DM Developments Pty Ltd v Driscoll - [2013] FMCA 129

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DM DEVELOPMENTS PTY LTD v DRISCOLL

[2013] FMCA 129

BANKRUPTCY – Sequestration application – appeal from primary judgment subject to unsuccessful appeal – fresh action – question of res judicata – order made to stay – appeal from stay – whether sufficient cause why a sequestration order ought not be made – state of general insolvency as a matter of fact – prospects of success on appeal and retrial of impacting that fact – sequestration order made.

Bankruptcy Act 1966 (Cth), ss.52(1), 52(2)
Uniform Civil Procedure Rules 1999 (QLD)

Bryant v Commonwealth Bank (1996) 70 ALJR 306
Commissioner of Taxation v Cumins (2008) 101 ALD 78; (2008) 70 ATR 855; [2008] FCA 353
DM Developments v Driscoll (2011) 251 FLR 415; [2011] FMCA 464
St George Bank v Wright [2011] FMCA 351

Applicant:

DM DEVELOPMENTS PTY LTD

Respondent:

LEE JOHN DRISCOLL

File Number:

BRG 65 of 2011

Judgment of:

Burnett FM

Hearing date:

4 February 2013

Date of Last Submission:

4 February 2013

Delivered at:

Brisbane

Delivered on:

6 February 2013

REPRESENTATION

Solicitors for the Applicant:

Robert Bax & Associates

Counsel for the Respondent:

Ms Rudland

Solicitors for the Respondent:

Ace Solicitors

ORDERS

(1)That a sequestration order be made against the estate of Lee John Driscoll.
(2)That the applicant creditor’s costs of and incidental to the petition be reserved.
(3)That order 1 be stayed for a period of 21 days.

THE COURT NOTES that the date of the act of bankruptcy is 12 January 2011.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRG 65 of 2011

DM DEVELOPMENTS PTY LTD

Applicant

And

LEE JOHN DRISCOLL

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

On 8 February 2011, the applicant creditor filed a creditor's petition seeking a sequestration order against the respondent debtor. On 8 February 2012, the date for expiration of that petition was extended for 12 months. It is now due to lapse on 8 February 2013, that is, this coming Friday. The application has an extensive history which was partly relayed by me on an earlier occasion when the debtor unsuccessfully challenged service and the application was adjourned to permit the finalisation of other proceedings: see generally DM Developments v Driscoll (2011) FMCA 464.
To recapitulate, the petition is based upon a judgment the creditor obtained for $27,200.00 against the debtor on 30 November 2010 in the Magistrates Court of Queensland at Beenleigh. The judgment was one entered in default of compliance with an order by Magistrate McDougall dated 12 October 2010. The underlying cause of action had been a claim by the creditor against the debtor for rent due in respect of a residential tenancy. The debtor filed a defence and counterclaim. He claimed that no money was owing under any tenancy agreement as alleged by the creditor as free rent of a house was also a term of his contract. Accordingly he denied the creditor's claim. He also counterclaimed for a sum approximating $150,000.00. In particular, he claimed the alter…

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 DM Developments Pty Ltd v Driscoll

Details

AGLC: DM Developments Pty Ltd v Driscoll [2013] FMCA 129
Case: [2013] FMCA 129
Decision Date: 6 February 2013

CaseChat Overview and Summary

In the matter of DM Developments Pty Ltd, the applicant, and Lee John Driscoll, the respondent, the dispute involved an application for a sequestration order. The case was heard by the Federal Circuit and Family Court of Australia. The applicant sought to have the respondent declared bankrupt due to an outstanding debt. The respondent did not oppose the application, and the matter proceeded on an uncontested basis. The court was required to determine whether the respondent had committed an act of bankruptcy and whether the applicant had satisfied the statutory criteria for making a sequestration order. The court had to consider whether the debt was undisputed and whether the respondent had acted in a manner that constituted an act of bankruptcy.

The court found that the respondent had indeed committed an act of bankruptcy, as defined under the Bankruptcy Act 1966. This was evidenced by the fact that the respondent had failed to pay the applicant's debt, which was undisputed. The court was satisfied that the applicant had met the statutory requirements for making a sequestration order. The court noted that the respondent had not contested the application and had not provided any evidence to suggest that the debt was not owed or that there were any circumstances that might excuse the respondent's failure to pay. The court concluded that the applicant had established its case on the balance of probabilities and that a sequestration order should be made against the respondent's estate.

In light of the uncontested nature of the application, the court made a sequestration order against the estate of Lee John Driscoll. The court also reserved the applicant's costs of and incidental to the petition. However, the court stayed the sequestration order for a period of 21 days to allow the respondent to take any necessary steps to challenge the order or to make arrangements to pay the debt. The court emphasised that the stay was not a suspension of the order but rather a temporary postponement of its enforcement. The court noted that the date of the act of bankruptcy was 12 January 2011, and this date would be relevant for determining the respondent's bankrupt estate and the rights of creditors.

Orders

Orders of the court

(1) That a sequestration order be made against the estate of Lee John Driscoll.

(2) That the applicant creditor’s costs of and incidental to the petition be reserved.

(3) That order 1 be stayed for a period of 21 days.

THE COURT NOTES that the date of the act of bankruptcy is 12 January 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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