Gleeson v Storey
[2008] FMCA 696
•20 May 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GLEESON v STOREY | [2008] FMCA 696 |
| BANKRUPTCY – Trustee’s application for annulment of sequestration order – admissions by creditor that the debt was not owed, and that debtor was improperly served – clearly solvent estate – sequestration order ought not have been made – annulment ordered – undertaking by trustee not to seek payment of costs from bankrupt. |
| Bankruptcy Act 1966 (Cth), ss.153B(1), 154(1) |
| Pattison v Hadjimouratis (2006) 155 FCR 226 |
| Applicant: | BRUCE GLEESON |
| Respondent: | BRUCE ROBERT STOREY |
| File Number: | SYG 941 of 2008 |
| Judgment of: | Smith FM |
| Hearing date: | 20 May 2008 |
| Delivered at: | Sydney |
| Delivered on: | 20 May 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Brown |
| Solicitors for the Applicant: | Matthews Folbigg |
ORDERS
The sequestration order made on 22 February 2008 against the estate of Bruce Robert Storey is annulled pursuant to s.153B(1) of the Bankruptcy Act 1966 (Cth).
Note that the applicant trustee, by his solicitor, undertakes to the Court that he will not seek to recover any costs, charges or expenses relating to this application, or arising from his appointment under the sequestration order, from Mr Storey nor from any of the property of Mr Storey, except with the consent of Mr Storey or the leave of the Court.
All parties have liberty to apply to revoke or vary these orders.
The applicant must serve copies of this order on the respondent, the Chief Commissioner of State Revenue, and on the Official Receiver within 2 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 941 of 2007
| BRUCE GLEESON |
Applicant
And
| BRUCE ROBERT STOREY |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
The applicant, Mr Gleeson, is the Trustee in Bankruptcy of the Estate of Bruce Robert Storey, pursuant to a sequestration order made on 22 February 2008. I shall refer to him as the Trustee.
Following his appointment, the Trustee made contact with Mr Storey, and his officers procured the completion of a statement of affairs. Their discussions revealed that Mr Storey had never been properly served with documents relating to his bankruptcy and the judgment debt upon which it was based, and that he was solvent.
The Trustee and his solicitors also had discussions with the office of the petitioning creditor who procured the sequestration order. This creditor was the New South Wales Office of State Revenue (“the OSR”), which had petitioned in the name of the Chief Commissioner of State Revenue. Its officers investigated their alleged debt further, in particular by examining their records as to the place of residence of Mr Storey. These revealed that the debt was not owed, and also defects in service of the Local Court and Bankruptcy proceedings on Mr Storey.
The debt relied on in the bankruptcy petition was an alleged unpaid land tax assessment issued in February 2006 and January 2007. The OSR's investigations revealed that an application by Mr Storey for review of the assessments had been overlooked, and that they had also acted upon incorrect information to identify the relevant property and the address for service on Mr Storey.
The discussions of the Trustee and his solicitor with the officers of the OSR resulted in an invitation from the OSR that the Trustee should procure the annulment of the bankruptcy. The Trustee and his solicitor then made contact with Mr Storey, and advised him that they intended to bring the present application.
Affidavits deposing to these matters are before me, as are affidavits of service of the Trustee’s application on Mr Storey and on the Chief Commissioner of State Revenue. Neither of those persons has sought to appear today and be heard in relation to the annulment application.
The Trustee, through his solicitor, indicates to the Court, as has been indicated to Mr Storey, that he does not intend to recover his expenses of the administration nor of this application from Mr Storey. This was, in my opinion, a very appropriate position to take, since it would appear that the Trustee should probably be looking for payment of his expenses from the OSR. The arrangements between them concerning this are not disclosed in the evidence before me.
On all the evidence before me I am satisfied in terms of s.153B(1) of the Bankruptcy Act 1966 (Cth) that the sequestration order ought not have been made, both by reason of Mr Storey having an apparent answer to the land tax assessment, and also imperfections in service on him of the bankruptcy processes.
I am also satisfied that the Trustee's investigations have revealed that he is solvent, and there is no public interest in maintaining his bankruptcy. I therefore consider the Court should exercise its discretion under s.153B(1) to annul the bankruptcy.
The automatic effect of such an order would be to leave Mr Storey exposed to the costs of the Trustee's administration, pursuant to s.154(1)(c). However, in the light of the position taken by the Trustee, I invited an undertaking to be given to the Court not to pursue his entitlement under s.154 without the prior leave of the Court. Such an undertaking has been offered, and I will receive it.
Mr Storey appears to have been willing to sit back and allow the Trustee to solve the situation. He has not himself made an application to the Court to set aside the sequestration order made by the Registrar, as an alternative to annulment (see Pattison v Hadjimouratis (2006) 155 FCR 226). I do not think it appropriate for the Court itself to consider that alternative on its own motion, particularly in the absence of the petitioner joined as a party to the present application.
If Mr Storey takes the view that it would be preferable for the Court to make an order setting aside the sequestration order, rather than annulling his bankruptcy, he will be able to apply to vary or revoke the present orders, to substitute a setting aside order, and to obtain any consequential orders in relation to the costs of the petition proceedings. I shall reserve liberty to make such an application. Whether he should make an application is a matter upon which Mr Storey should obtain his own advice.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Michael Abood
Date: 2 June 2008
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