National Australia Bank Limited v Acheson
[2011] FMCA 437
•24 May 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| NATIONAL AUSTRALIA BANK LIMITED v ACHESON | [2011] FMCA 437 |
| BANKRUPTCY – Where debtor has Supreme Court proceedings against the creditor due for hearing – whether it is proper to adjourn the hearing of the petition – where debtor has not complied with orders of the Supreme court nor provided evidence of his claim. |
| Bankruptcy Act 1966, s.52 Federal Magistrates Court (Bankruptcy) Rules 2006 |
| Acheson v National Australia Bank Ltd [2011] FMCA 45 St George Bank Limited v Helfenbaum [1999] FCA 1337 Totev v Sfar [2006] FCA 470 Rigg v Baker [2006] FCAFC 179 Field v St George [2009] FCA 1042 Douglas Dragan Jovanovic; Slavko Govedarica & Anor v Douglas Dragan Jovanovic (1998) FCA 463 Re James, ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (No.2)(1994) 51 FCR 14 Ling v Commonwealth [1996] FCA 164 |
| Applicant: | NATIONAL AUSTRALIA BANK LIMITED |
| Respondent: | ADRIAN GLYNN ACHESON |
| File Number: | SYG 601 of 2011 |
| Judgment of: | Raphael FM |
| Hearing date: | 24 May 2011 |
| Date of Last Submission: | 24 May 2011 |
| Delivered at: | Sydney |
| Delivered on: | 24 May 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Sulan |
| Solicitors for the Applicant: | Dibbs Barker |
| Counsel for the Respondent: | Mr R Brender |
| Solicitors for the Respondent: | Campbell Paton & Taylor |
ORDERS
A sequestration order be made against the estate of Adrian Glynn Acheson.
The Applicant Creditor’s costs (including any reserved costs) be taxed (in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006) and paid from the estate of the Respondent Debtor in accordance with the Act.
Under the Bankruptcy Regulations a copy of this sequestration order is to be given to the Official Receiver in Sydney within 2 days.
THE COURT NOTES:
That the date of bankruptcy as 4 February 2011.
A consent to act as trustee has been signed by Mark Robinson and has been lodged with the Official Receiver in Sydney.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 601 of 2011
| NATIONAL AUSTRALIA BANK LIMITED |
Applicant
And
| ADRIAN GLYNN ACHESON |
Respondent
REASONS FOR JUDGMENT
There comes before me today an application for a sequestration order based upon a petition dated 31 March 2011 in which the applicant bank claims that the respondent debtor owes it a net sum of $2,417,578.56. The petition is based upon an act of bankruptcy whereby the respondent failed to comply with a bankruptcy notice served on 19 April 2010 which was the subject of a hearing before this court in Acheson v National Australia Bank Ltd [2011] FMCA 45. The bankruptcy notice seeks payment of a sum of $149,204.57 and it is accepted by both parties that this amount of money is a debt that is separate from certain other debts which are the subject of Supreme Court proceedings that are due to be heard commencing 31 May 2011.
Mr Brender, who appears on behalf of the respondent debtor, tells me that at the hearing of the Supreme Court case the amount of the bank’s debt will be seriously challenged. It would seem clear from documents that have been tendered to the court in relation to those proceedings that the amount owed by the debtor to the bank and secured by a mortgage over certain properties has been the subject of considerable discussion and debate. It has so taxed the Supreme Court of New South Wales that Davies J who is to hear the case, ordered that both parties tell the other how much they believed was owed. The bank did this by way of a certificate dated 18 May 2011 which indicated an amount in excess of $2,780,000. Although Mr Sulan, who appears for the bank, indicates to me that that is not all that is owed. It would appear that Davies J also ordered that Mr Brender’s client provide a document indicating how much it believed was owed by the debtor to the bank. This document was required to have been provided by 23 May 2011. It was not provided. Mr Brender says it was because he was preparing for this hearing.
As I understand the way that Mr Brender intends to put his case on behalf of his clients in the Supreme Court it is to test the veracity of the amount claimed by the bank. Mr Brender has not put to me any sum that his client believes is owed. He says he thinks it is nothing but I am without any documentary evidence of how the $2,780,000 odd amount contained in the certificate is to be reduced. Certainly, Mr Brender has tendered some documents from his client’s solicitors which indicate that they believe monies have not been properly accounted for. But this is hardly the same as even prima facie evidence that the amount claimed is not in truth owing.
The authorities that the court should consider when deciding whether or not to set aside a petition or grant an adjournment in circumstances such as this, are familiar. They have been gathered with some authority by Sundberg J in St George Bank Limited v Helfenbaum [1999] FCA 1337. That case has itself been applied in numerous others, e.g. Totev v Sfar [2006] FCA 470; Rigg v Baker [2006] FCAFC 179; Field v St George [2009] FCA 1042. An applicant is required to satisfy the court that it has a claim against the petitioning creditor that has at least reasonable prospects of success in order for the court to set aside the petition but as French J, as part of the Full Court Spender, French and Cowdroy JJ said in Rigg v Baker at [66]:
“A distinction has been drawn between a claim against the petitioner creditor which is likely to succeed and which would warrant refusal of a sequestration order and a "real claim" which has sufficient prospect to warrant the debtor being granted an opportunity to have it litigated. In the latter case an adjournment of the petition may be appropriate. In the matter of Douglas Dragan Jovanovic; Slavko Govedarica & Anor v Douglas Dragan Jovanovic (1998) FCA 463 citing Re James, ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (No 2) (1994) 51 FCR 14 at [22] (Olney J): The existence of a cross-claim against a petitioning creditor, which is likely to succeed, may support the proposition that the sequestration order ought not to have been made and should be annulled. On the other hand, the existence of a real claim, which might have warranted an adjournment, would not necessarily support that conclusion. This is not to exclude the possibility that in an appropriate circumstances, the Registrar or Judge hearing the petition ought to grant to an adjournment on the basis of a “real cross-claim”.
In Totev Alsop J opined at [44] after considering the views of Sundberg J in Helfenbaum at [13]:
“It may be that the fourth sentence of the above passage in St George Bank Ltd v Helfenbaum is open to debate as to whether it states the matter slightly too unequivocally in the light of what was said in Ling v Enrobook. Nevertheless, what is clear is that the fact that there has been an act of bankruptcy does not make the claim by the debtor against the petitioning creditor irrelevant. It should be examined to assess whether it can be said that there is sufficient evidence to show that it is a real claim which is likely to succeed. Also relevant is the stage of the litigation, the length of time for its vindication and any other relevant matters. It goes without saying that solvency is a relevant consideration. In some circumstances, it may be difficult to assess the likelihood of success of the debtor’s claim. All the authorities show that central to the showing of "other sufficient cause" for the purposes of s 52(2)(b) is the question of the prospects of success. The case is not tried in the bankruptcy court, but the material is examined for the purpose alluded to by Gibbs J in Re Schmidt. As Olney J identified in Re James, if a likelihood of success can be demonstrated, that may justify a refusal of a sequestration order. Alternatively, the circumstances may reveal a claim of a character and nature in which likelihood of success cannot be predicted with accuracy but in the circumstances the petition should be dismissed or an adjournment of the petition should granted: see the approach of Sundberg J in Ling v Commonwealth[1996] FCA 1646.”
The instant case is finally balanced. There is certainly no evidence before this court which would enable it, consistent with the authorities, to dismiss the petition. The real question is whether or not an adjournment should be granted so that the hearing can take place next week. But when the court weighs up that decision it must take into account the requirements adumbrated in the authorities, in particular, the requirement that some reasonable cause of action be shown and it is here that I have very significant problems.
The failure of the debtor to file the document required by the Supreme Court is to my mind, fatal to his application. It may well be that the failure to file this document means that the Supreme Court will not hear his defence. It gives this court no comfort as to the possibility of any success in the proceedings. Mr Brender tells me that the property is worth approximately $1,000,000 and that if his client is successful in the Supreme Court proceedings that amount of money will be available to the pay the debt upon which the bankruptcy notice was founded.
But again, there is no evidence of the value of the property other than an assertion of it in a solicitor’s letter. To my mind and reluctantly I am of the view that the debtor has not crossed the threshold required by the authorities that would allow me to grant him an adjournment. I say “reluctantly” because it is clear that the amount of the bank’s debt is in dispute and may well have to be argued again by a trustee when a proof of debt is filed. The resolution of the matter in the Supreme Court next week would have been of considerable assistance. but that cannot be allowed to sway the court in the face of the debtor’s failure to provide any basis upon which the adjournment should be granted other than the proximity of the litigation.
I am satisfied that the respondent committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters required by s.52 of the Act. I make a sequestration order against the estate of Adrian Glynn Acheson. The Applicant Creditor’s costs (including any reserved costs) be taxed (in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006) and paid from the estate of the Respondent Debtor in accordance with the Act. Under the Bankruptcy Regulations a copy of this sequestration order is to be given to the Official Receiver in Sydney within 2 days. The court notes the date of bankruptcy as 4 February 2011. I note that a consent to act as trustee has been signed by Mark Robinson and has been lodged with the Official Receiver in Sydney.
I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Raphael FM
Date: 9 June 2011
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