Global Custodians Ltd v Bhagat - [2002] FCA 701

FEDERAL COURT OF AUSTRALIA
Global Custodians Ltd v Bhagat [2002] FCA 701
BANKRUPTCY – creditor’s petition- proceedings and order on creditor’s petition – reasons for making sequestration order
Bankruptcy Act 1966 (Cth) ss 43, 52(1)
Bhagat v Global Custodians Ltd [2002] FCAFC 51 cited
Cain v Whyte (1933) 48 CLR 639 cited
Ling v Enrobook Pty Ltd (1997) 74 FCR 19 cited
IN THE MATTER OF HARI BHAGAT
GLOBAL CUSTODIANS LTD v HARI BHAGAT
N 7379 of 2001
BRANSON J
31 MAY 2002
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 7379 OF 2001

IN THE MATTER OF HARI BHAGAT

BETWEEN:

GLOBAL CUSTODIANS LTD
APPLICANT

AND:

HARI BHAGAT
RESPONDENT

JUDGE:

BRANSON

DATE:

31 MAY 2002

PLACE:

SYDNEY

REASONS FOR JUDGMENT

On 24 May 2002, following the hearing of the creditor’s petition, I ordered that the estate of Hari Bhagat be sequestrated. These are the reasons for the making of that order.
I was satisfied, on the basis of affidavit evidence filed by the creditor, with the proof of the matters identified in pars (a), (b) and (c) of s 52(1) of the Bankruptcy Act 1966 (Cth) (“the Act”). Indeed, apparently to gain the perceived advantage of addressing the Court ahead of his creditor, Mr Bhagat initially conceded that each of the matters identified in those paragraphs had been proved. Subsequently, having addressed the Court ahead of counsel for the creditor, Mr Bhagat sought to withdraw his concession asserting that it had not been established that at the time that he committed the act of bankruptcy upon which the creditor relied that he was ordinarily resident in Australia. I ruled that Mr Bhagat was not entitled to withdraw his concession. First, there was no suggestion that Mr Bhagat had not been personally present in Australia at the time that he committed the act of bankruptcy relied upon (see s 43(1)(b)(i) of the Act). Secondly, Mr Bhagat’s own affidavit evidence disclosed that he has in fact been living in Australia for at least the past twelve years – albeit that he has ordinarily returned to India twice a year for stays that may extend to three months in length. The fact, as Mr Bhagat asserts, that he is not entitled to social security and does not hold a Medicare card is not relevant to this issue.
I was further satisfied, indeed Mr Bhagat did not suggest to the contrary, that Mr Bhagat is not able to pay his debts.
The real issue before the Court on the hearing of the petition was whether Mr Bhagat had satisfied the Court that there was nonetheless sufficient cause for a sequestration order not to be made. The cause which Mr Bhagat sought to propound was based upon an assertion that the creditor had engaged in fraudulent conduct. The asserted relationship between the alleged fraudulent conduct and the act of bankruptcy upon which the creditor’s petition was founded was not made clear.
All but the most recent aspects of the history…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2002] FCA 701
Decision Date: 31 MAY 2002

CaseChat Overview and Summary

Global Custodians Ltd applied for a sequestration order against Hari Bhagat. Bhagat opposed the application on the basis that the creditor had engaged in fraudulent conduct and that there was sufficient cause to not make a sequestration order. The Federal Court considered the application on 24 May 2002 and ordered the sequestration of Bhagat's estate. The court was satisfied that Bhagat was ordinarily resident in Australia at the time of the act of bankruptcy, that he was unable to pay his debts, and that he did not establish sufficient cause to not make a sequestration order. Bhagat's claim that the creditor had engaged in fraudulent conduct was rejected as it was not substantiated by evidence. The court found that the creditor's conduct did not give rise to sufficient cause to not make a sequestration order. The order was made on 24 May 2002.

Orders