Owners of Strata Plan 54026 v Foong
[2013] FCCA 1699
•30 September 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| OWNERS OF STRATA PLAN 54026 v FOONG | [2013] FCCA 1699 |
| Catchwords: BANKRUPTCY – Opposed creditor’s petition – whether the debtor is solvent or the judgment debt has been compromised considered. |
| Legislation: Bankruptcy Act 1966 (Cth), s.52 |
| Owners of Strata Plan 54026 v Foong [2013] FCCA 1234 |
| Applicant: | OWNERS OF STRATA PLAN 54026 |
| Respondent: | CHAO JOI FOONG |
| File Number: | SYG 679 of 2013 |
| Judgment of: | Judge Driver |
| Hearing date: | 30 September 2013 |
| Delivered at: | Sydney |
| Delivered on: | 30 September 2013 |
REPRESENTATION
Ms Y Foong appeared, with leave, on behalf of the applicant
| Solicitors for the Respondent: | Mr D Holt Grace Lawyers Pty Limited |
ORDERS
A sequestration order is made against the estate of Chao Joi Foong.
The petitioning creditor’s costs, including reserved costs, if any, be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that the date of the act of bankruptcy is 7 January 2013.
The Court notes that a Consent to Act as Trustee has been signed by David Ian Mansfield on 25 January 2013.
The Court notes the obligations on the petitioning creditor to notify, enter and serve these orders in accordance with the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth).
Pursuant to s.52(3) of the Bankruptcy Act 1966 (Cth), all proceedings under the sequestration order be stayed for a period of 21 days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 679 of 2013
| OWNERS OF STRATA PLAN 54026 |
Applicant
And
| CHAO JOI FOONG |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
I have before me a creditor’s petition presented on 4 April 2013 seeking a sequestration order and other orders against the estate of Chao Joi Foong. The creditor’s petition refers to several debts in respect of unpaid strata levies, recovery expenses, interest and costs. The petition is supported by the affidavit of Carol Byrne made on 3 April 2013 verifying paragraph 4 of it, the affidavit of service of the bankruptcy notice made by James Stephen Twigg on 19 December 2012, and the affidavit of Daniel Robert Holt made on 15 May 2013 verifying service of the creditors petition and other documents.
I also have before me a Consent to Act as Trustee signed by David Ian Mansfield on 25 January 2013 and Affidavits of Search and Debt. The most recent Affidavit of Debt specified that the debt as at 2 September 2013 stood at $15,707.53. I understand from the parties that the total debt currently in respect of unpaid strata levies and related costs and expenses is in the order of $35,000.
The matter came before Judge Lloyd-Jones who gave judgment on 30 August 2013 dismissing the Notice of Grounds of Opposition to the creditor’s petition filed by Mr Foong on 11 April 2013[1]. Significantly, Judge Lloyd-Jones disposed of the central ground of opposition to the petition, which was that the debt had been compromised on the basis of a proposal to pay $500 per month. His Honour found that the proposal had not been accepted.
[1] Owners of Strata Plan 54026 v Foong [2013] FCCA 1234
The petition came before a registrar on 2 September 2013. At that time, both the petitioning creditor and the respondent debtor were legally represented. The registrar made a sequestration order but stayed its operation for 21 days. He also made a costs order. A review application was lodged by the debtor on 23 September 2013. That was the final day prescribed for such an application, pursuant to rule 2.03(1) of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth). The review application is supported by the affidavit of the debtor made on 21 September 2013 and the affidavit of the debtor’s mother, Yena Suzen Foong, made on 23 September 2013. Neither of the deponents were required for cross-examination.
On review, the debtor was represented by leave by his mother who had also represented him at various times during the earlier course of the proceedings. Mrs Foong again raised the issue of the purported agreement to pay by instalments. I disposed of that by reference to the judgment of Judge Lloyd-Jones. The debtor also raised the issue of solvency. He owns a unit at Ultimo, which was the subject of the debt in unpaid strata levies. He currently lives there with his brother, Genn. It appears that Genn is in the process of buying a unit in North Sydney and has obtained agreement for a loan from the Bendigo Bank. The plan, as I understand it, is for the brothers to move to the unit in North Sydney once acquired, which would then make the unit at Ultimo available to be rented out. The debtor deposes that the rental would be in the range of $550 to $560 per week. He also deposes that the Ultimo unit might be sold at a price as high as $320,000, although it is subject to a mortgage which currently stands at $293,000.
It is unclear what equity the debtor has in the Ultimo property. His affidavit refers to a mortgage to the Commonwealth Bank of almost $3 billion, but that is obviously an error. Mrs Foong, in the course of argument, nominated the outstanding amount of the mortgage at $293,000, but later sought to change that to $250,000. The best that I can say is that the evidence does not disclose clearly what Mr Foong’s equity in the unit at Ultimo may be. I cannot be satisfied on a balance sheet basis that he is able to pay his debts as and when they fall due.
On a cash-flow basis, while it is hypothetically possible that he may be able to move into the unit at North Sydney proposed to be bought by his brother, Genn, releasing the unit at Ultimo for rental, that is, at best, uncertain. I am not persuaded on the state of the evidence that the debtor is solvent. There is no other ground of opposition to the creditor’s petition that this Court has not already dealt with.
I have concluded that the Court should make a sequestration order. It is unfortunate that Mr Foong is forced into bankruptcy over a strata levy debt which initially was quite small, although it has grown surprisingly quickly. It may be that he is able to benefit from the outcome of a motor vehicle accident claim made by his mother and his brother, Genn. Mrs Foong is hopeful that that claim might be resolved with the motor vehicle insurer during October this year. That is uncertain, but it is hypothetically possible that funds might become available to satisfy the petitioning creditor. That possibility supports, in my view, a stay over proceedings on the sequestration order.
I will make the following orders and notations. I am satisfied that Mr Foong committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters of which s.52(1) of the Bankruptcy Act 1966 (Cth) requires proof. I am not satisfied that the debtor has advanced any reason for the Court to refrain from making a sequestration order.
I note that a Consent to Act as Trustee was signed by David Ian Mansfield on 25 January 2013, and I note that the date of the act of bankruptcy is 7 January 2013. I further note the obligation on the petitioning creditor to enter, serve and notify the orders made by the Court.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Judge Driver
Associate:
Date: 25 October 2013
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