Kehagiadis v Constantinidis
[2014] FCCA 364
•4 March 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KEHAGIADIS v CONSTANTINIDIS | [2014] FCCA 364 |
| Catchwords: BANKRUPTCY – Creditor’s petition – application for a sequestration order – proof of matters required on creditor’s petition – sequestration order made. |
| Legislation: Bankruptcy Act 1966, ss.40(1)(g), 47, 52, 308, Bankruptcy Regulations 1996 (Cth), reg.16.10(e) |
| Constantinidis v Kehagiadis [2011] NSWSC 974 |
| Applicant: | MEROPI KEHAGIADIS |
| Respondent: | GEORGE CONSTANTINIDIS |
| File Number: | SYG 2251 of 2013 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 20 February 2014 |
| Date of Last Submission: | 20 February 2014 |
| Delivered at: | Sydney |
| Delivered on: | 4 March 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Mr Merewether |
| Solicitors for the Respondent: | Ms Gemma Constantinidis as agent for the respondent. |
ORDERS
A sequestration order is made against the estate of George Constantinidis.
The applicant creditor’s costs, to be fixed on publication of these orders, be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Under the Bankruptcy Regulations 1996 (Cth) a copy of this sequestration order be given to the Official Receiver in Sydney within 2 days.
THE COURT NOTES:
The date of bankruptcy is 29 May 2013.
A consent to act as a trustee has been signed by Maxwell William Prentice.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2251 of 2013
| MEROPI KEHAGIADIS |
Applicant
And
| GEORGE CONSTANTINIDIS |
Respondent
REASONS FOR JUDGMENT
Introduction
Before the Court is a creditor’s petition against the estate of the respondent, Mr George Constantinidis.
Course of proceedings
The creditor’s petition first came before me on 16 December 2013. Mr Constantinidis appeared by his agent, Ms Gemma Constantinidis, whom Mr Constantinidis so appointed under s.308 of the Bankruptcy Act 1966 (Cth) (Act).
When the matter was called, Ms Constantinidis objected to the matter having been referred to me from the Registrar’s list. After I requested Ms Constantinidis to sit down for me to hear what the solicitor for the petitioning creditor had to say, Ms Constantinidis said:
No, I don’t think we should be hearing it because whatever she says is a lie and has been set up. So therefore, we can just leave everything and you can do all your little things between you. Not necessary for anyone else to be here. What for? So you can be present to see a miscarriage of justice? Absolutely not. Do it all by yourselves. You set it up, now you do it by yourself.
Ms Constantinidis then left the bar table and the Court room.
The solicitor for the petitioning creditor indicated she intended to apply for a sequestration order. I was not prepared to hear the application on that day without giving Mr Constantinidis a further opportunity to appear at the hearing of the creditor’s petition. I adjourned the hearing of the creditor’s petition to 2.15 pm on 20 December 2013. I also ordered that by 5 pm on 16 December 2013 the legal representative of the petitioning creditor inform Mr Constantinidis that:
a)the hearing of the creditor’s petition was set down for hearing at 2.15 pm on 20 December 2013; and
b)unless the debtor or his representative appeared at the hearing the Court may make the sequestration order and may not make reference to the evidence filed in the proceedings by the debtor.
On 20 December 2013 Ms Constantinidis appeared. She applied for an adjournment of the hearing of the creditor’s petition. I granted the adjournment and made the following directions.
a)The respondent file and serve all evidence on which he intends to rely in opposition to the creditor’s petition by 6 February 2014.
b)The applicant file and serve all evidence on which she intends to rely in response to the respondent’s evidence by 18 February 2014.
c)The hearing of the creditor’s petition be adjourned to be heard before me on 20 February 2014 at 2.15 pm.
After I made these directions, the transcript records I said the following:
Now, Ms Constantinidis, I can’t emphasise enough how important it is that you give it your best shot by that day because it will be very difficult for you to get another – or for Mr Constantinidis to get another adjournment.
On 18 February 2014 the Registry received a fax from Ms Constantinidis. The fax consisted of what appears to be a medical certificate issued by a Dr Brian Cung which stated as follows:
TO WHOM IT MAY CONCERN
Dear Sir/Madam,
THIS IS TO CERTIFY THAT
Mr George Constantinidis
IS RECEIVING MEDICAL TREATMENT AND FOR THE PERIOD
Monday 17 February 2014 TO Monday 24 February 2014 INCLUSIVE
He WILL NOT BE ABLE TO attend Court due to right ankle sprain and right leg cellulitis
On that certificate, Ms Constantinidis wrote the following:
Urgent
Personal Attn: “Associate” to Justice [sic] Manousaridis
Matter SYG 2251 of 2013.
As requested by J. Manousaridis on 20th Dec 13 Mr Constantinidis presence is requested.
Due to a fall sustained by Mr Constantinidis he will not be able to attend.
Can you please organise for a new hearing date to be assigned for this matter.
Please contact me to confirm request.
After the Registry passed on this fax to my chambers, the Registry, at my direction, sent to Ms Constantinidis and the petitioning creditor’s solicitor an email as follows:
Judge Manousaridis will not adjourn the hearing date unless all parties consent.
Any application for an adjournment will be heard at the time and place of the hearing, namely, at 2.15 pm on Thursday 20 February 2014.
Judge Manousaridis has directed that if an application for an adjournment is proposed to be made on or partly on the basis of the attached letter from Dr Cung, Dr Cung should be available to be contacted by the Court by telephone at 2.15 pm on Thursday 20 February 2014 to give evidence about the medical condition of Mr George Constantinidis and his ability to attend Court.
Ms Constantinidis appeared at the hearing on 20 February 2014 for Mr Constantinidis, and Mr Merewether appeared for the creditor. Ms Constantinidis objected to Mr Merewether’s standing to appear for the creditor. As I understand it, the basis of Ms Constantinidis’s objection was that in an affidavit of debt sworn for the purposes of this application, the creditor stated her address to be “care of Lawcover Proprietary Limited”. Ms Constantinidis submitted that Lawcover Proprietary Limited was not an insurance company and that she required the matter to be adjourned or dismissed until Mr Merewether returns with a letter of appointment from Lawcover Insurance Proprietary Limited.
During the hearing Ms Constantinidis relied on two documents she filed on 20 February 2014. The first is an application for orders that the creditor’s petition be dismissed, or, in the alternative, an order that the proceedings be adjourned. The grounds for the adjournment was to give Mr Constantinidis an opportunity to recover from the medical condition referred to in Dr Cung’s certificate and for “counsel to finalise documentation, issue subpoenas, file documents with the court and serve on seven proposed defendants”.
The second document on which Ms Constantinidis relied is an unsigned document titled “Submission No.1”. The document contained a number of allegations to the effect that the previous solicitor for the creditor had also acted for Mr Constantinidis in 2007 and that, as a result, the solicitor had a conflict of interest. The document also alleged a criminal conspiracy between the former solicitor and the petitioning creditor, who is also a solicitor.
During the hearing, I asked Ms Constantinidis why Mr Constantinidis did not file any evidence by 6 February 2014 as he was directed to do. Ms Constantinidis’ answer was as follows:
Because the – there was a change of direction as to the fact that there is now evidence that constitute – that the insurance company, Lawcover Propriety Limited, Lawcover, CBP, have all got to answer to a matter of even identifying that they even have a right to issue the invoice.
After Ms Constantinidis made this statement, I informed Ms Constantinidis I would not grant the adjournment. I said:
Mr Constantinidis was given an opportunity to put on his evidence. He hasn’t done so. The explanation you’ve given me is unsatisfactory and I do not accept [it]. And I do note that there has been a doctor’s certificate tendered. At the moment, I’m not going to accept that that is a sufficient reason for Mr Constantinidis appearing or not appearing. But, in any event, in my opinion, it makes no difference whether Mr Constantinidis is available to attend today, because there has been no evidence filed. . . . And it is difficult to see what Mr Constantinidis could have said to the court in answer to the creditor’s petition without any evidence.
Ms Constantinidis then made a number of submissions. I then attempted to explain to Ms Constantinidis the nature of the application for a sequestration order and what I proposed to do in light of Mr Constantinidis not having put on any evidence. I said:
The application for a sequestration order is based on what’s called an act of bankruptcy. . . . The foundation of the act of bankruptcy here is the service of a bankruptcy notice. That bankruptcy notice, in turn, is based on a judgment which, for most purposes is as conclusive evidence as there can be of a debt. . . . Now, in applications for a sequestration order, a judgment is not necessarily conclusive. But the onus is on the debtor to make out a case to show why, even though there is a debt, one . . . doesn’t in fact exist. And the only way that can be done, as I’ve explained to you before, is by the filing of evidence. I’m going to note in my judgment the claims you have made. . . . And I’m also going to record, unless there is something you can specifically point to, that none of those claims is supported by evidence. So, I’m just telling you this because my decision will not be based on making any findings about whether there has been a conspiracy or not, because the onus is on you to show that there has been. . . . And if there’s no evidence about that, it’s not even an issue I consider. My only decision will be there’s no evidence of what you alleged.
Shortly after I said these things, I informed Ms Constantinidis that I would be asking Mr Merewether to address the Court. Ms Constantinidis then said she had been told to leave if I allowed Mr Merewether to proceed. Ms Constantinidis objected to what I was doing and then left the Court. As Ms Constantinidis was leaving the Court, I informed Ms Constantinidis that I had a few questions to ask of her. What I proposed to ask her was whether there were any other documents which she had filed or which Mr Constantinidis had filed on which Ms Constantinidis intended to rely. I then proceeded to hear the creditor’s petition.
In the balance of these reasons, I consider whether the creditor has proved the matters specified in s.52(1) of the Act. Assuming that is answered in the affirmative, I also consider whether, having regard to the material Mr Constantinidis filed, there is any reason why I should not make a sequestration order.
Proof of matters specified in s.52(1) of the Act
The act of bankruptcy on which the petitioning creditor relies is Mr Constantinidis’s failure to comply with a bankruptcy notice. The relevant bankruptcy notice is that issued on 23 February 2013 and numbered BN158239. It demanded payment of $182,800.15. This included the amount of a judgment debt of $181,546.73 entered in the District Court of New South Wales on 22 January 2013 together with interest. The judgment was entered pursuant to s.368 of the Legal Profession Act 2004 (NSW).
From this evidence of the judgment debt, there can be no doubt that the petitioning creditor, Ms Kehagiadis, is a creditor of Mr Constantinidis. There is no substance to the assertion made by Ms Constantinidis at the hearing that the creditor is Lawcover.
The bankruptcy notice was scanned and sent by email to “george constantinidis” on 8 May 2013.[1] The expression “george constantinidis” is the contact display name for the email address to and from whom the petitioning creditor’s solicitor has sent and received emails to and from Mr Constantinidis.[2] I am satisfied that the email address to which the bankruptcy notice was sent on 8 May 2013 was one which, in the ordinary course of events, would have been received by Mr Constantinidis and that service of the bankruptcy notice was effected in accordance with reg.16.01(e)(ii) of the Bankruptcy Regulations 1996 (Cth).
[1] Affidavit of Megan Zhang, [7], page 9
[2] Affidavit of S S Nash 22 July 2013, pp.13-34
Mr Constantinidis did not comply with the bankruptcy notice within 21 days of service.[3] This means that Mr Constantinidis committed an act of bankruptcy within the meaning of s.40(1)(g) of the Act. The act of bankruptcy occurred on 29 May 2013.
[3] Creditor’s petition, [4]
The petitioning creditor filed a creditor’s petition with this Court on 24 September 2013. The application has been filed in accordance with the prescribed form[4], and an affidavit verifying the matters required by s.47 of the Act has been sworn by the creditor, Ms Kehagiadis, on 23 September 2013.[5]
[4] Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (Bankruptcy Rules) r.4.02(1)
[5] Bankruptcy Rules, r.4.02(2)
The petitioning creditor also filed with the Court at the time she filed the creditor’s petition:
a)an affidavit required by r.4.04 of the Federal Circuit Court (Bankruptcy) Rules (Bankruptcy Rules);[6] and
b)affidavits of service of the bankruptcy notice as required by r.4.04(1)(b) of the Bankruptcy Rules.[7]
[6] Affidavit of Melanie Cavanough made on 23 September 2013
[7] Affidavit of Megan Zhang made on 19 July 2013; affidavit of S S Nash made on 22 July 2013
As required by r.4.05 of the Bankruptcy Rules, the creditor’s petition was served on 18 November 2013, being more than five days before the date fixed for the hearing of the creditor’s petition together with:[8]
a)the affidavit required by r.4.04(a) of the Rules;
b)affidavits of service of the bankruptcy notice; and
c)the consent of Maxwell William Prentice to act as trustee.
[8] Affidavit of Mark Slater made on 25 November 2013.
At the hearing on 20 February 2013 there was filed in Court further affidavits as required by r.4.06(3) and r.4.06(4) of the Rules.[9]
[9] Affidavit of debt made by the petitioning creditor, Ms Meropi Kehagiadis made on 19 February 2014, and an affidavit of search made by J F Merewether on 20 February 2014.
I am satisfied that the petitioning creditor has proved the matters she is required to prove under s.52(1) of the Act, and that, subject to any matters raised by Mr Constantinidis, a sequestration order should be made against the estate of Mr Constantinidis.
Any matters under section 52(2) of the Act?
Even if I am satisfied the petitioning creditor has proved the matters specified in s.52(1) of the Act, I may dismiss the petition under s.52(2) of the Act if I am “satisfied by the debtor” that the debtor “is able to pay his or her debts” (s.52(2)(a) of the Act) or if there is some “other sufficient cause” for dismissing the petition (s.52(2)(b) of the Act). The onus is on Mr Constantinidis to satisfy the Court of these matters. He cannot do so.
First, Mr Constantinidis has not claimed, and there is no evidence to suggest, Mr Constantinidis is able to pay his debts.
Second, I confirm what I said to Ms Constantinidis during the hearing. The allegations of conspiracy and all other allegations she made at the hearing cannot be taken into account by me unless they are supported by evidence. As they are not supported by any evidence, I must disregard them.
Third, although Mr Constantinidis filed a notice of opposition, and an affidavit made by him in support of the grounds stated in that notice, Ms Constantinidis did not refer to or rely on those grounds or on Mr Constantinidis’s affidavit. I cannot, therefore, have regard to these grounds or to the affidavit of Mr Constantinidis.
I did, however, look at Mr Constantinidis’s affidavit. It refers to a potential cross-claim Mr Constantinidis says he has against the petitioning creditor. The claims it appears Mr Constantinidis says he has are those, or related to those, which were pleaded in a statement of claim Mr Constantinidis sought leave to file with the Supreme Court of New South Wales. That application was heard and, on 2 September 2011, dismissed by Davies J in Constantinidis v Kehagiadis.[10]
[10] [2011] NSWSC 974 (2 September 2011)
Even if, at the hearing before me, Ms Constantinidis relied on the grounds stated in the grounds of opposition, and on the affidavit of Mr Constantinidis, that would not have persuaded me there was some other sufficient cause for not making a sequestration order. First, Mr Constantinidis’s affidavit consists of broad assertions of negligence and misconduct, and is not capable of providing evidence of a reasonable cross claim against the petitioning creditor. Second, Mr Constantinidis has had since 2 September 2011 to formulate and pursue a cross claim, but he has not done so. Third, I give no credit to the assertion made in the notice of objection, and repeated by Ms Constantinidis to me, that a barrister has been retained to draft the cross claim. Ms Constantinidis refused to disclose the name of the barrister whom she claimed had been retained. I do not accept that Mr Constantinidis has retained any barrister or, if he has, that the barrister has given any advice to the effect that Mr Constantinidis has a reasonable cross claim.
Finally, I am satisfied Mr Merewether is retained by the petitioning creditor to represent her in these proceedings. Mr Merewether has signed and on 20 December 2014 filed in Court a notice of acting. Mr Merewether also filed in Court an affidavit of debt apparently sworn by the petitioning creditor.
Conclusion and disposition
For these reasons, I propose to make a sequestration order. I also propose to order that the petitioning creditor be paid her costs out of the estate of Mr Constantinidis, and I propose to fix the amount of those costs at the time I publish these reasons.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Associate:
Date: 4 March 2014
0