BOQ Equipment Finance Ltd v Dhillon
[2012] FMCA 879
•21 September 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BOQ EQUIPMENT FINANCE LTD v DHILLON | [2012] FMCA 879 |
| BANKRUPTCY – Creditor’s Petition – Notice Stating Grounds of Opposition was filed – three month adjournment sought – application dismissed – no evidence or submissions made in support of Notice Stating Grounds of Opposition – Notice Dismissed – Formal Requirements for issuance of a sequestration order satisfied – sequestration order made. |
| Bankruptcy Act 1966, ss.40, 42, 43, 44, 52 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), rr.4.02, 4.04, 4.05, 4.06 |
Re Sarina; Ex parte Wollondilly Shire Council (1980) 30 ALR 266
| Applicant: | BOQ EQUIPMENT FINANCE LTD (ABN 78 008 492 582) |
| Respondent: | HARCHARAN SINGH DHILLON |
| File Number: | SYG 1378 of 2012 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 11 September 2012 |
| Date of Last Submission: | 11 September 2012 |
| Delivered at: | Sydney |
| Delivered on: | 21 September 2012 |
REPRESENTATION
| Solicitors for the Applicant: | Mr R. Iaconis of DibbsBarker |
| The Respondent: | The Respondent, Mr H. Dhillon, appeared at the initial referral hearing but was not present at the substantive hearing. |
ORDERS
The Notice Stating Grounds of Opposition to the Petition filed on 1 August 2012 by the respondent debtor be dismissed.
A sequestration order be made against the estate of HARCHARAN SINGH DHILLON.
The applicant creditor’s costs be fixed in the amount of $6,712.00 and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
A copy of this sequestration order be given to the Official Receiver within 2 days.
The Court notes that the date of the act of bankruptcy is 28 May 2012.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1378 of 2012
| BOQ EQUIPMENT FINANCE LTD (ABN 78 008 492 582) |
Applicant
And
| HARCHARAN SINGH DHILLON |
Respondent
REASONS FOR JUDGMENT
Introduction
On 25 June 2012 the applicant creditor, BOQ Equipment Finance Ltd (ABN 78 008 492 582) (“BOQ”), filed a creditor’s petition in this Court against the respondent debtor, Harcharan Singh Dhillon, pursuant to a judgment of the District Court of NSW in proceedings 2011/45689 on 27 January 2012 in favour of BOQ in the amount of $111,000.00. On 10 September 2012 I made a sequestration order against the estate of the respondent debtor. These reasons give effect to those orders.
Background
These proceedings were first listed before a registrar of the court on 1 August 2012. Mr Iaconis appeared on behalf of BOQ and Mr Dhillon appeared in person. Mr Dhillon filed a Notice Stating Grounds of Opposition to the Petition and an affidavit in support in court at the hearing. Mr Dhillon, by oral submission, sought an adjournment of at least three months in order to fully prepare his case. No application in a case or supporting affidavit was filed. Both sides made oral submissions and the matter was adjourned to 13 August 2012. The Registrar hearing the matter ordered that any further application for adjournment be supported by an affidavit which, if filed, was to be served by 10 August 2012.
The proceedings were then listed before a registrar of the court on 13 August 2012. On that day Mr Iaconis appeared on behalf of BOQ and Mr Dhillon appeared in person. Mr Dhillon made an application for an adjournment for a period of three months which he claimed was required to appoint a new accountant, and that person to prepare his accounts, to hold discussions with his creditors and prepare his challenge to the Petition. The Registrar granted an adjournment made the following orders on that day:
1. On Application of the Respondent the Petition be adjourned until 10am on 10 September 2012 at JMT 88 Goulburn Street Sydney.
2. Any request for further adjournment to be supported by an affidavit setting out the grounds, the facts and circumstances to be relied upon.
3. Any Notice of Opposition and affidavits in support to be filed and served by 04 September 2012. If filed after 04 September 2012, the Court will need to be persuaded to give leave to use the affidavit.
4. Costs be reserved.
The matter was then listed before a Registrar on 10 September 2012. Mr Iaconis again appeared for BOQ and Mr Dhillon appeared in person before the Registrar. After oral submissions, the matter was referred to this Court not before 10.30am. After hearing brief oral submissions from the parties, the matter was stood down to 12.00pm (noon) to be heard.
Notice Stating Grounds of Opposition to Petition
The respondent debtor’s Notice Stating Grounds of Opposition to the Petition filed on 1 August 2012 stated the following grounds of opposition:
1. Not in interest of all the creditors that a sequestration order be made.
2. Solvency.
The respondent debtor also filed an affidavit in support of the Notice Stating Grounds of Opposition which, in brief, states that the respondent debtor is in a poor state of health, suffered a heart attack approximately five years ago and continues to suffer a range of ongoing problems. He needs approximately three months to prepare a challenge to the petition. The respondent debtor’s accountant died approximately two years ago and his new accountants have not been able to deal with his requirements, so the respondent debtor has taken steps to engage new accountants. The Australian Taxation Office also claims the respondent debtor has a taxation debt of approximately $110,000.00. The respondent debtor requires three months so that he can deal with all these various issues. Further, he has come to in principle agreements with his major creditors meaning that his solvency cannot be accurately determined at this time. The respondent debtor was also served with both the Bankruptcy Notice and Creditor’s Petition on a Sunday which he understands is illegal, immoral and deeply affects his religious beliefs and customs. Mr Dhillon argued that an adjournment of three months will bear no great prejudice on BOQ.
Evidence
The applicant creditor, BOQ sought to rely on the following evidence:
a)Affidavit of Dale Elmer sworn 18 June 2012 (Part 2 of the Creditor’s Petition);
b)Affidavit of Bruce Andrews sworn 9 May 2012;
c)Affidavit of Robert Christopher Iaconis sworn 25 June 2012;
d)Affidavit of Bruce Andrews sworn 3 July 2012;
e)Affidavit of Robert Christopher Iaconis sworn 7 September 2012; and
f)Affidavit of Dale Elmer sworn 7 September 2012.
Formal Requirements for Issuance of a Sequestration Order
The Court may make a sequestration order upon proof of the matters set out in s.52(1) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”), and subject to the jurisdiction to making sequestration orders under s.43 of the Bankruptcy Act and the conditions on which the creditor may petition under s.44 of the Bankruptcy Act being met.
Section 52(1) of the Bankruptcy Act provides as follows:
(1)At the hearing of a creditor’s petition, the Court shall require proof of:
(a) The matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient),
(b) service of the petition; verified by an affidavit of service,
(c) the fact that the debt or debts on which the petitioning creditor relies or is still owing;
And, if it is satisfied with the proof of these matters, may make a sequestration order against the estate of the debtor.
Section 43 of the Bankruptcy Act provides that the Court may make a sequestration order when:
(a)A debtor has committed an act of bankruptcy (Bankruptcy Act s.43(1)(a)); and
(b)Relevantly, at the time when the act of bankruptcy was committed, the debtor was personally present and an ordinarily resident in Australia (Bankruptcy Act s.43(1)(b)(i)).
Section 44 of the Bankruptcy Act provides that the creditor’s petition is not to be presented, unless:
(a) The debt is more that $5,000;
(b)The debt is a liquidated sum due at law and payable immediately (Bankruptcy Act s.44(1)(b)); and
(c)The act of bankruptcy in which the petition is founded was committed within 6 months before the presentation of the petition (Bankruptcy Act s.44(1)(c).
The applicant creditor is also obliged by the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) (“the FMC (Bankruptcy) Rules”) to put before the Court affidavits:
a)Verifying the petition (Bankruptcy Act s.47(1), FMC (Bankruptcy) Rules r.4.02);
b)As to search of records of the Court and of the Federal Court as to any application in relation to the Bankruptcy Notice (FMC (Bankruptcy) Rules rr.4.04(1)(a) and 4.04(2));
c)Of service of the Bankruptcy Notice (FMC (Bankruptcy) Rules r4.04(1)(b));
d)Of service of the documents required to be served under the FMC (Bankruptcy) Rules r.4.05 (FMC (Bankruptcy) Rules r.4.06(2));
e)A search of the National Personal Insolvency Index no earlier that the day before the hearing date of the petition (FMC (Bankruptcy) Rules r.4.06(4)); and
f)Of debt which the creditor still relies as owing (FMC (Bankruptcy) Rules r.4.06(4)).
Some of the requirements under the FMC (Bankruptcy) Rules overlap with those under the Bankruptcy Act.
In relation to the matters requiring formal proof the Court finds as follows:
a)The matters stated in the petition are supported by the:
i)Affidavit of Bruce Andrews sworn 9 May 2012 accompanying the petition (Bankruptcy Act ss. 47 and 52(1)(a), FMC (Bankruptcy) Rules r.4.02). The Bankruptcy Notice was served on the respondent on 31 May 2012 at 1:42 pm;
ii)Affidavit of Dale Elmer sworn 18 June 2012 attached to the Creditor’s Petition verifying paragraphs 1, 2, 3 and 4 of the Creditor’s Petition;
b)The debt upon which BOQ relies is still owing (Bankruptcy Act s.52(1)(c));
c)The respondent has committed an act of bankruptcy (Bankruptcy Act s.42(1)(a)) committed on 28 May 2012 pursuant to s.40(1)(g) of the Bankruptcy Act;
d)At the time of the act of bankruptcy was committed the respondent:
i)Was ordinarily present in Australia; and
ii)Ordinarily resided in Australia (Bankruptcy Act s.43(1)(b));
e)The debt owed by the respondent is $114,802.89, being a sum more that $5,000.00 (Bankruptcy Act s.44(1)(a));
f)The debt of $114,802.89 is a liquidated sum, payable immediately (Bankruptcy Act s.44(1)(b));
g)The respondent, Harcharan Singh Dhillon, failed to comply on or before 28 May 2012 with the requirements of a bankruptcy notice served on him on 6 May 2012;
h)Searches of the records of this Court and the Federal Court have been made and no application has been made in either Court in relation to the Bankruptcy Notice;
i)The Bankruptcy Notice NN 2994 of 2012 was served on the respondent, Harcharan Singh Dhillon, by personal service on the respondent debtor (FMC (Bankruptcy) Rules r.4.04(1)(b));
j)That at least five days before the date fixed for the hearing of the petition the:
i)Petition (FMC (Bankruptcy) Rules r.4.05(a));
ii)A copy of the affidavit verifying the petition(FMC (Bankruptcy) Rules r.4.05(b));
iii)A copy of the affidavit of search of court records (FMC (Bankruptcy) Rules r.4.05(c)); and
iv)A copy of the affidavit of service of the Bankruptcy Notice (FMC (Bankruptcy) Rules r.4.05(d))
Were served on the respondent personally, Harcharan Singh Dhillon; Affidavit of Bruce Andrews sworn 3 July 2012;
k)The National Personal Solvency Index was searched on 7 September 2012 (the last business day before the petition was heard) (FMC (Bankruptcy) Rules r.4.06(3)) and that details of references in that index to the respondents are before the Court (FMC (Bankruptcy) Rules r.4.06(3)(a));
l)A copy of the relevant extract of the Index is attached to the affidavit of search of Robert Christopher Iaconis sworn 7 September 2012 (FMC (Bankruptcy) Rules r.4.06(3)(b)(i)); and
m)There is an affidavit of final debt of Dale Elmer sworn 7 September 2012, being a person with knowledge of the facts sworn the day before the hearing of the petition that the debt on which the applicant creditor relies is still owing (FMC (Bankruptcy) Rules r.4.06(3)(c)).
Hearing 10 September 2012
This proceeding came before a registrar on the morning of 10 September 2012, where it was referred to this Court. Mr Iaconis, appearing for BOQ, submitted that the respondent debtor had failed to comply with the previous orders made by the Court and had not filed any evidence in support of his Notice Stating Grounds of Opposition to the Petition, therefore the notice should be dismissed and he should be allowed to proceed with the Petition. Mr Dhillon, appearing in person, submitted that he needed a further adjournment, so that he could arrange for a meeting of creditors. Mr Dhillon also submitted that, in principle, that he and a Mr Clark of BOQ had come to a settlement arrangement and the petition should not proceed. Mr Iaconis informed the Court that his instructions were that there had been no arrangement entered into and to move on the Petition. The matter was stood down to 12.00pm (noon) to hear further submissions from both sides.
At 12.00pm (noon) the hearing of the matter resumed. Mr Iaconis was present in the courtroom, but the respondent debtor was not. The matter was called on three occasions in the precinct of the court but the respondent was unable to be located. Mr Iaconis sought to proceed with the hearing of the petition.
Consideration
When the matter was initially transferred to this Court by the Registrar the parties to this matter and other referrals were being requested to indicate to the Court whether they were ready to proceed and approximately the anticipated length of the hearing. When the matter was initially called Mr Dhillon indicated that he was seeking an adjournment of approximately three months in order to prepare his notice of objection to the Creditor’s Petition. Mr Dhillon indicated that there were a number of reasons for this request:
a)That he had suffered a heart attack approximately five years ago and continues to suffer a range of ongoing problems as a result of that major episode;
b)His accountant had died approximately two years ago and the replacement accountant that Mr Dhillon had appointed was not able to satisfy his requirements and withdrew;
c)He was taking steps to locate and appoint a new accountant to update his records and assess his financial position;
d)There were issues with the Australian Taxation Department asserting a taxation debt of approximately $110,000 which needed to be resolved before the balance of his true financial position could be assessed; and
e)That he had reached an “in principle” settlement with the Senior Officer of BOQ Equipment Finance, namely Mr Clarke, and he was awaiting a formal response from him.
Mr Iaconis representing BOQ said that there was a number of disputes arising from issues identified by Mr Dhillon, and that most of these issues had been previously raised before Registrar Hedge on 13 August 2012 when granting an adjournment until 10 September 2012 made the following orders:
…
2. Any request for further adjournment to be supported by an affidavit setting out the grounds, the facts and the circumstances to be relied upon.
3. Any notice of opposition and affidavits in support to be filed and served by 04 September 2012. If filed after 04 September 2012, the Court will need to be persuaded to give leave to use the affidavit.
Neither of these orders had been complied with.
I indicated to the parties that I would stand the matter down in order to deal with other referrals from the Registrar’s list and that I would resume the hearing in the same courtroom at 12 noon. At 12 noon the matter was resumed but Mr Dhillon was not present in Court. My Associate called the matter three times in the court precinct, but there was no response or appearance by Mr Dhillon.
I indicated that I had formed the view that Mr Dhillon had clearly raised the argument in support of his application for an adjournment previously before a Registrar of this Court, and again before me during the period that I was allocating times to the various parties that had been referred by the Registrar earlier in the morning. Mr Dhillon had been provided with copies of the order made by Registrar Hedge on 13 August 2012 clearly indicating what he was required to provide to the Court if he intended to seek a further adjournment. These orders have not been complied with.
In the Notice Stating Grounds of Opposition to the Petition Mr Dhillon raised two issues :
1. Not in interest of all the creditors that a sequestration order be made.
2. Solvency.
An affidavit of Harcharan Singh Dhillon prepared and filed in Court, on 13 August 2012, sets out a brief history of Mr Dhillon’s health issues and the nature of the position he now finds himself in, due to the death of his accountant and his inability to locate a suitable replacement, to prepare his accounts to a level satisfactory to Mr Dhillon. The two issues raised in his Notice Stating Grounds of Opposition are not addressed. In that affidavit it states that he has an “in principle” agreement with his major creditors, in that he has an oral agreement with Mr Clarke in respect to the debt with BOQ. Mr Iaconis informed the Court at the earlier hearing in the morning that his instructions from BOQ were to proceed with the Creditor’s Petition and that no agreement had been made with Mr Clarke. The other argument advanced was that because he had reached an “in principle” agreement with Mr Clarke, the major creditor, that solvency was not an issue; however in oral submissions Mr Dhillon indicated that the making of the sequestration order would be detrimental to his other creditors. In respect to solvency this is not addressed and there is a complete absence of any documents that clearly state Mr Dhillon’s assets and liabilities. In effect the two grounds which are being pursued in the Notice Stating Grounds of Opposition are completely unsupported by any form of affidavit evidence.
At the time of the initial adjournment I inquired of the parties whether it was convenient to them both that 12 noon was appropriate, to which no objection was raised and indicated that the resumption of the hearing would be in the same courtroom. The absence of Mr Dhillon, at the adjourned hearing without explanation, was taken to be Mr Dhillon’s decision not to pursue his opposition to the Petition.
It has been established in a series of cases that the proper purpose of seeking a sequestration order against the estate of a debtor is so that a debtor who is unable to pay their debts as and when they fall due should have their affairs controlled for the benefit of the creditors and not just specific ones. Also, there is the prevention of the debtor incurring further obligations which they will not be able to meet. This is a public purpose: Re Sarina; Ex parte Wollondilly Shire Council (1980) 30 ALR 266. This observation was prompted by the nature of the oral submissions made by Mr Dhillon during his initial appearance before me when hearing dates and times were being allocated and Mr Dhillon was seeking a further adjournment.
I am satisfied that all of the statutory requirements in order to make a sequestration order have been satisfied and the evidentiary basis for that decision set out above at [8]-[13] and I make the relevant orders for sequestration.
I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM
Date: 21 September 2012
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