Gounas v Rudaks
[2003] FMCA 129
•9 May 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GOUNAS v RUDAKS | [2003] FMCA 129 |
| BANKRUPTCY – Annulment – whether the applicant solvent – whether bankrupt indebted to the petitioning creditor – application dismissed. PRACTICE AND PROCEDURE – Determination of application without an oral hearing. |
Bankruptcy Act 1966 (Cth), s.153B
Federal Magistrates Act 1999 (Cth), s.54
Federal Magistrates Court Rules 2001 (Cth)
| Applicant: | MARIA CONNIE GOUNAS |
| First Respondent: | MARIS ANDRIS RUDAKS |
| File No: | AZ3 of 2003 |
| Delivered on: | 9 May 2003 |
| Delivered at: | Sydney, by telephone to Adelaide |
| Hearing date: | Determined without oral hearing |
| Judgment of: | Driver FM |
REPRESENTATION
The applicant appeared in person
The respondent appeared in person
ORDERS
The application is dismissed.
The costs of the trustee are to be taxed in accordance with the Federal Court Rules and paid in accordance with the Bankruptcy Act 1966 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
AZ3 of 2003 of 2003
| MARIA CONNIE GOUNAS |
Applicant
And
| MARIS ANDRIS RUDAKS As trustee of the bankrupt estate of Mario Disario |
First Respondent
REASONS FOR JUDGMENT
Introduction and background
This is an application for annulment of bankruptcy pursuant to s.153B of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”). The applicant seeks to annul her bankruptcy arising from a sequestration order made against her estate (and that of her husband Con Gounas) by this Court on 11 November 2002. Although the application does not set out the grounds of the application, it is clear that the grounds are that the bankrupt is solvent and that she is not indebted to the petitioning creditor.
The applicant relies upon her application and supporting affidavit filed on 9 January 2003. The respondent trustee relies upon two affidavits filed on 19 February 2003 and 28 March 2003. I heard directions in the matter on 7 April 2003 in which I ordered the applicant to file any further affidavits on which he proposes to rely on or before 11 April 2003. She has not filed any further affidavits. I also ordered the respondent to file and serve any further affidavits by 17 April 2003. On 17 April 2003 the respondent filed a supplementary affidavit which annexed a submission to the respondent, as trustee, from the petitioning creditor, dated 15 April 2003.
At the directions hearing on 7 April 2003 Mr Ellis appeared for the applicant and filed in court a notice of ceasing to act by his instructing solicitors. I thereupon gave him leave to withdraw. Thereafter, both Mrs Gounas and Mr Rudaks appeared on their own behalf. I also gave leave for Ms Baker to appear on behalf of the petitioning creditor, although she made no submissions and did not seek to have the petitioning creditor joined as a party. At my suggestion, and after some discussion, both parties agreed to this matter being dealt with without an oral hearing pursuant to s.54 of the Federal Magistrates Act 1999 (Cth) (“the Federal Magistrates Act”) and rule 15.03 of the Federal Magistrates Court Rules 2001 (Cth) (“the Federal Magistrates Court Rules”).
Consideration and findings
Section 153B of the Bankruptcy Act provides that if the Court is satisfied that a sequestration order ought not to have been made, the Court may make an order annulling the bankruptcy. The decision whether or not to make an order annulling a bankruptcy is a matter within the Court’s discretion. A person who seeks an annulment of bankruptcy carries a heavy burden and must make full and true disclosure to the Court. What the Court has to consider is, first, should the sequestration order have been made and, secondly, should the Court in its discretion annul the bankruptcy.
In her affidavit the applicant asserts that she is solvent. She acknowledges five debts which have been proved in her bankruptcy but says that she has always met required payments on those debts. She states, in effect, that the alleged debt owed to the petitioning creditor Carmine Morena came about because of dealings between her husband and Ms Morena and that although she signed a document relating to those dealings she did not understand what she was signing. She asserts that she did not know that she had been bankrupted until advised after the event by her husband.
In his first affidavit the respondent trustee states that the applicant is also known as Maria Disario, the name by which she is described in the sequestration order made on 11 November 2002. The applicant is said to have committed an act of bankruptcy on 18 February 2002 by failing to comply with a bankruptcy notice issued by the petitioning creditor. Following the appointment of the trustee a statement of affairs was sought from the applicant and was provided following her interview with the trustee’s staff on 11 March 2003. On the basis of that statement of affairs the trustee estimates that approximately $10,000 is realisable from her estate. It is apparent from the respondent’s affidavit filed on 17 April 2003 that that estimate was based upon an under statement by the bankrupt of the amount due to the mortgagee of her house property. In all probability nothing will be realisable from the bankrupt’s estate. This excludes any amount that may be recoverable from antecedent transactions, the recovery of any after acquired property or any contributions from the bankrupt. The bankrupt has unsecured liabilities according to the statement of affairs and the investigations of the trustee of $60,670, including the debt claimed by the petitioning creditor of $31,406. The debt claimed by the petitioning creditor is disputed by the bankrupt and has, at this stage, neither been admitted or rejected by the trustee. The trustee says in his second affidavit that both the bankrupt and her husband were unwilling to provide him with any detailed information concerning the debt claimed by the petitioning creditor. The bankrupt’s husband stated to the trustee that the claim arose from his own borrowings from the petitioning creditor, but he declined to provide the staff of the trustee with full and complete details why the moneys were borrowed by him and how they were disbursed.
The trustee says that, on the information presently available, the bankrupt would not be able to make a contribution to her estate and that no dividend can be expected to be paid to unsecured creditors. Even excluding the amount claimed by the petitioning creditor the bankrupt has an obvious deficiency of assets to liabilities. The bankrupt also provided information to the trustee which indicates an excess of expenses over income.
It is apparent from the three affidavits prepared by the trustee that the bankrupt is not solvent and almost certainly was not solvent at the time the sequestration order was made. While the bankrupt asserts her solvency that assertion lacks credibility in the light of the trustee’s affidavits.
I also find that the applicant has failed to satisfy me that she is not indebted to the petitioning creditor. The claim by the petitioning creditor is based upon a deed of settlement apparently signed by the bankrupt. The bankrupt’s husband had informed the trustee that the bankrupt’s only involvement with the debt claimed by the petitioning creditor was that the bankrupt’s husband had drawn a cheque on a joint bank account which had subsequently been dishonoured. That assertion lacks credibility in the face of the deed of settlement. In these proceedings the bankrupt acknowledged signing the deed of settlement but asserted that she did not know what she was signing. At paragraph 29 of her affidavit the applicant says that she queried with her husband why she had to sign the deed and said, “I have nothing to do with this”. She says that her husband replied, “Well, that’s what the solicitor wants.” At paragraph 30 she says, “I did not think to ask why I was required to sign any documents. I thought I had to sign it to support my husband”. She then says that on 12 August 2002 she went to a solicitor’s office and signed a document without reading it. I find it unbelievable that Mrs Gounas would contest with her husband why she had to sign the deed but would say nothing when she attended the solicitor’s office to sign the document, unless she had already decided to sign it following discussion with her husband.
The debt claimed by the petitioning creditor is supported by a judgment of the Port Adelaide Magistrates Court. The recitals to the deed, which was made on 12 August 2002, show that the applicant and her husband accepted that judgment debt and entered into the deed in order to deal with that debt. The current assertion of the applicant that she is not indebted to the petitioning creditor lacks credibility.
At paragraphs 14 to 18 of her affidavit the applicant admits being served with a bankruptcy notice. She says nothing about service of a creditor’s petition. She asserts that she knows nothing of what occurred between her signing of the deed and her bankruptcy. I do not believe her. The bankrupt and her husband were legally represented in the bankruptcy proceedings instituted by the petitioning creditor and the bankrupt and her husband were on notice that a sequestration order would be sought if they failed to meet their obligations under the deed of settlement.
The applicant has failed to satisfy me that the sequestration order should not have been made. Even if there was a real question whether the applicant is indebted to the petitioning creditor there were several other creditors who could have come forward in order to press the creditor’s petition. I find that at all material times, and now, the applicant was and remains insolvent. Even if I had been satisfied that the sequestration order should not have been made the insolvency of the applicant would prevent me from exercising my discretion to annul the bankruptcy. In addition, the applicant has made no proposal for payment of fees and charges incurred by the trustee in the course of the administration of her estate.
The application is dismissed with costs.
I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 9 May 2003
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