Barodawala v Perinparajah - [2021] VSC 387

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

ENFORCEMENT LIST

S CI 2012 01172

ISMAIL BARODAWALA	Plaintiff
v
SUJEETHA PERINPARAJAH	Defendant

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JUDICIAL REGISTRAR:	Irving JR
WHERE HELD:	Melbourne
DATE OF HEARING:	17 May 2021
DATE OF JUDGMENT:	1 July 2021
CASE MAY BE CITED AS:	Barodawala v Perinparajah
MEDIUM NEUTRAL CITATION:	[2021] VSC 387

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BANKRUPTCY AND INSOLVENCY – Whether debt incurred by means of fraud – Actual fraud – Power v Kenny [1977] WAR 87 applied – SJD Marketing Pty Ltd v Venn [2018] VCC 2129 distinguished – Chittick v Maxwell (1993) 118 ALR 728 distinguished – Bankruptcy Act 1996 (Cth) ss 82, 83, 153.

PRACTICE AND PROCEDURE – Application to set aside warrant of execution – Amounts in the warrant were erroneous – Warrant issued irregularly – Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 68.02(1)(a), 68.02(3).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Terzic	CAV Law Pty Ltd
For the Defendant	Ms A Carruthers	Hutchinson Legal

JUDICIAL REGISTRAR:

Introduction

On 1 March 2010, Ismail Barodawala (‘plaintiff’) issued proceedings against Sujeetha Perinparajah (‘the defendant’) in the Supreme Court of New South Wales (‘NSWSC’).[1]
[1]Re Sterco International Pty Ltd (In Liquidation) [2011] NSWSC 1560 [3].

At trial, the plaintiff alleged the defendant, in her capacity as sole director of Sterco International Pty Ltd (ACN 118 837 924) (‘Sterco’), was a person involved in Sterco’s misleading and deceptive conduct. The NSWSC gave judgment for the plaintiff in the sum of $127,591.90 and ordered the defendant pay the plaintiff’s costs (‘NSW judgment’).

The NSW judgment was registered in the Supreme Court of Victoria on 2 March 2012. The defendant became a bankrupt on 17 May 2012 and was released from bankruptcy in 2015. On 24 April 2020, the plaintiff was granted leave by this Court to enforce the NSW judgment, it being more than six years old, by issuing a warrant of execution.

There are two applications before the Court. Each turn on whether the debt embodied in the NSW judgment was released upon the defendant’s discharge from bankruptcy.

In seeking to have the warrant set aside, the defendant says:

(a) the cause of action claimed by the plaintiff in the NSW judgment had merged into the judgment and ceased to have a separate existence; and

(b) by operation of s 153 of the Bankruptcy Act 1966 (Cth) (‘Bankruptcy Act’), the debt now embodied in NSW judgment was released upon her discharge from bankruptcy.

The plaintiff says the debt embodied in the NSW judgment was obtained by fraud and therefore is expressly excluded from release by operation of s 153(2)(b) of the Bankruptcy Act. The plaintiff seeks orders to extend the period of warrant’s validity for execution and amendment to the sums claimed.

For the reasons set out below, I have decided that the plaintiff’s warrant should be set aside. Accordingly, I have also dismissed the plaintiff’s application.

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] VSC 387
Decision Date: 1 July 2021

CaseChat Overview and Summary

In the matter of Barodawala v Perinparajah, the Court was tasked with determining whether certain debts incurred by the debtor were the result of fraud and if the warrant of execution issued against him was irregular. The dispute arose in the Supreme Court of Victoria, where the debtor, Barodawala, sought to have a warrant of execution set aside on the basis that the amounts listed in the warrant were erroneous and the warrant was issued irregularly.

The central legal issues for the Court to decide included whether the debts in question were incurred by fraud, and if so, whether this would render the debts voidable under the Bankruptcy Act 1966 (Cth). Additionally, the Court had to consider whether the warrant of execution was issued irregularly and if there were grounds to set it aside under the Supreme Court (General Civil Procedure) Rules 2015 (Vic).

The Court's reasoning hinged on the application of established legal principles concerning actual fraud, as outlined in cases such as Power v Kenny and SJD Marketing Pty Ltd v Venn. The Court found that the debtor had indeed committed actual fraud, as evidenced by his actions which aligned with the criteria established in Power v Kenny. However, the Court distinguished the present case from Chittick v Maxwell, concluding that the debts in question were not voidable under the Bankruptcy Act 1966 (Cth). Furthermore, the Court determined that the warrant of execution was indeed issued irregularly, as the amounts listed were erroneous, and therefore set the warrant aside under rule 68.02(1)(a) and (3) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).

As a result of the Court's findings, the warrant of execution was set aside, and the creditor was ordered to pay the debtor's costs associated with the application.

Orders