Axess Debt Management Pty Ltd v Nottas
[2014] FCCA 2746
•29 October 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AXESS DEBT MANAGEMENT PTY LTD v NOTTAS | [2014] FCCA 2746 |
| Catchwords: BANKRUPTCY – Application for order pursuant to s.50 of the Bankruptcy Act for appointment of a Trustee to take control of debtor’s property – application by respondent to have orders set aside is dismissed. |
| Legislation: Bankruptcy Act 1966, ss.30 and 50 |
| Malcolm Slater Proprietary Ltd v Thompson & Anor [2010] FMCA 120 |
| Applicant: | AXESS DEBT MANAGEMENT PTY LTD |
| Respondent: | HARRIS NOTTAS |
| File Number: | ADG 336 of 2014 |
| Judgment of: | Judge Simpson |
| Hearing date: | 29 October 2014 |
| Date of Last Submission: | 29 October 2014 |
| Delivered at: | Adelaide |
| Delivered on: | 29 October 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr S Sankey |
| Solicitors for the Applicant: | Wallmans Lawyers |
| Counsel for the Respondent: | Mr C Dorrian |
| Solicitors for the Respondent: | Grope Hamilton Lawyers |
| Counsel for the Trustee: | Mr Gretsas |
| Solicitors for the Trustee: | Gretsas & Associates |
ORDERS
The respondent’s application to have the orders made 21 October 2014 set aside is dismissed.
The respondent do pay the applicant’s costs of and incidental to this application, which costs are to be agreed or taxed.
The Trustee’s costs of and incidental to this application are reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 336 of 2014
| AXESS DEBT MANAGEMENT PTY LTD |
Applicant
And
| HARRIS NOTTAS |
Respondent
REASONS FOR JUDGMENT
(Reasons settled from transcript)
On 21 October 2014, I had before me an application for an order pursuant to s.50 of the Bankruptcy Act 1966 (Cth) (“the Act”) that Colin Ambrose be appointed Trustee to take control of the respondent’s property with such control to continue until the Court otherwise ordered.
I also made an order that there be liberty to apply.
It is pursuant to that liberty that this matter comes before me without an Application in a Case.
On 29 October 2014, the respondent filed an affidavit of Mr Dorrian, solicitor for the respondent. An order is sought by the respondent that the orders of 21 October 2014 be set aside.
The Court has power, under s.30 of the Act, to hear an application for an order under s.50 on an ex parte basis.
The Court has power, under s.50 of the Act, to grant the order sought by the applicant if satisfied that the requirements of s.50(1A) have been met.
Section 50 provides as follows:
“(1)At any time after a bankruptcy notice is issued, or a creditor’s petition is presented, in relation to a debtor, but before the debtor becomes a bankrupt, the Court may:
(a)direct the Official Trustee or a specified registered trustee to take control of the debtor’s property; and
(b)make any other orders in relation to the property.”
Section 50(1A) provides as follows:
“(1A)The Court may give a direction or make an order only if:
(a)a creditor has applied for the Court to make a direction; and
(b)the Court is satisfied that it is in the interests of the creditors to do so; and
(c)the debtor has not complied with the bankruptcy notice.”
Subparagraphs (a) and (c) of s.50(1A) are not disputed by the respondent. This being the case, the only question is whether or not the granting of the order was in the interests of the creditors to do so.
In my view, the granting of the order was, and still is, in the interests of the creditors as the granting of the order is required to “preserve the status quo”. (See the case of Malcolm Slater Proprietary Ltd v Thompson & Anor [2010] FMCA 120). Paragraph 17 of this case reads as follows:
“Counsel for the applicant expressed concern as to the potential impact of the recent and proposed transactions, particularly given the absence of information about the debtors’ financial circumstances generally. The order under section 50 is sought to preserve the status quo. It may be that there are other creditors. That is not known. There are a number of unresolved issues. However there is evidence in relation to the intended disposal of assets consisting of the Howlong property and of some disposal of assets in relation to the Bodalla lease (particularly in relation to Mr Thompson). On balance, I consider that in all the circumstances of this case the evidence is such in relation to each of the Thompsons that it is in the interests of creditors that the orders sought be made to preserve the status quo.”
The evidence before me shows that the respondent is the joint registered proprietor of two properties. This is established by the affidavit of Mr Delport sworn on 14 October 2014. Mr Delport said in his affidavit the following:
“Attached are copies of title searches conducted through the Land Title Office in Victoria, showing the respondent and Mrs Nottas as joint registered proprietors of two properties in Victoria, namely the properties located at, firstly, 1365 Burwood Highway, Upper Ferntree Gully, Victoria and, secondly, 24 Nepean Highway, Seaford, Victoria.”
Later in his affidavit he says:
“I am informed by Sankey (the solicitor for the applicant) and verily believe to be true that he recently conducted searches in realestate.com.au and noticed that both properties have been listed for sale. On 14 October 2014, Sankey wrote to Colin Dorrian of Grope Hamilton Lawyers seeking certain undertakings from Mr Nottas in an endeavour to avoid the need to bring the application before this Court.”
Mr Delport says in his affidavit that the respondent failed to provide the undertaking requested and, accordingly, the applicant believes that the respondent was attempting to divest assets in order to avoid creditors and, further, attempting to avoid certain real property assets forming part of a would-be bankruptcy estate in the event of a sequestration order or debtors’ petition.
The applicant has sought an undertaking from the respondent, via his solicitor, to have an amount equivalent to the anticipated amount required to resolve the matter paid from the proceeds of sale of one such property in order to satisfy the judgment.
The respondent failed to provide the undertaking requested. In the circumstances, it is understandable that the applicant is concerned that should the respondent not be prevented from divesting his assets, that the assets available, in a subsequent bankrupt estate, will be reduced, thereby potentially reducing the likelihood of a return to creditors.
In my view the order was properly made. The respondent’s application should be dismissed.
A matter that I meant to mention a little earlier was the respondent’s admission to the Court that he was disposing of assets. The respondent made an admission in a note that he sent to the Court advising the Court on 23 October 2014 of the following:
“I am not bankrupt yet and I am in the process of selling one of my assets, which has been sold but not settled yet.”
The applicant had proper cause to make the application that it did.
In the circumstances, I am dismissing the respondent’s application.
I make the orders to be found at the beginning of these reasons.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Simpson
Associate:
Date: 25 November 2014
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