Palms (Chullora) Pty Ltd v Cummins - [2019] FCCA 3683

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…

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: [2019] FCCA 3683
Decision Date: 12 December 2019

CaseChat Overview and Summary

Palms (Chullora) Pty Ltd applied to the Federal Court of Australia for the annulment of a bankruptcy order made against it. The trustee in bankruptcy opposed the application.

The primary legal issue before the Court was whether to annul the bankruptcy order. This required the Court to consider the discretion it possessed under the relevant bankruptcy legislation, particularly in light of the bankrupt's conduct and the overall circumstances of the case.

Judge Driver found that there was no real doubt that the sequestration order should have been made in the first place. The Court considered the bankrupt's lack of cooperation with the trustee as a significant factor weighing heavily against granting the annulment. The discretionary factors, when assessed holistically, did not favour the bankrupt.

The application for annulment was dismissed.

Orders