Ghosh v Miller

Case [2016] FCA 1293

FEDERAL COURT OF AUSTRALIA

Ghosh v Miller [2016] FCA 1293

Appeal from: Miller v Ghosh (No 3) [2016] FCCA 2491
File number: NSD 1735 of 2016
Judge: MARKOVIC J
Date of judgment: 2 November 2016
Catchwords: BANKRUPTCY AND INSOLVENCY – application for suspension of the operation of a sequestration order pending determination of applicant’s appeal and for annulment of applicant’s bankruptcy – whether arguable case on appeal — whether balance of convenience favours the making of the orders.
Legislation:

Bankruptcy Act 1966 (Cth) ss 44, 44(1)(a), 44(1)(b) 49, 52, 52(2)(a), 52(3), 60, 60(2), 60(3), 60(4), 116(2)(g), 153B

Federal Court of Australia Act 1976 (Cth) ss 26, 29

Federal Court (Bankruptcy) Rules 2016 r 7.03

Federal Court Rules 2011 r 36.08

Cases cited:

Alfio Peter Bulic v Commonwealth Bank of Australia Ltd [2007] FCA 307

Clapham v Commonwealth Bank of Australia [2013] FCAFC 84

Evans v The Heather Thiedeke Group Pty Ltd (1990) 95 ALR 424

Investec Australia Finance Pty Limited v Naude [2016] FCA 731

James v Commonwealth Bank of Australia [2015] FCA 582

Lane Rowin Pty Ltd v Perovich [2007] FMCA 1429

Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494

Re Ronald Grafton Sarina v Council of the Shire of Wollondilly (1980) 32 ALR 596

Re Schmidt; ex parte Anglewood Pty Ltd (1968) 13 FLR 111

Date of hearing: 25 October 2016
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 79
Counsel for the Appellant: Mr J Baird
Solicitor for the Appellant: BJH Lawyers
Counsel for the Respondent: Mr M W E Maconachie
Solicitor for the Respondent: Higgins & Dix
Counsel for the Trustee: Mr S Golledge
Solicitor for the Trustee: Stacks The Law Firm

ORDERS

NSD 1735 of 2016
BETWEEN:

RATNA GHOSH

Appellant
AND:

RODNEY JAMES MILLER

Respondent

JUDGE:

MARKOVIC J

DATE OF ORDER:

2 NOVEMBER 2016

UPON THE APPLICANT UNDERTAKING TO THE COURT THAT:

1.She will cooperate with her Trustee in bankruptcy and comply with her obligations under the Bankruptcy Act 1966 (Cth) as he may request or direct.

THE COURT ORDERS THAT:

2.The operation of the sequestration order made against the estate of the applicant on 30 September 2016 be suspended pending the determination of the applicant’s appeal to this Court.

3.The amended interlocutory application filed on 24 October 2016 be otherwise dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

MARKOVIC J:

  1. On 30 September 2016 a sequestration order was made by a judge of the Federal Circuit Court of Australia (Federal Circuit Court) against the estate of the applicant, Dr Ghosh, and Mr Scott Anthony Newton (the Trustee) was appointed trustee of her estate: see Miller v Ghosh (No 3) [2016] FCCA 2491 (Miller v Ghosh (No 3)). 

  2. On 7 October 2016 Dr Ghosh filed a notice of appeal from the judgment in Miller v Ghosh (No 3) and an…

Continue reading Ghosh v Miller

Sign in free to access the full text

Details
AGLC
Ghosh v Miller [2016] FCA 1293
Case
[2016] FCA 1293
Decision Date

CaseChat Overview and Summary

In the case of Ghosh v Miller, the primary concern was the application by Dr Ghosh to suspend the operation of a sequestration order made against her on 30 September 2016 and to annul her bankruptcy, with an alternative request for further or alternative relief. The application was heard by the Federal Court of Australia. The central dispute revolved around whether Dr Ghosh had established a prima facie case for appeal and whether the balance of convenience favoured the suspension of the sequestration order and the annulment of her bankruptcy.

The court was tasked with determining whether Dr Ghosh had presented a plausible argument for appeal that would warrant the suspension of the sequestration order. Additionally, the court had to assess whether the balance of convenience favoured the applicant, considering the potential impacts on Dr Ghosh and her family, her financial situation, and the likelihood of her succeeding on appeal. Dr Ghosh argued that she was likely to receive a significant share of the matrimonial property upon the finalisation of her Family Court proceeding, and that she had the means to pay her debts, thus presenting a strong case for appeal.

The court examined the evidence provided by Dr Ghosh, including her financial situation, her potential to repay debts, and the likelihood of success on appeal. The court found that Dr Ghosh had not established a prima facie case for appeal, as she had not demonstrated a significant likelihood of success on appeal or shown that the balance of convenience favoured the suspension of the sequestration order. The court concluded that the sequestration order should remain in effect until the appeal was determined.

Consequently, the court dismissed Dr Ghosh's application for the suspension of the sequestration order and for the annulment of her bankruptcy. The court found that Dr Ghosh had not provided sufficient evidence to warrant the suspension of the order and that the balance of convenience did not favour her. The court's decision was based on the lack of a strong case for appeal and the potential impacts of suspending the sequestration order on the creditor and the administration of justice.

Orders

Orders of the court

2. The operation of the sequestration order made against the estate of the applicant on 30 September 2016 be suspended pending the determination of the applicant’s appeal to this Court.

3. The amended interlocutory application filed on 24 October 2016 be otherwise dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

In her amended interlocutory application Dr Ghosh sought three orders but because of the Trustee’s position in relation to the Defamation Proceeding she only pressed two of those orders namely orders that:(1)the operation of the sequestration order made on 30 September 2016 be suspended pending the determination of her appeal;(2)further or in the alternative that her bankruptcy be annulled pursuant to s 153B of the Act.THE FACTS Dr Ghosh’s amended interlocutory application is supported by an affidavit affirmed by her on 18 October 2016. She was also examined and cross examined at the hearing. Relevantly her evidence is that:(1)she is separated from her husband, although not divorced. There is one child of the marriage who is 11 years old, is autistic and is cared for by and resides with her;(2)in 2013 her husband commenced a proceeding in the Family Court of Australia for property orders in respect of their marriage (the Family Court Proceeding). That proceeding is dormant. No orders have been made in it and it has not been listed for hearing;(3)Dr Ghosh and her husband are the registered proprietors as joint tenants of two properties: one at 167 Lytton St, East Brisbane, Queensland (the East Brisbane Property) and the other at 56 Antoine St, Rydalmere, New South Wales (the Rydalmere Property). The East Brisbane Property is currently vacant and is managed by Dr Ghosh’s husband. The Rydalmere Property is occupied by Dr Ghosh’s husband. The East Brisbane Property and Rydalmere Property are subject to mortgages in favour of the Commonwealth Bank securing an amount of $488,000. A comparative market analysis prepared for the East Brisbane Property dated 21 October 2016 values it at between $900,000 to $1.2 m and a marketing appraisal dated 21 October 2016 for the Rydalmere Property says that its potential sale price is in the range of $940,000 to $1 m;(4)in response to a question about her options for realising her share in the East Brisbane Property Dr Ghosh said that prior to the making of the sequestration order she had a loan approved by the Commonwealth Bank, that was pending from June to September 2016, to increase her debt by $250,000. Its purpose was to pay off her debts. Dr Ghosh would rather not sell that property but she indicated that sale was a possibility and that the property could be sold readily. She also said that she could sell her half share in the property to her husband and that he would be more likely to agree to that than an outright sale;(5)Dr Ghosh understands that when the Family Court Proceeding is finally concluded she is likely to receive more than 50% of the matrimonial property because she has the primary care of their son;(6)Dr Ghosh is a medical practitioner employed by Ghoband Pty Ltd (Ghoband) trading as Charlestown Surgery. In the financial year ended 30 June 2016, Dr Ghosh received approximately $80,000 from her employment. She holds one of the two issued shares in Ghoband with the other being held by her husband. As at 30 June 2016 Ghoband had negative equity of $346.78;(7)on 6 August 2013 Dr Ghosh commenced the Defamation Proceeding in the District Court of New South Wales (the District Court). On 21 March 2016, on Dr Ghosh’s application, the Defamation Proceeding was transferred to the Supreme Court because Dr Ghosh’s claim for damages exceeds the jurisdictional limit of the District Court;(8)in the Defamation Proceeding and in related proceedings in the District Court and the Local Court of New South Wales (the Local Court) there have been a number of costs orders made at various times both against and in favour of Dr Ghosh in relation to Mr Miller and the other defendants in the Defamation Proceeding. Some of those costs orders have been assessed and are the subject of judgments and some of those costs orders and/or judgments in respect thereof are subject to appeal. The largest of these is an order for costs made against Dr Ghosh by Fagan J in the Supreme Court for $12,000;(9)the Defamation Proceeding is next listed before Rothman J on 28 October 2016 at which time Dr Ghosh understands his Honour will likely deliver his reserved judgment in relation to various strike out applications heard by him on 12 August 2016. Dependent upon his Honour’s orders it is possible that the Defamation Proceeding may then be set down for hearing;(10)Dr Ghosh believes that she is able to pay her debts, that her assets exceed her liabilities and that she is solvent.Dr Ghosh’s statement of affairs

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In Miller v Ghosh (No 2) the primary judge noted at [16] that, if he were to set aside the orders he made on 11 May 2016, it was quite likely that Mr Miller would seek to again amend his creditor’s petition to include three Local Court judgments for $1,444.48, $956 and $5,833.84 (the Local Court Judgments) and that if he was given leave to do that the sum of the debts would exceed the $5,000 specified in s 44 of the Act, even if the $3,300 costs order against Mr Miller is set off, and that it was therefore inevitable that a sequestration order would be made. His Honour identified two matters to note and said at [17]:First, the current amended creditor’s petition does not include the Local Court debts. It would be irregular for the Court to allow a sequestration order made on the basis of a debt specified in the creditor’s petition to stand because the debtor may owe the creditor debts not included in the creditor’s petition. Second, the evidence is unclear about the extent to which the Local Court debts are currently due and payable. As I have already noted, at the hearing of 11 May 2016 counsel for Mr Miller said that the Local Court judgments were stayed at the time the amended creditor’s petition was prepared. Although there is evidence that suggests the amended creditor’s petition was prepared by 13 April 2016, there is no evidence about when the stay orders were made, or the basis on which they were made or, if made, whether the stay has been lifted and, if so, when the stay was lifted. Given the serious consequences of a sequestration order being made against a person, the Court may not be prepared to make a sequestration order on the basis of the Local Court judgments unless evidence of these matters are before the Court. On 26 May 2016 the primary judge granted leave to Mr Miller to file a further amended creditor’s petition. At that time the primary judge also set down the further amended creditor’s petition for hearing on 20 July 2016 and made directions for the purpose of that hearing. On 30 May 2016 Mr Miller filed the further amended creditor’s petition. In it he claimed that Dr Ghosh owed him $15,234.32 which was the sum of the judgment for $7,000 entered in the District Court and the Local Court Judgments. The hearing of the further amended creditor’s petition proceeded on 20 July 2016. Dr Ghosh relied on a notice stating grounds of opposition which raised 15 grounds and an affidavit in support affirmed on 19 July 2016. His Honour made orders and delivered judgment in Miller v Ghosh (No 3) on 30 September 2016. In his judgment:(1)the primary Judge found that he was satisfied that the creditor’s petition filed by Baycorp was in the prescribed form and that it was served on Dr Ghosh together with the required affidavits, that the further amended creditor’s petition had been served on Dr Ghosh, that in the affidavit of search the deponent had deposed to the matters required by r 4.06(3) of the Bankruptcy Rules and that Mr Miller had filed an affidavit of debt in relation to all four judgements as required by r 4.06 of the Bankruptcy Rules. Accordingly, the primary judge was satisfied that a sequestration order should be made unless, for any one of the grounds on which Dr Ghosh relied for opposing the making of the order, he was satisfied that there was sufficient cause that a sequestration order should not be made: [20]-[21]; (2)in relation to the issue raised by Dr Ghosh as to whether the debts were payable, the primary judge noted that Dr Ghosh accepted that the judgment of $7,000 was payable but claimed a cross claim of $3,300 against Mr Miller for a costs order in her favour against Mr Miller which was not disputed by Mr Miller. Accordingly, for the purposes of his reasons, the primary judge assumed that the costs order for $3,300 was available as a set off to the four judgments on which Mr Miller relied: at [23];(3)the primary judge noted that orders had been made by Garling J in the Supreme Court in proceeding 2014/333115 staying, among other things, “execution of all costs orders made by the Local Court at Newcastle in proceeding 2014/247066 including the costs orders made on 8/12/14”. The primary judge was satisfied that this included the Local Court Judgments. However, the primary judge also noted that the order made by Garling J on 9 February 2015 had been lifted by Fullerton J on 27 May 2016. The primary judge held that, given the lifting of the stay of execution, he was satisfied that there was no impediment to Mr Miller enforcing the Local Court Judgments upon which he relied in the further amended creditor’s petition: at [28];(4)at [51] of his judgment the primary judge referred to Dr Ghosh’s assertion in her affidavit in support of her notice of grounds of opposition that she also needed “the time to sell my share of asset to pay any remaining debts”. In relation to that assertion, and others set out at [51], the primary judge held at [52] that:These matters do not afford a reason for not making a sequestration order. If anything, they demonstrate Dr Ghosh is not in a position to pay her debts as and when they fall due.(5)the primary judge concluded that he was satisfied that Dr Ghosh owed Mr Miller debts totalling more than $5,000 and that Dr Ghosh was liable to pay those debts on 18 November 2014 when she committed an act of bankruptcy by failing to comply with the requirements of the bankruptcy notice issued by Baycorp by that date. His Honour was satisfied that Mr Miller had otherwise complied with the requirements of the Act and of the Bankruptcy Rules and that the requirements for the making of a sequestration order had been met. His Honour was not satisfied that any of the grounds raised by Dr Ghosh constituted sufficient cause for the court not to make a sequestration order: at [53].THE AMENDED NOTICE OF APPEAL

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.