McNally v Fazio (No 3) - [2016] FCCA 215

FEDERAL CIRCUIT COURT OF AUSTRALIA

MCNALLY v FAZIO (NO. 3)

[2016] FCCA 215

Catchwords:
BANKRUPTCY – Application for sequestration order – whether proof of matters necessary for making of sequestration order – whether proof of ability to pay debts – whether other sufficient cause not to make sequestration order.

PRACTICE AND PROCEDURE – Application for adjournment – prior litigation history – previous orders made imposing conditions on application for adjournment – conditions not met.

Legislation:

Bankruptcy Act 1966 (Cth), ss.43, 44, 47(1), 52(1) and (2).
Evidence Act 1995 (Cth), s.140(1) and (2).
Federal Circuit Court (Bankruptcy) Rules 2006 (Cth), rr.4.02, 4.04(1), 4.05, 4.06(2), (3), (4).
Federal Circuit Court Rules 2001 (Cth), r.1.03.
Federal Circuit Court of Australia Act 1999 (Cth), ss.3, 42.
Federal Court Rules 2011 (Cth), r.16.42.
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)

Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175; (2009) 83 ALJR 951; (2009) 258 ALR 14
Cann v Commonwealth Bank of Australia (No. 3) [2011] FMCA 303
Fair Work Ombudsman v Kentwood Industries Pty Ltd [2010] FCA 98
Fazio v Centrelink [2008] FMCA 594
Fazio v Centrelink (No. 2) [2008] FMCA 1389
Lebot v Energetic IT Pty Ltd [2011] FMCA 755
McNally v Fazio (No. 2) [2015] FCCA 1935

Minister for Immigration & Ethnic Affairsv Pochi (1980) 44 FLR 41; (1980) 31 ALR 666; (1980) 4 ALD 139
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; (1992) 110 ALR 449

Pochi v Minister for Immigration & Ethnic Affairs (1979) 36 FLR 482; (1979) 26 ALR 247; (1979) 2 ALD 33

Re Communication Workers’ Union of Australia Postal and Telecommunications Branch, New South Wales (1996) 67 IR 246
Qantas Airways Ltd v Gama [2008] FCAFC 69; (2008) 167 FCR 537; (2008) 247 ALR 273; (2008) 101 ALD 459
Rejfek v McElroy (1965) 112 CLR 517; (1965) 39 ALJR 177; [1966] ALR 270
Sanders v Knudsen & Yates trading as The Hargreaves Practice [2004] FCAFC 305
Sanders v Sanders [2003] FCA 1079; (2003) 1 ABC(NS) 408
Streeter v Western Areas Exploration Pty Ltd (No. 2) [2011] WASCA 17; (2011) 278 ALR 291; (2011) 82 ACSR 1; (2011) 29 ACLC 11-012
Young Investments Group Pty Ltd v Mann [2012] FCAFC 107; (2012) 293 ALR 537; (2012) 91 ACSR 89

Applicant:

BRIAN MCNALLY

Respondent:

ARTURO SALVATORE FAZIO

File Number:

PEG 104 of 2014

Judgment of:

Judge Antoni Lucev

Hearing date:

29 January 2016

Date of Last Submission:

29 January 2016

Delivered at:

Perth

Delivered on:

10 February 2016

REPRESENTATION

Counsel for the Applicant:

Mr R Lennon

Solicitors for the Applicant:

Park Linfoot Legal Solutions

For the Respondent:

No appearance

ORDERS

A sequestration order issue against the estate of the respondent debtor, Arturo Salvatore Fazio.

AND THE COURT NOTES THAT the date of the act of bankruptcy is 12 November 2013.

FEDERAL CIRCUIT…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] FCCA 215
Decision Date: 10 February 2016

CaseChat Overview and Summary

This matter came before Judge Antoni Lucev in the Supreme Court of Western Australia concerning an application for a sequestration order against Mr Fazio, initiated by the applicant, McNally. Mr Fazio opposed the application, raising several grounds in his Notice of Opposition.

The court was required to determine whether Mr Fazio had provided sufficient proof to satisfy the requirements for the making of a sequestration order, specifically whether he had demonstrated an ability to pay his debts or established any other sufficient cause for the court to refrain from making such an order. The court also considered Mr Fazio's attempts to introduce further evidence and his assertions regarding his mental and physical health.

Judge Lucev found that Mr Fazio had failed to establish any of the grounds in his Notice of Opposition. The court noted that Mr Fazio had not issued the proposed notices to produce or subpoenas he had indicated an intention to file, and therefore, these did not constitute extant evidence. Furthermore, the affidavits of Ms Wilkinson and Mr Bowen were considered solely as affidavits of service, with no substantive bearing on the defence. Regarding Mr Fazio's health, the court found that the statements in his affidavit did not evidence an incapacity to attend a hearing, particularly in light of his prior success in having an administrator appointed to his estate revoked based on alleged incapacity. Consequently, the court concluded there was no admissible evidence of incapacity.

As Mr Fazio had failed to satisfy the court that he was able to pay his debts or that there was any other sufficient cause not to make a sequestration order, the court found that the conditions of section 52(2) of the Bankruptcy Act had not been met.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

Paragraph 13 of Mr Fazio’s Affidavit provides as follows:13. Mr Fazio quite understandably, also wishes and intends to issue court endorsed Notices to Produce and or Subpoenas upon the applicant and their counsel, in order to submit further extant evidence as to the direct issue of fraud. Drafts of the intended proposed Notice to Produce or Subpoenas have yet to been done due to timing and other constraints. No Notices to Produce or subpoenas of the kind referred to in paragraph 13 of Mr Fazio’s Affidavit have been issued, and it is therefore unnecessary to consider this matter further. Paragraph 14 of Mr Fazio’s Affidavit provides as follows:14. It is verily believed upon a cursory glance, that the affidavits of Ms Lynn Wilkinson and Mr Douglas Patrick Bowen filed by the applicant go more to the issues of service than substance, notwithstanding that they both contain what Mr Fazio says are "contrived untruths and deliberate deception." They certainly do not touch upon the issues of defence contained here within. The affidavits of Ms Wilkinson and Mr Bowen are indeed affidavits of service, and so save for formal proof of service which the Court is satisfied has occurred, nothing further turns on the affidavits of Ms Wilkinson or Mr Bowen. Paragraphs 15-16 of Mr Fazio’s Affidavit provides as follows:15. Mr Fazio furthers states verbatim “Having been prescribed Amisulpride, Olanzipine, Stillnox and a cocktail of other shit for my mental health and insomnia issues, I am not taking them as they leave me in a catatonic state. I would rather be prone to psychotic episodes and have a modicum of function and cognitive ability, than be completely fucked in the head.”16. He also states verbatim " I do carry around with me my Nitrolinguat Pumpspray, in the event I suffer yet another angina or heart attack, for which is a very real possibility given the deleterious effect the carriage of this matter has continually had on me physically, mentally and financially.” Leaving aside the evidentiary difficulties that arise from what appears to be an unnamed person attributing, in Mr Fazio’s Affidavit, a statement to Mr Fazio, the statements made do not evidence an incapacity on Mr Fazio’s part to attend a hearing more than a year after the Affidavit was made, and more than nine months after Mr Fazio was successful in persuading SAT to revoke an order appointing a plenary administrator to his estate, and thereby revoking an order based upon his alleged incapacity. In those circumstances, and in the absence of any other admissible evidence, there is no evidence before this Court as to any incapacity on Mr Fazio’s part to attend the hearing of the sequestration order application in this Court. For the reasons set out above Mr Fazio has failed to make out any of the grounds of the Notice of Opposition. In particular, the Court notices that he has been unable to satisfy the Court that he is able to pay his debts, or that there is some other sufficient cause for a sequestration order not to be made: Bankruptcy Act, s.52(2).

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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