Bunz v Raffaele Pty Ltd - [2009] FMCA 1311

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BUNZ v RAFFAELE PTY LTD

[2009] FMCA 1311

BANKRUPTCY – Application to set aside bankruptcy notice – application dismissed.

Bankruptcy Act1966, s.52

Applicant:

VIVIANNE SUSAN BUNZ

Respondent:

RAFFAELE PTY LTD

File Number:

BRG 623 of 2009

Judgment of:

Wilson FM

Hearing date:

1 October 2009

Date of Last Submission:

1 October 2009

Delivered at:

Brisbane

Delivered on:

1 October 2009

REPRESENTATION

Counsel for the Applicant:

N/A

Solicitors for the Applicant:

In person

Counsel for the Respondent:

N/A

Solicitors for the Respondent:

Porta Lawyers

ORDERS

That the application filed 18 September 2009 be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 623 of 2009

VIVIANNE SUSAN BUNZ

Applicant

And

RAFFAELE PTY LTD

Respondent

REASONS FOR JUDGMENT

The applicant is a director of Bunz N More Pty Ltd. That company was the tenant of premises owned by the respondent. On 27 February 2009, the respondent commenced proceedings in the Sandgate Magistrates Court to recover moneys said to be owing to it by the company. Those proceedings were brought not only against the company, but also against its two directors. The present applicant was named as third defendant. The company was named as first defendant.
On 24 April 2009, judgment was entered, by default, against the first and third defendants in the sum of $27,269.05. An application has now been made to the Sandgate Magistrates Court to set aside that default judgment. Some explanation is offered as to the reason why documents were not filed at an earlier point in time, bearing in mind that the judgment was given on 24 April 2009.
Ordinarily, on an application to set aside a default judgment, the applicant must satisfy the court of two matters. First, that there is a reasonable excuse for the delay in defending the proceedings or in bringing the application to set aside a default judgment, and, secondly, that there is a meritorious defence to the proceedings.
Because no application was made to set aside the default judgment until relatively recently, on 8 August 2009 the present respondent caused a Bankruptcy Notice to be issued, based upon the judgment that was in its favour. That Bankruptcy Notice was served on 29 August 2009.
The present application was filed on 1 October 2009, outside of the time that the applicant had to comply with the Bankruptcy Notice. The substantial affidavit of the applicant seems to proceed on the footing that if the Bankruptcy Notice is not set aside, that she will thereupon become bankrupt. That is not the case. All the Bankruptcy Notice does is to establish that the debtor commits an act of bankruptcy which is then a basis for proceeding with a creditor’s petition. It is only upon the making of a sequestration order, consequent upon the filing and service of a creditor’s petition, that a debtor becomes subject to bankruptcy.
Much of the material that the applicant has put before the court seems to me not to be relevant to the issue of whether or not the Bankruptcy Notice should be set aside. For example, there is no complaint that the Bankruptcy Notice is in any way irregular or misleading. It is not contended that there is not a final judgment or order against the respondent.
The two bases on which it might be said that the Bankruptcy Notice is susceptible to attack is that the debtor has a genuine defence to the judgment that has been obtained against her, and has prospects of setting it aside; and, secondly, that the debtor has a counterclaim, set-off or cross-demand which is equal to or exceeds the amount of the judgment debt.
In respect of the first matter, it seems that most of the material that has been filed on behalf of the applicant is directed to either attempts that the applicant has, or is making, with her creditors to satisfy their claims against her, or is directed to complaints which have been made against conduct of the National Australia Bank to the Financial Ombudsman.
I infer from what I have been told, although it is not expressly stated in the material put before me, that the applicant alleges that the present respondent was engaged in conduct consequent upon the default by Bunz N More Pty Limited under its lease to somehow acquire the business of that company or its assets at an undervalue. It may be alleged that the bank was either a party to or complicit in that conduct. As I have said, that is not presently made clear in the material.
In any event, in order to amount to a counterclaim, set-off or cross-demand that could not be set up in the proceedings, something more needs to be shown. If I have understood correctly the nature of the claim to be made by the applicant, it is the very matter in respect of which she will defend the proceedings brought against her. It is therefore necessary to focus attention on whether the application to set aside the default judgment has any prospects of success.
The judgment, as I have said, was entered on 24 April 2009. No application to set it aside was filed until 18 June 2009. The documents were then returned to the applicant, as they were in the incorrect form. There is no explanation for the delay between 24 April and 18 June. In terms of what has occurred thereafter, it seems that the application has now been rectified so that it is listed for hearing on 15 October next. It does not seem to me that the applicant’s prospects of persuading the State Court that it should consider her application, albeit brought out of time, are so poor that it should be dismissed out of hand.
When one then has regard to the merits of that application, all that is sworn to in the accompanying affidavit is that investigations are underway with the Financial Ombudsman’s office, and that the company is owed considerable moneys from a third party in respect of which litigation is pending, and that all creditors have been advised of that position.
That second matter does not seem to me to be a ground of defence to the proceedings brought by the present respondent as plaintiff. It is certainly unfortunate that the applicant has found herself in a financial position as a result of lending moneys to a third party that have not been repaid, but that does not mean that she does not remain liable to the present respondent in the State Court proceedings.
There is so little detail as to the first matter that is that the matter is under investigation by the Financial Ombudsman’s office that I am simply unable to form a view that the application to set aside the default judgment has any prospects of success.
It follows, therefore, that I am not persuaded that there are grounds to set aside the Bankruptcy Notice, and I refuse to do so. However, lest there be any misunderstanding, if the default judgment is set aside on 15 October next, that has important consequences as to whether or not this court would proceed to make a sequestration order; and, secondly, the matters that this court is required to give consideration to under s.52 of the Bankruptcy Act1966 do not preclude the applicant from ventilating some of the arguments that I think she intends to pursue at the time that the respondent seeks a sequestration order, if, in fact, that happens.
In my view the application for an order that the bankruptcy notice be set aside should be dismissed.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Wilson FM

Associate: Lynnette Chin

Date: 25 January 2010