Fang v Lin

Case [2024] FedCFamC2G 747

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fang v Lin [2024] FedCFamC2G 747

File number: SYG 30 of 2024
Judgment of: JUDGE BINGHAM
Date of judgment: 19 August 2024
Catchwords: PRACTICE AND PROCEDURE – BANKRUPTCY – interim application for an extension of time of one day for the filing on an application for review and stay of sequestration order made by a registrar – trustee appointed – prejudice to other persons – arguable case not supported by the evidence – balance of convenience not served by granting stay – other sufficient cause futile – application dismissed with costs
Legislation:

Bankruptcy Act1966 (Cth) s 5, 52(1) and 52(2)

Federal Circuit and Family Court of Australia Act 2021 (Cth) s 256(1)

Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy Rules) 2021 (Cth) r 2.02

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 2.05, 21.04

Cases cited:

Aon Risk Services Australia Ltd v ANU [2009] HCA 27

Ashwood v Ashwood [2024] FedCFamC2G 88

Bechara v Bates [2021] FCAFC 34; 286 FCR 166

Endresz v Australian Securities and Investments Commission [2014] FCA 1139

Murphy v Nyoni [2017] FCCA 143

Re Wardle, A.J. v Ex parte Widin, W.J. & ANZ Bank (resp) [1987] FCA 27; 70 ALR 633

Singh v Owners Strata Plan No. 11723 [2012] FCA 538

Division: Division 2 General Federal Law
Number of paragraphs: 59
Date of last submissions: 12 August 2024
Date of hearing: 12 August 2024
Place: Melbourne (by videoconference)
Solicitor for the Applicant: Bloomsbury Legal
Counsel for the Respondent: Mr Pokoney
Solicitor for the Respondent: Westlink Legal

ORDERS

SYG 30 of 2024

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

YANNA FANG

Applicant
AND:

SHAO HUA LIN

Respondent

ORDER MADE BY:

JUDGE BINGHAM

DATE OF ORDER:

19 AUGUST 2024

THE COURT ORDERS THAT:

1.The application for a stay of the Orders of the Registrar dated 4 July 2024 sequestrating the estate of Shao Hua Lin be refused and the Interim Application filed 26 July 2024 as amended 5 August 2024 be dismissed.

2.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 26 July 2024 is refused and the Application for Review be otherwise dismissed.

3.The scale costs of the Creditor and Trustee be paid from the estate of Shao Hua Lin.

AND THE COURT NOTES THAT:

A.The Orders of Registrar Ditton made on 4 July 2024 sequestrating the estate of Shao Hua Lin remain in full force and effect.

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…

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Fang v Lin [2024] FedCFamC2G 747
Case
[2024] FedCFamC2G 747
Decision Date

CaseChat Overview and Summary

The case of Fang v Lin involves the Debtor, who was subject to a sequestration order due to non-compliance with a bankruptcy notice and failure to pay a judgment debt. The Creditor, having obtained a garnishee order against the Debtor's bank account, filed a Creditor's Petition in the Federal Circuit and Family Court of Australia, seeking sequestration of the Debtor's estate. The Debtor subsequently filed an Application for Review, seeking to set aside the sequestration order and dismiss the Creditor's Petition, along with other relief. The matter required the Court to decide whether to grant an extension of time for the filing of the Application for Review, which was beyond the 21-day period prescribed by the Bankruptcy Rules.

The key legal issues before the Court were whether the Debtor's Application for Review should be allowed despite being filed outside the statutory time limit and whether the Court should grant an extension of time for the filing of the Application for Review. The Court needed to consider whether the Debtor had a reasonable explanation for the delay in filing the Application for Review, the length of the delay, the actions taken by others based on the sequestration order, and whether granting an extension would cause prejudice to those persons. Additionally, the Court had to assess whether there was an arguable point that would warrant extending the time for the Application for Review.

The Court found that the Debtor's Application for Review was filed beyond the 21-day period stipulated by the Bankruptcy Rules. The Debtor argued that there were reasonable grounds for the delay, but the Court held that the explanation provided was not sufficient to justify the late filing. The Court noted that the Debtor had made partial payments to the Creditor and had overpaid the amount due, but these actions did not constitute a reasonable explanation for the delay. Furthermore, the Court determined that granting an extension would cause prejudice to the Creditor, who had already taken actions based on the sequestration order. Finally, the Court found that the Debtor had not demonstrated an arguable point that would merit extending the time for the Application for Review.

As a result, the Court dismissed the Application for Review with costs. The Court held that the usual principles governing the grant of a stay of execution should be applied, focusing on whether there was an arguable point raised by the proposed appeal and whether the balance of convenience favoured the granting of a stay. In this case, the Court found that neither condition was met, and therefore, the Application for Review was dismissed. The Court's decision was based on the lack of a reasonable explanation for the delay, the length of the delay, the actions taken by the Creditor based on the sequestration order, and the absence of an arguable point that would warrant an extension of time.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 13 November 2023 judgment was entered against the Debtor. The Local Court of NSW made orders against the Debtor requiring him to pay the Creditor the sum of $72,976.59 (Judgment Debt). The Creditor commenced garnishee proceedings for the purpose of recovery of the judgment debt. On 24 November 2023 a garnishee order was made against the Debtor’s ANZ Bank account. The sum of $7,430.16 was paid pursuant to the garnishee order from the Debtor’s bank account.[5][5] Lin Affidavit, [11] and “Annexure SHL-01 Tab 6”, ‘Shao Hua Lin’s ANZ bank account statement’, 25. On 27 November 2023 and 3 December 2023 the Debtor was served with a bankruptcy notice dated 27 November 2023. The debt claimed was in the amount of $65,546.43 (Bankruptcy Notice). On 9 January 2024 proceedings were commenced in this Court by the Creditor via a Creditor’s Petition (Creditor’s Petition). The Creditor’s Petition sought sequestration orders pursuant to s 43 of the Bankruptcy Act against the estate of the Debtor. The Creditor’s Petition was filed on the basis that the Debtor owed the Creditor $65,546.43 with respect to the Judgment Debt and had not complied with the Bankruptcy Notice. On 3 February 2024 the Creditor’s Petition and documents relied upon were served on the Debtor. On 12 March 2024 the Debtor filed a Notice stating grounds of opposition to the application, interim application and petition. Those grounds were:1.The respondent had made $7,430.16 towards the creditor’s claim on 24 November 2023 by way of Garnish order.2.The creditor’s petition was received on 3 December 2023.3.Temporary difficulties in cash flow does not equivale bankruptcy.4.The debtor is to make a further $5,000 payment towards the creditor.5.The debtor is willing to make further payment by instalments by the 30 June 2024.(As written) The matter came before a Registrar of this Court on 14 March 2024, 18 April 2024, 16 May 2024 and 20 June 2024. The Debtor made payments in instalments to the Creditor in both Chinese Yuan and Australian Dollars. The Creditor deposed that as of 3 July 2024 the remainder of the debt was $23,797.82.[6][6] Affidavit of Debt of Yanna Fang affirmed and filed 3 July 2024. On 4 July 2024 the Registrar made Orders sequestrating the estate of the Debtor and for the Creditor’s costs in the amount of $7,020.31 to be paid from the Debtor’s estate. The Registrar found that the date of commission of the act of bankruptcy was 5 January 2024. On 4 July 2024 Mr Jason Porter from SV Partners was appointed Trustee under s 164A of the Bankruptcy Act. On 8 July 2024 the Debtor paid the Creditor $150,000 Chinese Yuan which equated to approximately $30,710.64 Australian Dollars. On 22 July 2024 the Debtor paid the Creditor $107.49. The parties do not dispute that the Judgment Debt has now been discharged by the Debtor. The Debtor contended that he has overpaid the Creditor $1,966.46 Australian Dollars more than the Judgment Debt required. On 26 July 2024 the Debtor filed an Application for Review seeking:1.The order made by Registrar Ditton on 4 July 2024 in proceedings SYG30/2024 be set aside, pursuant to s 256 of the Federal Circuit and Family Court of Australia Act 2021 (Cth).2.The creditor's petition filed on 9 January 2024 be dismissed.3.There be no order as to costs.4.Direct creditor to take such steps as may be required to remove the debtor's name from National Personal Insolvency Index.

Ratio Decidendi

Legal Principle Established

The usual principles apply when considering whether a stay should be granted in these circumstances before me. Namely whether there is an arguable point raised by the proposed appeal and whether the balance of convenience favours the granting of a stay: Singh v Owners Strata Plan No. 11723 [2012] FCA 538 at [29].CONSIDERATIONExtension of Time to make the Application for review Rule 2.03 of the Bankruptcy Rules provides that the Application for Review of a decision of a Registrar must be made in accordance with Form B3A and filed within 21 days of the decision. The Application for Review made by the Debtor was not made within the prescribed time under the Bankruptcy Rules. My ability to extend the time to file the Application for Review is discretionary and will turn on the facts of each case. In Ashwood v Ashwood [2024] FedCFamC2G 88 (Ashwood) Judge Manousaridis considered the factors that would have to be considered by a Court where a debtor had not filed an application for review within the time prescribed by r 2.02(3). At paragraph [52] his Honour expressed the following opinion:A debtor’s right, on an application for review of a Registrar’s sequestration order, to a de novo hearing of the creditor’s application for a sequestration order depends on the debtor having made an application for review within the 21 day period prescribed by r 2.02(3) of the Bankruptcy Rules. Where, however, a debtor has not applied for the review of the Registrar’s sequestration order within the 21 day period, the debtor must seek an order from the Court that the 21 day period be extended. That would require the exercise of discretion, and would bring into play factors that would not be relevant if an application for review were made within the 21 day period. The Court would have to consider whether there is a reasonable explanation for the delay; the length of the delay, what actions persons have taken on the faith of the sequestration order and whether, having taken such actions, extending the time for making an application for review will cause prejudice to such persons; and also whether there would be any arguable point in the Judge’s hearing of the creditor’s petition, such as would merit extending the time for the making of an application for review of the sequestration order. In Ashwood, his Honour found that the debtor had filed her Application for Review within the time prescribed by the Bankruptcy Rules. It is not the case here. The Amended Interim Application seeks an extension of time for filing of the Review Application. It is incumbent upon me to consider: whether there is a reasonable explanation for the delay, what is the length of the delay, what actions persons have taken on the faith of the sequestration order and whether taking such actions extending the time will cause prejudice to such persons and whether there would be any arguable point that would merit extending the time for making of an application for review of the sequestration order.The Explanation for the Delay