Daly v Watson

STATUTORY PROVISIONS Creditors' petitions are dealt with in Division 2 of Part IV of the Act. Sections 44 and 47 of that Division provide:

"44(1) A creditor's petition shall not be presented against a debtor unless: (a) there is owing by the debtor to the petitioning creditor a debt that amounts to $1,500 or 2 or more debts that amount in the aggregate to $1,500, or, where 2 or more creditors join in the petition, there is owing by the debtor to the several petitioning creditors debts that amount in the aggregate to $1,500; (b) that debt, or each of those debts, as the case may be: (i) is a liquidated sum due at law or in equity or partly at law and partly in equity; and (ii) is payable either immediately or at a certain future time; and (c) the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition. (2) Subject to subsection (3), a secured creditor shall, for the purposes of paragraph (1)(a), be deemed to be a creditor only to the extent, if any, by which the amount of the debt owing to him exceeds the value of his security. (3) A secured creditor may present, or join in presenting, a creditor's petition as if he were an unsecured creditor if he includes in the petition a statement that he is willing to surrender his security for the benefit of creditors generally in the event of a sequestration order being made against the debtor. (4) Where a petitioning creditor is a secured creditor, he shall set out in the petition particulars of his security. (5) Where a secured creditor has presented, or joined in presenting, a creditor's petition as if he were an unsecured creditor, he shall, upon request in writing by the trustee within the prescribed time after the making of a sequestration order, surrender his security to the trustee for the benefit of the creditors generally. (6) A secured creditor to whom subsection (5) applies who fails to surrender his security when requested to do so by the trustee in accordance with that subsection is guilty of contempt of court. ...

47(1) A creditor's petition: (a) shall be in accordance with the prescribed form; (b) shall be verified by the affidavit of a person who has knowledge of the facts; and (c) shall be served as prescribed. (2) Except with the leave of the Court, a creditor's petition shall not be withdrawn after presentation."

The Bankruptcy Rules ("the Rules") spell out the procedure for presentation of creditors' petitions. Rule 12 provides (so far as relevant): "12(1) A creditor may present a petition seeking the making of a sequestration order against the estate of a debtor by filing the petition with a Registrar in Bankruptcy. (2) A petition shall be in accordance with Form 5 and shall have attached to it, or written on it, a note, for signature and stamping by the Registrar, in accordance with Form 6. (3) At the time when a petition is filed, the petitioning creditor shall: (a) furnish to the Registrar so many copies of the petition as are required for service and for annexure to any affidavits of service; (b) file the affidavit verifying the petition required by paragraph 47(1)(b) of the Act; ..." Form 5 in Schedule 1 to the Rules provides three alternatives for paragraph 3 of a creditor's petition as follows:

"3. I do not, nor does any person on my behalf, hold any security over the property of the debtor or any part of it for the payment of the amount specified in paragraph 2. or 3. I hold security over the property (or part of the property) of the debtor, being (here specify particulars of the security), but the security is valued at $ , leaving an unsecured balance owing to me of $ . or 3. I hold security over the property (or part of the property) of the debtor for payment of the amount specified in paragraph 2, being (here specify particulars of the security), but I am willing to surrender the security for the benefit of the creditors generally in the event of a sequestration order being made against the estate of the debtor."

THE COURSE OF THE HEARING The petition was heard by Lockhart J on 30 March 1995. At the hearing counsel for the respondent applied ore tenus to alter the date of the act of bankruptcy specified in paragraph 4 of the petition to 15 March 1994. The amendment was sought because Hill J had not, in fact, extended the time for compliance with the bankruptcy notice from 15 March 1994, when the hearing before him commenced, to 4 May 1994, when he delivered judgment. The appellant opposed the amendment, but said that he was unable to point to any prejudice. Lockhart J allowed the amendment and dispensed with service of the amended process. The hearing then continued. Counsel for the respondent read, without objection, what was described on the face of the document as an "Affidavit of Truth of Statements in Creditor's Petition" made by Charles William Doughty on 22 June 1994. Counsel then read an affidavit of service made by Malcolm Hill on 25 August 1994, affidavits of search made by David Paul Courtenay on 27 June 1994 and 29 March 1995, and an affidavit of debt made by Mr Doughty on 29 March 1995. Mr Hill was required for cross-examination. In his case the appellant first sought to read an affidavit made by him on 15 March 1994 and filed in support of his earlier application before Hill J. Counsel for the respondent objected that the appellant had given no notice of his intention to use this affidavit, but his Honour allowed the affidavit to be read. Next, the appellant sought to read the affidavit of Robert B. McCullough, a chartered accountant, made on 17 August 1994. Upon objection by counsel for the respondent, his Honour rejected as inadmissible the whole of this affidavit save for paragraph 1, in which the deponent stated that he had been retained as the appellant's accountant. The appellant then indicated that he had no other affidavits he wished to read, but that he did want to call Mr McCullough to give evidence. The appellant tendered a number of documents, which were received in evidence and marked variously as exhibits 1-6. Some of these documents were admitted subject to their relevance being established. The appellant also tendered three letters from different real estate agents as evidence of estimates of sale values of the appellant's properties mentioned in the petition. His Honour rejected the tender on the basis that such evidence should have been given by affidavits filed in accordance with the Registrar's directions and that, in any event, it was not probative of any issue in the case. Mr Hill was cross-examined about the service of the petition. Mr Courtenay, the respondent's solicitor, was cross-examined as to the address of his firm. The appellant then called Mr McCullough. Counsel for the respondent objected to most of his evidence, principally on the basis that it was covered by the Registrar's direction of 13 December 1994, and such evidence was rejected. However, Lockhart J himself asked some questions of Mr McCullough about the appellant's assets and liabilities, and the appellant was permitted, over objection, to ask Mr McCullough his view about the appellant's capacity "to raise $2.4 million in the current market place". The answers to these questions were admitted. The appellant then applied for an adjournment in order to be able to adduce evidence of the matters dealt with in the three letters from the real estate agents referred to above. The application was opposed by counsel for the respondent. Following counsel's submissions, Lockhart J indicated to the appellant that, if he wished to pursue the adjournment application, further evidence of his financial position would be required. The appellant then re-called Mr McCullough to give evidence solely for the purposes of the adjournment application. The trial judge asked Mr McCullough several questions about the appellant's assets and liabilities. The appellant asked Mr McCullough nothing further in chief or in re-examination, and the witness was only briefly cross-examined by senior counsel for the respondent. The three letters were received in evidence for the purposes of the adjournment application only. In his judgment on the adjournment application Lockhart J summarized the evidence of the financial position of the appellant, his companies and family trusts. His Honour then concluded: "I have taken a view most favourable to [the appellant] of all that material, to determine whether or not there would be any reasonable prospects of his being able, through proper evidence, to establish his own solvency for the purpose of defeating the creditor's petition in this case. I have borne in mind that the petitioning creditor has a judgment debt in its favour in the sum of $2.4 million which excludes interest on judgment; the judgment having been signed in October 1993. I have also taken into account that, in accordance with the Bankruptcy Act and rules, the petitioning creditor has valued its securities over the various parcels of real estate of which it is a secured creditor in the sum of $1.25 million. It claims to be an unsecured creditor in the sum of $1.17 million. I can see on the material no purpose to be served by the adjournment. It would not in my view have any realistic prospect of establishing solvency of Mr Bryant. Accordingly, I decline to grant the adjournment."

No further evidence was adduced and the hearing proceeded to addresses. FINDINGS AND CONCLUSIONS OF THE PRIMARY JUDGE His Honour held that the petition was served in accordance with the Act. He rejected submissions that the petition was not delivered personally to the appellant and, in the alternative, that service on the appellant in the precincts of the court was an "abuse of process". His Honour also said that there was no evidence to support a finding that the address of the respondent's solicitors stated in the petition was not the proper address for service of the respondent. The appellant submitted, in effect, that he was unwilling to pay the judgment debt on the basis that he contested the quantum of the debt owing to the respondent. His Honour held that the evidence could not conceivably satisfy a court that the appellant was solvent. His Honour also found no substance in the allegation that the petition had been presented and prosecuted maliciously. The appellant further submitted that the court should go behind the judgment debt obtained in the Supreme Court, asserting that he had there been denied discovery and an opportunity to prepare his case. Importantly too, he relied upon what he submitted was an acknowledgment by a member of the Full Court during the hearing of his appeal from Hill J that he had "a real case on natural justice" in relation to the proceedings in the Supreme Court. This involved the circumstances in which the appellant had been allowed to amend his defences and cross-claims in those proceedings and which, the member of the Full Court had observed, provided his "best ground of appeal". His Honour rejected this submission, holding that there was no material before the court which would justify going behind the judgment of the Supreme Court. Finally, his Honour declined to exercise the discretion to adjourn the petition pending the disposal of the appeal to the Court of Appeal and of the special leave application to the High Court. Being satisfied with the proof of the matters required by s 52(1) of the Act, his Honour made the sequestration order. GROUNDS OF APPEAL AND CONCLUSIONS ON THE APPEAL The appellant has specified his grounds of appeal in paragraphs 2-35 of the notice of appeal. It is convenient to deal with them in the same order as his written submissions. "2. His Honour erred in not dismissing the Creditor's Petition."

The appellant argues, what he calls, four "points" under this ground. In substance, they are:

(1) there was no evidence that judgment was entered against him in the Supreme Court proceedings, the serial number of which is stated in the petition; (2) the unsecured balance stated as owing to the respondent in the petition is not a liquidated sum; (3) there was no affidavit verifying paragraph 4 of the petition; and (4) the value of the respondent's security is impermissibly stated in the petition as an "estimated value".

The first thing that may be observed is that none of these alleged deficiencies was either specified in the appellant's grounds of opposition or pressed by him at the hearing of the petition. It is, therefore, quite wrong to submit that the primary judge erred in these respects. In any event, the appellant's "points" are misconceived. As to point (1): if the serial number of the judgment debt proceedings be inaccurately stated in the creditor's petition, it may be amended so that the correct number is stated. No possible prejudice is suggested by the appellant. In fact, the office copy of the judgment filed with the application for the issue of the subject bankruptcy notice is headed with the serial number stated in the petition and certifies entry of the relevant judgment debt. There was no evidence before Lockhart J that the judgment was entered in any other proceedings. Points (2) and (4) concern the position of the respondent as a secured creditor under s 44 of the Act. The requirements of s 44 were explained by Lockhart J in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 36 FLR 182. In that case his Honour rejected a submission that s 44(2) required a petitioning creditor to state in its petition not its estimate of the value of its security, but the actual value thereof. His Honour held that a petitioning secured creditor may in its petition estimate the value of its security, provided the creditor acts in good faith, and that, in the event of a sequestration order being made, it is not bound by the estimate when it seeks to prove its debt. This construction is consistent with the prescribed form of petition required by s 47(1)(a) of the Act, which envisages a global value being placed on a creditor's security and not a separate value for each mortgage, charge or lien. See too the definition of "secured creditor" in s 5(1) of the Act. Once it is appreciated that the "value" referred to in s 44(2) is an estimated value, there is no difficulty in calculating the excess (or "unsecured balance" as it is termed in the prescribed form) in respect of which a secured creditor is deemed to be a creditor. Such an amount is plainly a "liquidated sum" within the meaning of s 44(1)(b)(i) of the Act. Of course, as Sheppard J observed in Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 (at 682), the petitioning creditor's estimate "must bear a close relationship to the realities of the matter ... [and] not be arbitrary or capricious". But, it could not, in our view, be said that, in this sense, there was a mis-statement in this petition. (See also Re Vassis; Ex parte Leung (1986) 9 FCR 518 per Burchett J at 528-531.) At first glance the appellant's point (3) has a superficial attraction. Rule 12(3)(b) requires the affidavit verifying the petition to be filed at the time when the petition is filed. In this case an affidavit expressly verifying, in terms, paragraph 4 of the petition was not filed. It may have been safer or more prudent if such an affidavit had been filed. The failure to file such an affidavit would not, however, render the filing of the petition a nullity. The petition has still been presented: r 12(1).

The requirement to verify a petition is designed to operate as a brake on the filing of insubstantial petitions: Re a Debtor (No 7 of 1910) [1910] 2 KB 59 at 62. The Registrar will be astute to check that the provisions of r 12(3) have been complied with before official copies of the petition are returned to the petitioning creditor. In Daly v Watson (1994) 50 FCR 544, Davies J expressed his opinion (at 545) that a petition which is not verified as required by s 47(1) of the Act is liable to be struck out. In Daly v Watson Beaumont and Gummow JJ held (at 553) that the question whether evidence in an affidavit purporting to verify a petition was in admissible form was immaterial in circumstances where at the hearing of the petition there was other evidence on the point which established the requisite facts. That is the situation here. Mr Courtenay's affidavits made on 27 June 1994 and 29 March 1995 do, in fact, verify paragraph 4 of the petition. The appellant did not even cross-examine on this aspect of the evidence. Indeed, issue was only joined on paragraph 4 of the petition by ground 4 of the appellant's notice filed on 13 December 1994. The language of this ground of opposition shows that the appellant must be regarded as having accepted that the matter was res judicata as a result of the orders made by Hill J on 4 May 1994. Since the hearing of the petition the High Court has, on 6 September 1995, refused leave to appeal against the decision of the Full Court affirming those orders. The appellant's point (3) also fails. "3. His Honour erred in making a sequestration order against the estate of the appellant based on the amended Creditor's petition which having been amended by leave to read "on the 15th March 1994" then contained an incorrect date of the Act of Bankruptcy relied upon.

4. His Honour erred in not finding that s.41(7) of the Bankruptcy Act 1966 extended the time fixed for compliance with the Bankruptcy Notice until and including the 4th of May 1994, the day on which Hill J delivered His Honour's Judgment which determined that the Court was not satisfied that the appellant had a counter-claim, set-off or cross demand. 5. His Honour erred in finding that the date of the act of bankruptcy contained in paragraph 4 of the Creditor's Petition originally stated as "on or before the 4 May 1994" was wrong and that it had to be amended."

The appellant's contention that the date of the act of bankruptcy was 4 May 1994 is hopeless. No order was ever pronounced extending the time for compliance with the bankruptcy notice beyond 15 March 1994. Nor did the appellant submit at the hearing of the petition that the later date was applicable. The possibility of an implied extension by operation of s 41(7) of the Act was also explicitly determined against the appellant by the Full Court on 9 November 1994 and must be regarded as res judicata. Under these grounds the appellant also submitted, in effect, that an amendment to the date of the act of bankruptcy stated in the petition may only be allowed within 6 months of the date to be relied on. So, it is said, in the present case an amendment may not be allowed on 30 March 1995 to allege an act of bankruptcy on 15 March 1994. The submission depends upon the correct construction of s 44(1)(c) of the Act, which provides that an available act of bankruptcy must have occurred "within 6 months before the presentation of the petition". Support for the submission is said to be found in the decision in Re Hastings [1985] 1 WLR 969. In that case a Divisional Court in England treated an application for leave to amend a petition as equivalent to the presentation of a petition, so that the available act of bankruptcy had to occur within the prescribed period prior to the application for leave to amend, apparently for the reason that the date of service of the bankruptcy notice was not as deposed to by the process server. For this reason, the amendment was treated as a matter of substance rather than form. The case should be distinguished for our purposes. Here the altered date of 15 March 1994 was within the prescribed period, the petition having been presented on 28 June 1994. Moreover, the amendment was purely formal, arising out of the absence of an application by the appellant to extend time beyond 15 March 1994, when Hill J reserved his decision. Indeed had no application to amend been made, it would have been open to the primary judge to have dealt with the petition without it having been formally amended. At the time the petition was served the appellant knew of the extension granted by the Registrar to 15 March 1994 and the order of Hill J refusing to extend the time further. The appellant would have known that the petition was based on an act of bankruptcy occurring on 15 March 1994 as a result of his failure to comply with the bankruptcy notice on or before that date. Section 306(1) of the Act provides: "Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court."

This section operates so as to ensure that a defect of the type we are considering, that is a formal defect, does not invalidate the proceedings; see Re Pinkerton; Ex parte B.G. Textiles Pty Ltd (In Liq.) (1984) 4 FCR 64, Re Dunhill; Ex parte Dunhill [1894] 2 QB 234, Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71.

Next, the appellant submits under these grounds that the amendment created a "new" petition, which must comply all over again with the requirements of s 47(1) of the Act. This submission cannot be accepted. The concept of amendment involves alteration or addition to an existing document. That is why appropriate provisions in relation to amendments are contained in rr 108-111 of the Rules. Here the alteration was written on the petition presented on 28 June 1994. "6. His Honour having given leave to the petitioning creditor to amend the creditor's petition, erred in not directing that the same amendment be made to Annexure "A" to the "AFFIDAVIT OF TRUTH OF STATEMENTS IN CREDITOR'S PETITION" sworn by Charles William Doughty on 22nd June 1994 (the affidavit verifying the Creditor's petition). 7. His Honour having given leave to the petitioning creditor to amend the creditor's petition, erred in not directing the petitioning creditor to re-verify, re-present, and re-serve the petition in accordance with the Bankruptcy Act 1966."

Obviously a court cannot order a deponent to alter a document annexed to an affidavit that he has already sworn. The appellant again misconceives the requirements of s 47(1)(b) of the Act. An amendment allowed under s 33 of the Act is not subject to verification, which is the procedure laid down for the purpose of instituting a proceeding on a creditor's petition: Thai v Commissioner of Taxation (1994) 53 FCR 252 at 274. Lockhart J did, in fact, dispense with service of the amended petition. "8. His Honour erred in the exercise of His Honour's discretion in granting leave for the creditor's petition to be amended by the petitioning creditor to introduce an Act of Bankruptcy which is out of time and not in accordance with s.44(1)(c) of the Bankruptcy Act 1966."

This ground has been dealt with above in relation to the grounds in paragraphs 3, 4 and 5. "9. His Honour erred in not finding that the Creditor's petition was not verified in accordance with s.47(1)(b) of the Bankruptcy Act 1966, as paragraph 3 of the "AFFIDAVIT OF TRUTH OF STATEMENTS IN CREDITOR'S PETITION" sworn by Charles William Doughty on 22nd June 1994 (the affidavit verifying the Creditor's petition) verified only "paragraphs 1, 2 and 3" of the petition and did not verify paragraph 4 of the creditor's petition."

There is no prescribed form for an affidavit verifying a petition. The affidavit of Mr Doughty did not purport to verify paragraph 4 of the petition. As explained earlier in this judgment, that paragraph was proved by the affidavits of Mr Courtenay. "10. His Honour erred in finding that the petitioning creditor had satisfied the requirements of s.52(1) of the Bankruptcy Act 1966 in circumstances where the affidavit verifying the amended Creditor's petition did not purport to verify all of the paragraphs of the amended Creditor's Petition and had annexed to it a copy of the Creditor's Petition which had not been amended and in circumstances where the deponent of the affidavit was not present in Court and was not aware of the amendment made to the creditor's petition in Court by His Honour's leave."

The substance of this ground has already been addressed. "11. His Honour erred in finding that the affidavit verifying the amended creditor's petition which did not contain the amendment was good."

Lockhart J made no such "finding". There was no affidavit verifying the amended petition. "12. His Honour erred in finding that the respondent had only to "ASSES" [sic] the value of the secured real property in it's [sic] possession, and that there was no requirement to present evidence to verify the assessment.

13. His Honour erred in finding that the respondent had only to asses [sic] the value of the property it held as security without any regard to the accuracy of the assessment. 14. His Honour erred in finding that the respondent was not required to present evidence of the valuation or a list of comparable sales relied on in the respondent's assessment of the value of the property. 18. His Honour erred in finding that the difference between the Judgement debt (subject to appeal) and an assessment by the respondent of the value of the real property in it's [sic] possession satisfied the requirements of s.44(1)(b)(i) of the Bankruptcy Act 1966 as being a "liquidated sum". 19. His Honour erred in finding that the paragraph 3 of the Creditor's Petition was sufficient to comply with the requirements of s.44(4) of the Bankruptcy Act 1966, as being "particulars of his security" without accurate and verified valuations of all the individual parcels of real property in the possession of the secured creditor (the respondent)."

These grounds cannot succeed for the reasons given in relation to the appellant's points (2) and (3) of his ground of appeal in paragraph 2 above. The value of the respondent's security was not mentioned in the appellant's grounds of opposition. There was no allegation that the respondent's estimate was a mere sham. Section 44(2) of the Act does not provide an opportunity to challenge a bona fide estimate of value given by a secured creditor. The appellant did (in the context of his application for an adjournment) make a faint submission orally to Lockhart J that the estimate was not a "bona fide figure", but such a submission was not pressed in his final address. Nor could it have been. Mr Doughty, the respondent's manager, was not required for cross-examination, and any suggestion of mala fides would necessarily have had to have been put directly to him. "15. His Honour erred in denying the appellant the right to challenge the respondent's assessment of the value of the real property in it's [sic] possession."

This ground misconceives the effect of s 44(2) of the Act, which is explained above. The three letters tendered by the appellant were irrelevant. However, even if they had been relevant, it would have been unfair to the respondent to receive them in evidence. The appellant had been directed to file his evidence by 10 February 1995. Yet he tendered at the hearing letters dated 14 March 1995, 22 March 1995 and 29 March 1995, which purported to set out three different authors' opinions as to possible sale prices for part of his property and which had not been served on the respondent. "16. His Honour erred in not finding that the 18 months which the respondent had available to it between being granted possession and the date of the hearing before His Honour was more than adequate time to sell the property and liquidate the debt and/or to put on evidence of the true market value of the real property in it's [sic] possession. 17. His Honour erred in finding that the respondent (petitioning creditor) seeking to bankrupt the appellant (debtor) was entitled to rely on the difference between the petitioning creditors [sic] own assessment without any proof of the true market value of the real property in it's [sic] possession and the judgement on which the petition is based in circumstances were [sic] the petitioning creditor had not sold the real property during the preceding 18 months."

The flaw in these grounds has already been exposed in sufficient detail. "20. His Honour erred in preventing the appellant who was unrepresented from conducting his case."

The appellant's submissions in support of this ground are barely comprehensible. They appear to rest on three complaints: the failure of the trial judge expressly to invite the appellant to object to the respondent's evidence, the rejection of Mr McCullough's evidence, and excessive intervention in the examination of Mr McCullough. The submissions are most confusing. The tender of the respondent's evidence in support of the petition is recorded in four pages of the transcript of the hearing. A reading of those four pages shows that the appellant was obviously conscious of his right to object to evidence, that he did object to evidence being read, and that he knew deponents might be required for cross-examination. There was plainly no need to advise the appellant on these matters. The rejection of Mr McCullough's evidence is said, in effect, to be unfair since he had been required for cross-examination and, when objection was taken by senior counsel for the respondent, the basis of the objection was not articulated. The most striking thing about the appellant's submissions on this point is that no attempt is made, nor could it be, to justify the reception of Mr McCullough's opinion as to the ultimate issue of the appellant's solvency. The primary judge did, in fact, explain patiently to the appellant why he could not adduce from Mr McCullough evidence of facts which should have been set out in an affidavit filed in accordance with the Registrar's direction. The appellant submits that the primary judge's questioning "blocked" the conduct of his case. The guidelines to be applied in considering a submission of this sort were usefully laid out by Kirby A-CJ in Galea v Galea (1990) 19 NSWLR 263 at 280-282. In the present case it could not be said that the questions asked by Lockhart J during Mr McCullough's examination were anything other than helpful to the appellant's case. His Honour could not conceivably be viewed as acting as an advocate for the respondent in his questions. It is true that his Honour took the initiative in questioning when Mr McCullough was recalled to give evidence in support of the adjournment application. But it should be noted, as we have mentioned above, that the appellant sought to ask no questions at all in this segment of the hearing. The transcript admits of no possible conclusion other than that the primary judge lent over backwards to ensure that the unrepresented litigant in person received the fairest hearing possible in the circumstances where that party had persistently ignored directions to file his evidence. In our opinion, there is no room for the slightest doubt that the appellant received a fair hearing. "21. His Honour erred in refusing to accept into evidence the Market Assessments obtained by the appellant and sought to be tendered as evidence at the hearing."

This ground cannot succeed for the reasons already given. The appellant's submissions in support are not in point. "22. His Honour erred in cross examining the appellant's Accountant to determine if His Honour would grant an adjournment to enable the Market Assessments obtained by the appellant to be verified in a manner suitable to His Honour and in accordance with His Honour's decision to otherwise refuse to accept them into evidence."

We have already said that we do not consider that the primary judge's questioning of Mr McCullough caused the hearing to miscarry. His Honour was not "cross-examining". That is the role of a party who does not call the witness. In any event, there was no possible basis upon which the three real estate agents' letters could be admitted in evidence once objection was taken. "23. His Honour erred in refusing the appellant's application for an adjournment on the basis that the Court was very busy and implying to the effect that "it must be done today" as a convenience of the Court was most important and must come before the appellant's rights to a fair and unbiased trial before a competent Court. 28. His Honour erred in denying natural justice and procedural fairness to the appellant by refusing the appellants [sic] application for an adjournment to enable the appellant to comply with His Honour's requirement that all evidence be in affidavit form."

The appellant did not develop any submission on bias. The exercise of the primary judge's discretion in relation to the appellant's adjournment application is said to have miscarried because an adjournment was necessary to obtain the real estate agents' evidence in admissible form. But, once it is appreciated that such evidence is irrelevant, this ground must also necessarily fail without further consideration. "24. His Honour erred in denying natural justice and procedural fairness to the appellant in finding to the effect that previous directions of the Court directing that the appellant "file and serve ANY affidavit's [sic] he wished to rely on", made to a litigant in person without explanation, should have been understood by the litigant in person as meaning that he was to "file ALL his evidence by affidavit and would be prevented from tendering any further evidence at the hearing". 25. His Honour erred in denying natural justice and procedural fairness to the appellant in not finding that as an unrepresented litigant he should have had it explained to him by the Court before the hearing that evidence ONLY BY AFFIDAVIT would be accepted. 26. His Honour erred in denying natural justice and procedural fairness to the appellant by refusing and or preventing the appellant from tendering relevant evidence which was crucial to the appellant's effective opposition to the creditor's petition. 27. His Honour erred in denying natural justice and procedural fairness to the appellant by refusing to accept evidence which was not in affidavit form." The appellant complains in his submissions that the respondent had the affidavit sworn by the appellant on 15 March 1994 for over 12 months. We do not understand why this point is raised as the primary judge admitted that evidence. As to the Registrars' directions about filing affidavits, it cannot be suggested that the appellant was unaware of their terms and effect. Two of the minutes of the relevant orders were actually signed by the appellant. There was nothing unfair about such directions. "29. His Honour erred in denying natural justice and procedural fairness to the appellant by refusing the appellant adequate time and the opportunity to prepare effective affidavits which would have contained ALL his evidence presented in a manner acceptable to the Court for it's [sic] consideration before making a determination in such an important matter affecting the appellant's rights, his status and his reputation."

This ground is without any merit. On the final occasion the Registrar gave the appellant over eight weeks to prepare his affidavits. No application for an extension of time was made. "30. His Honour erred in not exercising His Honour's discretion pursuant to s.52(2)(b) of the Bankruptcy Act 1966 to adjourn or dismiss the petition on the basis that the appellant had a reasonable ground of appeal from the judgement debt in the Supreme Court of New South Wales and that it was a bona fide appeal in the process of being expedited on advice from the Full Bench of this Honourable Court, facts unchallenged by the respondent and corroborated by a portion of the transcript of the full bench of this Honourable Court dated 21 September 1994 which was tendered in evidence before His Honour."

The primary judge expressly dealt with the observations made by one of the bench during the argument of the appeal from Hill J. Those observations plainly did not require that the petition be dismissed or adjourned pending the disposal of the appeal to the Court of Appeal. On the contrary, his Honour was required to consider whether the appeal was based on genuine and arguable grounds. Those grounds were said to involve a denial of natural justice in the Supreme Court in respect of discovery and the amendment of defences and cross-claims. There was no mis-statement of principle by the primary judge, and the consideration of the matters alleged did not require the discretion to be exercised in favour of the appellant. The fact that an application for special leave to appeal from the Full Court was pending at the time of the hearing of the petition may now be disregarded. However, it should be said that his Honour plainly had regard to that fact. "31. His Honour erred in finding in the absence of any evidence that the appellant had an estate which the respondent desired to have administered by the Court."

The primary judge made no such "finding". There was no submission made at the hearing that the petition should be dismissed on the basis that there would be no assets in the estate. The submission is now made that the respondent holds security over the whole of the appellant's property. There is no evidence that such is the case. That is not an inference that can be drawn from the appellant's affidavit sworn on 15 March 1994. "32. His Honour erred in not finding that written undertakings by a third party to make up any and all short fall between a genuine sale of the real property in the possession of the respondent and the judgement debt was not conclusive proof of the appellant's ability to meet his debts."

The "written undertakings" referred to were documents admitted in evidence as exhibit 5 at the hearing of the petition. One document comprises the signed minutes of a directors' meeting of Redstar Australia Pty Ltd ("Redstar") held on 14 November 1991, recording as a business item the provision of indemnities to directors of the "Bryant Group of Companies" in respect of guarantees given by them. The other document purports to be an indemnity dated 14 November 1991 given by Redstar to the appellant. (Redstar is a company apparently controlled by the appellant.) There was no evidence whatsoever that Redstar is able or willing to furnish the appellant with the amount of the unsecured balance stated in the petition. This documentary evidence could not establish the appellant's solvency. "33. His Honour erred in finding that the service in the Court building near the door of the Court was warranted by the special circumstances of this particular case when there was no evidence of any special circumstances and the evidence of the process server was that he was specifically instructed by the respondent's solicitor to serve Mr Bryant in Court on that particular day."

Lockhart J accepted the evidence of the process server that difficulties had been experienced in effecting service. In short, the appellant appeared to be evading service. Whilst, as his Honour said, service in the court's precincts is not generally desirable, in our view, the circumstances in this case made it necessary. In Re O'Sullivan ex parte O'Sullivan v Commonwealth Bank of Australia (1995) 129 ALR 295 Lindgren J reviewed in detail the authorities concerning service of process in the precincts of a court. It is clear from that review that such service is effective service unless it is set aside and whether the service of the process should be set aside will depend upon the circumstances of the case. This was not a case that warranted intervention by the primary judge. "34. His Honour erred in refusing the appellant [sic] application to go behind the judgement debt." The appellant sought to "go behind" the judgment on the basis of the same alleged irregularities that were said to ground his appeal to the Court of Appeal. The material relied on by the appellant was far from compelling, and the conclusion of the trial judge was plainly correct. "35. His Honour failed adequately to set out the reasoning process by which he reached his determination."

There is no basis for this contention. ORDER None of the grounds of appeal succeeds. The appeal is dismissed, the stay granted on 13 September 1995 and extended on 20 September 1995 is discharged, and the respondent's costs of the appeal are to be paid as costs of the petitioning creditor under the Act. I certify that this and the preceding twenty five pages are a true copy of the reasons for judgment herein. Associate: Date: 24 November 1995 The appellant appeared in person. Counsel for the respondent: W.H. Nicholas QC and D.R. Fredericks Solicitors for the respondent: Shaw McDonald Counsel for the trustee : A.C. Hogg Solicitors for the trustee: Simon Beverly & Associates Date of hearing: 13 September 1995