Colt v Workers Compensation Nominal Insurer

[2007] FMCA 2082

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COLT v WORKERS COMPENSATION NOMINAL INSURER [2007] FMCA 2082

BANKRUPTCY – Application to review sequestration order – application for extension of time – application for annulment – where no relevant evidence from bankrupt – where evidence from trustee raised issues in relation to solvency and conduct of bankrupt – application dismissed.

Bankruptcy Act 1966 (Cth), s.153B
Federal Magistrates Act 1999 (Cth), s.104

Federal Magistrates Court (Bankruptcy) Rules, r.2.03

Delph Sing v Wood and Others (1918) 25 CLR 497
Grundy v Wattyl Australia Pty Ltd [2002] FCA 1480
Rigg v Baker [2006] FCAFC 179

Applicant: JULIE AH COLT

Respondent: WORKERS COMPENSATION NOMINAL INSURER

File number: SYG 2125 of 2007

Judgment of: Barnes FM

Hearing date: 7 December 2007

Delivered at: Sydney

Delivered on: 7 December 2007

REPRESENTATION

Counsel for the Applicant: Mr. J. T. Johnson

Solicitors for the Applicant: Stormer Lawyers

Counsel for the Respondent and the Trustee in Bankruptcy: Mr E. Muston

Solicitors for the Respondent and the Trustee in Bankruptcy: Turks Legal

ORDERS

1. The application of 15 October 2007 be dismissed.

2. The trustee’s costs of the application by the bankrupt be costs and expenses in the administration of the bankrupt’s estate.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2125 of 2007

JULIE AH COLT

Applicant

And

WORKERS COMPENSATION NOMINAL INSURER

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. This matter comes before the Court by way of an application for notice of motion to set aside a sequestration order made against the estate of the applicant by a Registrar of this Court on 23 August 2007. The application was filed on 15 October 2007. The matter first came before me on 6 November 2007, having been adjourned by a Registrar from 30 October 2007. Counsel for the applicant indicated that the applicant sought time to file affidavit evidence and would seek an extension of time and review of the sequestration order and, in the alternative, an annulment of the bankruptcy.

2. I adjourned the matter for hearing today, ordered that the applicant file and serve any further evidence on which she wished to rely on or before 23 November 2007 and that the Trustee file and serve a trustee's report. Orders were also made for the creditor and Trustee to file further affidavit evidence. Liberty was granted to either party to apply on 2 days notice.

3. The applicant filed no further evidence. Today she sought an indefinite adjournment. Her counsel was not in a position to indicate when he would receive proper instructions. The application for an adjournment was refused.

4. No relevant evidence has been put before the Court by the applicant in support of her application. The Trustee, Giles Woodgate, relies on two affidavits sworn by him and filed on 30 October 2007 and 6 December 2007. Counsel for the parties are in agreement as to the impact of those affidavits: that the applicant has not filed a statement of affairs, that there are significant unexplained issues as to her solvency and also significant issues as to her conduct since bankruptcy which are unanswered by her.

5. In these circumstances, first, insofar as this is an application for review of the decision of the Registrar, the application is outside the 21 day time provided for in r.2.03 of the Federal Magistrates Court (Bankruptcy) Rules. The applicant seeks an extension of time under s.104(2)(b) of the Federal Magistrates Act 1999 (Cth). While the Court has power to extend the time provided for in r.2.03, having regard to the relevant factors (Grundy v Wattyl Australia Pty Ltd [2002] FCA 1480 at [6] – [10] per Downes J), I am not persuaded that this is a case in which there should be an extension of time.

6. While special circumstances need not be shown, there is no material to satisfy me that the Court can be properly satisfied that there is an acceptable explanation for the delay and that it is fair and equitable in all the circumstances to extend the time. I have had regard to the material before me, consisting of evidence from the Trustee, as to what has occurred since the sequestration order was made and the absence of any evidence on the part of the applicant to indicate any likelihood that the substantive application would succeed, as well as the time that has elapsed. Hence the application for review of the decision of the Registrar to make a sequestration order should be dismissed.

7. Insofar as this matter is to be considered as an annulment application, I have had regard to s.153B of the Bankruptcy Act 1966. However, I cannot be satisfied on the evidence before me that the sequestration order ought not to have been made, given the unexplained matters in relation to solvency and the absence of any relevant evidence on the part of the applicant in relation to other matters. (See Rigg v Baker [2006] FCAFC 179 at [71] – [73] per French J). In any event, I note the discretion under s.153B (see Delph Sing v Wood and Others (1918) 25 CLR 497). I am not satisfied in all the circumstances of this case that the Court should exercise its discretion to annul the bankruptcy.

8. While there was no appearance by the applicant at the time the sequestration order was made, none of the other circumstances are such that an annulment is appropriate on the evidence before the Court. I have had regard in particular to the conduct of the bankrupt insofar as it is attested to in the affidavits of the Trustee. There are unexplained issues in relation to her solvency and there is considerable evidence from the Trustee as to other creditors, apart from the petitioning creditor. She has not filed a statement of affairs. Nor has she filed evidence to address solvency concerns.

9. I also note that there is a public interest underlying the Act in the orderly administration of a bankrupt's estate. While there appear to be other creditors, there is no indication that the applicant has notified any other creditors of the proceedings today, despite the rules to that effect. In those circumstances, the Court cannot take into account the views of such other creditors. In particular, it is not disputed that there is what appears to be a significant debt owed to the Commissioner of Taxation. I am told from the bar table that tax returns have not been completed by the applicant at this stage. She has not put evidence before the court on such matters despite the time allowed for her to do so.

10. In all the circumstances, on the very limited evidence before me, in particular the absence of evidence from the applicant to address any of the matters on which she might rely to seek an annulment, the evidence of the trustee in relation to her failure to provide a statement of affairs, the absence of an explanation for solvency concerns given her apparent indebtedness and the issues raised by the Trustee in relation to the bankrupt’s conduct and co-operation with her the Trustee, I consider that no order for an annulment should be made. The application should be dismissed.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate:

Date:  17 December 2007