Palms (Chullora) Pty Ltd v Cummins
[2019] FCCA 3683
•12 December 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PALMS (CHULLORA) PTY LTD v CUMMINS | [2019] FCCA 3683 |
| Catchwords: BANKRUPTCY – Application for annulment of bankruptcy – bankrupt uncooperative with the trustee – no real doubt that the sequestration order should have been made – discretionary factors weighing heavily against annulment. |
| Legislation: Bankruptcy Act 1966 (Cth), s.153B |
| Applicant: | PALMS (CHULLORA) PTY LTD |
| Respondent: | RICHARD JAMES CUMMINS |
| File Number: | SYG 436 of 2018 |
| Judgment of: | Judge Driver |
| Hearing date: | 12 December 2019 |
| Delivered at: | Sydney |
| Delivered on: | 12 December 2019 |
REPRESENTATION
| Solicitors for the Applicant | Mr D Manca of LAS Lawyers and Consultants |
| The Respondent appeared in person |
ORDERS
Leave is granted to the petitioning creditor to rely upon the affidavits filed on 28 November 2019.
The application filed on 24 September 2019 is dismissed.
The costs of the application of the trustee are to be costs in the administration of the bankrupt estate.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 436 of 2018
| PALMS (CHULLORA) PTY LTD |
Applicant
And
| RICHARD JAMES CUMMINS |
Respondent
REASONS FOR JUDGMENT
Introduction and background
On 12 December 2019 I dismissed an application filed on 24 September 2019 by Mr Cummins (the respondent debtor in the principal bankruptcy proceedings) seeking review of a decision of District Registrar Wall made on 5 June 2018. On that day the Registrar had made a sequestration order against the estate of Mr Cummins as well as making other orders.
I also ordered that the costs of Mr Cummins’ application be costs in the administration of the bankrupt estate.
The following are my reasons for those orders.
The bankruptcy of Mr Cummins had its genesis in 2016 when Mr Cummins lodged a caveat over certain real estate at Oakhurst, NSW owned by the petitioning creditor, Palms (Chullora) Pty Ltd (Palms). Mr Cummins sought to extend the caveat in proceedings commenced in the NSW Supreme Court. The outcome of those proceedings included a costs order against Mr Cummins. Palms applied for assessment of those costs and a certificate was issued on 7 July 2017.
The certificate was filed in the Local Court Sydney Civil Registry and judgment was entered in favour of Palms on 19 July 2017.
Mr Cummins failed to pay the judgment debt thus created and, after he failed to pay the amount due on a bankruptcy notice served upon him, Palms commenced these bankruptcy proceedings.
Mr Cummins did not take any active steps in the bankruptcy proceedings and on 5 June 2018, in the absence of Mr Cummins, the Registrar made a sequestration and other orders.
In the course of the administration of the bankrupt estate the trustee obtained orders for possession of real estate at 12 Wraysbury Place, Oakhurst in New South Wales. The property was owned by Mr Cummins and had vested in the trustee upon the bankruptcy. A notice to vacate the property was issued by the NSW Sheriff on 9 July 2019 to Mr Cummins. Mr Cummins obtained a temporary stay but his action was ultimately dismissed on 3 September 2019.
It was very shortly after that that the present application was filed by Mr Cummins. The trustee took possession of the property the following day.
The current proceeding
As noted above, the application filed by Mr Cummins sought review of the Registrar’s decision made on 5 June 2018. An extension of time would have been required for that application and, given the very significant passage of time since the sequestration order was made, I was not minded to grant an extension of time.
However, on 16 October 2019 after hearing from the parties I ordered that the application for review be treated as an application for annulment under s.153B of the Bankrupcty Act 1966 (Cth) (Bankruptcy Act). I took into account that Mr Cummins is a litigant in person who contests not just the making of the sequestration order by the Registrar, but also the entire process leading to that order and the underlying debt. He made serious allegations from the bar table and I decided that he should be given the opportunity to ventilate those allegations by evidence at a hearing.
For the purposes of the hearing, in addition to the material which was before the Registrar (which clearly established that the procedural requirements for the sequestration order had been met) I received four affidavits by Mr Cummins filed on 24 September 2019, 9 October 2019, 14 October 2019 and 31 October 2019. Those affidavits are part hand written and part type written and attached a number of documents. They are somewhat hard to follow but, as explained by Mr Cummins from the bar table, they were intended to support the proposition that the costs order in the NSW Supreme Court proceedings should never have been made, was not properly assessed, that the bankruptcy notice was not properly served upon him and that serious wrongdoing vitiated the sequestration order.
Mr Cummins handed up in court two additional documents which I marked for identification. MFI A1 is a claim for the amount of $125 million by Mr Cummins apparently alleging wrongdoing by court staff in relation to the records of the NSW Supreme Court. MFI A2 appears to be the original application for assessment of ordered costs taken from the NSW Supreme Court file.
I gave leave for Palms to rely upon two affidavits filed on 28 November 2019. The first is an affidavit by Palms’ solicitor (Mr Manca) who deposes as to the background facts relating to this matter. The second is the affidavit of Bradley John Tonks (the trustee) made on 28 November 2019 providing a report on his administration of the bankrupt estate. I took into account that report in deciding to make my orders on 12 December and to reserve my reasons. Of particular significance is the urgent need for the trustee to resolve the fate of the real estate property of which he has taken possession, given that the Westpac Banking Corporation has given notice to the trustee of its intention to take possession of the property from 19 December 2019 pursuant to its mortgage over the property. As I sought to explain in oral argument with Mr Cummins, it seems to me in the interests of both him and his creditors that the property is dealt with in accordance with some agreement or understanding between the trustee and the bank. If the full value of the property is realised at sale there is at least the possibility of a surplus.
The parties made oral submissions at the hearing.
Consideration
The issues for the Court to resolve under s.153B of Bankruptcy Act are whether the sequestration order should not have been made and, if so, whether the Court should exercise its discretion to annul the bankruptcy.
Mr Cummins was unable to persuade me that the sequestration order should not have been made. The material available to the Registrar plainly supported the making of a sequestration order and, because of Mr Cummins’ failure to participate in any active way in the bankruptcy proceeding, there were no countervailing factors for the Registrar to consider. Although Mr Cummins now alleges wrongdoing at all stages commencing with the initial costs order in the NSW Supreme Court, his allegations are wholly subjective and wholly unpersuasive. The evidence of Mr Manca supports the regularity of the various processes leading ultimately to the sequestration order. I accept that evidence.
Even if I were wrong in concluding that the sequestration order was appropriately made, the available information weighs heavily against an annulment of the bankruptcy. In that regard, I accept the evidence of the trustee relating to his administration of the bankrupt estate. The administration of the bankrupt estate has been active and significant costs have been incurred. There is no proposal before the Court for the payment of the trustee’s costs and expenses. Mr Cummins has been uncooperative with the trustee, initially in relation to his statement of affairs and his taxation affairs and more recently in relation to the real estate over which the trustee has finally gained vacant possession.
It is strongly desirable that the administration of this bankrupt estate be permitted to run its course without further attempted interference by Mr Cummins.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge Driver
Associate:
Date: 19 December 2019
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