Caratti v Weininger - [2007] FMCA 415

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CARATTI v WEININGER

[2007] FMCA 415

BANKRUPTCY – Creditor’s petition – respondent debtor’s opposition to creditor’s petition – considerations relevant to review – creditor’s petition dismissed.

Bankruptcy Act 1966 (Cth), s.43

Commissioner of Taxation v Hadidi (1994) 51 FCR 453
Groom v Abela (1992) 37 FCR 277
Lindholdt v Merritt Madden Printing [2002] FCA 260
Re John A. Gilmore (Debtor) Ex parte James Carlyle (Creditor) No. QP1286 of 1990 FED No. 733 Bankruptcy
Re Taylor & Ors; Ex parte Taylor & Ors v Bill Acceptance Corporation Ltd (1985) 8 FCR 568
Re McCollun; Ex parte the Bankrupt (1987) 71 ALR 626
St George Wholesale Finance v Spalla [2000] FCA 1094; (2000) 181 ALR 682
Wren v Mahoney (1972) 126 CLR 212

Applicant Creditor:

REBECCA CARATTI

Respondent Debtor:

MARTIN WEININGER

File number:

SYG2660 of 2006

Judgment of:

Lloyd-Jones FM

Hearing date:

6 February 2007

Delivered at:

Sydney

Delivered on:

28 March 2007

REPRESENTATION

Solicitors for the Applicant Creditor:

Mr L Rupell of Milne Berry & Berger Solicitors

Solicitors for the Respondent Debtor:

Mr M Forsyth of Abadee Dresdner & Freeman

ORDERS

The applicant creditor’s bankruptcy notice, NN 2895/2004, issued on 8 November 2004 is void and of no effect.
The applicant creditor's petition filed on 19 September 2006 is dismissed.
The applicant creditor shall pay the respondent debtor's costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG2660 of 2006

REBECCA CARATTI

Applicant

And

MARTIN WEININGER

Respondent

REASONS FOR JUDGMENT

The proceedings

This is an application for review by Martin Weininger (the respondent debtor) opposing the applicant creditor’s petition filed on 8 January 2007. The Notice Stating Grounds of Opposition to Petition is on the following grounds:
1.At the time that the Applicant Creditor applied to the Local Court of New South Wales to register a judgment in the sum of $3622.62 ("the Local Court judgment") pursuant to an Order for the Payment of Money, namely the sum of $3,563.62, obtained by her in proceedings RT 02/36652 in the Consumer, Trader & Tenancy Tribunal ("the Tribunal") –
(a)   the Respondent had vacated the premises the subject of the Applicant creditor's claim for rent in the Tribunal proceedings;
(b)   no claim had been made by the Applicant Creditor that the bond of $2,000.00 acknowledged by her in the Tribunal proceedings to be held by her was required for the purposes of repair to or cleaning of the subject premises or for any other purpose other than the payment of rent;
(c)   the Applicant Creditor had not credited against the amount due pursuant to the Order for Payment of Money the sum of $2,000.00 held by her as a rental bond and was accordingly not entitled to register judgment for an amount in excess of $1,622.62.
2.The Local Court Judgment constituted the principal of a debt alleged due by the Respondent to the Applicant Creditor as claimed in the Applicant Creditor's Bankruptcy Notice dated 8 November 2004, the alleged failure to comply with which forms the basis of the Applicant Creditor's Petition in these proceedings.
3.As the date of the Bankruptcy Notice the Respondent was not indebted to the Applicant Creditor for an amount claimed in the Bankruptcy Notice or for any amount equal to or exceeding $2,000 for the reasons stated in paragraph 1. and, more particularly, in sub-paragraph 1(c).
4.The Bankruptcy Notice was not personally served on the Respondent and the Respondent had no knowledge of the Bankruptcy Notice prior to the receipt by the Respondent of a copy of the Applicant Creditor's Petition in the mail on or about 15 September 2006. Therefore, the Applicant Creditor was not able to –
(a) give notice to the Applicant Creditor within the time allowed by the Bankruptcy Act (“the Act”) pursuant to

sub-section 41(5) of the Act that he disputed the validity of the Bankruptcy Notice on the grounds of the misstatement of amount due to the Applicant Creditor.
(b) apply within the time allowed by sub‑section 41(6A) of the Act to:
(i)   set aside the Local Court Judgment;
(ii) set aside the Bankruptcy Notice; and/or
(iii) extend the time for compliance with the Bankruptcy Notice; or
(c)   seek to satisfy this Court that he has a counter-claim, set-off or cross demand equal to or exceeding amount due to the Applicant Creditor under the order made by the Tribunal.
5.As at the date of the issue of the Bankruptcy Notice, the Respondent had a counter-claim, set-off or cross-claim equal to or exceeding the amount due to the Applicant Creditor arising out of the Tribunal proceedings, in that the Respondent was entitled to compensation from the Applicant Creditor for the lack of access to a car space agreed to be provided by the Applicant Creditor to the Respondent pursuant to the Respondent's lease of premises owned by the Applicant Creditor;
6.The Respondent could not have set up that counter-claim, set-off or cross-demand in the Tribunal Proceedings because 30 days had elapsed since the Respondent had become aware of the breach of a lease giving rise to the Respondent's claim;
7.The Respondent could not have set up a counter-claim, set-off or cross-demand in the application by the Applicant Creditor to the Local Court to register the Local Court judgment because the Respondent was unaware of that Application when it was made;
8.In the circumstances –
(a)   the application by the Applicant Creditor for the issue of the Bankruptcy Notice and the filing by the Applicant Creditor of the Petition in these proceedings each constitute an abuse of the court process by the Applicant Creditor;
(b)   the Bankruptcy Notice is void and/or of no effect;
(c)   the Petition should be dismissed.
The creditor's petition was filed in these proceedings on 19 September 2006. Rebecca Caratti (the applicant creditor) applied to the Court for a sequestration order under s.43 of the Bankruptcy Act 1966 (“the Act”) against the estate of Martin Weininger. The claim being:
a)Mr Weininger owed Ms Caratti an amount of $4,303.28 for judgment entered on 4 November 2002 in the sum of $3,622.62, together with accrued interest in the sum of $680.66.
b)
Ms Caratti does not hold security over the property of

Mr Weininger.
c)At the time the act of bankruptcy was committed, Mr Weininger was ordinarily resident in Australia.
d)
On or before 11 April 2006, Mr Weininger failed to comply with the requirements of the bankruptcy notice served on him on

20 March 2006, or to satisfy the Court that he had a counter-claim, set-off or cross-demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross-demand that he could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained. The judgment was obtained in the Local Court of New South Wales for unpaid rent on 4 November 2002.
The bankruptcy notice, NN2895/2004, was issued on 8 November 2004. The notice was subsequently extended to 8 November 2005 and again to 8 May 2006. On 6 February 2006, an order for substituted service of the bankruptcy notice was issued in the Federal Magistrates Court by Registrar McIlhatton. The bankruptcy notice was deemed to have been served on the respondent debtor on 20 March 2006. The respondent debtor was required, within 21 days of that date, to pay the applicant creditor the amount of the debt or make arrangements to her satisfaction for settlement of the debt.
The following affidavits have been filed in these proceedings:
a)affidavit of service, sworn by Lewis Rupell on 28 November 2006 (affidavit of service);
b)affidavit of Martin Weininger, sworn 28 November 2006 (first affidavit of Mr Weininger);
c)affidavit of Lewis Rupell, sworn 29 November 2006 (affidavit of Mr Rupell);
d)affidavit of Rebecca Caratti, sworn 1 February 2007 (affidavit of Ms Caratti);
e)affidavit of Martin Weininger, sworn 8 January 2007 (second affidavit of Mr Weininger);
f)affidavit of Martin Weininger, sworn 2 February 2007 (third affidavit of Mr Weininger).
The parties did not require the deponents of the affidavits to be cross-examined. All of the above affidavits were read into evidence.

Submissions and reasons

Mr Forsyth, solicitor for the respondent debtor, submits that the debt that founded the bankruptcy notice related to Mr Weininger leasing an apartment from Ms Caratti, and then a claim by Ms Caratti for outstanding rent. In the CTTT proceedings, Ms Caratti was represented by her real estate agent and Mr Weininger appeared in person. Under the rules of the CTTT, the parties were encouraged to settle by conciliation. Accordingly, the estate agent and Mr Weininger met and agreed that the amount of rent outstanding was $3,562 as at

17 September 2002, the date of the CTTT orders.
The parties also agreed that Mr Weininger would vacate the premises on 27 September 2002 and the total amount of $3,562 was payable at that date. A number of other matters were dealt with during that meeting and recorded in a handwritten conciliation agreement.( affidavit of Ms Caratti, annexure “G”)
Annexure G contains the following information:
1.The arrears of rent due by the tenant to the landlord are agreed at $2,849.32 due from 08/08/02 up to today.
6. The tenancy agreement between the parties will end today and the Tenant will vacate the premises on: 27/9/02.
7.From tomorrow, the tenant will pay an occupation fee of $71.43 per day, being 1/7th of the weekly rent for each day of occupation of the premises after today.
13.It is noted that the tenant will make an application for compensation in regard to the premises.
It is further noted that receipts will be issued within 7 days for past payment of rent.
The landlord is to check the payment of $1000 made by the tenant on 19/7/02 and if same has not been credited to the tenant's account it shall be done forthwith.
It is noted that the sum of $2000 is held by the landlord on a/c of Rental Bond.(copied without alteration or correction)
Mr Forsyth drew the Court's attention to the annexure and that Mr Weininger was to receive a receipt for the $1,000. However, that amount was not incorporated in the owner ledger of the rental property.(affidavit of Ms Caratti, annexure “B”)The sum of $1,000 had been paid, but was not credited to Ms Caratti. Having reached an agreement, the above points were incorporated into the CTTT orders. On 27 September 2002, Mr Weininger vacated the rental premises on the understanding that they were to be left clean and undamaged.
On 30 September 2002, Ms Caratti’s agent, Campbell Mulder Real Estate Pty Ltd, applied to Department of Fair Trading in the following terms:
I would like to apply for a warrant on the subject property, as Mr Weininger has not honoured the Order made on 17/09/02. He has vacated the premises but left it unclean and had ripped out the telephone connection.
He has also not paid the amount of Rental Arrears outstanding.( affidavit of Ms Caratti, annexure “M”)
Mr Forsyth contends that Mr Weininger did provide an explanation about the telephone connection and that he left the premises clean.(third affidavit of Mr Weininger, at [3] )
Mr Forsyth submits that Mr Weininger moved out of the rental premises, left it in a fine condition and agreed that he owed Ms Caratti $3,562 in rent. It was agreed by the estate agent that there was $2,000 bond and a payment of $1,000 which needed to be clarified.

Mr Forsyth argues that Mr Weininger understood that he was owed a total of $3,000 or that it was available to be put toward the outstanding rent, which left an amount of approximately $562 outstanding. In

Mr Weininger’s view, Ms Caratti owed him money because he did have use of a car space. He calculated this amount to be $3,000, but was willing to not pursue the claim.
Mr Weininger then moved into an apartment in the same complex as the rental premises in question, but in an adjoining tower. Both towers share a common reception lobby. He remained in that new apartment for two years. Mr Weininger states that he saw Ms Caratti and her agent in the lobby regularly.(first affidavit of Mr Weininger)

Mr Weininger claims that at those times, neither Ms Caratti nor her agent raised with him any issue of outstanding rent. He therefore thought that it was no longer in issue.
Mr Forsyth drew the Court's attention to the affidavit of Mr Rupell, solicitor for the applicant creditor, which quotes Ms Caratti in relation to contents of the first affidavit of Mr Weininger:
I can tell you that I have never received the amount in the CTTT order from the Debtor and this is the first time I have heard of the debtor's alleged complaint about parking space.
Also, I can say I never ran into the Debtor – I deny I ever knew where the debtor was after the CTTT proceedings – had I known I would have instructed my solicitors to serve him – he is telling lies.
Mr Rupell’s affidavit then relays a telephone discussion he had with Mr John Caratti, Ms Caratti's father, who responded to Mr Weininger’s first affidavit as follows:
In answer to paragraph 7, the debtor moved next door – not in the same building – we tried desperately to serve documents on him but we believe the debtor's new apartment was under a different name.
Mr Forsyth drew the Court's attention to contradictory accounts of the factual background. In relation to whether Ms Caratti and

Mr Weininger ever met in the common lobby of the building,

Ms Caratti is quoted as saying that she “never ran into the debtor”.(affidavit of Mr Rupell) However, Ms Caratti’s own affidavit states at [29]:
In answer to paragraph 11 of the Respondent's Affidavit [second affidavit of Mr Weininger] I say I saw the Respondent in the lobby however each time I tried to approach him he would run away. I could not find the Respondents name on the Tenant Register and I was later informed that the Respondent Sub-let his apartment but did not know the name of the tenant and the Concierge would not tell me which apartment the debtor resided in.
Mr Forsyth then directed the Court's attention to a garnishee order filed by Ms Caratti in the Local Court in November 2002, which gives

Mr Weininger’s address at the time.(affidavit of Ms Caratti, annexure “K”) Mr Forsyth argues that this was the address in the adjoining tower in which Mr Weininger stated he was living, when he vacated the applicant’s premises.(third affidavit of Mr Weininger, at [8])

Mr Forsyth submits that although the parties entered into an agreement on 17 September 2002 as recorded in the CTTT orders, Ms Caratti decided to pursue Mr Weininger for the maximum amount. She used the CTTT orders to obtain a judgment in the Local Court for $3,622.62. This being the agreed amount of $3,563, plus $59, the Local Court fee.
Mr Forsyth submits that the Local Court judgment is a default judgment, being a judgment without a hearing and without

Mr Weininger being notified that an application for judgment was made. On the basis of that judgment, a bankruptcy notice was issued two years later claiming that amount, plus 762 days of interest. The proceedings in this Court are based on the bankruptcy notice issued in 2004, which has been extended a number of times.
Mr Forsyth referred to the affidavit of Ms Caratti and the accounts of the estate agent which operated up to 2 August 2002, which are annexures “B” and “L”. Mr Forsyth submits that it is clear that those accounts are incomplete as Ms Caratti’s affidavit refers to payments received from Mr Weininger on 2 and 8 July 2002 for a total of $3,000.(affidavit of Ms Caratti, paragraphs 17-18) However, those payments were not referred to in either sets of accounts. It is submitted that those accounts were irrelevant to the final settlement agreement reached after the accounts were finalised. The settlement agreement identifies an outstanding payment of $1,000, which was not credited to Mr Weininger. Therefore, the judgment that was entered in the Local Court was an incorrect representation of the final agreement between the parties.
Mr Rupell referred to where the CTTT noted additional matters pertinent to its hearing.(affidavit of Ms Caratti, annexure “H”) However, the order does not say that there was an agreement about the $2,000 rental bond. Mr Rupell argued that the CTTT orders noted what the parties had presented to it. Although the parties agreed that $3,563 had to be paid, there was no agreement that the bond would be applied as part payment for that amount. Mr Rupell submits that the bond could not be applied to the CTTT orders as that bond had previously been applied.
Throughout the tenancy in question, payments were expected to be made on time and in advance, from the commencement of the tenancy period in March 2002. Initially, the payments were made and the parties fulfilled their obligations. Mr Rupell tendered a schedule of payments to assist in this analysis, which I marked as Exhibit “A1”. The period of the tenancy was from 1 March 2002 to 27 September 2002. Ms Caratti’s affidavit records the relevant payments as follows:
6.On or about 2 April 2002, I received the amount of $1,312.50 which represents 4 weeks rent paid to 28 March 2002.
7.On or about 30 April 2002, I received an amount of $1,704.67 from the debtor, representing 4 weeks rent to 25 April 2002.
8.On or about early June 2002, a payment was made by cheque to my managing agent by the debtor for $1000. 00.
9.On or about early June 2002, a payment was made by cheque to my managing agent for $1000.00.
10.In or about mid-June 2002 I received copies of 2 cheques accompanied with letters noting that the cheques had bounced.
Mr Rupell submits that as both of Mr Weininger’s cheques bounced, the estate agent was well within his rights to make a claim for the rental bond money to cover that. The agent had paid the bond money to the Rental Bond Board, and then made applied for refund of the bond money.
Mr Rupell submits that Ms Caratti believed that she was owed more than what the CTTT had calculated and began the process of recovering the debt:
…Although the amount ordered to be paid was lower than the amount I believed I was owed; As the amount in question was less than $500 I decided not to pursue an alteration to the order and instructed my real estate agent to pursue the debtor for $3,563.62.(affidavit of Ms Caratti, at [22])
Mr Rupell then referred to another bounced cheque for $1,500, which was not recorded in the owner ledger of the Applicant Creditor.( affidavit of Ms Caratti, annexure “B”) Although the owner ledger records a rental deposit for $1,500 on 13 June 2002, there is no corresponding adjustment to indicate that the amount was not cleared by the bank. On 27 July 2002, a further $1,000 was received by the estate agent. However, Ms Caratti claims she received only $500 of that $1,000. Unfortunately, no further explanation of this anomaly was provided in the submissions.
Mr Rupell submits that as Mr Weininger’s new rental apartment was leased under a different name, Ms Caratti was unable to locate him for a number of months. After the address was obtained, Mr Rupell then began the long and arduous process of causing substituted service of the bankruptcy notice.
This Court is being invited to go behind a judgment which establishes the basis for a bankruptcy notice. In support of this, Mr Forsyth referred me to Wren v Mahoney (1972) 126 CLR 212 at [13] per Barwick CJ:
But, it has been made clear that the Bankruptcy Court will not as a matter of course inquire into the validity of a judgment debt: Re Flatau; Ex parte Scotch Whisky Distillers Ltd (1888), 22 QBD 83. In that case the judgment followed a trial of an action with a jury. Circumstances tending to show fraud or collusion or miscarriage of justice or that a compromise was not a fair and reasonable one, in the sense that even if not fraudulent it was foolish, absurd and improper, or resulted from an unequal position of the parties (see Re Hawkins; Ex parte Troup [1895] 1 QBD 404, at p 409; [1891–4] All ER Rep Ext 1280), offer occasions for the exercise by the Court of Bankruptcy of its power to inquire into the consideration for the judgment…

Mr Forsyth contends again that in this case, Mr Weininger was not served or notified that the judgment was being sought to be entered in the Local Court.
In Re John A. Gilmore (Debtor) Ex parte James Carlyle (Creditor) No. QP1286 of 1990 FED No. 733 Bankruptcy, Pincus J went behind the judgment on which a bankruptcy notice was based, where an order for the entry of judgment was made on terms quite different from the terms agreed to by that debtor.
In Lindholdt v Merritt Madden Printing [2002] FCA 260, a bankruptcy notice was issued on the basis of a Local Court judgment that was subject to an instalment order. An application was made to the Local Court to cancel the instalment order, but that debtor failed to make a full and frank disclosure to the Local Court prior to the cancellation. Justice Weinberg J stated at [45]:
A party who applies ex parte for an order in the exercise of a judicial, or quasi judicial, power is required to meet a high standard of candour and responsibility in bringing to the attention of the decision-maker all facts material to the determination of the application. This obligation extends to facts which the absent party (if present) would presumably rely upon in defence to the application. The existence of such a duty of candour is not limited to applications to the Court for injunctive or other equitable relief. An order obtained in breach of an ex parte applicant's duty of candour will almost invariably be set aside even if, on a fresh application following full disclosure, the applicant would be entitled to an order in similar terms.
St George Wholesale Finance v Spalla (2000) 181 ALR 682 was a case in which a company director was sued on a guarantee of a company's debt and the creditor appointed a receiver to the company who realised assets in reduction of the principal. There was a failure to acknowledge or record the payments since the judgment.
A similar case, Commissioner of Taxation v Hadidi (1994) 51 FCR 453 dealt with the setting aside of a bankruptcy notice. A Court will usually not go behind a judgment when there is a hearing on the merits, nor will it go behind a judgment in which the parties have agreed to a settlement. That was the case with this CTTT decision.
Mr Forsyth argues that in this case, the judgment entered in the Local Court was the basis for this bankruptcy notice. Therefore, this Court should go behind the Local Court judgment as it was an incorrect statement of the agreed position.
Money held as a security was discussed in Groom v Abela (1992) 37 FCR 277 at 280 per Neaves, Spender and Gummow JJ:
…as a matter of law, that the mere holding by a judgment creditor of a security which may, upon realisation, produce a surplus which will at that time reduce the judgment debt, does not preclude the creditor from having a bankruptcy notice issued in respect of the amount payable under the judgment at the date of the issue of the notice.
Mr Forsyth submits that in the circumstances in this case, where the parties had reached a financial agreement and a $2,000 bond amount was acknowledged, Mr Weininger would be of the view that the bond was available for rental payments unless used to repair any damages to the premises. However, the bond of $2,000 was not taken into account in the judgment nor in the bankruptcy notice. Similarly, the $1,000 that was acknowledged to have been paid, and the crediting of it, was not taken into account. It is submitted that bankruptcy is a very serious matter and the creditor bears the burden of having the right facts and be scrupulously honest in its dealings with the Court. Mr Forsyth contends that that has not happened in this case. On that basis, the bankruptcy notice issued on 8 November 2004 should be declared a nullity and, correspondingly, the creditor's petition should be dismissed with costs.
Mr Rupell referred me to the decision in Re McCollun; Ex parte the Bankrupt (1987) 71 ALR 626 at 628 per Pinkus J who said:
The fact that the judgment may be irregular or wrong in form is not sufficient reason for dismissing the petition. The object of going behind a judgment is not to inquire whether the proper procedure was followed to obtain it, but to determine whether the debtor in reality owes to the creditor the moneys which the judgment held that he owed. Once it is found that the debtor was really indebted to the petitioning creditor in the amount for which judgment was given, any irregularities of procedure, however important they may have been had they been relied upon in the proceedings in which the judgment was obtained, cease to be important … once the existence of the debt is found, it cannot be sufficient cause for refusing to make a sequestration order that a judgment for the correct amount, given by a Court having jurisdiction, was obtained by the wrong procedure or given in the wrong form…
Mr Rupell accepted that Mr Weininger did not know how the rental bond amount of $2,000.00 was applied and that the estate agent did not inform Ms Caratti that the bond money had been used. Mr Rupell confirmed that the estate agent did apply the rental bond money after the two bounced cheques. Despite this, Mr Rupell maintained that as the parties agreed on the amount owed, Re McCollun; Ex parte the Bankrupt should be followed.
Mr Rupell then made a number of submissions in response to the accounting items which Mr Forsyth identified as incorrect. He referred Ms Caratti’s affidavit:
…that on or about 13 June 2002 payment was allegedly made by the Debtor to my Real Estate Agent in the sum of $1,500.00.(affidavit of Ms Caratti, para.13)
This affidavit annexes two dishonoured cheques for $1,000 (annexures “C” and “D”) and a dishonoured cheque for $1,500 (annexure “F”). The owner ledger records the two dishonoured cheques for $1,000.00, but the $1,500.00 cheque was not recorded.(annexure “B”) Mr Rupell acknowledged problems with the estate agent’s accounting records and that Ms Caratti had therefore prepared the schedule of payments referred to above at [20].(Exhibit “A1”) That document purports to reflect how much was owed to the applicant creditor as at 27 September 2002. Mr Rupell submits that the core issue before this Court is the amount due as at 27 September 2002, which is reflected in the CTTT agreement.
The CTTT agreement noted that Ms Caratti was required to notify Mr Weininger whether she had received the $2,000.00 bond and the further $1,000.00. Although Mr Rupell contends that the bond money was applied to the dishonoured cheques, his explanation in respect of the other $1,000.00 is less clear.
Mr Rupell submits that the applicant creditor has been open with the Court by even producing documents that contradict what the CTTT orders. Ms Caratti was of the view that the order was not in any way “self-executing” so as to allow the $3,000 to be credited to Mr Weininger and therefore nullify the order.

Conclusion

On the material before me I am not satisfied that the amount Ms Caratti claims is owed to her is clearly established. Mr Rupell submits that the documentary evidence provided by the applicant creditor does precisely set out the amount which is owed. A wide range of evidence has been placed before the Court, however, the amounts in dispute cannot be clearly reconciled with that material. The affidavit of Ms Caratti contains an owner ledger maintained by her estate agent, Campbell Mulder Real Estate. Letters from the applicant creditor’s bank dishonouring the cheques are not clearly dated; they only refer to two $1,000 cheques deposited on 3 and 5 June 2002 respectively.(affidavit of Ms Caratti, annexures “C” and “D”) Reversing entries were recorded in her owner ledger on 30 June 2002.(affidavit of Ms Caratti, annexure “B”)However, the cheque of $1,500 which was deposited on 11 June 2002 was credited to

Ms Caratti’s account on 13 June 2002, and there was no reversing entry recorded. The closing balance of that account was zero as at 2 August 2002. No documentation which satisfactorily showed an application of the rental bond to the dishonoured cheques was produced. Furthermore, the CTTT orders issued on 17 September 2002 still records that:
$2,000.00 is held by the landlord on account of the rental bond. (affidavit of Ms Caratti, annexure “A”)
Mr Rupell acknowledged that the making of a sequestration order is a very serious matter and that accounting records presented in support of an application for a sequestration order should be transparent. I am not satisfied that the documentary evidence before the Court precisely sets out the amount that is owing. Although the affidavits filed contain contradictory evidence in this respect, the parties elected not to challenge any of that evidence. Consequently:
a)the application by the applicant creditor for the issue of the bankruptcy notice, and the filing by the applicant creditor of the creditor’s petition in these proceedings, each constitutes an abuse of the Court’s process;
b)the bankruptcy notice is void and of no effect;
c)the creditor’s petition should be dismissed.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.

Associate:

Date: 27 March 2007