Horne, in the matter of Kakavas

[2010] FCA 1410

FEDERAL COURT OF AUSTRALIA

Horne, in the matter of Kakavas [2010] FCA 1410

Citation:		Horne, in the matter of Kakavas [2010] FCA 1410
Parties:		STIRLING LINDLEY HORNE  and PETR VRSECKY (as Controlling Trustees of the Property of Harry Kakavas)
File number:		VID 1038 of 2010
Judge:		BROMBERG J
Date of judgment:		2 December 2010
Catchwords:		BANKRUPTCY – whether extension of time should be granted for the holding of a meeting of creditors.
Legislation:		Bankruptcy Act 1966 (Cth) s 33(1)(c), s 194(1)
Cases cited:		Re Riviera Group Proprietary Limited (2009) 72 ACSR 352
Date of hearing:	2 December 2010
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	11
Counsel for the Applicants:	Mr S.J. Maiden
Solicitor for the Applicants:	Cornwall Stodart

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 1038 of 2010

IN THE MATTER OF HARRY (AKA HARALAMBOUS) KAKAVAS

STIRLING LINDLEY HORNE AND PETR VRSECKY (as Controlling Trustees of the Property of Harry Kakavas)
Applicants

JUDGE:	BROMBERG J
DATE OF ORDER:	2 DECEMBER 2010
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.The time for the holding of the meeting of creditors of Harry (a.k.a. Haralambous) Kakavas under s 194(1) of the Bankruptcy Act 1966 (Cth) be extended to 9 February 2011.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 1038 of 2010

IN THE MATTER OF HARRY (AKA HARALAMBOUS) KAKAVAS

STIRLING LINDLEY HORNE AND PETR VRSECKY (as Controlling Trustees of the Property of Harry Kakavas)
Applicants

JUDGE:	BROMBERG J
DATE:	2 DECEMBER 2010
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. This is an application under s 33(1)(c) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) to enlarge the time set by s 194(1) of the Bankruptcy Act, in which the controlling trustee must call a meeting of the debtor’s creditors. The applicant, the controlling trustees, seek an order that the time limit in which the controlling trustees are to call the meeting of the debtor’s creditors be extended to 9 February 2011.

2. The grounds on which the application is made are set out in the affidavit of Stirling Lindley Horne sworn on 30 November 2010.  Mr Horne is one of the controlling trustees of the property of Harry (a.k.a. Haralambous) Kakavas.  Mr Horne makes his affidavit on his own behalf and on behalf of the other controlling trustee. 

3. Section 194(1) of the Bankruptcy Act provides for a meeting to be called under an authority, under s 188 of the Act, not more than 25 working days after the relevant consent or approval was given or if the relevant consent or approval was given in December, not more than 30 working days thereafter. Unless time is extended, a creditors’ meeting of the creditors of Mr Kakavas must be held by 6 December 2010.

4. The Court has power pursuant to s 33(1)(c) of the Bankruptcy Act to extend the time for the controlling trustees to call the meeting of creditors. The question remains whether I should exercise my discretion to do so.

5. There are bankruptcy proceedings against Mr Kakavas.  A creditor’s petition is listed to be heard in the Federal Magistrates Court on 16 December 2010.  The grant of an extension will have the effect of delaying the hearing of that creditor’s petition at least until the meeting of creditors.  The petitioning creditor in that proceeding is Paradise Enterprises Pty Ltd.  With leave of the Court, Mr Weinberger appeared for that entity.  The two supporting creditors are the Deputy Commissioner of Taxation and Crown Melbourne Ltd.  Mr Lancaster appeared on behalf of the Deputy Commissioner.  Mr Horne has deposed as to the reasons for the extension sought. 

6. The affairs of Mr Kakavas are complex for a range of reasons referred to by Mr Horne and expanded upon by Mr Maiden who appeared on behalf of the controlling trustees.  Mr Kakavas’ statement of affairs identifies 26 unsecured creditors with debts totalling $58,163,000 excluding any interest that may be owing.  There are allegations raised by Crown Melbourne and supported by Paradise Enterprises as to the genuineness of the debts alleged to be owed to some 11 creditors. 

7. There have been proceedings in the Supreme Court of Victoria, in which Mr Kakavas is the applicant and in which substantial damages are sought against Crown Melbourne.  Mr Horne deposes to the need to assess the prospects of Mr Kakavas’s success in relation to an appeal relating to those proceedings.  Mr Horne deposes to the need to obtain legal advice in relation to that matter and also in relation to a number of other matters which are the subject of the further investigations that Mr Horne deposes are necessary.

8. There are other reasons deposed to by Mr Horne which support the proposition that the affairs of Mr Kakavas are complex and also support the need for further relevant steps to be taken by the controlling trustees in order that their obligations under the Bankruptcy Act are complied with. In considering the factors that may be relevant to the exercise of my discretion, I have had regard to the decision of Austin J in Re Riviera Group Proprietary Limited (2009) 72 ACSR 352. Whilst that case deals with an application for an extension of time for a creditors’ meeting to be held in the context of voluntary administration, I have nevertheless been assisted by the observations relevant to discretion set out, in particular at [13] and [14] of his Honour’s decision.

9. By reference to the matters set out at [13] of that decision, the matters that appear to me to be of some weight in relation to the case at hand are as follows:

   ·    The size and scope of the affairs of Mr Kakavas;

   ·    The presence of offshore activities in the affairs of Mr Kakavas;

   ·    The complexity of transactions which have been entered into by Mr Kakavas;

   ·    The complexity associated with recovery proceedings (the Supreme Court case) relating to Mr Kakavas; and

   ·    The time needed for a thorough assessment of the personal insolvency agreement proposed by Mr Kakavas.

10. There is no material before me of any material prejudice to the creditors who may be affected by any extension of time.  For the reasons I have set out, together with the fact of the coming Christmas and holiday period, I am satisfied that the estimate of time given by the controlling trustees for the extension has been made on a reasonable basis. 

11. Accordingly I will make an order that the time for the holding of the meeting of the creditors of Harry (a.k.a. Haralambous) Kakavas under s 194(1) of the Bankruptcy Act be extended to 9 February 2011.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg.

Associate:

Dated:        2 December 2010