Mortgage Ezy Australia Pty Ltd v Turco - [2019] FCCA 1693

FEDERAL CIRCUIT COURT OF AUSTRALIA

MORTGAGE EZY AUSTRALIA PTY LTD v TURCO

[2019] FCCA 1693

Catchwords:
BANKRUPTCY – Creditor’s petition – application for a sequestration order – whether an adjournment is warranted pending the outcome of proceedings the subject of a notice of appeal in the Family Court of Western Australia – whether the Court should go behind the judgment debt – application for an adjournment is refused – sequestration order made – application for a stay is refused.

Legislation:

Bankruptcy Act 1966 (Cth), ss.27, 43, 52, 74, 82, 153

Applicant:

MORTGAGE EZY AUSTRALIA PTY LTD

Respondent:

MARIO TURCO

File Number:

PEG 423 of 2018

Judgment of:

Judge Street

Hearing date:

19 June 2019

Date of Last Submission:

19 June 2019

Delivered at:

Perth

Delivered on:

19 June 2019

REPRESENTATION

Counsel for the Applicant:

Mr P van der Zanden and Mr N Kalmund

Solicitors for the Applicant:

Hotchkin Hanly Lawyers

Counsel for the Respondent:

Mr C Brown

Solicitors for the Respondent:

MGM O'Connor Lawyers Pty Ltd

ORDERS

The application for an adjournment is refused.
A sequestration order is made against the estate of Mario Turco.
The applicant creditor’s costs of these proceedings, including all reserved costs, and its costs of its interim application for orders for substituted service of the petition, be paid out of the estate of the respondent in accordance with the Bankruptcy Act 1966 (Cth), on a party and party basis.
The application for a stay under s 52(3) of the Bankruptcy Act 1966 (Cth) is refused.

NOTES

The act of bankruptcy occurred on 14 June 2018.
A consent to act as trustee has been filed by Malcom Field.

DATE OF ORDERS: 19 June 2019

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PERTH

PEG 423 of 2018

MORTGAGE EZY AUSTRALIA PTY LTD

Applicant

And

MARIO TURCO

Respondent

REASONS FOR JUDGMENT

This is an application for a sequestration order within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (“the Act”) in respect of a judgment debt arising from a judgment obtained by the petitioning creditor in the Family Court of Western Australia on 9 November 2017 by orders of Walters J.
The judgment debt has not been the subject of any attempted challenge until, on 29 May 2019, there was purportedly filed a notice of appeal by the respondent seeking to identify the grounds upon which the appellate Court should interfere with the judgment debt.

Application for an adjournment

At the commencement of the proceedings, Mr Brown of counsel on behalf of the respondent sought an adjournment relying on the affidavit of Mario Turco sworn 13 December 2018 in respect of the steps taken by the respondent to challenge the judgment debt, the affidavit of Tihomir (Tim) Galic sworn 18 June 2019, and the affidavit of Mario Turco sworn 24 May 2019. Mr Brown submitted that the proceedings the subject of the notice of appeal identified real issues. As a result, Mr Brown submitted that these proceedings should be adjourned pending the outcome of the…

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: [2019] FCCA 1693
Decision Date: 19 June 2019

CaseChat Overview and Summary

Mortgage Ezy Australia Pty Ltd sought a sequestration order against Mr Turco in the Federal Court of Australia. The dispute arose from an alleged debt owed by Mr Turco to Mortgage Ezy, which was the subject of a judgment debt. Mr Turco sought an adjournment of the creditor's petition proceedings pending the outcome of proceedings in the Family Court of Western Australia, in which he had filed a notice of appeal.

The primary legal issues before the Court were whether an adjournment of the bankruptcy proceedings was warranted, and whether the Court should "go behind" the judgment debt. The Court was required to consider the principles governing adjournments in bankruptcy proceedings and the circumstances under which a court may inquire into the validity of a judgment debt that forms the basis of a creditor's petition.

In refusing the adjournment, the Court applied the principle that a creditor's petition will generally not be adjourned pending the outcome of an appeal against the judgment debt unless there are exceptional circumstances. The Court found that Mr Turco had not demonstrated such exceptional circumstances. Furthermore, the Court declined to "go behind" the judgment debt, adhering to the established legal principle that a judgment debt is generally considered conclusive in bankruptcy proceedings, and the appropriate forum for challenging the underlying debt is typically the court that issued the judgment. Consequently, the sequestration order was made, and an application for a stay of that order was also refused.

Orders