BANKRUPTCY – creditor’s petition – whether act of bankruptcy – whether order a final judgment – whether proof of the matters required under s52 – whether debtor is able to pay his debts – whether other sufficient cause – whether proceedings should be adjourned – sequestration order made
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:
JAY KOO KIM
Applicant
AND:
SEOUNG JIN GOO
Respondent
ORDER MADE BY:
JUDGE STREET
DATE OF ORDER:
12 AUGUST 2022
THE COURT ORDERS THAT:
1.A sequestration order is made against the estate of Seoung Jin Goo.
2.The costs of the petitioning creditor be paid out of the bankrupt estate with the priority to which they are entitled in the amount agreed or assessed.
THE COURT NOTES:
3.That a consent to act as trustee was filed on 4 November 2021 by Stewart Free.
4.The act of bankruptcy occurred on 8 October 2021.
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).
REASONS FOR JUDGMENT
JUDGE STREET:
INTRODUCTION
These are proceedings within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (Cth) (“the Act”) in which the applicant petition creditor is seeking a sequestration order against the respondent. The bankruptcy notice, dated 20 May 2021, was issued on the basis of a judgment or order in the sum of $300,000.00 made in the Supreme Court of New South Wales, in the Equity Division, on 21 April 2021 together with an order for interest thereon. The form of the order attached to the bankruptcy notice was in the usual judgment/order form identifying the Court details and the title of the proceedings, the date of the judgment/order, and the terms of the judgment/order relevantly were as follows:
(1)Order that the contract between the plaintiff [Mr Kim] and the third defendant referred to in [80] [Mr Goo] of the judgment of the Court in Re Hoju Jobs Pty [2021] NSWSC 302 be specifically performed…
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
AGLC
Kim v Goo [2022] FedCFamC2G 602
Case
[2022] FedCFamC2G 602
Decision Date
CaseChat Overview and Summary
The case of Kim v Goo involved a bankruptcy petition brought against the respondent, Goo, by the petitioner, Kim. The dispute centred on whether the respondent had committed an act of bankruptcy by failing to pay a debt or make an arrangement for payment within the required timeframe. The matter was heard in the Federal Circuit and Family Court of Australia.
The court was required to determine whether the evidence presented by the petitioner was sufficient to establish the respondent's bankruptcy and whether the respondent had provided a valid reason to defer the sequestration order. Key issues included the accuracy of the bankruptcy notice, the respondent's objections based on previous court proceedings, and the respondent's claims of defamation and associated costs.
The court found that the affidavit verifying the creditors petition was accurate and that the respondent had failed to pay the debt or make an arrangement for payment within the required timeframe. The respondent's objections, based on costs orders and defamation proceedings, did not sufficiently justify deferring the sequestration order. The court was not convinced that the costs incurred or the defamation claims warranted a deferral, especially given the significant amount of the debt. The court concluded that the petitioner had established their entitlement to a sequestration order and that there was no proper basis to defer the pronouncement of the orders.
In conclusion, the court granted the petitioner's request for a sequestration order against the respondent's estate, rejecting the respondent's objections and finding no sufficient cause to defer the order.
Orders
Orders of the court
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Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
The Court notes that the affidavit verifying the creditors petition identified that the paragraphs, 1, 2 and 3, were true and, in respect of paragraph 4, that identified the act of bankruptcy as occurring on 8 October 2021, and the affidavit said that the respondent failed within 21 days after the service of the bankruptcy notice to pay the debt or make an arrangement to the applicant’s satisfaction for payment of the debt. RESPONDENTS AFFIDAVIT EVIDENCE The respondent’s affidavit dated 2 February 2022 repeated the grounds in his notice of objection. The respondent referred to the Supreme Court of NSW proceedings no 2017/00316224 between himself as defendant and the petitioning creditor as plaintiff. Those are the proceedings upon which the petitioning creditor relies in respect of the alleged final order supporting the bankruptcy notice. The affidavit refers to costs orders made against the petitioning creditor on 4 June 2018 and 9 December 2020 and asserts although not taxed that those costs are in the order of $20,696.87. The making of these costs orders which have not been assessed do not provide a sufficient potential set-off to warrant dismissal of the bankruptcy notice. The affidavit then refers to the bringing of defamation proceedings against the petitioning creditor as a result of posts in Korean allegedly made by Mr Kim and others of which the respondent became aware around the end of June 2020. The respondent also alleged at the end of July 2020 he became aware of flyers distributed in identified Sydney suburbs. The respondent alleges a conversation with a third party that showed a mobile number said to be that of the petitioning creditor. The respondent alleged a person distributing flyers went to meet the petitioning creditor. The respondent also referred to a website and profile page of which he became aware shortly after 4 February 2021. The affidavit also alleges publishing of an article through Breaknews Australia around 20 July 2020 by the petitioning creditor and annexes a statement of claim for defamation filed in the District Court of NSW proceedings no 2021/00205852. The affidavit referred to lodgement of a notice of intention to appeal the proceeding in which the judgment was obtained and a decision by the respondent not to pursue the appeal. The affidavit referred to correspondence sent in respect of the bankruptcy notice and difficulties effecting service of the defamation proceedings. The affidavit deposed to the progress of the defamation proceedings and alleged pursuit of the same in good faith and with due diligence. The respondent estimated his damages against the petitioning creditor to be $400,000.00. The respondent referred to setting up a company Oakwood Sydney Pty Led and setting up an online business around 2017 and setting up Hoju Australia. The respondent alleges he earns margins by transferring Australian dollars to Korean Won. The respondent alleges negative comments since the publication of what he alleges is the defamatory material and alleges generating less business and less earnings.
Decision
Reasons for decision
Accordingly, the Court is not satisfied that this is an appropriate case to provide a further short adjournment following the publication of the Court’s reasons and finds that the judgment creditor is entitled to relief in the form of a sequestration order against the estate of the respondent. An adjournment is not warranted in the interests of the administration of justice. The Court is not satisfied it would be appropriate to defer the making of a sequestration order in the circumstances of the present case. The Court rejects the respondent’s submissions seeking an adjournment pending determination of the two proceedings or for a short adjournment. The two proceedings in light of the Court’s findings do not warrant the exercise of the discretion not to make a sequestration order. There would be no utility in any adjournment given the above findings and as the respondent has had ample opportunity to pay out the judgment debt if able to do so and because the petitioning creditor has made out the entitlement to a sequestration order. Accordingly the respondent has not succeeded on the issues (f) and (g) raised above.CONCLUSION The Court is has not been satisfied by the respondent debtor that there is other sufficient cause why a sequestration order ought not to be made. The Court finds that the petitioning creditor is entitled to a sequestration order and that there is no proper basis to defer the pronouncement of the orders.