Efstathiou v Fenwick

FEDERAL MAGISTRATES COURT OF AUSTRALIA

EFSTATHIOU & ANOR v FENWICK

[2007] FMCA 1450

BANKRUPTCY – Application for Trustee to take control of property – where debtor appears to have been disposing of assets – where application made ex parte.

Bankruptcy Act 1966, s.50

Applicants:

SIMON EFSTATHIOU AND
SASHA MASON

Respondent:

KEVIN WILLIAM FENWICK

File number:

SYG2488 of 2007

Judgment of:

Raphael FM

Hearing date:

14 August 2007

Date of last submission:

14 August 2007

Delivered at:

Sydney

Delivered on:

14 August 2007

REPRESENTATION

Counsel for the Applicant:	Mr J Johnson
Solicitors for the Applicant:	Macedone Christie Willis

ORDERS

Scott Darren Pascoe be directed to take control of the property of Kevin William Fenwick pursuant to s.50 of the Bankruptcy Act 1966 from the making of this order until 5.00p.m. on 20 August 2007 or further order.
The application be restored for hearing at 10.15a.m. on 20 August 2007.
That service of this order upon the debtor be made:
(1) Personally.
(2)By leaving a copy addressed to the debtors at 2/29 Jacaranda St, Caringbah, NSW, 2229.
(3)By sending a copy by facsimile to Mr Peter Williams solicitor at 02 9525 0799 with a letter requesting him to advise his client of the return date of the application.
(4) Costs reserved.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2488 of 2007

SIMON EFSTATHIOU and SACHA MASON

Applicants

And

KEVIN WILLIAM FENWICK

Respondent

REASONS FOR JUDGMENT

There comes before me an application by petitioning creditors for the court to exercise its powers under s.50 the Bankruptcy Act 1966 (the Act”) to appoint a registered trustee to take control of a debtor’s property. Section 50 relevantly states:
“(1) At any time after a bankruptcy notice is issued, or a creditor’s petition is presented, in relation to a debtor, but before the debtor becomes a bankrupt, the Court may:
(a) direct the Official Trustee or a specified registered Trustee to take control of the debtor’s property ; and
(b) make any other orders in relation to the property.
(1A) The Court may give a direction or make an order only if:
(a) a creditor has applied for the Court to make a direction; and
(b) the Court is satisfied that it is in the interests of the creditors to do so; and
(c) the debtor has not complied with the bankruptcy notice.
(1B) If the Court directs a trustee to take control of the debtor's property, the Court must specify when the control is to end.”
The application which is made to me today is made as an interim application and ex parte. It is supported by an affidavit of Murray Roderick Godfrey and another affidavit of Jonathon Craig Prowse. Mr Prowse’s affidavit confirms that the money due under the bankruptcy notice, in respect of which a petition was issued today 14 August 2007, has not been paid and thus sub.s.50(1A)(c) has been enlivened.
The affidavit of Mr Godfrey indicates that he is the liquidator of a company known as Fenwick Financial Management Solutions Pty Limited of which the respondent debtor was the sole director and secretary. Mr Godfrey deposes to the concerns he has about the manner in which the company was run and suggests that it was insolvent from at least June 2002. He states:
“During that period the company has incurred debt in the sum of $331,105.59. My investigations are continuing, but it is likely that an action will be commenced against the respondent to recover from him those debts incurred by the company whilst it was insolvent.
I believe the respondent is in the process of, or has already disposed of interests in assets to defeat the claims of creditors.”
The proof of the latter statement is provided by an annexure to the affidavit being a facsimile dated 24 February 2006 in which Mr Fenwick writes to a company known as CSC Homeloans requesting an assignment of a commission payable to Fenwick Financial Management Solutions Pty Limited to himself.
Mr Godfrey also deposes to the fact that a property believed to belong to Mr Fenwick has been listed for sale. I note that the listing took place in or around July 2007. There is no further evidence in relation to the property. In Mr Godfrey’s affidavit there is an indication that a caveat was lodged by him as liquidator of the company but that caveat lapsed upon the receipt of a lapsing notice in December 2006.
The making of an order under s.50 is a serious matter. It provides an opportunity for a concerned creditor to ensure that the property is preserved. Because this application is made ex parte I must be satisfied that there is sufficient ground for the order to be made and that it is in the interests of justice so to do. I am satisfied that Mr Godfrey has been able to show at least a prime facie case of serious concern and I am satisfied that it would be in the interests of justice to make an order as requested to protect the position for a short period of time whilst the bankrupt has an opportunity to bring the matter back to the court for a more sophisticated argument. I have received a consent to act as trustee from Scott Darren Pascoe of Sims Partners, Level 5, 55 Hunter Street, Sydney who is a registered trustee.
I am also required to be satisfied that the making of this order is in the interest of creditors. Whilst the creditor’s petition is for a reasonably small amount of money, namely $7,000, the claim that Mr Godfrey has indicated is large. It is unknown what other creditors may exist. It is clearly in the interest of those creditors that the proceeds of sale of the property should not be diminished in any way and I am satisfied that the making of this order would be in the interests of all creditors.
I make orders as follows. Scott Darren Pascoe be directed to take control of the property of William Fenwick pursuant to s.50 of the Act from the making of this order until 5.00pm on 20 August 2007 or further order. The application be restored for hearing at 10.15a.m. on 20 August 2007. That service of this order upon the debtor be made:
(1) Personally.
(2)By leaving a copy addressed to the debtors at 2/29 Jacaranda St, Caringbah, NSW, 2229.
(3)By sending a copy by facsimile to Mr Peter Williams solicitor at 02 9525 0799 with a letter requesting him to advise his client of the return date of the application.
(4) Costs reserved.

I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date:

Efstathiou v Fenwick is a case involving the dispute over control and management of a debtor’s property under the Bankruptcy Act 1966. The applicant, Efstathiou, sought an order to take control of the property of the debtor, Kevin William Fenwick, under the provisions of the Act. The matter was heard in the Federal Court of Australia.

The court was required to decide whether it was appropriate to grant the application for control of the debtor’s property. This involved assessing whether the conditions set out in the Bankruptcy Act 1966 were satisfied, including whether it was in the best interests of the creditors and the estate of the debtor to have the property taken into control. The court also had to consider the manner and methods of serving the order on the debtor as required by the Act.

The Federal Court found that the conditions for taking control of the debtor’s property were met. The court considered it was in the best interests of the creditors and the estate for the property to be taken into control. The court detailed the specific steps that should be taken to effect the control and outlined the methods for serving the order on the debtor, ensuring compliance with the statutory requirements. Consequently, the court granted the application and issued orders for the property to be taken into control, specifying the methods and timing for service of the order on the debtor.

In summary, the orders made by the court directed Scott Darren Pascoe to take control of the debtor’s property from the making of the order until a specified time on 20 August 2007. The court also restored the application for hearing on the same day and provided detailed instructions for the service of the order on the debtor, reserving costs for later determination.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established