Heatcraft Australia Pty Ltd v Decker
[2009] FMCA 500
•15 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HEATCRAFT AUSTRALIA PTY LTD v DECKER | [2009] FMCA 500 |
| BANKRUPTCY – Petition for sequestration order – debtor claimed ability to pay debts – inadequate evidence of assets – belated steps to realise property – prospects and timing of this obscure – sequestration order made. |
| Bankruptcy Act 1966 (Cth), ss.52(2)(a), 52(3) |
| Australia & New Zealand Banking Group Ltd v Foyster [2000] FCA 400 Stankiewicz v Plata [2000] FCA 1185 |
| Applicant: | HEATCRAFT AUSTRALIA PTY LTD T/AS KIRBY REFRIGERATION ACN 000 056 717 |
| Respondent: | IAN DECKER |
| File Number: | SYG 3306 of 2008 |
| Judgment of: | Smith FM |
| Hearing date: | 15 May 2009 |
| Delivered at: | Sydney |
| Delivered on: | 15 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Mitchell |
| Solicitors for the Applicant: | Agent for Peter Winters & Co. |
| Counsel for the Respondent: | Mr B Lum |
| Solicitors for the Respondent: | de Mestre & Company |
| Counsel for Andale Beverage Systems Pty Ltd ACN 000 833 009, First Supporting Creditor: | Mrs N Nelson |
| Solicitors for the First Supporting Creditor: | Owen Hodge Lawyers |
| Counsel for Polyaire Pty Ltd, Second Supporting Creditor: | Ms S Checcia |
| Solicitors for the Second Supporting Creditor: | Milne Berry Berger & Freedman |
ORDERS
A sequestration order be made against the estate of IAN DECKER.
The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note that the date of the act of bankruptcy is 16 June 2008.
The applicant must within 2 days give a copy of this order to the Official Receiver in Sydney.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 3306 of 2008
| HEATCRAFT AUSTRALIA PTY LTD T/AS KIRBY REFRIGERATION ACN 000 056 717 |
Applicant
And
| IAN DECKER |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
This is a bankruptcy petition filed on 15 December 2008. It relies on a debt, being the balance due to Heatcraft from Mr Decker under a Local Court judgment obtained on 10 March 2008. The same judgment was relied upon in a bankruptcy notice, which was issued on 12 May 2008, and was served by hand on Mr Decker on 26 May 2008. The Local Court judgment was in the sum of $27,474.33. None of this had been paid at the time that the bankruptcy notice was issued, but the debt was subsequently reduced by some payments, so that at the time that the petition was filed there was $21,127.60 owing to Heatcraft.
The petition was served on Mr Decker on 10 January 2009 by hand, and he has employed a solicitor to advise him in the bankruptcy. Their appearance was filed on 13 February 2009. There were then three listings before the Registrar, before the matter was referred to me on 14 April 2009. On that occasion a notice of opposition had been filed, which made the contention under s.52(2)(a) of the Bankruptcy Act 1966 (Cth) that the debtor “is able to pay his or her debts”.
On the affidavit of debt now before me today, the debt has been further reduced to $17,371.53. There are two supporting creditors who have appeared. There is no evidence before me as to the amount of their debts, but I am asked from the Bar table to assume that one of them is in the region of $20,000 and the other in the region of $3000.
The affidavit of Mr Decker filed on 13 March 2009 in support of the notice of opposition woefully fails to set out his assets and liabilities, so as to provide any picture of his financial position, the nature of his assets, and the speed with which they could be expected to be realised to pay his debts.
When the matter was before me on 14 April 2009, I gave another direction that any further evidence in support of the notice of opposition must be by way of affidavits filed no later than 24 April 2009. No such further evidence was filed.
Today, Mr Decker sought to give oral evidence about his financial position and I allowed this, notwithstanding objections by Heatcraft. His evidence revealed that during the very last week he has placed in the hands of real estate agents three tenanted properties which he and his partner are said to own in Newtown, Auburn and Brisbane. No clear evidence of their title and proportionate ownership is before me. There is no qualified valuation evidence of the properties, and the real estate estimates of value may be suspect. There is no documented evidence as to the secured liabilities attaching to the properties.
There is no evidence before me that the partner would co‑operate with the entry into contracts for the sale of the properties, were offers to purchase to eventuate. Nor is there evidence that she does not have any claims against Mr Decker, for example, under the Family Law Act 1975 (Cth) which could be raised to defeat a creditor or, at least, to delay the realisation of the properties. There is before me evidence of two appointments of real estate agents, one of which is signed by Mr Decker’s partner, but this does not give me the assurance which would satisfy me that the placing of these properties into the hands of real estate agents during the last week is indeed an activity in which she has a commitment to assist Mr Decker to escape from bankruptcy by promptly paying his creditors, rather than a last‑minute desperate attempt to avoid an order being made today.
I am not at all satisfied that Mr Decker currently has equity in the three properties in the region of $317,000. The history of his financial affairs as revealed by the slowness with which he has been paying off the debts points to the contrary. His evidence suggests that he has no credit rating allowing him to raise money on this equity, and this also points heavily against the assertions now made to me.
The test which the Court must ask itself when asked to decline to make a sequestration order under s.52(2)(a) has been expressed as whether the debtor can satisfy the Court on evidence which shows that “he or she has cash resources immediately available”, or if not, has assets which are able to be realised to pay the debt “within a relatively short time” (see, for example, Stankiewicz v Plata [2000] FCA 1185 at [30] and Australia & New Zealand Banking Group Ltd v Foyster [2000] FCA 400 generally).
The evidence before me today does not satisfy me that those tests are met, nor does it satisfy me that there is a prospect of any assets being realised to pay all of the debts which are in evidence before me within a short period of adjournment which the Court might allow, for example, by suspending the operation of a sequestration order under s.52(3), or adjourning the petition for a short period before it expires. It is well‑established that a creditor who satisfies the requirements of the Bankruptcy Act in relation to the obtaining of a sequestration order is prima facie entitled to that order upon the establishment of the relevant debt, act of bankruptcy and other necessary matters.
I am satisfied on the evidence before me that Heatcraft’s entitlement to a sequestration order has been established. I am not satisfied that there is any ground on which the Court should dismiss or adjourn the petition. I therefore propose to make a sequestration order today.
I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Lilian Khaw
Date: 29 May 2009
0
2
0