Credit Four Pty Ltd (in liq) v Guillemain
[2024] FedCFamC2G 43
•25 January 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Credit Four Pty Ltd (in liq) v Guillemain [2024] FedCFamC2G 43
File number(s): BRG 566 of 2022 Judgment of: JUDGE EGAN Date of judgment: 25 January 2024 Catchwords: BANKRUPTCY – application for review of a sequestration decision made by a Registrar – where bankrupt had erroneously claimed that the Applicant Creditor had accepted the tender of a sum of money before the presentation of the Creditor’s Petition such that an amount less than the statutory minimum debt was duly owing – where bankrupt unable to pay her debts as and when they fell due – where sequestration order made. Legislation: Bankruptcy Act 1966 (Cth), ss 44 and 52
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, Rules 2.05 and 4.06
Legal Profession Regulation 2017 (Qld)
Cases cited: Allison v Murphy [2021] FCAFC 232
Bechara v Bates [2021] FCAFC 34
Psevdos v Commonwealth Bank of Australia (No 2) [2017] FCA 19
Purden Pty Ltd v Registrar in Bankruptcy (1982) 62 FLR 306
Ramsay Health Care Australia Pty Ltd v Compton (No 2) [2016] FCA 691
Re Lowe; Ex Parte Lowe (1890) 7 Mor 25
Division: Division 2 General Federal Law Date of last submission/s: 1 December 2023 Date of hearing: 3 November 2023 Place: Brisbane Number of paragraphs: 25 Counsel for the Applicant: Ms S Long Solicitor for the Applicant: Celtic Legal Counsel for the Respondent: Ms L Brabazon Solicitor for the Respondent: Wallmans Lawyers
Table of Corrections 29 January 2024 In the Appearances on the cover page the Solicitor for the Applicant has been amended from Wallmans Lawyers to Celtic Legal. 29 January 2024 In the Appearances on the cover page the Solicitor for the Respondent has been amended from Celtic Legal to Wallmans Lawyers. 29 January 2024 In the Appearances on the cover page Counsel for the Applicant has been amended from Ms L Brabazon to Ms S Long. 29 January 2024 In the Appearances on the cover page Counsel for the Respondent has been amended from Ms S Long to Ms L Brabazon. ORDERS
BRG566 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF CHRISTABELLE AURELIE GUILLEMAIN
BETWEEN: CREDIT FOUR PTY LTD (IN LIQUIDATION) ACN 152 509 101
Applicant
AND: CHRISTEBELLE AURELIE GUILLEMAIN
Respondent
ORDER MADE BY:
JUDGE EGAN
DATE OF ORDER:
25 JANUARY 2024
IT IS ORDERED THAT:
1.A sequestration order be made against the estate of Christebelle Aurelie Guillemain.
2.The Petitioning Creditor’s costs be paid out of the bankrupt’s estate in accordance with the priority to which he is entitled as agreed, or failing agreement, to be assessed in accordance with the provisions of the Bankruptcy Act 1966 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
On 18 August 2022, the Applicant obtained judgment against the Respondent for the sum of $13,141.06 in the Magistrates Court of Victoria at Dandenong.
On 26 August 2022, a bankruptcy notice was issued against the Respondent. There had been no payment of the judgement sum by the Respondent to the Applicant before the issue of the bankruptcy notice.
On 17 November 2022, an application to set aside the bankruptcy notice was dismissed.
It was common ground between the parties that an act of bankruptcy was committed by the Respondent on 21 September 2022. [1]
[1] See paragraph 5 of the Respondent’s written submissions handed to the Court on 3 November 2023 and
paragraph 8 of the Applicant’s submissions filed on 1 December 2023.
On 15 December 2022, by the operation of Rule 2.05(4) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, a creditor’s petition was taken to have been filed in the Brisbane Registry of the Court at or about 4:00pm.
On 12 December 2022, prior to the filing of such creditor’s petition, the Respondent had a telephone conversation with one Candice Humm who was a paralegal in the employ of the Applicant’s lawyers. The effect of that telephone conversation was that the Respondent had asked Ms Humm for the bank details of the Celtic Legal trust account in order that she could pay some money into such account. It transpired that the amount which the Respondent told Ms Humm she was intending to pay into such account was less than the whole judgment debt owing to the Applicant, whereupon Ms Humm advised the Respondent that such offer, being payment of a sum less than the whole of the judgment debt, was rejected. [2]
[2] See Annexure CH-1 to the affidavit of Ms Humm filed on 15 September 2023.
On 13 December 2022, a paralegal named Ms Dudley sent a letter to the Respondent’s then lawyers providing the Applicant’s lawyers trust account banking details. [3] No doubt that was done to facilitate the payment of all outstanding monies to the trust account of the Applicant’s lawyers.
[3] See Annexure CAG-7 to the affidavit of the Respondent filed on 26 June 2023.
Notwithstanding the indication given by Ms Humm to the Respondent on 12 December 2022 that a lesser sum than the whole amount owing would not be accepted, the Respondent paid the sum of $6,500.00 into the Celtic Legal trust account 16 December 2022. The Court notes that 16 December 2022 was a Friday.
By letter from Celtic Legal to the Respondent’s then lawyers dated 19 December 2022, the following Monday, it was said as follows: [4]
[4] See Annexure CAG-9 to the affidavit of the Respondent filed on 26 June 2023.
‘Dear Colleague
We refer to the above matter and your email dated 16 December 2022.
We confirm we have received a payment from your client for the sum of $6,500.00.
As your client failed to accept our client’s offer of 30 November 2022, as confirmed in the email of our Brendan Long dated 8 December 2022, we do not accept this payment. This payment was not made pursuant to any agreement between the parties and will be returned to your client. A Creditor’s Petition has been filed in the Federal Circuit and Family Court Australia.
To return the funds to your client, please provide their nominated bank details as a matter of urgency.
Please do not hesitate to contact our office should you have nay queries.
Kind regards
Rhiannon Dudley
Paralegal’
Analysis
Section 44 of the Bankruptcy Act 1966 (Cth) relevantly provided that there were pre-conditions attached to the presentation of a creditor’s petition. The section provided as follows:
“44 Conditions on which creditor may petition
(1) A creditor's petition shall not be presented against a debtor unless:
(a) there is owing by the debtor to the petitioning creditor a debt that amounts to the statutory minimum or 2 or more debts that amount in the aggregate to the statutory minimum, or, where 2 or more creditors join in the petition, there is owing by the debtor to the several petitioning creditors debts that amount in the aggregate to the statutory minimum;
(b) that debt, or each of those debts, as the case may be:
(i) is a liquidated sum due at law or in equity or partly at law and partly in equity; and
(ii) is payable either immediately or at a certain future time; and
(c) the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition.
(2) Subject to subsection (3), a secured creditor shall, for the purposes of paragraph (1)(a), be deemed to be a creditor only to the extent, if any, by which the amount of the debt owing to him or her exceeds the value of his or her security.
(3) A secured creditor may present, or join in presenting, a creditor's petition as if he or she were an unsecured creditor if he or she includes in the petition a statement that he or she is willing to surrender his or her security for the benefit of creditors generally in the event of a sequestration order being made against the debtor.
(4) Where a petitioning creditor is a secured creditor, he or she shall set out in the petition particulars of his or her security.
(5) Where a secured creditor has presented, or joined in presenting, a creditor's petition as if he or she were an unsecured creditor, he or she shall, upon request in writing by the trustee within 3 months after the making of a sequestration order, surrender his or her security to the trustee for the benefit of the creditors generally.
(6) A secured creditor to whom subsection (5) applies who fails to surrender his or her security when requested to do so by the trustee in accordance with that subsection is guilty of contempt of court.”
It has most recently been submitted on behalf of the Respondent in written submissions filed on 17 November 2023 that the creditor’s petition lodged on 15 December 2022 was not accepted for filing until 20 December 2022, and that, accordingly, the creditor’s petition was presented on 20 December 2022 at a time when the amount owing to the Applicant was less than the $10,000.00 statutory limit for the commencement of bankruptcy proceedings. The Applicant’s argument proceeded on the basis that because the sum of $6,500.00 had been electronically transferred by the Respondent into the Applicant’s lawyer’s trust account on 16 December 2022, the amount owing to the Applicant was less than the statutory limit, a circumstance which prevented the lodgement of a creditor’s petition. Reliance was placed by the Applicant upon the decision of the Full Court of the Federal Court in Purden Pty Ltd v Registrar in Bankruptcy (1982) 62 FLR 306, the correctness of which was not challenged by the Applicant.
Rather, it was submitted on behalf of the Applicant that Purden was distinguishable from the facts of the present case because it dealt with a factual scenario where, at the relevant time, a document to be lodged in a Federal Court Registry had to physically be filed rather than filed electronically as was the case here.
Reliance was placed by the Applicant upon the provisions of Rule 2.05 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 which relevantly provided as follows:
“2.05 How documents may be filed
(1) A document must be filed by electronic communication as permitted by the Court, unless it is not reasonably practicable to do so.
(2) If it is not reasonably practicable to file a document by electronic communication in accordance with subrule 2.08(2), it may be filed, in order of preference, by:
(a)emailing it to the registry; or
(b)delivering it to the registry; or
(c)sending it to the registry by post; or
(d)faxing it to the registry.
(3) A document is filed when:
(a) the filing fee has been paid (or an exemption or deferral applies); and
(b) the document is accepted for filing by the Registry Manager and sealed with the seal of the Court or marked with the stamp of the Court, as required by Division 2.4.
Note 1: The Federal Court and Federal Circuit and Family Court Regulations 2012 provides that a document must not be filed in a registry of the Court unless the fee payable for the filing has been paid. The regulation also provides for an exemption or deferral of a fee, or payment of the fee on invoice, in certain circumstances.
Note 2: For the design, custody and affixation of the seal and validity of stamps (see sections 178 and 179 of the Act).
(4) However, a document sent by fax or electronic communication, if accepted, is taken to have been filed:
(a) if the whole document is received by 4.30 pm on a day the Registry is open for business--on that day; or
(b) in any other case--on the next day the Registry is open for business.”
The Court accepts the validity of the Applicant’s submission about the time of filing of the creditor’s petition – namely that it was taken to have been filed on the date of its lodgement and receipt by the Registry on 15 December 2022. By reason of such finding, the presentation of the creditor’s petition occurred at a time prior to the alleged part payment on 16 December 2022. In such circumstances, the Applicant was not precluded from lodging the creditor’s petition.[5]
[5] See also Ramsay Health Care Australia Pty Ltd v Compton (No 2) [2016] FCA 691 at [9]-[18] per Flick
Further, the Court does not accept that there was in fact any part payment of the judgment sum made to the Applicant at the time that the Respondent caused the sum of $6,500.00 to be electronically transferred into the Applicant’s lawyer’s trust account. There was no agreement between the Applicant and the Respondent that the Applicant would accept any sum less than the full amount owed by the Respondent to the Applicant in part payment of the judgment sum. There was certainly no agreement between the parties that the Applicant would accept the tender of any sum of money which would reduce the amount owing to a sum which was below the statutory $10,000.00 limit. The fact that the Applicant’s lawyers caused a trust account receipt to be issued in respect of the transfer was no more than such lawyers complying with relevant obligations imposed upon them under the relevant Legal Profession Regulation 2017 (Qld), and it was of no moment. The failure by the Respondent to provide her banking details to the Applicant’s lawyers so as to allow for the refund to her of the sum of $6,500.00 demonstrated to the Court that the tender of such sum was made for the purpose of her seeking some forensic advantage so as to delay the Applicant proceeding to seek the sequestration of the Respondent’s estate.
It has long been held that a creditor with knowledge of an act of bankruptcy committed by a debtor was justified in refusing to accept a tender which would have reduced the petitioning debt below the statutory limit. [6] Even if a debtor admitted the debt and paid that amount, together with costs into Court, the petitioning creditor was not bound to accept payment by taking the money out of Court. The Creditor was entitled to proceed with the bankruptcy petition even where the creditor had refused to accept the full amount owed which had been deposited into the creditor’s solicitor’s trust account. [7]
[6] Re Lowe; Ex Parte Lowe (1890) 7 Mor 25;
[7] Psevdos v Commonwealth Bank of Australia (No 2) [2017] FCA 19 at [26]-[27] and at [66]-[70] per
Those propositions were recently adopted in the judgement of the Full Court of the Federal Court in Allison v Murphy [2021] FCAFC 232 at [46] per Besanko, Colvin and Downes JJ where it was said:
“[46] However, there is a fundamental difficulty for Mr Allison's case to the effect that the monies should be treated as being available to reduce the debt such that it could not be relied upon to support the creditor's petition of Mr Murphy. Once the act of bankruptcy had been committed by Mr Allison, there was no obligation on the part of Mr Murphy to accept the tender of payment of the debt the subject of the bankruptcy notice: see McIntosh v Shashoua [1931] HCA 56; (1931) 46 CLR 494 at 505, 508; Taylor v Deputy Commissioner of Taxation [1999] FCA 195 at [39]; and Psevdos v Commonwealth Bank of Australia (No 2) [2017] FCA 19 at [70]. He was entitled to reject the tender made at that time and proceed with his petition. On the evidence, it was clear that Mr Murphy would accept nothing less than full payment. Therefore, even accepting the claim by Mr Allison that there had been such a tender (or a desire to make such tender) by the time of the review, that was not a sufficient basis upon which to conclude that there was error by the primary judge in making the sequestration order. Put another way, if the primary judge had found that there had been payment of the amount of $47,384 to Mr Murphy then that would not have been a sufficient reason, in itself, for the creditor's petition to have been dismissed. By reason of the act of bankruptcy in failing to satisfy the bankruptcy notice, it was only if the payment had been accepted by Mr Murphy that the debt would have been reduced. On the evidence, it was not accepted. Therefore, the debt remained outstanding.”
The Court finds that the creditor’s petition was duly presented for the purposes of s. 44 of the Bankruptcy Act.
Hearing De Novo
In Bechara v Bates [2021] FCAFC 34 at [27] the Full Court addressed the nature of an application to review a sequestration order in bankruptcy made by a Registrar as follows:
“[27]Thus, relevant to the matter before us, the following is, and has been since the mid-1990s, clear about the nature of a de novo hearing by way of review of a sequestration order in bankruptcy made by a registrar:
(a) The application for review leads to a hearing de novo of the creditor’s petition.
(b) The hearing (or rehearing) of the creditor’s petition is not prosecuted by the debtor (applicant for review) but by the creditor in the proceeding in which the registrar’s order was made.
(c) The application for review is a demand that the claim for relief (the sequestration order) be heard by a judge.
(d) The onus is upon the creditor to prosecute its petition. The only onus of the debtor/bankrupt against whose estate a sequestration order has been made is to prove either solvency or any other sufficient cause under s 52(2) of the Bankruptcy Act 1966 (Cth).
(e) An appreciation of the above considerations makes it evident that summary or default judgment terminating an application for review is highly likely to be misconceived and founded upon a misconception that the applicant for review has an onus to prosecute an application or to show error in the approach of the registrar.”
It was for the Applicant to prove the fact that the debt or debts which were relied upon were still owing as at the date of the hearing, and that the Respondent was unable to pay her debts as and when they fell due as set out in s. 52(1) of the Bankruptcy Act.
The Court notes that though the Respondent has deposed to her having owned certain real properties, she has not filed any affidavit material from a registered valuer which could have constituted evidence of the respective values of such properties. Automated value estimates annexed to the Respondent’s affidavit filed on 26 June 2023 do not constitute expert evidence of value. In such circumstances, the Court has had no regard to such estimates of value. The fact remains that a judgement of the Court for a sum exceeding the statutory limit remained outstanding as at the date of the hearing before the Court on 3 November 2023. There is no evidence before the Court that the Respondent has satisfied that debt prior to the date of this judgement. There is also no evidence before the Court which would cause the Court to exercise it’s discretion not to make a sequestration order on the basis that the Respondent was a person who had valuable assets which, within a relatively short period of time, could be sold so as to satisfy the whole of the judgement debt.
Further, the Respondent has admitted that she had an outstanding tax liability to the Australian Taxation Office as of June 2023. There was no evidence that the Applicant had satisfied such debt as at the date of the hearing before the Court on 3 November 2023.
The Court is satisfied that the Applicant has duly complied with the provisions of R 4.06 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 by the filing of all required affidavits. [8] The Court is satisfied that the Bankruptcy Notice was duly served, and that the Creditor’s Petition was brought within the relevant time. The Court is further satisfied that there are no grounds upon which a sequestration order ought not to be made.
[8] Affidavits of Evana Hapgood filed on 15 December 2022, Rhiannon Dudley filed on 15 December 2022,
The Court is satisfied that the Respondent is unable to pay her debts as and when they fall due, and that a sequestration order ought to be made against her estate.
The decision of Registrar Lynch is affirmed, and the application for review of the Registrar’s decision filed on 7 June 2023 is dismissed.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan. Associate:
Dated: 25 January 2024
J
Charlesworth J
Rhiannon Dudley filed on 15 February 2023, Kieran Monaghan filed 23 February 2023, Rhiannon
Dudley filed on 28 March 2023, Rhiannon Dudley filed on 28 March 2023, Rhiannon Dudley filed on
28 March 2023, David Stimpson filed on 28 March 2023, Evana Hapgood filed on 17 May 2023,
Rhiannon Dudley filed on 17 May 2023, David Stimpson filed on 22 May 2023, Kylie Mackey filed on
22 May 2023, Kylie Mackey filed on 22 May 2023, Candice Humm filed on 15 August 2023, Brendan
Long filed on 15 August 2023, Kylie Mackey filed on 2 November 2023, Kylie Mackey filed on 2
November 2023 and Abdul Chambal filed on 2 November 2023.
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