Community Association Deposited Plan No.270263 v Vu

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COMMUNITY ASSOCIATION DEPOSITED PLAN No.270263 v VU [2009] FMCA 150

BANKRUPTCY – Costs – creditor’s petition – where debtor provided proof of solvency some time after petition issued – where petition was dismissed – whether petition necessary in the first place – whether costs should be awarded to creditor.

Federal Magistrates Court (Bankruptcy) Rules 2006

Monsour Pty Ltd v Amos [2007] FMCA 740
World Best Holdings Ltd v Sarker [2006] FMCA 1876

Applicant: COMMUNITY ASSOCIATION DEPOSITED PLAN NO:270263

Respondent: TRANG DOAN VU

File Number: SYG 2422 of 2008

Judgment of: Raphael FM

Hearing date: 24 February 2009

Date of Last Submission: 24 February 2009

Delivered at: Sydney

Delivered on: 24 February 2009

REPRESENTATION

Solicitors for the Applicant: Grace Lawyers

Solicitors for the Respondent: Hall Partners

ORDERS

1. Petition dismissed.

2. Respondent Debtor to pay Applicant Creditor’s costs of Petition up to and including 16 December 2008.

3. Respondent Debtor to pay costs of Applicant Creditor of 10 February 2009 and of hearing today, all costs to be taxed if not agreed according to Federal Magistrates Court (Bankruptcy) Rules 2006.

THE COURT NOTES:

That the costs of the costs application include the costs of preparation in addition to the costs of appearance. 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2422 of 2008

COMMUNITY ASSOCIATION DEPOSITED PLAN NO:270263

Applicant

And

TRANG DOAN VU

Respondent

REASONS FOR JUDGMENT

1. In the hearing before me today, it has been agreed between the parties that the bankruptcy petition shall be dismissed.  What is in issue is the costs of the bankruptcy petition and the costs of the argument about costs because it is agreed that the bankruptcy petition would have been dismissed some short time ago had Registrar Hedge consented to do that rather than refer both matters to this Court.

2. The bankruptcy proceedings between the parties have a lengthy history brought about because the applicant, for medical reasons which have been explained, resisted service - not just of bankruptcy proceedings, but of the proceedings to enforce the judgment upon which the bankruptcy notice and now the petition were based.  Her resistance was effective and lengthy, and it was necessary for the creditor to apply for orders for substituted service in relation to both the bankruptcy notice and the petition.

3. One of the matters that I must consider in this case was the necessity to issue bankruptcy proceedings in the first place, because the amount of the debt is small.  I am satisfied from the evidence that has been given to me in the affidavit of Mr Ecob that the creditor tried strenuously to collect the debt without recourse to bankruptcy proceedings, and that these proceedings were only taken as a last resort.

4. The creditor did not respond to the bankruptcy notice and she did not initially respond to the bankruptcy petition.  Eventually, she secured the services of Mr Hall who has appeared before me today. He first contacted the respondent on or about 10 November 2008 and by about the 20