Barnard v ACM Group Ltd
[2013] FMCA 245
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BARNARD v ACM GROUP LTD | [2013] FMCA 245 |
| BANKRUPTCY – Review of Registrar – sequestration Order – no matter of principle. |
| Applicant: | MS BARNARD |
| Respondent: | ACM GROUP LTD (ACN 127 181 097) |
| File Number: | MLG 1128 of 2012 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 19 March 2013 |
| Date of Last Submission: | 19 March 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 19 March 2013 |
REPRESENTATION
| Counsel for the Applicant: | In Person |
| Counsel for the Respondent: | Mr Dunell |
| Solicitors for the Respondent: | Leonard Legal |
ORDERS
The Application for Review filed 28 November 2012 be dismissed.
The costs of the Respondent be paid from the bankrupt estate fixed at $2,000.
DIRECTIONS
The trustee have Ms. Barnard’s Affidavit filed 28 November 2012 drawn to their attention so as to enable them to proceed with appropriate care due to her medical condition.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of Federal Magistrate Riethmuller delivered this day will for all publication and reporting purposes be referred to as Barnard v ACM Group Ltd.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1128 of 2012
| MS BARNARD |
Applicant
And
| ACM GROUP LTD (ACN 127 181 097) |
Respondent
REASONS FOR JUDGMENT
(Revised from Transcript)
This is an application for review of a sequestration order made by a registrar. The creditor served the applicant with a bankruptcy notice in this matter on 11 July 2012. That bankruptcy notice concerned a judgment debt in the sum of $6,562.10 together with interest of $79.28 and costs of $723.19, this being a judgment debt created by an order in default made in the Magistrates Court at Melbourne on 29 November 2011.
The total debt in the bankruptcy notice came to $7,806.51. The judgment debt was $7,365.28, including some $79.28 in interest. As a result, the interest calculations in the bankruptcy notice were based on a principle debt amount of $7,286 in order to calculate interest at the sum of $441.23. This ensured that there was not interest calculated on interest.
The debt was not paid and subsequently the sequestration petition was filed, returnable on 23 October 2012.
On 18 September, the petition was served upon the bankrupt by a process server. The date of filing of the petition was some two months after the date of service of the bankruptcy notice, and therefore in excess of the minimum time required under the bankruptcy notice for payment or arrangements to be entered into, (which is 21 days as is stated on the face of the bankruptcy notice). The applicant did not appear and the registrar made the sequestration order.
At the time of the sequestration order there was a consent to act as trustee, and affidavit of search.
There does not appear to be any defect in the application and bankruptcy notice on its face.
The applicant comes before me today appearing by telephone as she was unable to attend at court as a result of her mental health. She suffers agoraphobia, severe anxiety and depression. Her treating doctor says as follows:
[Ms Barnard] has been a patient of our clinic all her life, she has been my patient since 2009. She has suffered from agarophobia and severe anxiety and depression. Her symptoms have been much worse since her father died on [date omitted] 2011.
[Ms Barnard] has had several crises this year including losing her job and her daughter has had some confronting domestic difficulties.
[Ms Barnard] has been finding it hard to concentrate and as such her personal documents are apparently in disarray and she tells me she had mislaid the subpoena to attend Court. This would be consistent with how I find her today. She also states that she has been unable to leave her home for long periods of time and consequently a trip to Melbourne to attend Court may put her mental health at risk.
This is consistent with the contents of her affidavit which are brief and can therefore be set out in full in this judgment, in the form in which they appear in the affidavit:
My name is [Ms Barnard] and im [sic] writing a letter of apology for not attending my court hearing and also a letter of review court case number MLG1128 of 2012 court date 23rd October 2012.
To the federal court, I am deeply sorry for not attending my court date on the 23/10/12
Over the last 11 months I have been very unwell, Ive [sic] been suffering bad depression, panic attacks and agrophobia.
On the [date omitted] 2011 my dad passed away very suddenly I was with him when he died, this has left me so traumatized [sic] to the point I have been numb for a very long time. Previously to my dad dying I lost my job. And 3 months ago my mum has become unwell she has got small blood vessel disease. My depression has gotten so bad where I forget things, lose things. Can’t concentrate and very sad all the time. I have not left [W] in over 5 years due to my agrophobia and panic attacks. Im [sic] also having vivid nightmares of my dad dying nearly every night, I can’t help it. I hardly leave my house as I find this is my comfort zone and usually get other people go to the shops for me. I live in my house which has been in the family for over 65 years, as it was my partner’s grandmother’s home. I also live with my partner [Mr P] and my 13 year old son [X]. I also have two grandchildren who also come and stay sometimes. My partner [Mr P] had no idea about this court date either as I was always so deep inside myself to the point I shut everyone out and lived in my dark hole as I call it.
The first time I have memory of this was 2 weeks ago, when my 5 year old grandson brought my mail in for me. On this occasion he opened my letter and handed it to me and it was a letter from PPB advisory stating that ACM group had taken me to court and that I was now bankrupt.
I rang a Mr. Ryan Taylor straight away as this is the person I had to talk to as it stated this in the letter I spoke to Mr. Taylor telling him I had no idea that this was happening to me. His reply was we sent you notification, which I have no idea about. Then I asked him if I could $50 a week until I get back on my feet as I explained my situation I was in. Mr Taylor told me they were not interested in my offer and they will be seeking equity in my home. This is not in my character to ignore things so important, usually if I was aware I would have been straight onto it.
I am praying to god right now that you can please give me a second chance and hopefully come to some payment arrangement with Mr. Taylor.
I will do anything your honor [sic] you tell me to, to save my house as I cannot afford a loan to save it as Mr. Taylor suggested I do.
I am now going to start treatment for grief counselling and my doctor is upping the dosage of my medication.
I would like to say thank you very much for taking the time to read my letter and I hope a decision can be made so Im [sic] not bankrupt.
Yours sincerely [Ms Barnard]
The creditors have produced a schedule that appears was prepared by the trustee in bankruptcy, which shows that there are a number of known unsecured creditors: The creditor in this case at $7,365.28, Credit Corp Services Proprietary Limited at $951.72, the Deputy Commissioner of Taxation at $1,689.15, Mitchelsons Dental Surgery at $500, Optus Financial Services at $510 and Telstra Credit Management at $574. The total unsecured creditors is therefore said to be $11,590.15.
In addition, the petitioning creditor has incurred legal costs which are said to amount to $6,252.10. There are two known secured creditors, the creditor who has the mortgage over the house in which the applicant lives of $160,455 as at 9 November 2012, and the Rural City Council of [W], which is owed $9,682.81 (presumably for unpaid council rates). Given the size of the council debt, it would not be unlikely that the City of [W] would be in the process of preparing to obtain orders to sell the property.
On the material before me, I am persuaded that the applicant has established a reasonable explanation for her failure to attend at court on various occasions, given the state of her mental health. However, the core question remains as to whether or not she is insolvent on the material placed before me, including submissions by her to the effect of an offer of a repayment plan and statement that she is unable to obtain any financial accommodation to pay out her petitioning creditor.
I suggested to the applicant (on a previous occasion when the matter came before me for mention) to seek advice from a financial counsellor and to enter into some negotiations to see if she were able to reach some form of settlement in the matter.
It seems clear that she is insolvent, in the sense that she is unable to pay her debts as and when they fall due, even though she has an asset in the home which I am told, (although I have no evidence of this) has an equity sufficient after the payment of the secured creditors to easily meet the debts that she currently has.
Remarkably in this case, the trustee in bankruptcy has calculated his fees to date as having reached $18,661.06. Despite the very modest size of the debt and asset pool involved in the case, these fees were charged out at an average hourly rate of $471.43. Some of the work done by the trustee was billed at an hourly rate $685. The bulk of the work was done at an hourly rate of $395. Ultimately, however, it is not for me to review the rates of fees of a bankruptcy trustee, although it does seem to me that this case highlights the lack of proportionality between the cost involved in even the simplest of bankruptcies against the very small amount of debt. In this case, (even at its highest), the unsecured creditors debts amount to only just more than half of the costs already incurred by the bankruptcy trustee.
The case is, however, one where the applicant is not able to pay her debts, and has no proposals other than to attempt to negotiate a repayment plan with her creditor. A number of offers have been made and I adjourned earlier today to allow the solicitor for the creditor to obtain instructions from his client as to whether or not any offer would be accepted. The petitioning creditor has declined to accept any offer. There is nothing more that could be expected of the solicitor for the respondent than to properly put any offers and obtain the client’s instructions.
Given that the applicant appears to be insolvent, it is not a case where it would be appropriate to set aside the existing sequestration order. In the circumstances, I therefore have no option but to dismiss the current application.
[Further argument ensued].
In this matter, the issues have been of quite small ambit. There has been a previous telephone mention before me, the appearance today, and some limited material. Having regard to the Federal Magistrates Court scale and the nature of the application, it seems to me that $2,000 is a reasonable sum for costs, and that it is more appropriate for me to fix the amount than to have further costs being incurred for preparation of a bill of costs in taxable form and taxation of those costs. I therefore fix the costs in the sum of $2,000.
I will further direct that the trustee have Ms Barnard’s affidavit drawn to their attention so as to enable them to proceed with appropriate care, given her medical condition.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Date: 19 April 2013
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