American Express Australia Limited v Michaels - [2010] FMCA 103

FEDERAL MAGISTRATES COURT OF AUSTRALIA

AMERICAN EXPRESS AUSTRALIA LIMITED v MICHAELS

[2010] FMCA 103

BANKRUPTCY – Creditor’s petition – jurisdiction – whether debtor ‘had a dwelling-house’ in Australia – service of bankruptcy notice by email – identification of time and place of receipt – formal validity of notice – omission of notes to creditors – hearing conducted in absence of debtor – sequestration order made.

Bankruptcy Act 1966 (Cth), ss.40(1)(g), 43, 43(1), 43(1)(b), 43(1)(b)(ii), 52, 306, 306(1)
Bankruptcy Regulations 1996 (Cth), regs.16, 16.01, 16.01(1)(e), 16.01(1)(e)(i), 16.01(1)(e)(ii), 16.01(2), 16.01(2)(b)
Electronic Transactions Act 1999 (Cth), ss.14, 14(3), 14(4), 14(5), 14(6), 14(6)(a)
Federal Court Rules (Cth), O.7 r.1
Federal Magistrates Court Rules 2001 (Cth), rr.9.03(2), 13.03C(1)(e)

Adams v Lambert (2006) 228 CLR 409
Battenberg v Restrom (2006) 149 FCR 128
Battenberg v Restom (2005) 223 ALR 692
De Robillard v Carver (2007) 159 FCR 38
Derriman v National Australia Bank Limited (2005) 142 FCR 475
Envee Energy Pty Ltd (In Liquidation) v Stockford [2007] FMCA 1426
Malek v Macquarie Leasing Pty Limited (2007) 156 FCR 55
Mathai v Kwee [2005] FCA 932
National Australia Bank Limited v Derriman [2004] FMCA 689
Reed Constructions Pty Ltd v Eire Contractors Pty Ltd [2009] NSWSC 678
Sainju v Minister for Immigration & Anor [2009] FMCA 1206
Skalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107

Applicant:

AMERICAN EXPRESS AUSTRALIA LIMITED
ACN 108 952 058

Respondent:

DAVID MICHAELS

File Number:

SYG 1922 of 2009

Judgment of:

Smith FM

Hearing date:

9 February 2010

Delivered at:

Sydney

Delivered on:

9 February 2010

REPRESENTATION

Counsel for the Applicant:

Mr S Docker

Solicitors for the Applicant:

Kemp Strang Lawyers

Counsel for the Respondent:

No appearance by or on behalf of the Respondent

ORDERS

A sequestration order be made against the estate of DAVID MICHAELS.
The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note that the date of the act of bankruptcy is 7 July 2009.
Note that a consent to act as trustee has been signed by Mrs Shabnam Amirbeaggi, and has been lodged with the Official Receiver in Sydney.
The applicant must within 2 days give a copy of this order to the Official Receiver in Sydney.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1922 of 2009

AMERICAN EXPRESS AUSTRALIA LIMITED

ACN 108 952 058

Applicant

And

DAVID MICHAELS

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

American Express Australia Limited (“AMEX”) filed a creditor’s petition on 12 August 2009, seeking a sequestration order against Mr Michaels. Its petition relies upon a consent judgment in the commercial list of the Supreme Court of New South Wales, which was signed on 14 January 2009 and was entered on 2 February 2009. It required Mr Michaels to pay AMEX $1,238,236.88, plus interest calculated from 9 January 2009 by reference to two rates indicated in the judgment. The amended petition alleged that an amount of $1,056,312.31 was then owing, and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read American Express Australia Limited v Michaels and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2010] FMCA 103
Decision Date: 9 February 2010

CaseChat Overview and Summary

The case of American Express Australia Limited v Michaels involved a petition for sequestration against David Michaels, brought by American Express Australia Limited. The petition claimed that Michaels had committed an act of bankruptcy on or around 7 July 2009, and that at the time, he had connections to Australia sufficient to justify the court's jurisdiction to make a sequestration order under s.43(1)(b) of the Bankruptcy Act. Specifically, the petition alleged that Michaels was ordinarily resident in Australia, had a dwelling-house in Australia, or was carrying on business in Australia at the relevant time. The case hinged on whether Michaels had a dwelling-house in Australia as of the date of the alleged act of bankruptcy.

The primary legal issue before the court was whether Michaels's circumstances at the time of the alleged act of bankruptcy met the jurisdictional criteria of s.43(1)(b) of the Bankruptcy Act. This involved interpreting the phrase "had a dwelling-house or place of business in Australia" and determining whether Michaels satisfied this condition. The court considered whether Michaels had a house in Australia that he used or could use as his residence and to which he could return at his discretion. The court examined the evidence presented by American Express Australia Limited, which detailed Michaels's connections to Australia, and assessed whether these connections were sufficient to establish the necessary jurisdictional criteria.

The court found that Michaels did indeed have a dwelling-house in Australia at the time of the alleged act of bankruptcy. The reasoning was based on the interpretation of the term "dwelling-house" as articulated in previous cases. The court held that having a dwelling-house in Australia did not require actual occupation but could be satisfied by a house that a debtor uses or has used and may use as their residence. Given the evidence presented, the court concluded that Michaels met the jurisdictional requirement. Consequently, the court determined that it had the jurisdiction to make a sequestration order against Michaels's estate.

The court ordered that a sequestration order be made against the estate of David Michaels, with American Express Australia Limited's costs to be taxed and paid from Michaels's estate. The date of the act of bankruptcy was noted as 7 July 2009. Additionally, the court directed that a copy of the order be provided to the Official Receiver in Sydney within two days.

Orders

Orders of the court

A sequestration order be made against the estate of DAVID MICHAELS.

The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).

Note that the date of the act of bankruptcy is 7 July 2009.

Note that a consent to act as trustee has been signed by Mrs Shabnam Amirbeaggi, and has been lodged with the Official Receiver in Sydney.

The applicant must within 2 days give a copy of this order to the Official Receiver in Sydney.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The first ground of opposition invokes the jurisdictional requirement of s.43(1)(b) of the Bankruptcy Act, which provides: 43Jurisdiction to make sequestration orders (1)Subject to this Act, where: (a) a debtor has committed an act of bankruptcy; and (b) at the time when the act of bankruptcy was committed, the debtor: (i)was personally present or ordinarily resident in Australia; (ii)had a dwelling‑house or place of business in Australia; (iii)was carrying on business in Australia, either personally or by means of an agent or manager; or (iv)was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager; the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor. AMEX’s amended petition contends that an act of bankruptcy occurred on or around 7 July 2009, and that Mr Michaels’s circumstances were such that the Court could conclude that he was “ordinarily resident in Australia”, or “had a dwelling‑house or place of business in Australia”, or “was carrying on business in Australia, either personally or by means of an agent or manager” at that time. AMEX has filed and served extensive evidence supporting these various connections with Australia at the time of the alleged act of bankruptcy, but I find it necessary only to address the evidence concerning whether he “had a dwelling‑house … in Australia”. The meaning of this condition was explained by Graham J in Mathai v Kwee [2005] FCA 932: HAVING A DWELLING‑HOUSE IN AUSTRALIA 111It is possible for a debtor to have a dwelling‑house in Australia even though he has not in fact been in occupation of it at any time during a given year (per Goff LJ, with whom Buckley and Orr LJJ agreed, in In re Brauch (A Debtor); Ex parte Britannic Securities & Investments Limited (“In re Brauch”) [1978] 1 Ch 316 at 335). 112To have a dwelling‑house in Australia it is not necessary that a debtor has a legal or equitable estate in the property in question. A licence to occupy a dwelling‑house may suffice (per Goff LJ in In re Brauch at p 334). 113A debtor who took five furnished rooms on two floors in a house in Piccadilly Circus, London, for three months and who occupied them together with his wife and a servant was found to “have a dwelling‑house” in England. He was not a passing or casual visitor making a journey through the country for the purpose of seeing it. He was not like a person living at rooms in a hotel in the ordinary way (per Lord Esher, MR in In re Hecquard; Ex parte Hecquard (1889) 24 QBD 71 at 74; see also per Lindley LJ at p 75). 114Where a debtor owns a house in Australia, does not occupy it although he could reoccupy it at any time, but has abandoned its use as a residence, he will not have a dwelling‑house in Australia (per Wilcox J at first instance in Re Boles [2000] FCA 1782 at [48]). 115If a debtor is away from his dwelling‑house for a temporary purpose but with an intent to return, he may still have a dwelling‑house. The more there is actual occupation, the easier it is to conclude that he has a dwelling‑house (per Goff LJ in In re Brauch at p 335). 116As I see it, a debtor will have a dwelling‑house in Australia if there is a house in Australia which he uses or has used and may use as his residence and to which he may repair at his whim at any time.