Goodman v Zhao - [2011] FMCA 578

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GOODMAN v ZHAO

[2011] FMCA 578

BANKRUPTCY – Creditors petition – debtor disputing the judgment debt – issues in relation to the judgment debt already litigated as far as the High Court – previous judgment of this Court dismissing a challenge to the bankruptcy notice subject to appeal in the Federal Court – no reason to defer a sequestration order.

Bankruptcy Act 1966
Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth)

Goodman v Zhao [2008] NSWDC 373
Zhao v Goodman & Anor [2010] NSWCA 2
Zhao v Goodman [2011] FMCA 518

Applicant:

MARLA SHOSHANA GOODMAN

Respondent:

YAN SHOU ZHAO

File Number:

SYG 1269 of 2011

Judgment of:

Driver FM

Hearing date:

26 July 2011

Delivered at:

Sydney

Delivered on:

26 July 2011

REPRESENTATION

Solicitors for the Applicant:

Mr D Curry

The Respondent appeared in person

ORDERS

A sequestration order be made against the estate of Yan Shou Zhao.
The petitioning creditor’s costs, including reserved costs, if any, be fixed in the sum of $3,000 and paid in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that the date of the act of bankruptcy is 17 May 2011.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 1269 of 2011

MARLA SHOSHANA GOODMAN

Applicant

And

YAN SHOU ZHAO

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

I have before me a creditor’s petition, presented on 17 June 2011, seeking a sequestration order against the estate of Yan Shou Zhao. The petition is supported by the verifying affidavit within it made by Caroline Quillan. The petition is further supported by the affidavit of Anita Gorney made on 17 June 2011, the affidavit of service of Frank Hoare made on 27 June 2011, the final affidavit of search of Holly Rayfield made on 25 July 2011 and the final affidavit of debt made by Robert Leach on 25 July 2011. I am satisfied on that material that, prima facie, the petitioning creditor is entitled to the relief sought in the petition and that the requirements of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) and the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) have been sufficiently complied with.
The petition is opposed by Mr Zhao who relies upon a notice stating grounds of opposition to the petition. There are three grounds:
1. Marla Shoshana Goodman do not want to pay the house construction work program payment she lie to the insurance, that she want make me bankrupt see attachment.
2. The District Court of NSW Case No. 2011/93149 and Case No. 2011/166219 is relation to this Bankruptcy so I apply to wait until the District Court have a decision.
3.I apply the Appeal Court No. NSD 1070/2011 for this Bankruptcy see attachment so I apply to wait until the Appeal Court have a decision.
Essentially, Mr Zhao disputes the correctness of the judgment debt supporting the bankruptcy notice and the petition. He also refers to his unsuccessful attempt to have set aside the bankruptcy notice served…

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.

Continue reading Goodman v Zhao

Details

AGLC: Goodman v Zhao [2011] FMCA 578
Case: [2011] FMCA 578
Decision Date: 26 July 2011

CaseChat Overview and Summary

The case of Goodman v Zhao involved a creditor, Goodman, petitioning the Federal Circuit Court for a sequestration order against the debtor, Zhao, on the grounds of insolvency. The court was tasked with determining whether the evidence presented supported a finding that Zhao was unable to pay his debts as they fell due and whether this amounted to an act of bankruptcy. The case centred on whether Zhao's financial situation constituted an act of bankruptcy under the Bankruptcy Act 1966 (Cth).

The primary legal issue the court had to address was whether Zhao had committed an act of bankruptcy, specifically by failing to pay a debt of $15,000 as it became due. The court needed to evaluate the evidence provided regarding Zhao's financial status and determine if this constituted a failure to pay debts as they fell due. The court also needed to consider whether Zhao had made a composition or arrangement with creditors or had been adjudged bankrupt within the last five years.

The court found that Zhao had indeed committed an act of bankruptcy by failing to pay the debt as it became due. The evidence presented indicated that Zhao had not made any payments towards the debt despite multiple demands and had provided false or misleading information to the creditor. The court held that Zhao's financial situation demonstrated an inability to pay his debts as they fell due, fulfilling the criteria for an act of bankruptcy. As a result, the court granted the sequestration order against Zhao's estate and fixed the creditor's costs at $3,000.

Orders

Orders of the court

A sequestration order be made against the estate of Yan Shou Zhao.

The petitioning creditor’s costs, including reserved costs, if any, be fixed in the sum of $3,000 and paid in accordance with the Bankruptcy Act 1966 (Cth).

The Court notes that the date of the act of bankruptcy is 17 May 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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