Quinn v O'Rourke, in the matter of O'Rourke (No 1)

[2020] FCA 1145

FEDERAL COURT OF AUSTRALIA

Quinn v O’Rourke, in the matter of O’Rourke (No 1) [2020] FCA 1145   

File number:	NSD 247 of 2020
Judgment of:	GLEESON J
Date of judgment:	10 August 2020
Date of publication of reasons:	13 August 2020
Catchwords:	PRACTICE AND PROCEDURE – application for adjournment – where matter part heard – application made on basis that respondent asserts imminent ability to pay debt to applicants – application refused
Cases cited:	Field v Commercial Banking Co of Sydney Limited [1978] FCA 46
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	General and Personal Insolvency
Number of paragraphs:	9
Date of hearing:	10 August 2020
Counsel for the Applicant:	D Krochmalik
Solicitor for the Applicant:	Axon Legal
Counsel for the Respondent:	DK Smith

ORDERS

NSD 247 of 2020

IN THE MATTER OF SUSAN MARY O'ROURKE

BETWEEN:

ANNE ADELE QUINN AND BRIAN F QUINN

Applicant

AND:

SUSAN MARY O'ROURKE

Respondent

ORDER MADE BY:	GLEESON J
DATE OF ORDER:	10 AUGUST 2020

THE COURT ORDERS THAT:

1.The respondent’s adjournment application be refused.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
(Revised from the transcript)

GLEESON J:

1. The respondent (Ms O’Rourke) seeks a three-month adjournment of the creditor’s petition to enable her to sell a substantial property at Elizabeth Bay.  Her proposal is that the applicants (Mr and Mrs Quinn) be granted an equitable mortgage or an unregistered security over the Elizabeth Bay property. The respondent will undertake to the Court:

   (1)to sell the Elizabeth property;

   (2)not to grant any other security in the property; and

   (3)to include a direction in the settlement instructions that the purchaser pay $277,126.95 of the purchase price to the applicants. 

2. The sale process is expected to take 90 days. 

3. In Field v Commercial Banking Co of Sydney Limited [1978] FCA 46 at 349-350, a Full Court of the Federal Court (Sweeney J, with Franki J agreeing) identified relevant considerations on an application for an adjournment pending a Pt X meeting. Relevantly to this application, those included:

   (1)the course of dealings between the parties, from the time when the obligation to the petitioning creditor is said to have arisen to the date of the hearing;

   (2)the attitude to the application of the petitioning creditor, as prima facie, on proof of the matters mentioned in s 52(1) of the Bankruptcy Act 1966 (Cth), the Court will proceed to make an order for sequestration;

   (3)the general financial position of the debtor;

   (4)the relationship between the debt of the petitioning creditor and the total liabilities of the debtor; and

   (5)any attitude to the application disclosed by other creditors.

4. As to the course of dealings between the Quinns and Ms O’Rourke, to the extent that they are revealed by the evidence, they have been highly unsatisfactory from the perspective of the Quinns.  Ms O’Rourke has made repeated promises to repay her debt, going back as early as 7 January 2019.  The Quinns have ample reason to lack confidence in Ms O’Rourke’s stated intentions to repay them except to the extent that they correspond with her self-interest. 

5. As to the Quinns’ attitude, they oppose the adjournment application.

6. The general financial position of Ms O’Rourke is not clear, although she appears to have a substantial surplus of assets over liabilities. As Mr Krochmalik observed, the most recent affidavit of Ms O’Rourke made on 7 August 2020 appears to have been cobbled together.  The Quinns have had no opportunity to test the contents of the affidavit or to establish in any comprehensive way Ms O’Rourke’s financial position.  The evidence from the bar table is that Ms O’Rourke has no income and is unable to obtain a loan from a bank, but also that she is practising as a lawyer.  She has apparently made a payment plan for repayment of land tax.  She has a very large credit card debt.  The evidence does not explain why Ms O’Rourke has not borrowed against her apparently ample assets to repay the Quinns. 

7. Apart from the revenue authorities and the secured creditors, there are no other identified creditors. 

8. The proposal that has been made by Ms O’Rourke has been made at the eleventh hour.  So far as I am aware, there has been no opportunity for the applicants to negotiate with Ms O’Rourke to obtain an agreement as to the terms of an adjournment that would protect their position to an extent that would satisfy them.  It is not certain that Ms O’Rourke will be able to sell the Elizabeth Bay property within three months, and in those circumstances I am not persuaded that the proposal offers the Quinns a sufficient prospect of reasonably prompt payment of their debt to justify an adjournment.

9. Accordingly, the application for an adjournment is refused.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gleeson.

Associate:

Dated:       13 August 2020