Harb v Gajic
[2011] FMCA 764
•14 October 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HARB v GAJIC | [2011] FMCA 764 |
| BANKRUPTCY – Application to review – creditor’s petition – Court satisfied as to proof of matters in s.52 of the Bankruptcy Act 1966 (Cth) – no sufficient cause a sequestration order ought not be made – sequestration order made. |
| Bankruptcy Act 1966 (Cth), ss.43, 52 Bankruptcy Regulations 1996 (Cth), reg. 4.02A |
| Gajic v Harb & Anor [2011] VSCA 132 |
| Applicant: | NABIL HARB |
| Respondent: | MICHAEL (MIKE) GAJIC |
| File Number: | MLG 1362 of 2010 |
| Judgment of: | Hartnett FM |
| Hearing date: | 29 September 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 14 October 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Woolley |
| Solicitors for the Applicant: | Lewenberg & Lewenberg Solicitors |
| The Respondent: | In person |
ORDERS
That the application for review filed 21 July 2011 is dismissed.
The Court affirms the earlier orders made on 1 July 2011 by Registrar Pringle.
The applicant’s costs be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1362 of 2010
| NABIL HARB |
Applicant
And
| MICHAEL (MIKE) GAJIC |
Respondent
REASONS FOR JUDGMENT
On 30 September 2010, the applicant creditor filed a creditor’s petition. Mr Nabil Harb applied to the court for a sequestration order under s.43 of the Bankruptcy Act 1966 (Cth) (the Act), against the estate of Michael (Mike) Gajic, claiming that the respondent debtor owed the applicant creditor the amount of $205,911.47, pursuant to the County Court general form of judgment entered 18 December 2007. An act of bankruptcy was said to be committed by the respondent debtor on 17 August 2010 in his failure to comply with the requirements of a bankruptcy notice numbered VN654/2009 and served personally upon the respondent debtor on 27 July 2010. The bankruptcy notice was issued on 3 April 2009 and pursuant to reg. 4.02A(2)(b) of the Bankruptcy Regulations 1996 (Cth), the official receiver for the bankruptcy district of Victoria provided for time in which the notice could be served to be extended to 5 October 2010, by notice dated
26 July 2010.
On 4 August 2010, Ms Kirenjit Cheema affirmed an affidavit of service of the bankruptcy notice, deposing to service being effected personally on 27 July 2010, with the bankruptcy notice having attached to it an extension of time for the service of the notice issued by the official receiver on 26 July 2010.
The first hearing date of the petition was to have been the 18 November 2010. However, that date was extended to 16 December 2010 by administrative extension on 22 October 2010. The hearing of the petition was adjourned on many occasions, before being finally concluded by Registrar Pringle on 1 July 2011. Mr Gajic filed a notice of appearance on 6 April 2011 and a notice stating grounds of opposition to the petition on 7 April 2011.
On 1 July 2011, Registrar Pringle ordered that:
1.A sequestration order be made against the estate of Michael Gajic (also known as Mike Gajic).
2.The applicant’s costs (including reserved costs) be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966, save for 50% of the costs incurred by the Applicant relevant to:
a) the Hearing before Registrar Pringle on 14 April 2011; and
b) the affidavit of Kirenjit Cheema affirmed on 16 May 2011.
The Court notes that the date of the act of bankruptcy is 17 August 2010.
Mr Gajic filed an application for review of Registrar Pringle’s orders on 21 July 2011. The order sought by him in the application for review was as follows:
The whole of the orders of Registrar Pringle made on the 1st July 2011 to be set aside, and the case to be set down for a new hearing, and so I would have a lawyer to attend and handle the matter for me.
The application for review was listed for hearing on 1 September 2011, and then adjourned to 29 September 2011 for hearing. On neither of those two dates did Mr Gajic have legal representation, and he proceeded to the final hearing on 29 September as a litigant in person.
The hearing of this application for review is a hearing de novo.
The Court is satisfied as to the following matters. The creditor’s petition is in correct form and the debt claimed is in excess of $5,000, in fact, being an amount of $205,911.47. The date of commission of an act of bankruptcy pleaded is 17 August 2010, and this creditor’s petition was presented within six months of the date of commission of the act of bankruptcy, being presented on 30 September 2010. The necessary affidavits verifying the petition are filed and relied upon, they being the affidavit verifying paragraphs 1, 2 and 3 of the creditor’s petition and sworn by Mr Harb on 29 September 2010 and the affidavit verifying paragraph 4 of the creditor’s petition, affirmed 29 September 2010, by Ms Cheema, Solicitor for the applicant.
Ms Cheema’s affidavit affirmed 29 September 2010 deposes to two other proceedings in this Court involving the respondent, namely proceeding number MLG 1185 of 2009 and proceeding number MLG 1474 of 2009. In the first of these and on 18 September 2009, an application for substituted service of the bankruptcy notice was filed on behalf of the applicant creditor, Mr Harb. The application for substituted service was made in relation to anticipated sequestration order proceedings to be issued by the applicant creditor. The anticipated sequestration order proceedings were then filed on 18 November 2009, being the second proceedings. By order made by Registrar Hetyey on 20 July 2010, that petition was dismissed with no order as to costs, and by reason of the petition being short‑filed by reference to the substituted service order made by Registrar Allaway in proceeding number MLG 1185 of 2009 on 7 October 2009.
Ms Cheema also deposed to a sealed copy of the bankruptcy notice being personally served by her upon the respondent debtor on 27 July 2010, and further, she deposed to the respondent having not filed any affidavit of counter‑claim, set‑off or cross‑demand, as referred to in the bankruptcy notice. Nor had the respondent made any application to a court to secure the satisfaction of the judgment debt referred to in the notice.
Also attesting to personal service of the sealed copy bankruptcy notice upon the respondent debtor on 27 July 2010 was Mr Alex Lewenberg, Solicitor acting for the applicant creditor, who deposed to witnessing Ms Cheema effect service upon Mr Gajic.
The applicant also relied upon the affidavit of service of the creditor’s petition filed 1 July 2011, affirmed 28 October 2010 by Ms Cheema, who deposed to personal service being effected on 27 October 2010. The respondent debtor was served with:
(a)a signed and sealed copy of the creditor’s petition filed on 30 September 2010, with extension notice;
(b)a copy of the affidavit verifying paragraphs 1, 2 and 3 of the petition sworn by Nabil Harb; and
(c)a copy of the affidavit verifying paragraph 4 of the petition affirmed by Kirenjit Cheema.
At the time of service, the respondent debtor accepted service of the documents and took the documents with him as he departed the offices of the applicant’s solicitors. At the hearing conducted in the matter before Registrar Pringle on 14 April 2011, Mr Gajic, through his representative, admitted that he was served with the creditor’s petition. This is deposed to in paragraph 8 of the affidavit of Ms Cheema affirmed 16 May 2011.
The applicant also relied upon an affidavit of debt, sworn 28 September 2011 by Mr Harb and deposing to the amount of $205,911.47 owing by the respondent debtor to him under a judgment obtained in the County Court of Victoria at Melbourne on 18 December 2007 being still wholly due and unsatisfied, and an affidavit of search affirmed on 28 September 2011 by Ms Cheema deposing to her search of the National Personal Insolvency Index. That affidavit of search records that Mr Gajic is in fact an undischarged bankrupt (consequent upon Registrar Pringle’s order of 1 July 2011).
Mr Gajic relied upon his notice stating ground of opposition dated
7 April 2011, an affidavit filed 21 July 2011, further affidavits filed
30 July 2011 and 30 August 2011, and the documents he filed on the day of the hearing, being exhibits to the affidavit of 30 August 2011.
The applicant proceeded in the application by way of affidavit evidence in accordance with s.52 of the Act. He relied upon the matters contained in the creditor’s petition and the affidavits supporting those facts as contained in the petition. The affidavit of service of the petition was itself prima facie evidence that it was served in accordance with the Rules, and affidavits were sworn on 16 and 18 May 2011 as referred to in these reasons as to the service of the bankruptcy notice. The Court is satisfied of those matters that are contained in the various affidavits.
In addition, Ms Cheema in her affidavit affirmed 29 August 2011, and in response to the affidavit of the respondent sworn 21 July 2011, said as follows in paragraph 9, in particular in relation to Mr Gajic’s assertion to the Court on the hearing that this matter had been resolved between the parties:
(a)I had without prejudice discussions with the Applicant in late June 2011.
(b)The purpose of those discussions was to attempt to resolve the Applicant’s Creditors Petition without the need to proceed to a hearing, and so as to hopefully secure at least some of the money that the Respondent owes to my client.
(c)On 21 June 2011 at 2.36 pm I sent an email to the Respondent. The email was sent by me following a phone conversation I had had with the Respondent earlier that day. A true of the copy is exhibited hereto and marked “KC2”.
(d)In my email at KC2, I record accurately my instructions from the Applicant to resolve this proceeding, and the terms are set out in that email (the Offer).
(e)Consistent with my instructions, and with the phone conversation I had had with the Respondent earlier in the day, I recorded that it was a term of any agreement reached that the first instalment payment of $15,000 would be made within 24 hours of the parties signing any terms of agreement. The settlement figure was $102,000.
(f)I did not receive a response from the Respondent within the 24-hour deadline (3 pm on 22 June 2011) for him to accept the offer.
(g) Accordingly, the Offer was automatically withdrawn.
(h)While we had still not agreed upon a settlement, on 23 June 2011 I drafted Terms of Settlement for my client to consider (the Terms). I had a conference with my client that day, and was instructed that he would still be prepared to resolve the Creditor’s Petition so long as the Respondent would agree to the Terms (including the first instalment of $10,000 within 24 hours of executing the Terms, and a settlement sum of $102,000). In anticipation of achieving a resolution, my client signed a copy of the Terms that I could then offer to the Respondent if he agreed to them. A true copy of the terms (as an unsigned version) is exhibited hereto and marked “KC3”.
(i)I then telephoned the Respondent on 23 June 2011 to advise him of my instructions, namely that my client was prepared to resolve the Creditor’s Petition on the basis of the Terms. During that conversation, the Respondent informed me that he would be unable to pay the first instalment sum of $10,000 within 24 hours of the parties’ executing the Terms, but that he could pay that sum in a week or two. I told him that my client’s instructions were clear, and that if he couldn’t pay the first instalment within 24 hours of signing the Terms, then there was no agreement.
(j)On 30 June 2011 the Respondent telephoned me and requested a copy of the Terms. He told me that he needed to show a friend of his the proposal, and that his friend was going to lend him the first instalment. I told the Respondent that if he is able to pay the $10,000 before tomorrow’s hearing, then we could execute the Terms and not proceed with the hearing. The Respondent said to me that he was unable to provide payment by tomorrow’s hearing.
(k)I then told the Respondent that because he was unable to pay the first instalment, we would be proceeding with the hearing the next morning.
(l)On the morning of the Hearing, the Respondent did not tender any money to me. I did not receive any promise of any money from him, nor did we discuss the Terms. Accordingly, no agreement was reached prior to the Hearing.
(m)I made no promises to the Respondent in the terms expressed by the Respondent in his affidavit, or at all.
The Court accepts the affidavit evidence of Ms Cheema and does not accept the assertion of Mr Gajic that there has been an agreement between the parties to resolve these proceedings. There was, and is, no concluded agreement and no moneys have been paid by Mr Gajic to the applicant. Mr Gajic also claimed at the hearing to have health problems in relation to which there was no medical evidence before the Court. Such health problems were also raised before the Court of Appeal in his application for an extension of time as referred to hereafter with such application being dismissed. There was no supportive evidence that his health has caused any difficulty or prejudice to him at the time of hearing, nor was there any such evidence before Registrar Pringle.
Finally, Mr Gajic in his material sought to challenge the judgment of Morrow J, being the County Court judgment which founds the petition. That decision was the subject of a notice of appeal by Mr Gajic in the Supreme Court of Victoria, and Tate JA and Macaulay AJA on (6 May 2011) considered the decision of Morrow J and dismissed Mr Gajic’s application for leave to appeal to the Court of Appeal. Macaulay AJA in those reasons (with which Tate JA agreed) said as follows:
11.Before us today, Mr Gajic said that there was other evidence he could have presented to Judge Morrow, but failed to do so. Mr Gajic gave no particular reason for this failure. Three years after the judgment, and a month after the application to this Court was filed, to raise the possible existence of these other documents now does, in my view, stretch credulity.
12.But more potently even still, it appears that Mr Nicolazzo, one of the three persons who Judge Morrow regarded as partners and who was also found liable, appealed to this Court. On 23 April 2009 Ashley, Neave and Dodds-Streeton JJA dismissed the appeal. Their Honours said that the evidence supported the learned trial judge's finding that Mr Eid, Mr Gajic and Mr Nicolazzo were partners for the purpose of the development project for which the loan was requested, and that Mr Gajic and Mr Nicolazzo were present during, and acquiesced in, Mr Eid's assertions that each of the partners was an owner of the Seaford land (so founding the misrepresentation allegation).
13.In my view, having regard to all of these matters, the applicant, Mr Gajic, has failed to demonstrate any doubt attending the decision below.
(The application of Mr Gajic to the Court on 6 May 2011 was for an extension of time within which to appeal from the decision and it was that application which was refused.)
The decision of Morrow J has been appealed on two occasions, each of which has been dismissed and cannot be challenged further in this Court.
The Court is satisfied with the proof of those matters that it is required to be so satisfied of, as set out in s.52 of the Act, and thus will make a sequestration order against the estate of the debtor in its confirmation of the earlier orders of the Court. The Court has not been satisfied by the debtor that he is able to pay his debts as and when they fall due, nor is there any other sufficient cause that a sequestration order ought not to be made.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Hartnett FM
Date: 14 October 2011
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