Bank of Western Australia Ltd v Henderson (No.2) - [2011] FMCA 837

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BANK OF WESTERN AUSTRALIA LTD v HENDERSON (No.2)

[2011] FMCA 837

PRACTICE AND PROCEDURE – Application to reopen application for sequestration order – where judgment reserved – whether fresh evidence.

Bankruptcy Act 1966 (Cth)
Border Insolvency Act 2008 (Cth)

Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22
The Movie Network Channels Pty Ltd v Optus Vision Pty Ltd [2009] NSWSC 132

Applicant:

BANK OF WESTERN AUSTRALIA LTD

Respondent:

DAVID STEWART HENDERSON

File Number:

SYG 324 of 2010

Judgment of:

Raphael FM

Hearing date:

17 October 2011

Date of Last Submission:

17 October 2011

Delivered at:

Sydney

Delivered on:

17 October 2011

REPRESENTATION

Solicitors for the Applicant:

Reid Legal

Counsel for the Respondent:

Mr B. Katekar

Solicitors for the Respondent:

Norton Rose

ORDERS

Interlocutory application dismissed.
Respondent to pay the Applicant’s costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 324 of 2010

BANK OF WESTERN AUSTRALIA LTD

Applicant

And

DAVID STEWART HENDERSON

Respondent

REASONS FOR JUDGMENT

There comes before me today an application to reopen an application for a sequestration order that was heard by me on 16 August 2011. The application itself is somewhat unusual because the debtor, Mr Henderson, has already been made bankrupt in New Zealand. The effect of a sequestration order in Australia would be to have bankruptcy administrations on both sides of the Tasman. At the hearing on

16 August the applicant bank produced an affidavit from a Mr Perry, an officer of the bank, which stated, inter alia, that the bank had suspicions that the debtor had assets in Australia.
This was not the first time that this suspicion had been raised. It was initially raised in an affidavit of Mr David Benjamin Goldman, filed in Court on 29 June 2011. Mr Goldman is the solicitor for the bank.

It appears that the bank suspected that it would be suggested that Mr Goldman’s views about the bank’s suspicions were hearsay and that they would be objected to. So the bank put on direct evidence through the affidavit of Mr Perry.
When the matter came on for hearing, Mr Katekar, who appears for the bank, sought to read the affidavit of Mr Perry. We do not have the benefit of a transcript but Mr Katekar assures me that the affidavit was read. Mr Reid tells me that he does not recollect whether it was read or merely filed. He does recollect the discussion with Mr Katekar in which the relevant paragraph came up. I do not have any independent recollection, but would be inclined to accept the assurance of Mr Katekar as to what occurred.
After hearing the evidence, including the formal evidence of insolvency and compliance with the rules and the Bankruptcy Act 1966 (Cth) (the Act), I reserved my judgment. I think I made it quite clear to the parties that the only reason that I was reserving my judgment was because the case raised the interesting question as to whether the Court should make a sequestration order against a debtor who is already under insolvency administration in New Zealand in respect of which administration the Official Assignee in bankruptcy has available to himself remedies under s.29 of the Act and under the Cross-Border Insolvency Act 2008 (Cth).
I explained to the parties that I was shortly to go on leave and that I would, therefore, not be completing the judgment until October 2011.

I did give the parties leave to make submissions in relation to the effect of the Cross-Border Insolvency Act and s.29 of the Act and Mr Katekar kindly provided me with such submissions, there were none from Mr Reid. I did not expect an application such as the one currently before me.
The application is, in effect, an application to re-open the case and such applications, whilst infrequent, are the subject of considerable judicial consideration. In Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22, her Honour Kenny J says (at [24]):
“The authorities indicate that, broadly speaking, there are four recognised classes of case in which a Court may grant leave to re-open, although these classes overlap and are not exhaustive. The four classes are (1) fresh evidence; (2) inadvertent error; (3) mistaken apprehension of the facts; and (4) mistaken apprehension of the law.”
Her Honour provides authorities for each of these classes and stresses that (at [24]):
“In every case, the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to reopen.”
In his further helpful submissions on this application, Mr Katekar also refers to the views expressed by Einstein J in The Movie Network Channels Pty Ltd v Optus Vision Pty Ltd [2009] NSWSC 132 his Honour noted (at [4]) that where the ground is fresh evidence:
“[T]he evidence must be credible, highly probative and not previously obtainable by reasonable diligence.”
The evidence which Mr Henderson wishes to bring is his own affidavit filed in Court which deals with two matters in the affidavit of Mr Perry. Mr Henderson also asks that he be given leave to cross-examine Mr Perry on his affidavit. In regard to the evidence, all Mr Henderson wishes to say is that he does not have any property or assets in Australia. By saying this, he believes he will refute the suspicion contained in Mr Perry’s affidavit. He also wishes to cross-examine Mr Perry on the bona fides of that suspicion.
The affidavit of Mr Henderson also goes to the status of various companies with which Mr Henderson was involved. But I informed Mr Reid that I fully accepted that these were special purpose companies and, in the way of property developments, would quite naturally be deregistered after the developments have been concluded. I do not believe that the existence of so many deregistered companies in any way reflects upon Mr Henderson’s conduct as a director or his solvency.
Having heard Mr Reid and Mr Katekar, I cannot be satisfied that reopening this case will be something which is in the interests of justice. The existence of a suspicion in the minds of a bank is not an unusual or even an unreasonable thing, given the very large amount of money Mr Henderson owes to his various creditors. The fact that Mr Henderson now says that he does not have any assets in Australia is not really the end of the matter. He may have had assets in Australia which are capable of being ‘clawed back’, as the phrase goes, because their disposal was uncommercial or in some other way preferential.
These are all things which can only properly be discovered by a trustee. And so, in my view, the matter again reverts to the question as to whether or not it is appropriate for a second trustee to be appointed or whether the statutory procedures are sufficient for one trustee to do the work. That will be the subject matter of my forthcoming judgment, which I hope I will be in a position to deliver shortly.
In the meantime, the application is dismissed and Mr Henderson must pay the bank’s costs of the application.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Raphael FM

Date: 31 October 2011