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Johnston v Aravanis

Johnston v Aravanis

Case [2013] FMCA 156 8 March 2013

Insolvency

Annulment of Bankruptcy

Statement of Affairs

Compulsory Income Contributions

Full and Frank Disclosure

Bankruptcy Law

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FEDERAL MAGISTRATES COURT OF AUSTRALIA

JOHNSTON v ARAVANIS

[2013] FMCA 156

BANKRUPTCY – Application to annul bankruptcy – whether debtors petition ought to have been presented – factors in exercise of discretion.

Bankruptcy Act 1966 (Cth), ss.55, 58(1), 116(1), 153B, 267(2)
Income Tax Assessment Act 1936 (Cth), ss.208, 222

Cottrell v Wilcox [2002] FCA 1115
Drake v Jones [2009] FMCA 298
Duyker v Official Trustee in Bankruptcy Qld & Anor [2003] FMCA 463
Foreman v Vince [2006] FMCA 128
Hawthorne v Carter (Trustee), in the matter of Hawthorne (Bankrupt) [2006] FCA 1097
Insurance Manufacturers of Australia Pty Ltd v Sherriff [2000] FCA 1505
In the matter of Almassy [1999] FCA 1004
Oberlechner v Commonwealth Securities Ltd [2003] FMCA 511
Official Trustee: In the matter of the Estate of Smith [1999] FCA 1755
Ozer v Australian Liquor Marketers Pty Ltd [2001] FCA 40
Ozer v Australian Liquor Marketers Pty Ltd [2001] FCA 1197
Plant v Ken Smith Electronics Pty Ltd [2000] FMCA 7
Provan v Peake [2003] FMCA 31
Re Coyle & Anor (1993) 42 FCR 72

McQuade & Gronow (Eds) McDonald, Henry and Meek Australian Bankruptcy Law & Practice (6^th Edn)

Applicant:

JASON STUART JOHNSTON

Respondent:

ANDREW ARAVANIS

File Number:

PEG 195 of 2012

Judgment of:

Lucev FM

Hearing date:

22 February 2013

Date of Last Submission:

22 February 2013

Delivered at:

Perth

Delivered on:

8 March 2013

REPRESENTATION

For the Applicant:

In person

Counsel for the Respondent:

Mr C Donoghue

Solicitors for the Respondent:

Donoghue Legal

ORDERS

The applicant’s application filed 20 August 2012 for annulment of his bankruptcy be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PERTH

PEG 195 of 2012

JASON STUART JOHNSTON

Applicant

And

ANDREW ARAVANIS

Respondent

REASONS FOR JUDGMENT

Application

This application filed on 20 August 2012 seeks an order from the Court annulling the applicant’s bankruptcy under s.153B of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”), on the basis that the debtors petition ought not to have been presented.

Applicant’s case

The applicant relied upon various affidavits filed during the course of the proceedings. They were the applicant’s affidavit sworn on 20 August 2012, two affidavits sworn on 21 August 2012, and an affidavit sworn on 11 September 2012.
The affidavit of 20 August 2012 annexes a personal budget which purports to show an excess of income over expenditure of $2015 per month.
The first 21 August 2012 affidavit asserts that the applicant’s bankruptcy trustee is taking action regarding a property situated at 10 Mitchell Street in Kellerberrin (“Mitchell Street property”). The applicant asserts that the Mitchell Street property is fully maintained by his estranged wife and that he had had no dealings with the property since March 2010. The applicant asserts that his “monetary funds are limited” and that “the burden of court action has impacted significantly on these funds.” The first 21 August 2012 affidavit was sworn in support of an urgent application for an interim order suspending the applicant’s obligations under his bankruptcy.
The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Johnston v Aravanis

Details

AGLC: Johnston v Aravanis [2013] FMCA 156
Case: [2013] FMCA 156
Decision Date

CaseChat Overview and Summary

In the Federal Magistrates Court of Australia, the applicant, Jason Stuart Johnston, sought an order annulling his bankruptcy under s.153B of the Bankruptcy Act 1966 (Cth). The application was filed on 20 August 2012, and the respondent trustee did not oppose the application but argued that the application should be dismissed. The central issue was whether the debtor's petition should not have been presented. The applicant claimed that he was advised that bankruptcy was the only option, that he was not informed correctly about his compulsory income contributions, and that he was not told that rental income from a jointly owned property would be sought from his ex-wife. The respondent trustee provided evidence that the applicant had been given detailed information about bankruptcy and its consequences, including the prescribed information attached to the debtors petition, which clearly stated that assets could be sold and compulsory income contributions might be required if income exceeded a certain threshold. The trustee also showed that the applicant signed a statement of affairs which did not fully disclose his financial obligations, including a $48,000 debt to an unsecured creditor. The Court considered the relevant factors, including the applicant's insolvency at the time of the petition, his failure to make full and frank disclosure, and the discretionary considerations. The Court concluded that the applicant was insolvent at the time he filed the petition and had not provided sufficient evidence to persuade the Court that he had become solvent thereafter. The application to annul the bankruptcy was dismissed. The Court also noted that incorrect advice about compulsory income contributions did not affect the applicant's insolvency at the time of the petition and that the time elapsed between the bankruptcy and the application did not support annulment. The Court will hear the parties as to costs.

Orders