Austin v CBFC Limited ACN 008 519 462

[2000] FCA 959

FEDERAL COURT OF AUSTRALIA

Austin v CBFC Limited ACN 008 519 462 [2000] FCA 959

KENNETH JAMES AUSTIN & DIANE CHRISTINA AUSTIN V CBFC LIMITED (ACN 008 519 462)

N 7427 of 2000

MATHEWS J
11 JULY 2000
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 7467 OF 2000

BETWEEN:	KENNETH JAMES AUSTIN AND DIANE CHRISTINA AUSTIN APPLICANTS
AND:	CBFC LIMITED (ACN 008 519 462) RESPONDENT
JUDGE:	MATHEWS J
DATE OF ORDER:	11 JULY 2000
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.   The orders sought in the application are declined.

2.   The applicants to pay the costs of the respondent.

3.   The applicants to pay the costs of the Official Trustee.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 7467 OF 2000

BETWEEN:	KENNETH JAMES AUSTIN AND DIANE CHRISTINA AUSTIN APPLICANTS
AND:	CBFC LIMITED (ACN 008 519 462) RESPONDENT

JUDGE:	MATHEWS J
DATE:	11 JULY 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an application on behalf of Kenneth James Austin and Diane Christina Austin to annul sequestration orders made on 24 March 2000 against each of them.  The application is made pursuant to s153B of the Bankruptcy Act (Cth) 1966 (“the Act”) being the only statutory provision which can be applicable to the present circumstances.  Section 153B provides, as relevant here:

   “If the Court is satisfied that a sequestration order ought not to have been made ………the Court may make an order annulling the bankruptcy.”

2. It follows that it is incumbent upon the person making the application, in this case the bankrupt debtors, to satisfy the Court that a sequestration order ought not to have been made.

3. The act of bankruptcy relied upon in the making of the sequestration order was a failure on the part of each of the debtors to comply with a bankruptcy notice within the time stipulated in the notice.  At the time of the service of the bankruptcy notices the respondent creditor had an outstanding judgment against the applicants in the Supreme Court of New South Wales as the result of a judgment handed down by Master Malpass on 13 October 1999.

4. It is not material for present purposes to recite the precise amount involved in the judgment, or to give details of the execution processes which served partially to meet it.  Suffice it to say that after the disposal of certain property of the debtors, the creditor claimed an outstanding unsecured debt of approximately $250,000.  This amount remained unpaid at the expiration of the bankruptcy notices.  No application was made by either of the debtors to set aside the bankruptcy notice or to challenge the judgment debt upon which it was based.  Accordingly, at the expiration of the time allowed in the bankruptcy notices, an act of bankruptcy was committed by each of the debtors.

5. In February 2000 a creditors petition was lodged and served upon each of the debtors.  The matter proceeded to hearing on 24 March.  Neither debtor entered an appearance or sought in any way to resist the proceedings.  Adequate proof having been presented to the Court by the petitioning creditor, a sequestration order was made on 24 March.  On 3 April 2000 the debtors instituted proceedings in the Supreme Court seeking leave to appeal against the judgment of Master Malpass.  There are, I am told, significant difficulties with this appeal.  It was lodged out of time and appears to have been made to the wrong Division of the Supreme Court.

6. That, however, is of little consequence here.  Even assuming the appeal to be effective, it would not avail the debtors in these proceedings.  For it is incumbent upon them, if they are to successfully invoke the provisions of section 153B of the Act, to satisfy the Court that at the time of the making of the sequestration order it ought not to have been made.  In this case there was an available act of bankruptcy committed within six months before the presentation of the petition.  There are no circumstances which suggest in any way that there was a defect in the process by which the sequestration order was made.  There is therefore no basis for annulling the bankruptcy.

7. Mr Austin, who appears in person for himself and his wife in these proceedings, explains their delay in challenging Master Malpass’s judgment by saying that they were “flattened” by the judgment and did not know what to do next.  He urges that there should be some discretion in the Court to ensure that injustice does not occur.  However the Court has no choice but to apply the provisions of the relevant legislation.  In this case it provides no basis, discretionary or otherwise, for annulling the bankruptcy. 

8. I decline to make the orders sought in the application.  I order the applicants to pay the costs of the respondent and of the Official Trustee.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mathews.

Associate:

Dated:             17 July 2000

Counsel for the Applicant:	The applicant appeared in person
Solicitor for the Applicant:
Counsel for the Respondent:	A Ridley
Solicitor for the Respondent:	Minter Ellison
Date of Hearing:	11 July 2000
Date of Judgment:	11 July 2000