ING Bank (Australia) Ltd v Haddad (No.2)
[2008] FMCA 1735
•23 December 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ING BANK (AUSTRALIA) LTD v HADDAD (No.2) | [2008] FMCA 1735 |
| BANKRUPTCY – Creditor’s petition – whether grounds for stay of proceedings under a sequestration order. |
| Bankruptcy Act 1966 (Cth), ss.44, 52, 58 |
| ING Bank (Australia) Ltd v Haddad [2008] FMCA 1695 Westpac Bank Corporation v Carver [2003] FCA 222 |
| Applicant: | ING BANK (AUSTRALIA) LTD |
| Respondent: | LEILA HADDAD |
| File Number: | SYG 1687 of 2008 |
| Judgment of: | Barnes FM |
| Hearing date: | 23 December 2008 |
| Delivered at: | Sydney |
| Delivered on: | 23 December 2008 |
REPRESENTATION
| Solicitors for the Applicant: | Gadens Lawyers |
| Solicitors for the Respondent: | John McEncroe & Co |
| Solicitors for the Supporting Creditors: | Hugh & Associates |
ORDERS
That a Sequestration Order be made against the estate of Leila Haddad.
That the applicant creditor’s costs (including reserved costs, if any) be taxed and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966.
A copy of this order to be provided to the Official Receiver in Sydney within two (2) days.
The Court notes that the date of the act of bankruptcy is 25 June 2008.
A consent to act as trustee has been signed by Scott Darren Pascoe and Elizabeth Ann Occleshaw.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1687 of 2008
| ING BANK (AUSTRALIA) LTD |
Applicant
And
| LEILA HADDAD |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
ING Bank (Australia) Ltd, the applicant, presented and filed a creditor's petition on 2 July 2008 seeking that a sequestration order be made against the estate of Leila Haddad, the respondent. The petition is founded on the failure by the debtor to comply with the requirements of a bankruptcy notice served on her on 25 February 2008. The creditor has filed and relies on affidavits including as to service of the bankruptcy notice and creditor’s petition, verification of the petition, debt and search.
The bankruptcy notice in question was issued on 15 February 2008. It was based on a judgment of the Supreme Court of New South Wales entered on 6 February 2008. I am satisfied on the affidavit evidence before me as to service of the bankruptcy notice on 25 February 2008. I am also satisfied as to service of the creditor's petition in accordance with the orders for substituted service made by a Registrar of this Court on 18 July 2008.
The applicant applied to set aside the bankruptcy notice in the Federal Court. The Federal Court extended the time for compliance with the bankruptcy notice. The application was dismissed by consent. It is not in dispute that the date of the act of bankruptcy is 25 June 2008.
The debtor filed a notice of intention to oppose the creditor’s petition and a supporting affidavit on 20 August 2008. It was contended (among other things) that the Court should go behind the default judgment of the Supreme Court. The parties consented to my dealing with the question of whether the Court should go behind the judgment as a preliminary issue. For the reasons given in a judgment delivered at the start of this hearing I answered that question in the negative (see ING Bank (Australia) Ltd v Haddad [2008] FMCA 1695).
In the hearing today the solicitor for Mrs Haddad indicated that the debtor would now not otherwise take issue with the matters relied on by the creditor. The debtor did not dispute that the creditor had satisfied the Court of the matters required under s.52(1) of the Bankruptcy Act 1966 (Cth). On the material before the Court including the creditor’s petition and the requisite affidavits under the Bankruptcy Act including the most recent affidavit of debt and final search I am satisfied with proof of the matters stated in the petition, that the creditor's petition was presented in correct form for a debt of more than $2,000 (see s.44(4)) within six months of the date of the act of bankruptcy and that the debt on which the creditor relies is still owing. No issue was taken by the debtor with the contents of the creditor's petition or the affidavits before the Court. I am satisfied with proof of the matters required under s.52(1) of the Bankruptcy Act.
The solicitor for the debtor also indicated that there was no intention to raise any issue under s.52(2) of the Bankruptcy Act. I am not satisfied on the evidence before me that the debtor was able to pay her debts. Nor am I satisfied that for any other sufficient cause a sequestration order ought not be made.
In all the circumstances, given that I am satisfied that the respondent debtor committed the act of bankruptcy alleged in the petition and with proof of the other matters required under s.52 of the Bankruptcy Act, I intend to make a sequestration order against the estate of Leila Haddad.
Before I formally make the orders, I note that the only issue raised for the debtor in the proceedings today was a contention that the Court should exercise its power under s.52(3) of the Bankruptcy Act to stay proceedings under the sequestration order for a period of 21 days. The Court has power under s.52(3) if it thinks fit to stay all proceedings under a sequestration order for a period not exceeding 21 days on such terms and conditions as it thinks proper. Such a stay can be granted in the court’s discretion provided grounds can be shown for doing so (see Westpac Bank Corporation v Carver [2003] FCA 222 at [19] per Beaumont J).
The stay was not sought on the basis that there was any appeal in relation to the Supreme Court judgment that formed the basis for the bankruptcy notice or on the basis that an appeal in relation to the foreshadowed sequestration order was contemplated. Nor was it suggested that funds might become available to satisfy the debt. Rather the solicitor for the debtor contended that there should be a stay under s.52(3) for 21 days because the applicant ING might, as a result of proceedings in the Supreme Court of New South Wales in which it obtained an order for possession of a property at Greystanes in which the debtor was living, seek execution of that order. I was told from the bar table that while a stay of execution had been ordered by the Supreme Court in the past a stay was not currently in force. ING is not in possession of the Greystanes property.
There is affidavit evidence before the Court in relation to the Supreme Court judgment proceedings on which the bankruptcy notice was based and also successful Supreme Court proceedings by the creditor (as second mortgagee) for possession of the property at Greystanes owned by the debtor and her husband as joint registered proprietors.
The debtor seeks that there should be a stay of proceedings under the sequestration order because (for some reason that has not been explained) no further stay of execution was ordered on the last occasion the possession proceedings were before the Supreme Court. Hence it is said to be possible that the debtor may be “removed” from her home over the Christmas period. The basis on which a stay under s.52(3) is sought is that the debtor seeks some time to move out of her property, as she will otherwise experience hardship. While I am told by the solicitor for the applicant that it is not likely that there will be any attempt to obtain possession of the property in the period over Christmas, there is no evidence before me in relation to this issue.
In any event, I am not persuaded that these circumstances are a proper basis on which to grant a stay of proceedings under the sequestration order under s.52(3) of the Bankruptcy Act. The power under s.52(3) is a power to stay proceedings under a sequestration order, not to stay all proceedings generally or to stay the execution of a judgment of another court apparently obtained by a secured creditor of the debtor (cf the effect of s.58, subject to s.58(5)).
While the discretion to grant a stay under s.52(3) is generally expressed, it has not been established that a stay of proceedings under a sequestration order would achieve what is sought by the debtor. Nor more generally has it been established that she would suffer prejudice by a sequestration order being made and remaining in effect that would outweigh the prejudice to creditors and the public interest that would result from having the sequestration order stayed.
On balance, on the evidence before me I am not persuaded that proper grounds for a stay of proceedings under a sequestration order have been made out, having regard to the nature of the order that can be made under s.52(3).
In all the circumstances I am satisfied that the debtor committed the act of bankruptcy relied on by the creditor and with proof of the matters required by s.52 of the Bankruptcy Act. A sequestration order should be made against the estate of Leila Haddad. It is appropriate that the applicant's costs in this case be taxed and paid from the estate of the respondent debtor.
ORDERS DELIVERED
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Barnes FM
Associate:
Date: 3 February 2009
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