Gleeson v Charan (No.2)

[2018] FCCA 439

FEDERAL CIRCUIT COURT OF AUSTRALIA

GLEESON & ORS v CHARAN (No.2) [2018] FCCA 439

Catchwords:
BANKRUPTCY – Application in a case for a stay of proceedings – no regard sufficiently arguable point identified in the draft notice of appeal to support a stay under s 53(2) of the Act – no proper affidavit evidence identifying the respondent’s financial position and the amounts owing to other creditors weighs in favour of the balance of convenience being one in which no stay is granted – application in a case dismissed.

Legislation:

Bankruptcy Act 1966, s.53

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

Cases cited:

Young v Hughes Trueman Pty Ltd (No 2) [2017] FCA 616

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: 23 February 2018

Date of Last Submission: 23 February 2018

Delivered at: Sydney

Delivered on: 23 February 2018

REPRESENTATION

Counsel for the Applicants: Ms D Naidenov
Daniela Fazio Lawyers Pty Ltd Mr R de

Solicitors for the Respondent: Robillard on a direct access basis

ORDERS

1. Counsel for the respondent file a notice of address for service.

2. Grant leave to the respondent to file in court the affidavit of the respondent dated 23 February 2018 annexing a medical certificate as to unfitness for work.

3. The application in a case is dismissed.

4. The further petitioning creditor’s costs be paid from the bankrupt’s estate in the sum of $1,200.00 with the same priority as the other petitioning creditor’s costs in the sequestration proceedings.

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 for a stay of proceedings under a sequestration order that was made on 20 February 2018. On that occasion, the respondent, (the applicant in the application in a case) failed to appear and the Court made orders for the hearing to proceed under r 13.03C(1)(e) of the Federal Circuit Court Rules 2001. 

2. On that occasion, the respondent’s wife endeavoured to appear and handed up a document from the respondent signed by him, suggesting he was unable to attend. Medical evidence was provided to the Court as to his absence and steps had been taken prior to that which had sought to identify an application for an adjournment on a completely different basis. 

3. These proceedings have been before the Court on 16 February 2018 and the hearing of the sequestration proceedings commenced on that date and was part heard. It was stood over to 20 February 2018 part heard in circumstances where the respondent debtor informed the Court that he proposed to pay out the full amount of the judgment debt and the petitioning creditors’ costs. To assist the respondent in doing so, the Court had identified the amount of the costs and ensured that the respondent was informed of the means by which payment could be made. 

4. The part heard proceedings were then stood over to 20 February 2018.  On the material before the Court on 20 February 2018, there was no satisfactory explanation for the failure of the respondent appear and the respondent appears to have made a deliberate decision not to attend. 

5. No medical evidence had been provided to the Court on that occasion, and the Court was satisfied that the requirements for the making of a sequestration order had been made out and that other sufficient cause not to make an order had not been shown. 

6. In support of the application for a stay, Mr de Robillard of counsel handed up to the Court a draft notice of appeal seeking to raise an arguable point as well as seeking to address the balance of convenience. The respondent’s outline of submissions in support of the application in a case were handed up and I accept that the principles in relation to a stay under s 53(2) of the Act are similar to the principles identified in Young v Hughes Trueman Pty Ltd (No 2) [2017] FCA 616 at [29].

7. On the issue of an arguable point, Mr Robillard’s draft notice of appeal identifies six grounds as follows:

Ground 1

1. Ground 1 erroneously assumes that the Court ordered the respondent to pay the petitioning creditors’ costs when the matter was stood over part heard. On the contrary, it was the respondent who identified that he proposed to make the payment that was noted by the Court. It is not apparent that there is any arguable point that arises in relation to ground 1. 

Ground 2

1. In relation to ground 2, the Court referred to the $10,000.00 that the respondent had deposed as having in his bank account as a result of steps taken to obtain funds from his mother and the unaccepted tender of the amount. The Court took into account the $10,000.00 in the reasons delivered and findings that the requirements for the making of a sequestration order were satisfied and that there was not sufficient cause not to make a sequestration order. It is not apparent that any arguable point arises in relation to ground 2.

Ground 3

1. In relation to ground 3, the order in respect to costs was the order made on 20 February 2018 when the petitioning creditor had succeeded in obtaining a sequestration order. It is not apparent that there is an arguable point in relation to ground 3. 

Grounds 4 and 5

1. In relation to ground 4, the Court was satisfied that the requirements of the Bankruptcy Act 1966 (Cth) were made out and there was no proper basis upon which the respondent’s disagreement with, and pursuit of other proceedings against other parties would give rise to circumstances in which other sufficient cause not to make the sequestration order. Upon the evidence before the Court, it was apparent that the respondent was unable to pay his debts as they become due.

2. The funds in the Supreme Court of New South Wales were the reason why this Court earlier adjourned the matter as a result of different representation. When the matter came before the Court on 25 January 2018, different legal representation on behalf of the respondent at that stage identified that there was a possibility that a part of those funds may be available to the respondent and accordingly, there may be some prospect of resolving the matter.

3. Those funds, on their face, are not ones to which the respondent alone has an interest, as the respondent’s wife is identified as a second party.  Further, the funds have been identified as sitting in proceedings in Court for quite some time, and there are a series of potential issues that may arise in respect of fruits of successful litigation, and lawyers liens in respect of the charges or interests of practitioners who might have represented the respondent and his wife in those proceedings. The information about the funds also identified other creditors.

4. The Court took into account the existence of the funds paid into Court and was satisfied in the circumstances of the present case, that this was a further reason why a sequestration order ought to be made in order to ensure that the interests of creditors are properly addressed in accordance with the Bankruptcy Act 1966 (Cth).

5. The existence of those proceedings and that amount held in the Supreme Court of New South Wales is a further reason why on a balance of convenience, it is not appropriate, in the circumstances of the present case, to grant a stay. However, relevantly, I do not regard grounds 4 or 5 as identifying an arguable error. 

Ground 6

1. In relation to paragraph 6, that does not identify an arguable point.  Accordingly, while it may well be that an appellate court may take a different view, this Court’s sequestration order is for the purpose of these proceedings, taken to have been correctly made. 

2. I do not regard there being a sufficiently arguable point identified in the draft notice of appeal to support a stay under s 53(2) of the Act.  Further, for the reasons I have already given, the existence of the disputes in relation to the funds in the Supreme Court of New South Wales, and the evidence before this Court, as to the existence of other creditors, is a further reason why the balance of convenience weighs in favour of the trustees of the bankrupt estate being able to take steps to ensure that the unsecured creditors’ interests are dealt with in accordance with the requirements of the Bankruptcy Act 1966 (Cth).

3. I am not satisfied that the balance of convenience weighs in favour of the granting of a stay of the proceedings under the Bankruptcy Act 1966 (Cth). I also take into account in that regard that no proper affidavit evidence was put on by the respondent identifying his financial position and the amounts owing to other creditors. That is a further factor that weighs in favour of the balance of convenience being one in which no stay should be granted.

4. There has been no suggestion that the applicant has completed a report as to affairs for the benefit of the trustees. These factors also support a refusal on the application for a stay.

5. Accordingly, the application in the case is dismissed.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Street

Date: 1 March 2018