Frumar v Faibicher
[2008] FMCA 801
•3 June 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FRUMAR v FAIBICHER | [2008] FMCA 801 |
| BANKRUPTCY – Application for review – whether the court is satisfied the applicant could have obtained a stay of judgment – where court has to consider discretionary matters. |
| Federal Magistrates Court (Bankruptcy) Rules 2006 Martin v Commonwealth Bank of Australia [2001] FCA 87 |
| Applicant: | STUART FRUMAR |
| Respondent: | LEO FAIBICHER |
| File Number: | SYG 389 of 2008 |
| Judgment of: | Raphael FM |
| Hearing date: | 3 June 2008 |
| Date of Last Submission: | 3 June 2008 |
| Delivered at: | Sydney |
| Delivered on: | 3 June 2008 |
REPRESENTATION
| For the Applicant: | In person |
| Solicitors for the Respondent: | Somerville & Co |
ORDERS
Application dismissed.
Applicant to pay respondent’s costs to be taxed if not agreed in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 389 of 2008
| STUART FRUMAR |
Applicant
And
| LEO FAIBICHER |
Respondent
REASONS FOR JUDGMENT
There comes before the court this morning an application for a review of a sequestration order made by Registrar Tesoriero on 28 March 2008.
The applicant for review, the debtor, is self-represented. He has not complied with the provisions of Part 7, r.7.06(3) and (4) of the Federal Magistrates Court (Bankruptcy) Rules 2006.
The relevant history of the matter, given by the debtor in his oral testimony and from the bar table and not seriously disputed by the creditor, is that on 17 October 2006 Backman J in the Industrial Court of New South Wales gave judgment to the creditor against the debtor and others for a sum of around $80,000.00. I am told by the debtor that he gave instructions to his legal advisers to appeal against that decision but due to their inefficiency the appeal was placed in the wrong court. I have no real evidence about this. I do not propose to make any finding in relation thereto. What I do know is that on 27 June 2007 Mr Frumar applied to Boland J of the Industrial Court of New South Wales for a stay of the proceedings so that he could proceed with an appeal that had been lodged.
In a considered decision, a copy of which is annexed to the affidavit of Joanna Baqleh, his Honour ordered that the judgment be stayed subject to the condition that the first and third appellants (the first appellant being the debtor) shall pay to the respondent $20,000.00 within 21 days of this decision. That money was not paid and therefore the stay did not proceed. An un-stayed judgment is capable of forming the basis for a bankruptcy notice. In this case the decision of the IRC was required to be registered with the District Court and that happened on or about 10 December 2007, the judgment being for $76,688.21 plus interest.
Mr Frumar was not satisfied with the decision of Boland J and appears to have sought a reconsideration of it from the then President of the Industrial Relations Commission Wright J.
On a date unknown but said by Mr Frumar to be in November 2007, Wright J delivered an ex tempore judgment, a copy of which I do not have, and made orders as follows:
i)The Court declines to set the appeal proceedings in this matter down for hearing.
ii)Liberty to apply is granted to the parties on 14 days notice to make such application in the proceedings as may be fit. The actual details of such application shall be provided to the party exercising this liberty to apply to the other party to the proceedings at the time such liberty to apply is exercised.
iii)The Court orders that the cost of the proceedings on 2 August 2007 and today be reserved.
iv)The leave referred to earlier may be exercised by means of an appropriate sufficiently detailed letter forwarded to the Industrial Registrar, with a copy of the letter forwarded to the other party.
Mr Frumar interpreted this decision of his Honour's to mean that if he could provide a sufficiently detailed letter his Honour might hear an application for a stay or, to put it more accurately, his Honour might reconsider the decision of Boland J and delete the requirement for a $20,000 payment to be made as a condition of any stay.
Mr Frumar did not do anything about the orders of Wright J until 27 March 2007 when he wrote a letter to the Industrial Registrar which contains the following:
“In this Commission, Justice Boland ordered that I needed to pay $20,000 as a condition to stay the orders against me.
Subsequently, Chief Justice Wright had said that he was unable to determine the validity of this order made by Justice Boland that I needed to pay $20,000 and that he would have some regard if it could be shown that the payment of this sum was beyond my financial capability.
Attached to this letter is an affidavit sworn by my wife listing my assets. This confirms my inability to pay the $20,000.
The reason for the delay in applying to have these proceedings continued earlier is that my wife was hesitant in providing this affidavit.
I now request that these proceedings be continued.”
I assume that Mr Frumar meant by the "proceedings being continued" that the appeal could be set down for hearing. It is interesting that there is no mention there of the $20,000 requirement in relation to the stay would appear to require a further application for removal.
The affidavit from Mr Frumar's wife states at paragraph three:
“He is unable to pay the $20,000 required by this Commission to the respondent as a condition to stay the orders made by Backman J.
An appeal has been lodged with this Commission.
I believe that the appeal has good prospects for success.”
The assets listed by the applicant's wife in her affidavit total $4,362.04.
I am told that when the matter came before Registrar Tesoriero, Mr Frumar advised that his application to the Industrial Relations Commission was to be heard on 10 April 2008. The Registrar declined to grant the adjournment and proceeded to make the sequestration order on the basis of the outstanding judgment and the usual affidavits in support. As I understand the evidence from Mr Frumar he appeared in the Industrial Relations Commission on 10 April as did the solicitors for the creditor. The solicitors informed the court that as Mr Frumar had been made bankrupt he had no status to appear in the matter and the court made no orders. On 29 April 2008 the trustee wrote to the court providing a copy of his Certificate of Appointment and advising the court that he elected to discontinue to act.
Mr Frumar argues that I should review the decision of the Registrar and set aside the sequestration order as otherwise he is prevented from progressing the appeal against the original decision of the Industrial Court and that decision is the only debt that he owes other than a judgment debt for approximately $2,500.00 which he says is associated with the dispute between himself and the judgment creditor.
I note that Mr Frumar has not made any attempt to seek a review of the trustee's decision as he is entitled to do under s.178 of the Bankruptcy Act 1966 (the “Act”). Nor has he indicated to me how, if he did this and was successful, he would pursue the appeal. I note also that I have nothing other than the statement made in Mrs Frumar's affidavit, and statements made by Mr Frumar from the bar table, that he believes the appeal has every prospect of success. I am not provided with any assistance to confirm that view. I know nothing whatsoever about the proceedings.
On 12 May 2008 Barry Kenneth Hamilton, the trustee, filed an affidavit in this court. The affidavit revealed that despite several requests Mr Frumar had not completed a statement of affairs. It also revealed that the trustee had had correspondence with the Taxation Office and the Taxation Office has advised the trustee that Mr Frumar had not filed a tax return for approximately 18 years. The trustee deposed to the fact that Mr Frumar had advised him that he had creditors totalling approximately $13,000.00 in addition to the respondent's claim. Today Mr Frumar tells me that the $13,000.00 is made up of the judgment debt previously referred to and another alleged debt owed to the creditor or persons associated with him.
Mr Frumar tells me that the reason he has not completed a tax return for 18 years is that at about that time he lost $2 million in property speculation. But has given me no evidence of that whatsoever other than his statement.
The hearing of a review into the granting of a sequestration order is a hearing de novo. But if the court has reason to believe that a debtor is a person who is unable to pay his debts as and when they fall due it can exercise its discretion not to grant review even though in other circumstances it may have done so. The real complaint being made by Mr Frumar in this case is not so much that a sequestration order was made but that the Registrar refused to grant what appeared to be a very short adjournment so that he could proceed to the Industrial Relations Court and obtain the stay. I do not have any evidence of the reasoning of the Registrar but one can assume that he took the view that Mr Frumar had already had a lot of time to deal with this judgment that had been given against him in 2006.
In considering the matter afresh I would take the same view but I would add that there is nothing in the evidence that would corroborate or allow me to infer the correctness of Mr Frumar's submission that Wright J was going to reconsider the stay question at all. The order of his Honour seems to be referring to the setting down of the matter for hearing. Even if I am wrong about that I would have to say that Mr Frumar has provided nothing in the way of evidence that might convince me that Wright J may have set aside the orders of Boland J in relation to the stay given the length of time that had expired and what, with respect, I would regard as the rather weak excuse of Mr Frumar, that he had to wait that time for his wife to swear the affidavit which I have referred to earlier in these reasons. I do not understand why Mr Frumar could not have sworn an affidavit about his own financial position and why he believed that an affidavit from his wife concerning that, which would to my mind be hearsay, was thought to be of more effect.
I am left with a general impression that Mr Frumar has not moved with any degree of haste to seek an appeal against the original decision. I also note in this regard the remarks made by Boland J in his decision found as annexure B to the affidavit of Ms Baqleh dated 30 May 2008 which states inter alia:
“His main point was that he was relatively impecunious and if the stay was not granted it would render the appeal nugatory. Mr Frumar indicated that he was not in a financial position to come to any agreement with the respondent to deposit even a portion of the debt owed by him to the respondent in trust pending the outcome of the appeal, nor was he in a position to agree to provide security for costs…
I am not prepared to accept that there should be a stay in the terms sought by the first and third appellants. Whilst I am prepared to make some concession given Mr Frumar's status as a self-represented litigant, it should be noted that, despite the obligation on him to make out a proper case for granting the stay, his case for doing so was quite unsatisfactory given no evidence was adduced as to the appellants’ financial circumstances.
Earlier his Honour had said:
“Moreover, in my earlier interlocutory judgment on the extension of time application, I observed that I found it difficult to assess the appellant's prospects of success in the appeal and the best that could be said in the appellant's favour in that regard was that it could not be concluded there was no chance of success. Whilst I now have the application to appeal before me, I am no more enlightened.”
In the light of all these matters I would not be inclined to grant
Mr Frumar the adjournment that he had sought, which means that at the time that the Registrar made the sequestration order and today there is still an outstanding judgment against him that has not been stayed. As at today's date Mr Frumar owes Mr Faibicher at least $76,000.00 and whilst he disputes that debt I am no clearer as to the grounds of that dispute than I was before the proceedings commenced.
Authority Martin v Commonwealth Bank of Australia [2001] FCA 87; Cottrell v Wilcox 2001 FCA 193; Adelaide Bank v Robert John Badcock [2002] FMCA 10; Ferella v Otvosi & Anor [2006] FMCA 231 has indicated that I am obliged as of today to consider the matters required by s.52 of the Act. Those include the requirements for an affidavit of debt and an affidavit of search. I would have to say that there is some artificiality about this requirement where a trustee has been appointed and has requested that the applicant for review complete a statement of affairs. I am prepared to say that provided those affidavits are supplied to me by 2.15p.m. today I would be prepared to confirm that I am so satisfied and to dismiss the application for review. I would additionally state that I would, in any event, have exercised my discretion not to set aside the sequestration order on the grounds that I am not satisfied that the applicant is solvent and I am not impressed by his evidence concerning his failure to file tax returns for 18 years or to pay tax on his current income. Nor would I be prepared to ignore the existence of another judgment, albeit for a sum of $2500.00, that has itself not been stayed. I am of the view that it is in the interests of justice and of the applicant's creditors, known and unknown, that he should remain in bankruptcy until his trustee can properly assess his financial position. Mr Frumar's failure to provide the trustee with a statement of affairs prior to last week tells significantly against him. Upon receipt of the required affidavits prior to 2.15p.m. today I shall make the order dismissing the application and order that the applicant pay the respondent's costs to be taxed if not agreed in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
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