Greenhalgh v XIONG

[2016] FCCA 1134

FEDERAL CIRCUIT COURT OF AUSTRALIA

GREENHALGH v XIONG [2016] FCCA 1134

Catchwords:
BANKRUPTCY – Whether there is sufficient cause not to make a sequestration order – whether the respondent is solvent and in a position to make payments – fraudulent representations alleged to have been made by the respondent – sequestration order made.

Legislation:

Bankruptcy Act 1966 (Cth), ss.27, 50

Applicant: GREGORY ROBERT GREENHALGH

Respondent: HANDONG XIONG

File Number: SYG 243 of 2016

Judgment of: Judge Street

Hearing date: 12 May 2016

Date of Last Submission: 12 May 2016

Delivered at: Sydney

Delivered on: 12 May 2016

REPRESENTATION

Solicitors for the Applicant: Mr A Grifoni
Grifoni Legal

The respondent appeared in person

ORDERS

1. A sequestration order be made against the estate of Handong Xiong.

2. The applicant creditor’s costs fixed in the amount of $8006.42 be paid from the estate of the respondent debtor.

THE COURT NOTES THAT:

The act of bankruptcy occurred on 30 October 2015.

A Trustee Consent to Act Declaration has been provided by registered trustees Andrew Aravanis and Alexander David Clark of Aravanis Insolvency.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 243 of 2016

GREGORY ROBERT GREENHALGH

Applicant

And

HANDONG XIONG

Respondent

REASONS FOR JUDGMENT

1. This is an application within the Court’s jurisdiction under s.27 of the Bankruptcy Act 1966 (Cth).  The petitioning creditor has moved for a sequestration order based on a judgment obtained in the District Court of New South Wales against the respondent.  That order was obtained by consent and entered on 21 November 2013, a verdict in judgment amounting to $251,313.60, and interest in the amount of $41,314.66.

2. I am satisfied that the creditor has proved an act of bankruptcy occurred on 30 October 2015.  The affidavit evidence has been read in relation to service of the bankruptcy notice, service of the creditor’s petition, verification of the creditor’s petition, affidavit of search, and affidavit of debt.  The proceedings have been in Court on a number of occasions, and an affidavit has been read in relation to representations made by the respondent and his partner that payments would be made to the creditor.  Those representations were not met.

3. On 22 April 2016, on the basis of the alleged fraudulent representations made by the respondent and his partner, the applicant moved for orders under s.50 in respect of property that was identified and the Court conveyed to the judgment creditor that given the short time until hearing of the creditor’s petition, the preferable course was for the matter in relation to the s.50 application to be stood over to the hearing of the creditor’s petition. An order under s.50 is only an interim order of an interlocutory kind until either dissolved or the making of a sequestration order.

4. It was in those circumstances the matter was stood over until 28 April 2016 for the hearing of the creditor’s petition.  Leave had been granted to the judgment creditor to approach the duty judge or this Court immediately on 28 April for orders in relation to the substantive matter or the interlocutory matter.  The solicitor for the applicant has identified that at the time of the hearing before Registrar on 28 April 2016 further representations were made by the respondent and his partner that a payment was in the process of being made.

5. That representation also turned out not to be true, but it was in the face of that representation that the applicant’s solicitor consented to the matter being adjourned and also obtained orders relating to a further listing of the interim application for today.  Prior to today’s hearing, I am satisfied that the petitioning creditor notified the respondent that the matter was listed today for hearing of either the interlocutory application or the creditor’s petition.  The respondent has appeared before the Court and has sought an adjournment on the basis that he alleges further payments may be ready. 

6. The respondent alleges that he was only assisting his wife and that he was a guarantor and that he was not really liable under the judgment debt.  The respondent said he wanted more time and that he was not in a position to proceed.  There was no affidavit evidence put on by the respondent to identify any basis upon which it could be said that he was solvent or identifying other sufficient cause not to make a sequestration order.  The history of the matter in relation to the false representations made to the creditor for the purpose of payment are circumstances I take into account in refusing the adjournment application.

7. I am satisfied that an adjournment would only unnecessarily add to the costs of the petitioning creditor and that it is appropriate to permit the creditor to move on the creditor’s petition.  In the circumstances, I am satisfied that the debtor respondent committed an act of bankruptcy, as identified, on 30 October 2015.  I am satisfied that the petitioning creditor has proved the matters stated in the petition and service of the petition and the fact that the judgment debt upon which the petitioning creditor relies is still owing.

8. I am not satisfied that the respondent is able to pay his debts and I am not satisfied that there is other sufficient cause not to make a sequestration order. In the circumstances, I am satisfied that a sequestration order should be made against the estate of the respondent.  The Court notes the act of bankruptcy occurred on 30 October 2015.  The Court notes a trustee consent to act declaration has been provided by registered trustee, Andrew Aravanis and Alexander David Clark of Aravanis Insolvency.

I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Judge Street

Date: 17 May 2016