Benjamin and Khoury Solicitors v Kessly (No.2)

[2019] FCCA 1979

FEDERAL CIRCUIT COURT OF AUSTRALIA

BENJAMIN & KHOURY SOLICITORS v KESSLY (No.2) [2019] FCCA 1979

Catchwords:
BANKRUPTCY – Application for a sequestration order under s 27 of the Bankruptcy Act 1966 – whether the petitioning creditor has established proof of the matters required under s 52(1) of the Act – no sufficient cause for why a sequestration order ought not to be made.

Legislation:

Bankruptcy Act 1966 (Cth), ss.27, 43, 52

Applicant: BENJAMIN & KHOURY SOLICITORS

Respondent: EVANGELINA KESSLY

File Number: SYG 317 of 2019

Judgment of: Judge Street

Hearing date: 18 July 2019

Date of Last Submission: 18 July 2019

Delivered at: Sydney

Delivered on: 18 July 2019

REPRESENTATION

Solicitors for the Applicant: Mr W Khoury
Benjamin & Khoury Pty Limited

Solicitors for the Respondent: Mr A Attapalli
Lexes Lawyers

ORDERS

1. (1)    Grants leave to Vaikom Rajeev, Rudra Legal Corporation, to withdraw from the proceedings.

2. (2)    The oral application for an adjournment is refused.

3. (3)    Dispenses with the need for the filing of a further updated affidavit of debt.

4. (4)    A sequestration order is made against the estate of Evangelina Francisca Kessly.

5. (5)    The petitioning creditor’s further costs, in addition to any existing costs order in these proceedings or in respect of the bankruptcy notice proceedings, be paid out of the bankrupt estate in accordance with the priority to which it is entitled in the sum of $9,000.00.

NOTES

1. (6)    The act of bankruptcy occurred on 11 February 2019.

2. (7)    Consent to act as trustee has been filed in respect of Kristen Beadle.

(1)    FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT Sydney

SYG 317 of 2019

Benjamin & Khoury Solicitors

Applicant

And

Evangelina Kessly

Respondent

REASONS FOR JUDGMENT

1. 1. This is an application for a sequestration order within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (Cth) (“the Act”) in respect of proceedings commenced on 14 February 2019.

2. 2.  On 30 May 2019, a Registrar of the Court made orders giving the respondent an opportunity to file affidavit evidence on or before 11 June 2019. No such affidavits have been filed. A lawyer was appointed to act on behalf of the respondent on 12 June 2019, but for reasons identified in the Court’s earlier reasons, leave was granted for that lawyer to withdraw.

3. 3.  The petitioning creditor has read an affidavit in support of the service of the bankruptcy notice. Proceedings were brought by the respondent seeking to challenge the bankruptcy notice which were unsuccessful and in the circumstances the act of bankruptcy as a result of the extension of time occurred on 11 February 2019.

4. 4. Affidavits were read in support of an order for substituted service that was made by a Registrar of the Court on 9 May 2019, and those affidavits identify a proper basis upon which the order for substituted service of the creditor’s petition was made. An affidavit has been read in respect of service of the creditor’s petition and also affidavits in respect of service of the creditor’s petition and also affidavits in respect of the debts remaining outstanding in an affidavit of search. The Court dispensed with the need for compliance with an updated affidavit of debt. The Court is satisfied that the petitioning creditor has established that the respondent committed an act of bankruptcy at a time the respondent was personally present or ordinarily resident within Australia within s 43 of the Act, whereby a sequestration order may then be made against the estate of the debtor.

5. 5. Given the affidavit evidence identified, the Court is satisfied that the petitioning creditor has established proof of the matters required under s 52(1) of the Act.

6. 6.  There is no affidavit evidence before the Court to establish that the respondent is able to pay her debts as they fall due. There has been admitted into evidence, on an adjournment application which the Court treats as being before it, a bank cheque that was handed up to the Court in the adjournment application that was marked Exhibit 2. That bank cheque identifies that an amount of $347,000 was paid into a Westpac account of the respondent. The amount does exceed the judgment debt being sought to be recovered by the petitioning creditor. However, no affidavit evidence has been provided in support of the respondent being solvent or to explain how there is sufficient cause why a sequestration order ought not to be made.

7. 7.  For reasons earlier given, the Court is not satisfied that an adjournment should be granted in respect of these proceedings when there has been last minute instructions given to a second solicitor the day before this hearing. The Court does not regard the medical condition of the respondent as explaining why no affidavit evidence was provided in respect of the circumstances concerning the non-compliance of the Court’s earlier orders, the change of lawyer, why an adjournment should be granted, or addressing and identifying why the bank cheque supported an arguable issue of solvency. For reasons the Court has separately given, the Court is not satisfied that an adjournment is warranted in the interests of the administration of justice.

8. 8.  The Court is not satisfied that the respondent is able to pay her debts or that other sufficient cause for why a sequestration order ought not to be made has been made out. The Court also takes into account that a sequestration order will also ensure that the assets of the respondent, including the amount in the cheque account, are distributed to the respondent’s creditors in accordance with the requirements of the Act. The Court is satisfied that this is a proper matter in which to make a sequestration order.

I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Judge Street

Associate:

Date: 5 September 2019