Fox v Noaks [2000] FCA 725

FEDERAL COURT OF AUSTRALIA

Fox v Noaks [2000] FCA 725

BANKRUPTCY – whether a debt, the subject of a bankruptcy notice, is owing – circumstances in which the Court will go behind a judgment to see whether in truth there is a debt owing

Bankruptcy Act 1966 (Cth) Wolff v Donovan (1991) 29 FCR 480 applied Emerson v Wreckair Pty Ltd (1992) 33 FCR 581 applied K B & L S FOX t/as BRER'S WELDING AND ENGINEERING REPAIR CO v REGINALD WALLY NOAKS T 7019 of 1999 MARSHALL J 31 MAY 2000 HOBART

IN THE FEDERAL COURT OF AUSTRALIA

TASMANIA DISTRICT REGISTRY T 7019 of 1999

BETWEEN: K B & L S FOX t/as BRER'S WELDING AND ENGINEERING REPAIR CO

APPLICANTS

AND: REGINALD WALLY NOAKS

RESPONDENT

JUDGE: MARSHALL J

DATE OF ORDER: 31 MAY 2000

WHERE MADE: HOBART

THE COURT ORDERS THAT: 1. The estate of Reginald Wally Noaks, also known as Walter Edward Noakes or Wally Noakes be sequestrated.

2. The applicants' (petitioning creditors') costs, including any reserved costs be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).

The Court notes that:

1. The date of the act of Bankruptcy is 25 August 1999.

2. A consent to act as trustee has been signed by Paul J Cook.

3. A copy of this order is to be provided to the trustee and to the Official Receiver in Hobart within 2 days after the order is entered. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

TASMANIA DISTRICT REGISTRY T 7019 of 1999

BETWEEN: K B & L S FOX t/as BRER'S WELDING AND ENGINEERING REPAIR CO

APPLICANTS

AND: REGINALD WALLY NOAKS

RESPONDENT

JUDGE: MARSHALL J

DATE: 31 MAY 2000

PLACE: HOBART

REASONS FOR JUDGMENT 1 The applicants sought an order from the Court for the sequestration of the estate of the respondent. Ultimately, the only issue raised by the respondent in opposition to a sequestration order was that the debt the subject of the bankruptcy notice was not owing. 2 On 19 November 1998 the applicants obtained a default judgment against the respondent in the Devonport Magistrates Court. The respondent instructed solicitors to seek to set aside that default judgment but no such application has been made nor is one in contemplation. There is evidence from one of the applicants, Mr Kerry Fox, that the respondent is indebted to the applicants in the sum of $19,268.17. The judgment debt is $19,716.17 which includes costs. The respondent did not seek to cross-examine Mr Fox but contended that if he does owe any money to the applicants it would be in the vicinity of $3,000. The respondent also admitted that there are no current steps in process to set aside the order of the Magistrates Court. In those circumstances I do not consider that the respondent has satisfied the "tactical onus" on him "to show that there are circumstances which make it appropriate to go behind the debt to see whether the judgment was in truth and reality a true debt". See Wolff v Donovan (1991) 29 FCR 480 at 487 per Lee and Hill JJ. Further, as the Full Court in Emerson v Wreckair Pty Ltd (1992) 33 FCR 581 at 589 recognised: "… the court should not go behind a judgment where the grounds upon which the judgment is challenged are such that, if accepted, they would only support a finding that the amount of the debt be reduced and would not support a finding that there was in truth no debt at all." 3 Consequently, this is not a proper case for the Court to exercise its discretion to go behind the judgment. I do not consider that there is a bona fide allegation that no real debt underlies the judgment. 4 Accordingly, it is appropriate to make the following order: 1. The estate of Reginald Wally Noaks, also known as Walter Edward Noakes or Wally Noakes be sequestrated.

2. The applicants' (petitioning creditors') costs, including any reserved costs be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).

The Court notes that:

1. The date of the act of Bankruptcy is 25 August 1999.

2. A consent to act as trustee has been signed by Paul J Cook.

3. A copy of this order is to be provided to the trustee and to the Official Receiver in Hobart within 2 days after the order is entered.

I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall.

Associate: Dated: 2 June 2000

Counsel for the Applicants: Mr S Latham

Solicitor for the Applicants: Page Seager

The Respondent appeared in person. Date of Hearing: 31 May 2000

Date of Judgment: 31 May 2000 (ex-tempore as revised from the transcript)