CostaExchange Limited v Shephard - [2010] FMCA 804

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COSTAEXCHANGE LIMITED & ORS v SHEPHARD

[2010] FMCA 804

BANKRUPTCY – Creditor’s petition – costs in protracted litigation with debtor – debtor’s evidence did not show ability to pay debt – sequestration order made.

Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(7), 52(1), 52(3), 52(2)(a), 52(2)(b), 58(1), 153A
Evidence Act 1995 (Cth), s.79
Federal Court Rules (Cth), O.7 r.1(3)

De Robillard v Carver (2007) 159 FCR 38, [2007] FCAFC 73
EyKamp v Deputy Commissioner of Taxation [2010] FCA 797
Foyster v Australian & New Zealand Banking Group Ltd [2000] FCA 1254
Shephard v Costa Exchange Ltd & Ors [2010] FMCA 314
Totev v Sfar [2006] FCA 470, (2006) 230 ALR 23

First Applicant:

COSTAEXCHANGE LIMITED

ACN 002 687 961
(FORMERLY CHIQUITA BRANDS SOUTH PACIFIC LIMITED)

Second Applicant:

ANTHONY GEOFFREY HARTNELL

Third Applicant:

GARY WILLIAM WRIGHT

Fourth Applicant:

DAVID ANTHONY BARDON

Fifth Applicant:

PETER WOODS

Sixth Applicant:

RIDLEY BELL

Seventh Applicant:

MICHAEL TAMANI

Eighth Applicant:

SCOTT ROLAND WOLGAMOT

Ninth Applicant:

PETER JOHN MCPHERSON

Respondent:

DEREK GEORGE SHEPHARD

File Number:

SYG1333 of 2010

Judgment of:

Smith FM

Hearing date:

12 October 2010

Delivered at:

Sydney

Delivered on:

12 October 2010

REPRESENTATION

Counsel for the Applicant:

Mr A Leopold SC and Mr J S Tobin

Solicitors for the Applicant:

Watson Mangioni Lawyers Pty Limited

Counsel for the Respondent:

Respondent in person

ORDERS

A sequestration order be made against the estate of Derek George Shephard.
All proceedings under the sequestration order are stayed under s.52(3) of the Bankruptcy Act 1966 (Cth) for 21 days, on the condition that Mr Shephard before 5pm today shall pay the amount of $19,000 into the trustee’s bank account designated in Exhibit B in today’s proceedings, those funds to be administered as property vesting pursuant to s.58(1) of the Act.
The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note that the date of the act of bankruptcy is 26 May 2010.
Note that a consent to act as trustee has been signed by Phillip Kenneth Aggs.
The applicant must give a copy of this order to the Official Receiver within 2 working days.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG1333 of 2010

COSTAEXCHANGE LIMITED ACN 002 687 961
(FORMERLY CHIQUITA BRANDS SOUTH PACIFIC LIMITED)

First Applicant

ANTHONY GEOFFREY HARTNELL

Second Applicant

GARY WILLIAM WRIGHT

Third Applicant

DAVID ANTHONY BARDON

Fourth Applicant

PETER WOODS

Fifth Applicant

RIDLEY BELL

Sixth Applicant

MICHAEL TAMANI

Seventh Applicant

SCOTT ROLAND WOLGAMOT

Eighth Applicant

PETER JOHN MCPHERSON

Ninth Applicant

And

DEREK GEORGE SHEPHARD

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

This judgment gives my reasons for making a sequestration order against Mr Shephard.
The petitioning creditors have been engaged in litigation with Mr Shephard in relation to a blueberry venture in the Coffs Harbour region for some years. The background to the litigation was referred to by Driver FM in Shephard v Costa Exchange Ltd & Ors [2010] FMCA 314

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.

Continue reading CostaExchange Limited v Shephard

Details

AGLC: CostaExchange Limited v Shephard [2010] FMCA 804
Case: [2010] FMCA 804
Decision Date

CaseChat Overview and Summary

CostaExchange Limited and several other applicants sought a sequestration order against Derek George Shephard based on his non-payment of a debt amounting to $48,797.98. The respondents had been engaged in protracted litigation with Shephard regarding a blueberry venture in the Coffs Harbour region. After Shephard's application to set aside a bankruptcy notice was dismissed, a sequestration order was sought against him. Shephard filed a notice of grounds of opposition, asserting that he had assets sufficient to meet the demands, and that he was a net creditor of the applicants. The court examined Shephard's assertions regarding his beneficial interest in a property at Sapphire Beach, but found them insufficient to establish that he was able to pay his debts within a reasonable timeframe.

The court found that Shephard's evidence did not show that he had the ability to pay his debt, and therefore, the grounds of opposition were not made out. The court granted a sequestration order against Shephard's estate, and stayed the operation of the sequestration order for 21 days, on the condition that Shephard paid $19,000 into the trustee's bank account before 5pm on the day of the hearing. The creditors' costs, including all reserved costs, were to be taxed and paid from Shephard's estate in accordance with the Bankruptcy Act 1966 (Cth). The date of the act of bankruptcy was 26 May 2010, and Phillip Kenneth Aggs had signed a consent to act as trustee. The applicants were required to give a copy of the order to the Official Receiver within 2 working days.

Orders