Mansour v Wiggins - [2005] FMCA 603

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MANSOUR v WIGGINS

[2005] FMCA 603

BANKRUPTCY – Application for annulment – where applicant was unable to attend application to set aside judgment – whether court should go behind judgment – whether court should exercise discretion not to annul.

Bankruptcy Act 1966, s.153B

Kevin Trevor Pollock v Deputy Commissioner of Taxation for the Commonwealth of Australia (1994) 94 ATC 4148
Heinrich v Commonwealth Bank of Australia [2003] FCA 539

Applicant:

MAKRAM MANSOUR

Respondent:

PAUL WIGGINS

File Number:

SYG416 of 2005

Judgment of:

Raphael FM

Hearing date:

2 May 2005

Date of Last Submission:

2 May 2005

Delivered at:

Sydney

Delivered on:

2 May 2005

REPRESENTATION

For the Applicant:

Applicant in person

Counsel for the Respondent:

Mr D Ash

ORDERS

Application dismissed.
Costs of the Respondent and the Official Trustee to be paid out of the bankrupt estate in priority to other creditors.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG416 of 2005

MAKRAM MANSOUR

Applicant

And

PAUL WIGGINS

Respondent

REASONS FOR JUDGMENT

The proceedings before me today are an application for the annulment by the court pursuant to s.153B of the Bankruptcy Act 1966 (Cth) (the “Act”) of a sequestration order that was made against the applicant by the District Registrar on 2 December 2004. Section 153B of the Act is in the following form:
“153B(1) If the court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.”
Mr Mansour, who appears on his own behalf, argues that the sequestration order should not have been made because the judgment upon which it was based was unable to have been set aside owing to a mistake of an address in a notice of motion filed by the applicant himself in the Parramatta District Court in August 2004. In order to understand this claim it is necessary to go through the history of the matter shortly.
Mr Mansour employed the judgment creditor as his solicitor to appear on his behalf in connection with proceedings against him in the Waverley Local Court. Mr Mansour was not satisfied with the service he received from Mr Wiggins. He had paid him some $800 but declined to pay any more. Mr Wiggins obtained judgment in the Local Court at Parramatta against Mr Mansour. I do not have a copy of any papers relating to that judgment other than the copy of the judgment itself, which is annexed to the bankruptcy notice. That document indicates the judgment was entered against Mr Mansour on 20 February 2004.
I am entitled to infer, however, that the judgment was entered regularly and that the proceedings had been served and that no defence had been filed. The judgment represented the balance of outstanding costs allegedly owed by Mr Mansour to Mr Wiggins.
Some months later, on 17 August 2004, Mr Mansour filed a notice of motion in the Local Court seeking to set aside that judgment. It is important to note that this was done after an examination as to his affairs had taken place in the Local Court and apparently on the same day as a bankruptcy notice was served upon him.
Mr Mansour's story was that the affidavit in support of the notice of motion was dictated by him to a clerk at the Waverley Court. Mr Mansour told the clerk that his address was 11 O'Brien Street Bondi, but the clerk misheard him and typed on the document

11 Alpine Street Bondi. Mr Mansour signed the affidavit, presumably after reading it, and then filed it with the application to set aside the judgment. Mr Mansour says that any further papers in relation to that application were not delivered to him because he does not live at 11 Alpine Street Bondi so he was unaware that the application was disposed of in his absence.
Mr Mansour denies that the bankruptcy notice was served upon him on 17 August 2005. There is an affidavit of service of the bankruptcy notice on the file SYG3191/2004, which I caused to be brought up to me today. Mr Mansour did not require the deponent of that affidavit for cross-examination and in the absence of such cross-examination I am not prepared to impugn the fact of service of the bankruptcy notice on him.
On 17 November 2004 the bankruptcy petition was served upon Mr Mansour at the address of 11 O'Brien Street Bondi that Mr Mansour says was the address he had given to the registrar at the Waverley Local Court and which had been misheard. Mr Mansour denies receipt of the bankruptcy petition. I have before me an affidavit of service dated 19 November 2004 by Mr Hewitt confirming that he served the petition and various other documents upon Mr Mansour at 7.35 pm at 11 O'Brien Street, Bondi.
11 O'Brien Street Bondi is not a residential address but, so far as I understand it, is the address of the establishment at which Mr Mansour works, a restaurant. The affidavit of service is therefore consistent with Mr Mansour's evidence of his employment. Mr Mansour did not call for Mr Hewitt to be cross-examined upon this affidavit either and for the reasons previously given I am satisfied that service took place.
Although he had received both the bankruptcy notice and the bankruptcy petition Mr Mansour does not seem to have queried why the application to set aside the judgment had not been heard at Parramatta. He did not attend the hearing of the petition on

2 December 2004. It was only when he received at 11 O'Brien Street Bondi the letter from the Official Receiver advising him of the making of the sequestration order and of his duties under the Act that Mr Mansour began to take any action.
He filed the application which is before me today and he appears to have gone to the Local Court at Parramatta and filed yet another application to set aside the judgment. He tells the court that this application which did not bear upon it a return date would not be heard by the court because he was a bankrupt. Mr Ash correctly advises the court that the Parramatta Local Court determined the matter on that basis. I am prepared to accept, having heard Mr Mansour give evidence, that the clerk of the Waverley Court may well have misunderstood the address he gave and written 11 Alpine Street instead of 11 O'Brien Street, but Mr Mansour did not read the document that was placed before him and did not correct it. To that extent he is the author of his own misfortunes.
I have already stated that I do not accept Mr Mansour's denials of service of the bankruptcy notice or bankruptcy petition. Mr Mansour therefore had two other opportunities to come to the court to argue against the issue of the bankruptcy notice and the making of the sequestration order. He did neither. He now comes to this court only after the sequestration order has been made and he realises the seriousness of his position.
The court has to be very careful in making a decision that a sequestration order ought not to have been made. The court is entitled to go behind the judgment founding a creditors petition on an application for annulment: Kevin Trevor Pollock v Deputy Commissioner of Taxation for the Commonwealth of Australia (1994) 94 ATC 4148, Heinrich v Commonwealth Bank of Australia [2003] FCA 539. Mr Mansour has attempted in his affidavit to indicate why I should go behind or look at this judgment, his argument is on the basis that he was not properly served by Mr Wiggins. It is Mr Wiggins submission that this is an argument as to fact which he does not believe would be appropriate for me to go into when Mr Mansour does not seem to have taken any of the steps that were open to him to challenge the charge.
Mr Mansour has made a belated complaint to the Legal Services Commission but that has not yet been determined. He could have defended the proceedings brought against him on the basis that he did not receive value for money or that Mr Wiggins had breached his contract but he did not do so. I am unable to see how his own failure to deal with an application to set aside the judgment which to my mind, was not actively pursued by the bankrupt, could constitute a good ground for a court not to have made the sequestration order.
To my mind, as at the date the sequestration order was made all the necessary matters were in order and the registrar had no alternative but to make that order, particularly as the debtor was absent and raised no objection. The new evidence that I have received does not change that situation.
Even if I am wrong and the bankrupt is able to argue that I should have gone behind this judgment or that his own failure to read properly the affidavit that he swore and which led to the mis-direction of documents concerning the application to set aside excuses him I would not have exercised my discretion to annul.
I would not have done this because the belated filing of the statement of affairs by the bankrupt reveals that, excluding the petitioning creditor’s debt and costs, legal expenses, realisation charges and official trustee's fees, there are disclosed creditors of some $13,627. Mr Mansour tells me today that he has no assets, he claimed in his statement of affairs to have as one asset, a car, which he valued at approximately $9,000 but today in cross-examination by Mr Ash he told the court that the car did not belong to him but to some lady friend of his who was able to take it back at any time of her choosing.
Mr Mansour reveals an income of approximately $14,000 a year from which he has to pay $300 to $400 per month by way of maintenance and child support. He must pay income tax. He must pay rent. He must pay petrol for the vehicle that he uses. He must pay for his mobile phone, for his electricity and to a limited extent for his food. He must pay for clothing. He must pay for his haircuts. He must pay for his entertainment. It is difficult to see how all this can be done on so little and how having done that he can still pay his outstanding creditors not to mention the petitioning creditor and now the Official Trustee. Either Mr Mansour is not telling the court the whole truth about his earnings or he is indeed living beyond his income. In either case it is not appropriate to set aside a sequestration order that has been made.
I dismiss the application. I note in an affidavit filed by Mr Wiggins that he seeks indemnity costs against the bankrupt. I have considered all that has been said in that affidavit. I appreciate that Mr Wiggins takes personal affront at the aspersions cast upon his professional conduct but this is not sufficient to alter the ordinary order for costs which is that they shall be paid out of the bankrupt estate in priority to other creditors.
The Official Trustee is also represented here today. Her representative has said nothing but has provided me with two affidavits of considerable assistance. Her costs too should be paid on the same basis.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: