Mead v Yang
[2009] FMCA 1160
•30 November 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MEAD v YANG | [2009] FMCA 1160 |
| BANKRUPTCY – Creditors petition – consideration of grounds of opposition. |
| Bankruptcy Act 1966 (Cth), s.52 Legal Profession Act 1987 (NSW), ss.208F, 208J |
| Mead v Mead (No 2) [2009] FMCA 1107 Yang v Mead [2009] FMCA 636 Yang v Mead [2009] FCA 1202 |
| Applicant: | COLIN ANTHONY MEAD |
| Respondent: | LEE CHIN LIEN YANG |
| File Number: | SYG 1714 of 2009 |
| Judgment of: | Driver FM |
| Hearing date: | 11 November 2009 |
| Delivered at: | Sydney |
| Delivered on: | 30 November 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr V Bedrossian |
| Solicitors for the Applicant: | Etheringtons |
The Respondent appeared in person
ORDERS
The estate of Lee Chin Lien Yang is sequestrated.
The petitioning creditors costs, including any reserved costs, are to be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).
Pursuant to s.52(3) of the Bankruptcy Act 1966 (Cth) all proceedings under the sequestration order are stayed for a period of 21 days.
The Court notes that the date of the act of bankruptcy is 15 July 2009.
The Court notes that a consent to act as trustee has been signed by Mark Julian Robinson and has been lodged with the Official Receiver in Sydney.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1714 of 2009
| COLIN ANTHONY MEAD |
Applicant
And
| LEE CHIN LIEN YANG |
Respondent
REASONS FOR JUDGMENT
Introduction and background
There is before the Court a creditors petition filed on 17 July 2009 seeking a sequestration order and other orders against Lee Chin Lien Yang. The petitioning creditor is the former husband of Ms Yang’s daughter. Ms Yang was involved in proceedings between Mr Mead and her daughter in the Family Court of Australia but the debt asserted in the petition arose out of other proceedings involving Mr Mead, Ms Yang and a company called Lamron Pty Ltd. Mr Mead obtained a costs order in his favour in those proceedings which resulted in a certificate as to the determination of costs issued on 27 July 2004 in the Local Court of NSW under ss.208F and 208J of the Legal Profession Act 1987 (NSW), being an assessment of party and party costs in the sum of $9,918.40. The certificate was filed in the Local Court at North Sydney on 18 August 2004. The costs were not paid. A bankruptcy notice was issued against Ms Yang and was served on 11 March 2008. Ms Yang challenged the bankruptcy notice in earlier proceedings in this Court[1]. That application was dismissed. Ms Yang appealed unsuccessfully against that decision to the Federal Court of Australia[2].
[1] Yang v Mead [2009] FMCA 636
[2] Yang v Mead [2009] FCA 1202
I have dealt with a creditors petition against Ms Yang’s daughter which was heard at the same time as this proceeding[3].
[3] Mead v Mead (No 2) [2009] FMCA 1107
The petition and evidence
The creditors petition is supported by the affidavit within it as well as the affidavit of service of Michael Lim made on 25 August 2009, the affidavit of search of Mr Lim made on 10 November 2009 and the affidavit of debt of Paul Martin Etherington made on the same day. The petition asserts a debt of $14,521.62 which includes interest accruing up until 16 July 2009.
I am satisfied that there has been adequate compliance by the petitioner with the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) and the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).
Grounds of opposition
The petition is opposed by Ms Yang. She filed a Notice Stating Grounds of Opposition on 12 August 2009 which sets out the following grounds:
1.On 29 July 2009 Notice of Appeal No. NSD 774/2009 was filed in the Federal Court of Australia, the appeal has been listed for a direction hearing on 24 August 2009 to set aside Her Honour Barnes FM Judgment dated 15 July 2009.
2. Bankruptcy Notice NN 0820/08 was issued on about 11 March 2008 in the middle of final trial of my ex-son-in-law’s Family Court Proceeding No. SF 3359 of 1997 it did not come with costs of bill No. 90771/04 alleged debt that Lamron Pty Ltd owed where I was at one state one of the company directors of Lamron Pty Ltd.
3. On about 18 August 2004 there was no proceeding in the Local Court No. 1103/04 in North Sydney served upon Lamron Pty ltd, me, my late husband nor the current company directors of Lamron Pty Ltd to raise in the proceedings to counter claim, set off or cross demand to a default certificate as to determination of costs in $9,918.40 caused by the applicant failed to repay his Citibank repayments of his own investment property at 53/53a Whitsunday [Terrace], Airlie Beach Queensland.
4. Prior to 30 October 1996 Lamron Pty Ltd and my family members had all been made to guarantee the applicant and his companies debts to the Commonwealth Bank in name of Hypec Electronics Pty Ltd. Hypec Technology Group Pty Ltd and Quoin Island Resort Development Pty Ltd. In approx. $2.5 million dollars where the applicant withdrawn his guarantee and re-direct business to his own Microtech company in time before Mr John Lord was appointed the official liquidator of Hypec Technology Group Pty Ltd. On 14 September 1998 by the Supreme Court of NSW.
5. Knowingly on 29 May 2009 morning a proceeding was to lift injunction to HITS company’s bank accounts that applicant and Etheringtons solicitors frozen since 3 April 2009 was listed before the trial judge in the Family Court of Australia, in addition I also had to file my Cross Amended Grounds of Appeal No. EA 51 of 2009 within time before 15 June 2009 in the Appeal Registry Eastern Region of the Family Court of Australia, yet the applicant and Etheringtons solicitors refused to postpone proceeding SYG 678/2008 before Her Honour Barnes FM in the afternoon in this Honourable Court.
7. According to the Bankruptcy Act 1966 Sect 35A subsection (2A) the Federal Magistrates Court may, on the application of a party to the proceeding or on its own initiative, transfer the proceeding SYG1714 of 2009 to the Family Court pending the resolution of Appeal Proceeding No. EA 51 of 2009 in the Full Court of the Family Court of Australia.
Ms Yang filed a supplementary Notice of Grounds of O
pposition on 31 August 2009 which sets out the following grounds:
1.That the creditor ex son-in-law misuse of the Act since 2004 by claiming a relatively small amount from a default judgment out of an unchallenged cost against a legal entity of Lamron Pty Limited from a solvent ex mother-in-law by issuing Bankruptcy Notice NN0820/08 on 11 March 2008 which is over four (4) years old.
2. That the Bankruptcy Notice NN0820/08 was to put pressure on solvent respondent debtor rather than to genuinely invoke the Court’s bankruptcy jurisdiction, where the default judgment for cost against Lamron Pty Ltd did not express recoverable forthwith is not recoverable until the conclusion of the proceedings in the Appeal Proceeding No. EA 51 of 2009 of the Family Court of Australia as well as in the proceeding No. SC 1933 of 2001 in the Supreme Court of New South Wales.
3. That the applicant creditor’s matrimonial property and companies assets were frozen since 7 September 1999 on the application of applicant creditor in Proceeding No. SYF 3359 of 1997 in the Family Court of Australia where the respondent debtor’s interest still exist at the time of this creditor’s petition was filed to be an abuse of process.
The first ground in the initial notice has been overtaken by the judgment of the Federal Court of Australia in Yang v Mead. I note that on 19 November 2009 Ms Yang applied for special leave to appeal to the High Court against the Federal Court’s judgment. However, in my view nothing new is raised in that application. Further, to the extent that Ms Yang relies upon asserted defects in the bankruptcy notice or that the bankruptcy notice was an abuse of process, I am bound by the judgment of Flick J. At [29]-[39] of his judgment, his Honour found:
The bankruptcy notice in respect to Ms Yang, the mother of Ms Mead, was issued on 11 March 2008 and claims that she owes Mr Mead a debt of $13,221.09. That debt is founded upon a certificate as to determination of costs issued on 27 July 2004 in the Local Court of New South Wales.
This notice was sought to be impugned upon two bases, namely:
* the contention that this notice had been issued by and signed by Mr Dominello in the same manner as had the bankruptcy notice in respect to Ms Mead; and
* the fact that the amount claimed, it was contended, had already been paid.
The former contention is again rejected. Support for the submission that the amount had been paid was said to be found in a letter dated 6 April 2004 from a firm of solicitors. That letter recorded the distribution of monies on the sale of a property. The amount retained by the solicitors was recorded as being $18,667.68. But such a letter, it is considered, falls well short of founding any conclusion that the money claimed in the bankruptcy notice had been paid.
The challenges to the bankruptcy notice served upon Ms Yang are rejected.
Before the Federal Magistrate Ms Yang also claimed to have a “counter-claim, set-off or cross demand”. The basis upon which such a claim was then advanced was apparently not self-evident. The amounts claimed, however, were identified by the Federal Magistrate as being claims for:
* an amount of $100,000 as from 28 June 1996 together with interest of $184,728;
* an amount of $177,000 sought to be founded upon a bank statement and copies of bank cheques;
* an amount of $175,000 as from 20 September 1995 together with interest of $367,616.
These were the amounts set forth in an affidavit filed in the Federal Magistrates Court on behalf of Ms Yang on 9 April 2008. The affidavit concluded as follows (without alteration):
The honorable court to order Mr. Colin Mead & Etheringtons solicitors pay LEE CHIN LIEN YANG $1,949,586.00
The honorable court to report Etheringtons solicitors to the law society& bar association to refrain their wrongful and unethical actions.
These claims also served as the focus of submissions in this Court on appeal.
In respect to the first amount of $100,000 the Federal Magistrate observed that “[t]he basis of the claimed entitlement to interest was not explained further”; in respect to the second amount of $177,000 the Federal Magistrate observed that “[t]here was no explanation as to how these documents established such a claim against Mr Mead”; and in respect to the last amount of $175,000 she observed that “[t]here is no explanation for the claimed entitlement to interest”.
Ms Yang was also a respondent to the proceedings in the Family Court between Mr and Ms Mead. Ms Yang and her now deceased husband were the Second and Third Respondents in those proceedings.
The Federal Magistrate was not satisfied that Ms Yang “had a counter-claim, set-off or cross demand that came within s.40(1)(g) of the Act that should be determined”: [2009] FMCA 636 at [19].
The Notice of Appeal as filed in this Court by Ms Yang has much in common with the Notice of Appeal as filed by Ms Mead in her own appeal. Again the same approach has been pursued of attempting to discern in any of the purported “Grounds of Appeal” whether there is any error in the reasons for decision of the Federal Magistrate or whether Ms Yang has any “counter-claim, set-off or cross demand” which has not hitherto been addressed. None can be discerned.
Whatever may have been the difficulties confronting Ms Yang when before the Federal Magistrates Court, no such difficulties were claimed in this Court. Her appeal was presented on her behalf by Ms Mead.
The manner in which each of the sums was claimed was explored as far as the evidence permitted. The further explanation provided in respect to each of these three sums was as follows:
* the sum of $100,000 was said to be traced back to a mortgage granted in favour of Ms Yang and her then husband over property jointly owned by Mr and Ms Mead at Ermington. The mortgage exposed a stamp apparently recording the value of the monies secured by the mortgage as being $100,000. And that was the amount recorded as the value of the parents’ interest in the Family Court proceedings. This claim, however, was addressed by the Family Court which granted a declaration that:
... the mortgage with dealing number 2277939 registered in favour of the Second Respondent and the Third Respondent against the title to the real property situate at and known as 20 Stamford Avenue, Ermington in the State of New South Wales secures no indebtedness and is liable to be discharged.
* the sum of $177,000 was more complex to trace but it could ultimately be traced back (at least in part) to a bank statement issued by the National Australia Bank dated 26 July 1996. That bank statement was for an account in the name of Hypec Technology Group Pty Ltd and showed deposits of:
$50,000
$37,000
$72,000
$159,000
In submissions, Ms Mead incorrectly identified the $37,000 sum as $57,000. In addition, two further sums of $1,000 and $5,000 were identified. The discrepancy in the cumulative total may presently be left to one side. The deposit of $50,000 was in turn traced to a cheque dated 28 June 1996 and payable to Hypec Technology Group Pty Ltd. That cheque was said to have been signed by Ms Mead’s sister on behalf of Ms Yang. The sum of $37,000 was traced to a deposit slip completed on 10 July 1996 but the name of the person who made the deposit is unknown. And the sum of $72,000 was traced to two bank cheques, one for $50,000 and one for $22,000. Again the name of the person on whose account the two sums were drawn remains unknown. Reliance on three exhibits — a “Summary of Receipts and Payments To 23 January 2009” for Hypec Electronics Pty Ltd, an undated “Shareholders’ Resolution” and a letter from the Commonwealth Bank of Australia to Mr Colin Mead dated 6 May 1997 — takes the matter no further.
* the sum of $175,000 was sought to be traced to a Notice issued by the liquidator on 4 September 2009 inviting “further evidence” from Mr and Ms Yang in respect to an amount claimed of $377,451. That sum of $377,451 was identified by the Federal Magistrate as referring to two deposits of $143,524.53 and $31,476 to cover the wages of Hypec employees. A deposit of $143,524.53 on 26 September 1995 was recorded in a bank statement for a joint account understood to have been held by Mr and Ms Mead. But who made the deposit remains unknown. And a document headed “Paid Wages from Cash Account” records a total of $31,488.20 being paid for a period extending from 22 September to 1 December 1995. But that document records no other information as to where that money came from other than the “Cash Account”. How the 4 September 2009 Notice correlated with the two deposits was left unexplained, as was how the Notice evidenced any basis for a claim that Ms Yang may have as against Mr Mead.
Again, no error can be discerned in the reasons for decision of the Federal Magistrate in respect to the conclusions reached as to the claims for $177,000 and $175,000.
The conclusion reached in respect to the claim for $100,000, however, is not so certain. The Federal Magistrate relevantly concluded as follows:
[8] The first of Mrs Yang’s affidavits simply contains the bankruptcy notice as an annexure and other “supporting documents”, consisting of a copy of a certificate of title for a property in the names of Mr Mead and Lucy Yang (who is apparently Mrs Yang’s, daughter now known as Mrs Mead) and a copy of a mortgage of that property to Mrs Yang and Mei Chen Yang dated 28 June 1996. It appears from what is described as an “interest table” that Mrs Yang claimed $100,000 from 28 June 1996 and “interest” of $184,728. The basis of the claimed entitlement to interest was not explained further.
Whether the basis of the entitlement to interest was explained may also be left to one side. Of more concern is whether Ms Yang can show that she has a “prima facie case” or “a fair chance of success” in respect to her claim as to the $100,000 ostensibly secured by the mortgage. If the mortgage alone had been the entirety of the evidence, a conclusion may have been reached that a “counter-claim” for the purposes of s 40(1)(g) had been made out. But the mortgage does not stand alone. It stands together with:
* the declaration as made by the Family Court, being proceedings in which Ms Yang and her then husband were respondents, that the mortgage secured no indebtedness; and
* the absence of any evidence before this Court that any moneys had in fact been advanced in accordance with the mortgage. No constraint was placed upon either Appellant as to the evidence to be now considered. That evidence included cheques, bank deposit slips and bank statements. But no trace could be found of this sum of $100,000 being advanced.
On balance, it is thus considered that no state of satisfaction can be reached for the purposes of s 40(1)(g) that Ms Yang has any “counter-claim, set-off or cross demand” as against the Respondent, Mr Mead.
His Honour also rejected assertions that the bankruptcy notices issued to Ms Yang (and her daughter) were an abuse of process. Ms Yang’s recent special leave application to the High Court simply repeats issues already dealt with by this Court and the Federal Court. As I have already noted, Ms Yang played a small part in proceedings between the petitioning creditor and her daughter. Final property orders have now been made between Mr Mead and his former wife in the Family Court. For the reasons I have given in Mead v Mead (No 2)[4] the existence of an outstanding appeal against those final property orders in the Family Court is not a sufficient reason for this Court to refrain from making a sequestration order.
[4] [2009] FMCA 1107
Further, I agree with the reasoning of Barnes FM in the earlier proceedings in this Court in respect of the bankruptcy notice at [26]-[29] where her Honour said:
Insofar as Mrs Yang’s claims are matters that are the subject of the Family Court proceedings (and it seems that this may be the case) such claims have been considered and determined by the Family Court. Indeed her application to set aside the bankruptcy notice was adjourned until determination of those proceedings. Final orders have now been made. Hence, if there was such a claim that was not statute barred that was a material claim, it has been dealt with by the Family Court.
Mrs Mead referred to the fact that Mrs Yang had filed a notice of cross-appeal in the Family Court proceedings and that some of the orders made by O’Ryan J had been stayed. As indicated, the orders made by O’Ryan J on 3 April 2009 dealt specifically with the issue of the mortgage over the former matrimonial home and also with certain companies (such as Hypec) in relation to which Mrs Yang appears to assert some interest. One of the orders made required not only Mrs Mead but also members of her family (including Mrs Yang) to indemnify Mr Mead against all claims arising in relation to his interest in the former matrimonial home and in various companies or as a result of any guarantees given by him or alleged indebtedness on his part in relation to those companies. The operation of that order was not stayed. Nor was there any stay on the operation of orders in relation to Lamron Pty Ltd. While there was no evidence before the Court as to the precise relationship between Lamron and Mrs Yang and Mr Mead, Lamron was one of the respondents to the certificate as to the determination of costs that formed the basis for the bankruptcy notice in relation to Mrs Yang. It is notable that one of the orders made by O’Ryan J (the operation of which was not stayed) was a declaration that the fixed and floating charge created in 1997 over Lamron Pty Ltd in favour of Mrs Yang and Mai Chen Yang secured no indebtedness and was liable to be discharged. Mrs Yang was also ordered to do all things necessary for the purpose of causing that to occur.
The fact that Mrs Yang has lodged a notice of cross-appeal and that the operation of certain orders has been stayed is not such as to persuade me that there should be a further adjournment pending determination of this matter by the Full Court of the Family Court. I am not persuaded that any such adjournment would be in the interests of justice or of the parties on the evidence before me or that the existence of the notice of cross-appeal provides a basis on which the bankruptcy notice should be set aside. No submissions were made for Mrs Yang in relation to the grounds of appeal and on the evidence before this Court she has not established that she has any prospects of success.
More particularly, the evidence before the Court described above is not sufficient to satisfy me or to establish that Mrs Yang has a “prima facie case” or a “fair chance of success” or a “genuine or bona fide claim” in relation to the asserted cross-claims as discussed in Glew v Harrowell.
Ms Yang also submits that she is solvent. The only evidence of her solvency, however, is exhibit D7, which purports to be a statement of the balance of a superannuation fund of $23,112.63. I am satisfied, both on the face of that document and also by reference to the judgment of O’Ryan J in the final property proceedings in the Family Court at [2292] that the superannuation interest is not that of Ms Yang but is that of Ms Mead. Ms Mead submitted, on behalf of her mother, that she also had real estate at Airlie Beach in Queensland. I am satisfied, however, that that property has been sold by order of the Family Court and the proceeds dispersed.
I am not satisfied that Ms Yang is solvent. I am not satisfied that any of the grounds of opposition to the creditors petition have any substance. I am satisfied that Ms Yang committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters of which s.52(1) of the Bankruptcy Act requires proof. I will make the orders sought in the petition. I note, however, that Ms Yang is an elderly woman who does not speak English and was totally reliant upon her daughter in order to present her case to the Court. The debt due to Mr Mead is a relatively small one and it would, in my view, be desirable for Ms Yang to consider her position independently of the influence of her daughter. With this in mind, I will stay proceedings under the sequestration order for the maximum period permitted by the Bankruptcy Act.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 30 November 2009
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