FEDERAL COURT OF AUSTRALIA Miller v Lipscombe [2001] FCA 358 Bankruptcy Act 1966 (Cth) s 52(2) RAY MILLER V BARRY LIPSCOMBE Q7353 of 1999 KIEFEL J BRISBANE 2 APRIL 2001 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q7353 OF 1999 IN THE MATTER OF BARRY LIPSCOMBE BETWEEN: RAY MILLER APPLICANT AND: BARRY LIPSCOMBE RESPONDENT JUDGE: KIEFEL J DATE OF ORDER: 2 APRIL 2001 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The petition be dismissed. 2. The petitioning creditor pay Mr Lipscombe's costs of the proceedings on and from 27 October 1999. 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 Q7353 OF 1999 IN THE MATTER OF BARRY LIPSCOMBE BETWEEN: RAY MILLER APPLICANT AND: BARRY LIPSCOMBE RESPONDENT JUDGE: KIEFEL J DATE: 2 APRIL 2001 PLACE: BRISBANE REASONS FOR JUDGMENT 1 Today, 2 April 2001, I made an order dismissing the petition and, after hearing further argument, ordered that the petitioning creditor pay Mr Lipscombe's costs of the proceedings on and from 27 October 1999. I then advised the parties that I would provide further reasons, in addition to the short outline I then provided. These are those reasons. 2 In March 1998 Mr Lipscombe purchased some goods from Mr Miller (the capacity in which he did so is put in issue in these proceedings). The price agreed to be paid was $20,000 in trade credit. This refers to monies being made available to the credit of an account in a trade exchange scheme to which further reference will be made. The goods were destroyed by fire prior to delivery. Following demand for payment, Mr Miller entered judgment by default in the Magistrates' Court on 4 August 1998 in the sum of $20,165.00. A later application by Mr Lipscombe to set that judgment aside was refused. 3 On 9 August 1999 the petition was filed following an act of bankruptcy said to have been committed on 3 May 1999. Service of the petition was effected in mid-August 1999 and settlement negotiations undertaken in late September. On 20 September 1999 Mr Lipscombe's solicitors wrote to Mr Miller's solicitors making a "further offer" to settle the matter by: "[M]aking payments to your client of $25,000.00 in Trade Dollars through Contrabart Trade Exchange. We note that this would not put your client in a less disadvantaged position that [sic] he would have been in if he had been paid by our client as originally envisaged by your client's own pleading. This offer to settle is made on the basis that it is without any admission of liability. …" 4 In a telephone conversation between the solicitors for each of the parties on 21 September 1999 the solicitor for Mr Miller advised that the offer would be accepted provided Mr Lipscombe supplied a directory of Trade Exchange members and a Contrabart Trade Exchange card to Mr Miller. As indicated above, the scheme was such that participants in it agreed to accept trade dollars for their services or goods. A facsimile transmission was sent the same day confirming the agreement and that each party would bear their own costs. It was further undertaken, on the part of Mr Lipscombe, that when Mr Miller had filled out the membership application form he would open an account and credit it forthwith with the trade dollars agreed. An adjournment of the petition was to be sought from the Court to allow these matters to be attended to. The application form was completed by 4 October 1999 and shortly thereafter an account was opened and the card and directory were forwarded. 5 It seems clear that an agreement was reached between the parties on 21 September 1999 and it took effect in place of the judgment in Mr Miller's favour. The petition founded upon it was no longer to be available to him. The only terms to which the agreement was conditioned was the opening of the account and the provision of the directory and Trade Exchange card. 6 It also appears tolerably clear that Mr Miller had second thoughts about the matter and that these concerns were confirmed when, following the agreement, he sought to access the scheme and found it to be not as effective or valuable as he had hoped. These factors do not displace the agreement which was reached. It is now said by Mr Miller that the agreement was further conditioned in terms "where he (Mr Miller) could use the trade dollars unconditionally". Just what this means is not at all clear. From all that later occurred however I take it that Mr Miller now contends that there was some form of warranty as to the scheme. Importantly however, these matters were not addressed in the settlement agreement. Mr Miller accepted the credit to a Contrabart account unconditionally and in place of the benefit the judgment gave him and the prospect of obtaining funds from the estate of Mr Lipscombe should the matter proceed to an order for sequestration. It is not to the point that Mr Miller now considers the agreement to be worth less to him than it should have. Nothing put forward points to a basis for treating the agreement as not having effect. If it is now alleged that Mr Lipscombe should be taken as having warranted the worth of the scheme or the value of the trade dollars agreed upon, these are matters which are collateral to the agreement. They provide no basis for treating the agreement as of no effect. 7 I am not satisfied that the debt upon which the petitioning creditor relies, namely that upon which the judgment of the Magistrates' Court was founded, is still owing. It follows from the compromise agreement that it is not. A sequestration order ought not to be made (s 52(2)) Bankruptcy Act 1966 (Cth)). 8 It is unnecessary to deal with the other argument advanced by Mr Lipscombe, which asks the Court to go behind the default judgment. The material does not seem to me to be sufficiently clear to enable a satisfactory conclusion as to whether Mr Lipscombe contracted for himself or on behalf of the company with which he was associated. More to the point, there would seem to me to have been a real argument as to whether the agreement for trade dollars properly converted to the amount of currency for which judgment was entered. Mr Lipscombe may also have had an argument as to whether the risk in the goods had passed to him and as to whether he was entitled, upon payment, to any insurance proceeds received by Mr Miller but these were matters upon which there was a paucity of evidence. It is not necessary to deal further with them. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel . Associate: Dated: 2 April 2001 Solicitor for the Applicant: Murrays Lawyers Counsel for the Respondent: Mr A F Maher Solicitor for the Respondent: Johnsons Date of Hearing: 2 April 2001 Date of Judgment: 2 April 2001