Deputy Commissioner of Taxation v Keating
[2015] FCCA 1625
•22 June 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DEPUTY COMMISSIONER OF TAXATION v KEATING | [2015] FCCA 1625 |
| Catchwords: PRACTICE AND PROCEDURE – Bankruptcy – affidavit of search – form of affidavit of search of court records. EVIDENCE – Bankruptcy – nature of proof in affidavit of search of court records. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.43, 44, 47(1), 52(1) and (2) Corporations Act 2001 (Cth), s.459Q |
| Deputy Commissioner of Taxation v National Skin Institute (Aust) Pty Ltd [2012] FCAFC 2; (2012) 200 FCR 146; (2012) 285 ALR 102 LexisNexis Butterworths, Cross on Evidence, Service 181 |
| Applicant: | Deputy Commissioner Of Taxation |
| Respondent: | Andrew Michael Keating |
| File Number: | PEG 42 of 2015 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 12 May 2015 |
| Date of Last Submission: | 12 May 2015 |
| Delivered at: | Perth |
| Delivered on: | 22 June 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr J E Scovell |
| Solicitors for the Applicant: | Australian Taxation Office |
| For the Respondent: | No appearance |
DECLARATION AND ORDERS
The Court declares that the affidavit sworn by Hayley Phillips on 9 February 2015 as an affidavit of search of court records complies with the requirements of r.4.04(1)(a)(i) of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth).
The Court orders that:
(a)a sequestration order be made against the estate of Andrew Michael Keating;
(b)the respondent debtor pay the applicant creditor’s costs in the sum of $5600.88 to be paid out of the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth),
and the Court notes that the date of the act of bankruptcy is 6 October 2014.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT Perth |
PEG 42 of 2015
| Deputy Commissioner Of Taxation |
Applicant
And
| Andrew Michael Keating |
Respondent
REASONS FOR JUDGMENT
Issue
The issue in these proceedings is whether the affidavit referred to in r.4.04(1)(a)(i) of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (“FCC Bankruptcy Rules”), commonly known as the “affidavit of search” or “affidavit of search of court records”, requires any more than a statement by the deponent that the requirements of r.4.04(1)(a)(i) of the FCC Bankruptcy Rules have been satisfied. The issue was referred to the Court by a Registrar of the Court for hearing and determination, and dependent upon the outcome of the issue, the Court will determine whether a sequestration order should also issue.
In referring the issue the Registrar made it known to the parties who appeared before the Registrar that they ought to address what was apparently described as the “best evidence rule” in relation to the preparation and contents of the affidavit of search of court records. Counsel for the applicant creditor, the Deputy Commissioner of Taxation (“DCOT”), observed in submissions that the issue was in the nature of a test case.
Legislative provisions
Rule 4.04 of the FCC Bankruptcy Rules provides:
(1) If a creditor’s petition is founded on an act of bankruptcy mentioned in paragraph 40(1)(g) of the Bankruptcy Act, the petition must also be accompanied by:
(a) an affidavit stating:
(i) that the records of the Court and the records of the Federal Circuit Court have been searched and no application in relation to the bankruptcy notice has been made; or
(ii) that an application was made in the Court or in the Federal Circuit Court, as applicable, for an order setting aside the relevant bankruptcy notice and the application has been finally decided; or
(iii) that an application was made in the Court or in the Federal Circuit Court, as applicable, for an order extending the time for compliance with the bankruptcy notice and the application has been finally decided; and
(b) an affidavit of service of the relevant bankruptcy notice.
(2) If an application mentioned in subparagraph (1)(a)(ii) or (iii) was made, a copy of the order finally deciding the application must be attached to the affidavit required by paragraph (1)(a).
Rule 4.04 of the FCC Bankruptcy Rules must be read in the context of s.52(1) of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”) which provides as follows:
(1) At the hearing of a creditor's petition, the Court shall require proof of:
(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
…
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
Factual background
Creditor’s petition
A Creditor’s Petition filed by the DCOT on 9 February 2015, seeks a sequestration order under s.43 of the Bankruptcy Act to issue against the estate of the respondent debtor, Andrew Michael Keating (“Mr Keating”) in respect of the following matters, listed at Part 1 of the Creditor’s Petition:
1. The respondent debtor owes the applicant creditor the amount of $208,728.18 for:
a. A District Court of Western Australia Judgement dated 11 August 2014 for recovery of $206,988.58 and $1,226.20 costs;
b. Post judgment interest in the amount of $513.40; and
2.The applicant creditor does not hold security over the property of the respondent debtor.
3.At the time when the act of bankruptcy was committed, the respondent debtor was ordinarily resident in Australia.
4. The following act of bankruptcy was committed by the respondent debtor within 6 months before presentation of this petition:
The respondent debtor failed to comply on or before 6 October 2014 with the requirements of a bankruptcy notice served on him on 15 September 2014 or to satisfy the Court that he had a counter-claim, set-off or cross-demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set off or cross demand that he could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.
In the Affidavit Verifying Creditor’s Petition, Jacqueline Daly, an Australian Public Servant employed in the Australian Taxation Office, affirmed on 30 January 2015 (“Ms Daly’s Affidavit”) says as follows:
1. I am an officer employed in the Australian Taxation Office. I am duly authorised by the applicant creditor to make this affidavit on his behalf and am able to depose to the matters stated herein from my own knowledge of the taxation affairs of the respondent debtor, including knowledge obtained from the records and information in the possession of the applicant creditor.
2. In the Australian Taxation Office the applicant creditor maintains a computer system in which are recorded tax related liabilities which are due by individual taxpayers to the Commonwealth, payable to the Commissioner of Taxation, and recoverable by the applicant creditor, and costs.
3. The system also records any payments made by a taxpayer and any other amounts applied to the credit of that taxpayer. The system is updated daily. In addition there is a file maintained in the Debt Section of the Australian Taxation Office in respect of the recovery action taken by a Deputy Commissioner of Taxation against the respondent debtor (“the Legal Collections File”). For the purpose of affirming this affidavit, I have perused the records contained in the system concerning the respondent debtor and the material contained in the Legal Collections File.
4. The statements made in paragraphs 1, 2 and 3 of the creditor's petition are within my own knowledge true.
5. In respect of the statements made in paragraph 4 of the creditor's petition, I say the respondent failed, within 21 days after service of the bankruptcy notice, to pay the debt or make an arrangement to the applicant's satisfaction for payment of the debt.
Affidavit of search of court records
The affidavit of search of court records in this matter is sworn by Hayley Phillips on 9 February 2015 (“Ms Phillips’ Affidavit”), and provides as follows:
1. I am a solicitor in the sole and permanent employment of Gadens Lawyers, the solicitors for the Applicant Creditor. I am authorised to swear this affidavit on behalf of the Applicant Creditor and do so from my own knowledge and belief except where I state otherwise.
2. The applicant creditor's records show a copy of Bankruptcy Notice No. 17 4575, signed by an officer authorised by the Official Receiver was served on the respondent debtor on 15 September 2014.
3. On 9 February 2015 1 did search the records of the Federal Court of Australia and the records of the Federal Circuit Court of Australia in relation to Bankruptcy Notice No. 17 4575 issued on the application of the applicant creditor against the respondent debtor, dated 27 August 2014.
4. It appears from my searches that the respondent debtor has not made an application to the Court to set aside the bankruptcy notice nor to extend the time for compliance with the bankruptcy notice.
Submissions
The DCOT submits that the affidavit of search of court records requires no more than a statement by the deponent that the requirements of r.4.04(1)(a)(i) of the FCC Bankruptcy Rules have been satisfied, and that support for this proposition can be found in the following:
a)there being no case law directly on point, the form of affidavits required for what are said to be analogous provisions of the Corporations Act 2001 (Cth) (“Corporations Act”);
b)the express provisions of r.4.04(2) of the FCC Bankruptcy Rules, which requires a copy of an order finally deciding an application to set aside the bankruptcy notice or to extend time for compliance with a bankruptcy notice to be “attached” to the affidavit required by r.4.04(1)(a) of the FCC Bankruptcy Rules; and
c)the Court’s Practice Guide to Filing a Creditor’s Petition (“FCC Bankruptcy Filing Guide”) which provides that an applicant need do no more than swear to whether any application has been made in respect of the bankruptcy notice.
The DCOT submits that the “best evidence rule” has no application to the current proceedings.
The Court notes that Mr Keating did not appear in earlier proceedings before Registrars of the Court, and did not appear and did not file submissions when the matter was listed before the Court for hearing.
Consideration – affidavit of search of court records
The purpose of the affidavit of search of court records is to provide the Court with satisfaction that no application has been filed by the respondent in relation to the bankruptcy notice which might affect the Court’s power to make a sequestration order.
By reason of s.52(1) of the Bankruptcy Act at the hearing of the Creditor’s Petition the Court requires proof of the matters stated in the petition and the fact that the debt or debts in which the petitioning creditor relies is or are still owing, and if the Court is satisfied with proof of those matters, together with service of the Creditor’s Petition, it may make a sequestration order against the estate of the debtor. Other than to say that the Court may accept the affidavit verifying the petition as sufficient for the purposes of proving the matters stated in the petition, no means of proof are prescribed by s.52(1). Relevantly, for the purposes of the proof of the search of court records, and therefore for proof that no application has been made in relation to the bankruptcy notice, the proof prescribed by r.4.04(1)(a) of the FCC Bankruptcy Rules is no more than that the relevant affidavit state that the court records have been searched and that no application in relation to the bankruptcy notice has been made.
The plain meaning of r.4.04(1)(a)(i) of the FCC Bankruptcy Rules, read together with s.52(1) of the Bankruptcy Act, is to prescribe a means of proof satisfied by the deponent of the affidavit of search of court records stating that they have conducted the search and the outcome of that search. The form of affidavit attests to whether any application has been made in respect of the bankruptcy notice, and there is no need to be any more specific if no application exists. There is no necessity for documentary evidence of the search that has been conducted, or for the deponent of the affidavit to indicate what searches have been conducted. For reasons that the Court will come to that might, for practical reasons, be seen as a weakness in r.4.04(1)(a)(i) of the FCC Bankruptcy Rules. But as it presently reads r.4.04(1)(a)(i) of the FCC Bankruptcy Rules requires nothing more than a statement in the affidavit from the deponent as to the outcome of the search of court records.
The plain meaning of r.4.04(1)(a)(ii) of the FCC Bankruptcy Rules is confirmed by an examination of r.4.04 as a whole, and in particular r.4.04(2) of the FCC Bankruptcy Rules which provides that if an application in r.4.04(1)(a)(ii) or (iii) of the FCC Bankruptcy Rules, that is an application for an order setting aside the relevant bankruptcy notice which has finally been decided or an order extending time for compliance with the bankruptcy notice which has finally been decided, has been made then “a copy of the order finally deciding the application must be attached to the affidavit” required by r.4.04(1)(a) of the FCC Bankruptcy Rules. The express requirement in r.4.04(2) of the FCC Bankruptcy Rules confirms that attaching a copy of a document or search to the affidavit of search of court records is not required by r.4.04(1)(a)(i) of the FCC Bankruptcy Rules. The draftsperson has clearly attended, within the confines of r.4.04 of the FCC Bankruptcy Rules, to the necessity or otherwise for the attachment of documents in relation to the searches required by r.4.04 of the FCC Bankruptcy Rules.
Although not in relation to directly analogous provisions the judgment in Deputy Commissioner of Taxation v National Skin Institute (Aust) Pty Ltd [2012] FCAFC 2; (2012) 200 FCR 146; (2012) 285 ALR 102 (“National Skin Institute”) is of some assistance. In National Skin Institute the Full Court of the Federal Court was required to consider provisions in the Corporations Act and the Federal Court (Corporations) Rules 2000 (Cth) (“Federal Court Corporations Rules”) concerning the adequacy of an affidavit filed by the Deputy Commissioner in support of an application to wind up a company. The relevant statutory provisions were:
a)section 459Q of the Corporations Act which provided as follows:
If an application for a company to be wound up in insolvency relies on a failure by the company to comply with a statutory demand, the application:
(a) must set out particulars of service of the demand on the company and of the failure to comply with the demand; and
(b) must have attached to it:
(i) a copy of the demand; and
(ii) if the demand has been varied by an order under subsection 459H(4)--a copy of the order; and
(c) unless the debt, or each of the debts, to which the demand relates is a judgment debt--must be accompanied by an affidavit that:
(i) verifies that the debt, or the total of the amounts of the debts, is due and payable by the company; and
(ii) complies with the rules.
and
b)rule 5.4 of the Federal Court Corporations Rules which provided as follows:
(1) The affidavit in support of an originating process seeking an order that a company be wound up must be made by the plaintiff or by a person with the authority of the plaintiff or plaintiffs.
(2) If the application is made in reliance on a failure by the company to comply with a statutory demand, the affidavit must:
(a) verify service of the demand on the company; and
(b) verify the failure of the company to comply with the demand; and
(c) state whether and, if so, to what extent the debt, or each of the debts, to which the demand relates is still due and payable by the company at the date when the affidavit is made.
(3) If the application is made in reliance on the ground mentioned in paragraph 461 (1) (a) of the Corporations Act, the affidavit must:
(a) state whether the company is able to pay all its debts as and when they become due and payable; and
(b) refer to the company's most recent balance sheet and profit and loss statement as an annexure or exhibit to the affidavit, or explain their absence.
(4) The affidavit must be made within 7 days before the originating process is filed.
In National Skin Institute the Full Court of the Federal Court observed at [16] per Finn, Gordon and Murphy JJ that:
Section 459Q requires that the deponent, inter alia, “verifies that the debt, or the total of the amounts of the debts, is due and payable by the company” (emphasis added) and complies with the Rules. Rule 5.4 requires the deponent, inter alia, “to state whether and, if so, to what extent the debt, or each of the debts, to which the demand relates is still due and payable by the company at the date when the affidavit is made” (emphasis added).
In relation to the language used in s.459Q of the Corporations Act and r.5.4 of the Federal Court Corporations Rules, the Full Court of the Federal Court in National Skin Institute held at [17] per Finn, Gordon and Murphy JJ that:
The express word of the provisions is verification that the debt remains due and payable. The language is one of “a formal affirmation” and not of the need to “prove or demonstrate by good evidence or otherwise substantiate”: AZED Developments Pty Ltd v Frederick & Co Ltd (in liq) (1994) 14 ACSR 54 at 56 (in the context of s 459E of the Act). What is required is formal affirmation on oath that a certain amount of money is due and payable: Australian Securities and Investments Commission v Eastlands Pty Ltd (2006) 58 ACSR 658 at [7]-[8] and the authorities cited. Section 459Q does not require the affidavit to prove by evidence the existence of the debt. Indeed, as Hayne J explained in AZED Developments at 57, if more was required, it would be difficult to identify what kind of affidavit would be required.
The language used in r.5.4 of the Corporations Rules refers to the relevant affidavit to “state” certain matters. Rule 4.04(1)(a) of the FCC Bankruptcy Rules refers to the need for “an affidavit stating” certain matters.
National Skin Institute provides a useful example of a statutory rule similar to r.4.04 of the FCC Bankruptcy Rules which has been held to mean that an affidavit required to “state” certain matters does not require formal affirmation or a demonstration by good evidence or substantiation of the fact stated. It is confirmatory of the view already reached by the Court on the plain meaning of r.4.04(1)(a) of the FCC Bankruptcy Rules that no more is required than a statement in the affidavit by the deponent as to the outcome of the search of court records.
Counsel for the DCOT also referred to:
a)paragraph 11 of the FCC Bankruptcy Filing Guide: html, which states that:
If the respondent has not filed an application, it will be in order for the person conducting the search to swear an affidavit deposing to these facts. The form of affidavit merely swears to whether any application has been made in respect of the bankruptcy notice. There is no need to be any more specific if no application exists.
and
b)that the FCC Bankruptcy Filing Guide also provides precedent Court forms for the Creditor’s Petition, including a precedent affidavit verifying paragraph 4 of the Creditor’s Petition, and that the form of the Ms Phillips Affidavit was not dissimilar to the precedent affidavit.
Although the terms of the FCC Bankruptcy Filing Guide are not inconsistent with the view already reached by the Court, it is, given that it is only a “guide” published on the internet (albeit by the Court), unnecessary to rely upon it for present purposes.
In England the best evidence rule has been pronounced dead: Masquerade Music Ltd v Springsteen (2001) 51 IPR 650 at [77] and [85] per Jonathan Parker LJ (with whom Laws and Waller LJJ concurred), and its existence in Australia must be doubted: LexisNexis Butterworths, Cross on Evidence, Service 181 at [1480] and [39005]. In this case, the best evidence rule does not apply in any event because the plain meaning of r.4.04(1)(a)(i) of the FCC Bankruptcy Rules requires a statement without the production of a document, namely an affirmation that the search was performed and that there was a certain outcome resulting from that search.
Having regard to what the Court has determined to be the proper meaning of r.4.04(1)(a) of the FCC Bankruptcy Rules Ms Phillips’ Affidavit complies with the requirements of r.4.04(1)(a)(i) of the FCC Bankruptcy Rules.
Should r.4.04(1)(a) of the FCC Bankruptcy Rules be amended?
Given the obvious concern of a Registrar of this Court in referring the issue of the nature of the proof required for a deponent to an affidavit of search of court records, it is appropriate that the Court comment on whether r.4.04(1)(a)(i) of the FCC Bankruptcy Rules ought to be amended to provide for more adequate proof of the relevant search to be before the Court when an application for a sequestration order is made. It is, arguably, concerning that the Court is required to act without knowing what search has actually been conducted. It is of course open to a Registrar, if dissatisfied with an affidavit of search of court records, to make a specific order concerning searches to be conducted or proof of searches to be provided.
It is important to stress that there is no evidence of deliberate abuse of the present requirement which does not require a copy of the relevant search to be attached to the affidavit of search of court records. In any event, were there deliberate abuse, and were it to be subsequently discovered, that might be a matter for appropriate criminal or professional sanctions in respect of those involved.
It seems more likely to the Court that any errors in a search would be inadvertent. Simple search errors might occur. Take a person known as “Bill Smith”. A search of court records of that name might reveal no application with respect to the Bankruptcy Notice, but an inquisitive Registrar might want to know if possible variations of the first name, including Billie, Billy, Will, Wil, Willie, Willy, Wilhelm, or the more orthodox William, were searched. The problem is compounded when names which are difficult to spell or pronounce, or which are unusual or have unusual variants are concerned. A middle European name such as “Keibler” might commonly be misspelt “Kiebler” or “Keebler”: see okmagazine.com\photos\celebrities-to-spell-names\photo\1000972433 (Ms Keibler is apparently an American actress, model, retired professional wrestler and valet who is best known for her work with World Champion Wrestling and World Wrestling Entertainment (“WWE”) as a “WWE Diva”: en.wikepedia.org\wiki\stacy_Keibler). A common first name such as “Susan” might in fact be spelt “Susann”, “Susanne” or “Suzan”: and the shortened version, “Sue”, might nowadays also be spelt “Sioux”: With the possibility of such variants, the likelihood that errors might be made in any search of court records is increased.
The matter is not necessarily assisted by the advent of computer assisted searches. A simple mis-stroke on the keypad might result in a deponent affirming an affidavit of search of court records containing errors: again using “Kiebler as an example – a single unnoticed mis-stroke might result in an erroneous and unrealised search for “Keibler” or “Keebler”.
Where a respondent to a creditor’s petition or application for a sequestration order appears, such inadvertent errors are likely to be corrected. Frequently, however, respondents do not appear before Registrars hearing applications for sequestration orders. In those circumstances, any errors in the affidavit of search of court records, inadvertent or otherwise, are less likely to be corrected.
The Court also notes that the FCC Bankruptcy Rules require copies of other searches, such as a copy of an order setting aside the relevant Bankruptcy Notice and an order extending time for compliance with a Bankruptcy Notice to be attached to the affidavit required by r.4.04(1) of the FCC Bankruptcy Rules: see r.4.04(2) of the FCC Bankruptcy Rules, and a copy of the relevant extract from the National Personal Insolvency Index in relation to the search of that Index: FCC Bankruptcy Rules, r.4.06(3)(c).
In the above circumstances, it might be appropriate for consideration to be given as to whether to amend r.4.04(1)(a)(i) of the FCC Bankruptcy Rules to provide for evidence of the actual search or searches conducted to be attached to the affidavit of search of court records.
Consideration: sequestration order
The following affidavits have been filed on behalf of the DCOT:
a)Ms Daly’s Affidavit verifying the creditors petition;
b)an affidavit of service of the Bankruptcy Notice sworn by Stephen Edwards on 16 September 2014;
c)an affidavit of search of court records being Ms Phillips’ Affidavit;
d)three affidavits of final search of the National Personal Insolvency Index by Ms Elizabeth Conquest sworn 13 March 2015, Ms Gianni Wei T’sung Bei sworn 7 April 2015 and Mr Hong Wei Lee affirmed 11 May 2015;
e)two affidavits of final debt affirmed by Ms Daly on 13 March 2015 and 11 May 2015; and
f)an affidavit of service of the creditors petition and other relevant documents by David Evans sworn 23 February 2015.
The Court may make a sequestration order upon proof of the matters set out in s.52(1) of the Bankruptcy Act, subject to the jurisdiction to make sequestration orders under s.43 of the Bankruptcy Act and the conditions on which a creditor may petition under s.44 of the Bankruptcy Act being met.
The DCOT, as petitioning creditor, is obliged to put before the Court affidavits:
a)verifying the petition: Bankruptcy Act, s.47(1); FCC (Bankruptcy) Rules, r.4.02;
b)as to search of the records of this Court and the Federal Court as to any application in relation to the bankruptcy notice: FCC (Bankruptcy) Rules, r.4.04(1)(a) and (2);
c)of service of the bankruptcy notice: FCC (Bankruptcy) Rules, r.4.04(1)(b);
d)of service of documents required to be served under the FCC (Bankruptcy) Rules, rr.4.05 and 4.06(2);
e)of search of the National Personal Insolvency Index no earlier than the day before the hearing date for the petition: FCC (Bankruptcy) Rules, r.4.06(3); and
f)of debt on which the creditor still relies as owing: FCC (Bankruptcy) Rules, r.4.06(4).
The Court may decline to issue a sequestration order if:
a)it is not satisfied with the proof of any of the above matters: Bankruptcy Act, s.52(2); or
b)it is satisfied by Mr Keating that:
i)he is able to pay his debts: Bankruptcy Act, s.52(2)(a); or
ii)for other sufficient cause a sequestration order ought not be made: Bankruptcy Act, s.52(2)(b).
The Court is satisfied as to the matters required to be proved for the making of a sequestration order. Specifically, the Court accepts that there is:
a)an affidavit verifying the petition;
b)an affidavit of search of court records;
c)an affidavit of service of the bankruptcy notice;
d)an affidavit of search of the National Personal Insolvency Index;
e)an affidavit of debt still owed; and
f)an affidavit of service of the creditor’s petition and other relevant documents.
A petitioning creditor who has made out the requirements set out above has a prime facie right to a sequestration order unless very special circumstances are shown to justify the Court departing from its usual practice: Re Sanders (2003) 1 ABC(NS) 408; [2003] FCA 1079 (“Re Sanders”); affirmed on appeal in Sanders v Knudsen & Yates trading as the Hargreaves Practice [2004] FCAFC 305 at [14] per Whitlam, Branson and Sackville JJ. No special circumstances arise in this case. There is no proof before the Court that Mr Keating is able to pay the debt referred to in the creditors petition. The test of solvency is not whether Mr Keating’s assets exceed his liabilities, but whether, looking at all of his financial circumstances, he is able to utilise such cash resources as he can command through the use of his assets to meet his debts as they fall due. Even where assets exceed liabilities it is possible to find that a person is not able to pay their debts within the meaning of s.52(2)(a) of the Bankruptcy Act: Re Sanders; Re Lakatos; Ex parte Lakatos v Deputy Commissioner of Taxation (1996) 33 ATR 145. Mr Keating has to prove that assets are available to be realised and capable of ready realisation likely to result in payment of the debt within a reasonable time: Re Sanders. There is no such proof before the Court. There is therefore a proper basis for the making of a sequestration order in this case.
Conclusions and orders
The Court has concluded that:
a)Ms Phillips’ Affidavit complies with the requirements of r.4.04(1)(a)(i) of the FCC Bankruptcy Rules, and there will be a declaration accordingly;
b)a sequestration order should issue against the bankrupt estate of Mr Keating, with the date of the act of bankruptcy being 6 October 2014; and
c)there will be an order that the DCOT’s costs of this application, including reserved costs, be taxed, if not agreed, by a Registrar of this Court under Part 40 of the Federal Court Rules 2011 (Cth) and paid out of Mr Keating’s bankrupt estate in accordance with the Bankruptcy Act, save that no costs are to be awarded for that part of the argument on the application relating to the matter referred to the Court by the Registrar in relation to the requirements for the affidavit of search of court records.
The Court notes that consideration of whether to amend r.4.04(1)(a)(i) of the FCC Bankruptcy Rules to provide for evidence of the actual search conducted by the deponent of the affidavit of search of court records may be appropriate.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Associate:
Date: 22 June 2015
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