Rayner v Ollis
[2007] FMCA 1160
•27 July 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RAYNER & ANOR v OLLIS | [2007] FMCA 1160 |
| BANKRUPTCY – Bankruptcy petition – whether stay on execution of judgment debt – effect of restraining order under NSW proceeds of crime legislation – bankruptcy notice not invalid – sequestration order made. |
Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(3)(b), 52(1), 58, 58A
Criminal Assets Recovery Act 1990 (NSW), ss.10, 10(1), 10(2), 10(3), 10(5), 10(6), 10(8), 10(9), 10B, 12, 12(1), 12(1)(a), 22(2), 25, 25(2), 25(2)(b), 27, 27(2), 27(2A), 27(7), 28
Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth)
Proceeds of Crime Act 2002 (Cth), ss.24, 24(1), 24(1)(d), 24(2)
Commissioner of Taxation v Stuart‑Jones (2000) 102 FCR 296
Crown Diagnostic Imaging Pty Ltd v Sood (No.2) [2006] FMCA 265
Mansfield v Director of Public Prosecutions for Western Australia (2006) 226 CLR 486
New South Wales Crime Commission v Ollis (2006) 65 NSWLR 478
Sood v Crown Diagnostic Imaging Pty Ltd (2006) 156 FCR 240
| First Applicant: | GAVIN BRUCE RAYNER |
| Second Applicant: | CAROL LOUISE RAYNER |
| Respondent: | VICTOR WARREN OLLIS |
| File Number: | SYG1449 of 2006 |
| Judgment of: | Smith FM |
| Hearing date: | 6 July 2007 |
| Delivered at: | Sydney |
| Delivered on: | 27 July 2007 |
REPRESENTATION
| Counsel for the Applicants: | Mr J T Johnson |
| Solicitors for the Applicants: | Sally Nash & Co |
| Counsel for the Respondent: | Mr C J Dibb |
ORDERS
A sequestration order be made against the estate of Victor Warren Ollis.
The applicant creditors’ costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note that the date of the act of bankruptcy is 29 March 2006.
Note that a consent to act as trustee has been signed by Schon Gregory Condon and Bruce Gleeson and has been lodged with the Official Receiver in Sydney.
The applicants must within 2 days give a copy of this order to the Official Receiver in Sydney.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG1449 of 2006
| GAVIN BRUCE RAYNER |
First Applicant
| CAROL LOUISE RAYNER |
Second Applicant
And
| VICTOR WARREN OLLIS |
Respondent
REASONS FOR JUDGMENT
This is a creditors’ petition for a sequestration order against the estate of the respondent debtor. The petition was filed on 19 May 2006, and was adjourned before the Registrar on numerous occasions before being referred to me for hearing. Most of the adjournments were given on the ground that the parties were awaiting the outcome of proceedings in the NSW Court of Appeal which might enable the payment of the debt, and which are still unresolved. There is no evidence before me as to the nature of those proceedings, but I was assured by counsel that they are irrelevant to the issue which I address below.
The petition relies upon a debt of $39,441.55, and upon an act of bankruptcy committed on 29 March 2006 when the respondent failed to comply with a bankruptcy notice served on him on 8 March 2006. Both the petition and the notice rely upon the same judgment debt.
The bankruptcy notice was issued on 20 February 2006, and required payment of the balance then owing under a judgment entered in the Local Court of NSW at Wollongong on 1 July 2005 in the amount of $39,441.55. The certificate of judgment refers to terms of settlement which required payment of the judgment amount before 1 September 2005, and which suggest that the debt arose out of a lease by the respondent of a property owned by the applicants at Cowra. This is also suggested in the petition, but no other circumstances of the indebtedness are shown in the evidence before me. The bankruptcy notice claimed that the respondent owed an amount of $28,960.75, deducting amounts already paid on the judgment and adding an amount of interest.
The respondent does not dispute the debts alleged in either the bankruptcy notice or the petition. Before me, his counsel relied upon one objection to the making of a sequestration order, which was framed in an amended notice of grounds of opposition:
1.The effect of orders made by Sully J of the Supreme Court of New South Wales on 17 [sic: 19] January 2006 is that the judgment on which the petitioners rely is one on which execution has been stayed, or alternatively, one on which execution was stayed during the relevant period.
In effect, this disputes the act of bankruptcy relied upon by the petitioner, on the ground that the bankruptcy notice was issued invalidly under s.41(3)(b) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) because “at the time of the application for the issue of the bankruptcy notice, execution of a judgment or order to which it relates has been stayed”. It is also contended that the same “stay” was in effect at the date of service of the bankruptcy notice and during its currency, so that an act of bankruptcy did not arise under s.40(1)(g).
The applicants did not dispute that the petition should be dismissed if I were satisfied that the January 2006 Supreme Court order amounted to a stay on execution of the Local Court judgment. However, they argued that the Supreme Court order did not operate as a “stay” for the purposes of the Bankruptcy Act.
The Supreme Court order was a “restraining order” made under s.10 of the Criminal Assets Recovery Act 1990 (NSW). It related to the whole of the respondent’s “property” at the date of the order, and was made in conjunction with an application by the New South Wales Crime Commission for a “proceeds assessment order” under s.27 of that Act. As I shall explain, its effect was to bring the respondent’s property under the control of the Supreme Court pending the Court’s assessment of an amount which will become a “debt payable by [the respondent] to the Crown … and is recoverable as such” under s.27(7). I was informed from the bar table that the assessment proceeding has not yet been completed.
A comparable scheme of criminal assets forfeiture and recovery has been enacted in Commonwealth legislation, and the existence of restraining orders, forfeiture orders and pecuniary penalty orders under State and Commonwealth legislation is recognised in s.58A of the Bankruptcy Act. This excludes property covered by these orders from the property of a bankrupt which vests in his or her trustee in bankruptcy under s.58. However, there may be many reasons for making a sequestration order in relation to a person who is subject to proceeds of crime proceedings, even if the existence of an order temporarily or permanently places some or all of his or her assets beyond the reach of creditors. There is no implication in s.58A, nor in any other Commonwealth legislation, that a sequestration order should not be made against the estate of a person whose property is wholly or partially “frozen” by a restraining order.
The difficulty, which the present case again highlights, is that the Bankruptcy Act does not make clear whether or when a restraining order under the various legislative schemes will amount to a “stay” on execution of a creditor’s judgment, so as to prevent the issue of a valid bankruptcy notice.
The situation in relation to the Commonwealth Proceeds of Crime Act 2002 (Cth) was recently addressed in this Court by Raphael FM in Crown Diagnostic Imaging Pty Ltd v Sood (No.2) [2006] FMCA 265, and on appeal by Gyles J in Sood v Crown Diagnostic Imaging Pty Ltd (2006) 156 FCR 240 (“Sood”). In that case, the restraining order covered “all the property” of Dr Sood “but excluding her interest in any business”, and provided that this “is not to be disposed of or otherwise dealt with by any person”. Section 24(1) of that Act provided that “the court may allow any one or more of the following to be met out of property, or a specified part of property, covered by a restraining order”, and then referred to reasonable living and business expenses and “(d) a specified debt incurred in good faith” by the person whose property is restrained. Section 24(2) provided that such an exemption could only be made under conditions, including that “(a) the person whose property is restrained has applied for the order”.
Gyles J examined relevant authorities, and in particular a useful consideration of them by Mathews J in Commissioner of Taxation v Stuart‑Jones (2000) 102 FCR 296. He observed that “the concept of stay of execution has been stretched beyond recognition”. However, he identified and applied a test which the authorities binding upon him, and also binding upon me, have established:
12I must apply the test laid down by one Full Court in Wiltshire‑Smith v Mellor Olsson (1995) 57 FCR 572 at 587 and applied by another in Boscolo v Botany Council [1996] FCA 897 – whether in the eyes of ordinary fairness in business it will be said that the order has in a business sense prevented the debtor in paying. That test was not overruled in Ling v Enrobook Pty Ltd (1997) 74 FCR 19, although the approval in that case of the decision of Heerey J in Re Ousley; Ex parte Commissioner of Taxation (1994) 48 FCR 131 concerning the effect of a Mareeva injunction is of some significance here. I have found the subsequent analysis of that topic by Madgwick J in National Australia Bank Ltd v Pollak (2001) 186 ALR 44 at [41]‑[52] to be valuable. (See also Taubert v Eddaglide Pty Ltd (in liq) [2001] FCA 567 at [15]‑[16].) I should add that Mathews J made no reference in Stuart‑Jones to the debtor being able to make an application of the kind provided for by s 24 of the Proceeds of Crime Act under the New South Wales Act considered by her.
13In my opinion, the ability of the debtor to seek an order permitting payment of the judgment debt pursuant to s 24 of the Proceeds of Crime Act means that execution is not stayed in the relevant sense. Counsel for the debtor submitted that it was unrealistic to think that such an application could be made after service of the bankruptcy notice and prior to the time for compliance. It is not at all clear to me that that is so, but it is false issue. The time to be considered is the whole period from the date of the judgment onwards. I take into account the consequences of the debtor’s contention. The creditor has no relevant locus standi in relation to varying the restraining order. Whether or not the judgment creditor is paid out of the assets covered by the restraining order would depend upon the debtor initiating the process. This would effectively mean that payment is optional for the debtor in a practical sense. Even then, a bankruptcy notice could only be issued if an order pursuant to s 24 had been made but the payment was not made. There is nothing to indicate that the legislature contemplated that the Proceeds of Crime Act would interfere with the ordinary operation of bankruptcy law beyond the effect of the sections introduced to expressly deal with that topic. I agree with the conclusion of Raphael FM that, for present purposes, this case is akin to a Mareeva injunction in its effect. I therefore uphold the decision that there was an act of bankruptcy proved to support the sequestration order.
In the present case, the applicants argue that this reasoning is equally applicable to the present restraining order made under the NSW legislation. I must therefore examine that order and the legislation, and consider obiter dicta of Mathews J which Gyles J declined to follow.
The NSW Criminal Assets Recovery Act provides two procedures for confiscation to the Crown of proceeds of crime. Division 1 of Part 3 provides for an “assets forfeiture order”, which forfeits all or some of a person’s interests in property, without proof of their derivation, if the Court finds under s.22(2) “it to be more probable than not that the person” within the preceding six years was engaged in “a serious crime related activity” of a defined character. In such a proceeding, or after the making of a forfeiture order, a person may apply for an “exclusion order” under s.25 excluding an interest from the operation of the order, but carries an onus of proving that “the interest in property to which the application relates is not illegally acquired property” (see s.25(2)(b)). There is no suggestion in the material before me, that the NSW Crime Commission has made, or is contemplating the making of, any application for a forfeiture order in relation to the present respondent’s property.
The second mode of confiscation, is provided in Division 2 of Part 3. This requires the Court to make a “proceeds assessment order” under s.27(2) if it “finds it to be more probable than not” that the person was engaged in the last six years in defined “serious crime related activity”. Also, under s.27(2A) the Court must make an assessment order against a person who knowingly “derived proceeds from an illegal activity” of another person who was engaged in serious crime related activity. In both cases, the assessment of a debt owed to the Crown is performed under s.28 by the valuation of the proceeds of the illegal activity. As I have indicated, the present respondent is currently the subject of a proceeds assessment proceeding, although the evidence before me does not show the factual basis of this proceeding and the extent to which his property is at risk of confiscation.
Part 2 of the Act provides for “restraining orders” to be made in aid of both types of proceedings under Part 3, which are required to be commenced before or within two working days from the making of a restraining order (see s.10(9)). Various other provisions also make clear that a restraining order produces only a provisional or interlocutory restraint on disposition of property. Thus, it can be made on an ex‑parte application by the Commission by telephone, and must be made if evidence is presented showing “reasonable grounds” for a suspicion that a person has engaged in serious crime related activity or that property is “serious crime derived property” (see s.10(2) and (3), and s.10B). The Court can refuse to make an order if the State fails or refuses to give an appropriate undertaking as to damages or costs (s.10(6)).
The Court has broad discretions to define the ambit of the property which becomes subject to a restraining order, and to condition and modify its orders. This is reflected in the terms of the key definitional provision:
10(1)A restraining order is an order that no person is to dispose of or attempt to dispose of, or to otherwise deal with or attempt to otherwise deal with, an interest in property to which the order applies except in such manner or in such circumstances (if any) as are specified in the order. (emphasis added)
Two areas of possible exceptions are expressly addressed:
10(5)A restraining order may, at the time it is made or at a later time, make provision for meeting out of the property, or a specified part of the property, to which the order applies all or any of the following:
(a)the reasonable living expenses of any person whose interests in property are subject to the restraining order (including the reasonable living expenses of any dependants),
(b)subject to section 16A, the reasonable legal expenses of any person whose interests in property are subject to the restraining order, being expenses incurred in connection with the application for the restraining order or an application for a confiscation order, or incurred in defending a criminal charge.
A general power to modify a restraining order in relation to “ancillary” matters is also conferred in apparently unqualified terms:
12Supreme Court may make further orders
(1)The Supreme Court may, when it makes a restraining order or at any later time, make any ancillary orders (whether or not affecting a person whose interests in property are subject to the restraining order) that the Court considers appropriate and, without limiting the generality of this, the Court may make any one or more of the following orders:
(a) an order varying the interests in property to which the restraining order relates,
(b) an order for the examination on oath of:
(i)the owner of an interest in property that is subject to the restraining order, or
(ii)another person,
before the Court, or before an officer of the Court prescribed by rules of court, concerning the affairs of the owner, including the nature and location of any property in which the owner has an interest,
(b1) an order for the examination on oath of a person who is the spouse or a de facto partner of the owner of an interest in property that is subject to the restraining order, before the Court or before an officer of the Court prescribed by the rules of court, concerning the affairs of the person, including the nature and location of any property in which the person or that owner has an interest,
(c) an order with respect to the carrying out of any undertaking with respect to the payment of damages or costs given on behalf of the State in connection with the making of the restraining order,
(c1) an order directing a person who is or was the owner of an interest in property that is subject to the restraining order or, if the owner is or was a body corporate, a director of the body corporate specified by the Court, to furnish to the Commission or Public Trustee, within a period specified in the order, a statement, verified by the oath of the person making the statement, setting out such particulars of the property, or dealings with the property, in which the owner has or had an interest as the Court thinks proper,
(d) if the restraining order requires the Public Trustee to take control of an interest in property:
(i)an order regulating the manner in which the Public Trustee may exercise functions under the restraining order, or
(ii)an order determining any question relating to the interest, including any question affecting the liabilities of the owner of the interest or the functions of the Public Trustee, or
(iii)(Repealed)
(e) an order requiring or authorising the seizure or taking possession of property.
(2)An order under subsection (1) may be made on application:
(a) by the Commission, or
(b) by the owner, or
(c) if the restraining order directed the Public Trustee to take control of an interest in property–by the Public Trustee, or
(d) with the leave of the Supreme Court–by any other person.
(3)The applicant for an order under subsection (1) must give notice of the order:
(a) if the applicant is a person referred to in subsection (2) (a), (b) or (c)–to the other persons referred to in those paragraphs, or
(b) if the applicant is a person referred to in subsection (2) (d)–to the persons referred to in subsection (2) (a)–(c).
The respondent’s counsel sought to distinguish the NSW legislation from the Commonwealth legislation which was addressed by Gyles J in Sood (supra). Counsel emphasised the omission from the NSW Act of any express recognition of the interests of innocent creditors of a person subject to a restraining order, and in particular to any provision in terms of s.24(1)(d) of the Commonwealth Act. He also referred to New South Wales Crime Commission v Ollis (2006) 65 NSWLR 478, where the Court of Appeal identified a limitation on the ambit of s.12 arising by implication of s.25.
In that case, it was held by Giles JA, Mason P agreeing, at [34] that “whatever the scope of s 12(1)(a) of the Act, however, it does not extend to reconsideration of the basis of the restraining order”, and at [35] that “it is also not consistent with the scheme of the Act that the defendants can apply, relying on s 12(1)(a), for variation of the restraining orders in the alternative to applying for exclusion orders”. His concern was that this would circumvent the reverse onus of proof raised by s.25(2). However, Giles JA suggested at [28] that otherwise “the kinds of orders which can be made [under s 12(1)] do not suggest a narrow notion of what is ancillary”.
Basten JA at [84] held that “the kind of exclusion order which is the subject of s 25 is one which involves a challenge to the suspicion which formed the basis of the order under s 10”, suggesting that an application under s.12 cannot be employed for this purpose. At [85]‑[87] Basten JA referred to the general powers under the Supreme Court Rules to set aside or vary orders made on an interlocutory basis or in the absence of a party, which would be available in relation to a restraining order in many circumstances, even if “for some reason s 12(1) were thought to have a more limited operation”.
I cannot find in these judgments, nor in the language of ss.10(1) or 12(1) or any other provision of the NSW Act, an implication that the Supreme Court does not have a power to frame or vary a restraining order so as to make available to a person who is subject to the order sufficient of his assets to meet a debt owed to a bona fide creditor under a judgment. In my opinion, many circumstances are conceivable where this would be plainly appropriate and entirely consistent with the scheme of the legislation, including circumstances where the judgment creditor might itself be an agency of the State or the Commonwealth. There would also be many occasions where it would be in the interests of the scheme of confiscation itself, to allow a person’s legitimate financial affairs to continue to be conducted by him under conditions controlled by the Court, including by the timely payment of judgment creditors. It would be contrary to an established principle of construction to find limitations in this respect in the powers of the Supreme Court in the absence of any expressed limitation (see Mansfield v Director of Public Prosecutions for Western Australia (2006) 226 CLR 486 at [10], [28], [50]). In my opinion, the language of ss.10(1) and 12(1) encompasses a discretion in the Supreme Court to allow the payment of specified debts which is at least as broad as that expressly conferred by s.24 of the Commonwealth legislation.
I would not find a contrary inference from the express provisions of s.10(5). The fact that the scheme envisages the payment of debts incurred by way of living expenses or legal expenses, suggests to me that the Court is also intended in appropriate cases to allow the payment of other creditors owed amounts under regularly obtained judgments, rather than the contrary (cf. Mansfield v DPP (supra) at [51]). I therefore do not accept the respondent’s submission that the legislation giving rise to the restraining order made in the present case is distinguishable from the legislation considered by Gyles J in Sood (supra).
I also do not accept the respondent’s submission that the NSW legislation contains a provision which directly imposes a stay on execution for the payment of judgment debts owed by persons subject to a restraining order. The provision which was submitted to do this was s.10(8), which provides:
10(8)If a restraining order is in force in respect of an interest of a person in property, the restraining order does not prevent:
(a)the levying of execution against the property in satisfaction, or partial satisfaction, of the debt arising under a proceeds assessment order in force against the person, or
(b)with the consent of the Supreme Court, the sale or other disposition of the interest to enable the proceeds to be applied in satisfaction or partial satisfaction of that debt, or
(c)with the consent of the Supreme Court, the application of the interest in satisfaction or partial satisfaction of that debt.
In Commissioner of Taxation v Stuart‑Jones (supra), Mathews J observed in relation to this provision:
26It is, in my view, at least arguable that a restraining order under s 10 will have the effect of preventing the levying of execution against the person’s property in circumstances outside those described in subs (8). If this were so, the existence of a restraining order against the whole of a debtor’s property would mean that a judgment creditor was not in a position to issue immediate execution upon it. As such, a restraining order would bear a closer resemblance to the appointment of a receiver or trustee than to a Mareva injunction, with the result that it may well constitute a stay of execution under s 41(3)(b) of the Act. However, it is not necessary for present purposes to reach a concluded view on this matter. For, as the judgment creditor points out, the restraining order taken out in this case applied to part only of the debtor’s property, namely her interest in the property at 368 Bronte Road, Bronte. Put at its highest this might, in accordance with the majority judgment in Boscolo, operate as a stay of proceedings so long as, in a practical and business sense, it prevented the debtor from paying the judgment debt. The onus of proving this matter lies squarely upon the debtor.
This observation was not a concluded opinion, and it was not necessary for Mathews J to arrive at a conclusion on the argument she noted. In my opinion, with respect, the argument draws from s.10(8) an implication of a general stay on execution which it neither states nor requires. Rather, the purpose of s.10(8) is to make it clear that enforcement of a debt arising under s.27(7), after the making of a proceeds assessment order, may be pursued by the normal processes of execution without the need to vary the s.10(1) order. I do not consider that it carries the implication that in all cases a restraining order has “in a business sense prevented the debtor from paying” other judgment debts owing to all creditors. It does not deal with that topic, at all.
This point appears to have been intended by Gyles J in Sood (supra), where he noted that Mathews J made no reference “to the debtor being able to make an application of the kind provided for by s 24” of the Commonwealth legislation. As Gyles J suggests, the presence of this capacity in the debtor, and the absence of any necessary inconsistency in all cases between the regular payment of judgment creditors and the objects of a restraining order, results in a restraining order being more “akin to a Mareeva injunction in its effect” than to the appointment of a receiver.
I therefore do not accept that the scheme of the NSW legislation itself reveals that a restraining order under s.10(1) directed at all the property of a person necessarily has the effect of a stay on execution, even under the broad test addressed by Gyles J in Sood (supra). I consider that his analysis is applicable to the NSW legislation, and should be followed.
It still remains possible that the terms of a particular restraining order in the context of a particular debtor’s financial circumstances at the time of issue of a bankruptcy notice, and in the context of other circumstances under examination in the Supreme Court confiscation proceedings under Part 3 at that time, might satisfy the bankruptcy court that “in a practical and business sense” the debtor’s property has been rendered immune from execution at that time, because there was no prospect that the debtor could have obtained the requisite exemption from the restraining order so as to pay the debt.
However, the evidence led by the respondent falls far short of establishing this situation in the present case.
The restraining order itself expressly recognised that a class of secured creditors should be free to enforce their rights. In relation to the respondent, it provided:
1.Pursuant to section 10 of the Criminal Assets Recovery Act 1990 that no person (other than any registered mortgagee dealing with its right to do so under the registered mortgage) is to dispose of, or attempt to dispose of, or otherwise deal with or attempt to otherwise deal with any interest in property (within the meaning of “interest in property” as defined in section 7 of the Criminal Assets Recovery Act 1990) of Victor Warren Ollis, including the interest in property in the property described in Schedules One, Two, Three, Four and Five hereto.
The order was apparently made ex parte, and in paragraph 20 expressly reserved to the respondent “liberty … to apply on three (3) days notice”. It thereby gave the respondent a liberty to seek the exclusion of assets to pay legitimate debts, including the judgment debt owed at that time to the applicants. This was in addition to his rights also to seek this by application under s.12(1)(a).
The respondent’s evidence as to his financial situation gives no suggestion that he would not have been able to satisfy the Supreme Court that it was appropriate to release funds to pay the applicants. His first affidavit said:
4.On 17 [sic: 19] January 2006, Sully J of the Supreme Court of New South Wales made orders restraining all of my property pursuant to s10 of the Criminal Assets Recovery Act 1990 (NSW). A copy of those orders is annexed hereto and marked “A”.
5.On 17 [sic: 19] January 2006, the New South Wales Crime Commission also made application for a proceeds assessment order pursuant to s27 of that Act.
6.As at the time of service of the Bankruptcy Notice on which the Applicants rely (8 March 2006) the restraining orders against all my property were still in force and they remain in force to this day.
7.As at the time of the service of the Bankruptcy Notice on which the Applicants rely, I had no significant property or assets that were not the subject of the orders referred to in 4. above. Throughout the period of 21 days following the service of the Bankruptcy Notice, my unrestrained property (i.e. property acquired after the making of the orders) never exceeded, I estimate, the sum of $500.
His second affidavit might suggest the contrary:
4.Of the four parcels of real property listed in Schedule 1 of the Orders, the one at paragraph 2 had already been sold at the time the orders were made and was no longer my property.
5.I estimate that as of 8 March 2006 the remaining three properties in Schedule 1 were worth approximately: $600,000 to $660,000. The property at paragraph 1 was worth approximately $500,000 and the properties at paragraphs 3. and 4. were worth approximately $50,000 to $80,000 each.
6.None of those parcels of real estate were subject to mortgage at that time and they are not subject to mortgage now.
7.At the time of the making of the Orders, and continuing until the service of the Bankruptcy Notice, I had considerable funds in bank accounts that were restrained by the orders.
8.A copy of the two most recent bank statements that I have in my possession for one of those accounts for the period immediately before the Orders were made is annexed hereto and marked “A”.
9.But for the Orders of Sully J made 19 January 2006, would have used funds from that or other bank accounts and/or funds raised against my real estate holdings to comply with the bankruptcy notice relied on by the petitioning creditors.
I am not satisfied from the mere existence of the restraining order, that the respondent did not have property which he was prevented by the Supreme Court “in a business sense” from using to meet the applicants’ judgment debt. I therefore do not accept that the bankruptcy notice was invalidly issued on 20 February 2006, nor that an act of bankruptcy did not occur on 29 March 2006 by reason of the respondent’s failure to pay the amount demanded under that notice.
I am satisfied as to the other matters required to be established under s.52(1) of the Bankruptcy Act and the Bankruptcy Rules, and that it is appropriate to make a sequestration order against the estate of the respondent.
I certify that the preceding thirty‑six (36) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Lilian Khaw
Date: 27 July 2007
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