Dunell v Kerr

Case [2021] FedCFamC2G 87

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Dunell v Kerr [2021] FedCFamC2G 87

File number(s): BRG 63 of 2021
Judgment of: JUDGE EGAN
Date of judgment: 29 September 2021
Catchwords: BANKRUPTCY – application for annulment of bankruptcy – failure by applicant to adduce any evidence of his solvency, either at the time of the making of the sequestration order, or at the time of the filing of the application for annulment of the bankruptcy – more than two (2) year delay in the filing of the application for annulment – scandalous allegations of fraud against Trustee ordered to be struck out – application entirely unmeritorious – application dismissed
Legislation:

Bankruptcy Act 1966 (Cth), ss 104, 153B

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), r 15.16(1)(a)
Cases cited:

Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18

Papps v Tapp (1997) 78 FCR 524

Mulhern v Pearce (No 2) [2014] FCA 805

Szepesvary v Weston [2018] FCAFC 224

Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325

Sims v Suda Ltd (No 2) [2015] FCA 281
Division: Division 2 General Federal Law
Number of paragraphs: 21
Date of last submission/s: 27 September 2021
Date of hearing: 27 September 2021
Counsel for the Applicant: Mr Dunell appearing in person on his own behalf
Solicitor for the First Respondent: Mr J. Shaw of Piper Alderman
Counsel for the Second and Third Respondents: Mr S. Webster
Solicitor for the Second and Third Respondents: Bartley Cohen

ORDERS

BRG 63 of 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

WARREN JOHN DUNELL

Applicant
AND:

DAVID JOHN KERR

First Respondent

PHIL KAUNITZ

Second Respondent

AIMEE MUNDT

Third Respondent

ORDER MADE BY:

JUDGE EGAN

DATE OF ORDER:

29 SEPTEMBER 2021

IT IS ORDERED THAT:

1.The Amended Application filed on 2 June 2021 be dismissed.

2.The Trustee’s reasonable costs and outlays be paid from the net proceeds of the Applicant’s bankrupt estate.

3.Paragraphs 12 and 18 of the Applicant’s affidavit filed on 2 June 2021 be struck out pursuant to the provisions of r. 15.16(1)(a) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review 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

JUDGE EGAN:

Introduction

  1. On 22 September 2017, judgment was entered against the applicant in the Supreme Court of Queensland, in favour of Australia and New Zealand Banking Group Limited (‘ANZ’), in the amount of $292,295.75, plus interest in the amount of $7,575.66.

  2. The judgment debt has to date…

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AGLC
Dunell v Kerr [2021] FedCFamC2G 87
Case
[2021] FedCFamC2G 87
Decision Date

CaseChat Overview and Summary

The case of Dunell v Kerr involved an application by the applicant, Dunell, for the annulment of his bankruptcy. The dispute centred on whether the Federal Circuit and Family Court of Australia should exercise its discretion to annul the sequestration order that had rendered the applicant bankrupt. The respondent to the application was Kerr, who was the Trustee of the applicant's bankrupt estate. The matter was heard and determined by the Federal Circuit and Family Court of Australia.

The court was required to decide whether the applicant had provided sufficient evidence to demonstrate that he was solvent at the time the sequestration order was made or at the time of filing the application for annulment. The court also needed to consider the applicant's delay of over two years in filing the application and assess whether there were any exceptional circumstances that warranted the annulment of the bankruptcy. Additionally, the court had to evaluate the scandalous allegations made by the applicant against the respondent, which lacked evidentiary support.

The court found that the applicant had not provided any evidence of his financial capacity or solvency, either at the time of the sequestration order or at the time of filing the application for annulment. The unexplained delay in filing the application was considered a significant factor against the applicant. The court also noted the applicant's lack of cooperation and unmeritorious conduct, including the scandalous allegations of fraud against the respondent without any evidentiary basis. As a result, the court dismissed the application for annulment of the bankruptcy. The scandalous allegations were also ordered to be struck out.

In conclusion, the court dismissed the applicant's application for the annulment of his bankruptcy, and the scandalous allegations made against the respondent were struck out. The respondent's reasonable costs and outlays were ordered to be paid from the net proceeds of the applicant's bankrupt estate. The order is subject to minor typographical or grammatical corrections as per the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021.

Orders

Orders of the court

IT IS ORDERED THAT:

1. The Amended Application filed on 2 June 2021 be dismissed.

2. The Trustee’s reasonable costs and outlays be paid from the net proceeds of the Applicant’s bankrupt estate.

3. Paragraphs 12 and 18 of the Applicant’s affidavit filed on 2 June 2021 be struck out pursuant to the provisions of r. 15.16(1)(a) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review 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).

Background

Background to the litigation

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Evidence

Evidence Before The Court

In Mulhern v Pearce (No 2) [2014] FCA 805 at [73], Collier J said as follows:“[73] A sequestration order resulting in bankruptcy is a very serious matter. An order annulling a bankruptcy is an equally serious matter, because it means that the sequestration order, the resultant bankruptcy, and the heavy financial and legal constraints placed on the bankrupt, should never have occurred in the first place. Indeed in Theissbacer v MacGregor Garrick & Co [1993] 2 Qd R 223 at 226 the Court of Appeal of Queensland described annulment as the retrospective annihilation of the sequestration order and its consequences. The power of annulment must be exercised with great caution and should not be exercised unless under special circumstances: Starke J in Cameron v Cole (1944) 68 CLR 571 at 594.”Application of Principles having regard to the Evidence before the Court The applicant has failed to satisfy the Court that it should exercise its discretion to annul the applicant’s bankruptcy. Relevantly: (a)The applicant failed to adduce any evidence of his financial resources or capacity, either at the time of the making of the sequestration order, or from that time until the time of the filing of the application for annulment.(b)The applicant has adduced no evidence as to why he delayed more than two (2) years in the filing of the application for annulment. In circumstances where the applicant has failed to provide any basis for the Court finding that the applicant was at any time solvent, in the sense of his being able to pay his debts (including the debt owed to ANZ) as and when they fell due, the unexplained delay is telling against the applicant. [2] [2] Szepesvary v Weston [2018] FCAFC 224 at [68]. The Court has further had regard to the fact that the applicant had failed to complete a statement of affairs, and that he had failed to complete an income questionnaire, thereby resulting in the Trustee being required to undertake a burdensome task of closely examining the applicant’s bank statements so as to allow the Trustee to issue an actual and notional income assessment. The conduct of the applicant evidenced a lack of co-operation which was another factor tending against the exercise of the Court’s discretion in the applicant’s favour. Additionally, the applicant’s conduct of the proceeding has been unmeritorious in a number of respects. First, the applicant failed to appreciate that he bore the onus of adducing persuasive evidence so as to support his claim as to why the bankruptcy ought to be annulled. Second, the applicant made serious allegations of fraud and criminality against the respondents in circumstances where such allegations lacked any evidentiary basis, and were scandalous. The applicant failed to provide any particulars of fraud able to support the claim. It was a necessary element of a claim of fraud that proper particulars be given. The applicant failed to do so. [3] Third, notwithstanding the many unmeritorious allegations made by the applicant against the respondents, the applicant failed to cross-examine any of the respondents on other than the most rudimentary of points, namely as to whether they ever had possession or control of the original loan agreement documentation, which gave rise to the applicant’s indebtedness to ANZ, which had not already been discovered. In that regard, the applicant admitted, during the course of the hearing before the Court, that he already had knowledge of the existence of the two (2) chattel mortgages granted by him to ANZ, and the two (2) guarantees executed by the applicant in favour of ANZ, each of which had respectively been annexed to an affidavit of Stefan Naumovski filed in the Supreme Court proceedings on behalf of ANZ on 6 April 2017. The applicant’s short cross-examination of each of the respondents was unproductive of anything of evidentiary value to either the applicant, or the Court.[3] Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325 at [57].

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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