PHOENIX CONSTRUCTIONS (QUEENSLAND) PTY LIMITED v MCCRACKEN - [2012] FMCA 855

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PHOENIX CONSTRUCTIONS (QUEENSLAND) PTY LIMITED v MCCRACKEN

[2012] FMCA 855

BANKRUPTCY – Bankruptcy notice – validity of service – notice based on judgment not stayed – judgment appealed – judgment sum and interest set aside – costs ordered to be paid by appellant notwithstanding results of appeal – amount claimed for costs unquantified – still able to support creditors petition – circumstance of appeal subsequently upheld did not affect the act of bankruptcy – sequestration of estate ordered.

Bankruptcy Act 1966, ss.5, 40(1)(c), 40(1)(g), 50, 52
Bankruptcy Regulations, 16.01(c)

Hope & Hope (1854) 2WR698
Re Mendonca: Ex parte FCT (1969) 15 FLR 256
Joseph Francis Emerson and Wilma Lucy Emerson v Wreckair Pty Ltd [1992] FCA 16
Walsh v Deputy Commissioner of Taxation [1984] HCA 33; (1984) 156 CLR 337
Re Hyams; Official Receiver v Hyams (1970) 19 FLR 232
Dean v QUF Industries Ltd (1981) 51 FLR 317
Re Tait; Ex parte DCT (1996) 65 FCR 592
Re Hanby; Ex parte Flemington Central Spares Pty Ltd (1967) 10 FLR 378
Re Hayes; Ex parte Thomas Borthwick and Sons (Australasia) Ltd (1970) 18 FLR 216
Clyne v Deputy Commissioner of Taxation (1983) 57 ALJR 673
Re Vella; Ex parte Seymour [1983] FCA 115; (1983) 67 FLR 287
Re Zagoridis; Ex parte Q’plas Group Pty Ltd [1990] FCA 459; (1990) 27 FCR 108

Applicant:

PHOENIX CONSTRUCTIONS (QUEENSLAND) PTY LIMITED
ACN 056 159 614

Respondent:

JARROD MCCRACKEN

File Number:

BRG 712 of 2011

Judgment of:

Coker FM

Hearing date:

19 July 2012

Date of Last Submission:

19 July 2012

Delivered at:

Townsville

Delivered on:

14 September 2012

REPRESENTATION

Counsel for the Applicant:

Mr Savage Senior Counsel

Solicitors for the Applicant:

Connolly Suthers

Counsel for the Respondent:

Ms O’Gorman

Solicitors for the Respondent:

Walsh Halligan Douglas

ORDERS

That a sequestration order be made against the estate of JARROD MCCRACKEN.
The applicant creditor’s costs be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

The Court notes that the date of the act of bankruptcy is 31 August 2011.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT TOWNSVILLE

BRG 712 of 2011

PHOENIX CONSTRUCTIONS (QUEENSLAND) PTY LIMITED ACN 056 159 614

Applicant

And

JARROD MCCRACKEN

Respondent

REASONS FOR JUDGMENT

These proceedings were commenced a little over a year ago on 11 August 2011 when Phoenix Constructions (Queensland) Pty Ltd, whom I shall hereafter refer to as “the applicant,” filed a creditor’s petition on 11 August 2011 and amended that creditor’s petition on 18 October 2011. Pursuant to the creditor’s petition, a sequestration order was sought to be made against the respondent, Jarrod McCracken, hereinafter referred to as “the Respondent”. The Applicant relied upon two distinct acts of bankruptcy. They related to noncompliance with the bankruptcy notice which was said to have been served in relation to the matter, a breach of the terms of section 40(1)(g) of the Bankruptcy Act, as well as, “keeping house,” a breach of the terms of section 40(1)(c) of the Act.
At the hearing of the matter on 19 July 2012 it was also sought, in the alternative, that there should be a trustee appointed, pursuant to the provisions of section 50 of the Bankruptcy Act, so that there would be administration of the respondent’s estate, at least until such time as an assessment was able to be perfected, in relation to costs under the currently unsatisfied orders of the Supreme Court.
The claim in relation to the matter, which gives rise to the bankruptcy notice and the subsequent creditor’s petition arose as a result of a judgment obtained in the Supreme Court of Queensland at Townsville against the respondent in favour of the applicant, in the sum of $2,025,212.17, inclusive of interest.
It was noteworthy however, that the judgment included the amount plus interest which totalled $2,025,212.17 but also specifically noted that there was an order in respect of the payment of costs. As a result of that judgment, on 7 July 2011 the applicant sought to serve a bankruptcy notice upon the respondent, which claimed that the respondent owed the applicant the judgment debt.
On 12 July 2011 the respondent filed a notice of appeal in relation to the judgment and on 13 July 2011 orders were made in the Supreme Court of Queensland at Townsville, making freezing orders in favour of the applicant, against the respondent.
On 20 July 2011 the applicant apparently gave instructions to its process server to serve the respondent with an Enforcement Hearing Summons.
Some issue was initially taken in relation to the service of the bankruptcy notice, however, that does not now appear to be pressed. What is clear is that on 10 August 2011, service was effected by Ian Kennedy, a bailiff, by placing the bankruptcy notice under the door at unit 2309, 6 Mariners Drive, The Strand. Service was said to therefore, have been effected in relation to the bankruptcy notice, pursuant to regulation 16.01 of the Bankruptcy Regulations. Regulation 16.01 is in these terms:
(1)Unless the contrary intention appears, where a document is required or permitted by the Act or these regulations to be given or sent to, or served on, a person (other than a person mentioned in regulation 16.02), the document may be …
(c)left, in an envelope or similar packaging marked with the person’s name, at the last-known address of the person; …
There does not appear to be any contention that at the time that service was effected, the respondent resided at unit 2309, 6 Mariners Drive, The Strand in Townsville and the creditor’s petition which has been filed in relation to the matter relies upon what is said to be one act of bankruptcy, arising from the failure to comply with the terms of the bankruptcy notice. Pursuant to section 40, subsection (1)(g), of the Bankruptcy Act headed “Acts of bankruptcy” the following is noted as an act of bankruptcy:
40(1) A debtor commits an act of bankruptcy in each of the following cases:
…(g)if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i)where the notice was served in Australia - within the time specified in the notice; or
(ii)where the notice was served elsewhere - within the time fixed for the purpose by the order giving leave to effect the service,
comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;...
In other words, there is, pursuant to the rules, 21 days in which to comply with the bankruptcy notice and if that has not been complied with then that, of itself, constitutes an act of bankruptcy.
However, the applicant also sought alternatively, to rely upon the provisions of section 40(1)(c) of the Act which is in these terms:
40(1) A debtor commits an act of bankruptcy in each of the following cases:
(c) if, with the intent to defeat or delay his or her creditors:
(i) he or she departs or remains out of Australia;
(ii) he or she departs from his or her dwelling-house or usual place of business;
(iii) he or she otherwise absents himself or herself; or
(iv) he or she begins to keep house;…
I shall come in due course to those particular aspects of the matter in relation to these proceedings but it is clear, at least from the applicant’s perspective, that service has properly been proven upon the respondent in relation to the bankruptcy notice and that there is a proper basis to also find that service of the creditor’s petition has been effected.
In that regard, there was again some argument on the part of the respondent relating to the issue of service. However, to a significant degree, that appears no longer to be in dispute in relation to the matter but, rather, there is a dispute as to whether there is a continuing basis upon which there could be reliance placed upon the bankruptcy notice as constituting a proper basis for there to be found to have been, an act of bankruptcy.
In relation to the issue of service, however, it is noteworthy that there has now been an appearance lodged in respect of the proceedings and, in fact, on numerous occasions during the last year the respondent has been represented by counsel and solicitors, in relation to the creditor’s petition. I should indicate, in any event, that I am satisfied as to service having properly being effected in relation to this matter and note particularly the submissions that were provided by applicant in relation to confirmation of the line of authority that has grown up in respect of proof of service.
In this instance, it was contended on the part of the respondent, at least initially, that service had not been affected, or, even if it were attempted, there had been noncompliance with the relevant statutory provisions relating to service of process. However, the line of authorities clearly indicate that, where an appearance has been effected, any of the deficiencies that might arise in relation to service are effectively corrected and in such a situation, there is taken to have been effective service.
In particular, the authorities go back as far as that of Hope & Hope (1854) 2WR698 where the Lord Chancellor noted:
The object of all service is, of course, only to give notice to the party to whom it is made, so that he may be made aware of and may be able to resist that which is sought against him; and when that has been substantially done, so that the court may feel perfectly confident service has reached him everything has been done that is required.
Quite clearly the filing of a notice of appearance and subsequent repeated attendances by or on behalf of the respondent has remedied any defect that might have been alleged in relation to the service of the creditor’s petition. The respondent is clearly aware of the proceedings and has been vigorously resisting the sequestration order which has been sought against him. It is not contested, but I would simply note that it is clearly the case that service has been effective upon the respondent such that both the bankruptcy notice and the creditor’s petition have been effectively served and are able to be relied upon.
What needs to then be considered more particularly in relation to the matter, is whether there is properly a basis upon which the court has the power to make a sequestration order and, if found that the court does have that power, whether the court should exercise its discretion to make the sequestration order. Section 52 of the Bankruptcy Act is clearly relevant in relation to such matters and section 52, headed “Proceedings and order on creditor’s petition”, is in these terms:
52(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 the 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.
(1A) If the Court makes a sequestration order, the creditor who obtained the order must give a copy of it to the Official Receiver before the end of the period of 2 days beginning on the day the order was made.
(1B) Subsection (1A) is an offence of strict liability.
(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 to be made;
it may dismiss the petition.
(3)    The Court may, if it thinks fit, upon such terms and conditions as it thinks proper, stay all proceedings under a sequestration order for a period not exceeding 21 days.
(4)    A creditor’s petition lapses at the expiration of:
(a)subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or
(b)if the Court makes an order under subsection (5) in relation to the petition – the period fixed by the order;
unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn.
(5)    The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor’s petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 23 months, commencing on the date of presentation of the petition as is specified in the order.
Quite clearly, therefore, there are three issues that the court needs proof of in order to be satisfied that it is appropriate to make a sequestration order against the estate of the debtor.
Before addressing those matter, however, it is proper to note, that normally a creditor’s petition lapses at the expiration of 12 months from the date of the presentation of the petition or, if the court makes an order in relation to the petition, the period fixed by the order. In this instance, the petition was filed on 11 August 2011 and, therefore, pursuant to section 52(4)(a), would normally have lapsed on 11 August 2012. However, on 9 August 2012 an order was made pursuant to the provisions of section 52(5), to the effect that the period at the expiration of which the petition was to lapse was extended to 11 November 2012. Clearly, therefore, the power to make a sequestration order remains.
It is necessary to therefore consider those issues which arise pursuant to the provisions of section 52(1). The first is whether the court is satisfied that the matters stated in the petition are proven. In this instance, the respondent strongly contends that the creditor’s petition should be dismissed, because there is no material before the court upon which the court may be, “satisfied with the proof of the fact that the debt or debts on which the petitioning creditor relies is still owing.”
Here, there is significant controversy that arises. The applicant relies upon the judgment which was originally obtained in the Supreme Court of Queensland on 15 June 2011. It detailed a judgment and interest totalling $2,025,212.17, as well as an order for costs. However, on 18 May 2012 the Court of Appeal set aside the judgment and, additionally, set aside the freezing orders that I made reference to previously, and ordered instead that:
(a) The applicant’s claim against the respondent is dismissed.
But, significantly -
(b) The respondent pay:
(i)the applicant’s cost of prosecuting the proceedings against and defending the counter-claim of Coastline Constructions Pty Ltd (the first defendant) up until 21 July 2010; and
(ii)70 per cent of the applicant’s costs of, and incidental to, the proceedings against the respondent.
In other words, a costs order, arising from the trial in the Supreme Court of Queensland in Townsville. The applicant says that the basis upon which the bankruptcy notice was issued was the debt which constituted, at the time of serving the bankruptcy notice, the judgment debt, the interest calculated and the costs.
From the perspective of the respondent, however, it was argued strongly that the only debt that could be relied upon, and was relied upon in the creditor’s petition at the time that it had been filed, was a debt that had been set aside in its entirety. That is argued upon the basis that the judgment and interest had been dismissed and the costs that were ordered to be paid were different to those which had been ordered to be paid, pursuant to the orders of the Supreme Court of Queensland at Townsville in June of 2011.
The applicant argues that there was continuity in relation to at least part of the debt that was relied upon and that that was all that was necessary, in order to found the basis upon which the sequestration order could be made.
It is noteworthy, that the applicant says that the appeal decision does not, of itself, set aside an act of bankruptcy and what is significant and relevant in relation to this matter is that, whilst the debt that was relied upon consisted of the judgment, the interest and the costs, there was still remaining a costs order and that that was sufficient to found the creditor’s petition.
The argument put for the respondent is that whilst the costs had not been quantified, pursuant to the costs order of June 2011, the costs that were ordered by the Court of Appeal in May of 2012 were not the same costs that existed at the time of the filing of the creditor’s petition and that there was, therefore, an inherent flaw in any suggestion that the debt or debts on which the crediting petitioner relied, was still owing.
Quite simply it was argued by the respondent that any current costs order was a new order which did not exist at the time that the creditor’s petition was filed. In that regard, the respondent argues that the court should not be placing reliance upon a payment, due pursuant to the costs order of 2011 because the Court of Appeal has made new costs orders following the determination of the appeal in May of 2012.
The respondent therefore says that the creditor’s petition does not rely on the liability imposed on the respondent by reason of costs orders, but relies only on the judgment debt and interest which were set aside. It is, therefore, not quantified and is suggested by the respondent to, therefore, not be a debt on which the petitioning creditor could rely to support the proof required, pursuant to the provisions of section 52(1).
It was argued in the alternative, however, that, even if the court were minded to grant the applicant leave to further amend the amended previous petition, the authorities establish that the debt or the debts on which the petitioning creditor may rely for the purposes of a sequestration order are only those debts that exist, at the time of the act of bankruptcy. In particular, I was referred to the decision of Conti J in Australia & New Zealand Banking Group v Coutts (2003) FCA 968, where his Honour said, at paragraph 24, the following:
It is settled law that the debt relied upon by a petitioning creditor must exist at the time of the act of bankruptcy relied upon: Re Mendonca: Ex parte FCT (1969) 15 FLR 256. The question which arose for determination in Re Mendonca was whether the debtor owed to the Commissioner of Taxation, as at the alleged dates of certain acts of bankruptcy, income tax in accordance with notices of assessments which had stipulated both the time for payment and the amount payable. Although the time for payment had not arrived as at the dates of acts of bankruptcy of the taxpayer, it was held that the taxpayer’s debts for income tax were already in existence as liquidated sums due as at those dates within s 44(1)(b) of the Act. Gibbs J observed (at 259) as follows:
The well-settled rule that the debt of the petitioning creditor must be a debt which existed at the date of the act of bankruptcy … has survived many legislative changes and is not altered by the Bankruptcy Act 1966-68.
Conti J went on to note that the rule had been subsequently applied in reported authorities and noted the cases of Re Hyams; Official Receiver v Hyams (1970) 19 FLR 232 at 239, Dean v QUF Industries Ltd (1981) 51 FLR 317, and in Re Tait; Ex parte DCT (1996) 65 FCR 592. In particular, in Re Tait; Ex parte Commissioner of Taxation, Lockhart J noted:
…the debt, upon which a petition and a sequestration order are based, must be a debt which existed at the date of the relevant act of bankruptcy.

Accordingly, the respondent’s position is simply to say that the costs that have been ordered to be paid following the hearing and determination of the appeal in May of 2012, was not a debt that existed at the date of the alleged act of bankruptcy. It was contended, therefore, that there was simply no basis upon which the court could be satisfied that the debt upon which the crediting petitioner relied was one that was still owing as the debt now sought to be relied upon is a new or different debt.
However, the applicant noted that the decision in Australia & New Zealand Banking Group v Coutts (supra) was a decision of a single judge and was one that failed to, in any way, recognise the decision of the Full Court of the Federal Court in Joseph Francis Emerson and Wilma Lucy Emerson, v Wreckair Pty Ltd [1992] FCA 16 where the court, constituted by Morling, Neaves and Spender JJ, commented specifically upon the validity of a bankruptcy notice founded on a judgment entered after a contested hearing and upon which no stay of judgment had been made.
There, at paragraph 22, the court noted:
22. A debtor commits an act of bankruptcy if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order, the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice and the debtor does not comply with the requirements of the notice or satisfy the Court that he has a counter-claim, set-off or cross-demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross-demand that he could not have set up in the action or proceeding in which the judgment or order was obtained (Bankruptcy Act, s.40(1)(g)). A bankruptcy notice is to be in accordance with the prescribed form (s.41(1), such prescribed form to be such that the notice requires the debtor named in it, within a specified time, to pay the judgment debt or sum ordered to be paid in accordance with the judgment or order or secure payment of, or compound, the debt or sum ( s.41(2)).
The judgment goes on in paragraphs 23 and 24 to note:
23. A bankruptcy notice may be invalid if the amount specified in the notice as the amount due to the creditor exceeds the amount in fact due. The date as at which the inquiry whether the amount specified in the notice is excessive is to be made is the date of the issue of the notice: Walsh v Deputy Commissioner of Taxation [1984] HCA 33; (1984) 156 CLR 337. A payment in reduction of the judgment debt made after the date of the issue of the notice but before its service on the debtor will not invalidate the notice: ibid. In that case, Gibbs C.J., in whose judgment the other members of the Court agreed, said at p 340:
“In form the notice speaks as at the date which it bears, that is the date of its issue, and although service is essential to make non-compliance an act of bankruptcy, and although the time fixed for compliance runs from the date of service, the notice must be understood as speaking as at the date of its issue and the requirement of the notice, for the purposes of s.40(1)(g) of the Bankruptcy Act, must be ascertained in that context. This reinforces the view that the amount which must be correctly stated is the amount of the judgment debt owing at the date of issue.”
24. It is also well established that, once an act of bankruptcy has been committed by the debtor’s failure within the time specified to comply with the requirements of a bankruptcy notice or to satisfy the Court that he has a counter-claim, set-off or cross-demand of the requisite kind, it remains an available act of bankruptcy even though subsequently the judgment on which it is based is set aside: Re Hanby; Ex parte Flemington Central Spares Pty Ltd (1967) 10 FLR 378; Re Hayes; Ex parte Thomas Borthwick and Sons (Australasia) Ltd (1970) 18 FLR 216; Clyne v Deputy Commissioner of Taxation (1983) 57 ALJR 673; Re Vella; Ex parte Seymour [1983] FCA 115; (1983) 67 FLR 287; Re Zagoridis; Ex parte Q’plas Group Pty Ltd [1990] FCA 459; (1990) 27 FCR 108. In the present case, of course, no act of bankruptcy has yet been committed by virtue of the service of the bankruptcy notice as the time for compliance has been extended until the determination of the present appeal.
It is clear from the comments of the Full Court, that once an act of bankruptcy has been committed by the debtor’s failure, within the time specified to comply with the requirements of the bankruptcy notice, it remains an available act of bankruptcy even though, subsequently, the judgment on which it is based is set aside.
It is exactly what is relied upon by the applicant in this proceeding. The judgment was entered and the judgment was obtained in June of 2011. An application was made to stay the judgment, but that was unsuccessful. Payment was, therefore, required to be made in relation to the judgment sum within 21 days of the date of the service of the bankruptcy notice and that has not occurred.
It, therefore, constitutes a basis upon which a sequestration order can be sought, relying upon the non‑compliance with the payment pursuant to the requirements of the bankruptcy notice, even though subsequently the judgment on which it was based was set aside. That occurred when the decision in the appeal was handed down in May 2012, some 10 months or so after the original decision and some eight months after the service of the bankruptcy notice.
Their Honours were then required to comment upon what steps should be taken by a court exercising jurisdiction in bankruptcy to “go behind” a judgment and inquire whether it was founded on a real debt. The argument that was relied upon by the applicant in that regard was to say that there is no obligation or, in fact, reason to go behind the decision of Cullinane J in the Supreme Court decision of June 2011, nor is it necessary or appropriate to go behind the judgment of the Full Court of the Supreme Court, handed down in May 2012.
It is clear, it is contended, that there is a debt. It may not be the same debt that was determined by the judgment in June 2011, but it remained a debt stemming from those proceedings, and that that is sufficient to show the continuity in relation to such matters. At paragraph 28 of the decision in Emerson v Wreckair Pty Limited, their Honours went on to say the following:
To found the presentation of a creditor’s petition it is necessary that there be owing by the debtor to the petitioning creditor a debt that amounts to $1,500 or two or more debts that amount in the aggregate of $1,500 (Bankruptcy Act, s.44(1)(a)). There is, however, no requirement for the issue of a bankruptcy notice that the creditor have a judgment for any minimum amount. Nor is there a requirement that a creditor who petitions for a sequestration order based upon an act of bankruptcy of the kind for which s.40(1)(g) of the Bankruptcy Act provides rely, wholly or at all, upon the debt upon which the bankruptcy notice was founded. It would, therefore, seem appropriate that upon an application to a court exercising jurisdiction in bankruptcy to set aside a bankruptcy notice, the court should not go behind a judgment 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.
What clearly is noted there is the understandable acceptance that, whilst a debt may exist at the time of the service of the bankruptcy notice or the filing of a creditor’s petition, it is not necessarily one and the same debt that was relied upon in the creditor’s petition at hearing. Nor is it necessary for it to be the same amount that is relied upon.
To suggest that that is required in relation to the matter, flies in the face of the obviously common occurrence of part payments being made in an attempt to try and stave off the evil day associated with the making of a sequestration order.
It is clear in my assessment of this matter that if there is continuity in relation to some part of the debt, stemming from the judgment of June 2011, then it remains a debt upon which the petitioning creditor could rely to obtain a sequestration order, pursuant to a previously filed creditor’s petition.
The respondent says that the debt arising pursuant to the judgment of June 2011 is totally expunged. The respondent contends that whilst there remains an order in relation to costs, it is an order which did not exist at the time of the filing of the application for sequestration and that, therefore, it cannot be relied upon. The respondent submits that on 18 May 2012 a new debt in relation to costs came into existence, and that it could not be relied upon.
The applicant says that such a stance, if taken, in relation to the matter would be a triumph over form over substance, though the respondent contends that form is important. The argument that is stressed repeatedly on the part of the respondent is that the orders relied upon to justify the making of a sequestration order must be the same orders, because the bankrupt must be able to quantify the amount to be paid, so that there is a requirement for form to be given priority over substance.
In this instance, however, it is clear that the costs that were ordered to be paid by Cullinane J in June of 2011, whilst changed in quantum, are the same costs that are relied upon to constitute the order of the Full Court, with regard to the respondent paying the applicant’s costs of and incidental to the proceedings against the respondent. There may have been a change in amount, and that is not quantified, but there is no requirement, as was emphasised by counsel for the applicant, for there to be a liquidated debt relied upon pursuant to the provisions of section 52.
All that section 52 requires is that the court is required to be satisfied that there is proof of the debt or debts upon which the petitioning creditor relies. There is clearly an ongoing debt. The amount may have changed, but the debt remains a liability which is due and owing.
In that respect I note particularly the provisions of section 5 of the Act which specifically notes that a debt includes a liability. As such, an unquantified sum can be relied upon and, in any event, it is clear that the Full Court in Emerson v Wreckair (supra), specifically acknowledged that once an act of bankruptcy has been committed, it remains available for the purposes of obtaining a sequestration order.
It is clear, in my assessment, that the failure to pay the moneys called upon to be paid pursuant to the judgment of 15 June 2011 and sought in the bankruptcy notice served upon the respondent is and of itself an act of bankruptcy upon which sequestration can and should properly be made. I intend, therefore, to make the sequestration order sought in relation to this matter.
It is not specifically necessary for me to comment upon whether, in fact, another act of bankruptcy has arisen as a result of the provisions of section 40(1)(c) of the Bankruptcy Act. I would note, however, that the significant amount of evidence provided in relation to the matter and not now challenged would, in my assessment, clearly satisfy the court that the debtor acted specifically with an intent to defeat or delay his creditors.
It was clear that notice had, by numerous means, come to the attention of the respondent that the process server was seeking to communicate with him for the purpose of service of documentation. The respondent absented himself on repeated occasions, many of them in dangerous circumstances, which clearly, in my assessment, constituted a direct attempt to absent himself and thus, clearly, that constituted an act of bankruptcy, upon which a sequestration order could properly be made.
Additionally, an alternative order was sought pursuant to the provisions of section 50 of the Bankruptcy Act, relating to the appointment of a trustee to take control of the respondent’s property, before sequestration. As indicated, I intend to make the order for the sequestration of the respondent’s estate. It is therefore unnecessary to address that alternative order.
Being satisfied as to those matters required to be proved pursuant to section 52(1) of the Bankruptcy Act, I intend to order the sequestration of the estate of Jarrod McCracken, along with an order for costs.

I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Coker FM

Date: 14 September 2012