Cary v The Owners Strata Plan No 7241

[2005] FMCA 374

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CARY & ANOR v THE OWNERS STRATA PLAN NO. 7241 [2005] FMCA 374

BANKRUPTCY – Bankruptcy Notice – application to set aside – application for compulsory mediation of creditors claim – whether such an order should be made.

Bankruptcy Act 1966 (Cth), ss.41(5), 41(6A)

Applicants:

GEORGE S CARY &

ANNE CARY

Respondent: THE OWNERS – STRATA PLAN NO 7241

File Number: SYG591 of 2005

Judgment of: Raphael FM

Hearing date: 22 March 2005

Date of Last Submission: 22 March 2005

Delivered at: Sydney

Delivered on: 22 March 2005

REPRESENTATION

Counsel for the Applicant: In person

Solicitors for the Respondent: J S Mueller & Co

ORDERS

1. Time for compliance with the bankruptcy notice extended until 24 March 2005.

2. The applicants must pay the respondent's costs to be taxed if not agreed in accordance with the Federal Court Act and Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG591 of 2005

GEORGE S CARY
ANNE CARY

Applicants

And

THE OWNERS – STRATA PLAN NO 7241

Respondent

REASONS FOR JUDGMENT

1. This is an application by the applicant debtor under s.41(6A) of the Bankruptcy Act 1966 (Cth) to set aside a bankruptcy notice numbered NN292/05 issued by the Official Receiver on 4 February 2005.

2. The amount claimed in the bankruptcy notice represents a debt for which judgment was secured in the Local Court at Ryde for strata title levies.  The certificate of judgment indicates that the judgment was for the sum of $19,477.74 but $6,776 was paid by the judgment creditor.  There are certain amounts as to costs.

3. The debtors allege that the amount which is claimed by the judgment creditor is not correct. He filed an affidavit in this court on 9 March 2005. Although the affidavit does not state so in terms I think that a beneficial reading of it as applied to a self represented litigant would construe it as notice under s.41(5) of the Act.

4. The male applicant came into this court indicating that he was able to pay the debt that was claimed against him but because he did not believe he owed that amount he wished the claim to be mediated compulsorily.  This is an order which the court can give but I do not recall ever being asked to do so in connection with an application to set aside a bankruptcy notice.

5. The applicant's narrative was, I am afraid, confusing to me. But my experience with this type of claim, which comes frequently before the court, is that it often ends up causing distress and financial hardship to a debtor far beyond the often small amount owed for strata levies.  There seems to be a reluctance to pay strata levies to which strata title owners do not believe the body corporate is entitled.  This frequently leads people into bankruptcy and to the multiplication of the debt owed by the imposition of costs, expenses and the trustee's involvement.

6. But notwithstanding this it would still be a very rare case in which a court would give leave that would effectively allow an applicant to re-argue a case that he was entitled to argue in the proper place, namely, the Local Court of New South Wales.  He would have to establish some fairly substantive reason why the judgment of that court may have miscarried in order to persuade me to allow it.

7. Mr Cary has not persuaded me.  He has provided an affidavit which is clearly on its face extracted from evidence that he attempted to give to the Local Court.  I am told by Mr Bentley who appears on behalf of the respondent that a default judgment was entered against the applicant on the grounds of non-compliance with orders of the Local Court and that he sought legal advice and attempted to persuade the court to allow him to defend.  This was not permitted and I can only assume that that happened because the evidence which Mr Cary presented did not persuade the learned Local Court Magistrate that there really was a substantive defence to the claim.

8. The power of the court to set aside a bankruptcy notice because the amount claimed has been overstated, is not a power to permit the court to re-hear the case upon which the judgment and the bankruptcy notice are based.  That is what Mr Cary would have me do by referring the matter to compulsory mediation. 

9. Mr Cary puts forward no other grounds upon which the bankruptcy notice should be set aside and in those circumstances I dismiss this application to set aside the bankruptcy notice. But because Mr Cary has told me that he has funds available to pay the amount claimed I will extend time for compliance with the bankruptcy notice until 24 March 2005.  The applicant must pay the respondent's costs which shall be taxed if not agreed in accordance with the Federal Court Act and Rules.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date:  22 March 2005