Pearl Printing Pty Ltd v Mackay, R

[1989] FCA 349

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CATCHWORDS

BANKRUPTCY - sequestration order.

BANKRUPTCY ACT 1966 -

PEARL RPINTING PTY.	LTD.	( P e t i t l o n l n g Creditor)
RAY	MACKEY	( D e b t o r )

9 MAY 1989

LOCKHART J .

SYDNEY

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY	) NO. P2147 of 1988
)

GENERAL DIVISION 1

BETWEEN:  PEARL PRINTING PTY. LTD.

Petltroning Creditor

RAY MACKEY

Debtor

JUDGE MAKING ORDER:	LOCKHART J .
DATE ORDER MADE:	9 MAY 1989
WHERE ORDER MADE:	SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.    A sequestration order be made against the estate of the

debtor.

2. The costs of the petitioning creditor including any

reserved costs be paid out of the estate.

NOTE:  Settlement and entry of orders is dealt with in Order
36 of the Federal Court Rules.

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY	) NO. P2147 of 1988
1

GENERAL DIVISION )

BETWEEN:  PEARL PRINTING PTY. LTD.

Petitioning Creditor

RAY MACKEY

Debtor

9 May 1989

REASONS FOR JUDGMENT

LOCKHART J.

This is a petition of Pearl Printing Pty. Limited to sequestrate the estate of Ray Mackey. I shall for convenience refer to them as the petitioning creditor and the debtor respectively.

The petition has been in the list on a number of

previous occasions. It appears that on at least one prior occasion an adjournment was permitted because the debtor offered to pay a portion of the debt which he owes the petitioning creditor. He has in fact paid two amounts to the petitioning creditor, totallrng some $2,000, since that time.

The petitioning creditor has proved the gormalities that are necessary for the making of sequestration order. The debtor opposes the making of that order on grounds set out in his notice of opposition of 18 November 1988, namely, that a portion of the debt claimed by the petitioning creditor is said to be owed, not by the debtor, but by a company, Columbia Offset Plates Pty. Limited. Some $1,674 is said to be owed by that company; however, the balance of the debt, which totals approximately $3,000, is admittedly owed by the debtor himself.

It is apparent from what the debtor has said that he had hoped for some last minute arrangement to be made with the petitioning creditor. I am informed by counsel for the petitioning creditor that that arrangement is not satisfactory and his client seeks to proceed today for a sequestration order. The debtor has given evidence ln support of his application to adjourn this petition for sufficient time to enable him to discharge at least a portion of his remaining indebtedness to the petitioning creditor.

The evidence reveals that the debtor has a business in the field of typesetting and related activities that is conducted by a firm of which he and his wife are the proprietors. It has equipment, machinery and other assets.

I have no evidence of their value, save that the debtor says

they are worth in the vicinity of $160,000 to $180,000.

Apart from his business assets, the. debtor has a Hercedes Benz motor car which is some 15 years or so old and which he says is worth some $2,000.

The debtor has given evidence of the amounts of money he owes various creditors, including trade creditors. The premises in which the business is carried on are rented and the rent is in arrears. The debtor lives with his wife in a house that is rented to them and that rent is also in arrears.

There are eight or nine judgments signed against the debtor totalling about $20,000, and other proceedings are pending against the debtor. Doing the best I can on the sparse material I have, it seems that the debts of the debtor are in the order of $170,000 to $180,000.

The debtor has an accountant who acts for him; but,
notwithstanding the services of the accountant, it appears

that the last income tax return filed by the debtor was in

are also not up to date, although his accountant is 1983 or thereabouts. The accounts of the debtor's business	apparently working on them in some fashion.
The debtor did seek to set aside the judgment upon which the petition in this Court is based; but he was unable to appear before the court which had jurisdiction with respect to that application and it was dismissed.
It is apparent from the evidence given by the debtor this morning that he has hopes that his business will prosper and that he will be able to discharge the debts owing to his creditors in due course. There is in existence some form of arrangement between the debtor and certaln creditors which involves in part relying upon future prospects of success from the business and in part, though not to a very clear degree, the sale of certain machinery of the business.
It is plain that there may be preferences involved in this matter which could be recoverable by the trustee in bankruptcy. It is an unfortunate position in which the debtor finds himself; but he has, for example, interest arrangements with a creditor who is seeking payment of hls debt which involves payment of interest on outstanding sums of 20 per cent. Whether this is an arrangement that exists with other creditors I do not know. The debtor has very substantial liabilities, there is no clear evidence of the value of the business or its assets, but evidence of piecemeal arrangements being made to pay creditors from time
uncommon in this Court in bankruptcy matters, the best which to time as they press for payment. Such a situation is not the debtor can do being from time to time to make those
payments and keep pressing debtors at bay. In the long run this does no good to anybody, including the debtor himself.
At some stage it may be appropriate for the debtor to consider some form of scheme of arrangement or assignment so that the business can be kept intact, but with advice from persons competent to give it in the insolvency as well as in the accounting field. I do not think it appropriate in the circumstances to allow any adjournment in the matter. In the long run it is in the best anterests of the debtor that a sequestration order is made. It is also in the public interest.
Accordingly, I am satisfied that the petitioning creditor has established the requisite elements for the making of a sequestration order. I make a sequestration order against the estate of the debtor and order that the costs of the petitioning creditor including any reserved costs be paid out of the estate.

I certify that this and the preceding four (4) pages are a true copy of the reasons for judgment herein of the Honourable Hr. Justice Lockhart.

Date: 9 May 1989