FEDERAL COURT OF AUSTRALIA

Re Jorgenson; Ex parte HG & R Nominees Pty Ltd [1999] FCA 1023

RE DENIS ERROL JORGENSON and MARK JOHN WHITEHEAD; EX PARTE HG & R NOMINEES PTY LTD

QG 7581 of 1997

DRUMMOND J

21 JULY 1999

BRISBANE

IN THE MATTER OF DENIS ERROL JORGENSON and MARK JOHN WHITEHEAD

THE COURT ORDERS THAT:

1.                  A sequestration order be made against the estate of Mark John Whitehead.

2.                  The petitioning creditor’s costs of and incidental to the petition be the creditor’s costs in bankruptcy.

3.                  Whitehead Payne Solicitors pay the costs of the petitioning creditor thrown away by reason of the adjournment of the hearing of the petition on 17 June 1999 on an indemnity basis, that is, to the intent that Whitehead Payne shall pay all the petitioning creditor’s so thrown away save only for such of its costs, if any, as may have been unreasonably incurred.

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

IN THE MATTER OF DENIS ERROL JORGENSON and MARK JOHN WHITEHEAD

REASONS FOR JUDGMENT

1                     This is an adjourned creditor’s petition.  The matter came before me for hearing on 17 June 1999.  On that day, the debtor, Mark John Whitehead, appeared and obtained leave to file and read an affidavit on the basis of which I granted him the adjournment for the reasons outlined on 17 June 1999.  On that occasion, the Court made orders adjourning the further hearing of the petition to today and gave detailed directions designed to ensure that Mr Whitehead would file any material that he wished to rely upon and be in a position to present argument to the Court today.

2                     Yesterday, Mr Whitehead filed an affidavit, which he did not bother to serve on the creditor, in which he says he is putting himself in the hands of the Court.  He claims he is not able to appear today as he has been called away to look at an opportunity which has been offered to him and his immediate need is to try to provide a living for his family and he apologises for his absence.  He presumably wishes the Court to undertake the burden of fossicking through the file and, if anything occurs to the Court that might be able to be raised for his benefit, Mr Whitehead seems to assume that the Court will follow that course.  It is no part of the role of the Court to act as advocate for an absent party and I do not propose to undertake the exercise that Mr Whitehead, impliedly at least, invites the Court to undertake.

3                     Having regard to the material read by the counsel for the petitioning creditor, I am satisfied of all the matters of which I am required to be satisfied by s 52 the Bankruptcy Act 1966 (Cth) and I will make a sequestration order against the estate of Mark John Whitehead.

4                     The question before me now is whether I should order the firm of Whitehead Payne to pay the petitioning creditor’s costs thrown away by the adjournment of the hearing of its contested petition on 17 June 1999.  On that day, the debtor, Mr Whitehead, appeared in person and read an affidavit in which he applied for an adjournment of the hearing on the ground there were a number of important witnesses, according to him, whose attendance he had been unable to procure because he was only advised by his solicitors, Whitehead Payne, of the hearing date two days before. 

5                     The material that the debtor, Mr Whitehead, filed on that occasion included a facsimile from Whitehead Payne dated 15 June 1999 enclosing a copy of the letter from the Court of 7 April 1999 to Whitehead Payne advising them that 17 June 1999 had been fixed for the hearing.  The circumstances in which I granted the adjournment are dealt with in brief in the reasons I gave on 17 June 1999 and, on that occasion, I also directed that Whitehead Payne be given an opportunity to show cause why they should not have to pay the costs of the petitioning creditor thrown away on that day because of the decision I then made to adjourn the hearing.

6                     A number of things are clear.  The first is that, on the material now before me, it seems that the debtor procured an adjournment in circumstances where he was really seeking to buy further time and it can be doubted strongly whether he ever had any bona fide intention to resist the winding-up order.  The second thing that needs to be noted, as Mr Philip Whitehead of Whitehead Payne has repeatedly pointed out, is that the debtor, Mark Whitehead (who is no relation to the solicitor), has, throughout the time this petition has been before the Court, appeared himself on his own behalf on every occasion.  That is, Whitehead Payne has never appeared for him at any Court hearing of the petition.

7                     However, that, to my mind, does not provide of itself a reason for concluding that a costs order should not be made against Whitehead Payne in respect of the creditor’s wasted costs of 17 June 1999.

8                     Mr Muller, in the affidavit read on behalf of the petitioning creditor today, refers to an extensive sequence of communications with Mr Philip Whitehead of Whitehead Payne in connection with issues raised by the petition.  He exhibits correspondence from Mr Philip Whitehead, including a letter written by Mr Philip Whitehead on 17 November 1998 which is headed “RE Mark John Whitehead - HG & R Nominees Pty Limited Creditor’s Petition:  7581/1997” and it begins in this way:

“We refer to our Mr. Whitehead’s telephonic discussions with you of even date and note we act on behalf of Mr. Mark John Whitehead, no relation to our Mr. Whitehead.

We enclose by way of service affidavit of Mr. Mark John Whitehead, and note our client’s point of contention, that being that the mortgagee has not exercised its power of sale.”

9                     In this letter, Mr Philip Whitehead then goes on to draw the attention of the solicitors for the petitioning creditor to what was said to be the existence of a possible purchaser for the land in respect of which the litigation ultimately involving Mr Whitehead in the bankruptcy petition arose.

10                  Subsequent to that, on 31 December 1998, a notice by the debtor of intention to oppose the petition was filed in the Court.  It contains the following subscription, “Le Mas Solicitors, 183 North Quay Brisbane Qld 4000, as Town Agents for Whitehead Payne Solicitors, 1744 Gold Coast H/way Burleigh Heads Qld 4220”.  There was also an affidavit sworn by the debtor setting out some of the evidence upon which he proposed to rely to answer the petition which bears a similar subscription identifying Whitehead Payne as Mr Whitehead, the debtor’s, solicitors in connection with the petition.  This material appears to have been served on the creditor’s solicitor.

11                  Mr Muller, in his affidavit, also refers to telephone conversations between 17 November 1998 and 15 June 1999 with Mr Philip Whitehead about the petition.  He exhibits a letter received on 15 June 1999 from Mr Philip Whitehead which reads as follows:

“We refer to the above matter and advise that our client requires an adjournment of this matter on Thursday, 17 June 1999 as our client cannot arrange for an important witness Mr. Brian Smith, Valuer of Colliers Jardine to be available.”

12                  The material provided by Mr Muller, not disputed by Mr Philip Whitehead, including that to which I have referred, shows that Whitehead Payne conducted themselves in such a way as to entitle the petitioning creditor’s solicitors to rely on them as acting for the debtor, in connection with these proceedings.  In addition, as I have already mentioned, the Court wrote to Whitehead Payne on 7 April, and there is no dispute that that letter was received around about that time, to advise of the hearing date.  It is not suggested that produced any response from Whitehead Payne to indicate that they were not, in fact, acting for the debtor in connection with the hearing of the petition or that they had only limited instructions of the kind that Mr Philip Whitehead says his firm, in fact, held from the debtor.

13                  I have no hesitation in accepting what Mr Philip Whitehead says about there being a limited retainer of his firm by the debtor.  I have more doubt about just what the exact content of that retainer is however.  The inference I draw from the material before me is that Whitehead Payne were acting for the debtor in connection with the petition but that, probably to minimise costs, it was left to the debtor himself, to attend at Court on the various occasions prior to the date fixed for hearing when the matter came before the Court and various directions were given to ensure the matter would be ready to proceed.

14                  In the reasons I gave on 17 June 1999, I outlined my concern at the responsibility of Whitehead Payne for the matter not, in fact, being able to be dealt with on 17 June and for the adjournment being granted which I then gave the debtor.

15                  There is no dispute that this Court has jurisdiction to make a costs order against a non-party and there is no dispute that that jurisdiction extends to a costs order against the solicitors personally acting for a party.  It seems to me that this is an appropriate case in which the petitioning creditor should be entitled to a costs order against the solicitors for the debtor in respect of their costs thrown away by reason of the adjournment on 17 June 1999.

16                  Given the extensive involvement of Whitehead Payne in acting for the debtor in connection with this petition commencing back with Whitehead Payne’s letter of 17 November 1998, in my opinion, those solicitors came under an obligation to either attend to the preparation of the debtor’s case so that it could have proceeded on 17 June 1999, the date appointed for the hearing as far back as April and notified to Whitehead Payne and the other parties or, alternatively, it should have made it clear to the petitioning creditor, and indeed to the Court also, well prior to 17 June 1999 that it could not be relied upon to take action necessary to get the matter ready for hearing on 17 June because of the limited extent of its retainer.

17                  Whitehead Payne’s failure to do either of those things, in my view, led directly to the situation that arose on 17 June 1999 where the debtor, probably for reasons now exposed as being unjustifiable, was able to procure the adjournment of the hearing and thus more time and to the creditor incurring the costs of that day in the expectation that the petition would be finally dealt with.

18                  I will therefore order Whitehead Payne pay the petitioning creditor’s costs thrown away by the adjournment of the petition on 17 June 1999.

19                  I do not make any finding that Whitehead Payne in any way lent themselves to assisting the debtor to procure time.  The evidence is to the contrary.  I think their default is one of neglect and not, in any way, of deliberate, improper assistance to a litigant to procure time.  But the neglect is of a substantial nature, particularly having regard to the fact that Whitehead Payne were notified by the Court as long ago as 7 April 1999 of the hearing date and no action was taken by that firm, on the material before me, until two days before to ascertain whether the matter could be readied for hearing.  It was only on 15 June 1999 that Whitehead Payne notified the debtor of the advice Whitehead Payne had received as far back as 7 April 1999.

20                  It seems to me that, given the extent of the neglect displayed by Whitehead Payne in that regard, it is proper to make the order for costs on an indemnity basis, that is, to the intent that the petitioning creditor will recover all its costs thrown away by the hearing of 17 June 1999 being adjourned save such costs, if any, as may have been unreasonably incurred.

Associate:

Dated:              21 July 1999