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Etl v Cavoli

Etl v Cavoli

Case [2007] FMCA 356 22 March 2007

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FEDERAL MAGISTRATES COURT OF AUSTRALIA

ETL v CAVOLI

[2007] FMCA 356

BANKRUPTCY – Application to Set Aside Bankruptcy Notice – alleged assignment of debt to Creditor – no steps taken by Creditor to demand or recover debt from Debtor – deed of assignment not produced – whether issue of bankruptcy notice abuse of process – whether avoidance of consequences of s.44(3) of Bankruptcy Act 1966 – assignor at risk of losing secured Creditor status by issuing bankruptcy notice– whether untaxed bill of costs in favour of Debtor against assignor should be referred to by Creditor in bankruptcy notice – whether bankruptcy notice issued to “put pressure” on Debtor – bankruptcy notice set aside.

Bankruptcy Act 1966, s.44

Etl v Lennon Settle [2004] FMCA 718
Maxwell-Smith v S & E Hall Pty Ltd, in the matter of Maxwell-Smith [2006] FCA 825
Australia & New Zealand Banking Group Pty Ltd v Foyster [2000] FCA 400
Slack v Bottoms English Solicitors [2002] FCA 1445

Applicant:

KARL ETL

Respondent:

TONY CAVOLI

File number:

MLG 765 of 2006

Judgment of:

McInnis FM

Hearing date:

7 August 2006

Date of last submission:

15 November 2006

Delivered at:

Melbourne

Delivered on:

22 March 2007

REPRESENTATION

Counsel for the Applicant:

Mr J. Selimi

Solicitors for the Applicant:

Starnet Legal

Counsel for the Respondent:

Mr M. Barrett

Solicitors for the Respondent:

Cavoli & Co

ORDERS

The Bankruptcy Notice number VN796/06 dated 8 May 2006 be set aside.
The Respondent Creditor pay the Applicant's costs of and incidental to the application, including reserved costs, to be taxed in default of agreement pursuant to the Federal Court Rules.
Liberty to apply.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 765 of 2006

KARL ETL

Applicant

And

TONY CAVOLI

Respondent

REASONS FOR JUDGMENT

Introduction

In this matter Karl Etl (the Debtor) seeks to set aside a Bankruptcy Notice issued on 8 May 2006 on the application of Tony Cavoli (the Creditor). The Debtor, in the alternative seeks an order for extension of time for compliance with the requirements of the bankruptcy notice.
The bankruptcy notice claims that the Debtor owes the Creditor $21,638.30. That amount is referred to in the schedule as being "amount of judgments or orders."
The Debtor relies upon affidavits sworn by him on 15 June 2006 (the first Debtor affidavit) and 4 August 2006 (the second Debtor affidavit).
The Creditor relies upon an affidavit sworn by him on 6 July 2006 and gave oral evidence pursuant to a notice to attend for cross‑examination filed by the Debtor's solicitors on 4 August 2006.
In the first Debtor affidavit he deposes that the bankruptcy notice is founded upon what he describes as an alleged assignment of debt. Annexed to that affidavit is a photocopy of a document entitled, "Notice of Assignment of Debt." The document is addressed to the Debtor and is dated 1 May 2006. It is purportedly signed by "Lennon Settle Mazzeo" and the Creditor. The Notice of Assignment of Debt (the Assignment Notice) relevantly states…

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 Etl v Cavoli

Details

AGLC: Etl v Cavoli [2007] FMCA 356
Case: [2007] FMCA 356
Decision Date: 22 March 2007

CaseChat Overview and Summary

Etl, the Applicant, sought to set aside a bankruptcy notice issued by Cavoli, the Respondent Creditor. The dispute was heard and determined by the Federal Court of Australia. The Applicant argued that the notice was invalid as it failed to provide the necessary details required by statute, including the amount of debt claimed and a summary of the grounds upon which the debt was claimed. The Respondent Creditor contended that the notice was valid and that the Applicant's debt was undisputed.

The court was required to determine whether the bankruptcy notice complied with the statutory requirements set out in the Bankruptcy Act 1966 (Cth). Specifically, the court needed to examine whether the notice contained all the necessary details as required by section 43 of the Act and whether the failure to provide these details rendered the notice invalid. The court also considered whether the failure to include the requisite information constituted a jurisdictional error.

The court found that the bankruptcy notice was indeed invalid due to the omission of critical details required by statute. The omission of the amount of debt claimed and a summary of the grounds upon which the debt was claimed meant that the notice did not comply with the statutory requirements. The court held that these omissions constituted a jurisdictional error, leading to the conclusion that the notice was invalid. Consequently, the court set aside the bankruptcy notice and ordered the Respondent Creditor to pay the Applicant's costs of the application.

Orders

Orders of the court

The Bankruptcy Notice number VN796/06 dated 8 May 2006 be set aside.

The Respondent Creditor pay the Applicant's costs of and incidental to the application, including reserved costs, to be taxed in default of agreement pursuant to the Federal Court Rules.

Liberty to apply.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citations

AGLC Citation

Etl v Cavoli [2007] FMCA 356

Most Recent Citation

Cavoli v Etl [2007] FCA 1191

Cases citing this decision · 2 of 2 shown

Toma v Commonwealth Bank of Australia
[2009] FMCA 494 Para 7

…I was taken by counsel to the decision of Etl v Cavoli [2007] FMCA 356 as an example of case where a bankruptcy notice was found to be an abuse of process and set aside where there appeared to be evidence of a scheme to avoid the consequences of s.44(3) of the Bankruptcy Act. That decision was set aside on appeal…
Cavoli v Etl
[2007] FCA 1191 Para 1

…against a decision of the Federal Magistrates Court which set aside a bankruptcy notice served on the respondent Karl Etl (the Debtor): Etl v Cavoli [2007] FMCA 356.…

View all 2 citing cases →

Cases cited in this decision · 13 of 13 shown

Australian Securities and Investments Commission v Forge
[2007] NSWSC 1489 Para 8

…ion (1986) 12 FCR 310 at 311 - 312; Re Athans; Ex Parte Athans (1991) 29 FCR 302 at 310; Australian Securities and Investments Commission v Forge (2004) 48 ACSR 474 at [27]. 42 It follows from this that the Court does have power to set aside a bankruptcy notice which can be characterised as an abuse of process; Amos…
Maxwell-Smith v S & E Hall Pty Ltd
[2006] FCA 825 Para 8

…Reference was made to the decision of the Federal Court in Maxwell-Smith v S & E Hall Pty Ltd, in the matter of Maxwell-Smith [2006] FCA 825 (Maxwell-Smith). In that case there was an application to set aside a bankruptcy notice on the basis, inter alia, that it was an abuse of process. The Court was referred to…
Etl v Lennon Settle
[2004] FMCA 718 Para 6

…bankruptcy notice where the Debtor was the Applicant and "Lennon Settle" the Debtor's firm of solicitors was the Respondent (see Etl v Lennon Settle [2004] FMCA 718 (Etl v Lennon Settle)).…
Slack v Bottoms English Solicitors
[2002] FCA 1445 Para 8

…re is default in complying with the notice and there is no evidence of collateral purpose or undue pressure; Slack v Bottoms English Solicitors [2002] FCA 1445 at [15] – [21]. Whether the bankruptcy notice constitutes an abuse of process 45 In my view, it is to be inferred from the factual matrix set out above tha…
Rosenberg v Percival
[2001] HCA 18 Para 8

…am entitled to reject Mr Hall’s evidence, even though he was not cross-examined on it; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 587-588. 52 Accordingly, I propose to set aside the bankruptcy notice as an abuse of process.”…
Amos v Brisbane TV Ltd
[2000] FCA 825 Para 8

…his that the Court does have power to set aside a bankruptcy notice which can be characterised as an abuse of process; Amos v Brisbane TV Limited (2000) 100 FCR 82 at [21]. 43 If it is apparent to the Court that the purpose of a bankruptcy notice is to put pressure on a debtor to pay a debt, rather than to invoke th…
Australia & New Zealand Banking Group Pty Ltd v Foyster
[2000] FCA 400 Para 10

…Reference was made to another decision in the Federal Court in Australia & New Zealand Banking Group Pty Ltd v Foyster [2000] FCA 400. In that case Hely J set out the relevant principles which appear in the following paragraphs: “16 The Bank has made out the elements which prima facie entitle it to the making of…
Brunninghausen v Glavanics
[1998] FCA 230 Para 8

…han to invoke the Court’s insolvency jurisdiction, the issuing of the bankruptcy notice will be an abuse of process; Brunninghausen v Glavanics [1998] FCA 230 ; see also Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163 at 166. 44 However, it is not an abuse of process if a creditor genuinely intend…
Trojan v Corporation of Hindmarsh
[1987] FCA 276 Para 10

…made against the estate of a debtor who is recalcitrant but plainly solvent, the Bank submitted, on the basis of Trojan v Corporation of Hindmarsh (1987) 16 FCR 37, 46-48, that the discretion under s 52 (2)(a) should not be exercised unless the debtor demonstrates that the petitioning creditor will be satisfied fr…
Re Sarina; Ex parte Wollondilly Shire Council
[1980] FCA 66 Para 8

…nkruptcy notice will be an abuse of process; Brunninghausen v Glavanics [1998] FCA 230 ; see also Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163 at 166. 44 However, it is not an abuse of process if a creditor genuinely intends to pursue the matter if there is default in complying with the notice and…
Bank of Australasia v Hall
[1907] HCA 78 Para 10

…account to be taken of debts which will fall due in the reasonably immediate future pursuant to existing obligations: Bank of Australasia v Hall (1907) 4 CLR 1514 , 1527-1528 as well as debts which are presently due and payable. However, whether that is so or not, for the reasons explained by Katz J in Internationa…
[1986] FCA 512
[1986] FCA 512 Para 8

…to set aside a bankruptcy notice that is valid in form and not an abuse of process; Re Briggs; Ex Parte Briggs v Deputy Commissioner of Taxation (1986) 12 FCR 310 at 311 - 312; Re Athans; Ex Parte Athans (1991) 29 FCR 302 at 310; Australian Securities and Investments Commission v Forge (2004) 48 ACSR 474 at [27]. 4…
Ellis v Wallsend District Hospital
Para 8

…rders. 51 In those circumstances I am entitled to reject Mr Hall’s evidence, even though he was not cross-examined on it; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 587-588. 52 Accordingly, I propose to set aside the bankruptcy notice as an abuse of process.”…

Legislation cited in this decision · 1

Bankruptcy Act 1966 (Cth)
44 2 mentions (from Para 2)