ANZ Banking Group Limited v Guijar

[2013] FCCA 2215

FEDERAL CIRCUIT COURT OF AUSTRALIA

ANZ BANKING GROUP LIMITED v GUIJAR [2013] FCCA 2215

Catchwords:
BANKRUPTCY – Hearing of Notice of Opposition to petition based upon debtor’s solvency – evidence considered – sequestration order made.

Legislation:
Bankruptcy Act 1966 (Cth), ss.52, 109

Federal Circuit Court (Bankruptcy) Rules 2006

Sandell v Porter (1966) 155 CLR 666

Applicant:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ACN 005 357 522

Respondent: ARTURO GUIJAR

File Number: SYG 1508 of 2013

Judgment of: Judge Raphael

Hearing date: 10 December 2013

Date of Last Submission: 10 December 2013

Delivered at: Sydney

Delivered on: 10 December 2013

REPRESENTATION

Solicitors for the Applicant: Gadens

Counsel for the Respondent: Mr A Rogers

Solicitors for the Respondent: Di Lizio & Associates

ORDERS

1. Application for Review dismissed.

2. Debtor to pay the Creditor’s costs to be taxed if not agreed in accordance with the Federal Circuit Court (Bankruptcy) Rules 2006.

3. Costs to be paid with the same priority pursuant to s.109 of the Bankruptcy Act 1966 (Cth) as the costs on the petition.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYG 1508 of 2013

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
ACN 005 357 522

Applicant

And

ARTURO GUIJAR

Respondent

REASONS FOR JUDGMENT

1. There comes before me today the adjourned hearing of an application for review of a sequestration order made by a Registrar of this Court on 10 October 2013.  The only ground for seeking review is that the debtor who owes the ANZ Bank approximately $200,000.00 is solvent.  It is worth noting that the hearing on 10 October was not the first date upon which the matter was before the Court.  It had come first on 8 August, again on the 29 August and then on the 19 September.  The adjournments were granted on the basis of the debtor’s evidence that there were some property sales in the pipeline.

2. The Registrar was satisfied of the matters required under s.52 of the Bankruptcy Act 1966 (Cth)[1] and of the existence of the debt for which the petitioning creditor sought a sequestration order and nothing that has happened since would appear to alter that position.  What is known now is that Mr Guijar is a property owner of some size.  The properties which he does own are listed at paragraph 3 of an affidavit which he filed with the Court on 31 October 2013.  He is also the proprietor of a take-away kebab business in Surry Hills.

   [1] “Act”

3. When the matter came first before me it was adjourned so that Mr Guijar could file some evidence of the value of the properties that he owned and of the fact that they were for sale.  He was required to do this by 2 December but did not do so.  However, Ms Britton, who appears for the creditor, did not object to the filing of three affidavits in Court this morning.  These are the affidavits of Mr Rowen Kelly, Mr William Lazarus and Mr Brett Connable, all of whom are real estate agents and they depose to a series of agency agreements which Mr Arturo Guijar has entered into.  Interestingly, the one for a property in Suffolk Park in northern New South Wales was entered into in the name of Patusan Pty Limited, which may or may not be the owner of the property.  That agreement was entered into on 21 May 2013 and the property has presumably been on sale since that time.  In the affidavit of Mr Kelly he gives evidence of an agreement for the sale of a property known as M5/86 Mountain Street, Ultimo.  The agency agreement was entered into on 22 February 2013 and actually expired on 31 May 2013.  The third affidavit of Mr Lazarus indicates that an agency agreement for four properties was entered into on 31 October 2012.  One of those properties 703/389 Bourke Street Sydney is under offer in the sum of $200,000.00.  The others are still for sale.

4. Another condition upon which the matter was adjourned was that Mr Guijar completed his Statement of Affairs.  This has been done and the relevant portion of the Statement of Affairs is found as Exhibit 1 in these proceedings.  Regrettably, there are some concerns about the manner in which that document was completed.  On page 15 Mr Guijar does not admit to any unsecured creditors yet the bank is an unsecured creditor in the sum of $200,000 and there is a contingent liability to a Mr Guitierrez admitted by Mr Guijar in previous evidence of some $550,000.00. The Statement of Affairs also notes that the assets in the take-away shop are the subject of a bill of sale and one does not know what the position with regard to those are.  But clearly they are unlikely to realise much in the way of cash.

5. There is one property which is alleged by Mr Guijar and his real estate agents to be worth $950,000.00.  It is situated in Bangalow in northern New South Wales.  But that property is not for sale.  All the properties that are listed are secured by mortgage to NAB and none of them have as yet realised any money for creditors generally.  The Court’s knowledge of the amount of the secured debt is scant.  Mr Guijar says it is in the area of $2,450,000.00 but there is no independent evidence of this. 

6. In order to establish solvency within the meaning of the Act an applicant must be able to satisfy the Court that he is able to pay his debts as and when they fall due from money which is available to him or can become available in a reasonable period of time. Even though s.52(2) of the Act has a slightly different requirement, that being that the Court can be satisfied that the debtor is able to pay his or her debts, the qualification of being able to pay it from one’s own money referred to in Sandell v Porter (1966) 155 CLR 666 is applicable. One’s own money, of course, can include money that a debtor is able to raise but it does not include the substitution of one indebtedness for another.

7. In the instant case the Court does have difficulty in coming to a conclusion on the balance of probabilities that Mr Guijar is able to pay his debts.  These properties have been on the market for a considerable period of time and there is only an indication that an offer has been made on one of them.  There is no satisfactory evidence of the total amount of the secured indebtedness so that the Court is in the dark as to how much is required from sales of property in order to secure the excess that will be used to pay the applicant’s unsecured creditor who is owed the substantial sum of $200,000.00.  There is certainly no question that Mr Guijar could refinance his properties and thus clear the debt and there is no suggestion that he can find the money from the trading profits of the take-away business.  It is also concerning that the most substantial asset in the group is not for sale. 

8. Mr Rogers has ably put every possible argument that could be made for his client.  He notes that the indications in the real estate agents’ affidavits are that sales could be completed within a few months and rightly, he reminds the court that if a sequestration order is made, the result will be that these properties will probably have to be sold to pay out the secured and then the unsecured creditors and that the expenses of sale and the expenses of the trustee are likely to be quite considerable which they would not be if Mr Guijar was allowed to carry out the sales himself.  It seems to me that Mr Guijar has had quite a lot of time in which to try and carry out the sales himself and has not been very successful.

9. A creditor who has available to him an act of bankruptcy and can satisfy the Court of the matters required under s.52 is prima facie entitled to his sequestration order however inconvenient that might be to the debtor. In this particular case, whilst I appreciate that inconvenience, I cannot be satisfied that it outweighs the creditor’s right to its relief. In those circumstances I would dismiss the application for review and order that the debtor pay the creditor’s costs, to be taxed if not agreed in accordance with the Federal Circuit Court (Bankruptcy Rules) 2006, these costs to be paid with the same priority pursuant to s.109 of the Act as the costs on the petition.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Judge Raphael

Associate: 

Date:  17 December 2013