Re New World Alliance Pty Ltd

[1994] FCA 1117

i

! JUDGMENT No. . ~ ~ ~ , ? , , j ~

1. IN THE FEDERAL COURT OF AUSTRALIA )

BANKRUPTCY DISTRICT OF THE STATE ) No. B 1991 of 1993

OF VICTORIA 1

Re :  KENNETH IAN 0°K13ARA

Bankrupt

Ex parte:

Applicant

And :  CITIBANK LIMITED

Respondent

No. B 756 of 1993

Re :  m L

Bankrupt

Ex parte:  LORRAINE O'MEARA

Applicant

FEDERAL COURT

OF AUSTRALIA ~ n d : CITIBANK LIMITED

2 1 JAN 2003 Respondent

LIBRARY 0 '

respectively. Both the bankrupts have made their applications	on a large number of grounds that are set out in filed
applications. In the case of M r O'Meara, there is both an application and what is described as an additional application. During the course of this lengthy proceeding I have made clear on several occasions that the majority of the orders sought, and even of the grounds on which the annulment is sought, are not appropriate for consideration by the Bankruptcy Court, if they are available to any court, and that I would only be dealing in these proceedings with the applications for annulment as permitted by the Bankruptcy Act. The single argument upon which the annulments may be granted is that there was no service on the bankrupts of the originating process on which the bankruptcies were founded, being proceedings in the Melbourne Magistrates' Court commenced by a complaint issued on 3 September 1991. Judgment or judgments were entered by that Court on 24 October 1991 in the absence of any appearance or defence on the part of the two debtors concerned. The O'Mearas have asserted that the process issued out of the Melbourne Magistrates' Court was not served on them. Thus the applications before the Court may be granted under section 153B of the Bankruptcy Act which provides,
made annulling the bankruptcy. amongst other things, that if the Court is satisfied that a sequestration order ought not to have been made, an order may be
In the course of the proceedings a serious issue has developed about whether the originating process from the Melbourne Magistrates1 Court was or was not served on Mr and Mrs O'Meara.
The case has proceeded a distance but has not been completed. Mr O'Meara has given some evidence and has been subjected to some cross-examination; Mrs O'Meara has not given evidence; and the process server whose written sworn testimony of service in the bankruptcy proceedings has been challenged has also not given evidence although a number of affidavits by him have been filed. If the proceedings continue to their- end, a number of further days hearing will be consumed. Although M r O'Meara is appearing in person, and as agent for his wife, this will seriously escalate the legal costs. Accordinglythe parties have sensibly asked me to express a view and make findings, on the written and oral evidence so far presented, on their limited agreement that an annulment would be appropriate if there is a serious doubt about the service of the originating process.
Having considered the matter closely and read the material now over quite a period of some months, I am satisfied that a sufficient doubt has been raised about the service to allow me to conclude that the sequestration orders ought not to have been made. It is not appropriate that I give final reasons for this finding because the parties are in effect consenting to the
circumstance, Citibank offers to withdraw its opposition to the annulment if the doubt is found. In other words, in the given
annulment applications and to no longer oppose an order of annulment being made in each matter.
Although, if there was no service of these documents, the applicants would be well down the track towards obtaining their annulments, the question of the O'Mearasr solvency would still arise in the exercise of the court's discretion. Some evidence has been given by M r O'Meara about solvency and no contrary evidence has been filed. Were it necessary for me to make a decision on the matter, I would be of the opinion that there is sufficient evidence that the O'Mearas were solvent at the time of their bankruptcies. There is certainly.insufficient evidence of his and Mrs O'Mearars insolvency as to justify the maintaining of the sequestration orders, notwithstanding the problems about service. In the circumstances it is inappropriate to maintain the harshness of the sequestration orders. I therefore accept Citibank's withdrawal of its opposition to the annulment orders and in accordance with the provisions of section 153B declare that the sequestration orders in these two matters, VB 1991 of 1993 and VB 756 of 1993, issued out of the Victorian Bankruptcy Registry, ought not to have been made.
The trustee, who has been exercising some powers since the bankruptcies were originally pronounced, has appeared by a solicitor to ask for costs, preferring that an order for costs be made against Citibank than against the two bankrupts. In view
being annulled is a doubt about the service, it seems to me of the fact that the reason why the sequestration orders are appropriate that Citibank should pay the trustee's costs and not
Mr or Mrs O'Meara. I order accordingly. I also order that Citibank pay the trustee's remuneration, including the trustee's legal costs of these applications and the legal costs incurred in these administrations.

REASONS FOR JUDGMENT

EINFELD J SYDNEY 25 OCTOBER 1994

Before the Court are two applications brought by Kenneth Ian O'Meara and Lorraine O'Meara for annulment of sequestration orders made against them on 26 July 1993 and 29 March 1993

. Justice Einfeld