Courtyard BUP 11747 v Stockley

FEDERAL COURT OF AUSTRALIA

Courtyard BUP 11747 v Stockley [1999] FCA 463

BANKRUPTCY  - creditor’s petition opposed on basis of debtor’s alleged solvency - test for solvency - circumstances where debtor unable to pay debts as they fall due - where context is the repeated failure to realise assets and meet principal financial obligations

Body Corporate and Community Management Act 1997 (Qld)
Bankruptcy Act 1966 ss 5(2), 52(2)(a)

Sandell v Porter (1966) 115 CLR 666 Cited
Re Riggs;  ex parte Commissioner of Taxation (WA) (1986) 9 FCR 149 Refd to

THE COURTYARD BUP 11747 v KENNETH JOHN STOCKLEY
Q 7175 of 1999

KIEFEL J
20 OCTOBER 1999
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 7175 OF 1999

BETWEEN:	THE COURTYARD BUP 11747 Applicant
AND:	KENNETH JOHN STOCKLEY Respondent
JUDGE:	KIEFEL J
DATE OF ORDER:	20 OCTOBER 1999
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.        The estate of Kenneth John Stockley be sequestrated.

2.        David Lewis Clout be appointed trustee of the estate of Kenneth John Stockley.

3.        The petitioning creditor’s costs be taxed and paid out of the bankrupt’s estate.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 7175 OF 1999

BETWEEN:	THE COURTYARD BUP 11747 Applicant
AND:	KENNETH JOHN STOCKLEY Respondent

JUDGE:	KIEFEL J
DATE:	20 OCTOBER 1999
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. The act of bankruptcy upon which the petition is founded, is non compliance with the requirements of a bankruptcy notice which was served on 10 December 1998.  The petitioning creditor, a company incorporated according to the Body Corporate and Community Management Act 1997 (Qld), had obtained a judgment against Mr Stockley in the Magistrates’ Court at Brisbane on 21 September 1998 in the sum of $25,915.15. Since the time for compliance with the bankruptcy notice passed two amounts have been paid towards satisfaction of that debt. On 26 May 1999 $11,228.79 was paid and a further sum of $3,000 was paid in July, leaving a balance presently due of $11,686.36.

2. The question which arises on the notice of opposition is whether Mr Stockley has the ability to pay.  He admits that he is solvent, within the meaning of the Bankruptcy Act 1966 (see s 5(2)) and that the Court should therefore dismiss the petition (see s 52(2)(a)).

3. A person is solvent if they are able to pay their debts as and when they become due and payable.  It has not however been held that this requires that all debts be paid instantly and the test is satisfied if assets, sufficient to satisfy the outstanding debts, can be realised within a relatively short period:  see Sandell v Porter (1966) 115 CLR 666. Other cases provide that regard can also be had to other factors which might readily disclose whether a person is solvent or not. This arises particularly where some difficulty is experienced in the realisation of assets, as is here the…