IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT
OF THE STATE OF VICTORIA
No VB 2074 of 1995
RE: DOMENICO ZAFFINO
A Bankrupt
BETWEEN:
DOMENICO ZAFFINO
Applicant
-and-
FORK TRUCK HIRE & TRANSPORT PTY LTD
Respondent
Coram: Olney J
Place: Melbourne
Date: 16 February 1996
REASONS FOR JUDGMENT
This is an application by a bankrupt pursuant to s 153B of the Bankruptcy Act for the annulment of the bankruptcy. The Court may annul a bankruptcy if it is satisfied that the sequestration order ought not to have been made. In the present case it is said that the sequestration order ought not to have been made because there was in truth no real debt behind the judgment relied upon by the petitioning creditor.
Where in truth there is no debt, an annulment order order is appropriate (See McCollum; ex parte The Bankrupt (1987) 71 ALR 626; Re Deriu (1970) 16 FLR 420; Re Raymond, ex parte Raymond (1992) 36 FCR 424).
On 19 January 1995 Fork Truck Hire & Transport Pty Ltd (the respondent) caused a bankruptcy notice to be issued against Domenico Zaffino (the bankrupt) in respect of a judgment debt and interest totalling $6,557.57. The bankruptcy notice required the bankrupt to respond to its demand within 14 days of its service on the bankrupt. Service was effected on 23 March 1995. The bankrupt did not respond to the notice nor did he make any application for an extension of time to comply or to have the notice set aside. The bankrupt accordingly committed an act of bankruptcy on 6 April 1995.
The respondent presented a bankruptcy petition against the bankrupt on 5 May 1995 relying on the act of bankruptcy committed on 6 April 1995. The petition was served on 5 July 1995. It was returnable on 28 August 1995. The bankrupt did not appear on the return date and a sequestration order was made on that day.
On 15 September 1995 the bankrupt filed an application seeking the annulment of the bankruptcy. The matter came on for hearing on 14 December 1995. The bankrupt (who had previously been represented by a solicitor) appeared in person. After hearing argument I adjourned the application until 7 February 1996 and gave the parties leave to file and serve further affidavit material. The hearing was resumed on 7 February 1996. The petitioning creditor filed further affidavit material but the bankrupt did not take the opportunity to do so. Following further argument I reserved my decision.
The bankrupt disputes that any debt is owing by him to the respondent and evidence contained in affidavits sworn by himself on 13 September 1995 and by his father Franco Zaffino sworn on 21 November 1995 is to that effect. The respondent relies on affidavits of Jeffrey Lewis Duneman (its solicitor) sworn 24 October 1995 and of Tony Hagg (a director of the respondent) sworn 31 January 1996.
In his affidavit in support of the application the bankrupt says as follows concerning the question of whether a debt is owing by him to the respondent:
5. Some time in September of 1991 my father, Franco Zaffino ordered a Fork Lift Truck to be used in his detergent manufacturing business. The contract of hire was between Fork Truck Hire and Transport Pty Ltd and L.C.P. Pty Ltd (A.C.N. 004 955 131) herein referred to as "L.C.P. Pty Ltd". Annexed hereto and marked 'DAZ 1' is Fork Lift Truck Hire Contract No 5867 in the name of L.C.P. Pty Ltd. Although a notation next to L.C.P. Pty Ltd states "(T/A Melchem Int.)", in fact Melchem International was never a trading name of L.C.P. Pty Ltd.
I accepted delivery of the Fork Lift Truck, on behalf of my father's company, L.C.P. Pty Ltd and my signature appears on the contract of hire.
6. It was never my intention to be personally bound to the contract of hire of the Fork Lift Truck. The Fork Lift Truck Hire was arranged by my father, Franco Zaffino, and it was on his instructions that the hire contract was made out to L.C.P. Pty Ltd.
7. Subsequent to the hire, a number of invoices were made out to L.C.P. Pty Ltd and in fact, the hiring fees were paid by my father, through his company, L.C.P. Pty Ltd. Annexed hereto and marked 'DAZ 2' are a number of invoices clearly made out to L.C.P. Pty Ltd. A statement dated August 1992 is also made out to L.C.P. Pty Ltd.
8. It was never my intention to be personally liable for the payment of my father's hire of the Fork Lift Truck, as the Petitioning Creditor well knew.
9. I am informed by my father and verily believe that the petitioning creditor sent monthly statements of account to my father's company, L.C.P. Pty Ltd and payments were made by my father from his company's cheque accounts.
The document DAZ 1 is accurately described in paragraph 5 of the affidavit. It does in fact indicate that the machine specified is on hire to
"L.C.P. Pty Ltd (t/a Melchem Int)
33 Stewart St, Brunswick"
The only additional feature of the document not referred to by the bankrupt is a hand written endorsement -
"Del. Point Fact 10-12
14 Moreland Rd Brunswick"
Iinterpret this endorsement as indicating that the machine was to be delivered to a factory number 10-12 at 14 Moreland Road Brunswick.
The documents exhibited as DAZ 2 are all headed in the name of the respondent. They can briefly be described as follows:
a) Invoice 5846 dated 20 September 1991 addressed to "LCP" for $30 being the charge for delivery of a hired machine.
b) Invoice 8862 dated September 1991 addressed to LCP Pty Ltd for $314.20 being fork truck hire for the period 20 September 1991 to 30 September 1991 charged at the rate of $200 per week plus government tax plus the amount of invoice 5846 referred to above.
c) Invoice 9201 dated August 1992 addressed to LCP Pty Ltd for $487.20 being for fork truck hire for the period 3 August 1992 to 18 August 1992 at the rate of $200 per week plus government tax.
d) Statement dated August 1992 showing the following particulars:
Account rend. July $4188.40
Less August Payment $ 500.00
$3688.40
Add August Dishonour $ 500.00
$4188.40
Invoice no 9201 $ 487.20
Balance outstanding at $4675.60
18th August
The bankrupt's affidavit also deals with efforts that were made to have the judgment set aside and that evidence will be referred to later. In addition, the bankrupt exhibited to the affidavit searches of the registration of the business names Melchem International (Australia) and Melchem International. The former name was registered on 26 August 1991 in respect of the business of household and industrial cleaning products manufacture carried on by Domenico Zaffino. The business is said to have ceased on 26 August 1994. The latter name was registered on 22 December 1994 in respect of the business of manufacture of household products. The proprietor is shown as Domenico Zaffino of 10 Moreland Road Brunswick which is also the place of business.
The affidavit of Franco Zaffino asserts:
2. Sometime in September of 1991 I ordered a Fork Lift Truck from the Petitioning Creditor to be used in my detergent manufacturing business. The contract of hire was between Fork Truck Hire and Transport Pty Ltd and a company which I controlled, being L.C.P. Pty Ltd (A.C.N. 004 955 1310), hereinafter referred to as "L.C.P.". Annexed hereto and marked "FZ1" is Fork Lift Truck Hire Contract No 5867 in the name of L.C.P. Although a notation on the contract note next to L.C.P. states "T/A Melcham Int." in fact, Melchem International was never a trading name of L.C.P.
3. My son's signature appears on the contract of hire below a notation which states "please receive in good order and condition". It was never the intention of Fork Truck Hire and Transport Pty Ltd nor my intention that my son be responsible for the hire charges on the fork truck.
4. It was always my intention as Fork Truck Hire and Transport Pty Ltd well knew that my company L.C.P. would be responsible for all hire fees.
5. Subsequent to the hire of the fork lift truck, a number of invoices were made out to L.C.P. and in fact the hire fees were paid through my company, L.C.P. Annexed hereto and marked "FZ2" are a number of invoices clearly made out to L.C.P. and a statement dated August 1992 also made out to L.C.P.
6. Monthly statements were sent out by the petitioning creditor and payments were made by myself through my company, L.C.P.
The documents exhibited as FZ1 and FZ2 are the same as those exhibited as DAZ1 an DAZ2 to the bankrupt's affidavit.
Duneman's affidavit deals mainly with attempts made by the bankrupt to have the judgment set aside and some reference will be made to that subject later. Hagg's affidavit deals with the circumstances relating to the contract for the hire of the fork truck and subsequent events. At paragraphs 2 to 5 he says:
2. I say that the contract of hire of fork truck made between the judgment creditor and the judgment debtor was entered into by the judgment debtor on his own behalf and whereby he derived all benefit from the hire.
3. I spoke with the judgment debtor on 19th September 1991 and negotiated the hire arrangement and the rates of hire. Subsequently I instructed Elaine Fox, a secretary in the employ of the judgment creditor to prepare the relevant hire contract being number 5867 and I believe the same was signed by the judgment debtor when the fork truck was delivered. The judgment debtor specifically requested that the invoice be raised in the name of the party to whom the same has been addressed.
4. I believe that at all relevant times the judgment debtor carried on business as Melchem International.
5. Now produced and shown to me at the time of swearing this my affidavit and marked with the letters "TH-1" are true copies of 2 cheques drawn by Melchem International (Australia) and signed by the judgment debtor and dated 10th August 1992 and 17th August 1992 and payable to the judgment creditor. These cheques were subsequently dishonoured by National Australia Bank.
When the matter was before me on 14 December 1995 I
was tentatively of the view that the evidence tended to support the bankrupt's
assertion that the contract had been made
between the respondent and L.C.P. Pty Ltd and that all payments made pursuant
to the contract were made by that company.
However, in the light of the evidence contained in Hagg's affidavit I am
not convinced that this is so. Both the
bankrupt and his father have sworn that monthly statements were sent to L.C.P.
and that payments were made by Zaffino Senior through that company. Exhibit TH-1 to Hagg's affidavit establishes
that on 10 August 1992 and 17 August 1992 cheques for $500 each in favour of
"Fork Truck Hire" were drawn on the account of Melchem International
(Australia) and signed by the bankrupt.
Both cheques are endorsed "Payment stopped". This is consistent with the respondent's
statement of August 1992 which shows first a credit of $500 as a payment
received in August and later a debit of the same amount against the detail
"August dishonour". The
statement shows a balance outstanding at 18 August and I infer from all the
circumstances that the "August payment" and "August
dishonour" refer to the cheque drawn on 10 August 1992 and that the cheque
of 18 August 1992 had not, at the time the statement was prepared, been brought
to account.
The failure of the bankrupt to disclose the circumstances relating to the drawing of the 2 cheques on the account of Melchem International (Australia) leads me to conclude that both he and his father have been less than frank in their evidence. As none of the deponents was cross-examined I am unable to form a view as to their credibility and accordingly, left as I am with conflicting evidence on the critical question as to who were the parties to the original agreement, I am unable to make a definitive finding on that issue. In these circumstances the bankrupt has failed to demonstrate that there was no real debt behind the judgment and it must therefore follow that he has failed to demonstrate that the sequestration order should not have been made.
I have found it unnecessary to deal with the evidence concerning the attempts made to have the judgment set aside. It appears that three such applications have been made. The first was made on 4 August 1993 but the bankrupt failed to prosecute the application and it was struck out and he was ordered to pay $300 costs to the petitioning creditor. The second application was made on 18 September 1995 and was listed for hearing on 10 October 1995. The bankrupt did not appear and the application was struck out with costs in the sum of $284.00. The third application was listed for hearing on 6 November 1995. As the application (like the previous application) was made after the date of bankruptcy the bankrupt had no standing in the matter (W.R. Henry & Son v Hodge (1963) VR 111). There is no evidence before the Court as to the outcome of the third application but it is common cause that the judgment has not been set aside. I can draw no inference from this fact nor from the history of the previous applications in the Magistrates' Court.
As the bankrupt has failed to establish that the sequestration order ought not to have been made the application for annulment will be dismissed.
I certify that this and the preceding 8 pages are a true copy of the Reasons for Judgment of the Honourable Justice Olney
Associate:
Dated:
Heard: 14 December 1995 and 7 February 1996
Place: Melbourne
Judgment:16 February 1996.
Appearances:
The applicant appeared in person.
Mr T. Connard (instructed by Duneman Sutherland Pty) appeared for the respondent.
