Baycorp Collections PDL (Australia) Pty Ltd v Ghosh (No. 2)

[2016] FCCA 240

FEDERAL CIRCUIT COURT OF AUSTRALIA

BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LTD v GHOSH (No. 2) [2016] FCCA 240

Catchwords:
BANKRUPTCY – Practice and procedure – application for leave to reopen – application to adjourn the delivery of judgment on an application for a sequestration order – adjournment granted on terms.

Legislation:

Bankruptcy Act 1966 (Cth), s. 52(5)

Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22

Applicant: BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LIMITED

Respondent: RATNA GHOSH

File Number: SYG 235 of 2015

Judgment of: Judge Manousaridis

Hearing date:	29 January 2016
Delivered at:	Sydney

Delivered on: 29 January 2016

REPRESENTATION

Counsel for the Applicant:

Solicitors for the Applicant:

Mr A Kaufmann

Baycorp Legal

Counsel for the Supporting Creditor: Mr M W E Maconachie

Solicitors for the Supporting Creditor: Higgins & Dix Lawyers

Respondent in person.

ORDERS

1. Pursuant to s.52(5) of the Bankruptcy Act 1966 (Cth) the period at the expiration of which the creditor’s petition filed in these proceedings will lapse will be a period of 24 months commencing on 2 February 2015, being the date of the presentation of the creditor’s petition.

2. Subject to orders 3 and 4, the delivery of judgment of the creditor’s petition heard on 17 December 2015 be adjourned to 9.30am on 18 March 2016.

3. By 4.00 pm on 29 January 2016 the respondent debtor pay to the applicant creditor the sum of $11,265.01.

4. If the respondent debtor does not pay the sum referred to in order 3 by the time referred to in order 3, the applicant creditor shall have liberty to apply to re-list the matter on giving 24 hours notice for an order that the date for delivery of judgment on the creditor’s petition referred to in order 2 be vacated, and a request that judgment on the creditor’s petition be delivered forthwith.

5. The question of costs, and the assessment of those costs be set down for hearing before Judge Manousaridis on 15 March 2016 at 10.15am.

6. By 19 February 2016 the applicant creditor file and serve all evidence on which it relies for its application and assessment of its costs.

7. By 11 March 2016 the respondent debtor file and serve all evidence on which she relies in opposition to the applicant creditor’s application and assessment of its costs.

8. A copy of these orders be provided to the Official Receiver in Sydney within two business days.

9. There be liberty to apply on such notice as the circumstances warrant.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 235 of 2015

BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LIMITED

Applicant

And

RATNA GHOSH

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. On 17 December 2015 there came before me for hearing an application for a sequestration order against the estate of Dr Ghosh.  On that occasion, Dr Ghosh was represented by counsel for the limited purpose of applying for an adjournment of the hearing of the application for a sequestration order.  I heard that application, but indicated that I would reserve my decision on the application for an adjournment, but I would nevertheless hear the application for a sequestration order.  I indicated that I would give judgment on the application for an adjournment on 29 January 2016, the intention being that on that day, if I were satisfied that Dr Ghosh was entitled to an adjournment, an order granting the adjournment would be made, but if I were not satisfied then I would render judgment on the application for a sequestration order.  The matter was then listed for judgment on 29 January 2016.  That is to say, today.

2. When the matter was called today Dr Ghosh, who was not legally represented, submitted that if I were minded to make a sequestration order she would oppose it.  Dr Ghosh relied on a number of grounds; she submitted that the debt on which the creditor’s petition was based was not a liquidated sum, that the bankruptcy notice was served on her more than six months after it was issued, and that the Financial Ombudsman had issued a stay of any enforcement proceedings by the applicant creditor in relation to the debt on which the creditor’s petition is founded. Dr Ghosh relied on an affidavit made on 23 November 2015 by her which set out the grounds on which she opposed the making of a sequestration order. The effect of that affidavit is that the default judgment in the Parramatta Local Court was irregular because it was not obtained on the basis of a liquidated debt, but was instead based on a claim for unliquidated damages.   

3. The application Dr Ghosh made has to be characterised in some way, and the proper characterisation was that she, in effect, was applying for an order that she be granted leave to reopen the case for the making of a sequestration order which I had heard on 17 December 2015.  The principles governing the exercise of the discretion to permit a party to reopen a case were summarised by Kenny J in Inspector-General in Bankruptcy v Bradshaw.[1]  At paragraph 24 her Honour said:

   The authorities indicate that, broadly speaking, there are four recognised classes of case in which a court may grant leave to reopen, although these classes overlap and are not exhaustive. These four classes are:  (1) fresh evidence, (2) inadvertent error, (3) mistaken apprehension of the facts, and (4) mistaken apprehension of the law.

   [1] Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22

4. And at paragraph 26 her Honour said:

   …the overriding principle requires that the Court consider whether, taken as a whole, the justice of the case favours the grant of leave to reopen.

5. There is a certain artificiality in applying these principles to the circumstances of this case, because although there was a hearing, Ms Ghosh did not appear, her counsel having only had limited instructions to appear on the application for an adjournment.  Nevertheless, when I considered the application for an adjournment, I did look closely at the grounds on which Dr Ghosh relied in opposition to the making of a sequestration order. It would be appropriate, therefore, to consider what Kenny J said in Bradshaw by reference not to what was before the Court on the hearing of the sequestration order, but what was before me and what I took into account when I considered Dr Ghosh’s application for an adjournment.

6. When that is done, and for the reasons that I will publish for the orders I propose to make on the completion of these reasons for judgment, the matters that Dr Ghosh has raised are by and large matters which she has raised before, and to the extent she has not raised them before there is no reason given why the matters have not been raised before.  Of some significance in making sense of that last statement is the fact that these proceedings have been on foot for almost a year, and there have been a number of appearances by Dr Ghosh in this Court in the course of the proceedings. She therefore had ample time to put before the Court matters on which she wished to rely in opposition to the making of a sequestration order against her estate. Further, the grounds on which Dr Ghosh relies do not have substance to them.  Although there was a claim that the debt was not liquidated, this overlooks the fact that the greater part of the debt demanded in the bankruptcy notice, the basis on which the creditor’s petition has been issued – has been filed, is an order of this Court, which has not been the subject of an appeal.

7. For those reasons, there is no overriding principle of justice which requires me to grant Dr Ghosh leave to reopen her case. In those circumstances, therefore, I am in the position where I would have made the orders which I intended to make in relation to the matters that I heard on 17 December 2015.  I can at once deal with the application for an adjournment; I did announce that the application for an adjournment would be dismissed.  Having said that, Dr Ghosh then indicated that she was willing to pay the amount claimed in the bankruptcy notice.

8. Counsel for the applicant creditor submitted that a creditor is not required to accept the tender of payment of the debt which founds the creditor’s petition, at least where an act of bankruptcy has been committed.  I am satisfied that in this case an act of bankruptcy has been committed, and that the creditor applicant in this case is not bound to accept the tender. 

9. In the usual circumstances, when a debtor tenders payment, the creditor often is willing to accept that payment; and a court, wishing to avoid a respondent being made bankrupt, when the respondent is in a position to make the payment, is certainly reluctant to make a sequestration order in those circumstances. The difficulty in this case, however, is that previous bankruptcy proceedings brought by this very creditor have reached the point where the debt claimed against Dr Ghosh was paid by Dr Ghosh, and an order for costs was made.  It is that order for costs which is the subject matter, or at least a substantial part of the subject debt, of the bankruptcy notice on the basis upon which this creditor’s petition has been filed. That gives rise to concern that the same thing will happen if I were minded not to give judgment on the application for a sequestration order on the basis that Dr Ghosh pay the amount of money and that there be an order for costs.

10. I did explore with counsel for the applicant creditor the possibility of adjourning the delivery of judgment on the sequestration order and to make that adjournment conditional on the debt being paid and also conditional on Dr Ghosh paying the creditor’s costs or, I should say, the creditor’s costs to which the creditor is legally entitled to.  Counsel for the applicant creditor submitted that his instructions were that the applicant creditor’s preference would be for the court making that sequestration order, otherwise the position was that the applicant creditor neither consent nor propose the court adjourning the date of delivery of the judgment conditional on the matters to which I have already referred.

11. I see some practical difficulties in me conditionally adjourning the delivery of judgment on the making of a sequestration order.  It ignores the submissions that have been made by the supporting creditor to which I will return in a moment.  And it is likely that there will be further dispute about the amount of costs and this may generate more costs and may be self-defeating.  Now, in the course of my delivering these very reasons, Dr Ghosh said that she would pay whatever costs I would order to pay.  On balance – and I do say “on balance” – and I will be frank that it was Dr Ghosh’s appeal as I was delivering this judgment that has swayed the balance - my view is that I should propose to frame some orders in which I extend the life of the creditors petition, adjourn the date on which I will deliver my judgment on the sequestration order and, in the meantime, appoint a date for the hearing of any question of cost in their assessment.  I will go off the bench with a view to drafting those orders and presenting them to the parties for their consideration.  Before I do that, and before I forget, I should say something about the submissions made on behalf of the supporting creditor.

12. The broad thrust of those submissions was that there are a number of other creditors who have outstanding costs orders which are not being paid or have not been paid by Dr Ghosh and that there are ongoing proceedings which are resulting in those creditors incurring further costs and there is a likelihood that those costs will not be recovered from Dr Ghosh.  The submission is not made that a sequestration order should be made to, in effect, minimise the damage that Dr Ghosh would be able to inflict by engaging in litigation she would not be entitled to engage if she were made bankrupt. Counsel’s submission was that I should, nevertheless, take into account the practical consequences of my not making a sequestration order and Dr Ghosh’s pursuing litigation is one of those practical consequences I should take into account. 

13. I am not satisfied that those submissions are a sufficient reason for me not to do what I propose to do. The time that I propose to give is relatively short and if Dr Ghosh pays the amounts a supporting creditor can apply to be substituted.  Moreover, it is clear that Dr Ghosh is most anxious to avoid being made a bankrupt and has indicated a willingness to do what she can to avoid that eventuality.  How genuine or realistic that is is a matter to be determined by future events.

14. I propose to adjourn the date for the delivery of judgment, say, two months hence or six weeks. That will be made conditional on the debt being paid today. I will also set a date for the hearing on costs which includes entitlement and quantification and that will be perhaps one or two weeks before that date and the intention will be that I will assess those costs.  If those costs are paid then, subject to an application for a creditor to be substituted, the creditor’s petition will be dismissed. 

    If it is not paid, then I will give whatever judgment I intended to give today on the hearing of the sequestration order.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Date: 10 February 2016