Duncan v Gurappaji, in the matter of Gurappaji
[2024] FedCFamC2G 910
•30 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Duncan v Gurappaji, in the matter of Gurappaji [2024] FedCFamC2G 910
File number(s): MLG 184 of 2024 Judgment of: JUDGE FORBES Date of judgment: 30 August 2024 Catchwords: BANKRUPTCY – application for an extension of time to seek review of a Registrar’s decision – consideration of criteria relevant to extension of time – where applicant for extension failed to file evidence to explain delay – where applicant debtor has not filed statement of affairs or other cogent evidence - where substantive review has no prospect of success – extension of time not granted – Registrar’s sequestration order affirmed Legislation: Bankruptcy Act 1996 (Cth) s 40, 42, 44, 52
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules (Cth) r 2.02, 4.06
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 3.05, 17.05
Cases cited: Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075
Hunter Vally Developments Pty Ltd v Cohen (1984) 3 FCR 344
Panagoulias v Official Trustee in Bankruptcy [2010] FMCA 945
Sandell v Porter (1966) 115 CLR 666
Division: Division 2 General Federal Law Number of paragraphs: 31 Date of hearing: 30 August 2024 Place: Melbourne Counsel for the Applicant: Ms Wangmann Solicitor for the Applicant: White Cleland Respondent: No appearance ORDERS
MLG 184 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF KAVITHA SIDDIAH GURAPPAJI
BETWEEN: CAYLEN DUNCAN
Applicant
AND: KAVITHA SIDDIAH GURAPPAJI
Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
30 AUGUST 2024
THE COURT ORDERS THAT:
1.Pursuant to r 2.02(3) of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy Rules) Rules 2021 (Cth), the application for an extension of time for the Application for Review of a Registrar’s Decision lodged on 23 July 2024 is refused and the Application for Review be otherwise dismissed.
2.The order of Registrar Curnow made 27 June 2024 sequestrating the estate of Kavitha Siddiah Gurappaji be affirmed.
3.The scale costs of the Applicant Creditor be paid from the bankrupt estate of the Respondent, Kavitha Siddiah Gurappaji.
AND THE COURT NOTES THAT:
A.Pursuant to rule 17.05(2)(a) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) the Court or a Registrar may, on application, vary or set aside a judgment or order after it has been entered if it was made in the absence of a party.
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
(ex tempore reasons revised from transcript)JUDGE FORBES
These ex tempore reasons explain why I have decided to dismiss the applicant’s application for an extension of time seeking a review of the decision of Registrar Curnow made on 27 June 2024. These published reasons depart from the transcript only to include relevant background information and necessary references to legislation and cited authority. Grammatical errors have been corrected and headings have been include to improve readability.
Introduction
The applicant in this review proceeding is the debtor Ms Kavitha Suddiah Gurappaji. The respondent is the petitioning creditor, Mr Caylen Duncan.
On 27 June 2024, Registrar Curnow pronounced an order for sequestration against the estate of the debtor Ms Gurappaji following Ms Gurappaji's failure to satisfy a judgment debt owed to the petitioning creditor in the sum of $86,279.96 (Judgment debt).
Ms Gurappaji has sought to review the registrar's decision. Because the application was filed outside the time permitted by rule 2.02 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules (Cth) (the Bankruptcy Rules), Ms Gurappaji requires leave of the Court to proceed with her application for review. Mr Duncan opposes the application for review and any application by Ms Gurappaji for leave to extend the time for filing an application for review. The petitioning creditor seeks that the application be dismissed and that there be an order for costs.
For the reasons set out below I have decided to dismiss the application for an extension of time. In my view the substantive application for review has no prospects of success and in those circumstances it would not be in the interests of the administration of justice for the extension of time to be granted.
Background
The background to Ms Gurrapaji’s bankruptcy is set out in the affidavit of Alan Sheppet sworn 27 August 2024.
Mr Sheppet deposes that the judgment debt which founded the bankruptcy proceedings relates to a contested dispute that was agitated in the Supreme Court of Victoria in proceeding S ECI 2019 00999 (the Supreme Court proceedings) relating to a property law dispute between the parties. In those proceedings Ms Gurrapaji was the plaintiff and Mr Duncan was the defendant (in his capacity as trustee of the Moores Road Unit Trust). Final orders were made in the Supreme Court proceedings by the Honourable Justice Forbes on 23 October 2023[1] which required Ms Gurappaji to pay the judgment debt forthwith and with further orders that Ms Gurappaji pay Mr Duncan’s costs of the Supreme Court proceeding on a standard basis until 16 November 2020 and on an indemnity basis since 16 November 2020, to be taxed by the Costs Court in default of agreement. Those costs have not as yet been taxed, but the Court has been informed they are expected to be greater than $500,000.
[1] Affidavit of Alan Sheppet sworn 27 August 2024, Annexure AS-1
On 23 November 2023 Mr Duncan served a bankruptcy notice on Ms Gurrapaji seeking payment of the judgment debt and interest. Suffice to say, Ms Gurappaji failed to comply with the requirements of the bankruptcy notice and the time for compliance with the bankruptcy notice expired without payment or arrangement to the satisfaction of the petitioning creditor on 14 December 2023.
On 30 January, Mr Duncan filed a creditors petition in this Court and that petition was supported by an affidavit or affidavits as required by the Rules. Ms Wangmann, who appears as counsel for the petitioning creditor today, seeks to rely upon that creditors petition and the affidavits filed in support. Following an order for substituted service, which Ms Wangmann has referred to today, substituted service of relevant documents was effected and that service was deposed to in affidavits of service filed on 8 May 2024.
The creditors petition proceeded before Registrar Curnow on 27 June 2024, and the sequestration order was made on that occasion.
On 23 July 2024 Ms Gurrapaji lodged an application for review of the registrar’s decision and sequestration order. The application for review was accepted for filing on 5 August 2024. In her application Ms Gurrapaji seeks orders setting aside the sequestration order and leave for an extension of time for her to make arrangements with the petitioning credit for settlement of the debt.
Review proceedings
The application for review of the registrar's decision was docketed to me and listed for directions on 8 August 2024. The directions hearing was held electronically via Teams. I informed Ms Gurrapaji that her application for review had been filed outside the time prescribed by the court rules and that she would require an extension of time. I made orders for Ms Gurappaji to file any affidavits upon which she intended to rely in support of her application for an extension of time by no later than 20 August 2024. I listed the hearing for 30 August 2024 and I directed Ms Gurrapaji to include in her affidavit an explanation as to why the matter should not be heard in person.
Ms Gurappaji did not file any such affidavit by 20 August 2024. Accordingly, on 23 August, a week ago, my chambers informed the parties that the matter would proceed in person.
On 28 August, Ms Gurappaji communicated with my chambers and raised a number of matters relating to her health and ability to prepare for this case. Later that same day, my chambers responded to Ms Gurappaji, reiterating my 8 August 2024 orders requiring her to file an affidavit stating why the matter could not proceed in person. My chambers indicated to Ms Gurappaji that, as no affidavit nor any medical evidence had been received to substantiate an adjournment, the matter would remain listed for today, to be held in person. Notwithstanding, through my chambers, Ms Gurappaji was invited to attend and make submissions at this hearing if she wished to press an adjournment application. She was also informed that if she or a representative did not appear, the petitioning creditor may seek to have the matter dismissed.
There was subsequent correspondence early yesterday from Ms Gurappaji, where she again emailed my chambers, seemingly in response to an email from the opposing party's solicitors, attaching the creditor's written submissions and saying:
CANNOT READ SHIT!!! WILL GET SOMEONE TO SEND IN AFFIDAVIT FORM OF DOCS UPLOADED ON E FILING. IF NO ONE COMES, I WILL LET U KNOW. U HAVE NO SUPPORT IN PLACE FOR VISION IMPAIRED, HANDICAPPED PEOPLE BUT U WANT EVERYTHING DONE ACCORDING TO U R DECORUM. THAT IS A SHAME. GIVE ME SUPPORT, NOT LEGAL ADVISE, JUST TO FILE OR GIVE ME AN ADJOURNMENT. WE ARE ALL ENTITLED TO JUSTICE!!!
Later yesterday morning, Ms Gurappaji forwarded to chambers a blank affidavit form. At 3.25 pm yesterday, Ms Gurappaji sent to chambers a document in the form of an affidavit, the contents of which are the same as the email she sent to chambers on 28 August, outlining reasons why she requires an adjournment and cannot present in Court. The affidavit was unsealed, it has not been sworn or affirmed before a witness, and it has not, to my knowledge, been properly filed with the Court registry.
Hearing on 30 August 2024
As at the commencement of this hearing, Ms Gurappaji had not, I am informed, uploaded any documents to the Court portal since my orders of 8 August 2024. My associate informs me that shortly prior to this hearing Ms Gurappaji forwarded what appears to be an auto reply from the registry, but it is otherwise meaningless.
The orders I made on 8 August have not been complied with. Ms Gurappaji has been afforded an opportunity to appear before the Court, either herself or by representative, to make an application for an adjournment, and she has failed to do so. There was no appearance by Ms Gurappaji this morning. I instructed my associate to call for Ms Gurappaji in the vicinity of the Court and my associate informed the Court that there was no appearance.
There being no appearance, there were proper grounds for me to dismiss this application on the basis of non-appearance. However, the review respondent offered to address both the extension of time application and also the substantive review application. I considered it appropriate to hear counsel for the petitioning creditor on those matters so that there is a decision recording my views in relation to both of those. That decision may be of assistance in the event Ms Gurappaji, having not attended today, makes a subsequent application for any orders I make in her absence to be varied or set aside.
Extension of time
Addressing the extension of time, as I said earlier, the application for review of the registrar's decision was made five days outside the time provided by rule 2.02(3) of the Bankruptcy Rules which provides as follows:
(3)Subject to any direction by the Court or a Judge to the contrary, an application under subsection 104(2) of the Act for review of the exercise of a power of the Court by a Registrar must be made by filing an application in accordance with Form B3A within 21 days after the day on which the power was exercised.
The Court has a discretionary power to extend time under rule 3.05 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules. It is well settled that in exercising its discretion, the Court will have regard to a number of matters, those being the criteria often referred to as the "Hunter Valley Development[2] considerations", which are: the length of the delay, the reason and explanation for the delay, the substantive merits of the application and any prejudice to the other party.
[2] Hunter Vally Developments Pty Ltd v Cohen (1984) 3 FCR 344
The length of the delay in this case is five days, which, on its face, is not a long time. In written submissions filed with the Court, the respondent creditor accepts that the delay is not long. Nonetheless, Ms Gurappaji has an obligation to explain the reason for the delay to the Court and she has not done so. Court timeframes are to be strictly adhered to, unless the Court exercises its discretion to extend time. Any exercise of discretion must be considered judicially and supported by evidence.
As has been submitted by counsel today, Ms Gurappaji has failed to file any affidavit in support of her application for leave, pursuant to rule 2.02(3) of the Bankruptcy Rules, for an extension of the 21-day time period. Ms Gurappaji has provided no explanation for the delay. She has not availed herself of the opportunity which I provided to her to put forward affidavit material.
Furthermore, Ms Gurappaji is in breach of other orders I made on 8 August 2024. She was required to file a statement of affairs and has not done so. She was ordered to serve affidavit material on other creditors and has not done so. That conduct by Ms Gurappaji weighs against her application for an extension of time.
The petitioning creditor, who is the review respondent in this review, submits that Ms Gurappaji has not demonstrated compliance with Court directions and has failed to meet the necessary threshold required for an extension of time, and that the interests of justice do not warrant the extension of time being granted. There is significant force in those submissions.
One of the matters that the Court must consider in relation to the extension of time is the merit of the underlying substantive application. In my view, on the material presently before the Court, the substantive application has no reasonable prospect of success.
I have read the written outline of submissions provided to the Court by the petitioning creditor and which are relied on by counsel. Those submissions, from paragraph 23 to 47, address the substantive application in relation to which the sequestration order was made. The creditor submits, and I accept, that:
(a)the petitioning creditor has satisfied the formal requirements of the Bankruptcy Act 1996 (Cth) (Bankruptcy Act) to enliven the Court's power to make a sequestration order against Ms Gurappaji and all of the elements required by the Court in relation to a sequestration order as set out in sections 43, 44 and 52 of the Bankruptcy Act are satisfied;
(b)the petitioning creditor has also complied with the requirements of r.4.06(4) and r.4.06(3) of the Bankruptcy Rules;
(c)Ms Gurappaji bears the burden to prove that she is solvent and able to pay her debts for the purpose of s 52(2)(a) of the Bankruptcy Act[3];
(d)the Court must presume that Ms Gurappaji is insolvent pursuant to section 40(g)(i) of the Bankruptcy Act as she has failed to comply within the time fixed for compliance with the requirements of the Bankruptcy Notice;
(e)affidavits filed by Ms Gurrapaji and considered by the Registrar assert solvency and purport to present evidence of assets sufficient to meet the judgment debt. However, the mere possession of assets does not establish solvency unless those assets can be readily converted into cash within a relatively short time frame to meet liabilities as they fall due[4]. The evidence filed in response to the sequestration application is unverified and does not meet the requirement to provide the “fullest and best” evidence of her financial position[5]. The evidence is very sparse and Ms Gurrapaji has not taken the opportunity to file any further or better evidence in these proceedings;
(f)there is no evidence that Ms Gurrapaji has taken steps to realise alleged assets and she has not demonstrated any capacity to meet her debts as and when they fall due;
(g)Ms Gurrapaji has not provided evidence of her liabilities nor has she given details of her income and expenses. As stated earlier Ms Gurrapji has not filed as statement of affairs despite her obligations under the Bankruptcy Act and court orders requiring her to do so; and
(h)the failure to put cogent and probative evidence before the Court weighs heavily against any assumption of solvency and it is open to the Court to infer that the evidence Ms Gurrapji could give would not assist her.
[3] Panagoulias v Official Trustee in Bankruptcy [2010] FMCA 945
[4] Sandell v Porter (1966) 115 CLR 666, 670
[5] Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075, 1081
I accept those submissions. The merit of the application is so weak and without reasonable prospect of success that it would not, in my view, be in the interests of justice to allow the extension of time. However, even if another court was to find that I was wrong in not allowing the extension of time, for the reasons advanced in the creditor's written submissions, I would have dismissed the substantive application as unmeritorious.
Disposition
For the reasons set out above, I decline to exercise my discretion to grant an extension of time for Ms Gurrapaji to seek review of the Registrar’s decision and orders made on 27 June 2024.
The application for an extension of time will be dismissed and the decision and orders of the Registrar affirmed.
The petitioning creditor’s costs of this review application should be paid from the sequestrated estate.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Ex-tempore Reasons for Judgment of Judge Forbes. Associate:
Dated: 16 September 2024
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