CNH Capital Australia Pty Ltd v Pratley (No.3)
[2009] FMCA 456
•15 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CNH CAPITAL AUSTRALIA v PRATLEY (No.3) | [2009] FMCA 456 |
| BANKRUPTCY – Creditor’s Petition – respondent debtor’s opposition to Creditor’s Petition – considerations relevant to review- Notice Stating Grounds of Opposition to Petition – dismissed. |
| Civil Procedure Act 2005 (NSW), s.101 |
| Biron Capital Ltd v Austee [2005] FMCA 1100 |
| Applicant: | CNH CAPITAL AUSTRALIA PTY LTD |
| Respondent: | ANTONY JOHN PRATLEY |
| File Number: | SYG 2593 of 2008 |
| Judgment of: | Lloyd-Jones FM |
| Hearing dates: | 24 March & 27 April 2009 |
| Delivered at: | Sydney |
| Delivered on: | 15 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr A P Spencer |
| Solicitors for the Applicant: | Bayside Solicitors |
| The Respondent: | The respondent appeared in person by telephone. |
ORDERS
The matter is to be listed on Friday 29 May 2009 at 10.15am for the making of further orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2593 of 2008
| CNH CAPITAL AUSTRALIA PTY LTD |
Applicant
And
| ANTONY JOHN PRATLEY |
Respondent
REASONS FOR JUDGMENT
The proceedings
This is an application for review by Antony John Pratley (the respondent debtor) opposing the Creditor’s Petition filed by CNH Capital Australia Pty Ltd (ACN 069 132 396) (“CNH”) on 8 October 2008. The Notice Stating Grounds of Opposition filed on 10 November 2008 to the Petition is on the following grounds:
1. The Applicant holds registered security interests in several parcels of real estate owned by the Respondent in Victoria.
2. The Applicant misled the Official Trustee in Bankruptcy by failing to disclose the Victorian Security Interests at the time it procured the petition.
3. The Applicant misled the Registrar of the Federal Magistrates Court by arranging for one Anne Vojenca of New South Wales, to depose on oath that the statement “The Applicant Creditor does not hold security over the property of the Respondent Debtor” was within her own knowledge and true when in fact it was untrue.
4. The acts of the Applicant particularised in paragraphs 2 and 3 above constitute the tort of Abuse of Process.
5. The Respondent was within the reasonable contemplation of the Applicant as a person who may be harmed by the Applicant abusing the process of the Bankruptcy Act.
6. The Applicant has suffered loss and damage by reason of the Abuse of Process of the Applicant referred to in paragraphs 2 and 3 hereof.
7. By reason of paragraphs 2 to 6 the Respondent has a claim, demand or set off that could not have been raised in the New South Wales District Court.
8. The Respondent resides and trades in Victoria.
9. The Applicant appointed an agent in Victoria to act on its behalf in its dealings with the Respondent.
10. The Applicant has not deposed to examining the books and records of the Agent it appointed in Victoria.
11. The evidence of the security interests is within the office of the Registrar of Titles Victoria.
12. In further abuse of process the Applicant chose to institute proceedings in the District Court of New South Wales to prejudice and inconvenience the Respondent and continues to seek to prejudice and inconvenience the Respondent in his defence of this petition by seeking the Petition to be heard in New South Wales.
An affidavit in support of the Grounds of Opposition to Petition was filed by Mr Pratley on 10 November 2008.
The Creditor’s Petition was returnable before a Registrar of this Court on 13 November 2008 at 9.45am. The matter was adjourned on that date and subsequently on 9 December 2008, 27 January 2009 and
24 February 2009before being transferred to my docket on 24 March 2009. During the hearing on 24 March 2009 Mr Spencer for the petitioning creditor indicated that there was an application to amend the Creditor’s Petition to correct the failure in the Creditor’s Petition by the creditor to refer to security which the creditor had over the respondent’s property. This was a charge over the debtor’s real property but it was noted that the creditor values that security interest as nil.
An original copy of the Amended Creditor’s Petition was filed in Court and it is indicated that Mr Pratley had been served with a copy of the proposed amended petition which was subsequently acknowledged by Mr Pratley. At the conclusion of the hearing on 24 March 2009 I made the following orders:
1. The respondent to file any amendments to the Notice of Opposition by 14 April 2009.
2. The applicant is to file any reply by 21 April 2009.
3. The proceedings be adjourned until 27 April 2009 at 10.15am.
At the commencement of the hearing on 27 April 2009 Mr Pratley sought to file in court three documents being:
a)Interim application;
b)Reply to judgment creditor’s response about notice of constitutional question;
c)Affidavit in response to affidavit of Anne Vojcena.
The order to file any amendments to the Notice of Opposition was not complied with and the Grounds of Opposition remain as those filed on 10 November 2008 (as reproduced at [1] above).
Application to amend Creditor’s Petition
Mr Spencer, Counsel for the applicant creditor, moved on the Petition that was presented on 8 October 2008 in this matter. On 24 March 2009 an amended petition was tendered and filed in Court on that occasion. The Court was advised that a copy had been served on Mr Pratley. It is submitted that the amendment be made in the matter that is transparent considering paragraphs number 1 and 2 of the Petition. The evidence in support of the amendment is in the affidavit of Ms Anne Vojcena sworn on 17 February 2009 and filed on that day. The second affidavit of
Ms Vojcena which was sworn on 23 April and filed on 24 April deals with these two matters. The affidavit of Ms Vojcena sworn 17 February 2009 states that default Judgment was entered in favour of the applicant for the sum of $33,505.18. Paragraph 8 of this affidavit deposed to the fact that Ms Vojcena did not know that between January 2008 and May 2008 amounts of $33,505.18 had been received by the way of direct deposits thereby reducing the amount that was due under the judgment. Consequently the amount was revised in paragraph 1 of the Petition down to $386,000.
In paragraph 2 of the original petition, it discloses that there was no security held by the petitioner. The reason for that appears in Ms Vojcena’s second affidavit which contains the correspondence with the banks in relation to the matters of caveats. The credit documents contained a charging clause which was sufficient to permit the creditor to lodge caveats over the properties. The value of the caveats as security is determined ultimately by what equity ultimately is disclosed in the properties. Annexure “B” is the first property search of the relevant land which discloses that Mr Pratley’s interest is five of 100 equal undivided shares in the property, a marginal interest. The mortgagee is the National Australia Bank. Then there are caveats held by two finance companies in front of CNH Capital which will be CNH Capital’s caveat each of them presumably supporting some unregistered interest that would affect the equity of the property. Relevantly Annexure “C” reveals that there is a first mortgage in favour of National Australia Bank however there is a statutory charge in relation to what appears to be an unpaid land tax.
In correspondence with the auction at Australia Bank at Annexure “I” and Annexure “L” showed that the Bank considers that there will be a shortfall in relation to the properties. At Annexure “L” the Bank is not willing, for proper reasons, to provide details of the amounts owed to other incumbent’s holders. Mr Spencer submits that it was inappropriate for CNH Capital to send out a valuer as was requested in the correspondence contained in Annexure “N”.
Mr Spencer submits that to correct any misunderstanding that may have arisen as a consequence of submissions made by Mr Pratley, the parties representing CNH Capital were unaware that the Bank was mortgagee in possession of all Mr Pratley’s properties until Mr Pratley made that statement before the Court. In these circumstances the task of the creditor relying on the decision in Biron Capital Ltd v Austee [2005] FMCA 1100 is to make a genuine estimate which may not necessarily be correct when the value of the equity is finally resolved. However, a genuine estimate in this case estimates the value of the security as nil based on the materials disclosed in Ms Vojcena’s affidavits. Mr Spencer indicated to the Court that a copy of the amended petition together with Ms Vojcena’s affidavits had been forwarded to Mr Pratley and that was acknowledged by him at the hearing on 24 March 2009.
Mr Pratley submits that CNH put caveats on all properties including 80 Forest St, Yarra Glen in which he held only five out of 100 points in that property. Mr Pratley argues that CNH did not have the right to put that caveat onto that property as they did not obtain permission from the other owner. CNH had been asked on a number of occasions since November 2008 to remove the caveat but this was refused. Mr Pratley states that he and the other parties had tried to sell the property with a tentative settlement in February 2008 which would have yielded in the vicinity of $400,000 that would have provided part of those funds to CNH Capital. However, CNH Capital refused to allow the sale.
Mr Pratley raised the second issue in respect of the disposal of machinery. Although a written request was made to return machinery to an auction house 200km out of Melbourne (which was an appropriate area to sell that type of machinery), the auction house dealt with farm machinery and did not have coverage for the earth moving machinery that would have been more successfully sold within the city.
Mr Pratley submits that the bankruptcy court should not provide a party with the opportunity to place themselves ahead of other creditors in order to gain payment. It is submitted that by these actions they were trying to achieve an advantage over others by incorrectly using the operation of the bankruptcy court. The proceeds were distributed amongst all creditors in the circumstances where machines were sold at general auction which therefore reduced the return to CNH Capital.
Mr Spencer submits that Mr Pratley in his submissions does not raise any point of prejudice specifically flowing from the proposed amendments to the petition and seeks to proceed on the basis of the amended petition.
I am satisfied in respect of the proposed amendments to the Creditor’s Petition and it is not apparent that Mr Pratley would suffer any prejudice by allowing those amendments to take place. I note
Mr Pratley’s submissions in respect of the affidavits prepared by
Ms Vojcena but there has been no request at any stage to cross-examine her in the contents of those affidavits. As it is acknowledged by Mr Pratley, he was in possession of the amendment and those affidavits prior to the hearing on 24 March 2009. Mr Pratley has also demonstrated that he possesses either personal knowledge or assistance from someone familiar with the acts and procedures and I am satisfied that Mr Pratley does not suffer any prejudice by allowing the amendment. Consequently I will allow the Petition to be amended.
Evidence
The act of bankruptcy relied upon is a failure to comply with a Bankruptcy Notice which was issued on 15 August 2008 in the correct form with a debt over $2,000. It gave an address for payment in Australia with a final judgment not more than 6 years old being 5 June 2008 and attached a copy of the final judgment / order and interest calculations with reference to the relevant legislation pursuant to s.101 of the Civil Procedure Act 2005 (NSW) .
The affidavit of Robert Felix Preac sworn 5 September 2008 indicating that the date of service of the Bankruptcy Notice was 3 September 2008 which was served within six months of the issue of the Bankruptcy Notice. The mode of service was personal on Mr Pratley at 80 Forest Street, Yarraglen and attached a relevant copy of the Bankruptcy Notice. Mr Pratley confirmed Mr Pratley’s identity by asking him whether he was in fact the person named in the document.
The affidavit of Robert Felix Preac sworn 27 October 2008 indicates that the Creditor’s Petition was presented on 8 October 2008. It was presented within six months of the date of the act of bankruptcy,
24 September 2008, 21 days after the date of service. The affidavit of service of the Creditor’s Petition was sworn by Robert Felix Preac on 27 October 2008. The Creditor’s Petition is verified in respect of paragraphs 1, 2, 3 and 4.
However, Anne Vojcena swore a further affidavit which seeks to correct a procedural error in that the original petition. These details are set out at [7]-[9] above.
Mr Spencer submits that the first affidavit of Ms Vojcena which verifies that the original petition contains the erroneous statement about the amount and the lack of security but otherwise verifies the petition after amendment. The affidavit of Matthew Wilson sworn 7 October 2008 verifies paragraph 4 of the Petition. The affidavit of adjournment notice sworn by Mr Matthew Wilson on 23 March 2009, Annexure A deals with the original petition which was first returnable on
13 November 2008. On that day orders were made for the benefit of Mr Pratley, that is, to serve him with notice of the fact that the proceedings have been stood over and the adjournment date of
27 January 2009. The matter was adjourned again on 27 January and a further letter was forwarded to Mr Pratley advising him that the matter was further adjourned until 24 February 2009. In Annexure “C” of
Mr Wilson’s affidavit is a letter enclosing a copy of the amended Creditor’s Petition which was proposed to be filed at the hearing on
24 February 2009. The Court notes that during the hearing on
24 March 2009Mr Pratley handed up submissions which acknowledge that he had received the amended petition. In effect he has not been served with a sealed copy of the amended petition but he has a sealed copy of the original petition plus a draft copy of the amendment which the petitioning creditor sought to proceed on at that date.
The affidavit of debt sworn by Anne Vojcena on 27 April 2009 verifies the amount still owing. The affidavit of search sworn by Matthew Wilson on 27 April 2009 reports on a search of the National Personal Insolvency Index (NPII) Index which discloses that there are no other creditor’s petitions currently on foot in relation to Mr Pratley.
The following material was admitted into evidence:
a)Creditor’s Petition presented 8 October 2008 in which CNH Capital Australia Pty Ltd the applicant creditor applies to the Court for a sequestration order against the estate of Antony John Pratley;
b)Amended Creditor’s Petition filed in Court 24 March 2009;
c)Affidavit verifying Creditor’s Petition sworn by Anne Vojcena on 17 February 2009 verifying paragraphs 1,2, 3 and 4 of the Creditor’s Petition;
d)
Affidavit of Service of Petition of Robert Felix Preac sworn
27 October 2008;
e)Affidavit of Debt sworn by Anne Vojcena on 27 April 2009.
f)Affidavit of Search sworn by Matthew Wilson on 27 April 2009.
Mr Pratley tendered the following evidentiary material in support of his application:
a)
Notice Stating Grounds of Opposition to Petition filed
10 November 2008;
b)Affidavit in support of Grounds of Opposition to Petition of Antony John Pratley sworn 6 November 2008.
c)Affidavit of Antony John Pratley sworn 21 January 2009.
d)Affidavit in response to affidavit of Anne Vojcena sworn 26 April 2009.
Submissions by Mr Pratley
Mr Pratley submits that the original Bankruptcy Notice was void given that it was for an amount of money put on the original judgment from the District Court and that judgment was incorrect because of the fact that money had already been paid in the sum of $30,000. Mr Pratley claims that the District Court judgment of $415,536.85 should have been reduced by $33,505.18.
The Court also notes the content of the affidavit of Mr Pratley filed in Court on 27 January 2009 in support of the Grounds of Opposition to the Petition. The contents of that affidavit are focused on the argument that the loan transaction took place in Victoria with the monies being advanced to Mr Pratley’s company “YNOT” by an agent of the finance company case, Victoria. These submissions and arguments substantially relate to the issues that should have been ventilated before the New South Wales District Court or any appeal from that decision. In these circumstances I do not believe it is necessary to reproduce those arguments put in that document in this judgment.
Consideration
The first ground of opposition is a statement of fact made by
Mr Pratley and does not raise any issue for this Court to resolve. In respect of the second ground of review this is an allegation that certain information was not disclosed to the Official Trustee in Bankruptcy. Any deficiency in the original petition has been addressed by the amendment forwarded by the affidavits of Anne Vojcena. Mr Spencer addressed the Court on these issues in the arguments put forward seeking the amendment.
In respect of ground three which concerns the allegation that the security over the properties was not disclosed in the original petition again has been addressed in the amended application and the explanation for this error is clearly set out in the affidavits of Ms Anne Vojcena. Grounds four, five and six are allegations of alleged wrongdoing however this has been addressed in the amended application as indicated above.
Ground seven is a statement that the respondent debtor has a claimed demand or set off that could have been raised in the New South Wales District Court. There is no evidence before the Court that any action has been taken by the respondent debtor to pursue this issue at any stage since the handing down of the judgment of the District Court on
5 June 2008. This matter was ventilated before the Court at the hearing on 24 March 2009 but no evidence or submissions were made at the subsequent hearing on 27 April 2009 that it was the intention of Mr Pratley to take any steps to pursue an appeal in respect of the decision of the New South Wales District Court. I am satisfied that the New South Wales District Court has the power and capacity to determine a matter involving Victorian law and that issue would not be a cause for this Court to further stay these proceedings. Grounds eight, nine, ten and eleven are again statements of fact and do not raise any ground of objection that can be sustained. Ground twelve again raises an issue that has been ventilated in this matter as to the selection of the appropriate court for the petitioning creditor to launch its proceedings.
Although the statements have been made on numerous occasions before this Court and before a Registrar of this Court no action has been taken by the respondent debtor to challenge this issue before the District Court. There is no evidence before me that would indicate that CNH Capital has launched these proceedings in New South Wales than for any other reason to resolve the recovery of the monies owed to it. There is no evidence or submissions to suggest that the respondent debtor had attempted to attend the District Court of New South Wales proceedings by telephone or video link and that the request was denied. Nor has the respondent debtor demonstrated any attempt to represent himself or retain anyone to appear on his behalf in those proceedings.
Conclusion
In the circumstances I am not satisfied that there is any ground to justify the further delay in this hearing. I am satisfied that all of the requirements in respect of s.52 of the Bankruptcy Act have been complied with. Consequently I set this matter down for the making of the relevant orders in respect to the issue of a sequestration notice on Friday 29 May 2009 at 10.15am.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM
Associate:
15 May 2009
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