JONES v TRAD

[2016] FCCA 2155

FEDERAL CIRCUIT COURT OF AUSTRALIA

JONES v TRAD [2016] FCCA 2155

Catchwords:
BANKRUPTCY – Application to set aside sequestration order – whether an extension of time is warranted – whether the respondent had been properly served – application dismissed.

Legislation:

Bankruptcy Act 1966, ss.27, 43, 52.

Federal Circuit Court Act 1999 (Cth), s.104.
Federal Circuit Court (Bankruptcy) Rules 2016, r.4.06.
Federal Circuit Court Rules 2001, r.20.01.

Applicant: ANDREW JONES

Respondent: CARL TRAD

File Number: SYG 493 of 2016

Judgment of: Judge Street

Hearing date: 22 August 2016

Date of Last Submission: 22 August 2016

Delivered at: Sydney

Delivered on: 22 August 2016

REPRESENTATION

Counsel for the Applicant: Ms D Woods

Solicitors for the Applicant: Dawson Lawyers

Counsel for the Respondent: Mr J Cohen

ORDERS

1. The application for an extension of time and the application to set aside the orders of the Registrar are dismissed.

2. Order 1 made by Registrar Segal on 21 June 2016 is affirmed.

3. The Applicant’s Creditor’s costs of the creditor’s petition and of the application to set aside the sequestration order be taxed and paid out of the estate of the Respondent’s estate according to the Bankruptcy Act 1966 (Cth).

4. The Court notes that on 21 June 2016 order 2 made by Registrar Segal ordered that the Creditor’s Petition be amended by altering the date of the act of bankruptcy in Paragraph 4 to 4 January 2016.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 493 of 2016

ANDREW JONES

Applicant

And

CARL TRAD

Respondent

REASONS FOR JUDGMENT

1. This is an application within the Court’s jurisdiction under s.27 of the Bankruptcy Act 1966 (Cth) (“the Act”). The application is for the review of orders made by the Registrar on 21 June 2016. The application is made pursuant to s.104(2) of the Federal Circuit Court Act 1999 (Cth).

2. Under r.20.01 of Federal Circuit Court Rules 2001, an application for review must normally be made within seven days. In the present case the sequestration order was made on 21 June 2016. It is apparent on the respondent’s evidence that the respondent was contacted by the trustee in bankruptcy on 22 July 2016. No application was filed in this Court until 4 August 2016. Whether time should be extended, however, turns on the merits of the application to set aside the sequestration order.

3. The respondent applied for an adjournment on the grounds that Counsel who appeared had only just been instructed and wished to obtain a solicitor and obtain further material.

4. The Court took into account that the sequestration order had been made on 21 June 2016 and, ordinarily, as a matter of principle, any review of the sequestration order ought to be heard on the day. Further, the making of the sequestration order had clearly come to the attention of the respondent on 22 July 2016 and it was not until 4 August 2016 that the application was filed to set aside the sequestration order. The making of a sequestration order is a significant order and any review which is heard de novo ought to be held promptly. The adjournment application was opposed.

5. The Court foreshadowed that the respondent’s Counsel would have leave to orally adduce any evidence sought to be advanced in relation to why the sequestration order ought to be set aside. The Court was not satisfied that an adjournment was warranted in the interests of the administration of justice. It was for these reasons the adjournment application was refused.

6. Evidence was adduced by the respondent alleging that he had not lived at the address at which the bankruptcy notice and petition had been served, since 2011. The respondent tendered his driver licence that shows his address as being 16 Swan Street, Revesby and not 20 Swan Street, Revesby. Nonetheless, the respondent’s telephone number in the White Pages is the same telephone number as on his interlocutory application that identifies his address as being 20 Swan Street, Revesby. The applicant is still on ASIC records as being a director of a company at that address.

7. The respondent gave evidence that his wife and children, from whom he is divorced, live at that address and he said that he had been at his brother’s house in a granny flat at 16 Swan Street, Revesby.

8. The applicant also gave evidence to the effect that there was a transaction between him and the judgment creditor in which he was given a vehicle to sell on assignment. The applicant agreed that the relevant vehicle was sold for something in the order of $95,000.00 and that he made a repayment to the judgment creditor of about $65,000.00.

9. However, the respondent gave evidence that there was a compliance cost of approximately $38,000.00 by reason of which he contended he owed no money to the judgment creditor.

10. The respondent was not an impressive witness. The respondent gave inconsistent evidence materially in relation to his explanation for the telephone number that he has described as his home telephone number in the White Pages, which he said was his brother’s. When the respondent was asked a question whether he had a home telephone number, he said he did not have one.

11. There was also evidence in relation to a text message that the respondent had sent the judgment creditor, which is completely inconsistent with the assertion of compliance costs being outstanding or any money being owed by the judgment creditor to the judgment debtor. Further, that text message is inconsistent with evidence given by the respondent that he did not own the Hummer vehicle that was photographed outside his premises, and in respect of which his text message refers to his endeavours to sell the Hummer, and not that the Hummer was given to him.

12. The respondent also gave unsatisfactory evidence in relation to what he was told by the trustee in respect of the report as to affairs that had to be completed, and which has not been completed by the respondent. The respondent’s evidence in relation to correspondence that was sent to his address at 20 Swan Street and also to 16 Swan Street was evasive. Evidence was tendered of correspondence sent to the respondent addressed both to 16 Swan Street as well as 20 Swan Street, and both were marked “Returned to Server”.

13. The respondent’s endeavour to explain that away included suggesting that someone had tampered with his mail. The respondent was not a witness of truth and I do not accept the respondent is credible in relation to any of the evidence that he has given.

14. It was submitted by Mr Cohen, on behalf of the respondent, that there had been an issue estoppel by reason of earlier proceedings in the Local Court being dismissed. On the evidence, it is apparent that those proceedings were dismissed in circumstances where there had been no hearing on the merits and where the solicitor for the applicant asked for the proceedings to be dismissed. I reject the submission that there is any arguable case of issue estoppel arising out of the dismissal of the earlier Local Court proceedings that occurred on 15 November 2013.

15. On the evidence before the Court, I am satisfied that the respondent has engaged in conduct deliberately trying to avoid service of process both in relation to the Local Court proceedings and in relation to the bankruptcy notice and the creditor’s petition.

16. I am not satisfied that the applicant has a genuine dispute in relation to the judgment debt that was obtained in the Local Court. I am not satisfied there is any counter-claim or offsetting claim in relation to that judgment debt. I am satisfied that judgment debt was properly obtained and is a genuine debt.

17. In relation to the creditor’s petition, I am satisfied that this is an appropriate matter in which there were made substitution of service orders for the bankruptcy notice. I am satisfied that the bankruptcy notice was served in accordance with those orders. I am satisfied that the bankruptcy notice served in that manner ought to have come to the debtor’s attention.

18. I am satisfied that the debtor committed an act of bankruptcy on 4 January 2016. I am satisfied that the creditor’s petition has been properly verified. I am satisfied that the order made for substituted service of the creditor’s petition was appropriate. I am satisfied that the service of the creditor’s petition ought to have come to the attention of the respondent debtor. I am satisfied that the appropriate affidavits of debt and search have been filed in accordance with r.4.06 of the Federal Circuit Court (Bankruptcy) Rules 2016. Under s.43 of the Act, I am satisfied that the respondent has committed an act of bankruptcy on 4 January 2016 and I am satisfied that the bankrupt was a person ordinarily resident in Australia at the time of that act of bankruptcy.

19. In relation to s.52 of the Act, I am satisfied as to proof of the matter stated in the petition, service of the petition, and the fact that the debt in which the petitioning creditor relies is still owing. On the evidence before the Court, I am not satisfied the respondent is able to pay his debts. I am not satisfied that any other sufficient cause has been made out that a sequestration order not be made.

20. The application to set aside the orders made by the Registrar is dismissed.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Street

Date: 1 December 2016