Case: McIntosh v Shashoua [1931] HCA 56 ; (1931) 46 CLR 494
Outcome: applied
It is not clear from the Federal Magistrate's reasons if an argument was made that the respondents were obliged to accept tender of the debt. Nonetheless, his Honour noted that the law is clear that a creditor is not obliged to accept tender of the sum owed if a creditor's petition has been presented: McIntosh v Shashoua [1931] HCA 56 ; (1931) 46 CLR 494. 17 The Federal Magistrate noted that the appellant's affidavit material made much of the amendment to the description of the creditor on the creditor's petition. His Honour found that nothing turned on this amendment. He said: "The [respondent] has at all times been a partnership and has sued as such. The fact that the partnership is constituted by two individuals is wholly irrelevant to its existence as what the [appellant] described as 'a juristic person'." His Honour also found that, contrary to the appellant's assertion, Mr Velos has always had the requisite authority to sue on behalf of the firm, and that Mr Velos and Mr Davis, the respondents, jointly agreed to commence the proceedings against the appellant. 18 The Federal Magistrate recorded that the appellant deposed to owning a property at Olinda Street worth $55,000 "plus or minus 4 year unencumbered title". He assumed, perhaps somewhat generously, that this meant that the appellant claimed that he owned this property unencumbered. The appellant also deposed to owning shares worth $1,000 and cash of $15,000 as well as having "family and friends dollars? a phone call away" and various other assets. His Honour said the appellant had made no endeavours to obtain funds from family and friends. His Honour noted evidence filed by the respondents showing that the appellant does not own registered land in Victoria but was prepared to assume, again generously, that "in some prima facie inexplicable way he may have an interest in land of some sort". 19 There was further evidence about the Olinda Street property. It suggested that the property was situated in Beaufort and that the appellant purchased it for $6,000 in 2002. He thereafter built a property on the land and has offered it for sale with an asking price of $75,000. However, a likely realisable purchase price is between $65,000 and $70,000, as recorded on the Real Estate Institute of Victoria exclusive sale authority. Further evidence, in the form of a flyer from a real estate agent, suggested that the construction of the property has not proceeded beyond the laying of foundations. 20 The appellant's wife swore an unchallenged affidavit in which she said that "the land has a proposed plan of subdivision with a minimum completed value of $250,000". The Federal Magistrate said of this affidavit that its style "suggests very strongly that its author was in fact the [appellant] himself". 21 The final piece of evidence concerning the Olinda Street property is the attribution by the relevant shire of $13,000 as the capital improved value of the property, and $13,000 as to the site value. The Federal Magistrate said that this probably suggests that the council valued the property at $26,000. He did not make a finding that the property was actually worth $26,000. 22 The Federal Magistrate found that "there is nothing in the material put forward by the [appellant] that enables the Court to form any view as to the true value of the Olinda Street property, whether subdivided or in its current state." He also found that the council valuation did not go to "establish to the Court's satisfaction what the true value of the property is." 56 Ground 6 appears to allege that the appellant offered a second tender of the debt on 10 August 2006 at the hearing before the Registrar. It states that "hearsay led Registrar Mussett to make a sequestration order against the appellant. The dubious methodology adopted, distorts. The purpose alleged was to prove or disprove solvency. The essential requirements of the Act a contrary purpose was intended in bankruptcy law and the claim of McIntosh v Shashoua, 76 years ago is that, THAT case, is not THIS case." 57 The last sentence of this ground is entirely incomprehensible. I think what the remainder of the ground alleges is that the appellant again tendered payment of the debt on 10 August 2006, not for the purpose of having the tender accepted but rather to demonstrate that he was solvent. Even if I assume, in the absence of any evidence, that the appellant did tender payment again on 10 August 2006, this ground is still flawed. The tender of a cheque in the amount of the debt owed to one creditor does not prove solvency. There is no indication of the provenance of the funds. It is entirely possible that payment of the debt owed to the respondents would have led to both a reduction of the appellant's liabilities and a corresponding reduction in his assets. If that is the case, his overall solvency is not altered. Furthermore, insolvency consists of an inability to pay all of one's debts as and when they fall due. The ability to pay one debt is not evidence of an ability to pay the others. This ground fails. 58 Ground 7 states: "The appellant claims that the Constitution assumes the rule of law. It is defeated by the passive discourse content and prestige bias in the judgment of Burchardt FM."