GLEESON v CHARAN

[2018] FCCA 426

FEDERAL CIRCUIT COURT OF AUSTRALIA

GLEESON & ORS v CHARAN [2018] FCCA 426

Catchwords:
BANKRUPTCY – Application for a sequestration order under s 43 of the Bankruptcy Act 1966 (Cth) – petitioning creditor established proof of the matters required under s 52(1) – Court provided the respondent with an opportunity to make payments to the petitioning creditor and no such payment was made – application seeking a further adjournment opposed – the Court is satisfied on the evidence before the Court that the respondent is unable to pay his debts as and when they fall due – appropriate matter to make a sequestration order – sequestration order made against the respondent.

Legislation:

Bankruptcy Act 1966, ss.27, 43, 52

Federal Circuit Court Rules 2001, r.13.03C(1)(e)

First Applicant: BRUCE GLEESON

Second Applicant:  SCOTT DARREN PASCOE

Third Applicant: ANDREW JOHN SCOTT

Respondent: PRABHAKAR CHARAN

File Number: SYG 3023 of 2017

Judgment of: Judge Street

Hearing date: 20 February 2018

Date of Last Submission: 20 February 2018

Delivered at: Sydney

Delivered on: 20 February 2018

REPRESENTATION

Solicitors for the Applicants: Ms D Naidenov Daniele Fazio Lawyers Pty Ltd

No appearance by or on behalf of the Respondent.

ORDERS

1. Under r 13.03C(1)(e) of the Federal Circuit Court Rules 2001 the part heard hearing is to proceed in the absence of the respondent.

2. A sequestration order is made against the estate of Prabhakar Charan.

3. The petitioning creditors’ costs in the amount of $14,878.55 be paid out of the bankrupt estate with the priority to which it is entitled.

THE COURT NOTES THAT:

1. The act of bankruptcy occurred on 13 July 2017.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 3023 of 2017

BRUCE GLEESON

First Applicant

SCOTT DARREN PASCOE

Second Applicant

ANDREW JOHN SCOTT

Third Applicant

And

PRABHAKAR CHARAN

Respondent

REASONS FOR JUDGMENT

1. This is an application within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (Cth) (“the Act”) for a sequestration order against the respondent. The proceedings were commenced on 28 September 2017. On 21 December 2017, an order was made by the Registrar referring the matter to a Judge of the Court for hearing of the petition on 25 January 2018.   

2. On 25 January 2018, this Court made orders fixing the matter for hearing on 16 February 2018 and giving the respondent an opportunity to put on further affidavit evidence and dispensing with the need for a further affidavit of debt or a further affidavit of service. On that occasion, a solicitor appeared for the respondent and said that she had just been instructed and asserted that there were monies being held in the Supreme Court of New South Wales that had been paid in by a secured creditor that may belong to the respondent in whole or in part, and may give rise to the respondent being in a position where the judgment debt and petitioning creditors’ costs could be paid out and where it could be asserted the respondent was solvent. It was in those circumstances the Court stood the matter over for hearing on 16 February 2018. On that occasion, the affidavits on the Court file were read by the petitioning creditors.

3. Prior to that hearing date, the solicitor for the respondent identified that she had served a notice of intention to cease to act and sought leave of the Court to withdraw from the proceedings. On 15 February 2018, the Court granted leave to the solicitor to withdraw from the proceedings and directed the solicitor to notify the respondent of the orders made by the Court. 

4. On 20 February 2018, the part heard matter was called, the respondent failed to appear and the Court proceeded with the hearing under r.13.03C(1)(e) of the Federal Circuit Court Rules 2001. The respondent had filed three affidavits. Those affidavits sought to assert that the respondent was able to pay his debts as and when they fell due. There was provided a payslip in support of those assertions, as well as a bank statement and an assertion of tendering an amount of the judgment debt but not the petitioning creditors’ costs. There was no evidence of acceptance of the tendered judgment by the petitioning creditors or any allocation of the purported payment. The material provided by the respondent fell well short of demonstrating that the respondent is able to pay his debts as and when they fell due.

5. The material filed on behalf of the respondent also sought to take issue with the validity of the bankruptcy notice. On the face of the bankruptcy notice, it complied with the statutory requirements and on the evidence that has been led by the petitioning creditor there was valid service of the bankruptcy notice on the respondent in respect of a judgment debt that was entered in the Supreme Court of New South Wales in the sum of $7,500.00.

6. The petitioning creditor has also read affidavits in respect of verifying the paragraphs of the petition. Affidavit of service of the petition, affidavits of debt and affidavits of search were compliant with the Federal Circuit Court (Bankruptcy) Rules 2016 (“the Rules”) in that regard. The Court dispensed with the requirement for a further affidavit of debt and further affidavit of search on 25 January 2018.

7. In the circumstances of the present case, I am satisfied on the evidence before the Court, that the respondent committed an act of bankruptcy on 13 July 2017. I am satisfied that at the time of the act of bankruptcy, the respondent was personally present and ordinarily resident in Australia in accordance with s 43(1) of the Act. I am satisfied that the petitioning creditor has established proof of the matters required under s 52(1) of the Act. In relation to s 52(2) of the Act, I note that the proceedings that were part heard on 16 February were stood over to today’s date part heard in circumstances where the respondent asserted that he could pay the full judgment debt and the costs to which the petitioning creditor would be entitled on the making of a sequestration order. 

8. On 16 February 2018, it was on the respondent’s assurance to the Court that he could obtain such funds that day in circumstances where on his evidence, he obtained $10,000.00 from his mother that would not meet the full amount crediting and the petitioning creditors costs that the Court was willing to provide the respondent with a further opportunity to resolve the matter by paying out to the judgment debt and costs. On that occasion, the respondent foreshadowed that he wanted to take issue with the secured creditor costs. The costs amount being sought reflected the ordinary costs that the Court would order on a sequestration order. The Court provided the respondent with an opportunity to make payment in full to the petitioning creditor and to settle the matter. No such payment in full was made.

9. On 19 February 2018, the Court received a proposed application in a case which misconceived the nature of the opportunity given to the respondent to make payment to the petitioning creditor but in substance, was seeking a further adjournment. The motion filed in the Supreme Court of New South Wales did not establish that the petitioning creditors were entitled to the whole proceeds and it is apparent there are other compelling creditors. No proper basis for a further adjournment was identified in that application. 

10. On 20 February 2018, the matter has been called and the respondent has failed to appear. The respondent’s wife attended the Court has on his behalf and has handed up to the Court a document signed by the respondent purporting to assert that he suffers from depression and anxiety and will not able to attend today. No doctor’s certificate has been provided to the Court. 

11. The adjournment either in the application in a case and/or by reason of a medical certificate was opposed by the petitioning creditor. The Court is not satisfied in the circumstances of this case that an adjournment is warranted in the interests of the administration of justice. One of the requirements under the Bankruptcy Act 1966 (Cth) is that proceedings in this Court must proceed with due expedition. The conduct of the respondent in the case demonstrates an endeavour to protract and delay the bringing on of the proceedings and an inability by the respondent to pay his debts as they fall due. 

12. I am satisfied on the evidence before the Court that the respondent is unable to pay his debts as and when they fall due and that this is an appropriate matter to make a sequestration order. I am not satisfied that there is other sufficient cause why a sequestration order ought not to be made.

13. Accordingly, a sequestration order will be made against the respondent. 

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Judge Street

Date: 1 March 2018