Mortgage Ezy Australia v WILLIAMS (Formerly Turco)

[2020] FCCA 1817

FEDERAL CIRCUIT COURT OF AUSTRALIA

MORTGAGE EZY AUSTRALIA v WILLIAMS (FORMERLY TURCO) [2020] FCCA 1817

Catchwords:
BANKRUPTCY – Application for review of a sequestration order – whether any proper basis for granting an adjournment – whether other sufficient reason why a sequestration order ought not to be made – sequestration order affirmed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.27, 33, 52

Applicant: MORTGAGE EZY AUSTRALIA

Respondent: SUELLEN WILLIAMS (FORMERLY TURCO)

File Number: PEG 12 of 2020

Judgment of: Judge Street

Hearing date: 3 July 2020

Date of Last Submission: 3 July 2020

Delivered at: Sydney

Delivered on: 3 July 2020

REPRESENTATION

Solicitors for the Applicant: Mr N Kalmund, Hotchkin Hanly Lawyers, via Microsoft Teams

Solicitors for the Respondent: Mr A Rumsley, via Microsoft Teams

ORDERS

THE COURT ORDERS THAT:

1. The Court affirms the sequestration order against the estate of Suellen Williams (formerly Turco) made by Registrar Trott on 16 June 2020.

2. The Petitioning Creditor’s further costs in the amount of $1,500.00 be paid from the bankrupt’s estate in accordance with the priority to which it is entitled.

3. Order 3 made by Registrar Trott on 16 June 2020 is vacated.

THE COURT NOTES THAT:

The act of bankruptcy occurred on the 28 November 2019 and a sequestration order was initially made by Registrar Trott on 16 June 2020.

DATE OF ORDER: 3 July 2020

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

PEG 12 of 2020

MORTGAGE EZY AUSTRALIA

Applicant

And

SUELLEN WILLIAMS (FORMERLY TURCO)

Respondent

REASONS FOR JUDGMENT

1. These are proceeding within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1996 (Cth) (“the Act”) arising out of an act of bankruptcy that occurred on 28 November 2019 as a result of the obtaining of a judgment in the Family Court of Western Australia (“the Family Court”) by the petitioning creditor against the respondent. 

2. The petitioning creditor has read affidavits in support of establishing the act of bankruptcy and the Court finds that the applicant was within the jurisdiction at the time of the act of bankruptcy.

3. Affidavits have been read in support of the requirements of s 52(1) of the Act and the Federal Circuit Court (Bankruptcy) Rules 2016. 

4. These are proceedings which were commenced on 9 January 2020. A sequestration order was made by a Registrar of the Court on 16 June 2020 and an application for review was filed on 25 June 2020.

5. Consistent with the practice that should be adopted in respect of all sequestration order review applications, which must be heard as soon as practicable, if not on the day of the making of the order by the Registrar, when this Court was informed of the application for review, it was promptly listed for hearing as soon as possible, being the following day of this Court being informed of the review application.

6. The petitioning creditor has established the requirements in support of the making of a sequestration order.

7. The respondent filed a notice of objection which, in substance, refers to proceedings that the respondent is seeking to take against an individual and a company pursuant to a deed dated 14 June 2013.

8. The respondent submits that these proceedings should be adjourned either pursuant to s 33 of the Act and/or that other sufficient cause has been made out as to why a sequestration order ought not to be made. 

9. In support of the application for the adjournment, reference was made to the inherent jurisdiction of the Court. This Court has ample statutory jurisdiction in relation to its powers concerning an adjournment found in s 33 of the Act.

10. The proceedings to which the respondent’s evidence relates involved an attempt in the Supreme Court of Western Australia (“the Supreme Court”) to pursue enforcement of the deed, relevantly, against the individual and the company and to which the respondent is not a party. A Master in that Court is currently reserved in a summary dismissal application of the respondent debtor’s case, which was argued before the Master. 

11. Those proceedings do not impeach the judgment debt, the subject of these proceedings. The pursuit of those proceedings are not a proper basis upon which an adjournment should be granted in the interest of the administration of justice. The petitioning creditor has established the requirements in support of the making of a sequestration order. The existence of the other proceedings in relation to the respondent debtor against other parties does not identify a proper basis upon which this Court is satisfied that an adjournment is appropriate in respect of the review application. The interests of the administration of justice do not warrant an adjournment. Ordinarily, review applications should be heard, preferably, on the day the order is made.

12. Whilst the Court does have power to adjourn the proceedings, the respondent would remain a bankrupt unless the Court granted some other interim relief. The proceedings before the Master are not such of a kind that warrant this Court adjourning the matter and it is not apparent that any success, if the respondent does succeed before the Supreme Court, will give rise to circumstances by reason of which it could be said that the respondent is able to pay her debts, nor is the Court satisfied that the existence of those other proceedings mean that there is other sufficient cause why a sequestration order ought not to be made. The reserved decision cannot give rise to any material difference in the respondent debtor’s ability to pay her debts and the outcome of the substantive proceedings, even if successful, is not one upon which the Court can be satisfied that the applicant’s ability to pay her debts would be materially different. Indeed, the more likely outcome of those proceedings appears to be adverse to the respondent debtor’s financial position.

13. Mr Rumsley, solicitor on behalf of the respondent, submitted that there was an overlap in respect of the origin of liability to the petitioning creditor and that the primary parties who had benefited from the provision of funds. It is those recipients of the funds provided by the petitioning creditor who entered into a deed with the respondent that was the source of the alleged cause of action by the respondent debtor. 

14. The deed clearly identifies in a number of provisions, the liability of the respondent debtor to the petitioning creditor in its provisions, albeit it is one to which the petitioning creditor was not a party. The Court is not satisfied that the pursuit of those proceedings gives rise to a proper basis by reason of which the petitioning creditor should not be entitled to enforcement of the judgment it has obtained in the Family Court of Australia.

15. The respondent’s former partner has also been make bankrupt, last year, arising out of the same judgment debt in favour of the petitioning creditor by the Family Court of Australia. 

16. The Court is satisfied that the requirements are established under s 52 of the Act. 

17. The Court finds that it is not satisfied that the respondent is able to pay her debts and is not satisfied that other sufficient cause as to why a sequestration order ought not to be made has been made out. The Court is satisfied that the petitioning creditor is entitled to the affirmation of the sequestration order made by the Registrar.

I certify that the preceding seventeen (17) paragraphs are a true copy of the transcript of the published oral reasons for judgment of Judge Street delivered in open Court on 3 July 2020.

Associate: 

Date: 13 July 2020