FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BEYOND PROPERTIES PTY LTD & ORS v KNIGHT | [2009] FMCA 779 |
| BANKRUPTCY – Review of Registrar's decision to adjourn creditors’ petition – “other sufficient cause” why a sequestration order should not be made – offsetting claim – abuse of process – public interest – sequestration order made. |
| Bankruptcy Act 1966, ss.52(1), 52(2)(a) & (b) Federal Magistrates Court Rules 2001 (Cth), r.20.03 |
| Cain v Whyte (1933) 48 CLR 639 Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509 Edward James Bride & Anor v KMG Hungerfords (A firm) [1998] FCA 412 Knight v Beyond Properties Pty Ltd [2007] FCA 70 Ling v Commonwealth (1996) 68 FCR 180 Re Coyne; Ex parte: Binningup (South) Pty Ltd [1993] FCA 81 Re Dominic Maddestra; Clyde William Badger and Christopher John Borella Ex parte: Penfolds Wines Pty Ltd [1993] FCA 15 Re LHF Wools [1970] Ch 27 Re Schmidt; Ex parte Anglewood Pty Ltd (1968) 13 FLR 111 Rozenbes v Kronhill (1956) 95 CLR 407 Williams v Spautz (1992) 174 CLR 509 |
| Applicant: | BEYOND PROPERTIES PTY LTD |
| Second Applicant: | BEYOND INTERNATIONAL LTD |
| Third Applicant: | DISCOVERY COMMUNICATIONS INC |
| Fourth Applicant: | SPECIAL BROADCASTING SERVICE CORPORATION(SBS) |
| Fifth Applicant: | FOXTEL MANAGEMENT PTY LTD |
| Sixth Applicant: | BEYOND PRODUCTIONS PTY LTD |
| Respondent: | ANDREW KNIGHT |
| File Number: | ADG 203 of 2008 |
| Judgment of: | Simpson FM |
| Hearing date: | 1 July 2009 |
| Date of Last Submission: | 1 July 2009 |
| Delivered at: | Adelaide |
| Delivered on: | 14 August 2009 |
REPRESENTATION
| Counsel for the Applicant: | Ms S. Goddard S.C. with Mr R. Ross-Smith |
| Solicitors for the Applicant: | DLA Phillips Fox |
| The Respondent: | There being no appearance by or on behalf of the respondent |
ORDERS
The order of the Registrar of 13 May 2009 adjourning the hearing of the creditor’s petition to 17 August 2009 at 9.00 am be dismissed.
A sequestration order be made against the estate of Andrew Knight.
The applicant creditor’s costs be taxed and be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that the act of bankruptcy is 30 April 2008.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 203 of 2008
| BEYOND PROPERTIES PTY LTD |
Applicant
| BEYOND INTERNATIONAL LTD |
Second Applicant
| DISCOVERY COMMUNICATIONS INC |
Third Applicant
| SPECIAL BROADCASTING SERVICE CORPORATIONS (SBS) |
Fourth Applicant
| FOXTEL MANAGEMENT PTY LTD |
Fifth Applicant
| BEYOND PRODUCTIONS PTY LTD |
Sixth Applicant
And
| ANDREW KNIGHT |
Respondent
REASONS FOR JUDGMENT
Introduction
I have before me an Application for Review of a decision of Registrar Christie of 13 May 2009. At that time the Registrar adjourned the hearing of a petition for the sequestration of the estate of Andrew Knight (“the respondent”) to 17 August 2009 at 9.00am giving liberty to apply and reserving costs. The applicants say that the sequestration order should have been made and should now be made on the review.
The creditor’s petition was filed on 8 September 2008 and relies on the applicants’ judgment debt against the respondent for the sum of $541,973.92. The debt arose…
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- AGLC
- Beyond Properties Pty Ltd v Knight [2009] FMCA 779
- Case
- [2009] FMCA 779
- Decision Date
CaseChat Overview and Summary
The Court examined the evidence presented by the respondent regarding his trade mark claim, which was pending before the Australian Trade Mark Office. The respondent argued that the resolution of this claim would not occur in the foreseeable future and that his entitlement to damages would not be current. However, the Court found that the respondent had not provided evidence that his contingent entitlement on the trade mark claim approached the amount of his current debt. The Court also considered the timelines provided by Ms. Platt, who stated that decisions on the trade mark claim would take a considerable amount of time to resolve through various stages of appeal. Based on these findings, the Court concluded that the respondent's claim did not constitute sufficient cause to dismiss the petition.
In its judgment, the Court dismissed the order adjourning the hearing of the creditor's petition and made a sequestration order against Andrew Knight's estate. The Court also ordered that the applicant creditor's costs be taxed and paid from the respondent debtor's estate in accordance with the Bankruptcy Act 1966 (Cth). The act of bankruptcy, as noted by the Court, was 30 April 2008.
Orders
Orders of the court
1.
The order of the Registrar of 13 May 2009 adjourning the hearing of the creditor’s petition to 17 August 2009 at 9.00 am be dismissed.
2.
A sequestration order be made against the estate of Andrew Knight.
3.
The applicant creditor’s costs be taxed and be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that the act of bankruptcy is 30 April 2008.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
If the respondent can show that he has a claim against the petitioning creditor equal to or exceeding the amount of the judgment debt the Court should dismiss the petition. The respondent must show that the claim is a genuine and serious one which he has not reasonably been able to litigate[3]. It must be a ‘real claim’ likely to succeed, having sufficient validity to justify a dismissal or adjournment[4]. An arguable claim by itself does not necessarily constitute “other sufficient cause” within the meaning of sub-s.52(2)(b) of the Act to justify dismissal or adjournment of the creditor’s petition. There is a public interest consideration in dealing with insolvent debtors which the Court must consider in addition to the interests of the individual parties. There is also a public interest consideration in dealing with creditors’ petitions promptly and before they expire. In Re Dominic Maddestra; Clyde William Badger and Christopher John Borella Ex parte: Penfolds Wines Pty Ltd[5] (Maddestra’s case”) Lee J said in somewhat similar circumstances to these:“Nine months have passed since the hearing of the petition was adjourned without the Supreme Court litigation being any closer to resolution and, indeed, if it were to go to trial it could not expect to be heard within fifteen months. Furthermore, I am satisfied, as counsel for the petitioner submits, that the litigation does not have on its face a real appearance that it is capable of satisfying the demands of the petitioner … in the short term, a matter to be borne in mind when assessing … the public interest in these petitions. If collateral litigation is well advanced and likely to bring a beneficial result to a debtor, there may be a good cause for the Court not to make a sequestration order and it may be satisfied that such an order ought not to be made…. The point has come where a determination must be made whether the petition should be dismissed or sequestration order made.” (emphasis added).[3] Re LHF Wools [1970] Ch 27.[4] Re Schmidt; Ex parte Anglewood Pty Ltd (1968) 13 FLR 111 at 116.[5] [1993] FCA 15, Unreported, Federal Court of Australia, Lee J 3 February 1993, paras.21-23. The applicants submissions in relation to the offsetting claim can be summarised as follows:a)The resolution of the trade mark proceedings will not occur in the foreseeable future and, in any event, will not give rise to a current entitlement to damages; andb)The respondent has not produced evidence to prove that his contingent entitlement on his trade mark claim even remotely approaches the amount of his current debt to the applicants. I accept the respondent’s evidence[6] that the Australian Trade Mark Office has confirmed that the opposition proceedings before it have been set for the September sessions in Sydney to take place between [6] See affidavit referred to in para.14(w) of these reasons.7 and 11 September 2009. I also accept the evidence of Ms Platt[7] that:[7] See affidavit referred to in para.14(o) of these reasons.·a decision of the Registrar of Trade Marks would take 3 to 6 months to be handed down;·an appeal by to a single judge of the Federal Court by the unsuccessful party in the opposition proceedings would take 1 to 2 years to be finalised;·an appeal to the Full Federal Court would take a further 6 to 18 months to be finalised; and·an application for special leave to appeal to the High Court of Australia (“High Court”) would take about 1 year to be determined and a further year to hear and issue judgment in relation to the appeal.