Ky Stockfeeds Pty Ltd v Kelvy
[2015] FCCA 3567
•23 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KY STOCKFEEDS PTY LTD & ANOR v KELVY | [2015] FCCA 3567 |
| Catchwords: BANKRUPTCY – Application for a sequestration order – respondent debtor died prior to the making of a sequestration order – matter referred under Part XI of the Bankruptcy Act 1966 (Cth) – consideration of ss.244(13) and 245 of the Act – criteria for the making of an order under s.245 of the Act satisfied. |
| Legislation: Bankruptcy Act 1966 (Cth), Pt.XI, ss.244(13), 245(1) |
| Feliciano Gonzales v Maria De Luz Marmentini, Executrix of the estate of the late Ida Garcia Raber [1998] FCA 911 L. McCredie, Administration of the Estate of Deceased Persons in Victoria, 1979, Butterworths |
| Applicant: | KY STOCKFEEDS PTY LTD (ACN 065 448 160) FORMERLY DANIELI & MEYER PRODUCE & GRAIN PTY LTD (ACN 065 448 160) |
| Supporting Creditor | LANDMARK OPERATIONS LIMITED |
| Respondent: | GARY THOMAS KELVY |
| File Number: | MLG 2297 of 2015 |
| Judgment of: | Judge Wilson |
| Hearing date: | 23 December 2015 |
| Date of Last Submission: | 23 December 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 23 December 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr A Segal |
| Solicitors for the Applicant: | BizLaw Solicitors |
| Counsel for the Supporting Creditor: | Ms R Quintin |
| Solicitors for the Supporting Creditor | JHK Legal |
| No appearance by the Respondent |
ORDERS
Pursuant to s.245(1) of the Bankruptcy Act 1966 (Cth), the estate of Gary Thomas Kelvy be administered under Part XI of the
Bankruptcy Act 1966(Cth).
The costs of the applicant and the supporting creditor, including reserved costs, be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2297 of 2015
| KY STOCKFEEDS PTY LTD (ACN 065 448 160) FORMERLY DANIELI & MEYER PRODUCE & GRAIN PTY LTD (ACN 065 448 160) |
Applicant
| LANDMARK OPERATIONS LTD (ACN 008 743 217) |
Supporting Creditor
And
| GARY THOMAS KELVY |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
Introduction
A registrar of the Court referred to me a matter under Pt.XI of the Bankruptcy Act 1966 (Cth) (“the Act”). It follows from the death of Gary Thomas Kelvy (“Mr Kelvy”), who died after
Ky Stockfeeds Pty Ltd (“Ky”) presented a petition for Mr Kelvy’s bankruptcy, but prior to the making of a sequestration order against the estate of Mr Kelvy.
If made, an order under s.245(1) of the Act will have the effect of causing the estate of Mr Kelvy to be administered under the Act rather than being administered in accordance with any of Mr Kelvy’s testamentary wishes under his last will made prior to his death.
Synopsis
For the reasons that follow, I make an order under s.245(1) of the Act.
Background Factual Matters
On 3 August 2015, on the application of Ky, judgment was entered against Mr Kelvy in the sum of $46,109.00 plus interest of $420.03, and costs of $1747.80.[1]
[1] Affidavit of Emily Jane Cordingley sworn 12 October 2015 at Annexure “EC-01”.
On 25 August 2015, Ky’s solicitors served a bankruptcy notice on
Mr Kelvy. The total debt due (being the judgment debt of $48,276.83 plus interest accrued after judgment of $276.43) was $48,553.26.[2]
Mr Kelvy did not pay the debt due within 21 days following service of the bankruptcy notice upon him, nor did Mr Kelvy make arrangements to the satisfaction of Ky for the payment of judgment debt.
[2] Ibid.
As a result of Mr Kelvy’s failure to respond to the bankruptcy notice within 21 days of service of it upon him, Mr Kelvy committed an act of bankruptcy as a result of which Ky filed a creditor’s petition on
13 October 2015 in respect of the sum then due, namely $48,553.26.[3]
[3] Creditor’s Petition filed 13 October 2015 at [1].
On 20 October 2015 Richard Alan, process server, served upon
Mr Kelvy a sealed creditor’s petition together with an affidavit verifying the debt due.[4]
[4] Affidavit of Service (General) of Richard Allen sworn 20 October 2015.
Ky’s petition was listed for hearing before this court on
24 November 2015. Another creditor, Landmark Operations Ltd (“Landmark”), notified its intention to support the petition in respect of a debt Mr Kelvy had owed Landmark in the sum of $12,410.53. According to the affidavit of Sarah Prentice, credit manager of Landmark,[5] Landmark served its own bankruptcy notice on Mr Kelvy for $15,363.90 under a default judgment obtained by Landmark in the Magistrates Court of Victoria on 14 August 2015.[6]
[5] Affidavit of Sarah Prentice sworn 18 November 2015.
[6] Affidavit of Sarah Prentice sworn 18 November 2015 at [3].
On 24 November 2015, when Ky’s creditor’s petition came before the Court, Registrar Caporale adjourned the hearing of the petition so that Mr Kelvy could file affidavit material in opposition to the evidence of Ky or Landmark by 4 December 2015. The Registrar adjourned the further hearing of the case until 8 December 2015.
On 8 December 2015, the matter came on for hearing, again before
Registrar Caporale. On that date, the Registrar adjourned the further hearing of the matter until 17 December 2015.
Mr Kelvy passed away on 7 December 2015. Ky’s solicitors brought that fact to the Court’s attention based on a telephone call from
Mr Kelvy’s sister on 8 December 2015, as was deposed to in the affidavit of Kerry Louise Walker-Staalkjaer affirmed
16 December 2015.[7]
[7] Affidavit of Kerrie Louise Walker-Staalkjaer affirmed 16 December 2015 at [2]-[3].
By the time the matter came before Registrar Caporale on
17 December 2015, Ky’s creditor’s petition was on foot and a creditor’s petition filed on 4 November 2015 by Landmark was dismissed on 17 December 2015.
Mr Robert Danieli of Ky swore on 22 December 2015 that Ky’s debt owed to it by the late Mr Kelvy was and remained unpaid.[8]
[8] Affidavit of Robert Danieli sworn 22 December 2015 at [2].
The Status of Ky’s Creditor’s Petition
Despite the many occasions on which Ky’s creditor’s petition had been before this court, by the date this matter came before me a sequestration order had not been made in respect to the estate of
Mr Kelvy.
The Status of Mr Kelvy’s Estate
It is readily apparent that upon Mr Kelvy’s death, he left at least one creditor, Ky, unsatisfied. Unsurprisingly, no material had been filed addressing any aspect of his estate at date of death. For that matter, I was unaware whether Mr Kelvy died having made a will or whether he died intestate. When this matter came on for hearing I was unaware whether probate had been granted nor even whether an application had been made for the grant of probate or of letters of administration. Ordinarily, any such application is made to a state Supreme Court.
Interaction Between ss.244(13) and 245 of the Act
Persons who die with bankruptcy proceedings pending are dealt with in various ways under state and federal legislation.
If a person dies and proceedings have been commenced in a Court for the administration of a deceased person’s estate under State or Territory law, a creditor is forbidden from presenting a petition in respect to the deceased person’s debts except by leave of a federal court and on such terms and conditions, if any, as that Court thinks fit. That is the import and effect of s.244(13) of the Act.
There may be circumstances where a person dies, yet probate has not been granted, nor letters of administration granted, but prior to the death of the deceased, a creditor has obtained a default judgment debt and even filed a creditor’s petition. That is the situation with which this case is concerned.
Section 244(13) of the Act has, at its core, a recognition of the undesirability that two courts are involved in the administration of a person’s estate. In that context, the undesirability relates to the
Federal Circuit Court of Australia or the Federal Court of Australia being involved in the administration of a person’s bankrupt estate while concurrently, the Supreme Court of a State or Territory, is involved in the administration of the deceased’s estate. A trustee in bankruptcy is ordinarily concerned for the interests of the general body of unsecured creditors in an insolvent estate. That is to be contrasted with an executor, whose role includes getting in assets, preserving assets, ascertaining liabilities and transferring assets to beneficiaries.[9]
[9] See L. McCredie, Administration of the Estate of Deceased Persons in Victoria, 1979, Butterworths.
The purpose of s.244(13) of the Act was explained by Emmett J in Feliciano Gonzales v Maria De Luz Marmentini, Executrix of the estate of the late Ida Garcia Raber[10] (“Gonzales”). There, his Honour said:
The purpose of section 244(13) is to ensure that there are not two Courts administering an insolvent estate or administering the estate generally. It is not concerned with the grant of probate or letters of administration by a Court of Probate.[11]
[10] [1998] FCA 911
[11] [1998] FCA 911 at pp.4-5.
Slightly further in that judgment, Emmett J made other observations about the purpose of s.244(13) of the Act. His Honour said:
The purpose of section 244(13) is to ensure that where an order for the administration of an estate has been made by the Supreme Court of a State of Territory, the effect of which is to prevent any dealings with the estate otherwise than under the direction of the court, the Bankruptcy Court will not, in conflict with such an order, seek to administer the estate.[12]
[12] [1998] FCA 911 at p.5.
The position in this case is a little different. Here, no proceedings of which I am aware have been commenced in a state or territory Supreme Court for the administration of Mr Kelvy’s estate. Conversely, this proceeding in this Court is pending and awaiting determination in relation to Ky’s creditor’s petition.
Section 245 of the Act permits this Court to make an order in respect of a deceased person’s estate where a creditor’s petition has been presented, but a sequestration order has not been made on that petition and the person dies in the time between the presentation of the petition and the making of the sequestration order.
Those are the circumstances with which this case is concerned. Ky presented its petition on 13 October 2015. Mr Kelvy died on
7 December 2015. So far, according to affidavit material before me at least, no steps have been taken seeking orders for the grant of probate or letters of administration of his estate.
Recognising, as I do, the undesirability of there being two courts administering an insolvent estate or administering a deceased estate generally, s.245 of the Act specifically enables this Court to make an order for the administration of Mr Kelvy’s estate under Pt.XI of the Act. The necessary criteria for making an order under s.245(1) of the Act exist in the circumstances of this case. They are:
(a)the presentation by Ky of a creditor’s petition which had been served on Mr Kelvy;
(b) Mr Kelvy’s death;
(c)at the time of Mr Kelvy’s death a sequestration order had not been made; and
(d)Ky’s petition has not been dismissed, nor yet a sequestration order made.
For reasons largely similar to those espoused by Emmett J in Gonzales, it seems to me that there should be no conflict in the administration of a person’s estate between a Court exercising jurisdiction under the Act and a Supreme Court of a State or Territory exercising jurisdiction consequent upon the grant of probate or letters of administration. To my mind, s.245(1) of the Act serves the very purpose of enabling
Mr Kelvy’s estate to be administered under Pt.XI of the Act. It seems to me to be highly desirable for that outcome to be achieved.
Accordingly, I make an order under s.245 of the Act.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Wilson
Associate:
Date: 28 January 2016
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