Kerbage v Fridman

[2023] FedCFamC2G 1004

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Kerbage v Fridman [2023] FedCFamC2G 1004

File number:

MLG 547 of 2023

Judgment of:

JUDGE CHAMPION

Date of judgment:

3 November 2023

Catchwords:

BANKRUPTCY LAW – Creditor’s Petition - Application for review of a sequestration order made by a Registrar – whether the Respondent was served with the bankruptcy notice – where the Respondent was served – review application dismissed

Legislation:

Bankruptcy Act 1966 (Cth) ss. 40, 43, 52

Federal Circuit and Family Court of Australia Act 2021 (Cth) s. 256

Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) r. 4.06

Cases cited:

Bechara v Bates (2021) 286 FCR 166; [2021] FCAFC 34

Division:

Division 2 General Federal Law

Number of paragraphs:

17

Date of last submissions:

3 November 2023

Date of hearing:

3 November 2023

Place:

Melbourne

Counsel for the Applicant:

Mr A Purton

Solicitor for the Applicant:

Robert James Lawyers

Solicitor for the Supporting Creditor:

HWL Ebsworth

Counsel for the Respondent:

Mr L Freckelton

Solicitor for the Respondent:

Norton Rose Fulbright

ORDERS

MLG 547 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

SHANE KERBAGE

Applicant

AND:

PAUL FRIDMAN

Respondent

ORDER MADE BY:	JUDGE CHAMPION
DATE OF ORDER:	3 NOVEMBER 2023

THE COURT ORDERS THAT:

1.The Respondent’s Application for review of the Registrar’s sequestration order made on 8 August 2023 is dismissed.

2.The Respondent pay the Applicant’s costs fixed in the amount of $17,455.

3.The costs of the supporting creditor be paid from the estate, such costs to be taxed.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

EX TEMPORE REASONS FOR JUDGMENT
Revised from Transcript

JUDGE CHAMPION:

INTRODUCTION

1. On 30 March 2023, Mr Shane Kerbage (Mr Kerbage or the Applicant) in these reasons, filed a Creditor’s Petition seeking a sequestration order under s. 43 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) against the estate of Mr Paul Fridman (Mr Fridman or the Respondent). Callum Fraser Holdings Pty. Ltd. is the supporting creditor. 

   PROCEDURAL HISTORY

2. On 8 August 2023, a Registrar of this Court made a sequestration order, among other orders. 

3. On 29 August 2023, the Respondent lodged an application to review the Registrar’s decision  (Review Application).  My task is to conduct a de novo review as to the creditor’s petition. I must consider afresh the Applicant’s creditor’s petition and whether he has proved each of the matters set out in s. 52(1)(a) to (c) of the Bankruptcy Act. The Court’s power on review is to make any order or order it thinks fit in relation to the matter: Federal Circuit and Family Court of Australia Act 2021 (Cth), s. 256.

4. I was further assisted by Mr Purton’s (who appeared from the Applicant creditor) helpful reference to a decision of the Federal Court Full Court in Bechara v Bates (2021) 286 FCR 166, [27]. The Full Court noted the relevant principle on a Registrar’s review is that the creditor’s petition is not prosecuted by the debtor but the creditor in the proceeding in which the Registrar’s order was made, and that the onus remains upon the creditor to prosecute his or her petition.

5. In this matter, following the filing of the review application, on 8 September 2023, I made orders for the filing of any amended application, affidavits and submissions. At that point in time, or subsequent to it, more accurately, both the Applicant creditor and the Respondent filed affidavits. Neither party filed submissions. 

6. However, when the matter was called on for hearing this morning, Counsel for the Respondent indicated he appeared as a courtesy to the Court and he had no instructions to prosecute the review application. The Court records its gratitude for his attendance in those circumstances.

7. The application not having been discontinued and remaining extant, it remained for the Court to deal with the application cognisant of the principles in Bechara v Bates and for the Court to consider the creditor’s petition and the matters that need to be proved afresh. In effect, the application for review, which remained extant, remained a demand that the creditor’s claim for relief, namely, the sequestration order, be heard by a Judge. I therefore turn to the matters on which the Applicant creditor relies in his application for a sequestration order.

8. Counsel for the Applicant identified eight affidavits upon which he relied and which I treat as read on this application. The eight documents are as follows:

   (1)the affidavit verifying the Creditor’s Petition of Mr Shane Kerbage made on 29 March 2023; 

   (2)an affidavit of service made by a process server, Mr Konstantino Dimitrakis, filed on 30 March 2023, as to the service of the bankruptcy notice; 

   (3)an affidavit of service of the Creditor’s Petition filed on 10 May 2023 and made by Mr Trent Del Monaco; 

   (4)a further affidavit of Mr Dimitrakis, the process server, made on 26 October 2023; 

   (5)an affidavit of Mr Kerbage, the Applicant creditor, made on 26 October 2023, which again deals with service issues; 

   (6)an affidavit of Ms Emily Dahl, dated 26 October 2023, which deals with service issues; 

   (7)an affidavit of Mr Kerbage made yesterday, 2 November 2023, being an affidavit of final debt;  and

   (8)an affidavit of final search made on 2 November 2023 by Ms Emily Dahl, lawyer. 

9. I note that the documents identified above as documents 7 and 8 were filed in the Court pursuant to the requirements of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth), particularly r. 4.06. In circumstances in which the Respondent no longer actively prosecuted his grounds of opposition, the issue for me is, sitting afresh and hearing the matter de novo, is as to whether I am satisfied the documents I have identified above satisfy me that the creditor has proved each of the matters set out in s. 52(1)(a) to (c) of the Bankruptcy Act. Of course, I might proceed on the basis that each of these factual matters are now effectively unchallenged before me. 

10. As to the matters in s. 52(1)(a), I am entitled to accept the affidavit verifying the creditor’s petition, as sufficient proof of those matters set out in the petition, and on that basis, I do so accept the affidavit of Mr Kerbage made on 29 March 2023 as sufficient proof of those matters in s. 52(1)(a) (document 1).

11. As to the matters set out in s. 52(1)(b) as to service of the petition, I accept the affidavit of Mr Trent Del Monaco, which is among the documents the creditor relies upon (document 3).

12. As to matters in s. 52(1)(c), I accept as proof of the fact that the debt or debts on which the petition creditor relies are still owing, I accept the matters set out in the affidavit of Mr Kerbage dated 2 November 2023 (document 7).

13. For the avoidance of doubt, in circumstances in which there was some contention (at least before the matter was called on for hearing this morning and Counsel for the Respondent indicated he had no instructions actively to prosecute the review application) as to the service of the bankruptcy notice, service of the bankruptcy notice is an essential matter in respect of my level of satisfaction that the debtor has committed an act of bankruptcy under s. 40(1)(g) of the Bankruptcy Act.

14. I now have unchallenged evidence from a number of sources as to service of the bankruptcy notice. I accept that service of the bankruptcy notice has been proved by reference to the two affidavits of Mr Dimitrakis: the first, which was made on 1 March 2023, and the second that was made on 26 October 2023. 

15. To the extent that Mr Dimitrakis’ evidence needs any support, the fact that Mr Fridman was served with the bankruptcy notice is reinforced by the nature and content of his WhatsApp messages to Mr Kerbage sent after 10.00 pm on the evening of 22 February 2023 referred to in Mr Kerbage’s affidavit made on 26 October 2023. Also, it can be weighed against any submission by the Respondent debtor now that he was not served with the bankruptcy notice that on at least three occasions before the Registrar, he never submitted that he was not served with the bankruptcy notice. 

16. For these reasons, I am satisfied that the creditor has proved each of the matters in s. 52(1)(a) to (c) of the Bankruptcy Act, and that the Court ought to make a sequestration order.

17. There is then the reality of the situation that I am sitting in review of a Registrar’s decision. The sequestration order has already been made, and it is part of the historical record. Although I have considered the matters afresh, as I must do in a de novo hearing, in all the circumstances, the appropriate order appears to be as  an order dismissing the application for review. I will hear the parties as to costs.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of Judge Champion.

Associate:

Dated:       3 November 2023