Cumberland Cabs Company Pty Ltd v Naidoo
[2009] FMCA 1305
•23 December 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CUMBERLAND CABS COMPANY PTY LTD v NAIDOO | [2009] FMCA 1305 |
| BANKRUPTCY – Creditor’s Petition – application for adjournment by Respondent Debtor to allow time to arrange finance – 21 day stay of sequestration under s.52(3) inappropriate in the circumstances – application for adjournment allowed. |
| Bankruptcy Act 1966 (Cth), s.52(3) |
| Applicant: | CUMBERLAND CABS COMPANY PTY LTD T/AS CUMBERLAND CABS |
| Respondent: | RADHAKRISHNA NAIDOO |
| File Number: | SYG 1568 of 2009 |
| Judgment of: | Smith FM |
| Hearing date: | 23 December 2009 |
| Delivered at: | Sydney |
| Delivered on: | 23 December 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Ash |
| Solicitors for the Applicant: | DTA Lawyers |
| Counsel for the Respondent: | Mr T Orlizki |
| Solicitors for the Respondent: | Kent Attorneys |
ORDERS
The petition is adjourned for hearing on 5 March 2010 at 10.15am.
Any additional affidavits relied upon by the respondent must be filed and served no later than 4pm on 26 February 2010.
Any affidavits in reply must be filed and served no later than 4pm on 2 March 2010.
Costs reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1568 of 2009
| CUMBERLAND CABS COMPANY PTY LTD T/AS CUMBERLAND CABS |
Applicant
And
| RADHAKRISHNA NAIDOO |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
In this matter, there is a petition filed on 1 July 2009 by Cumberland Cabs, claiming a debt of $39,451.49 under a Local Court judgment obtained against Mr Naidoo on 10 October 2008. There is an alleged act of bankruptcy by his failure to comply with a bankruptcy notice in relation to that debt, that act of bankruptcy occurring on 19 March 2009. Mr Naidoo does not challenge his indebtedness nor the act of bankruptcy, but seeks more time to raise money to pay the creditor.
The petition has been listed before a Registrar five times, and on the last occasion was referred to me for hearing. Mr Naidoo has been represented by legal practitioners on the last two occasions, but not on earlier occasions. The first adjournment was by consent due to Mr Naidoo requiring a medical procedure.
The petition still has another six months before the 12 month period of its life expires. However, it certainly has reached the point where Mr Naidoo needs to show more than just a hope of an ability to pay the debt, and is required to show substance to any further application to adjourn the petition. Such substance had been missing from documents previously filed by Mr Naidoo, but he has recently instructed a new solicitor who has assisted him to prepare an affidavit. The new solicitor appears to be assisting him to think seriously about how he can raise enough money to pay the indebtedness claimed in the petition. There is no evidence of any other creditors at risk, if an adjournment occurs.
There is an application to adjourn the petition today until late February, upon a proposal to pursue refinancing of an investment property owned by Mr Naidoo and his wife. They also own their home, but they appear not to have any equity of substance in that asset. The wife has employment with a reasonable income, and Mr Naidoo has income as a taxi driver which may be threatened if a sequestration order is made. There is a very vague proposal that Mr Naidoo can gain assistance from his young son, who is working as a motor mechanic, but the exact financial position of the son has not been set out, nor any clear substance given to his proposal to acquire an interest in the investment property in the course of its refinancing.
The refinancing proposal itself is in a most uncertain state, and there is only evidence that a broker has been employed on 7 December 2009 to commence investigations. That was the day before the last listing of this matter in the Court.
Cumberland Cabs urges on the Court the prima facie right of a creditor to have a petition heard and decided, and the sequestration order made once the creditor’s entitlement is made out. It points out that Mr Naidoo does not appear to be contesting its entitlement to such an order, but seeks Court indulgences in relation to time to pay the debt relied upon.
However, there does appear to be some corroborative evidence that there is $100,000 equity owned in the investment property between Mr Naidoo and his wife, which would be more than ample to pay Cumberland Cab’s debt and expenses. There appears to be no other unsecured creditor of substance.
I have not been persuaded that Mr Naidoo’s objective of refinancing is manifestly hopeless. Nor have I been persuaded that it has good prospects. However, in the circumstances, I consider that it would be in the interests of all the parties to allow a short adjournment until early next year. This would allow some additional time for Mr Naidoo’s efforts to obtain refinancing, to pay the debt, and, hopefully, reach some agreement in relation to the payment of any additional claims and costs of Cumberland Cabs, without Mr Naidoo having to be sent into insolvency administration.
This is a case where I would normally have been likely, if I had made a sequestration order today, to exercise the court’s discretion under s.52(3) of the Bankruptcy Act to stay the operation of the sequestration order, to allow any further and belated efforts to find a solution to Mr Naidoo’s indebtedness, without a trustee incurring too much added expense. However, where today’s listing is almost on Christmas Eve, allowing merely a 21 day opportunity to do this would not seem to carry much utility.
In all the circumstances, I consider it is in the interests of all the parties, and consistent with the administration of justice and the objectives of the Bankruptcy Act, to allow Mr Naidoo the further opportunity which he seeks to obtain refinancing or to reach a satisfactory agreement with the creditor in a period ending in late February. However, manifestly, the present evidence is unlikely to induce me to allow further adjournments, without additional evidence showing a significant improvement in relation to Mr Naidoo’s prospects of paying all his creditors within a reasonable time.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Michael Abood
Date: 20 January 2010
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