BOTTOMS ENGLISH v Slack - [2003] FMCA 390

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BOTTOMS ENGLISH & ORS v SLACK

[2003] FMCA 390

BANKRUPTCY – Acts of bankruptcy – assets – sequestration order – counter-claim, set-off or cross-demand – capacity to pay within a reasonable time.

Applicant:

BOTTOMS ENGLISH & ORS

Respondent:

RICHARD JOHN SLACK

File No:

BZ400 of 2002

Delivered on:

12 August 2003

Delivered at:

Townsville

Hearing Date:

12 August 2003

Judgment of:

Coker FM

REPRESENTATION

Solicitor for the Applicant:

Miller Harris Lawyers

Appearing for the Respondent:

Mr Laghaifar (with leave)

ORDERS

That a sequestration order be made against the estate of RICHARD JOHN SLACK.
That the applicant creditor’s costs be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

THE COURT NOTES that the date of the act of bankruptcy is 3 June 2002.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
TOWNSVILLE

BZ400 of 2002

BOTTOMS ENGLISH & ORS

Applicant

And

ROBERT JOHN SLACK

Respondent

REASONS FOR JUDGMENT

In relation to the application for adjournment, there are a number of issues that arise in relation to the proceedings, and on the last occasion that the matter was before me, on 8 July 2003, certain directions were given including the adjournment of the proceedings to today.
There was also a direction made by me with regard to the provision of evidence in relation to the ongoing proceedings in Supreme Court claim 17 of 1994, which are the proceedings, that involve Mr Laghaifar, who appears as representative for Mr Slack and that is consented to today.
There was evidence sought, in relation to the position with that matter and I understand that on or about 15 July 2003, the matter came before Jones J in the Supreme Court and Jones J adjourned the matter then until later this month when McKenzie J would be in a position to hear the matter.
What is contended on the part of Mr Slack is that there is a direct correlation or connection between the possible outcome of proceedings 17 of 1994 and the later proceedings number 50 of 2001. The fact is, of course, that the proceedings 17 of 1994 are those which involve Mr Laghaifar direct and he says that there is a basis upon which they have been improperly obtained.
What he asks me to do, however, is to make a legalistic jump from those proceedings to the outcome of proceedings number 50 of 2001. I understand the concern that Mr Laghaifar raises in relation to this matter but the fact is that there is, at least in my view, no direct legal connection between the proceedings 17 of 1994 and the proceedings upon which the application is based such that a sequestration order is sought in respect of this matter at this time.
Accordingly, I am not satisfied - - -
RECORDED : NOT TRANSCRIBED
As I say, I am not, therefore satisfied that there is a direct connection between any determination of the proceedings 17 of 1994 and those of 50 of 2001. Accordingly, there is no, basis upon which there should be an adjournment today and I will allow the application to proceed.
RECORDED : NOT TRANSCRIBED
This matter has been one that has been on foot for a very considerable period of time and it gives rise to a number of very complicated issues. The fact is, however, that there is a judgment in place in relation to the affairs of the respondent, Richard John Slack.
It is also the case that, on a number of occasions, adjournments have been granted in relation to various proceedings so as to enable Mr Slack and others, who have involvement in the proceedings, to clarify the position and, in particular, it was required in February of this year to clarify the position in relation to his financial circumstances.
Annexed to the affidavit of Mr Sohail Laghaifar is exhibit 3 which is headed Assets and Liability Statement for Richard John Slack as at

1 August 2003. It details two primary assets, the first being the interest in the business and shooting gallery which Mr Slack says he holds in Kuranda. It has, however, been the subject of proceedings before the Supreme Court of Queensland on two occasions and Mr Slack has been unsuccessful in those proceedings.
Mr Laghaifar submits to me that there is a causal link that flows from proceedings that he is involved in at this time which, if successfully able to be dealt with, would mean that there would be a grave injustice that has been caused or perpetrated upon Mr Slack as a result of dealings with persons other than Mr Laghaifar direct. It is, however, the case that I am required to deal with the position as it presently stands.
I am not satisfied, particularly in light of the judgments previously made by the Supreme Court, that there is an interest in relation to the business of $425,000. That is not to say that there may not, in fact at some time in the future, be an interest in such a business dependent upon the outcome of the proceedings, but one of the issues that I must deal with in relation to an application for bankruptcy is not only to deal with an issue in relation to the capacity to pay or the holding of assets sufficient to meet the liability that is claimed but there is also a requirement that there should be a capacity to meet the liability within a reasonable time.
Even if Mr Laghaifar's submissions to me are correct, and there is a nexus or connection between his proceedings in the Supreme Court and what might be the position with regard to Mr Slack, there is no indication whatsoever, that there would be an interest sufficient, within reasonable time, for the debt to be met. As such, I am not satisfied that there is a capacity in relation to the interest claimed of $425,000 relating to the business and to the leasehold property from which the business is operated.
The second asset that is claimed is one, held in an allotment of land at the city of Russell Island. It is alleged that that property is valued at $45,000. However, the only indication that I have in relation to that particular property, is an assessment which has been provided by an agent on the island which puts the value of the property at somewhere between, $5000 and $7000. That valuation, or assessment, is by Mr

I R Larkham. It is indicated in Mr Laghaifar's exhibit number 3 that the $45,000 is the moneys that have been expended by Mr Slack in relation to both the purchase of the property and whatever improvements may have been effected to the property. However, Mr Laghaifar indicates that there is no valuation on the property.
I am left in a situation where, it is clear that there may have been an over capitalisation on the part of Mr Slack, but, that the only evidence of any nature in relation to the value of the property is somewhere between $5000 and $7000 and that there is difficulty that would be experienced in respect of a sale of such a property.
There are two other assets that are referred to, being a car and firearms as well as plant and equipment and furniture which, it is indicated, have no current value. There is no information, however, in relation to the car or the firearms and I am not satisfied that there is information sufficient for me to be satisfied as to an immediate or reasonably opportune capacity for the respondent to pay his debts. In that regard there is also a notation that there are liabilities of approximately $29,000 to credit card facilities, Visa and American Express.
I have indicated previously that there were issues that needed to be considered by me in relation to the actual act of bankruptcy. On

25 February 2003 I indicated that I was satisfied as to the requirements arising pursuant to the provisions of section 44(1) and section 52(1). It is now nearly six months later and there has certainly been a number of other issues raised in relation to the matter. The fact is, however, that there remains still on foot a judgment which has not been satisfied and a non compliance with the bankruptcy notice that has been given.
As I indicated on 25 February 2003, and it still remains the case, the only matter that was required, in my view, to be satisfied in relation to this matter was whether or not Mr Slack had the capacity to meet, within a reasonable time, the payment of the debt which is claimed. I am satisfied on the material that is before me, or rather the lack of material that is before me, that there is no evidence whatsoever of his capacity to meet the claim within a reasonable time and I am satisfied as I am otherwise required to be, pursuant to the provisions of the Bankruptcy Act, that a notice has been given, there has been non-compliance and that it is appropriate, therefore, that an order should be made for the sequestration of the estate of Richard John Slack and I so order.
RECORDED : NOT TRANSCRIBED

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Coker FM

Associate:

Date: 11 September 2003