Allianz Australia Workers' Compensation (NSW) Ltd v Andreou
[2006] FMCA 364
•13 March 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ALLIANZ AUSTRALIA WORKERS’ COMPENSATION (NSW) LTD v ANDREOU | [2006] FMCA 364 |
| BANKRUPTCY – Sequestration Order – Application by creditor to set aside sequestration order made in the absence of debtor where debt had been paid. |
| Bankruptcy Act 1966 (Cth), s.52 Federal Magistrates Court Act 1999 (Cth), s.104 Federal Magistrates Court Rules 2001, r.16.05 Federal Court Rules, O.35 r.7 |
| Registrar of Aboriginal Corporations v Murnkurni Womens Aboriginal Corporation (1995) 137 ALR 404 George Ward Steel Pty Limited v Kizkot Pty Limited (1989) 15 ACLR 464 Austral Brick Co Pty Limited v Tome Daskalovsk [1998] FCA 782 |
| Applicant: | ALLIANZ AUSTRALIA WORKERS COMPENSATION (NSW) AUSTRALIA |
| Respondent: | ZACHARIAS ANDREOU |
| File Number: | SYG3646 of 2005 |
| Judgment of: | Barnes FM |
| Hearing date: | 13 March 2006 |
| Delivered at: | Sydney |
| Delivered on: | 13 March 2006 |
REPRESENTATION
| Solicitors for the Applicant: | Woods & Day Solicitors |
| Solicitors for the Respondent: | No Appearance |
ORDERS
That the orders made by a Registrar of this court on 2 February 2006 be set aside.
That the applicant creditor notify the respondent and Scott Darren Pascoe of the orders made today by letter sent by prepaid post within seven days of today's date.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG3646 of 2005
| ALLIANZ AUSTRALIA WORKERS COMPENSATION (NSW) AUSTRALIA |
Applicant
And
| ZACHARIAS ANDREOU |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This is an application filed on 2 February 2006 by the creditor, Allianz Australia Workers' Compensation (NSW) Limited, seeking that a sequestration order made on that day by a Registrar of this Court in the absence of the debtor Zacharias Andreou be set aside. When the matter came before me on 2 February 2006 on an ex-parte basis, orders were made for the application to be listed today and for the creditor to serve the Trustee (who had signed a consent to act as Trustee) and the debtor with a copy of the application and notice of the hearing date. Neither the debtor nor the Trustee appeared today.
Mr Reinoso, the solicitor for the creditor, gave evidence confirming that notification had been given to both the Trustee and to the debtor. He tendered a copy of a letter of 14 February 2006 from his firm to the trustee advising of the circumstances in which the sequestration order was made. The application for a sequestration order was made in respect of a debt consisting of unpaid workers’ compensation insurance premiums. However, according to Mr Reinoso, the application for the sequestration order was made in error, because the amount due ($8,300) had in fact been paid on 2 February 2006 and the petition should have been withdrawn. Accordingly it sought to have the sequestration order annulled or set aside. After discussion with the Trustee, Mr Reinoso sought to proceed by way of an application to set aside the orders made in the absence of the debtor pursuant to Rule 16.05 of the Federal Magistrates Court Rules 2001.
Emmett J suggested in Austral Brick Co Pty Limited v Tome Daskalovsk [1998] FCA 782 that in an appropriate case the Federal Court could make an order under Order 35 Rule 7 of the Federal Court Rules (the equivalent to Rule 16.05 of the Federal Magistrates Court Rules 2001) to set aside a sequestration order made in the absence of the debtor, where the debtor had not been served with the documents filed by the creditor. I consider that, similarly, this Court can set aside a sequestration order under Rule 16.05.
There is no evidence before the Court of any other creditors. Mr Reinoso tells the Court that the Trustee has not informed him of any other creditors and that the sequestration order was made in circumstances where the creditor would not have pursued it had it been aware of the actual situation of the debtor and of the fact that the debt, (the only debt of which it is aware) had been paid. I am satisfied that the Trustee has been notified of the proceedings today as has the debtor.
In these circumstances I consider that it is appropriate to deal with this application as an application for an order pursuant to Rule 16.05 of the Federal Magistrates Court Rules 2001 setting aside the sequestration order made against the estate of the debtor Zacharias Andreou on
2 February 2006.
It is apparent from the material before the Court that the sequestration order was made on 2 February 2006 but there is a notation on it that the order was not entered as it was immediately brought to the attention of the Court that there would be an application to set aside the orders. Hence an order setting aside the sequestration order could be made under Rule 16.05(1) of the Federal Magistrates Court Rules 2001, but I have also taken into account the factors relevant under Rule 16.05(2). I note that the sequestration order was made in the absence of the debtor.
Bearing in mind that the power to set aside an order or judgment is to be exercised with great caution, the applicant creditor has established that the order was made in the absence of the debtor, that the debtor had paid the debt in issue, that he is not aware of any other debt of the debtor and that the Trustee is aware of the proceedings. The sequestration order was made without the debtor being given an opportunity to be heard, because he was informed by the creditor that the creditor’s petition would be withdrawn so that there was no need for him to attend the hearing of the application for the sequestration order.
There is an adequate explanation for the non-appearance of the debtor in those circumstances. The creditor himself contends that there is no doubt as to the solvency of the debtor insofar as the creditor is aware. The Trustee has not sought to participate or to bring any material before the court such as to indicate that it would be inappropriate to make the orders sought. The situation complained of has been brought about by the creditor who now seeks to have the orders set aside. There is nothing to suggest that there are any other creditors or a wider public interest contrary to what is sought in this case; see in Registrar of Aboriginal Corporations v Murnkurni Womens Aboriginal Corporation (1995) 137 ALR 404 and George Ward Steel Pty Limited v Kizkot Pty Limited (1989) 15 ACLR 464.
I have taken into account that the fact that a debt due to a petitioning creditor has been paid is not necessarily a bar to the making of a sequestration order. However in the particular circumstances of this case there is no suggestion that there is any reason why it would be appropriate or in the public interest to maintain the sequestration order made in the absence of the debtor. There is no statement of affairs filed and no documents from the Trustee before the Court. It is not a case in which it is appropriate to proceed by way of annulment. I consider it preferable to proceed under Rule 16.05 rather than to proceed with a full review of the sequestration order under section 104 of the Federal Magistrates Court Act 1999, in relation to which it would be necessary for me to consider each of the matters under section 52 of the Bankruptcy Act 1966 (Cth) in a somewhat artificial manner, given that it is the creditor who seeks that the sequestration order be set aside.
In all of the circumstances I am satisfied that the sequestration order should be set aside under Rule 16.05(1) as it appears that the orders have not been entered. If I am wrong then the order should be set aside under Rule 16.05(2) as having been made in the absence of the debtor.
RECORDED : NOT TRANSCRIBED
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Barnes FM
Associate:
Date: 17 May 2006
3
4