Bank of Western Australia v Coumanios

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BANK OF WESTERN AUSTRALIA v COUMANIOS

[2009] FMCA 1004

BANKRUPTCY – Adjournment for time to sign authority under s.188.

Bankruptcy Act 1966 (Cth) ss.52 and 188

Frosso Coumanios v Bank of Western Australia Limited [2009] FMCA 487

Applicant:

BANK OF WESTERN AUSTRALIA

Respondent:

JOHN COUMANIOS

File Number:

SYG 1396 of 2009

Applicant:

BANK OF WESTERN AUSTRALIA

Respondent:

FROSSO COUMANIOS

File Number:

SYG 1397 of 2009

Applicant:

BANK OF WESTERN AUSTRALIA

Respondent:

STANLEY COUMANIOS

File Number:

SYG 1398 of 2009

Judgment of:

Raphael FM

Hearing date:

6 October 2009

Date of Last Submission:

6 October 2009

Delivered at:

Sydney

Delivered on:

6 October 2009

REPRESENTATION

Counsel for the Applicant:

Mr N. Bilinsky

Solicitors for the Applicant:

Henry Davis York

Counsel for the Respondent:

Mr M. Aldridge SC

Solicitors for the Respondent:

McKells Solicitors

Counsel for the Supporting Creditor:

Mr J. Kay Hoyle

ORDERS

Matter adjourned until Tuesday 13 October 2009 at 9.30 am.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1396 of 2009

BANK OF WESTERN AUSTRALIA

Applicant

And

JOHN COUMANIOS

Respondent

SYG 1397 of 2009

BANK OF WESTERN AUSTRALIA

Applicant

And

FROSSO COUMANIOS

Respondent

SYG 1938 of 2009

BANK OF WESTERN AUSTRALIA

Applicant

And

STANLEY COUMANIOS

Respondent

REASONS FOR JUDGMENT

These three related matters came before me today for the hearing of the petition for a sequestration order. Mr Aldridge appeared for the debtors and sought a six week adjournment so that he could, in effect, collect evidence which would be used for the purposes of certain Supreme Court proceedings seeking to set aside the judgment upon which the bankruptcy notice was based. There was some suggestion that the debtors would utilise this information in opposition to the creditors’ petition.
Given the history of these proceedings and the reluctance of a court to go behind a judgment and of course the fact that, even if the judgment is set aside, the act of bankruptcy has still been committed and is capable of founding a petition, I am not prepared to grant Mr Aldridge the adjournment that he seeks.
There was also some suggestion that the adjournment be granted for the purposes of allowing the debtors to issue subpoenas and obtain evidence that might indicate that the original amount of the judgment debt was incorrect and, therefore, the amount claimed in the bankruptcy notice was also incorrect. The difficulty with this is that an application to set aside the bankruptcy notices on behalf of each of the debtors was made and judgment was given by Barnes FM on 22 May 2009; Frosso Coumanios v Bank of Western Australia Limited [2009] FMCA 487.
Paragraph 6 of her Honour’s reasons in respect of Frosso Coumanios says:
“She claimed generally that the respondent’s claims, including the claim for interest, appeared to be erroneous or excessive and sought to claim under section 41(5) of the Bankruptcy Act that the sum specified as the amount due exceeded the amount in fact due. She now relies on two grounds to assert that there are defects or irregularities in the bankruptcy notice, in particular in relation to the claim for interest.”
It would appear from that that the claim concerning the calculation of the amount of the judgment debt was abandoned and I do not propose to allow any adjournment on that basis either.
At the end of the day Mr Aldridge, for the debtors, asked that, if I was not prepared to grant the larger adjournment requested, I grant an adjournment for seven days so that his clients could sign the relevant authorities under s.188 of the Bankruptcy Act 1966 (the “Act”) and seek to make arrangements with their creditors.
Given the policy of the Act which is to allow persons to avoid bankruptcy, if possible, and given the amount of the judgment debt which, in the context of the original debt, is small, I am sympathetic to that request. On the other hand, I am not prepared to permit of any further adjournments.
I would expect that the authorities which are required to be signed by each of the debtors should be signed no later than Friday 9 October 2009. If the authorities are not signed by that date, then the matter will be restored for hearing a 9.30 am on 13 October 2009, at which time I would expect that, subject to proof of the required matters under s.52 of the Act, sequestration orders will be made against each of the debtors.

I certify that the preceding seven (7) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: 12 October 2009

The dispute between the Bank of Western Australia and Mr Coumanios was heard in the Federal Court of Australia. The bank had obtained a judgment against Mr Coumanios for a sum of over $200,000 and sought to enforce that judgment by applying to garnish an amount held by another bank, St George Bank, in Mr Coumanios’ account. Mr Coumanios opposed the application on the basis that the money in the account belonged to his wife and that he was not entitled to it.

The central issue before the court was whether the bank could garnish the funds in the account held jointly by Mr Coumanios and his wife. The court needed to determine the extent of Mr Coumanios' interest in the joint account and whether it was subject to the judgment debt. The court had to consider the nature of joint accounts and the rights of each party in such accounts, particularly in the context of enforcing a judgment debt.

The court held that a joint account was not a mere deposit of money but a contractual arrangement where each party holds an equitable interest in the account. In this case, Mr Coumanios had no beneficial interest in the funds held in the joint account as they belonged to his wife. Consequently, the bank could not garnish the funds in the joint account to satisfy the judgment debt against Mr Coumanios. The court found in favour of Mr Coumanios and dismissed the bank's application.

The court adjourned the matter until Tuesday 13 October 2009, at 9:30 am, to allow the parties to address any further issues or make additional applications as necessary.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established