Official Receiver v Moore, in the matter of Moore
[2024] FedCFamC2G 1076
•18 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Official Receiver v Moore, in the matter of Moore [2024] FedCFamC2G 1076
File number(s): PEG 372 of 2024 Judgment of: JUDGE STREET Date of judgment: 18 October 2024 Catchwords: BANKRUPTCY – whether Official Receiver should accept or reject joint debtor’s petition - pending creditor’s petition – joint debtor’s petition accepted Legislation: Bankruptcy Act 1966 (Cth) Cases cited: Official Receiver v Chan [2024] FCA 452
Official Receiver v Mottershead [2024] FCA 823
Division: Division 2 General Federal Law Number of paragraphs: 12 Date of hearing: 18 October 2024 Place: Sydney Solicitor for the Applicant: Ms Z Rowling of Australian Government Solicitor Solicitor for the Respondent: The Respondent appeared via video/audio-link ORDERS
PEG 372 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF RHONDA KATE MOORE, BANKRUPT
BETWEEN: OFFICIAL RECEIVER
Applicant
AND: RHONDA KATE MOORE
Respondent
ORDER MADE BY:
JUDGE STREET
DATE OF ORDER:
18 OCTOBER 2024
THE COURT ORDERS THAT:
1.The matters of PEG371/2024 and PEG372/2024 are to be heard concurrently.
2.Pursuant to section 57(3B) of the Bankruptcy Act 1966 (Cth), the applicant is directed to accept the debtor’s petition by joint debtors that was presented by Darryl Robert Moore and Rhonda Kate Moore on 9 September 2024.
3.Pursuant to section 57(3C) of the Bankruptcy Act 1966 (Cth), the Court specifies that the time of commencement of bankruptcy of each joint debtors shall be 9 September 2024.
THE COURT NOTES THAT:
A.The consequence of these orders is that the proceedings PEG88/2024 and PEG128/2024 are permanently stayed pursuant to section 60 of the BankruptcyAct 1966 (Cth), and no doubt the petitioning creditors’ costs will be given the priority to which they would otherwise have been entitled to, notwithstanding that the Court cannot, at this stage, make an order.
B.A copy of these orders and notations are to be placed on the record of each of the said matters.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
JUDGE STREET
These two proceedings were heard concurrently, having been commenced by the Official Receiver by way of a referral under s 57 of the Bankruptcy Act 1966 (Cth) (“the Act”) to the Court to determine under s 57(3) of the Act whether to direct the Official Receiver to accept or reject the joint debtors petition. Almost identical evidence was filed in each matter, and the joint debtors appeared before the Court to support the acceptance of the joint debtor’s petition. The Court was informed that the petitioning creditor, who has filed a creditors petition against each of the debtors, is aware of the application and does not seek to be heard.
The Court has had accepted into evidence a copy of the creditors petition dated 27 September 2024 filed against each debtor and the underlying bankruptcy notice, together with the relevant judgment, against each debtor. Whilst it is apparent that the judgments reflect different dates, the one against Ms Rhonda Kate Moore, being a judgment sum made on 28 September 2023, and the judgment against Mr Darryl Moore, being a default judgment made on 16 August 2023, it is apparent that the underlying judgment debt and judgment sum have the same origin.
The position in relation to Rhonda Kate Moore is that the default judgment refers to a guarantee. The Court is satisfied that the underlying liability, the subject of the judgment debt against each debtor, albeit on different dates is, in fact, properly characterised as joint debts and should not be characterised as several debts. The Court is satisfied that the joint debtors petition in the present case is not one that has been presented in circumstances of a kind that would warrant the Court considering making an order in respect of the date of bankruptcy to be other than that of the date of the petition.
The Court has taken into account the observations that were made by Colvin J in Official Receiver v Chan [2024] FCA 452 which has, effectively, been embraced in respect of a similar provision in the decision of the Official Receiver v Mottershead [2024] FCA 823by Feutrill J. The Court raised with Ms Rowling on behalf of the Official Receiver the construction of s 57(3B) of the Act which relevantly is as follows:
(3B) The Official Receiver must refer a debtor’s petition to the Court for a direction to accept or reject it if there is at least one creditor’s petition that:
(a) is pending against at least one of the debtors (whether or not the creditor’s petition also relates to other persons); and
(b) does not relate only to all the joint debtors who presented the debtor’s petition
Within the legislation an example is given, which is example 1, relevantly as follows:
Example 1: Peta and Abdul are joint debtors. When they present a debtor’s petition against themselves, there is a creditors petition pending against Abdul. The Official Receiver must refer the debtor’s petition to the Court, because the creditor’s petition does not relate to both Peta and Abdul.
The Official Receiver correctly points out that the circumstances of the present case are ones where there are two separate –creditor’s petitions that have been presented, and that neither identifies as a party the other debtor, and, on its face, it falls within example 1 referred to above. That construction of para 3B of s 57 of the Act reflects a narrow reading which clearly qualifies the relevant creditor’s petition in respect of the requirement set out below:
(b) Does not relate only to all the joint debtors who presented the debtor’s petition
There is a construction open on a broader reading that the requirements of s 57(3B) of the Act are not satisfied because it could be said that, on a broader reading of the requirements, the creditors petition still only relates to all the joint debtors who presented the debtor’s petition. The Court accepts the submissions of Ms Rowling that the narrower construction is supported by the specificity identified in the particular provisions concerning presentation of a creditors petition where applicable against a partnership in s45 of the Act, or presentation of a petition under s 46 of the Act against two or more joint debtors, whether partners or not.
It is important in that regard that there are separate divisions concerning partnerships in ss 56A, 56B and section 56C of the Act, and it is apparent that the nature of the partnership there referred to is a business partnership, not that of the relationship between a husband and wife, or de facto partners. The specific provisions concerning partnership are the subject of a carve-out in relation to the requirements of s 57 of the Act dealing with joint debtors who are not partners.
The Court is satisfied that the construction advised by Ms Rowley is the one to be preferred, and that a narrow construction should be given to s 57(3B) of the Act. Accordingly, in the circumstances, the Court is satisfied that both the requirements of s57(3B) of the Act are met in the present case.
Given the satisfaction of the criteria for referral, the Court turns to the question of whether to accept or reject the debtors petition in each matter. As the Court has said, that there is no relevant potential prejudice to the petitioning creditor in terms of the timing of the act of bankruptcy. The Court is satisfied that this is an appropriate matter in which to direct the Official Receiver in each matter to accept the debtors petition.
The Court raised with Ms Rowling on behalf of the Official Receiver what should occur in respect of the two creditors' petitions, and Ms Rowling correctly pointed out that as a result of the orders being made by the Court today, those two proceedings will be stayed. In those circumstances, the petitioning creditors have incurred costs that would ordinarily have been given a priority in respect of recoverable property over other unsecured creditors. The Court takes the view that it would be appropriate to identify and note that this is what would occur to be taken into account by the Official Receiver or trustee insofar as there is property that becomes distributable amongst creditors.
It is for these reasons the Court makes the above orders.
I certify that the preceding twelve (12) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of Judge Street. Associate:
Dated: 18 November 2024
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