LASM v Body Corporate for La Porte D'Or CTS 12681
[2011] FMCA 800
•20 October 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LASM v BODY CORPORATE FOR LA PORTE D’OR CTS 12681 | [2011] FMCA 800 |
| BANKRUPTCY – Sequestration order – application for review of decision of Registrar – fresh proceeding – requirement on petitioning creditor to file fresh affidavits – where failure to file fresh affidavits. |
| Bankruptcy Act 1966 (Cth), ss.43, 44, 47(1), 52(1), 153B(1) Federal Magistrates Act 1999 (Cth), ss.3, 42, 104(2) and (3) Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), rr.4.02, 4.04, 4.05, 4.06(2), (3) and (4) Federal Magistrates Court Rules 2001 (Cth), rr.1.03, 20.03(a), (b) and (c) |
| Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Fair Work Ombudsman v Kentwood Industries Pty Ltd [2010] FCA 98 Martin v Commonwealth Bank of Australia (2001) 217 ALR 634; [2001] FCA 87 O’Meara v Hitwise Pty Ltd & Another (2007) 160 FCR 518; [2007] FCAFC 114 Pattison v Hadjimouratis (2006) 155 FCR 226; [2006] FCAFC 153 Travaglini v Raccuia (2007) 211 FLR 127; [2007] FMCA 777 |
| Applicant: | JEAN-JACQUES LORNG LASM |
| Respondent: | BODY CORPORATE FOR LA PORTE D'OR CTS 12681 |
| File Number: | PEG 132 of 2011 |
| Judgment of: | Lucev FM |
| Hearing date: | 26 August 2011 |
| Date of Last Submission: | 26 August 2011 |
| Delivered at: | Perth |
| Delivered on: | 20 October 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr I Tait |
| Solicitors for the Applicant: | Tait & Co Business Lawyers |
| Counsel for the Respondent: | Ms C Nguyen |
| Solicitors for the Respondent: | Irdi Legal (as town agents for Holman Webb) |
ORDERS
The Sequestration Order made by a Registrar of this Court on 26 May 2011 be set aside.
The Creditors Petition filed by the respondent on 4 February 2011 be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 132 of 2011
| JEAN-JACQUES LORNG LASM |
Applicant
And
| BODY CORPORATE FOR LA PORTE D'OR CTS 12681 |
Respondent
REASONS FOR JUDGMENT
Application
The application in this matter, filed on 3 June 2011, is for the review of a sequestration order made by a Registrar of this Court in Brisbane on 26 May 2011.[1] The Sequestration Order was made on the basis of a creditors petition filed by the now respondent on 4 February 2011,[2] and other material put before the Registrar at a hearing on 26 May 2011.
[1] “Sequestration Order”.
[2] “Creditors Petition”.
Previous orders made
At the directions hearing on 17 June 2011, the Court made the following orders:
1.The applicant file and serve an affidavit of service of the application upon the Trustee in Bankruptcy by 24 June 2011.
2.The applicant file and serve:
(a)a notice on creditors in accordance with Form 12 by 1 July 2011; and
(b)an affidavit of service of that notice by 8 July 2011.
3.The respondent file and serve any affidavits in opposition by 15 July 2011.
4.The applicant file and serve any affidavits in reply to the respondent’s affidavits in opposition by 22 July 2011.
5.This application be adjourned to 10:15am on 29 July 2011.
6.Costs of today be reserved.
On 27 July 2011 orders were made by consent, as follows:
1. The time for the applicant to file and serve any affidavits in reply to the respondent’s affidavits be extended to 5 August 2011.
2. The hearing listed for 10:15am on 29 July 2011 be adjourned to 10:15am on 22 August 2011.
3. The parties be excused from attending on 29 July 2011.
4. There be no order as to costs.
Evidence
The applicant relied upon two affidavits sworn by him and filed on 16 June 2011 and 4 August 2011 respectively, which were taken as read without objection.
The respondent sought to rely upon the affidavit of the Trustee in Bankruptcy, William John Fletcher, sworn 15 August 2011, which was, in part, the subject of objection by the applicant.[3] For reasons which will become apparent, it is unnecessary to determine those objections. It suffices to observe that the Trustee’s Affidavit deals solely with the issue of the applicant’s solvency.
[3] “Trustee’s Affidavit”.
Law
Under s.104(2) of the Federal Magistrates Act 1999 (Cth)[4] the Registrar’s exercise of power to issue the Sequestration Order may be the subject of an application for review. Under s.104(3) of the FM Act, this Court “may make any order or orders it thinks fit in relation to” the Registrar’s exercise of power in issuing the Sequestration Order.
[4] “FM Act”.
The review proceeds by way of a hearing de novo,[5] and the Court may receive as evidence any affidavit or exhibit tendered before a Registrar, and may, with leave, receive further evidence.[6] It is open to the Court to make an order for annulment of bankruptcy[7] when reviewing a sequestration order.[8]
[5] Pattison v Hadjimouratis (2006) 155 FCR 226 at 230-231 per Nicholson J and 237 per Jacobson J; [2006] FCAFC 153 at paras.10-11 per Nicholson J and para.59 per Jacobson J (“Hadjimouratis”); Travaglini v Raccuia (2007) 211 FLR 127 at 133 per Lucev FM; [2007] FMCA 777 at para.21 per Lucev FM.
[6] Federal Magistrates Court Rules 2001 (Cth), r.20.03(a)-(c) (“FMC Rules”).
[7] Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”), s.153B(1).
[8] Hadjimouratis, FCR at 230-231 per Nicholson J and 237 per Jacobson J; FCAFC at paras.10-11 per Nicholson J and para.63 per Jacobson J.
Because the application is a fresh proceeding, albeit by way of review, the respondent (as petitioning creditor) must prove all matters necessary for the making of a sequestration order.[9] The Court may make a sequestration order upon proof of the matters set out in s.52(1) of the Bankruptcy Act, and subject to the jurisdiction to make sequestration orders under s.43 of the Bankruptcy Act and the conditions on which a creditor may petition under s.44 of the Bankruptcy Act being met.
[9] Hadjimouratis, FCR at 235 per Jacobson J and 251-252 per Lander J; FCAFC at para.43 per Jacobson J and para.156 per Lander J; O’Meara v Hitwise Pty Ltd & Another (2007) 160 FCR 518 at 521 per Kiefel, Sundberg and Gyles JJ; [2007] FCAFC 114 at para.9 per Kiefel, Sundberg and Gyles JJ.
The respondent as petitioning creditor is also obliged to put before the Court affidavits:
a)verifying the petition;[10]
b)as to search of the records of the Court and the Federal Court as to any application in relation to the bankruptcy notice;[11]
c)of service of the bankruptcy notice;[12]
d)of service of documents required to be served under r.4.05 of the FMC (Bankruptcy) Rules;[13]
e)of search of the National Personal Insolvency Index no earlier than the day before the hearing date for the petition;[14] and
f)of debt on which the creditor relies as still owing.[15]
[10] Bankruptcy Act, s.47(1); Federal Magistrate’s Court (Bankruptcy) Rules 2006 (Cth), r.4.02 (“FMC (Bankruptcy) Rules”).
[11] FMC (Bankruptcy) Rules, r.4.04(1)(a) and (2).
[12] FMC (Bankruptcy) Rules, r.4.04(1)(b).
[13] FMC (Bankruptcy) Rules, r.4.06(2).
[14] FMC (Bankruptcy) Rules, r.4.06(3).
[15] FMC (Bankruptcy) Rules, r.4.06(4).
Fresh affidavits of search and debt must, unless an order waiving compliance has issued, be filed on an application for review.[16] In this case no order waiving compliance has been issued by the Court, and none was ever sought.
[16] Martin v Commonwealth Bank of Australia (2001) 217 ALR 634; [2001] FCA 87.
At hearing, the Court inquired as to whether fresh affidavits had been filed. The following exchange occurred:
HIS HONOUR: Ms Nguyen, this is – have you got anything further by way of response to Mr Tait?
MS NGUYEN: No, sir.
HIS HONOUR: This is an application de novo by way of rehearing or by way of review, but it’s effectively a de novo hearing. Are there any other affidavits that you seek to put before the court in support of a sequestration order?
MS NGUYEN: I don’t have instructions on that, your Honour, but I can take and ask my instructing solicitors to see if they intend to do so.
HIS HONOUR: Well, if they intended to do so, I assume that they would have done so by yesterday or even this morning, at the latest, with respect to those issues that are required to be proved in respect of a sequestration order. That’s why I asked whether you had those instructions?
MS NGUYEN: I don’t know.
HIS HONOUR: All right. Anything else, Ms Nguyen?
MS NGUYEN: No, sir.
HIS HONOUR: Mr Tait, anything by way of reply?
MR TAIT: Your Honour, no. It’s self-evident that the further affidavits haven’t been filed as required and I rest my case on that.[17]
[17] Transcript, page 8.
It suffices to observe that the fresh affidavits required to be served by the respondent as petitioning creditor were not, and have not, been filed.
Given that:
a)more than two months elapsed from the time when the matter was first listed until the matter was actually heard; and
b)the opportunity for the respondent to file affidavits had been afforded and availed of (but only to the extent indicated above in relation to the Trustee’s Affidavit),[18]
[18] See para.5 above.
the tentative indication at hearing from Counsel for the respondent that further instructions as to the filing of affidavits might be sought was not a matter which moved the Court to adjourn the matter (not that an adjournment was sought) or to allow the filing of further affidavits.
In so doing, the Court had regard to the role and mode of operation of this Court, as prescribed by the objects of the FM Act[19] and the objects of the FMC Rules,[20] which provide for the Court to operate in a manner:
c)as informal as possible in the exercise of judicial power;
d)which is not protracted in its proceedings;
e)which resolves proceedings justly, efficiently and economically;
f)which uses streamlined procedures; and
g)that avoids undue delay, expense and technicality.[21]
[19] FM Act, ss.3 and 42.
[20] FMC Rules, r.1.03.
[21] A manner generally consistent with the modern approach to case management: see generally Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 127; Fair Work Ombudsman v Kentwood Industries [2010] FCA 98.
Conclusion and orders
In the circumstances where the respondent has failed to file any of the required fresh affidavits, and in the absence of an order waiving compliance with the requirement to file the fresh affidavits, the Court cannot be satisfied as to the matters required to be proved for the making of a sequestration order. It follows that the application for review must be upheld, and that there be orders that:
a)the Sequestration Order be set aside; and
b)the Creditors Petition be dismissed.
In the circumstances, it is unnecessary to address issues of the applicant’s solvency.
The Court will hear the parties as to costs.
I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 20 October 2011
9
4