Saparas, in the matter of Touma v Touma

7 The applicant submitted that the express unwillingness of this respondent to pay his debt (even though all avenues of appeal had now been exhausted and even though he has the resources to do so) was sufficient to persuade the court that it should not exercise its discretion to dismiss the petition under s 52(2)(a). 8 The applicant argued that the decision of the Full Federal Court in Re Sarina; Ex parte Wollondilly Shire Council (1980) 32 ALR 596, a case substantially similar to the case before the court where the respondent was at all material times capable of paying his debts but his failure to pay was his refusal to do so. The Full Court in that case held that the words "able to pay his debts" in section 52(2)(a) did not mean "willing and able to do so" and that there is no policy underlying the Act that a debtor should be made bankrupt if he is able to pay his debts but is unwilling to do so. They commented in the judgment that if a debtor is able to pay his debts but is recalcitrant, his creditors may resort to the remedies otherwise afforded by the law such as execution against his property and garnishee proceedings. The court confirmed that the power conferred by s 52(2) is permissive and not mandatory but they said the occasions on which the discretion not to dismiss the petition when solvency was established would not be frequent. Not surprisingly the respondent debtor relied upon these principles. The applicant referred the court to two cases whether the discretion or the permission under s 52(2) was exercised and sought to argue that this ease should be similarly treated. 9 In my view the two cases referred to by the applicant were markedly different from the present case. In Trojan v Corporation of Hindmarsh (1987) 16 FCR 37 the assets relied on by the debtor to establish solvency were not easily available to the debtor being in joint hands and subject to a trust. The court decided that, as there was no straightforward legal access to these assets, the sequestration order would be made even though the debtor was technically solvent. 10 Secondly in Stafford v Bank of New Zealand (Heerey J, 18 November 1992, unreported) the assets purportedly relied on by the debtor to establish solvency included an expectation of money to flow from a judgment in favour of the debtor in a New Zealand court. That judgment had not at the time of the hearing of the creditor's petition been given and was characterised by the judge as an expectation only. 11 As was said in Re Lakatos; Ex parte Lakatos v Deputy Commissioner of Taxation (1996) 33 ATR 145, the onus to establish solvency and also that the discretion should be exercised in the favour of the debtor, is one placed on the respondent. Whether the onus has been discharged is a matter of fact for the court to determine. In this case the applicant offered no relevant evidence to challenge the respondent's evidence as to his solvency. An attack was made only on the bona fides of the respondent, in particular the history of the relationship between the applicant and respondent to date, and also on his acknowledged unwillingness to accept the judgment of the court and pay the debt. 12 The court was asked to infer from that, that his evidence was not to be believed. In my view this inference cannot be made on the material before me. Although counsel for the applicant made a number of comments concerning the list of assets and aborted attempts to recover the debt, nothing said from the Bar Table was supported by evidence. I find that the respondent is solvent. 13 Further, I do not consider that as a discretionary matter the fact that the debtor is solvent should be disregarded in considering this creditor's petition. The applicant argued that it should be disregarded because of the unwillingness of the respondent to pay and his course of conduct. I am bound to follow the decision in Re Sarina and so the unwillingness to pay is not relevant to solvency and in my view would not, unless particular circumstances were established of the kind existing in the Trojan case, amount to grounds for exercising the discretion of a sequestration order in spite of the established solvency. 14 The respondent also submitted that the affidavit verifying the creditor's petition did not comply with the provisions of s 47 because the amount verified in the affidavit differed from that in the petition. I was invited by the applicant to regard this deficiency as something which could be cured by recourse to s 306 of the Act. In my view s 306 cannot be used in this way. The defect is material. 15 I decline to make the sequestration order and dismiss the petition. 16 At the conclusion of the hearing of the matter yesterday, I indicated to parties that I would hear submissions from them on the question of costs in this matter. I have today been provided by the respondent debtor with an outline of submissions, an authority Re Vikelis in relation to the matter that was not actually referred to in submissions and a photocopy of a fax from the solicitor for the applicant which concedes that the evidence as to solvency, in particular, the valuation of property would not be challenged in the proceedings. 17 The applicant based its submission to resist the ordinary costs order which would be made, that the costs would follow the event, by referring again to the submissions it made in the course of the hearing that the court should have regard in relation to costs to what it described as the "moral position" or better described as the unwillingness of the respondent to pay this debt. He had relied upon that submission in relation to the discretion under section 52(2). I am not persuaded in relation to costs any more than I was persuaded in relation to the other matters. Those matters can properly be taken into account in awarding costs and so costs will follow the event. The applicant is ordered to pay the costs of the respondent.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Connor.

Associate: Dated: 17 March 2000 Counsel for the Applicant: Mr M Abdul-Karim

Solicitor for the Applicant: Jeffrey Hinde & Associates

Solicitor for the Respondent: D Riggio & Associates