FWO Nominees Pty Ltd v Jackson-Grose (No. 1) - [2002] FMCA 194

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FWO NOMINEES PTY LTD v JACKSON-GROSE (No. 1)

[2002] FMCA 194

BANKRUPTCY – Application for adjournment by respondent creditor – circumstances in which it would be reasonable for a court to grant an adjournment considered – application for adjournment dismissed.

Bankruptcy Act 1966 (Cth) s.188

Field v Commercial Banking Company of Sydney Limited (1978-79) 22 ALR 403
Jackson-Grose v FWO Nominees Pty Limited [2002] FCA 958

Applicant:

FWO NOMINEES PTY LIMITED
(ACN 003 540 412)

Respondent:

CATHERINE HELENE JACKSON-GROSE

File No:

SZ 661 of 2001

Delivered on:

27 August 2002

Delivered at:

Sydney

Hearing Date:

27 August 2002

Judgment of:

Raphael FM

REPRESENTATION

Solicitors for the Applicant:

Turner Whelan as agents for Fishburn Watson O’Brien

For the Respondent:

Mr D Jackson-Grose

ORDERS

Respondent’s application for adjournment dismissed.
Respondent pay the applicant’s costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 661 of 2001

FWO NOMINEES PTY LIMITED (ACN 003 540 412)

Applicant

And

CATHERINE HELENE JACKSON-GROSE

Respondent

REASONS FOR JUDGMENT

In this matter the respondent debtor has filed in court a notice of motion seeking an adjournment of 35 days to enable a meeting of creditors envisaged by the appointment by the applicant on 26 August 2002 of a controlling trustee under Part 10 of the Bankruptcy Act 1966 (Cth). There is another application made that the hearing of the creditor’s petition be adjourned until after the hearing of a notice of motion seeking to amend the application to set aside the bankruptcy notice in the matter No 360 of 2001, or to file a new application to set aside that bankruptcy notice.
The applicant is not present in court. She is represented by a Mr Jackson-Grose who claims to be her unpaid agent and has filed a notice of appearance. He says in regard to the second application that it is no longer relevant. This is probably because her Honour Branson J dismissed an application for leave to appeal out of time from a decision of Federal Magistrate Driver refusing to set aside the bankruptcy notice. It seems to me that proceedings in regard to the bankruptcy notice are now completed.
Turning to the main application, the debtor through her agent sought to file in court a number of affidavits. The first was from Mr David Jackson-Grose, who I presume is the gentleman who appears before me today, and that document deposes to the fact that the debtor owes approximately $8 million. The affidavit says at paragraph 18:
The judgment debtor has virtually no assets other than personal belongings. In the event of bankruptcy, it appears as if there would be no assets available for the benefit of her creditors.
However, the affidavit at paragraph 19 goes on to say the following:
A third party has confirmed that, if the meeting of creditors takes place under the direction of controlling trustee and in accordance with Part 10 of the Bankruptcy Act, he intends to make an offer to the creditors on behalf of the judgment debtor valued at around $1 million.
The affidavit then contains a photographic copy of a medical certificate from a Dr Youssef and a typed version of that certificate. In addition to that affidavit, there is an affidavit from Mr Loke Ching Wong who is an accountant and a registered trustee in bankruptcy and has confirmed that he has accepted the appointment as a controlling trustee.
There was then an affidavit from a Wayne Richard Trotter, the effect of which is to say that he appears to have control over debts due by the debtor to himself and various companies of which he is associated, of approximately $5,622,535.32. He says that he has been told by the debtor that she signed an authority pursuant to section 188 of the Bankruptcy Act and intends to advance a proposal for settlement and he believes that if a proposal is advanced the creditors will do better than if the matter proceeds to a sequestration order.
There was a similar affidavit from Ramon Jimenez who is personally or to whom companies with which he is associated, owed $910,584.04. Then there is an affidavit from Barbara May Jackson-Grose in similar form and she claims that she is owed $232,035.35. Finally there is an affidavit from Christopher Arendse in similar form claiming to be owed $35,000.
Ms Jackson-Grose has helpfully referred me to the seminal decision on these matters of the Full Bench of the Federal Court in Field v Commercial Banking Company of Sydney Limited (1978-79) 22 ALR 403 where a Full Bench of CA Sweeney, Franki and St John JJ, set out the circumstances in which it would be reasonable for a court to grant an adjournment of a sequestration application when the debtor had signed an authority to a controlling trustee under section 188 of the Bankruptcy Act.
That judgment gives seven considerations and it is worth going through each of them in turn. The first is “because of dealings between the parties, from time to time, when the obligation to the petitioning creditor is said to have arisen to the date of the hearing.” This case is one of some age. It involves a judgment in the Local Court at Coffs Harbour upon which there have been no less than four applications to set aside judgment. None of those applications have proceeded.
There has been an application to set aside the bankruptcy notice which was refused by Federal Magistrate Driver and then a very late application to appeal which required leave. That leave was not granted by her Honour, Branson J, in Jackson-Grose v FWO Nominees Pty Limited [2002] FCA 958. A liquidated claim was filed on 25 October 2000 and moves to set aside the judgment had been proceeding up until 27 June of this year, which was the last time that the debtor failed to appear on the hearing of a notice of motion to have the full judgment set aside.
The petition itself was issued on 8 October 2001, it's nearly a year old. In my view, the course of dealings between the parties indicates that it is appropriate for the current sequestration proceedings be brought to finality as soon as possible.
The second item referred to by their Honours is “the attitude to the application of the petitioning creditor, as "prima facie", on proof of the matters mentioned in section 52(1) of the Bankruptcy Act 1966 the court will proceed to make an order for sequestration.” I am advised by Ms Saltoon who appears on behalf of the petitioning creditor that she wishes to proceed.
A further matter is “the general financial position of the debtor.” We now know from the affidavit of Mr Jackson-Grose that his wife is a very significant obligee. She owes $8 million; this is a very large sum of money. We also know that she has no assets.
The purpose of bankruptcy legislation is to ensure that persons who do not have assets and who owe large sums of money are placed into the control of a trustee so that their affairs can be sorted out, a veil can be drawn over previous activity, and they can proceed to live in a normal financial state as soon as possible. Again it seems to me that the general financial position of the debtor would seem to indicate the benefit of bringing this matter to a speedy conclusion.
The fourth matter is “the relationship between the debt of the petitioning creditor and the total liabilities of the debtor.” For example, would the petitioning creditor's opposition be sufficient to defeat any special resolution proposed at the creditor's meeting? In this case the petitioning creditor is owed a debt of approximately $20,000 and the affidavit evidence that I have admitted seems to indicate that the other creditors are obviously very very much more in value and in number. However, these people have only just appeared and one has to consider with at least a small degree of scepticism how $6 million worth of debts can suddenly arise which have never before been indicated.
In view of the remarks I propose to make concerning matter number 6, I believe that this relationship between the debt of the petitioning creditor and the other debts is probably of little relevance.
The fifth matter is “any attitude to the application disclosed by the creditors.” There is no doubt in this case that the evidence is that the five, nearly $6 million-worth, of creditors support the application. That support is predicated on the basis of an offer. It may well be predicated on the basis of the offer deposed to by Mr Jackson-Grose in his affidavit of $1 million. This is a matter I will discuss immediately below.
The sixth matter is “any evidence bearing upon the question whether it would be for the advantage of the creditors that the debtor's affairs be administered under part X of the Act.” Obviously if an offer of $1 million is to be made there may well be an advantage for the creditors if the debtor's affairs are administered under part X of the Act.
The problem with which I am faced here is that the only evidence, if such it be, that there is about this offer of $1 million is in the affidavit of Mr Jackson-Grose. Mr Jackson-Grose is merely his wife's agent. He does not say who has made the offer and no person who has made the offer has come forward and gone on affidavit to say that such an offer exists. We do not know the name of the person, the terms under which the offer is to be made, the ability of that person to make the offer or why suddenly someone should come up and place $1 million at the disposal of Mrs Jackson-Grose who is alleged to owe $8 million and have no assets whatsoever. I am not satisfied that this offer is a substantial or genuine offer. There is simply no evidence of it; just a hearsay inference by Mr Jackson-Grose.
The final matter is “the likelihood that the debtor would be able to place before the meeting of creditors a particular proposal or evidence of his general circumstances calculated to persuade them to vote for the administration of his affairs under part X.” This seems to me to be very similar to the matter which I have just discussed. We really do not have any evidence of this likelihood other than Mr Jackson-Grose's assertion in his affidavit. Mrs Jackson-Grose has not filed an affidavit. It is claimed that she is sick. She is obviously not so sick that she cannot put her affairs into the hands of the Trustee. She could easily have gone on affidavit and deposed to details of this offer which she hopes she will be in a position to make from some, so far unnamed and unknown, third party.
I have a discretion as to whether or not I should grant the adjournment requested. In my view I have not heard sufficient evidence to enable me to feel confident that there really will be any benefit to any creditor by adjourning this matter. Indeed, given the general history of this case, I am of the view that a further adjournment would probably only add to the pain already being felt by the creditors of this particular debtor.
I dismiss that respondent’s application for adjournment and I order that the respondent pay the applicant’s costs.

I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: 27 August 2002