Re Abdulnour, Solie Ex Parte Abdulnour, Solie v CBFC Leasing Pty Ltd

[1996] FCA 640

CATCHWORDS

BANKRUPTCY - application for annulment of bankruptcy under s153B of the Bankruptcy Act 1966 - whether the Court is satisfied that the sequestration order ought not to have been made.

Bankruptcy Act 1966 ss153B, 178.

RE SOLIE ABDULNOUR; EX PARTE SOLIE ABDULNOUR v CBFC LEASING PTY LIMITED & ANOR

VB No 1622 of 1993

Olney J
Melbourne
17 July 1996

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE
STATE OF VICTORIA  No VB 1622 of 1993

RE:
  SOLIE ABDULNOUR

BETWEEN:
  SOLIE ABDULNOUR

Applicant

-and-

CBFC LEASING PTY LIMITED

First Respondent

OFFICIAL TRUSTEE IN BANKRUPTCY

Second Respondent

Coram:    Olney J

Place:    Melbourne

Date:     17 July 1996

REASONS FOR JUDGMENT
On 13 May 1996 the applicant filed an application seeking an order pursuant to s 153B of the Bankruptcy Act 1996 annulling the bankruptcy which occurred on the making of a sequestration order against her estate on 21 June 1993.   In the circumstances of this case, the Court may make an order annulling a bankruptcy if it is satisfied that the sequestration order ought not to have been made.

The background to the bankruptcy is that the applicant was made bankrupt on the petition of CBFC Leasing Pty Limited (the first respondent) a company which is acknowledged to be a wholly owned subsidiary of the Commonwealth Bank of Australia. The debt on which the sequestration order was based was a judgment of the County Court at Melbourne obtained on 11 August 1992 in a total sum of $45,101.71.   The judgment debt arose out of a guarantee which the applicant had signed on 10 July 1990 when a company of which she was a director and secretary leased a Ford motor car from the first respondent.   The applicant became liable under the guarantee when the lessee defaulted under the lease.  The  applicant was discharged from bankruptcy by operation of s 149 of the Bankruptcy Act on 14 July 1996.

Insofar as it can be ascertained from the papers, the basis on which the annulment is sought is set out in paragraph 14 of the affidavit of the applicant sworn on 13 May 1996.   I propose to refer to the provisions of that paragraph in which the applicant deposed as follows:

I believe that the sequestration order ought not have been made on the following basis:

(a)CBFC's sole purpose was to obtain a sequestration in respect of me and not to minimise their loss by first selling the vehicle before seeking recovery of any amount outstanding against myself as guarantor.

(b)The vehicle was always made available for inspection and return to CBFC.   No formal demand for the return of the vehicle was ever made by CBFC except for the issuance of a search warrant on 1 September 1994, some 14 months after the making of a sequestration order in respect to me and over two years after CBFC obtained judgment against me for amounts owing under the lease.

Then there is another sub-paragraph (b):

CBFC did not genuinely attempt to request the return of the vehicle to recover possession of the vehicle.   CBFC should have engaged the assistance of the police to recover the vehicle at any time up to the making of the sequestration order against my estate in order to sell the vehicle and mitigate its loss if any.   No attempt was made to obtain a court order for the delivery up of the vehicle.

(c)CBFC's sole purpose in making me bankrupt was to make it easier for its parent company the Commonwealth of Australia(sic) to execute its Supreme Court writ to gain possession of the family home.  It was for a purpose inconsistent with the purpose of the Bankruptcy Act.

(d)No real attempt was made by CBFC to ascertain the likelihood of any return from my assets or to ascertain that its best course would be to recover monies from the sale of the vehicle or accept the offers put by [my] husband.

The factual basis relied upon in this proceeding is revealed in the affidavit evidence of the applicant and her husband.   Briefly, it is said that the first respondent had an ulterior motive in making the applicant bankrupt, namely, to assist its parent company, the Commonwealth Bank of Australia, to enforce a security it held over the applicant's house.   It is said that rather than repossessing and selling the leased vehicle, thus reducing the amount due by the guarantors, the first respondent refrained from doing so.   The argument is that if the debt had been reduced by the repossession and sale of the vehicle the applicant may have been better able to satisfy the debt at the time the bankruptcy proceedings were brought and thus avoid bankruptcy.

There is no evidence to suggest that this was a likely result.  Indeed there is no evidence as to the means of the applicant at that time, nor as to the value of the vehicle at any relevant time.   On the evidence that I have heard and on the affidavit evidence that has been put before the Court I am satisfied that the first respondent made serious attempts to regain possession of the vehicle before bankruptcy proceedings were commenced.   This conclusion is reached upon reference to correspondence that passed between the first respondent and two different firms of mercantile agents over quite a significant period.   In my opinion no adverse inference can be drawn from the failure of the first respondent to repossess the vehicle until well after the sequestration order was made.

Furthermore, I reject the evidence of the applicant's husband that on 17 May 1993 he made an offer to an officer of the first respondent, Mr Dobeli, to return the vehicle and pay $10,000 in full settlement of the debt.   I accept Mr Dobeli's evidence that on that occasion the offer was to pay $5,000 in settlement and no offer was made to return the vehicle.   I accept Mr Dobeli's evidence that this was the only offer made, contrary to the evidence of the applicant's husband who says that three separate offers were made, the last of which was that to which I have made reference.

In any event there is nothing to suggest that the offer said to have been made by the applicant's husband would have satisfied the debt and there would have been no obligation, either legal or moral, on the part of the first respondent to accept such an offer if in fact it was made.   However, I accept that Mr Dobeli was a credible witness and his testimony is supported by his contemporaneous records.   The allegation by the applicant's husband concerning the offers said to have been made by him only came to light after Mr Dobeli's affidavit of evidence had been served.   In the circumstances, as a matter of credit, I prefer Mr Dobeli's evidence to that of the applicant's husband.

Nor is there any evidence before the Court to suggest that the action of the first respondent in seeking to obtain a sequestration order against the estate of the applicant was motivated otherwise than for the purpose of enforcing its legal rights against the applicant.   Nothing has been put to the Court which would lead to an inference that the first respondent had any collateral purpose nor that its conduct was either extortionate or oppressive.   The only evidence relied upon in this context is paragraph 3 of the applicant's affidavit in which she says:

During 1991 the company experienced financial difficulties which was attributable to actions of the Commonwealth Bank of Australia, of which CBFC Leasing is a wholly owned subsidiary.   The Commonwealth Bank of Australia froze accounts and facilities of the company, and to this day has been unable to account for the unauthorised transfer of money from our personal accounts and those of the company.

Even accepting as fact all of the assertions there made, there is nothing before the Court which would enable it to draw an inference that the first respondent and the Commonwealth Bank had in some way colluded with a view to trying to frustrate the applicant enforcing whatever rights she may have had against the Commonwealth Bank by the device of making her bankrupt.   The applicant's real complaint seems to be that she is in some way inhibited in defending a Supreme Court proceeding brought by the Commonwealth Bank in relation to the possession of her house by reason of the failure of the second respondent to assign his rights to her.   There is no evidence about this aspect of the case other than what has been said at the bar table.

If in fact the applicant's trustee has made a decision in relation to the Supreme Court proceeding which has the effect of inhibiting the proper prosecution of that proceeding the applicant's remedy is to seek review of that decision pursuant to s 178 of the Bankruptcy Act.   There is however no evidence that the trustee has made any relevant decision.   In the circumstances the application for annulment will be dismissed.  It is entirely without merit.   The applicant must pay the costs of the respondents including any reserved costs.

I certify that this and the preceding 5 pages are a true copy of the Reasons for Judgment of the Honourable Justice Olney

Associate:

Dated:

Heard:    17 July 1996

Place:    Melbourne

Judgment: 17 July 1996

Appearances:

Ms M. Purvis (instructed by Franzese & Associates) appeared for the applicant.

Mr A.W. Ellis (instructed by Australian Government Solicitor) appeared for the first respondent.

Mr M. O'Brien appeared for the second respondent.