Re Phil W Roberts & MT Roberts Ex Parte: Bernard John Evans and Marjorie Louise Evans [1989] FCA 340 (25 August 1989)

FEDERAL COURT OF AUSTRALIA

Re: PHIL W. ROBERTS & M.T. ROBERTS

Ex Parte: BERNARD JOHN EVANS AND MARJORIE LOUISE EVANS

No. NP 410 of 1989

FED No. 484

Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION

BANKRUPTCY DISTRICT OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY

Hill J.(1)

CATCHWORDS

Bankruptcy - whether requirements for service of Bankruptcy Notice satisfied - meaning of "delivery" to the person to be served - standard of proof applicable to service of bankruptcy notice discussed - circumstances in which court will go behind default judgment to determine whether real debt existed.

Bankruptcy Act 1966, s.41(4)

Bankruptcy Rules, r.15, 122

HEARING

SYDNEY

25:8:1989

Counsel and Solicitors

for Debtors: J T Johnson of Johnson & Co

Counsel and Solicitors P Walsh instructed by Williams

for Petitioning Creditors: Ryman & Co as city agents for

Peter Whitty

ORDER

A sequestration order be made against the estate of each Phillip Walter Roberts and Marguerite Therese Roberts, it being noted that Richard Andrew Gagie, a registered trustee, has consented to act as trustee of the estates of the debtors.

Costs including reserved costs be taxed and paid according to the Act.

A draft of this order be delivered to the Registrar within seven days in accordance with Rule 124(2) Bankruptcy Rules.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

Mr and Mrs Evans who carry on business as "Southern Riverina Tyres" petition the Court for sequestration orders against the estates of each Mr and Mrs Roberts ("the debtors") on the grounds of non-compliance with bankruptcy notices said to have been served on the debtors on 16 December 1988. The notices were based upon a judgment debt obtained by default against the debtors in the District Court, Deniliquin on 26 October 1988 in the sum of $56,958.14 plus interest.

2. Mrs Roberts opposes the petition on the basis that the bankruptcy notice was not properly served upon her on 16 December 1988 and further on the ground that the judgment debt was a debt of her husband alone and not a debt to which she was liable. The notice of intention to oppose the petition also raised as a discretionary ground the solvency of Mrs Roberts. A statement of affairs was filed both by her husband and herself as well as a statement of the affairs of the partnership P W & M T Roberts Transport. Ultimately, however, it became clear that the question of Mrs Roberts' solvency was dependent upon whether she was liable for the debt to the petitioning creditor and in the event no separate submission was put that I should refuse to make a sequestration order on discretionary grounds.

3. Mr Roberts did not oppose the making of the sequestration order against him and there being no contest that he had failed to comply with the bankruptcy notice which had been served upon him and since I am satisfied that he has committed the act of bankruptcy alleged in the petition and also I am satisfied with the proof of the other matters of which s.52(1) of the Act requires proof, I would make a sequestration order against his estate.

4. Before discussing each of the grounds raised I should make some comment about the course which the case took. The petition came before Deputy Registrar Murray on 19 July 1989 and was by consent adjourned for hearing on 8 August 1989. The notice of intention to oppose the petition was apparently filed in court on 19 July 1989.

5. When the matter was called for hearing before me, the solicitor for the debtors appeared but the debtors were not present in court and there was initially no explanation of their absence. The petitioning creditor had arranged for Mr Quayle, a sheriff's officer from Deniliquin to be present in court to give evidence as to service; Mr Evans and Mr Mongan, an employee of the petitioning creditors had also travelled from Finlay to give evidence. In these circumstances I refused to grant an adjournment of the petition but proceeded to hear in addition to the affidavit evidence, oral evidence from Messrs Quayle, Evans and Mongan, the last two witnesses giving their evidence on Wednesday 9 August, the day after the matter had been listed for hearing. I excused Mr Evans from further attendance after he had been cross-examined by the solicitor for the debtors.

6. I was informed from the bar table that the debtors had left to come to Sydney on 7 August 1989, had reached Canberra that night, that Mr Roberts had taken sleeping pills and had slept through until lunch time and that it was only when ultimately he was telephoned by his accountants at the request of his solicitors that he realised there was still point in opposing the petition but of course by that time it was too late for him to be in Sydney. In the circumstances I adjourned the matter until 14 August to permit the debtors to go into evidence, ordering that affidavits be served upon the petitioning creditors in the meantime so that counsel for the petitioning creditors could be apprised of the case made against them.

7. When the matter resumed on 14 August I asked Mrs Roberts in the course of her evidence why the debtors had not come to Sydney on the day appointed for hearing. Her reply was that they were tired when they reached Canberra and decided to stay there not knowing that there was any urgency to be in Sydney. She said that her husband had stayed in bed because he had been the driver (and thereby presumably tired) but denied that he took sleeping pills. This episode did not reflect well on the credit of one or both of the debtors.

Service with the Bankruptcy Notice

8. There was no dispute that Mr Quayle had attended at the debtors' home at Deniliquin for the purpose of serving the bankruptcy notices upon each of the debtors.

9. Mrs Roberts had no recollection whether she was present on this particular occasion. She deposed that she would have remembered being served with the notice if she had been present because she would not have been able to drive to Leeton, a two hour drive, to pick up her children from school had this happened. However, there was uncertainty whether the school in question was still in session or whether it had broken up for the long school holidays so this comment had little force.

10. Mr Quayle was apparently a friend of the debtors and in his words "knew them very well". In his professional capacity he often called upon the debtors to serve court processes upon them relating to the transport business conducted by Mr and Mrs Roberts in partnership. He enjoyed as well a social relationship with them.

11. Mr Quayle, in his evidence, swore that he was sure that both Mr and Mrs Roberts were present on the day in question and I accept his evidence. He gave his evidence forthrightly and there was no reason why he should not tell the truth.

12. Mr Quayle swore an affidavit of service in which he deposed that at the time of service he said to the person served: "Are you M T Roberts, the person named in this Bankruptcy Notice?" to which Mrs Roberts had replied, "Yes I am."

13. In cross-examination Mr Quayle freely admitted that no such conversation had taken place. According to Mr Quayle he probably went to the kitchen where he sat down with Mr and Mrs Roberts and had a cup of coffee. He placed one document (being the bankruptcy notice) for Mrs Roberts on the table and one before Mr Roberts. He said words to the effect: "I feel that what I told you when I served the statements of claim on you, Phil, you have not done, and that I suggest that you should get something done immediately on this, otherwise bankruptcy proceedings will take place, and you do not want that." Mr and Mrs Roberts were together at the time and these comments were addressed to both of them. At some stage Mr Quayle deposed that he had said words to the effect: "Marg I've got one for you."

14. Mr Quayle explained in effect that he had been told always to use words such as appeared in the present affidavit of service and saw those words as a formality. In his words: "All you are virtually swearing is that on that particular time you served those particular documents."

15. Mrs Roberts denied she was given a copy of the notice by Mr Quayle and denied that Mr Quayle ever said words to the effect "I've got one for you as well." Although she had no recollection of the particular occasion she said that normally near the end of similar meetings Mr Quayle would hand documentation to her husband. She also denied any recollection of Mr Quayle having intimated to her husband in her presence that Mr Roberts should have done something about the matter before and that it was now serious.

16. However, she did remember picking up the bankruptcy notice, seeing the words "bankruptcy notice" on it and thinking: "Well this is the end, this is it." Quite when this thought occurred to Mrs Roberts was not clear from her evidence.

17. The solicitor for the debtors referred me to s.41(4) of the Bankruptcy Act 1966 ("the Act") which provides that service of a bankruptcy notice shall be effected "as prescribed". This prescription is to be found in r.15 of the Bankruptcy Rules which provides that unless otherwise ordered by the Court under s.309(2) service of a bankruptcy notice shall be effected on the debtor by "delivering to the debtor personally" a copy of the bankruptcy notice. Reference was then made to r.122 which is concerned with the question of proof of personal service rather than the manner of personal service. Rule 122 provides that where service of a document is effected on a person by delivering the document or a copy of it to the person personally, due service shall be deemed not to have been proved by affidavit unless the person who delivered the document to the person to be served states in an affidavit, inter alia:

"the means by which he established that the person

to whom the document was delivered was the person

required to be served with the document."

18. Although the rules contemplate that personal service will be proved by affidavit, affidavit is not the only method of proof permitted. If proof is purely by affidavit then of course the affidavit would need to set out the means by which in the present case Mr Quayle established that Mr and Mrs Roberts were the persons referred to in the bankruptcy notice. However Mr Quayle gave oral evidence which I accept in which he referred specifically to the District Court documents which he had apparently also served and the bankruptcy documents which he saw as ultimately were inevitable. In these circumstances it seems to me that the question whether or not the affidavit complied with r.122 is irrelevant. Indeed I would, having regard to Mr Quayle's evidence, have made an order under s.306 that insofar as there was a formal defect in the proceedings by failure of the affidavit to comply with r.122 that defect be waived. However where, subject to the factual issue of whether there has been in fact a service valid under r.15, that is to say, one effected on the debtor by "delivering" to her personally the relevant copy of the bankruptcy notice service on the person who is clearly the person referred to in the bankruptcy notice is proved, it seems to me that there is no defect in the proceedings that needs to be waived.

19. It was submitted, and no doubt correctly, that the onus of proving service of a bankruptcy notice in accordance with r.15 lay upon the petitioning creditors. Further it was submitted that while the criminal onus did not apply nevertheless the standard of proof required was something greater than the ordinary civil onus being of the kind envisaged in Helton v. Allen [1940] HCA 20; (1940) 63 CLR 691, namely that the proof must be established to a standard of "reasonable satisfaction according to the nature of the case" (see at p 714). Reference was also made to the case of re J S (a minor) a paternity case reported at (1980) 1 All ER 1061, 1066.

20. The present is not a case where it is necessary to determine whether there is some higher but intermediate standard of proof between the ordinary civil balance of probabilities on the one hand and the criminal standard on the other applicable to the proof of service of bankruptcy notices. It is of course obvious that bankruptcy, involving as it does not only the sequestration of the estate but also a change of status from debtor to bankrupt, is a matter of considerable seriousness. The making of a sequestration order with its consequence that the debtor thereupon becomes a bankrupt may lead ultimately to criminal proceedings being taken against the bankrupt. Whether it necessarily follows from this that a standard of proof higher than the civil standard of proof applies has not, so far as I am aware, been the subject of any decision. There is in my view much to be said for the view expressed by Dixon J as his Honour then was, in Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336, from which the concept of an intermediate standard of proof derived, that no third standard of persuasion different from the civil and criminal has ever definitely been developed by the common law. It is however somewhat of a truism that the more serious the allegation, the more grave the consequences flowing from a particular finding, the more likely it will be that the tribunal of fact will require some actual persuasion of its occurrence or existence before that fact is found. As his Honour said at p 361:

"It (i.e. the fact) cannot be found as a result of

a mere mechanical comparison of probabilities

independently of any belief in its reality. No

doubt an opinion that a state of facts exists may

be held according to indefinite gradations of

certainty; and this has led to attempts to define

exactly the certainty required by the law for

various purposes."

To put it in another way:

"...the nature of the issue necessarily affects the

process by which reasonable satisfaction is

attained." (see at p 363)

21. As I have already indicated the present is not a case where it is necessary to delve more deeply into this issue. Suffice it to say that accepting the test of reasonable satisfaction, if that be a higher form of proof than, the mere balance of probabilities, I would find that what Mr Quayle deposed to did in fact happen, that is to say that he discussed the general nature and significance of the document placing it on the table before Mrs Roberts and indicating that the notice was for her.

22. I was referred to a number of cases in which the question or the requirements of service of bankruptcy notices were discussed. In Re Ditford; Ex parte Deputy Commissioner of Taxation (NSW) (1988) 83 ALR 265 Gummow J held that a bankruptcy notice had been properly served where the person who allegedly served the bankruptcy notice attended at the Long Bay Remand Centre, a prison officer escorted a man into his presence, the server said to the person so escorted that he had a bankruptcy notice to serve on him, the person said he would not accept it and that the server should speak to his solicitor, whereupon the server then proffered the notice to the person who stepped back and did not touch it. The bankruptcy notice was then placed on a side table and a Mr Ritchie told the server that he would hold the document for the person so "served", Mr Ditford, until the latter spoke to his solicitor.

23. In the course of his judgment Gummow J emphasised the necessity for strictness of proof in observance of the requirements for service of bankruptcy notices. His Honour referred to Re Long; ex parte Fraser Confirming Pty Ltd (1975) 12 SASR 130 where it was held that service of a bankruptcy notice on the wife of the debtor at his house where the notice had not been brought to the debtor's attention until some eight or ten days had elapsed was not good service. His Honour also made reference to Thompson v. Pheney (1832) 1 Dowling's Practices Cases 441 in which it was held that it was not necessary that the process being served actually touch the person to be served but that it would be sufficient if the deponent informed the defendant of the nature of the process and threw it down. In such a case there would be a sufficient delivery

24. Reference was also made to the case of In Re a Debtor (1939) 1 Ch 251 where it was held that service of a bankruptcy petition in a sealed envelope was inadequate service where the person attempting to effect the service made no reference to the contents of the envelope. In that case Sir Wilfred Green MR at 255 said:

"Delivery is the manner of service, but the

question is, what does "delivery" in that context

mean? Mr Blagden wishes us to say, in the first

place (and I do not think he pressed us very hard),

that by delivering the envelope which physically

contained these documents to the debtor in person

service within the rule was duly effected, that

there was physical delivery to the person in

question. I am quite unable to construe the

section and the Rules in any such sense as that,

because it appears to me that, on those assumed

facts, what is after all the essential thing in

service cannot have been complied with, the

essential thing being that the documents served

shall be brought to the personal knowledge of the

person whose concern it is."

25. I am content to accept as a relevant test what is said by Sir Wilfred Green MR but am of the view on the evidence that whether or not Mrs Roberts in fact looked at the bankruptcy notice at the time of service, or indeed on the same day, the nature of the document which had been put in front of her for the purpose of service was brought to her attention. I do not believe that it is a necessary requirement of delivery as that expression is used in r.15 that the bankruptcy notice require actually to be put into the hands of the person to be served. Nor did the debtors' solicitor so suggest. There is a sufficient delivery if the notice is placed on the table in front of the person in his or her own home together with a statement as to the general consequences of the document. Even if there had been no statement as to the general consequences of the document but merely a statement that the document was important and was for the recipient I would have been inclined to the view that a bankruptcy notice left on the table in front of the person to be served at his house was delivered to the person to be served. There is a considerable difference between leaving a document at the home of a person and leaving it at one of her Majesty's prisons.

26. It was said that, given the evidence of Mrs Roberts, I should not believe Mr Quayle. As I have already indicated I accept the evidence of Mr Quayle having seen him as a witness. There was certainly no reason why he should prevaricate and while it can be said that he may have served many documents so that his memory may not have been entirely without fault, I am satisfied that the events of the 16 December happened substantially as he deposed to them. I do not find that Mr Quayle's credit is affected by his deposing in the affidavit of service that a conversation took place when it did not. However I express the concern that henceforth Mr Quayle not regard affidavits of service as mere formalities. They must reflect actual not invented conversations.

27. Accordingly I am of the view that the bankruptcy notice was properly served.

Whether the Judgment Debt was a Debt owed by Mrs Roberts

28. There was no dispute that the debtors carried on in partnership a road transport business under the name P W & M T Roberts Transport (an unregistered business name). That business was conducted from the home of the debtors. The debtors had a joint bank account with the National Australia Bank Limited at its Deniliquin branch under the same name, that account presumably being originally established for the purposes of the business conducted by them in partnership.

29. In mid 1987 the applicant decided to carry on the business of retailing tyres. He gave evidence that he was concerned about the viability of such a business and wished to ensure that his wife was not liable for the debts of that business. He registered a business name, Phil Roberts Tyres, on 10 September 1987 and opened a bank account under that name with the National Australia Bank at Deniliquin. The account was capable of being operated on by each of the debtors as well as a Mr Arthur who was an employee of either Mr Roberts or Mr and Mrs Roberts, which, was not stated.

30. Some time in 1987 a meeting took place between Mr Evans and Mr Roberts. According to the evidence of Mr Evans the meeting took place some few weeks prior to Mr Roberts commencing to carry on the tyre business. According to Mr Roberts the meeting took place after Mr Roberts had commenced the tyre business and after the first order of tyres had been delivered for that business, that order having been placed by Mr Arthur.

31. According to Mr Evans Mr Mongan an employee of the creditors was present throughout a part of the meeting, although not all. According to Mr Roberts Mr Mongan was not present, and indeed no one was present who could have heard the business part of the conversation. According to Mr Evans, Mr Roberts in this conversation requested to open a credit trading account. Mr Evans said that he replied:

"Yes, I'll give you a credit account but only in

the name of you and your wife personally and care

of your home. Maximum terms of payment will be 60

days and we will say how it goes from there."

32. According to Mr Evans, Mr Roberts then said: "Fine, my wife and I will deal on those terms." Thereafter, according to Mr Evans, Mr Roberts commenced to order tyres.

33. Mr Mongan deposed that he was present during the conversation and that the conversation occurred as deposed to by Mr Evans.

34. Mr Roberts denied that the conversation took place in this way. According to Mr Roberts, the conversation took some 45 minutes of which the relevant part took but a few minutes. Mr Roberts' version of the conversation was as follows:

"I said, in words or to the effect: "I want to

open a credit account?"

Mr Evans said, in words or to the effect: "That's okay."

I then said: "Is there some form for me to sign?"

Mr Evans said, in words or to the effect: "No,

that's okay, we can take care of that. We have had

a bit of trouble with customers in the past and it

is vital for you not to let me down.""

35. Mr Roberts denied that the discussion had at any time extended to his wife being made liable upon the account. Mr Roberts annexed to his affidavit a copy of what was said to be the first statement sent to the debtors. It was dated 29 December 1987, was for $420, was hand-written and addressed to "P W & M T Roberts T.A. Phill Roberts Tyres" at the Roberts' address in Deniliquin. The statement was the subject of attack because there was tendered in evidence a typed statement bearing the same date for the same amount, dated December 1987 and addressed to "Phil Roberts Tyres". A delivery docket dated 29 December 1987 was also addressed to "Phil Roberts Tyres". Neither document referred to trading terms of 60 days.

36. The typed statement showed the amount of $420 overdue 30 days and it is unlikely that the hand-written statement came into existence later than the typed statement. Rather the typed statement appears to have been prepared later and presumably addressed to Phil Roberts Tyres because the hand-written statement assumed that P W & M T Roberts were trading under that name.

37. The solicitor for the debtor submitted that I should draw an inference from the failure of Mr Evans to return to Sydney and give evidence about the two statements after I had specifically excused him from attendance and in the circumstances that on both the Tuesday and Wednesday previously when the case had been before me the debtors had not appeared in Sydney. The solicitor for the debtor failed in his cross-examination of Mr Evans to put the discrepancy to Mr Evans and I decline to draw any inference at all from it.

38. Having regard to the corroborative evidence of Mr Mongan and the impression I formed of Mr Evans as a witness of truth, I prefer Mr Evans' version of the conversation and find that on the balance of probabilities the conversation occurred as deposed to by both Mr Evans and Mr Mongan.

39. Mr Evans gave oral evidence that thereafter tyres were ordered by Mr Roberts and on some occasions (two or more) by Mrs Roberts. There seems little doubt that generally orders were placed by Mr Roberts although sometimes orders were also placed by Mr Arthur. Mrs Roberts accepted that she may have ordered the occasional tyre but otherwise deposed that she had not to her knowledge spoken to Mr Evans except perhaps to pass the phone to her husband when Mr Evans had called. This is in conflict with the evidence of Mr Evans who said that on the first occasion that he spoke to Mrs Roberts when she ordered tyres from him (probably a few weeks after the account had been opened) Mr Evans said to Mrs Roberts:

"Marg, your husband Phil, has been in to ask to

open an account for tyres. I have explained to him

this is how we operate. I will deal with him and

you as people care of your home address. Do you

understand that?"

40. According to Mr Evans, Mrs Roberts replied: "Yes. I understand that that is how we are trading with you."

41. Mrs Roberts denied that this conversation had ever taken place.

42. Mr Evans also deposed that he had in June or July 1988 telephoned Mrs Roberts on several occasions and said to her words to the effect:

"When are you and Phil going to get your account up

to date?"

Mrs Roberts had replied:

"We will get you the money as soon as we can."

43. Invoices and statements tendered in evidence were generally addressed to Phil Roberts Tyres (sometimes the word "Phil" was written "Phill"). Sometimes invoices or statements were addressed to Phil Roberts. Cheques in payment of accounts were sometimes drawn on the account of Phil Roberts Tyres signed by Mrs Roberts, sometimes on the account of P W & M T Roberts (see deposit statement 16.2.88). Usually however it would seem that payment was made on the account of Phil Roberts Tyres, presumably signed by Mr Roberts. To my mind this is a matter of little significance having regard to the evidence next discussed.

44. It seems clear that the affairs of both businesses were to some extent intermingled. Indeed, in answer to a question from the bench about income tax returns (no attempt was made to tender either returns, books of account or any other accounting data) Mr Roberts indicated that he had taken dockets to his accountants for preparation of income tax returns but he had "not been back to see whether it is Phil Roberts Tyres or P W & M T or whatever". He was then asked:

"And you say that you do not know whether the tyre

purchases are in the one or the other?"

To this Mr Roberts replied:

"I am sorry your Honour, I do not. I realise how

that sounds, but I do not."

45. Mr Roberts said that as much as possible he kept the affairs of the two businesses separate but being "hand to mouth" money was used where it was necessary. Certainly both businesses were conducted from the same address. Mrs Evans gave evidence that she dealt from time to time with the creditors of the transport business but not the creditors of the tyre business.

46. I think that it is more probable than not that Mr Evans did speak to Mrs Roberts and that Mrs Roberts did acknowledge the trading terms upon which Mr Evans was prepared to do business. However in my view it is not necessary to decide the matter.

47. There is no doubt that the Court has jurisdiction to go behind a judgment obtained by default. As the Full Court of this Court said in Boral Johns Perry Industries Pty Ltd v. Piccardi & Ors (unreported) 23 June 1989 at p 13:

"It is well established that a court exercising

bankruptcy jurisdiction has power to go behind a

default judgment, and will do so, in a case where a

reason is shown for questioning whether - behind

the judgment, or, as it is sometimes said, as the

consideration for it - there was really a debt."

48. It is clear that the existence of the judgment is prima facie evidence of the debt: cf In re Fraser; ex parte Central Bank of London (1892) 2 QB 633 at 636-7 and while this does not mean that the court exercising bankruptcy jurisdiction will not enquire into the validity of the judgment debt, it does follow that the burden of proof will lie upon the debtor to show that the debt was not really owed.

49. However as Lord Esher made clear in re Flatau; ex parte Scotch Whisky Distillers Ltd (1888) 22 QBD 83 at 85-6 a court will not go behind a judgment as a matter of course but only if appropriate circumstances are shown to exist. Sir Garfield Barwick CJ expressed the matter in Wren v. Mahoney [1972] HCA 5; (1971-2) 126 CLR 212 at 224 as follows:

"The judgment is never conclusive in bankruptcy.

It does not always represent itself as the relevant

debt of the petitioning creditor, even though under

the general law, the prior existing debt has merged

in a judgment. But the Bankruptcy Court may accept

the judgment as satisfactory proof of the

petitioning creditor's debt. In that sense that

Court has a discretion. It may or may not so

accept the judgment. But it has been made quite

clear by the decisions of the past that where

reason is shown for questioning whether behind the

judgment or as it is said, as the consideration for

it, there was in truth and reality a debt due to

the petitioning creditor, the Court of Bankruptcy

can no longer accept the judgment as such

satisfactory proof. It must then exercise its

power, or if you will, its discretion to look at

what is behind the judgment: to what is its

consideration. ... the emphasis is upon the

paramount need to have satisfactory proof of the

petitioning creditor's debt. The court's

discretion in my opinion is a discretion to accept

the judgment as satisfactory proof of that debt.

That discretion is not well exercised where

substantial reasons are given for questioning

whether behind that judgment there was in truth and

reality a debt due to the petitioner."

50. As is emphasised in these passages some facts must emerge which will cast doubt on the judgment before the Court will go behind it. That is perhaps but another way of saying that the onus lies upon the debtor to show, a judgment having been obtained, albeit a judgment by default, that the judgment does not reflect a real liability.

51. It is critical to the liability of Mrs Roberts either that the debt was incurred by her husband in the course of the partnership transport business or in circumstances where he had actual or ostensible authority to incur it and that she was therefore bound by it or that Mrs Roberts agreed to the terms of trading with Mr and Mrs Evans that she was liable for the purchase price of tyres bought on account. The onus in my opinion lay therefore upon the debtor to show, if she could, that the conversation between Mr Roberts and herself did not take place. Where the Court is left in a position of uncertainty as to whether that conversation did or did not take place (and that is the present case) i.e. where the debtor has not adduced evidence which on the balance of probabilities shows that there was no liability for the debt which formed the foundation of the judgment then the judgment debt remains a good basis upon which a bankruptcy notice can be founded and in the event of non-compliance with that bankruptcy notice upon which a sequestration order will be made.

52. No satisfactory explanation was given as to why no steps had been taken either to defend the claim brought by the petitioning creditors in the District Court or judgment having been entered by default to seek to set it aside. Mrs Roberts said that she left matters of that kind to her husband and I am asked to infer that perhaps the documents had not been served upon Mrs Roberts but rather handed to Mr Roberts. I need however make no finding of fact as to these matters for in my opinion the case is not one where reason has been shown for questioning whether behind the judgment there was really a debt.

53. Being satisfied therefore that each of the debtors has committed the act of bankruptcy alleged in the petition and being satisfied with the proof of the other matters of which s.52(1) of the Act requires proof, I accordingly make sequestration orders against the estates of each of the debtors and order that costs (including reserve costs if any) be taxed and paid according to the Act. I direct that a draft of the orders be delivered to the Registrar within seven days in accordance with r.124(1). I note that Richard Andrew Gagie being a registered trustee has consented to act as the trustee of the joint and separate estates of the joint debtors.

Judges

Headnote

Case Details

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Judgment

Authorities Cited1›

Subsequent Judicial Consideration10›

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For Australian Law.