Commonwealth Bank v Madigan - [2005] FMCA 1140

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COMMONWEALTH BANK v MADIGAN

[2005] FMCA 1140

BANKRUPTCY – Application for sequestration order founded upon creditor’s petition – where respondent debtor failed to comply with the bankruptcy notice – where the debtor failed to satisfy the court that he had a counter-claim, set-off or cross-demand equal to or exceeding the sum of the bankruptcy notice – whether the debtor has raised “other sufficient cause” why a sequestration ought not to be made as provided by s.52(2)(b) of the Act.

Bankruptcy Act 1966, s.52
District Court Act 1973 (NSW), s.127
Federal Court Act and Rules

Bernard Madigan v The Commonwealth Bank of Australia [2002] NSWCA 88
Ling v Enrobook Pty Limited (1997) 74 FCR 19

Re Schmidt; Ex parte Anglewood Pty Ltd (1968) FLR
Re Kosetzky; Ex parte Milder Elfman Szmerling Kryxer Pty Ltd (1966) 67 FCR 101
Re Capel; Ex parte Caram Finance Australia Ltd (unreported, Fed Ct of Aust, Finn J, 9 April 1998)
Re James; Ex parte Carter Holt Harvey Roofing (Aust) Pty Ltd (No 2) (1994) 51 FCR 14
Re Coci; Ex parte Barwick Management Pty Ltd (Unreported Fed Ct of Aust, RD Nicholson J, 19 September 1997)
Australia & New Zealand Banking Group Ltd v Prestia [2001] FCA 792
Commonwealth Bank of Australia v Gargan [2004] FCA 707

Re Maddestra; Ex parte Penfolds Wines Pty Ltd (1993) 44 FCR 303

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

Applicant:

COMMONWEALTH BANK OF AUSTRALIA

Respondent:

BERNARD ERNEST MADIGAN

File Number:

SYG 1470 of 2005

Judgment of:

Raphael FM

Hearing date:

11 August 2005

Date of Last Submission:

11 August 2005

Delivered at:

Sydney

Delivered on:

17 August 2005

REPRESENTATION

Counsel for the Applicant:

Mr M Lee

Solicitors for the Applicant:

Henry Davis York

For the Respondent:

In Person

ORDERS

Sequestration order made against the estate of Bernard Ernest Madigan.
The applicant creditor’s costs (including any reserved costs) are to be taxed and paid from the estate of the respondent debtor in accordance with the Federal Court Act and Rules.
A copy of this sequestration order is to be given to the official receiver in Sydney within two days in accordance with the Bankruptcy Regulations.
Mr M J Robinson of PPB be appointed trustee of the bankrupt’s estate.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1470 of 2005

COMMONWEALTH BANK OF AUSTRALIA

Applicant

And

BERNARD ERNEST MADIGAN

Respondent

REASONS FOR JUDGMENT

I have before me an application for a sequestration order founded on a creditor's petition dated 7 March 2005. The act of bankruptcy alleged in the petition is the failure of the respondent debtor to comply on or before 3 March 2005 with the requirements of a bankruptcy notice served upon him on 24 January 2005 or to satisfy the court that he had a counter-claim, set-off or cross-demand equal to or exceeding the sum specified in paragraph 1 of the bankruptcy notice. That sum is the amount of $118,824.42. Mr Lee, who appears…

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: [2005] FMCA 1140
Decision Date: 17 August 2005

CaseChat Overview and Summary

The Commonwealth Bank of Australia brought a claim against Bernard Ernest Madigan in the Federal Court of Australia. The bank sought a sequestration order against the debtor, who had failed to repay a substantial loan. The central issue was whether the bank could prove the debt claimed and whether it was appropriate to make a sequestration order. The court had to consider the evidence provided by the bank regarding the debt and the debtor's financial situation. Additionally, the court needed to determine whether the debtor had committed an act of bankruptcy under the Bankruptcy Act 1966.

The court found that the bank had adequately proven the debt and that the debtor had indeed committed an act of bankruptcy by failing to repay the debt. The judge considered the evidence of the bank's financial records and the debtor's inability to settle the debt, concluding that it was appropriate to grant the sequestration order. The court also found that the bank's claim was not frivolous or vexatious, thereby justifying the imposition of costs on the debtor. Following these findings, the court issued a sequestration order against the debtor's estate and directed that the costs of the proceedings be paid by the debtor from his estate.

Orders

Orders of the court

Sequestration order made against the estate of Bernard Ernest Madigan.

The applicant creditor’s costs (including any reserved costs) are to be taxed and paid from the estate of the respondent debtor in accordance with the Federal Court Act and Rules.

A copy of this sequestration order is to be given to the official receiver in Sydney within two days in accordance with the Bankruptcy Regulations.

Mr M J Robinson of PPB be appointed trustee of the bankrupt’s estate.

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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