Ferizis v Vaughan
[2009] FMCA 453
•11 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FERIZIS v VAUGHAN | [2009] FMCA 453 |
| BANKRUPTCY – Sequestration order – whether sufficient cause to dismiss the petition – stay of proceedings under the order. |
| Bankruptcy Act 1966 (Cth), s.52 |
Re Vitoria; Ex parte Vitoria [1894] 2 QB 387
King v Henderson [1898] AC 720
| Applicant: | GEORGE FERIZIS AS TRUSTEE OF THE KALLITHEA TRUST |
| Respondent: | GRAHAM VAUGHAN |
| File Number: | SYG 2894 of 2008 |
| Judgment of: | Raphael FM |
| Hearing date: | 11 May 2009 |
| Date of Last Submission: | 11 May 2009 |
| Delivered at: | Sydney |
| Delivered on: | 11 May 2009 |
REPRESENTATION
| Solicitors for the Applicant: | Merewether & Co |
| For the Respondent: | In person |
ORDERS
A sequestration order be made against the estate of Graham Vaughan.
The Applicant’s costs (including reserved costs, if any) be taxed and paid from the estate of the Respondent in accordance with the Act.
All proceedings under these orders be stayed for a period of 21 days.
THE COURT NOTES
(i)The date of the act of bankruptcy is 25 September 2008.
(ii)Under the Bankruptcy Regulations a copy of these orders is to be given to the Official Receiver in Sydney within 2 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2894 of 2008
| GEORGE FERIZIS AS TRUSTEE OF THE KALLITHEA TRUST |
Applicant
And
| GRAHAM VAUGHAN |
Respondent
REASONS FOR JUDGMENT
On 7 April 2009, I made orders listing this matter for the hearing of the bankruptcy petition against the debtor and for the substitution of the current applicant for the original petitioning creditor. I made certain other interlocutory orders which were complied with by the respondent debtor.
On 21 April 2009, the debtor issued a subpoena out of this Court seeking documents referred to in a deed of settlement between the creditor and certain other debtors who were involved with the respondent in a property development scheme whose failure occasioned the proceedings in the District Court pursuant to which judgment was given against the debtor and upon which the current creditor now relies. Mr Vaughan initially instituted an appeal against that judgment, but he has withdrawn it because he says he is impecunious. In the meantime, the creditor has settled with the other parties to the proceedings leaving only Mr Vaughan. The documents which Mr Vaughan seeks under the subpoena are documents relating to issues between the creditor and the other parties from which Mr Vaughan seeks to adduce evidence that he believes will show that Mr Ferizis did not give accurate evidence to the District Court and to indicate that Mr Ferizis might have made a claim against LawCover for the non provision of proper guarantees when he is, at the same time, seeking to recover from Mr Vaughan money due under a guarantee.
At the present time, this Court has before it a final judgment against Mr Vaughan upon which an appeal has been withdrawn. Mr Vaughan says that if he gets the documents that he has subpoenaed, he might reconsider his decision to withdraw the appeal. There is nothing before me that would give me grounds for considering that it might be appropriate to go behind the judgment that has been obtained by Mr Ferizis and I do not think that the obtaining of the documents which Mr Vaughan has sought would assist. That judgment remains enforceable and valid until such time as it is set aside; Re Vitoria; Ex parte Vitoria [1894] 2 QB 387; King v Henderson [1898] AC 720. Mr Merewether, who appears on behalf of Mr Ferizis, has explained that the settlement with LawCover was made because the solicitor who acted for Mr Ferizis had employed a junior solicitor. Because this employed solicitor had failed to investigate and discover that at the time Mr Vaughan entered into the arrangements which were the subject of the proceedings he was an undischarged bankrupt, the trust Mr Ferizis is Trustee of lost its investment in the property development. It would not have entered into the arrangement had it known Mr Vaughan was then an undischarged bankrupt. Before me today, Mr Vaughan has confirmed that this was the case. In those circumstances, it does not seem to me that the documents are relevant and I would therefore set aside the subpoena.
Mr Vaughan has resisted the making of a sequestration order on the grounds contained in his affidavit of 21 April. He accepts that there is a judgment against him for $500,000 plus interest of $384,931.50 plus costs. He notes that a substantial amount of that money has been paid by way of the settlements that I have referred to previously between Mr Ferizis and his former solicitor leaving a balance of $134,931.50. He notes that the costs of the hearing, which have also been awarded against him, are not yet taxed and he says that if he received the documents required under the subpoena, it might confirm that he does not owe Mr Ferizis any money. In the light of the comments which I have made concerning the subpoenaed documents, I am of the view that there really is no proper ground upon which I could exercise my discretion under s.52 not to make a sequestration order provided that the applicant had satisfied me of the proof of the matters required by that subsection.
Mr Vaughan tells me that he has commenced negotiations with Mr Ferizis and Mr Merewether advises that those negotiations are being conducted in a harmonious manner. For those reasons, I would be prepared to grant a stay of the sequestration order in the hope that accommodation can be reached between the parties and that Mr Vaughan will not again be made bankrupt.
I am satisfied that the respondent committed the act of bankruptcy alleged in the petition, being the non compliance with a bankruptcy notice numbered NN2637/08 prior to 25 September 2008. I am satisfied with the proof of the other matters required by s.52 of the Bankruptcy Act 1966 (Cth). I make a sequestration order against the estate of Graham Vaughan. I order that the applicant’s costs, including reserved costs, if any, be taxed and paid from the estate of the respondent in accordance with the Act. I stay this order for a period of 21 days. Under the bankruptcy regulations, a copy of this sequestration order is to be given to the Official Receiver in Sydney within two days. The Court notes that the date of the act of bankruptcy is 25 September 2008.
I certify that the preceding six (6) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 13 May 2009
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