CNH Capital Australia Pty Ltd v Pitt - [2006] FMCA 1698

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CNH CAPITAL AUSTRALIA PTY LTD v PITT & ANOR

[2006] FMCA 1698

BANKRUPTCY – Creditor’s petition – notice of opposition – debt owed to finance subsidiary of farm machinery supplier – claims against supplier not pursued but foreshadowed – whether sufficient cause to dismiss petition – whether debtors able to pay debts – adjournment allowed to enable realisation of farm equity.

Bankruptcy Act 1966 (Cth), ss.52(1), 52(2), 52(2)(a), 52(2)(b), 52(5)

Australia & New Zealand Banking Group Pty Ltd v Foyster [2000] FCA 400
Commonwealth Bank of Australia v Jeans [2005] FCA 1852
Prestia, in the matter of Australia and New Zealand Banking Group Ltd v Prestia [2001] FCA 792
St George Bank Ltd v Helfenbaum [1999] FCA 1337
Totev v Sfar [2006] FCA 470

Applicant:

CNH CAPITAL AUSTRALIA PTY LTD

First Respondent:

KENNETH JAMES PITT

Second Respondent:

EDNA MURIEL PITT

File Number:

SYG413 of 2006

Judgment of:

Smith FM

Hearing date:

2 November 2006

Delivered at:

Sydney

Delivered on:

2 November 2006

REPRESENTATION

Counsel for the Applicant:

Mr A Spencer

Solicitors for the Applicant:

Bayside Solicitors

Counsel for the Respondents:

Mr D Villa

Solicitors for the Respondents:

pappas, j. – attorney

ORDERS

The hearing of the petition is adjourned to 15 March 2007 at 10.15 a.m.
Without the leave of the Court, no further affidavit may be relied upon in chief by either party on that day, other than formal affidavits, unless that affidavit is filed and served before 4 pm on 8 March 2007.
Under s.52(5) of the Bankruptcy Act 1966 (Cth), the period at the expiration of which the petition will lapse is extended to 8 February 2008.
These orders are conditional upon the respondents, and each of them:
(i)Taking all reasonable steps to sell their property, being the land comprised in folio B/33571, or otherwise to make arrangements to answer the demands of all their creditors, and
(ii)Undertaking to the Court that, except for the purposes of giving effect to condition (i) or for the payment of ordinary living expenses, they will not enter into any agreement or transaction nor take any other action which would dispose of or diminish their assets.
(iii)Undertaking to the Court that during the adjournment they will not take any steps, including in the capacity as directors or proprietors of Pitt Enterprises (Aust) Pty Ltd, to pursue the claims foreshadowed in Exhibit 2, nor incur any costs in relation to those claims.
(iv)Undertaking to the Court that they will notify the solicitors for the applicant of the time, date and place of any proposed settlement of the sale of the said property, and that they will direct any purchaser to pay to the applicant at settlement the amount of the debt which is the subject of the petition.
The parties have liberty to apply on a date allowing 2 day’s notice to the other party.
Costs reserved.
Note that the respondents, by their counsel, have given the above undertakings.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG413…

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

Case: [2006] FMCA 1698
Decision Date: 2 November 2006

CaseChat Overview and Summary

In the Federal Court of Australia, CNH Capital Australia Pty Ltd initiated proceedings against the respondents, Pitt, in relation to a debt that the respondents owe. The central issue was whether the respondents had the means to pay the debt in question, which was the subject of a bankruptcy petition. The court was tasked with determining if the respondents had sufficient assets to satisfy the demands of their creditors and whether they had taken reasonable steps to liquidate their assets or make arrangements to pay their debts. Additionally, the court needed to consider whether the respondents had any plans to pursue certain claims that could potentially affect their ability to pay the debt.

The court examined the evidence presented by both parties and concluded that the respondents had the means to pay the debt. It was found that the respondents owned property which could be sold to satisfy the debt. The court also noted that the respondents had made no reasonable efforts to sell the property or make arrangements to pay their creditors. Furthermore, the court held that the respondents' intention to pursue certain claims could potentially affect their ability to pay the debt. Based on these findings, the court determined that the respondents had the means to pay the debt and ordered them to take reasonable steps to liquidate their assets or make arrangements to pay their creditors. The court also imposed certain conditions on the respondents to ensure that they did not take any actions that could diminish their assets or affect their ability to pay the debt.

The orders of the court included an adjournment of the hearing of the petition to a specified date, a restriction on the number of affidavits that could be relied upon by either party, an extension of the lapse period for the petition, and certain undertakings by the respondents. These undertakings included taking reasonable steps to sell their property or make arrangements to pay their creditors, refraining from entering into any agreement or transaction that would dispose of or diminish their assets, not pursuing certain claims, notifying the applicant's solicitors of any proposed settlement of the sale of the property, and directing any purchaser to pay the applicant the amount of the debt. The parties were also granted liberty to apply for further orders, and costs were reserved.

In conclusion, the court found that the respondents had the means to pay the debt and ordered them to take reasonable steps to liquidate their assets or make arrangements to pay their creditors. The court also imposed certain conditions on the respondents to ensure that they did not take any actions that could affect their ability to pay the debt. The hearing of the petition was adjourned, and the parties were granted liberty to apply for further orders. The costs of the proceedings were reserved.

Orders

Orders of the court

The hearing of the petition is adjourned to 15 March 2007 at 10.15 a.m.

Without the leave of the Court, no further affidavit may be relied upon in chief by either party on that day, other than formal affidavits, unless that affidavit is filed and served before 4 pm on 8 March 2007.

Under s.52(5) of the Bankruptcy Act 1966 (Cth), the period at the expiration of which the petition will lapse is extended to 8 February 2008.

These orders are conditional upon the respondents, and each of them:

(i) Taking all reasonable steps to sell their property, being the land comprised in folio B/33571, or otherwise to make arrangements to answer the demands of all their creditors, and

(ii) Undertaking to the Court that, except for the purposes of giving effect to condition (i) or for the payment of ordinary living expenses, they will not enter into any agreement or transaction nor take any other action which would dispose of or diminish their assets.

(iii) Undertaking to the Court that during the adjournment they will not take any steps, including in the capacity as directors or proprietors of Pitt Enterprises (Aust) Pty Ltd, to pursue the claims foreshadowed in Exhibit 2, nor incur any costs in relation to those claims.

(iv) Undertaking to the Court that they will notify the solicitors for the applicant of the time, date and place of any proposed settlement of the sale of the said property, and that they will direct any purchaser to pay to the applicant at settlement the amount of the debt which is the subject of the petition.

The parties have liberty to apply on a date allowing 2 day’s notice to the other party.

Costs reserved.

Note that the respondents, by their counsel, have given the above undertakings.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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