Meriton Finance Pty Limited v Xu - [2007] FMCA 331

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MERITON FINANCE PTY LIMITED v XU

[2007] FMCA 331

BANKRUPTCY – Creditor’s petition – no appearance by debtor.

Bankruptcy Act 1966 (Cth), s.52

Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCA 863

Applicant:

MERITON FINANCE PTY LIMITED

Respondent:

FEI XU

File number:

SYG3021 of 2006

Judgment of:

Barnes FM

Hearing date:

9 March 2007

Delivered at:

Sydney

Delivered on:

9 March 2007

REPRESENTATION

Solicitors for the Applicant:

Ms K Mihail

Respondent:

No Appearance

ORDERS

I make a sequestration order against the estate of Fei Xu.
I order that the applicant creditor’s costs including any reserved costs be taxed in accordance with the Federal Court Rules and paid from the estate of the respondent debtor in accordance with the Act.
Under the Bankruptcy Regulations a copy of this sequestration order be given to the Official Receiver in Sydney within two days.

THE COURT NOTES THAT

The date of the act of bankruptcy is 11 October 2006.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 3021 of 2006

MERITON FINANCE PTY LIMITED

Applicant

And

FEI XU

Respondent

REASONS FOR JUDGMENT

This is the hearing of a creditor’s petition seeking that a sequestration order be made against the estate of the respondent debtor, Fei Xu. The matter has been before the Court on three earlier occasions, twice before a registrar and subsequently before me. On those occasions the debtor had legal representation. A notice of ceasing to act was filed by his solicitor on 21 February 2007. A copy was served on the solicitors for the applicant creditor.
Exhibit A is a copy of a letter from the solicitors for the applicant creditor to the respondent debtor at the address provided in the notice of ceasing to act (which is the address on the debtor’s affidavits filed in these proceedings) enclosing by way of service a folder containing the creditor’s submissions and relevant material as well as a copy of the affidavit of service of the creditor’s petition.
On 23 January 2007 the creditor’s petition was listed for hearing 10:15am today, 9 March 2007. Orders were made for the debtor to file and serve a notice of opposition. That occurred. The creditor responded to subpoenas. The debtor has not filed written submissions although a further affidavit was filed on his behalf. The creditor filed and served written submissions.
There was no appearance for the debtor when the matter was first called. There is still no appearance by the respondent debtor some 40 minutes after the time at which this matter was listed. In these circumstances I considered it appropriate to proceed with the hearing of the creditor’s petition in the absence of the debtor.
In relation to the formal requirements, first I have before me the bankruptcy notice dated 8 September 2006 to which is annexed a copy of the judgment founding the notice and an affidavit of service of the bankruptcy notice filed on 18 October 2006. It is apparent that the bankruptcy notice is on the correct form and relates to a debt of over $2,000. It gives an address for payment in Australia. It relates to a final judgment or order of the Supreme Court of New South Wales which took effect on 16 September 2004, a copy of which is attached, together with a calculation of interest, in a total amount of $148,664.30. The affidavit of service of the bankruptcy notice indicates that it was served on 20 September 2006 by way of personal service. The act of bankruptcy relied on is a failure to comply with the bankruptcy notice. On the material before the Court I am satisfied that there was such a failure and that the date of the act of bankruptcy is

11 October 2006.
The creditor’s petition was presented on 18 October 2006 within six months of the date of the act of bankruptcy in the correct form in relation to the amount of the debt, signed by the solicitor for the applicant creditor and accompanied by an affidavit verifying each of paragraphs 1, 2, 3 and 4 of the creditor’s petition. In addition, the other necessary affidavit material in relation to the formal matters in s.52 of the Bankruptcy Act 1966 (Cth) has been filed in court, including an affidavit of service of the creditors petition, an affidavit of debt of

9 March 2007 and an affidavit of search of 9 March 2007.
The debtor filed a notice of grounds of opposition and such opposition was foreshadowed on the last occasion at a time at which he had legal representation. He has not filed written submissions. The creditor has filed written submissions addressing the grounds of opposition.
In relation to those grounds, I note first that it was claimed that the respondent did not commit the act of bankruptcy. There is no evidence before the Court to establish that claim. It is also alleged that the bankruptcy notice was invalid. It was indicated on the last occasion that issue was taken with the fact that the bankruptcy notice, while stating the name of the creditor (Meriton Finance Pty Limited) correctly, indicated that payment may be made to Meriton Property Finance Pty Limited, although the address provided was the same as the address provided for the creditor.
The bankruptcy notice was in accordance with the form prescribed (see s.41(2) of the Bankruptcy Act 1966 (Cth)). There has been identification of the relevant creditor and also identification of the place and person to whom, as representative of the creditor, the payment was to be made. (See Worchild v The Drink Nightclub (Qld) Pty Ltd [2005] FCA 863 at [8] per Dowsett J). The form of bankruptcy notice permits insertion of details of a nominated payee. The address specified is in Australia and is the same as the address for the creditor. It is not such that the debtor could be in doubt as to the identity of the creditor (correctly named in the form), confused or prejudiced. If it was a defect it would be no more than a formal defect amenable to cure under s.306. On the material before me I am not satisfied that there is any invalidity in the bankruptcy notice such that the sequestration order sought should not be made.
The other substantive ground foreshadowed was that in the exercise of discretion the Court ought not to make the sequestration order. Before turning to that I note that I am satisfied that the debtor committed the act of bankruptcy alleged in the petition. I am satisfied with proof of the other matters required by s.52 of the Bankruptcy Act 1966. I am not satisfied that there is sufficient cause for a sequestration order not to be made. It appears that this argument was intended to be put on the basis that the respondent had commenced proceedings in the New South Wales Court of Appeal in an appeal from a decision of the District Court in a matter in which one of the respondents was a company that is related to the applicant creditor in these proceedings. It appears to be suggested that the judgment arose out of the same transaction (the purchase of a unit) that gave rise to the judgment debt, (the creditor in this case being the provider of finance), and that the applicant hoped that he would have some success in those proceedings and hence be able to pay the debt. There is no notice of appeal before the Court.
The debtor has not appeared and has not put evidence before me. The creditor addressed this issue in written submissions, annexing a copy of the judgment in the District Court in which Rein J found that the debtor had deliberately misrepresented his income to Meriton Finance (the creditor in these proceedings) and made adverse findings as to the credit of the debtor relevant to his decision. I am not satisfied on the material before me that there is an arguable case on appeal such that funds may become available to the debtor. I note that the appeal in issue is not an appeal from the judgment on which the bankruptcy notice was based or such as to establish a counter-claim, set-off or cross‑demand. Nor am I satisfied for any other reason or that for other sufficient cause a sequestration order ought not to be made. The debtor has not put evidence before the Court in relation to solvency.
In these circumstances, I am satisfied of all of the matters in s.52 and I make a sequestration order against the estate of Fei Xu.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate:

Date: 20 March 2007