Lilburn, H.S. v Lanson Investments P/L

[1993] FCA 1036

,636, 93

JUDGMENT No. ..... .. ,........ .. ......

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION	1	Nos. VP 1083 & 1084 of
BANKRUPTCY DISTRICT OF THE	1	1993
STATE OF VICTORIA	1
B E T W E E N :

RE:	HERBERT STEPHEN LILBURN Debtor LOIS ELIZABETH LILBURN Debtor
EX PARTE:	LANSON INVESTMENTS PTY. LTD ACN 008 145 113

Petitioning Creditor

JUDGE :	GRAY J
PLACE :	Melbourne  RECEIVED
DATE :	7th December 1993  21 FEB 1994

PRINCIPAL REQISTRy

EX TEMPORE REASONS FOR JUDGMENT

In each of these matters, I am satisfied of the matters stated in the petition, namely that each debtor was, at the date of the commission of the act of bankruptcy, ordinarily resident in Australia, that each debtor is justly and truly indebted to the petitioning creditor in the sum of $451,939.90, inclusive of interest and costs, as promisor of a

occurred. The act of bankruptcy was the . failure of each

promissory note for which judgment was obtained in the Supzeme Court of Victoria on 7th July 1993, that the petitioning creditor does not, nor does any person on its behalf, hold any security over the property of either debtor or any part of it

I ,

for the payment of that amount and that the zct of bankruptcy

debtor to comply on or before 4th October 1993 with the requirements of the bankruptcy notice served on her and him on 19th September 1993, or to satisfy this Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the sum specified in paragraph (a) of the bankruptcy notice, being a counter-claim, set-off or cross demand, that the debtor could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.

I am satisfied in each case as to the service of the petition. I am satisfied in each case of the fact that the debt on which the petitioning creditor relies is still owing. I am not satisfied that either of the debtors is able to pay his or her debts. In reaching that conclusion, I have taken into account the material in the effidavit of each of the debtors filed today, and particularly the summary of assets and liabilities in paragraph 8 of each of those affidavits. I desire to comment on some of the matters dealt with in that

summary.

First it is clear from paragraph 8 of each of the affidavits that the summary of assets and liabilities takes into account the assets and liabilities of a company, Group Television Services Pty Ltd, which the debtors claim to be 99.26 per cent owned by them. Even if that statement as to

'ownership and control of the company is correct, the assets of the company are not available for the satisfaction of the personal debts of the debtors. Insufficient attention has been paid to endeavouring to sort out what are liabilities of

the company and what are personal liabilities. In truth, what should be listed as an asset is shares in Group Television Services Pty Ltd, and that has not been done. I am simply not able to say from the evidence what the position is.

The next comment I make is as to the item in paragraph 8 of each affidavit, entitled "Shares in Media Companies", with an estimated value of $374,400. It has been conceded from the bar table by M r Lilburn that at least the majority of those shares, namely a parcel of 22,000 shares in one company, is owned not by the Lilburns but by a company, Shepparton F.M. Pty Ltd, in which in turn, the Lilburns own shares. Again, that asset of the company is not available for the satisfaction of personal debts.

There is also listed in the summary an item,

"Superannuation Fund Investment", for which a figure of

bar table, that that fund is not an asset of the Lilburns and	$100,000 is given. It is plain, and again conceded from the
not available for the satisfaction of their personal debts. It is apparently a superannuation fund from which they may ultimately benefit, but any benefit to them is dependent upon action by the trustee of the fund.
The liabilities of the debtors are also understated in the summary. With respect to the petitioning creditor, the only reference is to a shortfall of $325,000. That I understand to be calculated as the estimated difference between the amount which the receiver of Murray River Broadcasting Pty Ltd expects to realise in respect of a debenture charge to the petitioning creditor over the assets of the company, and the full amount owing in respect of the purchase of shares in that company by a company called Murray River F.M. Pty Ltd. The purchase price was guaranteed by M r and Mrs Lilburn.
In fact, of course, the debt to the petitioning creditor by each of the debtors on which the petition is based is as I have said, $451,939.90. In addition, there are liabilities in respect of sabsequent instalments of the purchase price of the shares in Murray River Broadcasters Pty Ltd. Those instalments have been called up because of default. The petitioning creditor is not obliged to prefer one debtor to another and is not obliged to wait and see if, for instance, the liquidator of Kurray River F.M. Pty Ltd is
able to call up uncalled capital of that company in order to satisfy its debt. It is clear that the petitioning creditor
has taken steps to enforce its security. It is also clear that not all of the indebtedness will come out of the estaLces of the two debtors, but it cannot be said that their debts have been reduced by those actions.

It is, therefore, very plain that neither of the

' debtors is able to pay his or her debts at the present time.

In each case there is a clear excess of liabilities over assets. I should say also that even if it were proper only to take into account the amount of $325,000, being the shortfall to which I have referred, the same conclusion would follow, namely, that each of the debtors is unable to pay his or her debts.

It has been suggested to me that if the Court were to stay its hand in relation to these petitions, some form of financial rescue would be just around the corner. Indeed, it is fair to say that Mr Lilburn appears to be a very great optimist in relation to the future of his and Xrs Lilburn's business interests. That is not an optimism which I can share on the basis of'the evidence before me. The debtors have had several opportunities, by adjourniient of these proceedings and other related proceedings involving the liquidation of Murray River FM Pty Ltd, to satisfy the Court that they will be able to find their way out of the financial mess that they are very obviously in. They have been unable to produce evidence to that effect; I do not see it as proper that the Court should	trample upon the rights of the petitioning creditor any	further by giving them any greater opportunity to do that,
especially when no concrete propose1 has been put before the Court. I can, therefore, find no other sufficient cause why a sequestration order ought not to be made. I, therefore, decline to dismiss or adjourn the further hearing of either "petition.
In matter number VP1083 of 1993, I therefore order that a sequestration order be made against the estate of Lois Elizabeth Lilburn. I note the date of the commission of the act of bankruptcy as 4th October 1993. I also order that the costs of the petitioning creditor be taxed and paid out of the bankrupt estate of the debtor in accordance with the Act.
In matter number VP1084 of 1993, I order that a sequestration order be made against the estate of Herbert Stephen Lilburn. I note the date of the act of bankruptcy as 4th October 1993 and I further order that the cost of the petitioning creditor be taxed and paid out of the bankrupt estate of the debtor in accordance with the Act.
Counsel for the petitioning
creditor:  Mr. Donald
Solicitor for the petitioning
creditor:  Gledhill, Burridge h Cathro
Each of the debtors appeared in person.

Date of Hearing:	7th December 1993
Date of Judgment:	7th December 1993

I certify that this and the preceding five (S) pages are a true copy of the reasons for judgment of his Honour Justice G

Associate :