JMD Electrics Pty Ltd v Williams
[2003] FMCA 108
•3 March 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| JMD ELECTRICS PTY LTD v WILLIAMS | [2003] FMCA 108 |
| BANKRUPTCY – Review of Registrar’s decision – jurisdiction of Federal Magistrates Court to review sequestration orders made by Registrar – satisfaction of matters required by section 52(1) of the Bankruptcy Act 1966 (Cth) – application dismissed. Bankruptcy Act 1966 (Cth), ss.43,52; 37, 153B; 303; 40. |
| Applicant: | JMD ELECTRICS PTY LTD |
| Respondent: | WILLIAM ROBERT WILLIAMS |
| File No: | MZ1049 of 2002 |
| Delivered on: | 3 March 2003 |
| Delivered at: | Melbourne |
| Hearing date: | 3 March 2003 |
| Judgment of: | Hartnett FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Fijalski |
| Solicitors for the Applicant: | Davies Moloney |
| Counsel for the Respondent: | Mr Johnstone |
| Solicitors for the Respondent: | Raymond M Johnstone |
ORDER
Leave to the applicant in the application for review filed 19 February 2002 to orally amend his application to seek an annulment of the sequestration order made 4 February 2003.
The application for review filed 19 February 2003 and as amended is dismissed.
The costs of the respondent to be paid out of the estate of William Robert Williams in the fixed sum of $800.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ1049 of 2002
| JMD ELECTRICS PTY LTD |
Applicant
And
| WILLIAM ROBERT WILLIAMS |
Respondent
REASONS FOR JUDGMENT
This is an ex tempore judgment.
A creditor's petition was filed in this Court on the 11th day of October 2002. The applicant creditor JMD Electrics Pty Ltd applied to the Court for a sequestration order under s.43 of the Bankruptcy Act 1966 (Cth) against the estate of William Robert Williams. That petition claimed that the named respondent debtor, Mr William Robert Williams had committed an act of bankruptcy within six months before the presentation of the petition in that he had failed on or before the twenty ninth day of April 2002 either to comply with the requirements of a bankruptcy notice served on him on the seventh day of April 2002 or to satisfy the Court that he had a counter claim, set off or cross demand equal to or exceeding the sum of $3112, that sum obtained being the final judgment for work and labour done by JMD Electrics Pty Ltd. That final judgment was obtained in the Magistrates Court of Victoria at Melbourne on the 16th day of October 2000.
In support of that creditor's petition was filed on 11 October 2002 an affidavit of the truth of statements in paragraphs 1, 2 and 3 of the said petition. An affidavit verifying paragraph 4 of the creditor's petition and sworn by John Adam Fijalski was filed on 11 November 2002 attesting to a search of the indexes on 26 September 2002 maintained by the Registrar of the Federal Court of Australia, the records held by the Chief Executive Officer of the Federal Magistrates Court of Australia and the National Personal Insolvency Index maintained by the Official Receiver. The necessary matters pursuant to the Federal Magistrates Court Rules 31.04(2) were annexed to the said affidavit. An affidavit of service of the creditor's petition upon the respondent debtor together with a copy of the affidavits verifying paras 1, 2, 3 and 4 of the petition was filed on 14 January 2003. That affidavit, sworn by one Gregory John Quillinan, was evidence of the personal service of the creditor's petition and verifying affidavits upon the respondent debtor on the sixth day of January 2003.
On 4 February 2003 was filed an affidavit of Robert Eason director of the applicant creditor deposing to the amount of $3112 still being wholly due and unsatisfied and on the fourth day of February 2003 there was also filed an affidavit of searches being an affidavit of one Melissa Toll deposing to her search of the National Personal Insolvency Index kept by the Official Receiver on 4 February 2003. No records could be found of any other bankruptcy proceedings in the Victorian District Registry pending against the respondent debtor nor could any records be found that the respondent debtor had previously become a bankrupt. There were no details in the Insolvency Index of a debt agreement in relation to the debt on which the applicant relied in the index on the day when the creditor's petition was presented, namely the 4th day of February 2003.
On the fourth day of February 2003 Registrar Efthim ordered that a sequestration order be made against the estate of William Robert Williams. The act of bankruptcy was said to be the 29th day of April 2002. There was a consequential costs order.
On the 19th day of February 2003 the respondent debtor made application for review of Registrar Efthim's decision. That application for review sought to set aside the sequestration order. A further order was sought that the applicant have leave to defend the application for sequestration against him and that the application for sequestration be adjourned until such time as the proceedings by the applicant against the company were completed. In support of that application the respondent debtor filed an affidavit on 19 February 2003. At the time of the matter proceeding before Registrar Efthim on 4 February 2003 Mr Williams was not in attendance. He deposes to at that time being in Queensland visiting his family. He claims to have been told by the Registry of the Court to write a letter to the Court seeking an adjournment. He did so and sent a copy of such letter to the applicant creditor. Dealing firstly with that issue:
a)Until the filing of the application for review no documents had been filed by the respondent debtor in the proceedings. All that had occurred is that the respondent had written to the Court by letter dated 22 January 2003 advising that he would not be able to attend Court on 4 February 2003 as on 22 January 2003 he had to go to Queensland for the sake of his family. He wrote that he expected to be back in Victoria about March 2003. He requested an adjournment until shortly after he returned. He advised that he had consulted Mr Johnstone DA, solicitor at Patterson Lakes whom had advised him that he had a case against JMD Electrics Pty Ltd for breach of s.51AA of the Trade Practices Act 1974 (Cth) for $100,000 for damages for the unconscionable conduct of the company. Upon receiving that letter, solicitors for JMD Electrics Pty Ltd responded to Mr Williams advising him by correspondence the following day (namely 23 January 2003) that they had instructions to proceed. They noted that Mr Williams had not filed nor served an appearance or any other material. The solicitors for the company suggested that any adjournment would need to be sought on the day on proper grounds. That correspondence was before Registrar Efthim on 4 February 2003. It is quite clear that at the time of the writing of his letter Mr Williams had sought and obtained legal advice. Mr Williams may have requested an adjournment but he did not bother to ascertain the response of the court or the applicant creditor to that request. The applicant creditor responded in writing in my view promptly and at the soonest possible time. That Mr Williams was then interstate and unable he says to ascertain the response does not produce an automatic adjournment. In the absence of any material filed by Mr Williams or solicitors acting on his behalf and with all necessary material before the court for the making of the sequestration order that order was made. In my view it was properly made as referred to later in these reasons and notwithstanding the request of Mr Williams for an adjournment. That adjournment application which he did not attend at the hearing to prosecute was not successful. This is a rehearing and I am not required to consider whether or not the sequestration order obtained should be set aside because Mr Williams failed to attend before Registrar Efthim. He is here today. I note however that at the earlier hearing Mr Williams had failed to do those things required of him pursuant to the Rules of this Court.
At the commencement of the proceedings I gave the respondent debtor leave to amend his application to seek in addition, an annulment of the sequestration order made 4 February 2003. There was no objection by the respondent. There was no compliance with the requirements as set out in the Rules of this Court but that is a matter I shall deal with, if necessary, later.
Section 37(2) of the Bankruptcy Act 1966 (Cth) (“the Act”) provides in part that:
The Court does not have power to rescind or discharge, or to suspend the operation of:
(a) a sequestration order; …
Counsel for the petitioning creditor argued that the provisions of the Bankruptcy Act overrode Sections 103 and 104 of the Federal Magistrates Act1999 (Cth). He provided no authority to support that submission. Quite clearly Registrar Efthim has delegated power to make a sequestration order. What this court then does is review the exercise of that delegated power.
Thus the application before me for review of an exercise of power by the Registrar is a hearing de novo. The court must review the decision [rule 29.04(3)]. The court may receive as evidence any affidavit or exhibit tendered before the Registrar. Those affidavits and exhibits I have earlier alluded to and form the application for a sequestration order before me. I note there has been no change as to the matters deposed to in those earlier affidavits. There is further introduced and accepted into evidence by me the affidavit of the respondent debtor.
I must be satisfied with the proof of matters required pursuant to section 52(1) of the Act in the material now before me.
At the commencement of these proceedings there was no application before me for annulment by the Court of the sequestration order. The respondent determined to amend his application to seek pursuant to s.153B of the Act an annulment by the Court of the sequestration order. This ground must be pleaded in the alternative to my mind and in the event of the continuation of the sequestration order. The applicant has the necessary standing to make such application pursuant to s.303 of the Act. In determining whether the Court is satisfied that the sequestration order ought not to have been made the Court's power is discretionary. No defect or irregularity in the proceedings in which the sequestration order was made is argued by the applicant.
In exercising its discretion the Court has the power to go behind the judgment in the same manner and to the same extent as if the Court were hearing the petition. The test is whether behind the judgment or as consideration for it there was in truth and reality a debt. [See Re Raymond; ex parte Raymond (1992) 36 FCR 424.]
The respondent debtor's evidence in this case is as follows:
a)he required wiring to be changed at his farm in Broadford. He “did a deal” with the applicant creditor such that the applicant creditor would supply the materials (for which he would pay) and the applicant creditor would perform the labour for a slab of beer;
b)the workmen of the applicant creditor did the work but would not take the slab of beer;
c)subsequently the applicant creditor rendered an account for $1590 with the respondent debtor refusing to pay any more than the amount of $490 being the cost of materials;
d)proceedings were had in the Melbourne Magistrates Court with the applicant creditor obtaining an order against him. The matters in (a) to (c) above were placed before the Court in a contested proceeding;
e)the applicant creditor is controlled by a man who because of his alcoholism cannot be trusted;
f)following the making of the order he became very unwell;
g)the respondent debtor won the Stawell Gift in 1956 and at the time was being trained by a Bat Curran. Moneys that should have been paid by the said Bat Curran to the respondent debtor were never paid and accordingly the executor of Bat Curran's estate along with his two brothers are persons whom the respondent debtor alleges wrongfully received money from an estate and are therefore personally liable to repay such funds to him. On this basis he desires to bring proceedings against the three Curran brothers for $208,350 being the amount he should have received in 1956 plus interest thereon. Furthermore, he shall be seeking damages against the estate for personal injuries, loss and damage;
h)finally, he desires to seek to set aside the order made in the Melbourne Magistrates Court on 16 October 2000. Annexed to the affidavit of Mr Williams is a draft statement of claim in the Supreme Court of Victoria at Melbourne naming JMD Electrics Pty Ltd as the defendant and handed up to me in the proceedings was a Federal Court application filed 26 February 2003 which is yet to be heard.
Counsel for the applicant creditor submitted I should dismiss the application for review as no reasonable cause of action has been disclosed. Further Counsel claimed that the material was frivolous and an abuse of the process of the Court. Such application was made pursuant to Rule 13.10 of the Federal Magistrates Court Rules 2001. Finally, counsel claimed that the affidavit of the respondent debtor contained evidence which was inadmissible, unnecessary and irrelevant. The allegation that the director of the creditor company was an alcoholic and because of alcoholism could not be trusted, was denied and it was submitted was a scandalous piece of material. I find the respondent’s material to be irrelevant; and possibly scandalous although I need make no finding about this later point.
No issue was taken by the applicant as to the matters which are necessary to be proved before the making of a sequestration order such as the accuracy of the bankruptcy notice, service of the petition, filing of affidavits and search of the Insolvency Index – that is, that the creditor has complied with the formalities required by the Act and the Rules. Nor is there any issue that the judgment was in fact obtained in the Melbourne Magistrates Court some considerable time ago now, namely 16 October 2000. Such judgment was not a default judgment. It occurred after the hearing of contested proceedings before the presiding magistrate. The material filed and contained in these proceedings and contained in the affidavit sworn by William Robert Williams and filed 19 February 2003 raise matters which could well have formed the basis of a counter-claim or set-off to the proceedings in the Melbourne Magistrates Court. The respondent debtor did not seek to appeal from the judgment of the 16.10.2002.
It is quite clear on the material before me that no reasonable cause of action is disclosed in the applicant's material for any of the orders as sought by the applicant. I am satisfied as to the matters which go to the necessary proofs required for the making of a sequestration order. There has been compliance with s.52 of the Act and with the Federal Magistrates Court Rules 2001 as to bankruptcy proceedings as detailed earlier in these reasons. The debtor has committed an act of bankruptcy pursuant to s.40(1)(g) of the Act, the date of such act of bankruptcy being that as found by Registrar Efthim, namely 29 April 2002.
I propose to dismiss the application for review filed 19 February 2002 as amended and to order that the costs of the respondent be paid out of the estate of William Robert Williams in the fixed sum of $800.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Hartnett FM
Associate:
Date:
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