FEDERAL COURT OF AUSTRALIA
Arwon Finance Pty Ltd v Wilson [2021] FCA 1599
File number: WAD 215 of 2021 Judgment of: BANKS-SMITH J Date of judgment: 16 December 2021 Catchwords: BANKRUPTCY - whether leave should be granted to amend the creditor's petition to record that the creditor would proceed on the basis that its security was surrendered - leave granted Legislation: Bankruptcy Act 1966(Cth) ss 33, 43, 44, 52 Cases cited: Arwon Finance Pty Ltd v Wilson [2019] WASC 244
MacDonald v Official Trustee in Bankruptcy [2001] FCA 140; (2001) 107 FCR 72
Valladares as executor of the estate of Sabrina Karen Andreazza v De Angelis [2020] FCA 1865
Division: General Division Registry: Western Australia National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 27 Date of hearing: 16 December 2021 Counsel for the Applicant: Mr VN Ghosh Solicitor for the Applicant: Allens Counsel for the Respondent: Mr J Sippe Solicitor for the Respondent: Laird Lawyers ORDERS
WAD 215 of 2021 BETWEEN: ARWON FINANCE PTY LTD
Applicant
AND: FRANK CULLITY WILSON
Respondent
ORDER MADE BY:
BANKS-SMITH J
DATE OF ORDER:
16 DECEMBER 2021
THE COURT ORDERS THAT:
1.Pursuant to s 33(1)(b of the Bankruptcy Act 1966 (Cth), leave be granted to the applicant to immediately file and serve an amended creditor's petition, substantially in the form annexed to the affidavit of Christopher Prestwich sworn 26 November 2021 and marked 'A'.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BANKS-SMITH J:
The applicant, Arwon Finance Pty Ltd (Arwon) obtained judgment against the respondent, Mr Frank Wilson, in the Supreme Court of Western Australia. Arwon issued and served a bankruptcy notice on Mr Wilson and subsequently filed and served a creditor's petition. The petition has not been determined, and is listed for hearing on 3 February 2022.
Arwon is a secured creditor. It seeks to amend the petition to include a statement that it is willing to surrender the security for the benefit of the creditors generally and present its petition as if it were an unsecured creditor, pursuant to s 44(3) of the Bankruptcy Act 1966(Cth).
The application is granted, having regard to the following matters.
History of debt
Arwon summarised the circumstances leading up to the issue of the bankruptcy notice as follows:
On 30 June 2014, Mr Wilson, the respondent, borrowed $13,267,650 from Arwon Finance Pty Ltd (Arwon), the applicant. Mr Wilson used the funds to invest in Indian sandalwood plantations through the Quintis Group.
Mr Wilson stopped making the required loan repayments after January 2017. After issuing a notice of demand in June 2017, Arwon commenced proceedings to recover the debt in the WA Supreme Court on 24 July 2017 (Debt Proceedings).
There was a trial in the Debt Proceedings on 29 and 30…
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- Case
- [2021] FCA 1599
- Decision Date
CaseChat Overview and Summary
The legal issues before the court included whether the creditor should be granted leave to amend the petition to reflect the change in its position from a secured to an unsecured creditor, and if such an amendment would result in any undue prejudice or delay to the debtor. The court had to consider the discretion granted under section 33(1)(b) of the Bankruptcy Act 1966 (Cth) to determine whether the amendment should be permitted.
The court granted the leave to amend the petition, finding that the amendment would not prejudice the debtor or any other creditors, nor would it delay or undermine the administration of justice. The court noted that the creditor had acted promptly in seeking to amend the petition and that there was minimal delay in doing so. The debtor did not oppose the amendment and had not provided any evidence of prejudice. The court concluded that the amendment was appropriate in all the circumstances and exercised its discretion in favour of the creditor. Consequently, the creditor was granted leave to file and serve an amended creditor's petition.
Orders
Orders of the court
1. Pursuant to s 33(1)(b of the Bankruptcy Act 1966 (Cth), leave be granted to the applicant to immediately file and serve an amended creditor's petition, substantially in the form annexed to the affidavit of Christopher Prestwich sworn 26 November 2021 and marked 'A'.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
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
For completeness, I note that Arwon rejects Mr Wilson's assertion that the security is worth more than $22 million. Counsel for Mr Wilson noted that Mr Wilson rejects Arwon's description of the nature of the property the subject of the security. It is not necessary to resolve these matters for the purpose of today's application.Consideration Although through his counsel Mr Wilson did not oppose the orders sought, counsel said that Mr Wilson considered the application should properly be determined by the Court in its discretion. The amendment sought will not delay these proceedings. Arwon's surrender of the security may have the benefit that it will narrow the scope of the expert evidence that Arwon says it will present at the hearing of the creditor's petition. There has been minimal delay in Arwon's application to amend the creditor's petition, notice of the proposed amendment having been given to Mr Wilson shortly after Mr Wilson indicated that he contested the value of the security. The amendment application was brought promptly. There is no evidence of any relevant prejudice to Mr Wilson by the amendment. Mr Wilson has not sought to file any affidavits or make submissions as to any prejudice on this application. Arwon's surrender of the security does not prejudice other creditors. Nor does it have a detrimental effect on other litigants or undermine the confidence in the administration of justice: Valladares at [43]. While Arwon initially elected to present the creditor's petition as a secured creditor, it now seeks to present it as if it were an unsecured creditor. While this represents a change of its position, I am not satisfied that there is any reason why Arwon should be prevented from doing so in all of the circumstances. For these reasons I am persuaded that it is appropriate to exercise the s 33(1)(b) discretion in favour of the applicant. There will be orders accordingly.