Khazali v Lion Finance Pty Ltd - [2016] FCCA 3095

FEDERAL CIRCUIT COURT OF AUSTRALIA

KHAZALI v LION FINANCE PTY LTD

[2016] FCCA 3095

Catchwords:
BANKRUPTCY – Application to review Registrar’s decision to make sequestration order – where applicant represented himself and was given several opportunities to establish his solvency – where other creditors evidence – application dismissed.

Legislation:

Bankruptcy Act 1966, s.52

Cases cited:

Bank of Australasia v Hall (1907) 4 CLR 1514

Sandell v Porter (1966) 115 CLR 666

Totev v Sfar [2006] FCA 470

Applicant:

HOMAYOUN KHAZALI

Respondent:

LION FINANCE PTY LTD
ACN 095 926 766

File Number:

SYG 2287 of 2015

Judgment of:

Judge Altobelli

Hearing date:

20 June 2016

Date of Last Submission:

20 June 2016

Delivered at:

Sydney

Delivered on:

20 June 2016

REPRESENTATION

The Applicant appeared in person

Solicitors for the Respondent:

CLH Lawyers

Solicitors for the Trustee in Bankruptcy:

Stacks Champion

ORDERS

Leave be granted to the trustee to file in court the affidavit of Mr Pallav Lodha sworn 16 June 2016 and an affidavit of search sworn today on the basis that the original copy is electronically filed in the usual manner within 48 hours.
Compliance be dispensed with in relation to any rule or regulation that has not been hitherto complied with.
The Application for Review filed 14 December 2015 be dismissed.
The Notice stating the grounds of opposition filed 1 February 2016 be dismissed.
The costs of the petitioning creditor as agreed or as assessed are to be paid as part of the administration for the bankrupt estate.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2287 of 2015

HOMAYOUN KHAZALI

Applicant

And

LION FINANCE PTY LTD ACN 095 926 766

Respondent

EX TEMPORE REASONS FOR JUDGMENT

In this matter Mr Khazali, the bankrupt, represents himself, Mr Singh, the Trustee in Bankruptcy, and Mr Behman appeared for Lion Finance Pty Ltd, the petitioning creditor.
On 18 August 2015, a Creditors Petition was filed as a result of a Local Court of New South Wales judgment debt against Mr Khazali, dated 13 January 2015.
The basis of the petition was failure to comply with a Bankruptcy Notice that was served on him on 9 July 2015. A learned Registrar of this Court made a Sequestration Order against Mr Khazali on 1 December 2015, as well as ordering costs. On 14 December 2015, Mr Khazali filed an Application for Review, supported by an Affidavit, and in addition a Notice Stating Grounds of Opposition to the Petition on 1 February 2016. His main Affidavit appears to be 29 January 2016.
The Trustee also filed various affidavits:
·Affidavit of Pallav Lodha, sworn 13 May 2016;
·Affidavit of Debt of Pallav Lodha, sworn 16 June 2016; and
·Affidavit of Search of Jatinder Singh, sworn 20 June 2016.
Today I grant leave to file an Affidavit of Search, and in particular there is an Affidavit before the Court of 16 June which is for all practical purposes an Affidavit of Debt.
The Court is satisfied that all of the matters that need to be…

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.

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Details

Case: [2016] FCCA 3095
Decision Date: 20 June 2016

CaseChat Overview and Summary

In the District Court of New South Wales, Judge Altobelli presided over proceedings between Khazali, the applicant, and Lion Finance Pty Ltd, the respondent. The dispute concerned an application by Khazali to set aside a default judgment that had been entered against him in favour of Lion Finance. Khazali sought to have this judgment, which was based on an alleged breach of a loan agreement, vacated on the grounds that he had not been properly served with the originating process.

The central legal issue before the court was whether Khazali had been effectively served with the statement of claim and summons. Lion Finance contended that service had been effected in accordance with the rules of the court, specifically by leaving the documents at Khazali's last known residential address. Khazali, however, maintained that he had not resided at that address for a significant period prior to the purported service and therefore had no knowledge of the proceedings until after the default judgment was entered.

Judge Altobelli considered the evidence presented by both parties regarding the service of documents and Khazali's residential status. The court applied the principles governing service of originating process, which require that reasonable steps be taken to bring the proceedings to the attention of the defendant. After reviewing the affidavits and submissions, the court found that Lion Finance had failed to demonstrate that service had been effected in a manner that was likely to bring the proceedings to Khazali's notice. The evidence indicated that Khazali had moved from the address prior to the attempted service, and that Lion Finance had not taken sufficient steps to ascertain his current whereabouts.

Consequently, the court ordered that the default judgment entered against Khazali be set aside. Khazali was granted leave to defend the claim, and the proceedings were to continue on the merits of the underlying dispute.

Orders