PETER CARANTINOS v ANTHONY MAGAFAS and GEOFFREY MCDONALD
NSD 2000 of 2008
PERRAM J 15 JUNE 2009 SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 2000 of 2008
BETWEEN:
PETER CARANTINOS Applicant
AND:
ANTHONY MAGAFAS First Respondent
GEOFFREY MCDONALD Second Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
15 JUNE 2009
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal be dismissed with costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 2000 of 2008
BETWEEN:
PETER CARANTINOS Applicant
AND:
ANTHONY MAGAFAS First Respondent
GEOFFREY MCDONALD Second Respondent
JUDGE:
PERRAM J
DATE:
15 JUNE 2009
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Introduction
On 11 December 2008 a federal magistrate made a sequestration order against the estate of Mr Carantinos. From that order Mr Carantinos now appeals. The appeal raises only three issues:
(a) The service issue. Mr Carantinos submits that he was not validly served with the bankruptcy notice. The parties agree that the notice had to be served at Mr Carantinos’ last known address but are in disagreement as to whether an address at 44 Princess Highway, St Peters was that address. Mr Carantinos submits that his last known address was that of the firm of solicitors representing him in associated Supreme Court proceedings involving the petitioning creditor and himself.
(b) The undertaking issue. Mr Carantinos submits that the solicitor for the petitioning creditor gave an enforceable undertaking not to enforce the petitioning creditor’s judgment debt if certain affidavits were filed by a particular date. He says that the issue of the bankruptcy notice and the petition itself are contrary to this undertaking and that the federal magistrate should have declined to make the sequestration order in those circumstances.
(c) The estoppel issue. Mr Carantinos submits that the same undertaking gives rise to an equitable estoppel preventing the petitioning creditor from pursuing the present sequestration proceedings.
It is useful to consider these issues in turn.
(a) The service issue
Before the federal magistrate, the petitioning creditor relied upon an act of bankruptcy said to have occurred on 13 March 2008 which was 21 days after it was alleged that Mr Carantinos had been served with a bankruptcy notice. It was common ground that he had not complied with the notice. Mr Carantinos’ argument, very ably put by Mr Bowles, was that he had not been served with the notice so that no act of bankruptcy had occurred.
By force of s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (“the Act”) a person who is served with a bankruptcy notice upon a…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Carantinos v Magafas [2009] FCA 627
Case
[2009] FCA 627
Decision Date
CaseChat Overview and Summary
In the case of Carantinos v Magafas, the petitioner sought a bankruptcy order against Mr Carantinos, the respondent. The matter was heard in the Federal Circuit Court, where the respondent appealed against a decision of a federal magistrate. The respondent contested the validity of the bankruptcy notice on multiple grounds, including the adequacy of the address to which the notice was sent and the effect of a letter from the petitioner’s solicitors.
The primary legal issues revolved around whether the bankruptcy notice was validly served and whether the letter from the petitioner's solicitors constituted an equitable estoppel that prevented enforcement of the judgment debt. The court needed to determine whether the notice was correctly addressed to Mr Carantinos and if the letter of 24 September 2007, which promised to refrain from enforcing the judgment if certain conditions were met, created an estoppel that could be relied upon by the respondent.
The court found that the federal magistrate’s decision was correct in rejecting the respondent’s grounds of appeal. The court held that the address to which the notice was sent was adequate, as there was no evidence that the creditor or anyone else was aware of the renovations or Mr Carantinos' absence from the St Peters' premises. Furthermore, the court found that the letter of 24 September 2007 did not ground an equitable estoppel, as Mr Carantinos had already raised this argument and could not now deny the creditor’s right to examine compliance with the letter’s terms. Consequently, the appeal was dismissed, and costs were awarded to the petitioner.
The final orders of the court were that the appeal be dismissed with costs.
Orders
Orders of the court
1. The appeal be dismissed with costs.
Note:
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
PERRAM J
Mr Bowles submitted that only the Supreme Court could properly consider whether its orders for accounts had been complied with. However, such a contention cannot be correct. His client raised in this Court the argument that the letter of 24 September 2007 grounded an equitable estoppel. Having raised that argument Mr Carantinos cannot be heard to deny the ability of the petitioning creditor to examine his own compliance with that which the letter contemplated. The ground must be rejected.Conclusion Each of the grounds fails. The appeal must be dismissed with costs.
Ratio Decidendi
Legal Principle Established
Established by:
PERRAM J
Mr Bowles’ submission that Munro Lawyers was the “best” address for ensuring that Mr Carantinos would get the notice was also based on a submission that the St Peters’ premises were undergoing renovations and that Mr Carantinos did not attend those premises for the period between December 2007 and June 2008 [at sub 16].Consideration I would reject Mr Carantinos’ argument for two reasons. First, the evidence did not establish that the creditor, or anyone else for that matter, was aware that the St Peters’ premises were being renovated or that Mr Carantinos was absent therefrom. Secondly, the federal magistrate – unsurprisingly in those circumstances – found as a fact that the premises of Munro Lawyers were not “better” than the premises at St Peters. This finding was not directly challenged before me. Once that is accepted it is difficult to discern how this ground can succeed. In my opinion, it does not. (b) The undertaking issue The debt the subject of the bankruptcy notice was based upon a judgment entered in the petitioning creditor’s favour in the Supreme Court of New South Wales. The proceeding giving raise to that judgment debt travelled together with a broader partnership dispute between Mr Carantinos and the petitioning creditor which was heard and decided by Einstein J at the same time. The partnership dispute – but not the dispute resulting in the judgment debt – was subject to an appeal to the New South Wales Court of Appeal. However, in the meantime it had resulted in orders calling for the taking of accounts. I will not set those orders out. It suffices to say that Einstein J ordered Mr Carantinos to file on or before 28 September 2007 accounts together with verifying affidavits. Because Mr Carantinos did not appeal from the judgment debt he was, in a practical sense, exposed to the risk that that judgment might be enforced. However, to avert that possibility he advanced to the petitioning creditor an argument that once the process of account taking in the partnership proceedings was concluded there would be sufficient funds in his favour to permit a set-off against his liability under the judgment. The petitioning creditor was unpersuaded and signalled his intention to enforce the judgment. Mr Carantinos’ solicitors then entered into a correspondence with the petitioning creditor’s solicitors in which they sought to obtain an undertaking not to enforce the judgment whilst the appeal to the Court of Appeal was unresolved, if Mr Carantinos filed his affidavits verifying the accounts. It is not necessary to set out in full all of this correspondence. However, two letters are of some importance. The first is a letter from the petitioning creditor’s solicitors to Mr Carantinos’ then solicitors of 24 September 2007. It is in these terms:Your response is unsatisfactory in a number of aspects. However, as a gesture of goodwill, we are instructed by our client that the judgment will not be enforced provided that the verified accounts are furnished by 28 September 2007 and if not, we are instructed to proceed to enforce the judgment without further notice.