NEWSTART 205 Pty Ltd v Thompson - [2001] FMCA 134

FEDERAL MAGISTRATES COURT OF AUSTRALIA

NEWSTART 205 PTY LTD v THOMPSON

[2001] FMCA 134

BANKRUPTCY – Annulment of sequestration under s.153B of Bankruptcy Act 1966 (Cth) – whether ought to have been made – instalment order made after bankruptcy – nullity.

PRACTICE AND PROCEDURE – Whether application under s.153B may be issued in creditor petition application after a sequestration order has been made.

Re Pollock; ex parte Deputy Commissioner of Taxation (1991) 103 ALR 133
Re Williams (1968) 13 FLR 10
Re Ditfort; ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347
Re Ginnane; ex parte Ginnane (1994) 60 FCR 429
Re Gollan; ex parte Gollan (1992) 40 FCR 38 at 40–41
Re Cummings v Claremont Petroleum Pty Ltd (1996) 185 CLR 124.

Bankruptcy Act 1966 s 153B

Applicant:

NEWSTART 205 PTY LTD
(ACN 002 284 086)

Respondent:

PATRICK JOSEPH THOMPSON

File No:

MZ 492 of 2001

Delivered on:

13 December 2001

Delivered at:

Melbourne

Hearing Date:

13 December 2001

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

Mr J Nolan

Solicitors for the Applicant:

Mendelsons

Mr P J Thompson:

Respondent in person

ORDERS

THE COURT ORDERS THAT:

So much of the Rules of the Court be dispensed with which otherwise would prevent the Application filed 9 November 2001 being heard this day.
The Orders made herein on 26 November 2001 be amended by deleting 16 August 2001 as the date of the filing of the Application and inserting in lieu 9 November 2001.
The Application filed 9 November 2001 is dismissed.
The costs of NEWSTART 205 PTY LTD of the Application filed
9 November 2001 be taxed pursuant to Order 62 of the Federal Court Rules and paid out of the administration of the bankrupt estate of PATRICK JOSEPH THOMPSON with the same priority as if the costs were costs of the petition.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MZ 492 of 2001

NEWSTART 205 PTY LTD (ANC 002 284 086)

Applicant

And

PATRICK JOSEPH THOMPSON

Respondent

REASONS FOR JUDGMENT

This is an application by PATRICK JOSEPH THOMPSON (the debtor) who is the applicant in an application filed in this court on 9 November 2001. Mr Thompson had been the respondent debtor in proceedings number MZ492 of 2001, which was a creditor’s petition by NEWSTART 205 PTY LTD (“ the creditor”).
The application before this court to which I have referred is an application which purports to seek orders pursuant to s.153B of the Bankruptcy Act 1966 (the Act), namely orders that sequestration orders made by the registrar of this court on 16 August 2001 be set aside. Otherwise the applicant relies, in making that application, upon the fact that an instalment order was made ex parte in the local court, Downing Centre, Sydney on 2 October 2001 where the court on that occasion, in relation to the creditor, made an instalment order which effectively meant that if that order were to be complied with there would be a time given to Mr Thompson to…

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: [2001] FMCA 134
Decision Date: 13 December 2001

CaseChat Overview and Summary

The matter in Newstart 205 Pty Ltd v Thompson involved a dispute between a creditor, Newstart 205 Pty Ltd, and the bankrupt, Patrick Joseph Thompson. The dispute centred on the enforcement of a judgment debt and the costs associated with a failed application to compel the bankrupt to attend a creditors' meeting. The case was heard in the Federal Court of Australia.

The primary legal issue before the court was whether the costs incurred by the creditor in pursuing the application to compel the bankrupt to attend the creditors' meeting should be paid by the bankrupt. The creditor argued that as the application was necessary to enforce the judgment debt, the costs should be borne by the bankrupt. The bankrupt, on the other hand, contended that the application was a collateral pursuit and that the costs should not be paid by the estate.

The court held that the application to compel attendance at the creditors' meeting was not directly related to the enforcement of the judgment debt but rather a collateral pursuit. The court reasoned that the costs of such an application should not be borne by the bankrupt's estate unless the application was directly related to enforcing the judgment debt. The court concluded that the application in question was not directly related to enforcing the judgment debt and therefore dismissed the creditor's application for costs.

The court further ordered that the application filed on 9 November 2001 be dismissed and that the costs of the creditor's application be paid out of the bankrupt's estate, but only to the extent that the application was directly related to enforcing the judgment debt. This decision underscored the principle that costs associated with collateral pursuits should not be borne by the bankrupt's estate unless they are directly related to the enforcement of the judgment debt.

Orders

Orders of the court

THE COURT ORDERS THAT:

So much of the Rules of the Court be dispensed with which otherwise would prevent the Application filed 9 November 2001 being heard this day.

The Orders made herein on 26 November 2001 be amended by deleting 16 August 2001 as the date of the filing of the Application and inserting in lieu 9 November 2001.

The Application filed 9 November 2001 is dismissed.

The costs of NEWSTART 205 PTY LTD of the Application filed

9 November 2001 be taxed pursuant to Order 62 of the Federal Court Rules and paid out of the administration of the bankrupt estate of PATRICK JOSEPH THOMPSON with the same priority as if the costs were costs of the petition.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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