CHEN v Baycorp Collections PDL (Australia) Pty Ltd

[2017] FCCA 414

FEDERAL CIRCUIT COURT OF AUSTRALIA

CHEN v BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LTD [2017] FCCA 414

Catchwords:
BANKRUPTCY – application to set aside a sequestration order made by the Registrar – whether the Court was satisfied that service of the bankruptcy notice had been effected – current substituted petitioning creditor paid out – appropriate matter in which to set aside the sequestration order – sequestration order set aside.

Legislation:

Bankruptcy Act 1966, ss.43(1), 52(1)(a)

Applicant: MUHONG CHEN

Respondent:

BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LIMITED

ACN 119 478 778

File Number: SYG 3055 of 2015

Judgment of: Judge Street

Hearing date: 7 March 2017

Date of Last Submission: 7 March 2017

Delivered at: Sydney

Delivered on: 7 March 2017

REPRESENTATION

Solicitors for the Applicant:

Ms R Luk

Luk & Associates

Solicitors for the Respondent:

Ms K Fernandez

Smith Leonard Fahey

ORDERS

1. Order 1 being the sequestration order made by the Registrar on 16 January 2017 is set aside.

THE COURT NOTES THAT:

1. The trustees costs have been paid in respect of the period from 16 January 2017 to date.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 3055 of 2015

MUHONG CHEN

Applicant

And

BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LIMITED
ACN 119 478 778

Respondent

REASONS FOR JUDGMENT

Before this Court

1. This is an application to set aside a sequestration order made by the Registrar on 16 January 2017. The nature of the application is a hearing de novo. The respondent has adduced evidence taking issue with the service of the bankruptcy notice. The respondent identified an erroneous identification of the respondent as a male at the time of the alleged service of the bankruptcy notice. 

2. This is a case where the original creditor’s petition was the subject of amendment following the substitution of a supporting creditor. The original petitioning creditor had been paid out by the respondent.

3. The position now before the Court is that the current substituted petitioning creditor has been paid out. The Court also accepts that the costs of the trustee to date have been paid in full. Correspondence was tendered by the respondent identifying notification to each of the creditors in the report as to affairs as to the return date today. The matter has been called and there is no appearance by any supporting creditor seeking to be substituted in respect of the current application.

4. On the material before the Court, I am not satisfied that the respondent was served with the bankruptcy notice. Accordingly, I am not satisfied that the requirements under s.52(1)(a) of the Bankruptcy Act 1966 (Cth) (“the Act”) have been met. Further, the position currently is that the requirements of s.52(1)(c) of the Act are not met as the debt on which the substituted petitioning creditor relies is not still owing. The requirements for the making of a sequestration order under s.52 of the Act are not met.

5. The Court is not satisfied under s.43(1) of the Act that the debtor respondent committed an act of bankruptcy in the circumstances of the present case. The Court is, however, of the view that it was proper and necessary for the respondent to pay out the costs incurred by the trustee who, until the making of this order, was validly appointed pursuant to the orders made by the Registrar on 16 January 2017.

6. As those costs of the trustee have been paid in small and given the findings made, I am satisfied that this is an appropriate matter in which to set aside the sequestration order made by the Registrar on 16 January 2017. I note that the substituted petitioning creditor consents to that order and that the trustee was aware of the seeking of that order today.  I am also satisfied that proper notice of these proceedings was given to the creditors identified in the report as to affairs.

I certify that the preceding six (6) paragraphs are a true copy of the reasons for judgment of Judge Street

Date: 9 March 2017