Magnin v Creevey

[2018] FCCA 1485

FEDERAL CIRCUIT COURT OF AUSTRALIA

MAGNIN v CREEVEY [2018] FCCA 1485

Catchwords:
BANKRUPTCY – Application for sequestration order – whether preconditions for making sequestration order satisfied – sequestration order made.

Legislation:

Bankruptcy Act 1966 (Cth), s.52(1)
Federal Circuit Court (Bankruptcy Rules) 2016 (Cth), rr. 4.06(3), 4.06(4)

Applicant: ANN MAGNIN

Respondent: RONALD CREEVEY

File Number: SYG 4000 of 2017

Judgment of: Judge Manousaridis

Hearing date: 22 May 2018

Date of Last Submission: 22 May 2018

Delivered at: Sydney

Delivered on: 22 May 2018

REPRESENTATION

Solicitors for the Applicant: Ms A Kozary of Piper Alderman

No appearance by or on behalf of the respondent

ORDERS

1. The estate of Ronald Creevey be sequestrated under the Bankruptcy Act 1966 (Cth).

2. The applicant’s creditor’s costs (including reserved costs) be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).

THE COURT NOTES THAT:

1. The date of the act of bankruptcy is 12 December 2017.

2. The consent to act as trustee signed by Aaron Kevin Lucan has been filed under s.156A of the Bankruptcy Act 1966 (Cth).

3. A copy of this order is to be provided to the official receiver in Sydney within two business days.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 4000 of 2017

ANN MAGNIN

Applicant

And

RONALD CREEVEY

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

1. Before the Court today is the hearing of a creditor’s petition, filed by the applicant, Ms Ann Magnin, against the respondent, Mr Ronald Creevey.  The creditor’s petition was filed on 21 December 2017. 

2. The respondent was represented by lawyers and, on 12 February 2018, the respondent filed a notice of grounds of opposition.  Directions were made for the progress of the hearing and, in addition – and this is relevant to the question of costs to which I will return later – there was a dispute arising out of the respondent’s issuing to the applicant a notice to produce calling for certain documents.  That dispute resulted in the filing of an application in a case, but that application was resolved by agreement by the parties on 4 April 2018. On that day, I ordered that the creditor’s petition be set down for hearing before me at 9.30 am on 22 May 2018. 

3. At the hearing of the matter on 22 May 2018 there was no appearance by or on behalf of the respondent.  Ms Kozary, who appeared for the applicant, informed me from the bar table that on 16 May 2018, she had received a communication from the solicitor for the respondent stating that the notice of grounds of opposition would be withdrawn.  What Ms Kozary said from the bar table is confirmed by an email Ms Kozary tendered from Mr Brenton Yates, who appears to be the lawyer for the respondent.  That is an email sent at 9.48 am on 16 May 2018, which states:

   I have instructions to withdraw my client’s Grounds of Opposition. 

   My client is otherwise not in a position to meet the debt in the subject of your client’s Bankruptcy Notice. 

   Could I ask that you submit draft Consent Orders with the purpose of dealing with the matter on or before the hearing next Tuesday, 22 May 2018.

4. Ms Kozary informed me that she did not provide any consent orders because she was of the view that the hearing of the creditor’s petition should take place in open court.  In any event, and I have already stated this, the matter was called, but there was no appearance by the respondent.  In those circumstances, Ms Kozary sought to proceed with the hearing of the creditor’s petition, and I did hear the creditor’s petition. 

5. Ms Kozary relied on the following affidavits:

   a)an affidavit of service of the bankruptcy notice, made by Natalie Louise Miller, on 21 December 2017;

   b)an affidavit of Stefano Andrea Calabretta, made on 21 December 2017, verifying paragraphs 1, 2, 3 and 4 of the creditor’s petition and also deposing to searches made on the day that the creditor’s petition was filed;

   c)an affidavit of service, made by Frank Hoare on 15 January 2018, deposing to the service on the respondent of the creditor’s petition filed on 21 December 2017; the affidavit of Mr Calabretta made on 21 December 2017; the affidavit of Ms Miller made on 21 December 2017; and, also a form of trustee consent to act declaration made by Aaron Kevin Lukam.

   d)an affidavit of search made by Angelina Kozary on 21 May 2018;

   e)an affidavit of final debt made by Ann Magnin, the applicant, on 21 May 2018.

6. On the basis of those affidavits I am satisfied of the following:

   a)A bankruptcy notice was issued on 11 October 2017 demanding the payment of $373,285.

   b)The bankruptcy notice was served by email on the respondent on 20 November 2017.

   c)The respondent failed to comply with the requirements of the bankruptcy notice by 12 December 2017, which means that, on that day, the respondent committed an act of bankruptcy.

   d)The matters stated in paragraph 1, 2, 3 and 4 of the creditor’s petition have been verified.

   e)As required by the Federal Circuit Court (Bankruptcy Rules) 2016 (Cth) (Bankruptcy Rules), on the day the creditor’s petition was filed, an online search of the public register of the Federal Court of Australia proceedings and the Federal Circuit Court of Australia proceedings was carried out.  The result of the search was that there was no record of any other bankruptcy proceedings pending against the respondent; and there was no record of any application being made in relation to the bankruptcy notice issued by the applicant against the respondent, whether to set aside the bankruptcy notice, or to extend the time for compliance with the bankruptcy notice, or to make any other application in relation to the bankruptcy notice. 

   f)On 21 December 2017, a search was conducted of the National Personal Insolvency Index. 

   g)The creditor’s petition, the affidavit of service of the bankruptcy notice, the affidavit of Mr Calabretta and the trustee consent to act declaration, all of which I have already referred to, were served on the respondent on 28 December 2017. 

   h)On 21 May 2018, being the day before the hearing of the creditor’s petition, the applicant filed an affidavit of search as required by r.4.06(3) and r.4.06(4) of the Bankruptcy Rules. 

   i)A trustee consent to act declaration has been filed. 

7. In those circumstances, I am satisfied that the preconditions prescribed by s.52(1) of the Bankruptcy Act 1966 (Cth) for the making of a sequestration order are satisfied. And I will, in a moment, make the appropriate orders to give effect to that conclusion.

8. I turn to the question of costs.  Ms Kozary has submitted I should make a fixed costs order in the amount of $40,000 or, in the alternative, an order that the respondent pay the costs to be taxed.  The basis of that submission is that the nature of the grounds of opposition raised by the respondent and the issuing of the notice to produce caused the applicant to incur significantly greater legal costs than would otherwise have been the case. Ms Kozary tendered a fee note issued by the applicant’s solicitors to the applicant, as well as an email from the counsel who had been retained on behalf of the applicant.  I have no doubt that the applicant has incurred the fees set out in these documents. 

9. In further support of the application for costs, either in terms of my making a fixed costs order or in terms of my actually ordering that the costs be taxed, Ms Kozary made submissions which were to the effect that the notice to produce issued by the respondent was of no value to the proceeding.  And that, even though that was resolved, the costs that were incurred by reason of the issuing of the notice to produce are costs that should be visited on the respondent. 

10. It is unnecessary for me to consider the merit of that submission.  I think that the simpler course is to observe that the issuing of the notice to produce by the respondent was, presumably, thought to be relevant to the grounds of opposition.  Those grounds of opposition have been withdrawn.  In the absence of any suggestion that the applicant acted unreasonably in the manner in which she responded to the notice to produce, and in which she acted in relation to the dispute that arose from the notice to produce, the appropriate exercise of discretion would be to order that the costs incurred in connection with the notice to produce be costs in the cause. 

11. That finally requires me to say something about whether I should make a fixed costs order.  I am not a costs assessor.  And I do not have the confidence to assess whether what is not an insignificant sum represents costs that have been reasonably incurred and are costs which would be recovered on a taxation.  That is not to say that I have any view about whether the costs are reasonable or not.  I do not have any such view.  My view is that the costs should be assessed by an appropriately qualified costs assessor. 

12. What I have just said implies that I am of the view that the costs the applicant has incurred are more extensive than is usually the case in proceedings based on the presentation of a creditor’s petition and that I am satisfied that the appropriate costs order would be simply to order that the applicant’s costs be taxed.  And I propose to make an order to that effect in a moment. 

13. I need to say something about one of the proposed orders set out in the draft sequestration order that has been handed up to me by Ms Kozary.  That provides for the making an order for the costs of the supporting creditor.  I am not aware of any power that I have to make any such order, and I decline to do so. 

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Date: 14 June 2018