One Flush Plumbing Services Pty Ltd v St Clair
[2023] FedCFamC2G 1118
•4 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
One Flush Plumbing Services Pty Ltd v St Clair [2023] FedCFamC2G 1118
File number(s): BRG 236 of 2023 Judgment of: JUDGE SYMONS Date of judgment: 4 December 2023 Catchwords: BANKRUPTCY – Application for review of a sequestration order made by a registrar – where debtor invites Court to go behind judgment debt obtained in default of appearance – consideration of relevant principles – treatment of payments made into solicitor trust account by debtor in effort to reduce judgment debt - where applicant creditor has established matters prescribed by s 52(1) – application for review dismissed – sequestration order made Legislation: Bankruptcy Act 1966 (Cth) ss 41, 47, 52.
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021(Cth) rr 2.02, 4.02.
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 254.
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 21.04
Cases cited: Allison v Murphy [2021] FCAFC 232
Bechara v Bates (2021) 286 FCR 166; [2021] FCAFC 34.
Culleton v Balwyn Nominees Pty Ltd (2017) 343 ALR 632; [2017] FCAFC 8
Lowbeer v De Varda (2018) 264 FCR 228; [2018] FCAFC 115
Ganesh v Dobrowolski [2021] FCA 909
Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; [2017] HCA 28
Division: Division 2 General Federal Law Number of paragraphs: 50 Date of last submissions: 6 September 2023 Date of hearing: 6 September 2023 Place: Melbourne Solicitor for the Applicant Celtic Legal The Respondent In person. ORDERS
BRG 236 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ONE FLUSH PLUMBING SERVICES PTY LTD (ACN 077 287 891)
ApplicantAND: CHRISTOPHER ST CLAIR
Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
4 DECEMBER 2023
THE COURT ORDERS THAT:
1.The application for review of a Registrar’s decision filed on 23 August 2023 be dismissed.
2.The estate of Christopher St Clair be sequestrated under the Bankruptcy Act 1966 (Cth) (Act).
3.The respondent is to pay the applicant’s costs as agreed or taxed, paid out of the estate of Mr St Clair.
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).
REASONS FOR JUDGMENT
JUDGE SYMONS:
INTRODUCTION
The application before the Court is an application for review of a decision made by a Registrar of this Court on 2 August 2023, who exercised powers delegated pursuant to s 254 of the Federal Circuit and Family Court of Australia Act 2021 (Cth).[1]
RELEVANT BACKGROUND
On 13 April 2023, the Official Receiver in Bankruptcy issued bankruptcy notice BN 259556 (bankruptcy notice) directed to Mr St Clair. The named creditor in the bankruptcy notice is One Flush Plumbing Services Pty Ltd (One Flush Plumbing) and the bankruptcy notice relates to a debt in the amount of $10,031.76, comprising damages and costs payable pursuant to an order made by the Local Court of NSW (Small Claims Division) on 13 March 2023.
The bankruptcy notice was served on Mr St Clair on 13 April 2023 and the creditor’s petition in these proceedings, which identified the failure of Mr St Clair to comply with the requirements of the bankruptcy notice on or before 4 May 2023 as the act of bankruptcy, was filed on 25 May 2023.
On 2 August 2023, the matter came before a Registrar of this Court for hearing. Mr St Clair did not appear at the hearing and the Registrar made the following orders:
1.The estate of CHRISTOPHER ST CLAIR be sequestrated under the Bankruptcy Act 1966.
2.The applicant creditor’s costs, including reserved costs, if any, be fixed in the sum of $7,851.72 and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.
The Registrar’s order noted that a consent to act as trustee signed by Leon Lee had been filed under section 156A of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act). The Trustee did not participate in the review proceeding.
On 23 August 2023, Mr St Clair filed an application for review of the Registrar’s decision.
The matter came before me for hearing on 6 September 2023 and was conducted by video link using Microsoft Teams. One Flush Plumbing was represented by solicitor Mr Long, and Mr St Clair represented himself.
DOCUMENTS BEFORE THE COURT
At the outset of the hearing, the Court confirmed with the parties the documents they each sought to rely upon.
In the case of One Flush Plumbing, these had been identified in a set of written submissions filed with the Court on 6 September 2023 and comprised:
·The creditor’s petition filed on 25 May 2023;
·Affidavit of service of bankruptcy notice filed on 25 May 2023;
·Affidavit of search of paragraph 4 of the creditor’s petition filed on 25 May 2023;
·Consent to act as trustee filed on 25 May 2023;
·Affidavit of service of creditor’s petition filed on 1 August 2023;
·Affidavit of costs filed on 1 August 2023;
·Affidavit of debt filed on 5 September 2023; and
·Affidavit of Brendan Long filed on 5 September 2023.
In the case of Mr St Clair, he relied upon his application for review and an affidavit that he filed on 23 August 2023. Mr St Clair also informed the Court that he wished to cross-examine the deponent of the affidavit of debt, Ms Rhianna Cristiano. Although Mr St Clair had not given notice of this intention to One Flush Plumbing or the Court, his request was able to be accommodated and Ms Cristiano made herself available for brief cross-examination as is discussed later in this decision.
DE NOVO REVIEW OF REGISTRAR’S DECISION
A review of a decision made by a Registrar is to be conducted as a review de novo: r 21.04(1) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules).
In Bechara v Bates (2021) 286 FCR 166 at [27] a Full Court of the Federal Court (Allsop CJ, Markovic and Colvin JJ) identified the following principles concerning the nature of a de novo hearing by way of review of a sequestration order in bankruptcy made by a registrar:
a)The application for review leads to a hearing de novo of the creditor’s petition.
b)The hearing (or rehearing) of the creditor’s petition is not prosecuted by the debtor (the applicant for review) but by the creditor in the proceeding in which the registrar’s order was made.
c)The application for review is a demand that the claim for relief (the sequestration order) be heard by a judge.
d)The onus is upon the creditor to prosecute its petition. The only onus of the debtor/bankrupt against whose estate a sequestration order has been made is to prove either solvency or any other sufficient cause under s 52(2) of the Bankruptcy Act.
e)An appreciation of the above considerations makes it evident that summary or default judgment terminating an application for review is highly likely to be misconceived and founded upon a misconception that the applicant for review has the onus to prosecute an application or to show error in the approach of the registrar.
CREDITOR’S PETITION
The de novo character of the Court’s review jurisdiction requires that, in a case involving a sequestration order, the judge hearing the review be satisfied as to the matters referred to in s 52 of the Bankruptcy Act.
Subsections 52(1) and 52(2) of the Bankruptcy Act, which identify matters as to procedure and proof of a creditors petition, provide:
(1) At the hearing of a creditor’s petition, the Court shall require proof of:
(a)the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b) service of that petition; and
(c)the fact that the debt or debts on which the petitioning creditor relies is or are still owing:
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
…
(2)If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not be made;
it may dismiss the petition.
Should the Court go behind the judgment debt?
Although Mr St Clair did not in terms invite the Court to go behind the judgment debt, I understood his argument in essence to concern itself with this concept.
A judgment such as that delivered by the Local Court of New South Wales in this matter, is usually taken to be determinative of a debt owed. However, the power of the Court to go behind a judgment was considered at length in Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; [2017] HCA 28. In Lowbeer v De Varda [2018] FCAFC 115, under the heading “general principles concerning proof of the petitioning creditor’s debt”, the Full Court (Reeves, Farrell and Colvin JJ) set out a summary of the relevant case law as follows:[2]
53.On the hearing of a creditor’s petition, the court has a statutory duty to be satisfied for the purposes of s 52 of the Bankruptcy Act 1966 (Cth) as to the existence of the petitioning creditor’s debt. Therefore, on such an application, a judgment or order is never conclusive of the existence of a debt. Rather, the court must decide whether to accept the judgment or order as proof of the debt or to go behind the judgment or order (sometimes described as a discretion). Usually, a determination after a contested hearing will provide a practical guarantee of reliability that will mean that the court will not go behind the judgment or order. The court looks with suspicion on consent judgments and default judgments. However, all depends upon the circumstances. If the court is persuaded to go behind the judgment or order then it will investigate the debt upon which the creditor’s petition is based. For a creditor’s petition to be dismissed on the basis that in truth and reality there is no debt behind the judgment, there must first be a proper basis to exercise the discretion to go behind the judgment and then an assessment that, in truth and reality, there is no debt. These are separate questions that might be determined separately. As to these matters, see the judgment of Kiefel CJ, Keane and Nettle JJ in Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28 at [16], [37]-[38], [65]-[71].
54.The test or standard to be applied in deciding whether to accept a judgment order as proof of the debt for the purposes of a petition for sequestration orders has been variously expressed.
55. In Petrie v Redmond [1943] St R Qd 71 at 75-76, Latham CJ (with whom Rich and McTiernan JJ agreed) said that “special circumstances” must be established. In Corney v Brien (1951) 84 CLR 343 at 347, the plurality quoted with approval a passage in In re a Debtor [1929] 1 Ch 125 at 127 in which it was said that the court may, “upon a prima-facie case being shown, go behind a judgment for the purpose of satisfying itself” that there was a real debt (see also Fullager J in Corney v Brien at 356-357). In Ramsay Health Care at [20], the plurality quoted with apparent approval a passage from Wren v Mahony (1972) 126 CLR 212 at 224-225 in which Barwick CJ said that the discretion to accept the judgment as proof is not well exercised where there are “substantial reasons” to go behind it, but in an earlier passage (also quoted in Ramsay Health Care at [42]), Barwick CJ referred to going behind a judgment “where reason is shown”.
56.The plurality in Ramsay Health Care accepted the argument for the respondent that the Court should go behind a judgment where “sufficient reason is shown for questioning whether behind the judgment there is in truth and reality a debt due to the petitioning creditor”: at [37]-[38]. Edelman J in a separate judgment supporting the result referred to authorities where courts exercising bankruptcy powers had been “extremely cautious” before going behind a common law judgment: at [108]-[109]. His Honour said that “in the absence of some evidence of fraud, collusion, or miscarriage of justice, a court exercising bankruptcy jurisdiction will rarely have substantial reasons to investigate whether the debt merged in the judgment is truly owed”: at [111].
57.However, there appears to be no magic in any of these formulations. As Fullager J said in Corney v Brien at 356, “[n]o precise rules exist as to what circumstances call for an exercise of power”. That is because in each case there must be a contextual consideration as to whether, for the purposes of s 52 of the Bankruptcy Act, the debt has been proven. In all cases, it must be borne in mind, as was stated by the plurality in Ramsay Health Care at [55], that:
The scrutiny required by s 52 as to whether there is, in truth and reality, a debt owing to the petitioning creditor serves to protect the interests of third parties, particularly other creditors of the debtor. It is of critical importance to appreciate that such persons were not parties to the proceedings that resulted in the judgment debt. It has long been recognised that their interest in being paid their debts in full should not be prejudiced by the making of a sequestration order in reliance on a judgment debt which does not reflect the true indebtedness of the debtor to the petitioning creditor…
I accept that the principled approach this Court should take is to first determine whether it is persuaded that there is a proper basis to exercise its discretion to go behind the judgment debt, and if it is, whether or not, in truth and reality, there is a debt owed.
Mr St Clair
Mr St Clair acknowledges that in around July 2017 he requested One Flush Plumbing to complete plumbing works at an address in Marshall Mount, New South Wales and that One Flush Plumbing issued to him an invoice relating to the works on 29 July 2017 in the amount of $15,200.[3]
However, it appears that Mr St Clair was not satisfied with aspects of the charges identified in this invoice and communicated his concerns to One Flush Plumbing in an email sent on 24 November 2017. [4] The concerns related to the cost of septic tanks; according to Mr St Clair he had been quoted an amount of $3,000 and the invoice included a charge of $3,435.90 plus a mark-up of 20 per cent and the passing on of GST on items on the invoice. Mr St Clair also requested that One Flush Plumbing deduct an amount of $620 for what were described as “Works left to do” and which Mr St Clair explained, in his email, he had mostly done already himself.
It appears that One Flush Plumbing did not provide a substantive response to this email. Instead, the next relevant event occurred later in 2017 when Mr St Clair received emails from a collection agency (ecollect) requesting payment of the outstanding balance of $8,620. On 1 December 2017, Mr St Clair sent an email to George at ecollect in which he repeated his concerns about the invoice and offered to pay the reduced amount of $4,219.02 over a period of six weeks.[5] According to Mr St Clair, he was told by George that “the collections matter was not being continued”.
Mr St Clair further deposed that in 2022 he received emails from a Mr Wieland of Professional Collection Services in relation to the payment of the amount of $7,250.31 owing to One Flush Plumbing. It was Mr St Clair’s evidence that he was in contact with Mr Wieland for over three months but with no return correspondence from him. Mr St Clair produced an exchange of emails as evidence of this communication,[6] however this consisted of: (i) an email from Mr Wieland sent to Mr St Clair on 22 August 2022 which gave a Notice of Intention to Commence Proceedings in respect of a debt owed by Mr St Clair to One Flush Plumbing of $7,250.31; (ii) a message sent by Mr St Clair to Mr Wieland (date unknown) seeking an update “re this matter”; and (iii) a message sent by Mr St Clair to Mr Wieland on 7 November 2022 in which he referred to the matter having “been dragging on for 3 months now” and requesting an update as soon as possible.
According to Mr St Clair the next event of significance was his receipt on 22 March 2023 of an email informing him that judgment had been entered against him in the New South Wales Small Claims Court. Mr St Clair’s evidence was that he had no previous knowledge of the matter (of the debt) being the subject of court proceedings and he sent a message to this effect to Professional Collection Services.[7]
Mr St Clair deposed that after learning of the judgment against him he made attempts to log into the District Court’s online system but was prevented from creating an account because his home address was not listed on the system. On 16 June 2023, Mr St Clair contacted the lawyers for One Flush Plumbing, Celtic Legal, to inform them of the difficulties he was experiencing in navigating the online registration system. As part of this correspondence Mr St Clair noted that the Court had queried how the paperwork in his matter had been served “as it would not have been posted without my address being in the courts system”.[8]
When invited to make submissions, Mr St Clair told the Court that he had attended the Wollongong District Court to complete documents to challenge the judgment debt and had left them with a court officer. However, it appeared that there was still no record of him having filed documents. Mr St Clair thought that he had attended the Wollongong District Court on 8, 9, or 10 May 2023. However, I consider it more likely that this attendance was in June given that the communication from the Court advising Mr St Clair to attend in person for filing was sent on 6 June 2023.[9]
Mr St Clair explained that on 18 July 2023 and again on 28 July 2023, he had made a payment of $500 to Celtic Legal as partial payment of the amount outstanding and in an effort to get the matter resolved. Mr St Clair maintained that his indebtedness to One Flush Plumbing should not exceed $4,219.02 on the basis of the matters identified at [19] above as well as to compensate him in the amount of $1,600 for a hot water system that had allegedly been damaged by One Flush Plumbing when it was delivered to his property and which Mr St Clair had subsequently replaced when it stopped working in March 2018. However, he explained that despite this, he had been prepared to pay to One Flush Plumbing the entire amount they were claiming, plus the amount of $3,000 in interest.
Mr St Clair’s case essentially was that he had done everything within his power to resolve the matter and the fact that a sequestration order had been made and a trustee appointed was already having a significant impact on his mental health and his livelihood.
I note for completeness that although Mr St Clair was given the opportunity to cross examine the deponent of the affidavit of debt, Ms Rhianna Cristiano, this exercise did not advance his case. Ms Cristiano was asked whether all of the work described in the invoice dated 29 July 2017 (see [19]) had in fact been completed. However, although Ms Cristiano is now the Financial Controller of One Flush Plumbing, at the time that the invoice was created she had no involvement in the business and was not able to shed any light on the matters described in the invoice. Her evidence was limited to establishing that the debt of $10,031.76 remained outstanding as at 6 September 2023, the date of the review hearing.
One Flush Plumbing
One Flush Plumbing did not challenge Mr St Clair’s evidence either through cross-examination or through assertion of a different narrative. It did however make the point that Mr St Clair’s submissions at times strayed into “evidence from the bar table” and to that extent, the Court should exercise caution in the weight to be attributed to such matters.
One Flush Plumbing acknowledged that Mr St Clair had made two payments in the amount of $500 to the trust account of its lawyer, Celtic Legal. However, in his affidavit sworn on 5 September 2023, Mr Long deposed that these funds had been receipted to a trust account (this being a statutory requirement) but not otherwise accepted. Celtic Legal had made attempts to return the funds to Mr St Clair but he had not provided the firm with his bank account details to facilitate this.
As far as Mr St Clair sought to have the Court go behind the judgment debt, One Flush Plumbing noted that the circumstances for the exercise of the Court’s discretion to do so did not arise when Mr St Clair had done nothing with respect to setting aside the judgment debt from the date on which he became aware of its existence (this, on his evidence, being 22 March 2023) to the date of the hearing. In this regard, One Flush Plumbing relied on annexure “BTL-2” to the Long affidavit – a screenshot of the NSW Online Registry relating to the Local Court Proceeding between One Flush Plumbing and Mr St Clair and which, as at 5 September 2023, did not contain any record of an application to set aside the judgment.
One Flush Plumbing submitted that where the High Court has acknowledged that the power to go behind a judgment debt is “not readily exercised” (referring to Ramsay Health at [68]) and in the absence of any identified conduct that might involve fraud, collusion or other improper conduct, the Court should be slow to intervene, notwithstanding Mr St Clair’s circumstances and efforts to negotiate a payment plan might elicit sympathy.
One Flush Plumbing otherwise submitted that it had complied with all procedural aspects for the making of a sequestration order and that the decision of the Registrar should be confirmed.
CONSIDERATION
Mr St Clair does not challenge the satisfaction by One Flush Plumbing of the formal requirements stipulated in s 52(1) of the Bankruptcy Act. Neither did I understand him to put his solvency in issue (refer s 52(2)(a)). Instead, as noted above, he essentially invited the Court to exercise its discretion to go behind the judgment debt.
I accept that an example of a circumstance in which the Court might be persuaded to take up Mr St Clair’s invitation is where a debt has been established by judgment, but the debtor is able to establish that he has taken active steps to apply to set aside or appeal the judgment. The taking of steps however merely engages the discretion to dismiss the petition with the Court ultimately concerned to evaluate whether “in truth and reality” a debt exists.
In considering the evidence and submissions made by Mr St Clair I remain cognisant that it is a significant outcome for a person to be made bankrupt. In Culleton v Balwyn Nominees Pty Ltd the Full Court reminded courts, such as this one, exercising jurisdiction under the Bankruptcy Act, not to forget the “human reality of bankruptcy”.[10]
However, the Full Court also recognised that it was “legitimate” for a creditor to proceed in bankruptcy for the purpose of recovering a debt.[11] The Bankruptcy Act does not place parameters around the timeliness of the pursuit by a creditor of a debtor, save that once entered, a judgment debt cannot be relied upon to support a bankruptcy notice after the expiry of six years (s 41(3)(c)). I make this observation because in this case, while One Flush Plumbing did not make any attempt to explain why it took a period of roughly five years to issue proceedings in the Local Court of NSW (Small Claims List), this does not provide a satisfactory basis to question the legitimacy of the judgment debt subsequently obtained.
What might arouse a level of suspicion is the fact that in this case the judgment debt was obtained in default of Mr St Clair’s participation and appearance in the Local Court proceeding. One Flush Plumbing did not put any material before the Court to indicate that Mr St Clair was properly served with documents relating to the application for judgment and although I have some difficulty accepting that default judgment would be obtained in the absence of satisfactory proof of service, I am prepared to accept at least that Mr St Clair did not have knowledge of the proceeding (and its outcome) until he received information about the judgment debt on 22 March 2023.
What Mr St Clair did, or did not do, following the receipt of this information, requires some consideration. Mr St Clair was not challenged on his evidence concerning his efforts to engage with the Local Court of NSW. I accept that he made some attempts to log onto the system maintained by that Court and that he presented to the Wollongong registry with documents for filing on a date in June 2023. I also accept that he communicated with the lawyers for One Flush Plumbing on 16 June 2023. However, I am not persuaded that these steps involved or constituted an active pursuit of an application to set aside or appeal the judgment debt. Mr St Clair did not produce any application document or identify the grounds on which he would contend the judgment debt was improperly obtained. Further, I accept that at the time of hearing there was no record of Mr St Clair having successfully made an application to challenge the judgment debt in the Local Court.
Further, given the fact that across the period that these limited steps were taken by Mr St Clair he was also served with the bankruptcy notice and failed to take any step to have the bankruptcy notice set aside, I am not persuaded that he acted with sufficient urgency or diligence to challenge the judgment debt in any forum. Inevitably, the matter continued its trajectory through this Court.
However, even if I was persuaded that the efforts made by Mr St Clair operated in favour of the exercise of my discretion, the additional difficulty is that this case is of a kind where Mr St Clair does not challenge the underlying basis for his indebtedness (he accepts that One Flush Plumbing provided him with product and services in 2017) but instead argues that the account rendered was excessive. Mr St Clair accepts that a debt exists but takes issue with its value.
The Full Court has held that the discretion to go behind a judgment should not be exercised where the grounds upon which the judgment is challenged are such that, if accepted, they would only support a finding that the amount of the debt be reduced and would not support a finding that there was in truth no debt at all: Emerson v Wreckair Pty Ltd (1992) 33 FCR 581 at [589]; Katter v Melhem (No 2) (2014) 319 ALR 646; [2014] FCA 1176 at [77] .
Although this statement of principle might require qualification in circumstances where the effect of any reduction of the debt was to bring it below the statutory minimum (presently $10,000), I am not persuaded that Mr St Clair’s objections to quantum, if accepted, would produce this result.
This is because the principal, and in the end only, complaint pressed by Mr St Clair was that he had been charged an amount of $620 for work that was not performed by One Flush Plumbing. However, closer inspection of the invoice produced by Mr St Clair reveals that even after making an allowance for the disputed amount of $620 (item #3) and taking account of the part-payment of $8,100 made earlier by Mr St Clair, the amount outstanding for a combination of labour and material was $15,182.40.[12]
In relation to the attempts at part-payment of the judgment debt made by Mr St Clair on 18 and 28 July 2023 (refer [25] above), the position is that once the act of bankruptcy had been committed by Mr St Clair (this occurring on 4 May 2023), there was no obligation on the part of One Flush Plumbing (including, acting through its legal representative) to accept the tender of payment of the debt the subject of the bankruptcy notice.[13] One Flush Plumbing was entitled to reject the tender at that time and proceed with its petition. The fact of payment can have no bearing on the exercise of discretion to look behind the judgment debt. It does not otherwise constitute a “sufficient cause” for the purpose of s 52(2)(b) of the Bankruptcy Act.
Proof of matters specified in s 52(1) of the Bankruptcy Act and Bankruptcy Rules
The matters that must be stated in a creditor’s petition are prescribed by s 47(1A) of the Bankruptcy Act, which provides that if “the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed”. Rule 4.02 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules) prescribes a form for the purposes of s 47(1A) of the Bankruptcy Act. The form requires the creditor, among other things, to identify the act of bankruptcy on which the creditor relies, and the debt or debts the creditor claims the debtor owes it.
In the creditor’s petition, One Flush Plumbing claims Mr St Clair failed to comply on or before 4 May 2023 with the requirements of a bankruptcy notice served on him on 13 April 2023. One Flush Plumbing relies on the affidavit of service of the bankruptcy notice made by Celine Rojc on 15 May 2023. Mr St Clair does not, in any case, dispute service on him of the bankruptcy notice, or for that matter, the creditor’s petition. I am satisfied Mr St Clair was served with the bankruptcy notice on 13 April 2023. Given Mr St Clair did not comply with the requirements of the bankruptcy notice, I am satisfied he committed an act of bankruptcy on 4 May 2023. The creditor’s petition also identifies the debt One Flush Plumbing claims that Mr St Clair owes it, being the amount identified in the judgment debt to which extensive reference has been made already.
One Flush Plumbing filed a creditor’s petition on 25 May 2023. The creditor’s petition is in the prescribed form[14] and, as required by s 47 of the Bankruptcy Act, an officer with authority has made an affidavit verifying it on behalf of the applicant creditor.[15] One Flush Plumbing also filed, at the time it filed the creditor’s petition, an affidavit required by r 4.04(1)(a) of the Bankruptcy Rules,[16] and the affidavit of service of the bankruptcy notice referred to above.
Further, I read an affidavit of debt[17], being an affidavit which, under r 4.06(4) of the Bankruptcy Rules, must be made as soon as practicable before the hearing of a creditor’s petition, and also an affidavit of search,[18] as required by r 4.06(3) of the Bankruptcy Rules.
DISPOSITION
One Flush Plumbing, as applicant creditor, has established the matters prescribed by s 52(1) of the Bankruptcy Act and by the Bankruptcy Rules; I am not satisfied that it is appropriate to go behind the judgment debt; I am not satisfied Mr St Clair is able to pay his debts; and I am not satisfied there is any sufficient cause for not making a sequestration order against the estate of Mr St Clair.
I propose therefore to dismiss Mr St Clair’s application for review. I also propose to order that the applicant’s costs be paid out of Mr St Clair’s estate.
I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons . Associate:
Dated: 4 December 2023
[1] See also r 2.02(1)(a) of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) and item 1 of Part 1 in Schedule 1 to those Rules.
[2] See also Ganesh v Dobrowolski [2021] FCA 909 at [67]-[68] per Moshinsky J.
[3] Annexure “CS-2” to the St Clair affidavit.
[4] Annexure “CS-3” to the St Clair affidavit.
[5] Annexure “CS-4” to the St Clair affidavit.
[6] Annexures “CS-5” and “CS-6” to the St Clair affidavit.
[7] Annexure “CS-7” to the St Clair affidavit.
[8] Annexure “CS-10” to the St Clair affidavit.
[9] Annexure “CS-9” to the St Clair affidavit.
[10] [2017] FCAFC 8 at [55].
[11] [2017] FCAFC 8 at [44].
[12] Annexure “CS-2” to the St Clair affidavit.
[13] Allison v Murphy [2021] FCAFC 232 at [46].
[14] Form B6.
[15] See affidavit of Nicola Cristiano sworn on 23 May 2023.
[16] See affidavit of Leahra McKendrick affirmed on 25 May 2023.
[17] See affidavit of debt of Rhianna Cristiano sworn on 5 September 2023.
[18] See affidavit of search of Leahra McKendrick affirmed on 5 September 2023.
0
7
4