Cashman v Sydney Water Corporation - [2014] FCCA 1957

FEDERAL CIRCUIT COURT OF AUSTRALIA

CASHMAN v SYDNEY WATER CORPORATION

[2014] FCCA 1957

Catchwords:
BANKRUPTCY – Whether orders should be made annulling the Sequestration Order made on 22 August 2013 – orders not opposed by Trustee in Bankruptcy – orders made.

Legislation:
Bankruptcy Act 1966 (Cth) s.153B

Cases Cited:
Re Williams (1968) 13 FLR 10
Wong v Robinson [1995] FCA 805
Piepkorn v Scott [2005] FCAFC 88
Re Papps; Ex Parte Tapp (1997) 78 FCR 524
Ozer v Australian Liquor Marketers Pty Ltd [1999] FCA 1206
Heinrich v Commonwealth Bank of Australia [2003] FCA 315
Hacker v the Owner Strata Plan Number 17572 [2005] FCA 1936

Applicant:

PETER JOHN CASHMAN

Respondent:

SYDNEY WATER CORPORATION

File Number:

SYG 2037 of 2014

Judgment of:

Judge Emmett

Hearing date:

8 August 2014

Date of Last Submission:

8 August 2014

Delivered at:

Sydney

Delivered on:

2 September 2014

REPRESENTATION

Counsel for the Applicant:

Mr Vahan Bedrossian

Solicitor for the Trustee in Bankruptcy:

Ms Sally Nash
(Sally Nash & Co Lawyers)

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2037 of 2014

PETER JOHN CASHMAN

Applicant

And

SYDNEY WATER CORPORATION

Respondent

REASONS FOR JUDGMENT

This is an application for an order pursuant to s.153B of the Bankruptcy Act 1966 (Cth) (“the Act”) for the annulment of the applicant’s Bankruptcy made by way of Sequestration Order on 22 August 2013.
Relevantly, s.153B of the Act is as follows:
“Annulment by Court
(1) If the Court is satisfied that a Sequestration Order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.
…
(3) The trustee must, before the end of the period of 2 days beginning on the day the trustee becomes aware of the order, give to the Official Receiver a written certificate setting out the former bankrupt's name and bankruptcy number and the date of the annulment.”
The applicant contends that at the time the Sequestration Order was made, he was solvent and that no Sequestration Order ought to have been made.
The respondent does not oppose the annulment. At the time of this hearing, the respondent was satisfied that a satisfactory arrangement had been put in place whereby finance was provided sufficient to fulfil payment of all amounts due in relation to the bankruptcy administration, including estate charges, costs, expenses and creditors’ claims.
It is common ground that immediately prior to the making of the Sequestration Order, the applicant was the sole registered proprietor of an unencumbered property at 455 Darling St, Balmain NSW, with an approximate value of $1.4 million at that time. The applicant owned two further properties located in Hargreaves, NSW, which the applicant says were worth in the vicinity of $100,000 to $150,000.
It is common ground that at the date of the Sequestration Order, the applicant’s debts were in the vicinity of $80,000. However, the applicant accepts that his financial circumstances were not properly put before the Court on the first occasion and his conduct contributed to the circumstances in which the Sequestration Order was made.
In exercising the Court’s discretion to annul the Bankruptcy, the Court is entitled to consider not only the case as disclosed at the time the Sequestration Order was made, but as it would have been disclosed had all the true facts been before the Court on the making of the order (see Re Williams (1968) 13 FLR 10 at 23).
It is well accepted that the factors to be taken into account in the exercise of the Court’s discretion, include:
a)Delay by the Bankrupt in making the application (see Wong v Robinson [1995] FCA 805);
b)Interests of the creditors;
c)Failure to file a Statement as to Affairs (see Piepkorn v Scott [2005] FCAFC 88 at [3]);
d)Failure to make a full disclosure (see Re Papps; Ex Parte Tapp (1997) 78 FCR 524 at 531);
e)Making arrangements to pay the debt to the Petitioning Creditor and the Trustee in Bankruptcy’s costs (see Wong);
f)Conduct of the Bankrupt since Bankruptcy, including committing offences (see Ozer v Australian Liquor Marketers Pty Ltd [1999] FCA 1206 at [26]).
In Heinrich v Commonwealth Bank of Australia [2003] FCA 315 at [20], the Full Court of the Federal Court of Australia stated:
“The Court must first consider whether the Sequestration Order ought not to have been made. If it so finds, then the Court must consider whether, in the exercise of its discretion, the bankruptcy should be annulled: Re Deriu (1970) 16 FLR 420. Later evidence of previously unknown facts may disclose matters which show that the Sequestration Order ought not to have been made. That is, the Court is entitled to consider not only the case as disclosed at the time when the Sequestration Order was made, but also those facts now known then to have existed. The Court excludes those facts which have occurred since that order was made. Later evidence of previously unknown facts may disclose matters which show that the Sequestration Order ought not to have been made: Re Frank; Ex parte Pilisky (1987) 16 FCR 396; Stankiewics v Plata [2000] FCA 1185 at [19], Re Williams (1968) 13 FLR 10 at 23; Re Ditfort; Ex Parte Deputy Commissioner of Taxation (1988) 19 FCR 347. These authorities, all of which were cited by the learned primary judge in his judgment, were accepted at first instance as reflected the relevant law.”
In support of his application, the applicant read an affidavit of his sworn 21 July 2014. That affidavit addresses in detail the liabilities of the applicant at the time of the Sequestration Order, identified further current debts and provided evidence as to a current loan that exceeds the total sum of the payout required for an annulment.
The applicant also read the affidavit of Vincent Eugene D’Arcy, sworn 4 August 2014. Mr D’Arcy is the applicant’s solicitor and he deposed to the various documents filed in support of the application this morning and annexed those documents.
The Trustee in Bankruptcy, Maxwell William Prentice, was appointed by the Official Receiver when the Sequestration Order was made against the applicant by Registrar Morgan on 22 August 2013.
The Trustee in Bankruptcy’s solicitor, Ms Sally Nash, conceded that if an appearance had been made and an explanation given or refinance offered at the time the Sequestration Order was made, the order would not have been made.
I accept that the phrase “ought not to have been made” is to be applied in the light of all the true facts as known at the time of the application for annulment, irrespective of the evidence that may have been before the court that made the Sequestration Order (see Hacker v the Owner Strata Plan Number 17572 [2005] FCA 1936 at [46]).
On the evidence before me, I am satisfied that the applicant was solvent as at the date of the Sequestration Order. I note that the Trustee in Bankruptcy does not oppose the application, provided that the applicant’s outstanding debts are paid at the time of any annulment.
I also accept that the applicant has put in place financial arrangements to cover all outstanding liabilities in respect of the bankruptcy.
Further, I accept the submission by the applicant’s counsel that, although the applicant has identified some creditors which were not included in his Statement of Affairs, there is no suggestion that the applicant has acted dishonestly in any of his disclosures to, or any dealings with, his Trustee in Bankruptcy. I accept that the Trustee in Bankruptcy’s conditional support for the annulment application corroborates that submission.
In all the circumstances, I am satisfied that all the orders sought by the applicant should be made, and the Sequestration Order made against the estate of the applicant on 22 August 2014 should be annulled.

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

Associate:

Date: 2 September 2014