Donnelly v Official RECEIVER - [2009] FMCA 1173

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DONNELLY v OFFICIAL RECEIVER

[2009] FMCA 1173

BANKRUPTCY – Annulment under s.153B – where trustee’s costs remain unpaid.

Bankruptcy Act 1966, s.153B

Swain v Official Trustee [2003] FMCA 13
Kathleen Wong; Ex Parte Wong v Robinson BC9502840

Applicant:

KERRY GARTH DONNELLY

Respondent:

OFFICIAL RECEIVER

Interested Party:

PAUL LEROY AS TRUSTEE OF THE BANKRUPT ESTATE OF KERRY GARTH DONNELLY

File Number:

SYG 1956 of 2009

Judgment of:

Raphael FM

Hearing date:

17 November 2009

Date of Last Submission:

17 November 2009

Delivered at:

Sydney

Delivered on:

17 November 2009

REPRESENTATION

Counsel for the Applicant:

Mr G Ng

Solicitors for the Applicant:

DarganKelly Lawyers

Solicitors for the Interested Party:

ERA Legal

ORDERS

The Applicant causes to be paid the sum of $16,280.83 in cleared funds to Paul Leroy as Trustee of the Bankrupt Estate of Kerry Garth Donnelly on or before 1 December 2009.
Provided that Order 1 is complied with, the Bankruptcy of Kerry Garth Donnelly be annulled pursuant to s153B of the Bankruptcy Act 1966 (Cth) on 1 December 2009.
In the event the payment is not made the proceedings be listed for further directions on 8 December 2009.
The parties are to bring in Minutes of Order annulling the bankruptcy in the event that payment is made.

The Court notes that in the event that payment is made there will be no order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1956 of 2009

KERRY GARTH DONNELLY

Applicant

And

OFFICIAL RECEIVER

Respondent

PAUL LEROY AS TRUSTEE OF THE BANKRUPT ESTATE OF KERRY GARTH DONNELLY

Interested Party

REASONS FOR JUDGMENT

There comes before me an application under s.153B of the Bankruptcy Act 1966 (the “Act”) for the annulment of a bankruptcy which came about by way of the filing of a debtor’s petition. The only significant issue in the matter is whether I should make orders requiring the bankrupt to pay the agreed costs of the Trustee before the annulment takes place or whether I should annul the bankruptcy and make an order for the payment of those agreed costs which, if they are not paid, the Trustee would be entitled to enforce either by way of lien on the property of the bankrupt that he has in his possession or by a separate action.
In the helpful submissions of the Applicant that were provided to the court on 12 October 2009 the court was told that the Applicant filed his own debtor’s petition because he wrongfully believed that he was indebted to the Deputy Commissioner for Taxation in respect of the taxation liabilities of a trust. He had apparently received some inappropriate advice from so called “specialist in insolvency matters”. If the bankrupt had not failed to defend the proceedings in which the judgment was obtained then it is understood that he would not have been insolvent at the time he filed the debtor’s petition.
I am satisfied from reading the affidavits of Mr Donnelly, which were filed in the…

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 Donnelly v Official RECEIVER

Details

AGLC: Donnelly v Official RECEIVER [2009] FMCA 1173
Case: [2009] FMCA 1173
Decision Date: 17 November 2009

CaseChat Overview and Summary

The Applicant, Kerry Garth Donnelly, sought relief from the Official Receiver in relation to their bankruptcy, which was to be annulled if certain conditions were met. The Official Receiver, acting in their capacity as the statutory trustee for Donnelly's bankrupt estate, was the respondent. The dispute involved the annulment of Donnelly's bankruptcy and the conditions under which this would occur, including the payment of a specific sum to the trustee of the bankrupt estate. The matter was heard in the Federal Circuit Court of Australia.

The central legal issue before the court was whether the bankruptcy of Kerry Garth Donnelly could be annulled under section 153B of the Bankruptcy Act 1966 (Cth) upon the payment of a specified amount to the trustee. Donnelly argued that the bankruptcy should be annulled upon compliance with the court's order, while the Official Receiver contended that the conditions set forth by the court were necessary to ensure that the trustee was compensated for the administration of the estate. The court had to determine whether the conditions imposed were legally sound and in line with the provisions of the Bankruptcy Act.

The court found that the conditions imposed for the annulment of Donnelly's bankruptcy were reasonable and lawful. The judge held that the payment of $16,280.83 to the trustee was sufficient to compensate for the costs associated with the administration of the estate. The court acknowledged the need to balance the interests of the bankrupt, the trustee, and the creditors. It concluded that the conditions met the statutory requirements and provided a fair resolution to the dispute. Consequently, the court ordered the annulment of the bankruptcy on the condition that the payment was made by the specified date.

The final orders of the court required Donnelly to pay the specified sum to the trustee on or before 1 December 2009. If the payment was made, the bankruptcy would be annulled on that date. If the payment was not made, the proceedings would be listed for further directions. The court noted that there would be no order as to costs if the payment was made as directed. The parties were also required to bring in minutes of the order annulling the bankruptcy if the payment was made.

Orders

Orders of the court

The Applicant causes to be paid the sum of $16,280.83 in cleared funds to Paul Leroy as Trustee of the Bankrupt Estate of Kerry Garth Donnelly on or before 1 December 2009.

Provided that Order 1 is complied with, the Bankruptcy of Kerry Garth Donnelly be annulled pursuant to s153B of the Bankruptcy Act 1966 (Cth) on 1 December 2009.

In the event the payment is not made the proceedings be listed for further directions on 8 December 2009.

The parties are to bring in Minutes of Order annulling the bankruptcy in the event that payment is made.

The Court notes that in the event that payment is made there will be no order as to costs.

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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