Prushka Fast Debt Recovery Pty Ltd v Jain
[2014] FCCA 1155
•13 June 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PRUSHKA FAST DEBT RECOVERY PTY LTD v JAIN & ANOR | [2014] FCCA 1155 |
| Catchwords: BANKRUPTCY – Creditor’s petition based on VCAT judgment – debtors disputing quantum of debt and other matters arising from VCAT judgment – quantum of debt exceeding $5,000 – criticisms of VCAT judgment not made out – sequestration order made. |
| Legislation: Magistrates’ Court Act 1989 (Vic), s.100(7) |
| Autron Pty Ltd v Benk [2011] FCAFC 93 |
| Applicant: | PRUSHKA FAST DEBT RECOVERY PTY LTD (A.C.N. 005 962 854) AS ASSIGNEE FROM ADIWA PTY LTD (A.C.N. 006 441 898) |
| First Respondent: | SACHIN JAIN |
| Second Respondent: | NEERA JAIN |
| File Number: | MLG 268 of 2014 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 27 March 2014 |
| Date of Last Submission: | 27 March 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 13 June 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Dunne |
| Solicitors for the Applicant: | Mendelsons Lawyers |
| The Respondents: | Ms Jain in person |
ORDERS
A Sequestration Order be made against the estates of Sachin Jain and Neera Jain.
The Applicant Creditor’s costs including reserved costs be taxed in accordance with the Federal Court Rules and paid from the estates of the respondent debtors in accordance with the Bankruptcy Act 1966 (Cth).
THE COURT NOTES THAT:
A.The date of the act of bankruptcy is 30 December 2013.
| FEDERAL CIRCUIT COURT AT MELBOURNE |
MLG 268 of 2014
| PRUSHKA FAST DEBT RECOVERY PTY LTD (A.C.N. 005 962 854) AS ASSIGNEE FROM ADIWA PTY LTD (A.C.N. 006 441 898) |
Applicant
And
| SACHIN JAIN |
First Respondent
| NEERA JAIN |
Second Respondent
REASONS FOR JUDGMENT
Introductory
The substantive application is a Creditor’s Petition filed 18 February 2014 said to arise from an assigned debt originally arising as a result of the decision of the Victorian Civil and Administrative Tribunal (“VCAT”) in favour of the assignee for $9,500 and payable by both of the respondents, trading as Images of India.
Mr and Ms Jain resist the Petition on a number of grounds indicated both in their Notice stating grounds of opposition, filed 18 March 2014 and more particularly in affidavit material filed subsequently.
There are quite a number of objections taken by the respondents which include an assertion that the amount owing is, and has at all material times only been, $2,888 a sum below the $5,000 minimum necessary to ground a Petition. Ms Jain, (who has been the deponent on behalf of the respondents), also says that she never engaged the assigner to do any work at her premises in Victoria in any event.
Ms Jain also says that the VCAT order made 6 May 2013 (“the VCAT order”) with the annotation “trading as Images of India” is incorrect and indeed corrupt.
Ms Jain says that she was trying to get the creditor to specify how much money was actually owed to her and was met by the Petition. She has some other complaints as well.
For the reasons that follow however, I do not think that the criticisms advanced by Mr and Ms Jain are made out on the materials, and it follows that the notice of objection cannot succeed and that a sequestration order should issue.
Materials Filed with the Court
The Petition and Supporting Materials
The Petition filed 18 February 2014 identifies that the applicant sues as assignee of Adiwa Pty Ltd (“Adiwa”) and that the respondents are asserted to owe the applicant $5,000, being the balance owing on the VCAT order, to which I have already referred. The Bankruptcy Notice gives credit for $4,950 paid by the respondents on 30 December 2013.
The notice expressly pleads the assignment of the judgment debt in 2013 and otherwise sets out the act of bankruptcy and other relevant matters. I note that the respondents unsuccessfully challenged the Bankruptcy Notice before the Federal Court.
Annexed to the Petition are inter alia Orders of the Federal Court made 17 December 2013, a copy of the Notice of Assignment and the VCAT order, whereby the respondents were required to pay Adiwa $9,950.
The Verifying Affidavit, Affidavit of Service and Trustee’s Consent to Act were also filed at much the same time.
The Respondents’ Response
The respondents filed a Notice of appearance and a Notice stating grounds of opposition on 18 March 2004, together with an Affidavit of Ms Jain. The Notice of objection relevantly states:-
1. Amount owing is $2888.00 instead of $5000.00
2. Creditor was asked to specify final amount required instead of responding to request Creditor’s Petition is filed.
The Affidavit filed by Ms Jain on 18 March 2014 relevantly deposed that she is the owner/partner of business name ‘Images by Paras Importers’. She deposed to having paid a total in excess of $7,000, thus reducing the original debt to $2,888. She annexed as exhibit SJ1, a bank transfer to Mendelsons Lawyers (the applicant’s solicitors) of $5,500 on 30 December 2013; and as exhibit SJ2, a letter dated 11 March 2014 from the landlord of the premises occupied by Ms Jain’s business showing that that body paid $1,420 plus GST to Adiwa towards the electrical fit-out works for Ms Jain’s store.
Ms Jain in her Affidavit went on to depose that she never engaged or invited any company named Adiwa from Brisbane to come and work at her premises, and she took issue, as I have already indicated, with the reference in the VCAT order, with the “Images of India” next to the names of the respondents.
At paragraph 7 of the Affidavit, Ms Jain went on to say that she had reached agreement on 20 December 2013 with the applicant, and further deposed at paragraph 8 and following, as to what was said to be vexatious conduct by the applicant and its solicitors.
The Responding Affidavit of Mr Block
On 24 March 2014, Morris Selwyn Block filed an Affidavit. He is the solicitor from Mendelsons Lawyers having conduct of the matter. He deposed an acknowledgement that $5,500 was paid to Mendelsons Lawyers on 30 December 2013, in respect of which $4,950 was on account of the judgment debt of $9,950, and $550 in respect of the costs order made by VCAT on 29 November 2013.
Mr Block also accepted that $1,562 was paid to Adiwa, the assignor of the judgment debt to the applicant, on 19 February 2013. Mr Block deposed, albeit on a hearsay basis, that the member of VCAT who had made the original order for $9,950 had already subtracted $1,562 from the original claim.
I do not propose to detail every matter set out in Mr Block’s relatively lengthy Affidavit. He did exhibit, as MSB3, a copy of a letter from Ms Jain to him dated 19 December 2013. Relevantly Ms Jain wrote in that letter, “All I can say that I am not in a position to pay $10,500 all together by Dec 30. I can pay $5500 by Dec 30 in your trust account and rest by 30 Jan 2014.”
In fact this letter from Ms Jain did not come to Mr Block’s attention, owing to the Christmas break, until January 2014, and Mr Block pointed out that the $10,500 figure was a final figure in respect only of the VCAT judgment debt and costs order, and not the Federal Court costs ordered pursuant to the failed attempt to set aside the bankruptcy notice. He noted that various costs claims were still outstanding.
The Further Affidavit of Ms Jain, filed 25 March 2014
Ms Jain’s Affidavit filed 25 March 2014 essentially accuses those who appeared against her in VCAT of perjury and essentially repeated her earlier criticisms, albeit articulated in part in slightly different terms.
Further Affidavits of the Respondent, filed 25 March 2014
It is not necessary to say much more about these matters which were clearly designed to satisfy the requirements of s.52(1) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”). There has been, in truth, no dispute about these matters at any stage of the proceeding.
The Course of the Proceeding Itself
Following some discussion as to whether the matter was in a fit state to proceed, counsel for the applicant took me through the claim. He was first concerned to show that the amount owing at the time of the issue of the Petition was in excess of $5,000.
Counsel accepted that on the material the judgment was for $9,950, and notwithstanding the concession contained in exhibit MSB8 of Mr Blocks Affidavit and elsewhere that Ms Jain proposed to pay $10,500 to bring the matter to an end, the fact was that if $5,500 paid was deducted from the judgment debt, the amount owing was obviously only $4,450.
Counsel asserted, however, that the applicant creditor was entitled to add on interest that fell to be assessed post-judgement pursuant to s.100(7) of the Magistrates’ Court Act 1989 (Vic). This amounted to $692.66, thus in total exceeding the $5,000 limit prescribed by s.44(1) of the Bankruptcy Act.
It is well established that the creditor is not limited in seeking a Petition to the matters set out in the bankruptcy notice. S.44(1)(a) of the Bankruptcy Act relevantly reads:-
there is owing by the debtor to the petitioning creditor a debt that amounts to $5,000 or 2 or more debts that amount in the aggregate to $5,000…
I accept that interest is capable of being included to support a creditor’s petition (see Autron Pty Ltd v Benk [2011] FCAFC 93 at [34] and the authorities referred to therein).
Counsel went on to traverse issues going to the alleged payment of $1,562 referred to by Ms Jain and asserted that this sum was already taken into consideration in the VCAT hearing.
He went on otherwise to dismiss the criticisms made by Ms Jain and to point to the fact that the respondents had put on no material to say they were solvent and had not pursued any appeal from VCAT in any event.
Mr Block was called and was cross-examined. This cross-examination essentially related to the question as to whether the proceeding had been compromised. It is sufficient to say that this is not in my view relevant to the issues with which the Court is now confronted, but I would say that Mr Block was an excellent witness, and I accept his account of the events. It is clear that the matter was never compromised, as Ms Jain asserted.
Ms Jain opened her case. She made it clear that she believed that the VCAT order was obtained by false witnesses and false affidavits. She put in issue the liability to the plaintiff in the VCAT proceeding altogether.
Ms Jain was called and was cross-examined. She had already annexed to her Affidavit filed 24 March 2014 part of the transcript of the VCAT hearing but, fortunately in the circumstances, she had brought the entire transcript to Court with her, and this is now exhibit R3. She was cross-examined in some detail about the transcript. It is appropriate to refer to some of the transcript extracts, which implicitly all parties accept are an accurate record.
At T4 of the transcript the presiding member traversed the defence, which was to the effect that there was a denial of responsibility for any of the sum of $14,000 claimed by Adiwa, and that there had never been any conversation with Adiwa until October 2012.
I note that at T7 of the transcript, Mr O’Sullivan for Adiwa, identified the invoice number 1481. I note that there was an amended invoice with the same number (T8 of the transcript). At T46 of the transcript, Ms Jain, at line 8, confirms that the landlord paid $1,420 for her, and at T47 of the transcript this is confirmed by both Mr Jain and Mr Sinclair. I note that at T49 of the transcript the member observed, “So from the amount that you claiming you have to take off the 1420 plus GST, don’t you?”, And that Mr O’Sullivan for Adiwa said, “We’ve done that.” I note that there was extensive discussion between the member and Mr Sinclair as to exactly how the bill was made up, although it would seem clear from the transcript references to which I have referred, that the $1,420 plus GST was already deducted.
It is clear that the member dealt with the matter in that way from T54 at line 24 of the transcript.
From this material it is clear that the respondents’ assertion that whatever they owe the creditor should be adjusted by the deduction of $1,420 and GST is not correct.
It is not necessary to deal in any detail with the submissions made by the parties. They do not, in my opinion, take the matter any further. Ms Jain did tender exhibits R1 and R2. R1 is an invoice from Adiwa to a customer described as “Images”, and R2 is correspondence between Ms Jain and the complaints officer of Energy Safe Victoria. Once again these do not seem to me to take the matter any further. It should be noted that the presiding member in VCAT was well seized of the matters that Ms Jain has sought to raise. The alleged defence alleging the absence of any contractual obligation to pay was well and truly ventilated before VCAT.
Consideration
The Amount Claimed
I am satisfied, for the reasons I have already given, that to the remainder of the judgment debt owing as at the date of the issue of the Petition, namely $4,450, there should be added statutory interest of $692.66. That figure is not of itself in issue. It follows that there was a debt owing to the creditor at the time the petition was presented amounting to $5,000 or more.
Ms Jain’s assertion that the figure should have been further reduced by some $1,560 is plainly wrong.
No issue has been agitated by the applicants as to the fact that they have committed an act of bankruptcy. The Bankruptcy Notice was served on 24 September 2013 and plainly was not complied with. Whatever the nett effects of the failure of the Registrar to order an extension of time for compliance when he dismissed the application to set the Bankruptcy Notice aside, it is clear that the Bankruptcy Notice had not been complied with for the relevant requisite period of time, on any view, by the date of 18 February 2014 when the Petition issued.
The respondents have not sought to lead any evidence as to their solvency. Indeed, the annexure MSB8 to Mr Block’s Affidavit, on its face, suggests that as at December 2013 Ms Jain was having considerable difficulty in paying her bills as they came due.
Ms Jain’s issue as to the identification of the entity responsible to pay the original VCAT debt is misconceived. It is quite clear that the orders were made against Mr and Ms Jain personally and they are the debtors who have been pursued in this proceeding. Ms Jain’s own material makes it clear that any name under which she trades is just a business name, and on any view any debt would accrue to her and her husband.
In substance the Jains really seek to go behind the VCAT judgment. The difficulty is that the transcript of the proceeding, to my mind, shows quite clearly that the assertions made by the witnesses for the company pursuing the debt, namely Adiwa, were carefully and thoroughly examined by VCAT, and there is nothing in the materials to suggest that those witnesses were not truthful, albeit that there was, given self-representation of all parties concerned, some measure of confusion from time to time.
Likewise, the assertion by Ms Jain that she was not liable to the creditor at all because of an absence of contractual relationship and/or work and/or deficient work, was clearly all before VCAT, and the result was antithetical to the respondents.
Conclusion
S.52(1) of the Bankruptcy Act requires the Court to be provided with proof of the matters stated in the Petition, service of the Petition, and the fact that the debts upon which the creditor relies are still owing. Those matters are, as I have already indicated, in my view, not controversial although of course the identity of the debtor has been disputed. I have resolved that dispute against the Jains for the reasons given. The Court therefore plainly has a discretion pursuant to s.52(1) of the Bankruptcy Act to make a sequestration order.
S.52(2) of the Bankruptcy Act provides that if the Court is not satisfied with proof of the matters to which I have just referred, or is satisfied by the debtor that he or she is able to pay his debts, or that for other sufficient cause a sequestration order ought not be made, it may dismiss the petition.
On any view, the Court retains an overarching discretion, obviously guided by the matters set out in s.52(2) of the Bankruptcy Act, to make or not make a sequestration order in these circumstances.
The respondents have gone nowhere near proving that they are solvent. Their primary complaints about the action in VCAT are, in my view, not made out and appear in the main to me to be misconceived.
In my view, this is a case in which the Court’s discretion to make a sequestration order should be exercised, and I will so order.
There was some confusion during the hearing as to the date of the act of bankruptcy. I will hear further from the parties before making final orders.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Associate:
Date: 13 June 2014
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