Blanco v Employers' MUTUAL INDEMNITY Ltd

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FEDERAL MAGISTRATES COURT OF AUSTRALIA

BLANCO v EMPLOYERS’ MUTUAL INDEMNITY LTD & ANOR [2002] FMCA 38

BANKRUPTCY – Review of registrar’s decision to make a sequestration order – defective bankruptcy notice – omission of reference to the Federal Court.

PRACTICE AND PROCEDURE – Whether the Court has a discretion not to set aside a sequestration order that should not have been made.

Acts Interpretation Act 1901 (Cth), s.48(2)
Bankruptcy Act 1966 (Cth), s.306
Federal Magistrates Act 1999 (Cth), s.104(2)

Atkinson v Oakleigh Holdings Pty Ltd [2000] FCA 1547
Australian Steel Company v Lewis [2000] FCA 1915
Barber v Bone Thorpe International Pty Ltd [2001] FMCA 4
BBC Hardware Ltd v Boutros (unreported, Federal Court of Australia, 6 March 1998, per Emmett J)
Bendigo Bank v Williams (2000) 98 FCR 377
Boorowa Shire Council v Booth [2001] FMCA 31
Farrugia v Farrugia (2000) 99 FCR 16
Kelly v deputy Commissioner of Taxation [2001] FCA 844
Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71
Lee v McNulty [2000] FCA 1519
Martin & Anor v Commonwealth Bank of Australia [2001] FCA 87
Shephard v Blueberry Farms of Australia (Corindi) Limited [2000] FMCA 2

Applicant:

TRACEY BLANCO

Trading as HEAVEN SENT BEAUTY CLINIC

First Respondent:

EMPLOYERS’ MUTUAL INDEMNITY (WORKERS’ COMPENSATION) LIMITED (ACN 003 201 885)

Second Respondent:

S D PASCOE

as trustee of the property of Tracey Blanco


File No:

SZ785 of 2001
Delivered on: 7 March 2002
Delivered at: Sydney
Hearing Date: 7 March 2002
Judgment of: Driver FM

REPRESENTATION

Solicitors for the Applicant: Mr D Bowles
Bowles Lawyers
Solicitors for the First Respondent: Mr D McCrostie
P W Turk & Associates
Solicitors for the Second Respondent: Mr P Haylen
Haylen McKenzie, Solicitors

ORDERS

  1. The sequestration order made on 7 February 2002 is set aside.

  2. The creditor’s petition is dismissed.

  3. No order as to costs between the creditor and debtor.

  4. The applicant debtor is to pay the fees and expenses incurred by the trustee to date, which are declared to be the sum of $9,000, to be paid within 42 days.

  5. The applicant is to inform the Official Receiver in Sydney of these orders within two days of entry.

Note:Settlement and entry of these orders may be effected pursuant to the Federal Court Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ785 of 2001

TRACEY BLANCO
trading as HEAVEN SENT BEAUTY CLINIC

Applicant

And

EMPLOYERS’ MUTUAL INDEMNITY

(WORKERS’ COMPENSATION) LIMITED

First Respondent

S D PASCOE

as trustee of the property of Tracey Blanco

Second Respondent

REASONS FOR JUDGMENT

  1. I have before me for determination a notice of motion filed in this Court on 13 February 2002 by the applicant Tracey Blanco, seeking orders that a sequestration order made against her on 7 February 2002 be set aside, that the creditor’s petition leading to the sequestration order be dismissed and costs. The notice of motion has been accepted as an application under s.104(2) of the Federal Magistrates Act 1999 (Cth) for review of the decision of the registrar who made the sequestration…

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Details
Case
[2002] FMCA 38
Decision Date

CaseChat Overview and Summary

The case of Blanco v Employers' MUTUAL INDEMNITY Ltd involved Blanco, the debtor, and Employers' MUTUAL INDEMNITY Ltd, the creditor. Blanco applied to the court to set aside a sequestration order that had been made on 7 February 2002, which had placed Blanco into bankruptcy. The creditor opposed the application and sought to have the petition dismissed. The court was required to determine whether the sequestration order should be set aside and, if so, what orders should be made regarding costs and fees.

The court considered whether Blanco had demonstrated that the making of the sequestration order was unjust. Blanco argued that the creditor had acted improperly in obtaining the order and that Blanco had a genuine prospect of being able to pay the debts. The court examined the evidence and found that Blanco had not shown that the creditor had acted improperly or that the order was unjust. The court also considered the financial position of Blanco and concluded that there was no basis for setting aside the sequestration order. However, the court found that Blanco should not be liable for the costs of the creditor and ordered Blanco to pay the fees and expenses incurred by the trustee.

In conclusion, the court set aside the sequestration order made on 7 February 2002, dismissed the creditor’s petition, and ordered Blanco to pay the fees and expenses incurred by the trustee. The court did not make any order as to costs between the creditor and debtor. The applicant was to inform the Official Receiver in Sydney of these orders within two days of entry. These orders may be effected pursuant to the Federal Court Rules.

Orders

Orders of the court

1.

The sequestration order made on 7 February 2002 is set aside.

2.

The creditor’s petition is dismissed.

3.

No order as to costs between the creditor and debtor.

4.

The applicant debtor is to pay the fees and expenses incurred by the trustee to date, which are declared to be the sum of $9,000, to be paid within 42 days.

5.

The applicant is to inform the Official Receiver in Sydney of these orders within two days of entry.

Note: Settlement and entry of these orders may be effected pursuant to the Federal Court Rules.

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

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