Queensland Mining Corporation Ltd v RENSHAW
[2016] FCCA 979
•27 April 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| QUEENSLAND MINING CORPORATION LTD v RENSHAW | [2016] FCCA 979 |
| Catchwords: BANKRUPTCY – Petition for a sequestration order – whether the applicant is a secured creditor – whether trust moneys were applied by the respondent in relation to the purchase of land – whether an order extending time for compliance with the bankruptcy notice was ultra vires – sequestration order made. |
| Legislation: Bankruptcy Act 1966, ss.27, 33, 41(6A), 44(1), 44(2), 306(2) Corporations Act 2001, s.200J |
| Cases cited: Wright Designed Pty Ltd v McClymont [2006] FCA 999 James v Abrahams (1981) 34 ALR 657 |
| Applicant: | QUEENSLAND MINING CORPORATION LTD |
| Respondent: | HOWARD RENSHAW |
| File Number: | SYG 2129 of 2015 |
| Judgment of: | Judge Street |
| Hearing date: | 27 April 2016 |
| Date of Last Submission: | 27 April 2016 |
| Delivered at: | Sydney |
| Delivered on: | 27 April 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr N Furlan |
| Solicitors for the Applicant: | Jurisbridge Legal |
| Counsel for the Respondent: | Mr J Johnson |
| Solicitors for the Respondent: | Beazley Boorman Lawyers |
ORDERS
A sequestration order is made against the estate of the respondent, Howard Renshaw.
The petitioning creditor’s costs of these proceedings be paid out of the estate of the bankrupt.
The application for a stay of proceedings is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2129 of 2015
| QUEENSLAND MINING CORPORATION LTD |
Applicant
And
| HOWARD RENSHAW |
Respondent
REASONS FOR JUDGMENT
This is an application within the Court’s jurisdiction under s.27 of the Bankruptcy Act 1966 (Cth), being a petition for a sequestration order. Mr Johnson of counsel has appeared for the respondent and has properly conceded that there is no issue of service of the creditors petition. Affidavits have been read in relation to the verification of the petition and the compliance with the Federal Court Bankruptcy Rules 2016, in terms of search, current affidavit of debt, as well as verification of the petition.
In relation to the verification of the petition, counsel for the respondent took the Court to a caveat that had been lodged by the applicant over a property in the name of the respondent and his partner. That caveat appears to have been lodged on 2 July 2014, and asserts the following interest:
Equitable interest in proportion to amount for trust moneys to which caveator is beneficially entitled by virtue of section 200J of the Corporations Act (trust moneys), applied by the respondent to the land, and/or equitable charge or lien over the land to secure repayment of trust moneys applied to the purchase of the land by the respondent.
Section 200J provides as follows:
Benefits to be held on trust and repaid
(1) If an entity (the giver ) contravenes section 200B by giving a benefit to a person (the recipient ), then the amount of the benefit, or the money value of the benefit if it is not a payment:
(a) is taken to be received by the recipient on trust for the giver; and
(b) must be immediately repaid by the recipient to the giver.
(1A) An amount repayable under subsection (1) to the giver:
(a) is a debt due to the giver; and
(b) may be recovered by the giver in a court of competent jurisdiction.
(2) Subsection (1) applies to the whole of the amount of a payment or of the money value of the benefit even though giving the benefit would not have contravened section 200B if that amount or value of the benefit had been less.
On 5 May 2015 the Federal Court of Australia relevantly made orders as follows:
THE COURT DECLARES THAT:
1. The First Defendant holds an amount of$270,000.00 on trust for the Plaintiff pursuant to section 2001(1) of the Corporations Act 2001 (Cth).
2. The Second Defendant holds an amount of $264,000.00 on trust for the Plaintiff pursuant to section 2001(1) of the Corporations Act 2001 (Cth).
3. The First and Second Defendants hold an amount of $143,333.00 on trust for the Plaintiff pursuant to section 2001(1) of the Corporations Act 2001 (Cth).
THE COURT ORDERS THAT:
4. Judgment he entered against the First Defendant in favour of the Plaintiff in the amount of $270,000.00 together with pre-judgment interest pursuant to section 51A of the Federal Court of Australia Act 1976 (Cth) from 23 October 2012 to the date of judgment as agreed or assessed.
5. Judgment be entered against the Second Defendant in favour of the Plaintiff in the amount of $264,000.00 together with pre-judgment interest pursuant to section 51A of the Federal Court of Australia Act 1976 (Cth) from 23 October 2012 to the date of judgment as agreed or assessed.
6. Judgment be entered against the First and Second Defendants in favour of the Plaintiff in the amount of $143,333.00 together with pre-judgment interest pursuant to section 51A of the Federal Court of Australia Act 1976 (Cth) from 23 October 2012 to the date of judgment as agreed or assessed.
7.. The sum of $50,333.00 held by the Third Defendant subject to undertakings given by the Third Defendant to the Court on 24 October 2013 be paid forthwith by the Third Defendant to the Plaintiff
8. Upon payment of the sum referred to in order 7 above, the Plaintiff is restrained from enforcing the judgment referred to in order 6 above save to the extent that it may enforce judgment np to the amount of $93,000.00.
9. The First and Second Defendants are to pay the Plaintiff's costs of the Cross-Claim.
Mr Johnson points to the requirements of s.44(2) of the Bankruptcy Act 1966 and the definition of secured creditor, as well as referring to the decision of Rares J in Wright Designed Pty Ltd v McClymont [2006] FCA 999. In that decision, Rares J identified the breadth of meaning of the term secured creditors, and relevantly found that there was a secured creditor in respect of which the requirements of the petition had not been correctly stated, and that there had been no application to amend in that case and the petition was dismissed.
In the present case, there is no evidence before the Court that establishes that any trust moneys were applied by the respondent in relation to the purchase of the relevant land. The respondent was in a position to adduce evidence, if he saw fit to do so, to identify moneys allegedly caught by s.200J which could give rise to a position of the applicant being a secured creditor. No such evidence was put on by the respondent.
Counsel for the applicant referred to the content of the caveat and identified the process by which that caveat came to be completed. The caveat does not of itself establish any interest in land, does not identify the applicant as being a secured creditor. On the evidence before the Court, there are no trust moneys anywhere the subject of the trust the subject of the declarations made by the Federal Court, and there is no evidence to support any basis to believe that those funds are traceable into the land the subject of the caveat.
I do not accept that the petition required any amendment. I find that the applicant, on the evidence before this Court, was not a secured creditor, and that the petition did not require any amendment, and that the circumstances that occurred in the decision of Rares J in the Wright Designed Pty Ltd v McClymont are clearly distinguishable.
It is material to take into account that this issue was raised by counsel for the respondent today. The matter had already been the subject of directions for the purpose of hearing the matter today, with the issue having been identified as one of solvency. Mr Johnson of counsel properly conceded that there was no issue being advanced that the respondent was solvent. The proposition that the petition was an abuse of process on the basis of the applicant being a secured creditor is without substance, and does not identify any proper basis upon which it could be said the petition was an abuse of process.
The next issue raised by counsel for the applicant was the contention that an order extending time for compliance with the bankruptcy notice under s.41(6A) was in some way beyond the power of the Court, and that accordingly the requirements of s.44(1)(c) could not be made out on the basis that the petition was not commenced within six months of the act of bankruptcy.
On the evidence before the Court I find that the act of bankruptcy occurred on 4 June 2015. I find the petition was presented on 30 July 2015. I find that the petitioning creditor satisfies each of the conditions identified under s.44(1)(a), (b) and (c) of the Bankruptcy Act 1966.
In relation to the contention that the registrar made an order beyond power, reference was made to the decision in James v Abrahams (1981) 34 ALR 657, relevantly at p.662. That case is clearly distinguishable on the basis that on the circumstances in that case, there had been no application to set aside the bankruptcy notice. And the proceedings in which the Registrar made the order of 9 February 2015, the present case, an application had been made to set aside the bankruptcy notice.
I should note that even if, contrary to the finding I have made, it was held that there was any excess of power by the Registrar in relation to the making of the order in respect of the extension of time for compliance, it was an order that could have been made under s.33 of the Bankruptcy Act 1966, and the erroneous reference, if it be such, to the wrong source of power would be a defect or irregularity within s.306(2) of the Act.
Further, if this was a case in which there was an issue under s.44(1)(c), the Court has power under s.33 to extend time in relation to the six months identified. And this is a case where in the circumstances the Court would have extended the time under s.33 of the Bankruptcy Act1966 in respect of the requirements under s.44(1)(c).
Mr Johnson of counsel on behalf of the respondent also submitted that the Court should be satisfied in the present case that there was other sufficient cause not to make a sequestration order. Given the position conceded that the respondent is not solvent, I am not satisfied that other sufficient cause not to make a sequestration order has been made. I am satisfied that the respondent is unable to pay his or her debts. I am satisfied that the respondent has committed an act of bankruptcy and I am satisfied that this is an appropriate case in which to exercise the Court’s powers to make a sequestration order against the estate of the debtor.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge Street
Associate:
Date: 10 May 2016
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