Green v Dare

[2002] FMCA 297

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GREEN v DARE & ANOR [2002] FMCA 297

BANKRUPTCY – Annulment application – whether applicant solvent at the time of sequestration – whether applicant had put her only significant asset beyond the reach of creditors – exercise of discretion – application dismissed.

Bankruptcy Act 1966 (Cth), s.153B

Applicant: ROBYN PATRICIA GREEN

First Respondent:

Second Respondent:

TRACY DARE

PHILIP ARTHUR HENNESSAY
as trustee of the bankruptcy estate of Robyn Patricia Green

File No: BZ186 of 2002

Delivered on: 9 July 2002

Delivered at: Brisbane

Hearing Date: 9 July 2002

Judgment of: Driver FM

REPRESENTATION

Applicant appeared in person

Counsel for the Respondent: Mr Martin

Solicitors for the Respondent:

Solicitors for the Supporting Creditor:

Hewlett & Co

Flower & Hart

ORDERS

1. The application is dismissed.

2. The costs of the trustee of this application are to be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BZ186 of 2002

ROBYN PATRICIA GREEN

Applicant

And

TRACY DARE

First Respondent

PHILIP ARTHUR HENNESSY

as trustee of the bankrupt estate of Robyn Patricia Green

Second Respondent

REASONS FOR JUDGMENT

1. The application I have before me is an application by Robyn Patricia Green for annulment of her bankruptcy pursuant to s.153B of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”).  The application is made in respect of a sequestration order made on 3 August 2001 in proceedings BZ286 of 2001, the order being made by Registrar Ramsey.  The applicant represented herself in the proceedings before me today.  The applicant had sought an adjournment of the proceedings, but I declined the adjournment on the basis that no useful purpose would be served by the adjournment. 

2. It was apparent almost immediately from submissions made by the applicant that she had refined the basis of her application beyond that which was set out in previous documents filed in support of the application, and that there was some conflict between the way the application was put orally before me and the way in which it was supported previously by affidavit, in particular the applicant's affidavit filed on 18 April 2002. 

3. The application was supported before me today on the basis that the applicant is, and was at all material times, solvent and that because of that solvency the sequestration order made by Registrar Ramsey should not have been made, and that if the bankruptcy was annulled the applicant would proceed to realise assets in order to discharge her debts.  The evidence given orally by the applicant establishes that the only means now, or at the time of the hearing of the creditors' petition, that the applicant could conceivably have met the claim against her was by realising the value of a house property located at 26 Myrtle Street, The Grange, in Queensland. 

4. I have evidence that prior to the sequestration order the applicant had taken steps to transfer her interest in that property to a company which had then made a gift of the property to a family trust in which the applicant is not a beneficiary.  That establishes to my satisfaction that, at the time the creditors' petition was heard, the applicant was not in a position legally to realise any interest in that property because she had done all that she could do to dispose of that interest.

5. The applicant says that she has always regarded the property as her own and that she would, by one route or another, obtain the co-operation of those who have taken on the legal interest in order to permit the property to be sold in order to pay off her debts.  But that is no more than an assertion.  I am not persuaded that at the time the creditors' petition was heard the applicant was in a position to pay her debts.  Accordingly, I conclude that the Registrar was entitled to find that the applicant was insolvent on 3 August 2001.  If I am wrong in that finding and the applicant in fact was able to realise the value of the house property, it is quite likely that the funds realised would have discharged the amount due to the petitioning creditor, which would have established the solvency of the applicant. 

6. The jurisdiction that I have to exercise under s.153B of the Bankruptcy Act is a jurisdiction involving two steps. Under s.153B, the Court may annul a bankruptcy if a sequestration order ought not to have been made, but the Court's power to order an annulment is discretionary. The discretion must be exercised only upon a proper finding that the relevant petition ought not to have been presented or accepted, or the sequestration order ought not to have been made. Even where that finding is made the Court has a discretion in order to decide whether or not to annul the bankruptcy.

7. It is apparent to me that, even if I was wrong on the finding of whether the applicant was solvent at the time of the hearing of the creditors' petition, the circumstances would persuasively indicate to me that I should not exercise a discretion to annul the bankruptcy.  Those circumstances are that the applicant has taken steps to protect her former interest in the house property by the transfer to, first, the company, and then to the family trust, which had the effect, whether or not this was the intention, of temporarily at least putting that asset beyond the reach of her creditors.

8. In the circumstances, the public interest in the orderly administration of the bankrupt's affairs under the Bankruptcy Act strongly indicates that the bankruptcy should proceed so that steps can be taken to gain access to that property for the benefit of creditors. I am satisfied that the interests of creditors are best served by the completion of the administration of the bankruptcy and the distribution of funds from the realisation of that asset if possible, rather than the matter being left to the goodwill of the applicant, who it appears has shown herself to be a recalcitrant debtor to this point.

9. In the circumstances, even if I were persuaded that the sequestration order should not have been made – and I do not make that finding,

   
   

   I make the opposite finding nn but even if I were persuaded that the sequestration order should not have been made, I would not be persuaded that the application should be granted in any event.  In the circumstances, therefore, I will dismiss the application. 

10. The orders that I will make, therefore, are that the application be dismissed and that the costs of the trustee of this application are to be taxed and paid in accordance with the Bankruptcy Act.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Driver FM

Associate: 

Date:  29 November 2002