Gounder (Bankrupt) v Superior Alignments Pty Ltd
[2024] FedCFamC2G 691
•2 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Gounder (Bankrupt) v Superior Alignments Pty Ltd [2024] FedCFamC2G 691
File number(s): BRG 623 of 2023 Judgment of: JUDGE EGAN Date of judgment: 2 August 2024 Catchwords: BANKRUPTCY – Application for annulment of the bankruptcy – whether the bankrupt had satisfied the Court that a sequestration order ought not to have been made – failure of the bankrupt to so satisfy the Court – application for annulment dismissed. Legislation: Bankruptcy Act 1966 (Cth) s. 153(B) Cases cited: Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 Division: Division 2 General Federal Law Number of paragraphs: 17 Date of last submission/s: 31 July 2024 Date of hearing: 31 July 2024 Place: Brisbane Applicant: Ms Gounder, appearing on her own behalf Solicitor for the Respondent: Celtic Legal ORDERS
BRG 623 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF SHOBNA GOUNDER, BANKRUPT
BETWEEN: SHOBNA GOUNDER
Applicant
AND: SUPERIOR ALIGNMENTS PTY LTD
Respondent
ORDER MADE BY:
JUDGE EGAN
DATE OF ORDER:
2 AUGUST 2024
IT IS ORDERED THAT:
1.The application for annulment filed on 29 May 2024 be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE EGAN
INTRODUCTION
A sequestration order was made against the estate of the applicant, Shobna Kumari Gounder, (the bankrupt) on 11 October 2018.
One David Ian Mansfield was appointed as the trustee in bankruptcy of the applicant’s bankrupt estate.
On 22 November 2023, the bankrupt filed an application seeking an order that the Court annul her bankruptcy pursuant to the provisions of s. 153(B) of the Bankruptcy Act 1966 (Cth) (‘the Act’)
Prior to the filing of such application, the relevant history concerning events relevant to the application to annul were as follows:
TIMELINE
1. On 6 November 2017 the Respondent filed a Claim and Statement of Claim with the Magistrates Court of Queensland at Brisbane, numbered 0055360/17.2. On 15 January 2018 Default Judgment was entered due to the Applicant’s failure to file a Notice of Intention to Defend.
3. The Judgment ordered the Applicant to pay the Respondent the amount of $11,081.89 inclusive (‘Debt’).
4. On 18 January 2018 the Applicant filed an application to set aside Judgment. A Hearing was set for 16 March 2018 at 9:00am.
5. The application to set aside judgment was adjourned to 20 April 2018 with orders made that
a. The Applicant had until 11 April 2018 to file and serve the documentation; and
b. The Applicant was ordered to pay costs in the sum of $191.50 to the Respondent.
6. On 20 April 2018 the application to set aside judgment was dismissed and the Applicant was ordered to pay the sum of $383 in costs.
7. On 26 April 2018 the Respondent served the Applicant a Bankruptcy Notice.
8. On 30 April 2018 the Applicant filed an Application with the Magistrates Court of
Queensland to set aside judgment entered on 15 January 2018.
a. A hearing date of 25 May 2018 was set.
9. On 25 May 2018 the matter was adjourned to 18 June 2018.
10. The Applicant did not appear at the hearing on 18 June 2018. An order was made on 18 June 2018 for the dismissal of the Applicant’s Application and the Applicant was to pay the Respondent’s costs of and incidental to the Application in the sum of $383.00.
11. The Respondent filed a Creditor’s Petition in the Federal Circuit and Family Court of Australia, hearing was listed for 20 September 2018 at 9:30am.
12. On 20 September 2018 Magistrate Hay dismissed a further Application by the Applicant to set aside judgment and award costs of $502.80 to the Respondent.
14. On 10 October 2018 the Applicant filed a 4th Application to set aside judgment, which was to be heard on 26 October 2018.
15. On 11 October 2018 the Applicant was made bankrupt, and the Applicant’s creditor’s costs fixed in the sum of $6,898.20. David Ian Mansfield was appointed as Trustee.
16. On 25 October 2018 the Applicant filed an application requesting a review of the Registrar’s decision.
a. Hearing was set for 14 January 2019.
17. On 26 October 2018 the Applicant’s 4th Application to set aside judgment was dismissed and she was ordered to pay the Respondent’s costs of and incidental to the Application in the sum of $502.80;
a. The court also ordered that no further application to set aside judgment is to be made by the Applicant without leave of the court.
18. On 14 January 2019 the Respondent attended the Federal Circuit Court before Judge Vasta where the matter was adjourned to 10 April 2019.
19. On 10 April 2019 the Applicant and Respondent attended the Federal Circuit Court, where after hearing, the Judge reserved his decision until 12 April 2019 10am.
20. Judge Jarrett ordered on 12 April 2019 that the Order made on 11 October 2018 remain in place, the application filed on 25 October 2018 be dismissed and the Applicant’s costs of the Respondent’s review be its costs in the Respondent’s bankruptcy.
21. On 21 May 2019 the Applicant filed an application for an extension of time to appeal with the Federal Court of Australia at Brisbane.
22. A hearing was set for 23 August 2019 in relation to the Application for an extension of time filed 21 May 2019.
23. On 23 August 2019 the Order was made that the matter was set down for hearing on 6 December 2019 at 10am.
24. On 6 December 2019, Derrington J heard the appeal and the Application for an extension of time was dismissed and the Respondent’s costs be costs in the Applicant’s bankruptcy.
In the affidavit of Mr Mansfield filed on 4 June 2024, creditors to whom money was owed by the bankrupt, as at such date, were identified. [1] The estimated amount owing to those creditors by the bankrupt was $366,852.00 as follows:
[1] Paragraph 3 of Affidavit of Mansfield filed on 4 June 2024.
Creditor Name Statement of Affairs Amount ($) Advised Amount ($) Estimated Amount Owing ($) Australian Tax Office 2,129 2,128 2,168 Cheryl Gounder 120,000 279.765 279,765 Commonwealth Bank of Australia 9,456 - 9,455 Panthera Finance 21,602 21,601 21,601 Queensland Motorway Management Pty Ltd 51,964 51,963 51,963 Superior Alignments Pty Ltd 2,000 11.464 1,900 Total 207,151 366,921 366,852
The amount of costs estimated as having been incurred by the trustee in the administration of the estate up until 4 June 2024 was $234,588.00, as follows:
Category Amount (excl. GST) ($) Renumeration 135,595 Expenses 24,459 Total renumeration and expenses (excl. GST) 160,054 Legal Fees 74,534 Total estimated Trustee’s costs (excl. GST) 234,588 The applicant’s claims
The grounds for the annulment application were set out in the application filed on 22 November 2023 as follows:
1. As per Division 5 (Section 153 B) of the Bankruptcy Act 1966, I am requesting for an annulment of the bankruptcy as the Sequestration Order on case number BRG810/2018 should not have been made as an act of Bankruptcy was not committed. I was suffering from severe abuse from domestic violence and hence this business of running trucks was my previous husband but I was financially abused and taken advantage off and hence had to look after this business. Please find attached the medical report in the affidavit outlining abuse of several years and how at times I have been physically injured severely that I may have been killed as I have been hospitalised several times due to physical abuse and have had surgery too to my head, face and eyes. Mr Gounder ran the courier business.
2. I had questioned the integrity of the work performed by the mechanic and hence the fees were unpaid. I was at that time also suffering from severe sadness due to Mr Gounder being critically and mostly in hospital from the beginning of March 2018 all through 2019 and sadly passed away in the month of February 2020.
3. The debt on the bankruptcy notice was paid off of an amount of $11,464 and of which $9,563.90 was paid off on 6th of December 2019. No act of bankruptcy was committed as I was paying my bills. An amount of $1,901 was left to be paid, the Sequestration order should have been lifted here as the bankruptcy threshold amount to keep someone bankrupt was $5,000 as per Section of the Bankruptcy Act 1966 prior to 24th March 2020. Therefore, the outstanding amount owing on the notice was below the threshold and hence the bankruptcy application should have been voided and Sequestration Order withdrawn. I would have entered into a payment plan to pay the balance of the debt which was manageable.
4. The personal circumstances at home were not good, Mr Gounder was critically ill and later passed away in February 2020 and then there was COVID.
5. We were victims of severe domestic violence abuse and our safety to be looked after adequately in a safe house was our main priority.
6. With wrong intentions of the trustees this debt is manageable now and I get asked to move out of the house where I feel most safe. I used to pay my mortgage bills and would fetch money to pay bills under extreme circumstances but this bankruptcy which shouldn't have occurred is literally others taking our money and assets for their own personal benefit leaving me and my family without a house and homeless. We are victims of domestic violence,. Some of my children have been displaced because of the abuse and their lives are at risk. I repeat there are 3 lives at risk. If this act of chasing us out of the house will get us killed soon.
7. I was taken as an object by the trustees to take financial advantage off.
The affidavit material filed on behalf of the applicant, in large part, goes to the question of her having allegedly suffered domestic violence. The Court, though mindful of the contents of such affidavit material, was not persuaded that such evidence in any way established that a sequestration order ought not to have been made in respect of the estate of the bankrupt.
Similarly, to the extent that the bankrupt’s affidavit evidence continued to dispute the validity of the claim made against her by Superior Alignments Pty Ltd, such evidence did not persuade the Court that a sequestration order ought not to have been made. The bankrupt had unsuccessfully sought to dispute the validity of the judgment entered against her, and the subsequent sequestration order, without success.
On 30 July 2024, the day before today’s Court hearing, the applicant e-mailed to Chambers a proposal for payment of some of the creditors, and otherwise attached a “Market Sales Report” from Harcourts Real Estate Agency at Warner, in respect of the property registered in the bankrupt’s name, and situated at 6 Windamere Street, Warner Lakes. As to the payment proposal, the Court was advised by Mr Long, the lawyer for the trustee, that such proposal was not acceptable to all creditors. As to the “Market Sales Report”, the contents of such report were irrelevant to the Court’s consideration as to whether or not the Court was persuaded that the sequestration order ought not to have been made.
There was no evidence put before the Court by the applicant to substantiate any of the claims made in ground 3 of the application for annulment, save for an unsubstantiated claim under the heading “Trustee’s Misconduct” at paragraph 6 of the bankrupt’s affidavit filed on 29 May 2024. The bankrupt did not adduce any evidence to support her claim that a bankruptcy notice should not have been issued.
The Court is satisfied that there was a sound basis for the making of a sequestration order against the estate of the bankrupt.
It is clear, in any event, that the bankrupt has failed to demonstrate that she was solvent as at the date of the hearing before the Court, that being a relevant consideration to be taken into account on any annulment application.
The Court respectfully adopts, and has had regard to, what was held by the Full Court in Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 at [16] per Rares, Flick and Bromberg JJ as follows:
[16] Tracey J helpfully summarised a number of principles relevant to the exercise of the discretionary power conferred by s 153B in Bulic v Commonwealth Bank of Australia Limited [2007] FCA 307 at [12] including the following:
Section 153B(1) and its predecessors have been considered in many decisions of this and other Courts. These authorities establish a number of relevant propositions. They are:
...
(2) An applicant who seeks an annulment of his or her bankruptcy “carries a heavy burden”. It is incumbent on an applicant “to place before the Court all relevant material with respect to his or her financial affairs so that the Court may be properly informed and may make a judgment that is based on the actual circumstances of the applicant”: Re Papps; Ex parte Tapp [1997] FCA 1031; (1997) 78 FCR 524 at 531.
(3) In determining whether or not a sequestration order “ought not to have been made” the Court is not confined to a consideration of whether the order should have been made on the facts known to the Court at the time at which it was made. The Court must take account of facts, known at the time at which the sequestration order was made and at which it determines an annulment application, even if those facts were not before the Court at the time at which the sequestration order was made: Boles v Official Trustee in Bankruptcy [2001] FCA 639; (2001) 183 ALR 239 at 243; Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426.
(4) A sequestration order “ought not to have been made” if, on the facts known at the time of the annulment application, the Court would have been bound not to make the sequestration order: Re Frank; ex parte Piliszky (1987) 16 FCR 396.
...
(6) If the Court is so satisfied, it is not precluded from annulling the bankruptcy because the bankrupt had not sought to have the default judgment set aside or failed to oppose the creditor’s petition or failed to seek a review of the sequestration order: Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426.
(7) The power conferred on the Court by s 153B(1) is discretionary in nature. Even if persuaded that the sequestration order ought not to have been made, the Court can, in appropriate circumstances, decline to annul the bankruptcy: Boles v Official Trustee in Bankruptcy [2001] FCA 639; (2001) 183 ALR 239 at 243.
(8) Considerations which may have a bearing on the exercise of discretion include unexplained delay in the making of the application, whether or not the applicant is solvent, whether or not the applicant has made full disclosure of his or her financial affairs and a failure by the bankrupt to oppose the creditor’s petition and attend the hearing at which the sequestration order was made: Re Williams (1968) 13 FLR 10 at 24–5; Boles at 247; Re Papps; ex parte Tapp [1997] FCA 1031; (1997) 78 FCR 524 at 531; Rigg v Baker[2006] FCAFC 179; (2006) 155 FCR 531 at 548 [79] (per French J); Cottrell v Wilcox[2002] FCA 1115 at [7]. Additional considerations are collected in D. A. Hassall, “Annulment of Bankruptcy and Review of Sequestration Orders” (1993) 67 ALJ 761 at 766.The bankrupt has failed to satisfy the Court that the sequestration order ought not to have been made.
The application for an annulment of the sequestration order is without merit and is dismissed.
The costs of and incidental to the application shall be assessed, and paid out of the bankrupt estate.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan. Associate: RC
Dated: 2 August 2024
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