Guo v Ong
[2022] FedCFamC2G 384
•29 April 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Guo v Ong [2022] FedCFamC2G 384
File number(s): SYG 1546 of 2021 Judgment of: JUDGE GIVEN Date of judgment: 29 April 2022 Catchwords: BANKRUPTCY – application for review of Registrar’s decision – redundancy of change of venue in a post-pandemic world Legislation: Bankruptcy Act 1966 (Cth) ss 40, 41, 52
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 184, 254, 256
Federal Circuit Court of Australia Act1999 (Cth) ss 52, 104
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth)
Cases cited: Allison v Murphy [2021] FCAFC 232
Bechara v Bates (2021) 388 ALR 414
Mulhern v Pearce [2012] FMCA 1186
Robson as former trustee of the estate of Samsakopoulos v Body Corporate for Sanderling at Kings Beach CTS 2942 (2021) 392 ALR 93
Wren v Mahony (1972) 126 CLR 212
Division: Division 2 General Federal Law Number of paragraphs: 68 Date of hearing: 29 April 2022 Place: Sydney Solicitor for the Applicant: Mr A Grifoni of Grifoni Legal The Respondent: In person Solicitor for the Trustee: Mr S Sankey of Wallmans Lawyers ORDERS
SYG 1546 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: JIAN MIN GUO
Applicant
AND: SHAO TING ONG
Respondent
ORDER MADE BY:
JUDGE GIVEN
DATE OF ORDER:
29 APRIL 2022
THE COURT ORDERS THAT:
1.Order 2 made on 23 November 2021 for the sequestration of the estate of Shao Ting Ong under the Bankruptcy Act 1966 (Cth) is affirmed.
2.The application for review filed on 15 December 2021, and as amended, is dismissed.
3.Order 3 made by Registrar Gitsham on 23 November 2021 is vacated and instead the respondent debtor pay the applicant creditor’s costs of the proceedings fixed in the sum of $11,147.50, such costs to be paid in the priority accorded by s 109(1)(a) of the Bankruptcy Act 1966 (Cth).
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).
EX TEMPORE REASONS FOR JUDGMENT
(revised from transcript)JUDGE GIVEN:
I have before me an application for review of a decision of a Registrar who, on 23 November 2021, made an order for the sequestration of the estate (sequestration order) of Shao Ting Ong (respondent debtor). At the time that the Registrar made the sequestration order, she had power to make it pursuant to s 254(2)(i) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (Court Act), read together with r 2.02(1) of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules) and Item 9 of Schedule 1 of Part 1 to the Bankruptcy Rules. Pursuant to s 256(1) of the Court Act that section has the effect that a party to proceedings in which a Registrar has exercised delegated powers under s 254 may apply to the Court for review of that exercise of power within a prescribed time. The time prescribed for a review of this kind is within 21 days after the day on which the power is exercised pursuant to r 2.02(3) of the Bankruptcy Rules.
Rule 7.05 of the Bankruptcy Rules imposes additional requirements on the respondent debtor if such review application is then made, and thereafter, r 7.06 of the Bankruptcy Rules is triggered by the making of such an application and imposes an obligation on the trustee to furnish the Court with a report, which must be filed at least five days before the date fixed for the hearing of the review application and must be in the form of an Affidavit.
Evidence
The evidence before me today is:
(a)an Affidavit of Service of Bankruptcy Notice of David Geoffrey Chambers made 11 May 2021 (First Chambers Affidavit);
(b)the Affidavit verifying the Creditor's Petition of Ziyu Guo made 12 August 2021;
(c)an Affidavit of Service of Creditors Petition of David Geoffrey Chambers made 14 September 2021 (Second Chambers Affidavit);
(d)the Affidavit of Andrew Aravanis made 20 April 2022 annexing the Trustee’s Report pursuant to r 7.06 of the Bankruptcy Rules which was filed on the same date and is made in accordance with subrule 7.06(5);
(e)the Affidavit of Anthony John Grifoni (Grifoni Affidavit) sworn 28 April 2022 which deposes to the background of the matter;
(f)an Affidavit of search sworn by Anthony John Grifoni on 28 April 2022 (Affidavit of Search);
(g)an Affidavit of debt made by Ziyu Guo sworn 28 April 2022 which will be referred to as the Affidavit of debt (Affidavit of Debt); and
(h)an Affidavit affirmed by the respondent debtor on 27 April 2022.
While I note that a number of other Affidavits have been filed by the respondent debtor since the time she filed the review application in December of 2021, each of them seemed to be an updated version of its antecedent. Accordingly, I confirmed with the respondent debtor that her most recent Affidavit, being that made on 27 April 2022, was intended to replace the others that she has filed since 14 December 2021 and she confirmed that this was so.
The respondent debtor also sought to put before the Court a document which had been filed as correspondence on 27 April 2022. That correspondence was an email from a solicitor, addressed to the applicant, which described various matters pertaining to a criminal proceeding in which the respondent debtor is involved. The content of the email is not only hearsay, it appeared to simply repeat back to the respondent debtor matters as to which she had herself instructed the solicitor. The respondent debtor, when asked what the document went to, described it as a letter of support from her criminal solicitor in relation to the bankruptcy matter and she told the Court that it emphasised that she required the money which would otherwise be able to meet the amount the subject of the Creditor’s Petition, in order that she pay her criminal lawyer for those proceedings.
The document was not only inadmissible, but it was not probative of any relevant matter to the proceeding and accordingly it was rejected. As noted previously, the Court is to hear the Creditor’s Petition anew and the matters which require proof are provided by s 52(1) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) which in summary requires that the applicant creditor establish:
(a)the matters stated in the Creditor’s Petition;
(b)its service; and
(c)the fact that the debt on which the petitioning creditor relies is still owing. On 26 February 2020, Jian Min Guo (applicant creditor) obtained a final judgment, the execution of which has not been stayed. The respondent debtor admits that she took no steps towards staying it.
Background
The following can be discerned from the evidence before me.
On 1 December 2018, the respondent debtor as borrower entered into a loan agreement (Loan Agreement) with the applicant creditor as lender.
The Loan Agreement provided that:
(a)the applicant creditor would lend to the respondent debtor the sum of $135,000.00 (loan funds); and
(b)the respondent debtor agreed to repay the loan funds plus interest calculated at 36% p.a. from 1 December 2018 to the applicant creditor by 6 May 2019.
On 6 March 2019, the respondent debtor entered into a Deed of Personal Guarantee and Indemnity with the applicant creditor.
The respondent debtor signed an acknowledgement of loan dated 21 March 2019 confirming that she had borrowed and received the sum of $135,000, paid to Abraham Construction on 1 December 2018 from the applicant creditor.
The respondent debtor failed to repay any of the loan funds and/or any interest to the applicant creditor by 6 May 2019.
On 1 August 2019, the applicant creditor as Plaintiff filed a Summons (Summons) against the respondent debtor as Defendant, in the District Court of South Australia, proceedings no. DCCIV 19/938 of 2019 (South Australian proceedings).
On 1 August 2019, the applicant creditor filed a Statement of Claim (Statement of Claim) against the respondent debtor in the South Australian proceedings.
The Statement of Claim pleaded the written terms of the Loan Agreement as the basis for the cause of action against the respondent debtor. The Statement of Claim made no reference to, and therefore presumably placed no reliance upon, the Deed of Personal Guarantee and Indemnity dated 6 March 2019.
On 26 February 2020, the applicant creditor filed judgment pursuant to an offer to consent to judgment by the respondent debtor in the South Australian proceedings. Judgment was entered in favour of the applicant creditor against the respondent debtor for the sum of $166,997.90 inclusive of interest and costs (Judgment).
Bankruptcy Notice BN 252576 was issued by Australian Financial Security Authority (AFSA) on 19 April 2021, relying on Judgment entered on 26 February 2020 in the South Australian proceedings for the sum of $166,997.90.
The Bankruptcy Notice was personally served on the respondent debtor on 6 May 2021 by process server David Geoffrey Chambers.
The respondent debtor failed to comply with the requirements of the Bankruptcy Notice on or before 27 May 2021. This failure to comply constituted the act of bankruptcy for the purposes of s 40 of the Bankruptcy Act.
The Creditor's Petition was presented on 13 August 2021 relying on the respondent debtor's failure to comply with the Bankruptcy Notice. The Affidavit verifying the Creditor's Petition was sworn by the applicant creditor's son Ziyu Guo on 12 August 2021.
The Creditor's Petition and all supporting Affidavits and Trustee Consent to Act were personally served on the respondent debtor on 13 September 2021 by process server David Geoffrey Chambers.
As noted on 23 November 2021, Registrar Gitsham made the sequestration order. Following the making of the sequestration order, the respondent debtor filed an application with the Court for review of that decision on 12 December 2021, which by reference to r 2.02(3) of the Bankruptcy Rules was made within time. The matter was listed before me for a first Court date on 4 February 2022. While being within time, the application for review sought the following orders (errors in original):
1.The orders made by Registrar Gitsham on 23 November 2021 in proceeding SYG1546/2021 be set aside, pursuant to s104(3) of the Federal Circuit Court of Australia Act 1999 (Cth).
2.The creditor’s petition filed by the creditor be dismissed.
3.The Court make no order as to costs.
4.The Court make no order to Trustee costs.
The Affidavit in support of the review application which was affirmed on 14 December 2021 stated as follows:
I will resubmit the Affidavit as I am still waiting to get full legal advice and guidance on the review.
Also filed on 15 December 2021 was an incomplete Form B13, which is a Notice to Creditors under Part 9 of the Bankruptcy Rules. By the time the matter came before me for its first Court date on 4 February 2022, despite having been on foot for some seven weeks, the respondent debtor had not complied with her obligations under r 7.05 of the Bankruptcy Rules. I explained to the respondent debtor that she was required to so comply with that rule, and I made orders inter alia that she do so by 25 February 2022. On that occasion, the respondent debtor sought that the matter adjourn for a period because she wished to obtain legal representation. The fact that she had not done so in the weeks following making her application for review was of concern, and it was impressed upon her that if she desired legal representation, it was a matter for her to obtain it and the matter would not adjourn endlessly in order to enable that to occur.
On 4 February 2022, the respondent debtor also sought an opportunity to amend her review application and to file further evidence on the review. These opportunities were granted, and orders were made to that effect, granting leave to amend and to file evidence on or by 25 February 2022. In particular, it was also impressed upon the respondent debtor that the orders sought in the review application required amendment, referring as they did to the Federal Circuit Court of Australia Act1999 (Cth) (Former Court Act) which has since been repealed and replaced the Court Act. Accordingly, the reference to relief under s 104(3) of the Former Court Act was misconceived. The matter was then listed for hearing on 25 March 2022.
On 25 February 2022, the respondent debtor filed the following documents with the Court:
(a)an Amended Application for review which now sought the following orders:
1.The orders made by Registrar Gitsham on 23 November 2021 in proceeding SYG1564/2021 be set aside, pursuant to
s104(3)sec 52(2b) of the Federal Circuit Court of Australia Act 1999 (Cth).2.The creditor’s petition filed by the creditor be dismissed.
3.The Court make no orders as to costs.
4.The Court make no order to Trustee costs.
(b)a document which was set out on the Court’s Affidavit form but was unwitnessed.
While the Amended Application for review had changed the section under which the application was purported to be made, it had not in fact cured the original malady from which that document suffered. Rather than substituting s 256 of the Court Act for s 104(3) of the Former Court Act, the Amended Application no longer sought any relief of that kind.
Instead, the Amended Application sought that the Registrar’s orders be set aside pursuant to “sec 52(2b)” of the Former Court Act.
Section 52 of the Former Court Act deals with venue and has been replaced by s 184 of the Court Act. However, it was tolerably clear to me from the content of the Affidavit document, that the respondent debtor was seeking to have the proceedings transferred from the Sydney Registry to the Adelaide Registry of this Court on the basis that the loan contract which gave rise to the judgment debt was said to be governed by the laws of South Australia.
Notwithstanding the obvious misstatements in relation to which section this application is brought under, it was also apparent that the applicant is seeking, in substance, a review of the Registrar’s decision made on 23 November 2021. Section 104(3) of the Former Court Act is in relevantly identical terms to s 256(2) of the Court Act. Having made such an application, the Court may make any order or orders that it thinks fit in relation to the matter in respect of which power has been exercised by a Registrar in their capacity as a delegate. I confirmed with the respondent debtor today that she intended that her Amended Application, in fact, be taken to be a review application pursuant to s 256(2) of the Court Act, and she confirmed that this was so.
Following the filing of the aforementioned documents, correspondence was sent by the respondent debtor to the Court’s Registry, seeking a further opportunity and/or extensions of the orders made on 4 February 2022 apparently in order to file further evidence once she had consulted a lawyer. This further opportunity was opposed in correspondence from the applicant creditor’s solicitor who sought to exercise the liberty granted to apply to return the matter to Court. Accordingly, the matter was listed for directions at 2.15 pm on 3 March 2022, and I ultimately moved that fixture to accommodate the respondent debtor who had indicated that she would be meeting with a lawyer in the matter at 2pm on that date so I moved the directions hearing to 3.30 pm on 3 March 2022.
On that occasion and despite having been given the opportunity to meet with a lawyer, the respondent debtor was, again, unrepresented. The respondent debtor sought further time for evidence and also sought the transfer of the matter. On that occasion, I declined both requests. In relation to evidence, I indicated to the respondent debtor that, given the hearing remained three weeks away, she could file anything she needed in the interim and that the question of leave would be dealt with at the hearing. In relation to venue, given that the parties were in different parts of Australia and that the Court is a national court, I indicated that the hearing would in any event be utilising the Microsoft Teams platform, and, in my preliminary view, transfer was otiose. I declined to transfer the proceedings. As at that time, the respondent debtor had still not complied with her obligations under r 7.05 of the Bankruptcy Rules, and it was again impressed upon her by the Court that she must.
The applicant creditor sought costs of the directions hearing, which question I reserved. Ultimately, it became necessary to adjourn the hearing from 25 March 2022 to 13 April 2022 due to the availability of the Court. On 13 April 2022 the matter was not able to proceed because the Trustee had not complied with Order 4 made on 4 February 2022 insofar as, while a report had been filed on 3 March 2022, it was not in the form of an Affidavit as required by r 7.06(5) of the Bankruptcy Rules. An email from the Trustee received on 12 April 2022 indicated that no material changes had occurred since the time the report was filed. While it was of course possible to dispense with the formality required by r 7.06(5) of the Bankruptcy Rules or to put the report’s author in the witness box, given that the report should ideally be current and because r 7.06(5)(b) of the Bankruptcy Rules requires that it be filed at least five days before the hearing, I adjourned the matter to today with further consequential orders for the filing of all necessary evidence.
Adjournment and transfer of Review Application
The respondent debtor has appeared again before me today using the Microsoft Teams platform, which has been the medium of every appearance on every occasion in this review since it was filed in December 2021. She is again unrepresented. The applicant creditor is represented by a solicitor located in Sydney, and Mr Sankey on behalf of the Trustee appeared from South Australia. The Court is sitting in Sydney. The connection appeared to me to be clear and without any technical difficulties. The parties did not appear to have any difficulty in understanding one another nor in engaging with the Court.
On all occasions before me now, the respondent debtor has sought to rely on the fact that she is unrepresented as a basis for seeking an ongoing adjournment. Further, by various iterations of the Affidavit that she has filed throughout the proceedings, she has also on a number of occasions contended that, because the judgment debt has its origins in a loan agreement governed by the laws of South Australia, that this matter should, as I noted previously, be transferred to the South Australian Registry of this Court. The applications for adjournment and transfer are somewhat intertwined.
The respondent debtor made submissions to the effect that she had approached a lawyer in New South Wales who “insisted” that the matter be transferred to South Australia and that he did not want to represent her because the matter should be domiciled in the Court’s Adelaide Registry.
The respondent debtor then submitted that when she tried to search for a lawyer in South Australia:
“There are a lot of lawyers in South Australia, but not many competent lawyers in South Australia, unfortunately. The one I am seeking is one of the best in bankruptcy and she is extremely uptight with her work. That’s why she insisted that unless it is a South Australian case, she will not take it. I cannot just appoint anyone to rep me just for the sake of having a lawyer on-board.”
The solicitor for the applicant creditor opposed the application for adjournment and/or transfer on the basis that the matter had been on photo for a considerable period of time, that its hearing could adequately be facilitated online and that there seemed little utility in the matter being technically transferred to South Australia when the actual consequence of that occurring would not materially change the nature of the hearing.
For the Trustee it was submitted that contrary to submissions which case aspersions on the legal profession of South Australia, there are “plenty of lawyers in South Australia with insolvency and bankruptcy experience” who could provide competent representation if the respondent debtor wanted a lawyer who is themselves physically located in Adelaide. Of course there are.
I am not persuaded that there is any basis upon which the matter should further adjourn simply by reason of the fact that the applicant remains unrepresented. The review application which was instigated by her was filed approximately three weeks after the sequestration order was made. The respondent debtor did not obtain representation in that time nor then, between 15 December 2021 and the first return date before me on 4 February 2022, did the applicant obtain such representation. The matter has now thrice since adjourned, and on each occasion, the respondent debtor has been told by the Court that her lack of representation is a matter for her to resolve should she wish to, but given that there is no right to legal representation that would not, in and of itself, form a basis to adjourn.
Moreover, when the matter was listed for directions before me on 3 March 2022, as I noted previously, I even acceded to a request from her to delay that fixture so that she could consult a lawyer, but despite this indulgence, she again appeared unrepresented. In my view, the respondent debtor has had ample time to secure legal representation and to take legal advice if that was something of which she was desirous. I am not persuaded that there is any utility in further adjourning the review when in the almost six months since the application was filed, nothing has been achieved in this regard. Accordingly, and to the extent that there was another similar request today for an adjournment, I refused it, and the matter proceeded.
In relation to change of venue, there are a number of factors which arise for consideration of the exercise of that discretion: see Mulhern v Pearce [2012] FMCA 1186 per Federal Magistrate Driver (as his Honour then was) at [5]:
In determining whether to order a change in venue the court will act in accordance with the following principles:
a) in considering a change of venue application this court is constrained by the mandatory requirements of rule 8.01(2) of the Federal Magistrates court Rules: Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd [2008] FMCA 495 at [7]–[19]; CNH Capital Australia Pty Ltd (No 2) [2009] FMCA 455 at [16];
b) the court must first consider those matters identified in rule 8.01(2)(a), (b) and (c) and must then consider any other relevant matter by reason of rule 8.01(2)(d) of the Federal Magistrates court Rules: Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd [2008] FMCA 495 at [7]–[19]; CNH Capital Australia Pty Ltd (No 2) [2009] FMCA 455 at [16];
c) the matters that must be considered by the Federal Magistrates court on a change of venue application are different to those that are considered by the Federal Court of Australia because the discretion conferred on the latter court is unfettered as to the factors it may consider: Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd [2008] FMCA 495 at [7]–[19]; CNH Capital Australia Pty Ltd (No 2) [2009] FMCA 455 at [16];
d) Federal Court authorities on change of venue are relevant insofar as they consider the factors referred to in rule 8.01(2) of the Federal Magistrates court Rules: Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd[2008] FMCA 495 at [7]–[19]; CNH Capital Australia Pty Ltd (No 2) [2009] FMCA 455 at [16];
e) in considering rule 8.01 the test is where can the case be conducted or continued most suitably, bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them and the most efficient administration of the court: Koh v Erwin [2010] FMCA 278 at [13].>
In refusing the respondent debtor’s transfer request I explained to her that in the time since she filed the application for review in December 2021 she has sought on multiple occasions to delay the matter so she can seek representation. However those attempts really have centred on only one practitioner. That (unnamed) practitioner allegedly refused to represent the applicant because the application had not been filed in the Adelaide Registry, or had not been transferred there after the fact. As I explained to the respondent debtor that seems nonsensical.
In contrast to the submission that this geographically-based refusal, assuming it occurred, was indicative of this lawyer’s skill and expertise in the bankruptcy arena, it seems to indicate the complete opposite. In any event, and as I explained to the respondent debtor at the hearing, the fact that the matter was always intended to be heard using an online hearing platform meant that marking the matter as being in the Adelaide Registry of the Court would be an exercise in form over substance because the parties would in any event be appearing using MS Teams before me.
Due both to the advances in technology but also to the exigencies of the recent pandemic, principles pertaining to a change of venue in 2012 have a somewhat altered relevance today. The COVID-19 pandemic has unarguably changed the way that the world, but more specifically the Court, undertakes its business. Since the commencement of the pandemic, this Court and the Federal Court of Australia rapidly adapted and adopted the use of web conferencing systems in order to continue to facilitate the hearing of matters. This Court is a national court and, given that the matter was always intended to be heard utilising an online forum, this significantly impacts the consideration of the relevant factors which would go towards the applicant’s request for a venue change. That is not to say that a change in venue can no longer be a relevant issue. There would be many types of hearing or many types of subject matter in which it may always be preferable to hold a hearing in person.
However, in the instant case all the evidence is by way of Affidavit and no cross-examination was required by the parties. Where the issues are relatively limited and the parties are in different parts of Australia the matter is best remaining in the current Registry and being heard by me today, utilising an online platform, and that is my view in relation to each of the factors which include the convenience for the parties, the limitations of expense to them, the fact that this matter has been listed for a final hearing on several occasions always via web conference and that the law governing the original loan documents being a law of South Australia is not remarkable.
As I noted several times throughout the course of these proceedings to the respondent debtor, the bankruptcy law is a national law, and it is one in which this Court shares a parallel jurisdiction with the Federal Court of Australia. It is therefore not uncommon that in many if not most matters, the underlying judgment debt will be one of a state-based court and have its origin as being governed by a law of a state or a territory. Where, as in this matter, the parties are in disparate locations, if the hearing of the matter can be facilitated by a Judge online, even if the Court is convened in a third location from the parties and allowing for time differences, provided that the giving of evidence or the utility of the hearing opportunity is not otherwise compromised, it can be optimal for the matter to proceed online.
For reasons that I have already explained to the respondent debtor today, I am not persuaded that the interests of the administration of justice warrant that the matter be transferred to the South Australian Registry of this Court and accordingly, to the extent that the respondent debtor made such an application, it was refused.
Review of Registrar’s Decision
The applicant creditor has contended on a number of occasions throughout the proceeding that in the absence of the respondent debtor having complied with the Court’s orders and/or prosecuted her application for a review of the Registrar’s decision with any diligence, it should be struck out. While the instinct for a litigant to make such an interlocutory application is understandable in circumstances which seem somewhat like an appellant failing to prosecute their appeal, a review application in this case is not such a proceeding, as the Full Court of the Federal Court has recently made abundantly clear in the decisions of Bechara v Bates (2021) 388 ALR 414 and Robson as former trustee of the estate of Samsakopoulos v Body Corporate for Sanderling at Kings Beach CTS 2942 (2021) 392 ALR 93. Salient principles from Bechara and Robson were recently distilled in Allison v Murphy [2021] FCAFC 232 where Besanko, Colvin and Downes JJ stated as follows at [10] to [11]:
The nature of the proceedings to review the registrar’s decision
10. In Bechara v Bates [2021] FCAFC 34 , the Court considered the state of the authorities concerning the nature of an application to review a sequestration order in bankruptcy made by a registrar and concluded at [27] that the following matters were clear:
(a) The application for review leads to a hearing de novo of the creditor‘s petition.
(b)The hearing (or rehearing) of the creditor‘s petition is not prosecuted by the debtor (applicant for review) but by the creditor in the proceeding in which the registrar‘s order was made.
(c)The application for review is a demand that the claim for relief (the sequestration order) be heard by a judge.
(d)The onus is upon the creditor to prosecute its petition. The only onus of the debtor/bankrupt against whose estate a sequestration order has been made is to prove either solvency or any other sufficient cause under s 52(2) of the Bankruptcy Act 1966 (Cth).
(e)An appreciation of the above considerations makes it evident that summary or default judgment terminating an application for review is highly likely to be misconceived and founded upon a misconception that the applicant for review has an onus to prosecute an application or to show error in the approach of the registrar.
11. Therefore, on such a review application, the judge is not concerned with considering the correctness of the decision made by the registrar or redressing any perceived error in that decision. Rather, the Court hears the case again unaffected by what has gone before and the applicant on the review is the petitioning creditor even if it is the debtor who brings the review application: Robson at [2], [38], [40], [61]–[64], [299].
The relevance of any defaults on the part of the respondent debtor in relation to the hearing of their application for a review of the Registrar’s decision is, in essence “on their own head be it”. As was observed by the Full Court in Bechara at [61] and [62], if at the hearing of their application for review a respondent debtor is not present, then the rehearing of the Creditor’s Petition can proceed without effective opposition and with no evidence in relation to relevant aspects of s 52(2) of the Bankruptcy Act. Similarly, if the respondent debtor does not avail themselves of the opportunity to file evidence, then that does not absolve the Court from undertaking the hearing or the applicant creditor from discharging their onus in establishing the matters relevant to the petition presented.
Rather, the Court’s usual discretion will operate in relation to its own practice and procedure to determine whether the respondent debtor will be allowed to lead further evidence, having failed to comply with any timetable set. In relation to the evidence that I have before me today, notwithstanding that the applicant creditor’s primary position has on occasion been that the review should be dismissed for want of prosecution, in any event we have proceeded to have the matter heard in relation to the sequestration order.
Based on the evidence which has been identified earlier, I am satisfied that the respondent debtor committed an act of bankruptcy which was constituted by her failure before 27 May 2021 to comply with the Bankruptcy Notice that had been served upon her by reference to s 41(g) of the Bankruptcy Act.
I am satisfied that the Affidavit verifying the petition made by Ziyu Guo on 12 August 2021 is sufficient proof of the matters stated in the petition: s 52(1)(a) of the Bankruptcy Act.
I am satisfied as to proof of personal service of the Creditor’s Petition on the respondent debtor. In this regard, I am satisfied that a copy of:
(a)the Creditor’s Petition filed on 13 August 2021;
(b)the Affidavit verifying the Creditor’s Petition by Ziyu Guo on 12 August 2021;
(c)the Affidavit of online search of Court records sworn by Anthony John Grifoni on 13 August 2021;
(d)the Affidavit of service of the Bankruptcy Notice sworn by David Geoffrey Chambers on 11 May 2021; and
(e)the Trustee Consent to Act Declaration signed by Andrew Aravanis and Alexander David Clark on 9 August 2021;
were personally served on the respondent debtor on 13 September 2021 by David Geoffrey Chambers (see Second Chambers Affidavit at [2]).
I am also satisfied from the Affidavits which were read before me today, but in particular the Affidavit of Search and the Affidavit of Debt, that the debt relied upon is still owing. In this regard, I am further satisfied that the debt was owing at the time of the date of bankruptcy, at the date of the presentation of the Creditor’s Petition and at the date of the making of the sequestration order, and remains owing today.
I am therefore satisfied in relation to the matters required by s 52(1)(b) and (c) of the Bankruptcy Act.
By the additional matters which are raised in the Affidavit of the respondent debtor made on 27 April 2022, she seeks in essence to allege that somehow due to extant criminal matters, the orders ought not be made.
There have been additional allegations made by the respondent debtor in relation to what she now says was some form of undue influence or vulnerability under which she says she was suffering, which I will return to shortly. Either way, this seem to be an attempt to go behind the judgment. Having regard to the principles in Wren v Mahony (1972) 126 CLR 212 at 222 to 223 that the bankruptcy court will not, as a matter of course, inquire into the validity of a judgment debt, I am not satisfied based on the matters set out in the respondent debtor’s Affidavit that she, who bears the onus of establishing that special circumstances or substantial reasons exist such that I ought exercise my discretion to conclude that there is not a debt established by the judgment upon which the Bankruptcy Notice was founded, has discharged that onus. This is particularly the case by reference to annexures “C”, “F”, “F1”, and “G” to the Grifoni Affidavit.
By reference to those annexures and two paragraphs, [11] to [13] inclusive, of the Grifoni Affidavit, it is clear that the judgment debt arose with the consent of the respondent debtor.
Firstly, and contrary to matters which seem to be raised by her in her Affidavit, the respondent debtor firstly acknowledged the debt by a signed acknowledgement of loan dated 21 March 2019 by which the respondent debtor confirms that she had borrowed and received the sum of $135,000 paid to Abraham Construction on 1 December 2018 from the applicant creditor. That document is before me and forms annexure “C” to the Grifoni Affidavit. What is also apparent from annexures “F”, “F1”, and “G” to the Grifoni Affidavit is that on 6 September 2019 the respondent debtor made an offer to the applicant creditor and consented to the judgment in the sum $166,997.90.
What is said for the applicant creditor is that the period of time between the making of that offer to the applicant creditor and the applicant creditor having accepted it, which did not take place until February of 2020, is significant. That becomes relevant in relation to the assertions by the respondent debtor made from the (virtual) Bar table today to the effect that she was importuned by a business associate of hers who took advantage of her state of mind and had her sign the documents.
The person is said to be a solicitor who was acting for the applicant creditor at the time. Aside from the fact that I have no evidence before me except a bare assertion from the respondent debtor that she was suffering from any vulnerability or any deficiency at the time (in particular there has been no medical or other evidence filed in support of that proposition), there are other matters which do not give credence to the assertion and certainly would not persuade me to go behind the judgment.
Firstly, the respondent debtor has filed a number of Affidavits in these proceedings, both before the sequestration order was made and also from the time that the review application was made until the matter was heard today. This is the first time that those allegations have been made.
When I pointed out the recent inclusion of such a claim, about which the respondent debtor sought to give further evidence from the virtual Bar table only today, she said that she had “only just had a flashback about this”. The respondent debtor said she was “blindly” signing everything. However, she does admit that she signed these documents. In relation to any question of duress, she says that the documents were, in any event, emailed to her and that the only time she has ever actually met the solicitor in question was on the first occasion when she actually signed the loan documents. The remainder of documents were signed by her at the time of her choosing and not in the presence of said lawyer.
The respondent debtor also made a submission that she was “way too foolish to believe anything that this lawyer said” and with the benefit of hindsight she feels deceived, she concedes that she did sign all relevant documents and while her regret is understandable, it is not something gives rise to any special circumstance or a substantial in existence why the Court should question or go behind the judgment.
Further, if the respondent debtor had such regrets, second thoughts, or wished to withdraw the offer that she made in September 2019, she could have done so at any time up to February 2020 at which time it was:
(a)accepted by the applicant creditor; or
(b)up until 26 February 2020 when an application was subsequently made to the South Australian District Court for judgment to be entered pursuant to the agreement of all the parties. Further, and as the respondent debtor readily admits today, she never sought to set the judgment aside.
I would also note that three Affidavits were filed in these proceedings by the respondent debtor between the time that the Creditor’s Petition was first presented and the sequestration order was made by the Registrar on 23 November 2021, which the respondent debtor used as a basis also for seeking adjournments of the hearing of the petition. As has been pointed out by the solicitor for the applicant creditor, none of these Affidavits raised any question of duress, but, more specifically, none of them ever sought to question the veracity of the judgment debt or seek to impugn it. Rather, the basis upon which those Affidavits were filed seemed not to dispute the debt but rather to suggest that the respondent debtor had a financier, a Mr Ballantyne, and the annexure to those Affidavits specifically indicated that said financier was going to remit to the respondent debtor a sum of $160,000 in the next couple of days. Aside from the fact that none of that money appears to have ever been forthcoming such that the debt does still exist, reliance is placed by the solicitor for the applicant creditor on the fact that none of these questions of vulnerability or duress has ever been raised before.
I am not satisfied that there is a basis upon which to question the veracity of the judgment debt. I am satisfied that the petitioning creditor has proven each of the matters required by s 52(1) of the Bankruptcy Act and by the Bankruptcy Rules. I am not satisfied that the Creditor’s Petition ought to be dismissed, and I am satisfied that the Registrar was correct in making the sequestration order on 23 November 2021.
I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Given. Associate:
Dated: 19 May 2022
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