Holcim (Australia) Pty Ltd v NOLAN

[2016] FCCA 440

FEDERAL CIRCUIT COURT OF AUSTRALIA

HOLCIM (AUSTRALIA) PTY LTD v NOLAN [2016] FCCA 440

Catchwords:
BANKRUPTCY – Whether the proceedings should be adjourned pending the determination of separate proceedings – separate proceedings involving unrelated third party – likely deficiency of assets regardless of success of other proceedings – adjournment refused – sequestration order made.

Legislation:

Bankruptcy Act 1966 (Cth), ss.27, .43, 52

Federal Circuit Court (Bankruptcy) Rules 2006 (Cth), rr.4.05, 4.06

Applicant: HOLCIM (AUSTRALIA) PTY LTD

Respondent: CATHERINE NOLAN

File Number: SYG 1291 of 2015

Judgment of: Judge Street

Hearing date: 2 March 2016

Date of Last Submission: 2 March 2016

Delivered at: Sydney

Delivered on: 2 March 2016

REPRESENTATION

Counsel for the Applicant: Ms F Ashworth

Solicitors for the Applicant: Results Legal Solutions

Counsel for the Respondent: Mr B Zipser

Solicitors for the Respondent: Brock Partners Lawyers

ORDERS

1. A sequestration order is made against the estate of Catherine Mary Nolan.

2. The petitioning creditor’s costs of and incidental to the petition be paid out of the bankrupt estate in accordance with the Bankruptcy Act 1966 and the Bankruptcy Regulations 1996.

THE COURT NOTES

The act of bankruptcy occurred on 9 April 2015.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1291 of 2015

HOLCIM (AUSTRALIA) PTY LTD

Applicant

And

CATHERINE NOLAN

Respondent

REASONS FOR JUDGMENT

1. This is an application within the Court’s jurisdiction under s.27 of the Bankruptcy Act 1966 (Cth) seeking a sequestration order. The creditor’s petition was filed on 12 May 2015. The act of bankruptcy occurred on 9 April 2015. On 6 July 2015, a Registrar of the Court made orders in relation to effecting service of the creditor’s petition, which was stood over till 19 August 2015. On 19 August, the petition was stood over to 27 August 2015 by the Registrar before this Court.

2. On 27 August 2015, this Court made orders fixing the matter for hearing on 27 August 2015 and making procedural orders.  On 30 September 2015, by consent, the Court made orders vacating the hearing date and fixing the matter for hearing on 2 March 2016 and provided a further timetable for the filing of affidavits.  On behalf of the petitioning creditor respondent affidavits have been read that establish that an act of bankruptcy was committed on 9 April 2015, and I am satisfied that the creditor’s petition was properly verified and that there is evidence of service of the petition consistent with the orders made by the Court. 

3. There is a current affidavit of debt and affidavit of search consistent with the rules. I am satisfied that the requirements under s.43(1)(b) are made out. I am satisfied that the requirements in relation to the creditor’s petition under part 4 of the Federal Circuit Court (Bankruptcy) Rules 2006 have been satisfied.  I am satisfied the requirements of r.4.05 of the Federal Court (Bankruptcy) Rules have been met, as well as the requirements of r.4.06. 

4. Mr Zipser, counsel on behalf of the respondent, seeks either an adjournment of the proceedings pursuant to s.52(1) of the Bankruptcy Act and/or submits that the Court should be otherwise satisfied that there is sufficient cause not to make a sequestration order under s.52(2) of the Bankruptcy Act.  The grounds for the adjournment are the existence of Supreme Court proceedings between the respondent and a third party bank.  Those proceedings have been progressing through the Supreme Court but are not proceedings to which the petitioning creditor is a party. The petitioning creditor’s debt does not relate to those proceedings. 

5. Mr Zipser of counsel argues that those Supreme Court proceedings are ones in which there is an arguable defence and cross-claim that may impact upon the claim advanced by the bank, which could in turn impact upon the current financial position of the respondent.  On the face of the evidence before the Court, the respondent is currently insolvent.  The nature of the dispute in the Supreme Court is not one in respect of which that insolvency position of the respondent is likely to be affected, unless the respondent were wholly successful in respect of two substantial different debts: one for $564,895.51 and the other for $1,195,241.21. 

6. Taken together with the admitted liabilities of the respondent, there is a likely deficiency of assets regardless of whether either or both of the Westpac claims were to succeed.  The grounds of the amended defence and the cross-claim advanced by the respondent in the Supreme Court proceedings are said to be supported by an affidavit by the respondent’s husband.  There is no affidavit evidence by the respondent to support the allegations of unconscionable conduct, and the substance of the dispute appears to be one concerning the delay in the sale of other assets held by the bank. 

7. Whilst this Court would ordinary embrace the notion of adjourning a matter in respect of which there were proceedings that involved the underlying debt the subject of the petition to be explored, the circumstances in the present case are ones where these proceedings involve a stranger to the petitioning creditor and the material before the Court does not establish any realistic prospect that those proceedings will result in a surplus of assets available to meet the petitioning creditor’s debt. 

8. The position of the respondent appears to be one in which the steps that have been taken have probably exacerbated the respondent’s deficiency of assets as against liabilities.  I do not regard the evidence before this Court as identifying any reasonably arguable prospect of success sufficient to warrant adjourning the proceedings brought by this petitioning creditor.  On the material before the Court, the Supreme Court proceedings brought by the respondent have little, if any, prospect of success. 

9. Even if the respondent were partially successful, that would not give rise to the respondent being likely to be able to pay her debts as and when they fall due, when taking into account the costs that are likely to have been incurred in those proceedings together with the other liabilities of the applicant.  I am not satisfied that this is an appropriate case in which to exercise the Court’s discretion to adjourn the matter for a further occasion. I have taken into account the history of the matter and the other matters I have referred to above.  It is for these reasons that the adjournment request is refused.

10. So far as Mr Zipser has endeavoured to establish other sufficient case, he relies in substance upon the existence of the Supreme Court proceedings and the possibility identified from the pleadings of a potential to defeat the claim brought by the thirty-party bank and evidence of the value of a property that, on the valuation evidence, is worth about $1 million.  On the material before the Court, the respondent is currently insolvent and unable to pay her debts as and when they fall due.  That is a state of affairs that weighs against the establishment of other sufficient cause. 

11. Further, for the reasons I have given, the Supreme Court proceedings are not ones in which there appears to be any realistic prospect of the respondent succeeding. The respondent’s position is only like to further deteriorate. The respondent debtor has not satisfied the Court that there is other sufficient cause why a sequestration order ought not to be made under s.52(2) of the Act. I am satisfied that this is an appropriate matter in which to exercise the Court’s jurisdiction under s.43 of the Bankruptcy Act 1966.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Judge Street

Date: 9 March 2016