence and is not explained by any evidence. 21 On 15 September 1998, the Pupil's parents paid $2,000 to the School and the School issued a receipt for this amount to the Pupil. 22 A handwritten School memo dated 28 October 1998 shows that as at that date the School knew that the Pupil was no longer living with Mr Park. 23 On 10 November 1998, the School sent an account to Mr Park for the first time. It was addressed to him at 5G/164 Burwood Road, Concord and was for $9,840 representing the previous amount of $11,780, plus two late payment fees of $30 each, minus the sum of $2,000 that the Pupil's parents had paid on 15 September 1998. Mr Park did not protest to the School over receipt of the account, but he may not have received it, since there is a suggestion in the evidence that he had moved from 5G/164 Burwood Road, Concord prior to 10 November 1998. In evidence Mr Park acknowledged, however, having received the School's earlier letter of 2 September 1998. 24 On 24 November 1998, a further sum of $6,500 was debited to the Pupil's account at the School for tuition for Terms 1 and 2 of 1999. This brought the debit balance on the account up to $16,340. The School did not send Mr Park a bill for these 1999 fees but on 14 December 1998, it filed the Local Court statement of liquidated claim against him for the total sum of $16,340, plus interest fees and costs making a total claim of $17,485.62. The sum of $16,340 is shown in the statement of liquidated claim as made up as follows: "DATE DETAILS AMOUNT 1st APRIL 1998 010873 TERMS 1 & 2 1998 $ 5,880.00 1st APRIL 1998 010719 BOOK HIRE FEE $ 20.00 15TH JUNE 1998 011317 TERMS 3 & 4 1998 $ 5,880.00 25TH AUGUST 1998 011843 LATE PAYMENT FEE $ 30.00 15TH SEPTEMBER 1998 PAYMENT $ 2,000.00 13TH NOVEMBER 1998 012654 LATE PAYMENT FEE $ 30.00 24TH NOVEMBER 1998 013121 TERMS 1 & 2 1999 $ 6,500.00 ----------------------- TOTAL AMOUNT DUE $16,340.00" ============== 25 On 19 December 1998, the statement of liquidated claim was served, but Mr Park testifies that it was not served on him and that he was unaware of its existence for some time. 26 On 19 January 1999, the School obtained default judgment against Mr Park in the Local Court proceeding for $17,815.72. 27 On 19 February 1999, Mr Park paid the School $4,000 (by a cheque drawn on his dental company's account). In his affidavit, he said he made that payment because he had received the letter dated 2 September 1998 (referred to above) from the School. He said that he believed when making the payment that he would be reimbursed by the Pupil's parents. 28 On 9 March 1999, Mr Park gave the School his personal cheque for $6,000 but it was dishonoured on presentation. 29 On 19 April 1999, the School issued the bankruptcy notice which founds the present petition. 30 On 21 June 1999, the School rendered an account to Mr Park at 5G/164 Burwood Road, Concord for $18,850. This amount included a dishonoured cheque fee of $10 and $6,500 for tuition for Terms 3 and 4 of 1999 and gave credit for the sum of $4,000 that Mr Park had paid on 19 February 1999. 31 On 17 August 1999, the School filed the creditor's petition which commenced this proceeding. On the return date, 8 November 1999, Mr Keith Williams, solicitor, appeared for the School but Mr Park did not appear and the petition was stood over to 22 November 1999. 32 On 22 November 1999 Mr Williams and Mr Park appeared. There was a discussion at court between the two men when Mr Park agreed to pay $10,250 by bank cheque on or before 24 November 1999 and $11,000 by bank cheque within four weeks of 22 November 1999. Mr Williams indicated to the Court that an agreement had been reached and the Registrar asked Mr Park if he was agreeable to the settlement mentioned and he said that he was. The petition was adjourned to 29 November 1999. Mr Park did not pay the sum of $10,250 on 24 November. On 29 November, when Mr Williams appeared but Mr Park did not, the petition was further adjourned to 6 December 1999. 33 On 30 November 1999, Mr Park paid the solicitors for the School $2,700 by a bank cheque he procured from the Commonwealth Bank. Mr Park said that when he made the payment he believed he would be reimbursed by the Pupil's parents. 34 On 6 December 1999, Mr Park appeared but due to an oversight there was no appearance for the School, at least until after the petition had been reached in the Registrar's list, and the petition was adjourned to 2 February 2000. On that day both Mr Williams and Mr Park appeared and the petition was further adjourned to 1 March 2000. 35 In his affidavit, Mr Park states that it was in February 2000 that it became apparent to him, because his telephone calls to the Pupil's parents were not being returned, that he was not going to be put in funds by them. 36 Some time in February 2000, Mr Park attended on Mr Senek, the Bursar of the School and they spoke as follows: Mr Park: "Hyung Gun Kim's parents are liable for the school fees. They should have sent funds to the school sometime ago. I am the victim in the situation with Mr Kim's parents as much as you are. Is the school prepared to give me a discount or will arrange for Mr Kim's parents to pay the money?" Mr Senek: "No" It was after that conversation with Mr Senek that Mr Park sought legal representation. 37 On 29 February 2000, Mr Park's notice of motion to set aside the default judgment was filed in the Local Court and a stay of enforcement was granted. On the same day, in this proceeding, Mr Park appeared by his solicitors and filed a notice of intention to oppose the petition, an ill conceived notice of motion to set aside both the bankruptcy notice and the creditor's petition, and an affidavit as to his assets and liabilities. 38 On 1 March 2000, both parties were represented before the Registrar and directions were made for the preparation of the matter for a contested hearing. reasoning Indebtedness 39 In terms of subss 52(1) and (2) of the Act, I am not satisfied with the proof of the indebtedness of Mr Park to the School in respect of the 1998 and 1999 fees on which the School relies and I will dismiss the petition. My reasons follow. 40 The parties treated the question of Mr Park's indebtedness as depending substantially on the "Acceptance of Offer Overseas Student" document dated 4 February 1999 and in my view they were correct to do so. 41 The background against which that document was sent home by the School with the Pupil, signed by Mr Park and returned to the School is curious because the School and Mr Park had different understandings as to that background. The School understood that Mr Park had earlier, on 15 October 1996, signed the document attached to the Application for Enrolment, whereas Mr Park knew that he had not. If anything turned on the matter, I would hold that it is Mr Park's understanding that matters since the fact that he had not signed the Application for Enrolment document was something for which, as between him and the School, the School had to bear responsibility. But as it happens, in my view both parties had the important understanding that there had been an undertaking of responsibility for the fees which preceded the "Acceptance of Offer Overseas Student" document of 4 February 1997. 42 I will consider the position first from the viewpoint of the School. The School understood that by the Application for Enrolment document Mr Park had applied for the enrolment of the Pupil and had acknowledged having several "understandings", in particular, · that fees would be paid 12 months in advance; · that invoices for fees presented to parents would be paid within 7 days of the due date; · that one semester's notice of withdrawal was required or payment of one fees in lieu of notice. The School's letter dated 16 October 1996 notified provisional acceptance of the Pupil subject to certain conditions, all of which were apparently satisfied by Mr Moon and the Pupil. 43 On the first day of the 1997 school year, the School's understanding was that there was already in existence a contract between it and Mr Park, the terms of which were to be found in the Application for Enrolment and the letter dated 16 October 1996. Against that background the School's purpose in having Mr Park sign the document of 4 February 1997 was "merely" to have him acknowledge, as the document states, "conditions of entry and retention of a place". Its purpose was to set out the conditions on which the School was undertaking to accept and retain the Pupil in the School, or, concomitantly and more importantly, the circumstances in which the School would be entitled to cease accepting and retaining the Pupil in the School. Accordingly, if neither one full term's notice of withdrawal was given nor one full term's fees were paid in lieu of notice, the School was not obliged to continue providing tuition. Similarly, if school fees were not paid one year in advance, the School was not obliged to continue providing tuition. From the School's viewpoint, the purpose of the document was, in part, to remind the signatory of the earlier document of that document's own terms and in part to stipulate new terms. But the essential purpose of the document is that by it the parent or guardian acknowledges what are to be the conditions on which the School is to be obliged (and therefore also those on which it was to be not obliged) to allow entry and to retain a place. Mr Park did not purport to withdraw the Pupil from the School and does not deny that for a failure (by anyone) to pay fees one year in advance, the School was entitled to refuse entry and a place. 44 I turn next to consider the "Acceptance of Offer Overseas Student" document from Mr Park's viewpoint. Mr Park correctly understood that the Pupil's parents had made the necessary arrangements with the School for the enrolment and tuition of the Pupil (apparently they had done so exclusively through Mr Moon). Mr Park was not a party to those arrangements and understood that financial responsibility had been undertaken by the parents. The first document that the School ever invited him to sign was the document of 4 February 1997. Many of the ten "conditions of entry and retention of a place" set out in that document concerned matters touching the day to day relations between the School, a child and the person with whom the child was residing. The School had not previously obtained Mr Park's acceptance of financial responsibility for the Pupil. The document is therefore to be construed according to the reasonable understanding of a person placed as Mr Park was. Such a person would understand it to be one concerned primarily with the day to day relationship between the School, the Pupil and himself or herself. 45 What is a reasonable construction of the document in the light of Mr Park's correct understanding that the School had made financial arrangements with others and had sent the document, unannounced, home to him with the Pupil? A reasonable construction is again that the document was setting out the conditions on which the School was obliged (and, concomitantly those on which it was not obliged) to continue to allow the Pupil entry and to retain a place for him. I do not think that the document, fairly construed, extracted an undertaking from a reasonable person placed as Mr Park was, with whom the School had had no contact previously, to pay fees. Rather, again, the School was obtaining an acknowledgment that the School would be entitled to refuse the child entry and to cease retaining a place for the child if any of the conditions ceased to be satisfied. In particular, if school fees were not paid one year in advance, the School would be entitled to cease providing tuition and to cease retaining a place for the Pupil. The School did not exercise that self-help remedy but that was not something that concerned Mr Park. 46 The School relies on Mr Park's payments of $4,000 on 19 February 1999 and $2,700 on 30 November 1999, and his tender of his cheque for $6,000 on 9 March 1999. Mr Park's testimony was that he made the two payments because of the letter dated 2 September 1998 to him from the School and "correspondence received from … a debt collection agency threatening legal action", and that he believed he would be reimbursed by the Pupil's parents. His cross-examination in relation to the tender of the cheque for $6,000 on 9 March 1999 included the following: "MR RONZANI:…You tendered a payment, didn't you, by way of a cheque in the sum of $6000 in March of 1999, isn't that correct? THE INTERPRETER: Yes, when I was giving that $6000 cheque, I remembered in that account I had only about $5000 available balance, so I mentioned that you had better cash that cheque about a week later. The reason being that Mr Kim's father was going to send the school fees from that but the contact was not available so I put another $1000 – so because $1000 short because of that problem, later I cancelled that cheque so that was not cashed." 47 I find that at all times Mr Park's subjective understanding was that it was the Pupil's parents who were liable to the School in respect of school fees. I find that his own payments, attempted payment and undertakings to pay are explicable, not by virtue of an understanding on his part that he was liable or had agreed to be liable for the fees, but by virtue of the fact that he was assisting friends and thought he would be put in funds by them. 48 For the above reasons I am not satisfied that Mr Park is indebted to the School in respect of the 1998 and 1999 fees as alleged by the School. Ability to pay debts 49 The conclusion that I have reached above makes it unnecessary for me to deal with the question of Mr Park's solvency. CONCLUSION 50 For the above reasons, the creditor's petition will be dismissed with costs. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate: Dated: 1 September 2000 Counsel for the Applicant: Mr D Ronzani Solicitors for the Applicant: Birch Partners Counsel for the Respondent: Ms K Rees Solicitors for the Respondent: Selby Anderson Date of Hearing: 10 May, 10, 21 August 2000 Date of Judgment: 1 September 2000