Playford v Go to Court Pty Ltd
[2014] FCCA 2501
•17 October 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PLAYFORD v GO TO COURT PTY LTD & ORS | [2014] FCCA 2501 |
| Catchwords: BANKRUPTCY – Annulment – where applicant was solvent at time of sequestration order – where applicant currently insolvent – application dismissed. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.40, 41, 52, 109, 153B |
| ANZ Banking Group Limited v Menso [2006] FMCA 1522 Australia & New Zealand Banking Group Ltd v Foyster [2000] FCA 400 Cameron v Cole (1944) 68 CLR 571 Lane Rowin v Perovich [2007] FMCA 1429 Mulherin v Quinn Villages Pty Ltd [2012] FMCA 1063 Re Calderon (unreported Federal Court of Bankruptcy, 31 May 1977 No. NSW 573 of 1976) Re Pollock (a Bankrupt); Ex Parte Pollock v DCT (1994) 94 ATC 4148 Sandell v Porter (1966) 115 CLR 666 Yarranova Pty Ltd v Shaw (No.2) [2014] FCA 616 |
| Applicant: | MATTHEW WILLIAM PLAYFORD |
| First Respondent: | GO TO COURT PTY LTD |
| Second Respondent: | GO TO COURT FRANCHISING PTY LTD |
| Third Respondent: | GTC PARTNERS PTY LTD |
| Fourth Respondent: | JAMES TERENCE ALEXANDER STEVENS |
| File Number: | BRG 594 of 2014 |
| Judgment of: | Judge Burnett |
| Hearing date: | 15 October 2014 |
| Date of Last Submission: | 15 October 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 17 October 2014 |
REPRESENTATION
| The Applicant appeared on his own behalf. |
| Counsel for the Respondent: | Ms K. Gothard |
| Solicitors for the Respondent: | Go To Court Solicitors |
ORDERS
That the application be dismissed.
That the applicant pay the respondent’s costs of and incidental to the application. Such costs to be taxed and paid from the bankrupt estate with priority afforded to costs, pursuant to s.109(1)(a) of the Bankruptcy Act 1966 (Cth).
| FEDERAL CIRCUIT COURT AT BRISBANE |
BRG 594 of 2014
| MATTHEW WILLIAM PLAYFORD |
Applicant
And
| GO TO COURT PTY LTD |
First Respondent
| GO TO COURT FRANCHISING PTY LTD |
Second Respondent
| GTC PARTNERS PTY LTD |
Third Respondent
| JAMES TERENCE ALEXANDER STEVENS |
Fourth Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
The applicant, a bankrupt, seeks orders for annulment pursuant to s.153B of the Bankruptcy Act 1966 (Cth) (“the Act”) on the basis that a sequestration order ought not to have been made against him. The sequestration order was made against him on 29 May 2013 by a registrar of the Court. His application for annulment was made on 7 July 2014 – a matter that I shall touch upon shortly.
The relevant principles for determining such an application are broadly addressed in the decision of Carr J in Re Pollock (a Bankrupt); Ex Parte Pollock v DCT (1994) 94 ATC 4148, which canvassed the relevant authorities and adopted the course foreshadowed by Rich J in Cameron v Cole (1944) 68 CLR 571, and outlined by Riley J in Re Calderon (unreported Federal Court of Bankruptcy, 31 May 1977 No. NSW 573 of 1976).
As it is the applicant for annulment who alleges he out not to have been sequestered, it is therefore for him to bring himself within the section and satisfy the court that the sequestration order would not have been made. In determining the application the Court to whom the application is made must first seek to ascertain the actual state of affairs at the time when the sequestration order was made. In order to ascertain the actual state of affairs the Court hearing the application for annulment looks at the facts that were before the Court which made the sequestration order and any other facts that were not before the Court but are shown on the hearing of the application for annulment to have been in existence when the sequestration order was made.
Having considered all the facts so looked at, the Court will then determine whether on those facts the applicant has satisfied it that the sequestration order ought not to have been made, and if the Court is so satisfied, the Court is still not bound to annul the sequestration order but must consider all the circumstances of the case as to whether it ought be annulled.
These considerations were perhaps best addressed in Bulic v Commonwealth Bank of Australia Pty Ltd [2007] FCA 307, by Tracey J at [12], who observed, upon a review of the authorities, that the following matters ought to be considered.
(1) An order can be made under s 153B(1) of the Act notwithstanding that the applicant has been discharged from bankruptcy; Re Oates; ex parte Deputy Commissioner of Taxation (1987) 17 FCR 402.
(2) An applicant who seeks an annulment of his or her bankruptcy “carries a heavy burden”. It is incumbent on an applicant “to place before the Court all relevant material with respect to his or her financial affairs so that the Court may be properly informed and may make a judgment that is based on the actual circumstances of the applicant”: Re Papps; ; Ex parte Tapp (1997) 78 FCR 524 at 531.
(3) In determining whether or not a sequestration order “ought not to have been made” the Court is not confined to a consideration of whether the order should have been made on the facts known to the Court at the time at which it was made. The Court must take account of facts, known at the time at which the sequestration order was made and at which it determines an annulment application, even if those facts were not before the Court at the time at which the sequestration order was made: Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at 243; Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426.
(4) A sequestration order “ought not to have been made” if, on the facts known at the time of the annulment application, the Court would have been bound not to make the sequestration order: Re Frank; ex parte Piliszky (1987) 16 FCR 396.
(5) The Court will be so satisfied if it is established that the debtor was not, at the time the sequestration order was made, indebted to the petitioning creditor: Re Deriu (1970) 16 FLR 420 at 422.
(6) If the Court is so satisfied, it is not precluded from annulling the bankruptcy because the bankrupt had not sought to have the default judgment set aside or failed to oppose the creditor’s petition or failed to seek a review of the sequestration order: Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426.
(7) The power conferred on the Court by s 153B(1) is discretionary in nature. Even if persuaded that the sequestration order ought not to have been made, the Court can, in appropriate circumstances, decline to annul the bankruptcy: Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at 243.
(8) Considerations which may have a bearing on the exercise of discretion include unexplained delay in the making of the application, whether or not the applicant is solvent, whether or not the applicant has made full disclosure of his or her financial affairs and a failure by the bankrupt to oppose the creditor’s petition and attend the hearing at which the sequestration order was made: Re Williams (1968) 13 FLR 10 at 24–5; Boles at 247; Re Papps; ex parte Tapp (1997) 78 FCR 524 at 531; Rigg v Baker [2006] FCAFC 179 at [79]; Cottrell v Wilcox [2002] FCA 1115 at [7]. Additional considerations are collected in D. A. Hassall, “Annulment of Bankruptcy and Review of Sequestration Orders” (1993) 67 ALJ 761 at 766.
The applicant here contends that the orders ought not to have been made because:
a)there was no final judgment in support of the petition;
b)there was ineffective service of the bankruptcy notice, a factor which it contends infects the ultimate order made;
c)the sequestration proceedings constituted an abuse of process and accordingly no order ought to have been made;
d)the applicant had no notice of the adjourned hearings of the sequestration application and accordingly to that end was denied procedural fairness; and
e)that he is solvent.
No final judgment
The applicant says that the judgment supporting the bankruptcy notice was not a final judgment. In particular, he contended that according to the facts in his case, the order – which was the order of Martin J – had not been properly quantified prior to the bankruptcy notice being filed. Therefore, in his contention, it was not enforceable at that time. The logic of his contention continues, if it is not enforceable, it cannot be a final order for the purposes of the Bankruptcy Act (supra).
The relevant order itself was an order made by Martin J on 25 October 2012. The order of the Court was that “the defendants [including the applicant] pay the plaintiffs' costs fixed in the sum of $5000.” The order was one made by a Justice of the Supreme Court in accordance with powers under the Uniform Civil Procedure Rules 1999 (Qld) (“the UCPR”). In particular, rr.658, 660 and 798 are relevant. Chapter 16 of the UCPR, r.658 provides:
658 General
(1) The court may, at any stage of a proceeding, on the application of a party, make any order, including a judgment, that the nature of the case requires.
UCPR r.660 relevantly provides in part:
(1) An order is made by:
(a) the order being pronounced in court by the person making the order…
UCPR r.661 proceeds then to deal with the process of authentication of orders providing for orders to be ultimately prepared, endorsed and signed by a relevant officer of the court. So far as costs orders are concerned, UCPR 798 provides:
A person entitled to enforce an order with costs may enforce the order and, when costs become payable, enforce payment of the costs separately
The applicant says that because it was an order for costs rendered at an interlocutory stage in the proceeding, it was not a final costs order. His contention was that it is a final order only once the proceeding is concluded.
Whilst the respondent didn't cavil with the applicant's submission that an act of bankruptcy founded on a s.40(1)(g) bankruptcy notice issued under s.41(1)(a) of the Act requires a judgment or final order, it contended the order of Martin J, in this instance, was however such an order. In support, it was submitted that in this court, in the decision of ANZ Banking Group Limited v Menso [2006] FMCA 1522, Wilson FM (as he then was) stated at [11]-[12]:
“… a judgment obtained in an action to recover the amount of costs due under an interlocutory order (which order could not itself found a notice) can be a final order sufficient to found a bankruptcy notice: Re Boyd; ex parte McDermott [1895] 1 QB 611; ex parte Moore; in re Faithfull (1885) 14 QBD 627 at 633; Re McAlister; ex parte McAlister; Edith Moore (respondent) (1936) 8 ABC 283; Re Skinner’s and Smith’s Application (1982) 45 ALR 553 at 555.
[12] Even if it is not a final order as commonly understood, an order for costs may be deemed to be a final judgment by s.40(3)(b) Bankruptcy Act if it is enforceable in the same manner as a final judgment. Therefore, it is to the terms of the relevant legislation that attention must be focused, to see which is the order that is enforceable.”
In this case, the order is, as I have already noted, a judgment by Martin J for a sum of costs fixed in the amount of $5,000. It is a money order, and the order is one that took immediate effect. It was not one that was to be stayed pending the resolution of the proceeding in its totality. I am satisfied that the order of Martin J dated 25 October 2012 upon which the bankruptcy notice was issued was a final order sufficient for the issue of the bankruptcy notice. On that basis, the applicant’s submission on this ground is unsustainable.
Ineffective service of bankruptcy notice
The second ground advanced by the applicant is that there has been ineffective service of the bankruptcy notice. Service of notices under the Bankruptcy Act (supra) are provided for in r.16.01 of the Bankruptcy Regulations 1996 (Cth). In particular, in this case service of the bankruptcy notice was effected by inter alia service by email. The Bankruptcy Regulations (supra) contemplate service in this form, in particular, r.16.01(1)(e) provides:
(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:
(e) sent by facsimile transmission or another mode of electronic transmission:
(i) to a facility maintained by the person for receipt of electronically transmitted documents; or
(ii) in such a manner (for example, by electronic mail) that the document should, in the ordinary course of events, be received by the person.
Mr James Terrence Stevens, who is a solicitor and the principal of the creditor entity, Go to Court Proprietary Limited, and of other relevant entities who were the original petitioning creditors, swore an affidavit addressing service of the bankruptcy notice. He was an officer of the company, and deposed to the fact that the person who had previously conducted the file was no longer employed by the corporation.
He proceeded to note that on a review of the file maintained in respect of the creditor’s interests with the debtor, on or about 12 October 2012, the respondent debtor had filed a notice of intention to defend various Supreme Court proceedings that gave rise to the initating final judgment. Under the address for service an email address was provided of “[email protected]”, and accordingly that address had been used to communicate back and forth with the debtor from about 2010.
It was against this background that the original affidavit of Mr Mark Edward Aberdeen filed in the original creditor’s petition was received in the application. In that affidavit, Mr Aberdeen noted that on 4 February 2013, he had served the bankrupt debtor, by both mailing and emailing the bankruptcy notice to the debtor’s last known address. That was an email address which I have already noted and a mail address at 8 Greenhill Road, Wayville, South Australia.
Putting aside the mail address of the bankruptcy notice, the email address was the email address which had been provided by the bankrupt debtor in the Supreme Court proceedings. The email which was annexed to Mr Stevens’ affidavit identifies that indeed a bankruptcy notice addressed to him was attached as a pdf document. The email noted:
“We attach by way of service upon you and each of your aliases a bankruptcy notice issued by the Insolvency and Trustee Service Australia dated 31 January 2013. This document has also been posted.”
I should observe that the question of service did initially occasion concern by the registrar at the time the application came on for initial hearing. However, as I’ve earlier stated, the matter of service was subsequently addressed to the registrar’s satisfaction by the latter affidavit of Mr Stevens.
Given that the service was properly effected by email it is unnecessary for me to consider the issue of postal service and so I make no further observations about it. I previously considered the question of electronic service in the context of bankruptcy proceedings in the matter of Mulherin v Quinn Villages Pty Ltd [2012] FMCA 1063, where I concluded electronic service to an email account will give rise to good service.
This is what occurred in this instance. Given there has been good service by that means there is, in my view, no utility in then proceeding to consider and address the other modes of service relied upon by the creditor and complained of by the applicant bankrupt. Although, as I note, they too are subject to his complaint. In any event, I am satisfied there was effective service of the bankruptcy notice and, accordingly, this ground has no merit.
Additionally, concerning this ground, I note that one complaint was made by the bankrupt that the email had gone to the wrong address, namely, it had gone to an address noted as “[email protected].” The bankrupt produced to the court a copy of the email which he purported demonstrated the email had gone to that other address. The email copy produced by the bankrupt was heavily pixelated and it was quite apparent from the pixellation of the address that the number “1”, on an initial visual impression, could have given rise to a view that it was indeed addressed to dpl2. However, when the original is compared against the pixelated version it is quite apparent that the distortion of the numeral “1” has occurred in the course of pixellation, possibly through the subsequent facsimile transmission of the document.
Abuse of process
The third ground advanced by the bankrupt is that the sequestration proceedings constituted an abuse of process. The thrust of the bankrupt’s complaint concerning this matter is that the bankrupt held assets at the time that the sequestration order was made such that it was inappropriate for the creditor to revert to the sequestration process to, in effect, use it to enforce his debts as a mere debt collection facility. He contended that, had the creditor used the enforcement means available under the UCPR, the judgment debt could have been readily discharged. The principles governing these matters are well settled. In Yarranova Pty Ltd v Shaw (No 2) [2014] FCA 616, Gordon J said this at [90]:
“An abuse of process occurs when the purpose of bringing the proceedings is not to prosecute them to a conclusion, but to use them as a means of obtaining some advantage for which they are not designed or for some collateral advantage beyond what the law offers: Williams v Spautz (1992) 174 CLR 509 at 526. There is a heavy onus on the person alleging the abuse of process. In any particular case, whether there is a use of the process or an abuse of it depends upon the purpose rather than the result: Re Excel Finance Corporation (Receiver and Manager Appointed); ; Worthley v Australian Securities Commission (1993) 41 FCR 346. To establish abuse of process, more than mere assertion is required: Davidova v Murphy [2009] FCA 601 at [91] citing Watts v Adelaide Bank Ltd [2009] FCA 420.
[91] It is an abuse of process for a judgment creditor to pursue bankruptcy proceedings “for the purpose of stifling litigation“: Bayne v Baillieu; Bayne v Riggall (1908) 6 CLR 382 at 396. So, for example, if the purpose of the bankruptcy notice is to put pressure on a debtor to pay a debt rather than to invoke the Court’s jurisdiction in relation to insolvency, then the filing of a bankruptcy notice is an abuse of process: cf Maxwell-Smith v S & E Hall Pty Ltd, in the matter of Maxwell-Smith (2006) 233 ALR 81.”
The judgment of Gyles J in Killoran v Duncan [1999] FCA 1574 is also apposite to the current circumstances. Adopting the words used by Gyles J at [12]-[14]:
“Whilst there is no debate about the jurisdiction of the Court to set aside a bankruptcy notice as an abuse of process where it can be concluded that it was simply to put pressure on the debtor rather than to genuinely invoke the Court's jurisdiction, I am not satisfied that that is the position here. There is nothing to indicate that the respondent creditor does not genuinely intend to pursue the matter if there is default in complying with the notice. In my opinion, there is nothing special about abuse of process in this field, and, if a person wishes to resort to the jurisdiction of the Court for appropriate orders, then it will be an unusual case in which that will be prevented.
[13] There is no evidence here of any collateral purpose or of any undue pressure being applied. It is correct, I think, that the time to judge abuse of process is the time that the bankruptcy notice is issued and that subsequent events have relatively slight relevance. They may be relevant insofar as they throw light upon circumstances which might have been appreciated and foreseen at the time of the issue of the notice.
[14] If, contrary to my view, however, there were a prima facie case of abuse of process, the remedy is discretionary and, in my view, if circumstances following that time had altered significantly so that it would not be appropriate to set aside the notice, I think that the jurisdiction of the Court is wide enough to give effect to that. I have in mind here that whilst the immediate parties to the application are those with the most interest in the matter, the body of creditors generally also have an interest and I cannot be certain one way or the other about the position of solvency. It may be most unfortunate if a bankruptcy notice were set aside in circumstances where the debtor is in fact insolvent.”
In his affidavit, the bankrupt has listed assets he held at the time of sequestration. I particularly note he owned certain real property. Although not canvassed in evidence, in the course of exchange from the bar table the court was informed that such property was not readily ascertainable because the property was held in the name of various aliases and nom de plumes of the bankrupt. The bankrupt did not demur to any of those assertions. Those assertions, in fact, perhaps explain why the bankrupt is unable to access the TAB account that he contends has a balance of about $42,000 in it. He says that sum was lost on merger of TAB Corp with another entity. It may well be that those funds are tied up because of an ability by the bankrupt to identify the funds as belonging to him, if, indeed, he used a nom de plume or an alias to establish that account. In any event, it’s unnecessary for me to resolve that, but it rather suggests such a likelihood, given his predilection towards the use of aliases.
The remainder of the bankrupt’s estate consisted largely of personal items, against which I doubt there would have been any capacity to effect enforcement. If the real estate had, in fact, been in the applicant’s own name, I may have come to a differing view on this matter. In any event, for reasons which follow, even I had decided this issue in the bankrupt’s favour, it would not be enough, in my view, to overall warrant the exercise of any favourable exercise of the discretion because of the difficulty which I will address below. The fact remains there was no reasonable basis for the creditor to expect it could have sought enforcement against real estate assets of the debtor prior to making its application.
The Adjourned Dates of the Creditor’s Application
The first return of the creditor’s application was on 10 April 2013. The bankrupt did not appear on that occasion, or on the four subsequent occasions when the matter was further mentioned. The applications were adjourned administratively on four occasions before it was concluded with the making of a sequestration order. The court record demonstrates that on each occasion it came on for mention it was adjourned to a subsequent occasion, with notification of the notice of adjournment provided to the bankrupt. This process involved the automatic generation of orders and posting those orders to the bankrupt through the court’s casetrack programme to an address at Unit 1, 668 Anzac Highway, Glenelg East, South Australia, 4045. The bankrupt says he did not receive such notices. However, this was, and is, the bankrupt’s address. It is not to the point that he did not receive any such notice.
In saying this, I am conscious of the medical reports which the bankrupt has produced, evidencing that throughout this period he suffered a depressive condition. Those matters certainly weigh in the bankrupt’s favour, and perhaps explain why he did not address the matter. They can also be seen to, at least in part, provide some explanation for why he did not bring his application to set aside the sequestration order more promptly than he has.
However, notwithstanding those matters, that does not explain his failure to attend. He is, by profession, a lawyer, and it is to be expected that, irrespective of his depressive condition, he ought to have had some insight into the significance of non-attendance on these matters, and an appreciation of the significance of non-attendance. I note that at about the time of these events he was well enough, for instance, to travel overseas. I am generally sympathetic to his condition, and this is one factor that weighs in his favour.
Solvency
In my view, this is the most critical factor. It seems apparent that, on the best case that can be made for the bankrupt, he was solvent at the time the sequestration order was made. However, that is not the case now. From a review of the assets and liabilities he had at the time of the sequestration order, without allowance for execution costs, I estimate he had a general surplus of about $132,000. However, since that time some of the real estate has been sold. Overall, it would seem that his debts largely equate to the liabilities that are presently outstanding.
Although there was some quibbling about the claims allowed by the trustee, and how much ought to be allowed, even adopting a most favourable and optimistic outcome for the bankrupt, it would seem to me that there might be only up to about a $30,000 surplus on a realisation, based on the figures alone. However, that realisation, of course, would assume that he can sell his assets at the valuations asserted for, and that there would be some surplus after the costs of his outstanding administration and sale costs are paid.
I have already noted that there are nefarious elements that surround the bankrupt’s dealings, in particular the manner in which he has previously sought to disguise assets. None of this gives me any great confidence that he will be able to realise sufficient from his assets to meet his obligations as and when they fall due, principally because I am not necessarily satisfied, given his history, that he will be entirely cooperative in the usual way that one would expect in the realisation of assets, in particular when the only asset which is realistically available for realisation is his principal place of residence.
In Lane Rowin v Perovich [2007] FMCA 1429, the approach to be adopted was expressed in these terms:
“One starts from the uncontroversial proposition that a debtor who is in a position to pay all the debts which she owes within a reasonable time ought not be subject to a sequestration order. The ability to pay debts does not necessarily require a debtor to have sufficient cash on hand or available on deposit to pay all creditors in full immediately, if the debtor has other realisable assets.
In Sandell v Porter at 670–671 Barwick CJ said:
But the debtor’s own monies are not limited to his cash resources immediately available. They extend to monies which he can procure by realisation by sale or by mortgage or pledge of his assets within a relatively short time — relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear for the consideration of the debtor’s financial position in its entirety and generally speaking ought not be drawn simply from evidence of a temporary lack of liquidity. It is the debtor’s inability, utilising such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency.”
In International Alpaca Management Pty Ltd v Ensor [1999] FCA 72, Katz J gave detailed consideration to what is required to be proved by a debtor to satisfy the court under s.52(2)(a) of the Act. His Honour considered at [7] that the debtor must satisfy the court that he or she can discharge his or her liabilities in order to show solvency.
At [14], his Honour said that “although the notion of a person's own money is to be treated in the expansive way just described (subject to what I say in the next paragraph of these reasons), it does not extend, most obviously, to money borrowed without security for the purpose of paying one's debts.” Thus if the respondent in the present case intends to borrow money on an unsecured basis and thereby incur a further debt, that would not satisfy the test of solvency. Katz J proceeded to decide the question of solvency on the basis that it required the debtor to prove that he could satisfy his debts, including liabilities, when they became payable from his own money.
In Australia & New Zealand Banking Group Ltd v Foyster [2000] FCA 400 Healy J at [17] and [19] said:
“The onus of proving sufficiency of assets lies on the respondent. It is not sufficient for the respondent simply to establish that he has assets which exceed his liabilities in value. It must also be established that the assets are available to be realised and that they are capable of ready realisation. If a debtor is able to pay his or her debts, but is recalcitrant, the creditors may resort to other remedies, such as execution against property and garnishee proceedings, but not to sequestration. Bankruptcy is not a proceeding designed for the recovery of debts: see Re Sarina; Ex Parte Wollondilly Shire Council (1980) 32 ALR 596, 599.
…
[19] Under s52(2)(a) the respondent must satisfy the Court that he is "able to pay his ... debts", including liabilities: s5(1). In my view, the subsection refers to a state of affairs which requires account to be taken of debts which will fall due in the reasonably immediate future pursuant to existing obligations: Bank of Australasia v Hall (1907) 4 CLR 1514, 1527-1528 as well as debts which are presently due and payable. However, whether that is so or not, for the reasons explained by Katz J in International Alpaca Management Pty Ltd account needs to be taken, if not in assessing solvency, then in the exercise of the discretion whether or not to dismiss the petition, of liabilities which will become payable in the reasonably immediate future.”
In this case, the bankrupt has one asset. It is subject to significant claims, such that even allowing for the most optimistic outcome, I do not think there will be sufficient to satisfy the test provided in Sandell v Porter (1966) 115 CLR 666, that is, that upon its realisation, there is sufficient to discharge his debts as and when they fall due. In that regard, I’m also mindful of the fact that the applicant bankrupt, because of his ill health, is not likely to make reasonable earnings from his legal practice. That matter is entirely consistent with his observations made to the psychiatrist, Dr Begg, in the course of his examination.
The bankrupt says that his girlfriend will lend him $30,000 or something in that order. However, that fact cannot influence this outcome for the reasons stated in International Alpaca Management Pty Ltd v Ensor (supra), that is, that it is only the persons own moneys which ought to be considered and that moneys provided by others without security provided for the purpose of paying debts ought not be taken into consideration.
It follows, having regard to the overall circumstances of the applicant’s case, he is, in my view, currently insolvent. Accordingly, given that although he ought not to have been sequestrated when he was, because he was, in fact, solvent at that time, there are strong discretionary factors against the relief he seeks today, namely, his current insolvency.
I acknowledge his explanation for delay in the bringing of this application and the reasons that he did not appear on the original application, but those factors, in my view, do not militate against the overwhelming interest which the court would have to the general body of creditors. In the circumstances, I’m satisfied that the discretion to annul the bankruptcy ought not to be exercised. The application is dismissed.
Orders
That the application be dismissed.
That the applicant pay the respondent’s costs of and incidental to the application. Such costs to be taxed and paid from the bankrupt estate with priority afforded to costs, pursuant to s.109(1)(a) of the Bankruptcy Act 1966 (Cth).
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Burnett
Associate:
Date: 7 November 2014
0
19
4