Equuscorp Pty Ltd v Chang

[1999] FCA 607

FEDERAL COURT OF AUSTRALIA

Equuscorp Pty Ltd v Chang [1999] FCA 607

EQUUSCORP PTY LTD v PAUL MENG CHANG 

VG 7047 OF 1998

NORTH J
12 APRIL 1999
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 7047 OF 1998

BETWEEN:	EQUUSCORP PTY LTD Applicant
AND:	MENG CHANG Respondent
JUDGE:	NORTH J
DATE OF ORDER:	12 APRIL 1999
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.        Leave to the applicant to amend the creditors' petition as follows:          

(a)in the heading the name of the respondent, where it appears, be amended by adding the words “(also known as Paul Meng Chang)”;

(b)in paragraph 1 by deleting all words after the words “the respondent debtor owes the applicant creditor the amount of” and inserting in place thereof the words “$25,056.74 for moneys due and owing under a loan agreement dated 27 July 1990 (the loan agreement)”;

(c)in paragraph 2 by deleting the whole of that paragraph and inserting in place thereof the words, "The applicant creditor holds security over the property of the respondent debtor to the value of nought dollars and consisting of the charged property referred to in the loan agreement and is willing to surrender this security for the benefit of creditors generally if a sequestration order is made against the respondent debtor."

2.        Re-verification and re-service of the creditor’s petition as amended is dispensed with.

3.The cross-claim filed by the respondent on 14 January 1999, insofar as it applies to the applicant, be treated as a Notice of Intention to oppose the petition under Order 77 rule 11(2).

4.The respondent is to file and serve any affidavit in support of the grounds of opposition to the petition by 4:00 pm on 3 May 1999.

5.The applicant is to file and serve any affidavits in opposition to the affidavits filed by the respondent by 4:00 pm on 17 May 1999.

6.The application is adjourned until 10:15 am on 7 June 1999 before the duty judge taking the bankruptcy list on that day.

7.The hearing of the application on 7 June 1999 is to be conducted by video link with the respondent in Sydney, subject to any other order or direction made by the judge hearing the application.

8.        Costs reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 7047 OF 1998

BETWEEN:	EQUUSCORP PTY LTD Applicant
AND:	MENG CHANG Respondent

JUDGE:	NORTH J
DATE:	12 APRIL 1999
PLACE:	MELBOURNE

EX TEMPORE REASONS FOR JUDGMENT

1. This matter comes before me as the duty judge on an application by the applicant, Equuscorp Pty Ltd, for an order for sequestration against the estate of the respondent, Mr Meng Chang.

2. The matter has had a very long history, part of which is set out in some short Reasons for Judgment of Heerey J of 30 July 1998.  The sequestration order is sought in a creditor’s petition.  The act of bankruptcy alleged is the failure of Mr Chang to comply with a bankruptcy notice which was served on 17 November 1997.  The bankruptcy notice relied upon a judgment of the Magistrates’ Court at Melbourne on 15 April 1993.  The judgment was for monies owing by Mr Chang under a loan agreement with Equuscorp.

3. When the application for a sequestration order came before this Court on a previous occasion, Mr Chang outlined circumstances which made it likely that the original Magistrates' Court order might be set aside.  Consequently, the application for a sequestration order was adjourned and was further adjourned on a number of occasions.  In due course, the Magistrates' Court did set aside the original judgment.  It then reheard Equuscorp's claim to moneys owing under a loan agreement.

4. On 6 January 1999, after a hearing of five days, the Magistrates' Court ordered that Mr Chang pay $32,026.70, including costs, and ordered a stay of 14 days.  Equuscorp then sought to proceed upon the original creditor’s petition.

5. Equuscorp contended that the Magistrates' Court judgment of 6 January 1999 is a basis for concluding that at the date for compliance with the original bankruptcy notice, namely 8 December 1997, the amount claimed of $16,794.89 was then owing under the loan agreement between Mr Chang and Equuscorp.

6. Today I have been asked to make a sequestration order on the basis of the existence of the debt claimed at the date of the alleged commission of the act of bankruptcy.  It is clear from the course of proceedings that Mr Chang seeks to challenge the making of the sequestration order.  He appeared on his own behalf today and should have complied with the Federal Court Rules by filing a Form 149 under Order 77 subrule 11(2), indicating his intention to oppose the petition, setting out the grounds of that opposition, and filing an affidavit supporting those grounds.

7. He did not do that but on 14 January 1999 he filed a document headed “Cross-Claim”, in which he alleges that he was deceived and misled by a number of parties including Equuscorp.  He alleges in that document that the loan agreement should be set aside or declared void.  The document is in general terms and is quite insufficient for me to determine whether Mr Chang has any basis for the allegations.

8. However, I deduce from his actions and some of the things he has told me in the course of the proceedings that he seeks to argue that he has a counterclaim, a set-off or a cross-demand, equal to or exceeding the amount of the judgment debt, and that that counterclaim, set-off or cross-demand could not have been set up in the Magistrates' Court proceeding. 

9. If he were able to establish both those elements, then under section 40(1)(g) of the Bankruptcy Act1966 (Cth), the basis of the creditor’s petition would not be made out. The document headed “Cross-Claim” is not supported by any affidavit and makes allegations in the most general way. In order for Mr Chang to successfully oppose the making of a sequestration order by establishing the matters to which I have referred under section 40(1)(g), he will need to file and serve an affidavit or affidavits which explain in detail the basis of the counterclaim, set-off or cross-demand, and also to explain why that case could not have been set up in the Magistrates' Court proceedings.

10. It is clear that Mr Chang has not until today appreciated the need to file affidavits addressing these issues and consequently an adjournment should be granted to allow him time to do so.  Indeed, quite properly, Mr Ellis, who appeared with Mr Holzer for the respondent, did not suggest that an adjournment for those purposes would be inappropriate, even though the case has been marked by a very significant protraction in the proceedings.

11. Equuscorp also seeks leave to amend the creditor’s petition in several ways, none of which are opposed by Mr Chang.  I will therefore give leave to amend in those respects.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.

Associate:

Dated:             12 April 1999

Counsel for the Applicant:	Anthony Ellis
Solicitor for the Applicant:	Phillip Kotsanis
Counsel for the Respondent:	Appeared in person
Solicitor for the Respondent:
Date of Hearing:	12 April 1999
Date of Judgment:	12 April 1999