Re O'Sullivan, J.R. v Ex parte Deputy Commissioner of Taxation

[1994] FCA 638

JUDGMENT No. ..... 632 . , .... .....J .,-,,., 9%

IN THE FEDERAL COURT OF A U S T W )

1

GENERAL DIVISION	)	NO. NP 993 of 1994
BANKRUPTCY D I D I C T OF	)
m STATE OF NEW SOUTH WALE	S	)

RE :  JEFFREY RONALD O'SULLIVAN

Debtor

EX PARTE:  DEPUTY COMMISSIONER OF TAXATION

Creditor

24 August 1994

REASONS FOR JUDGMENT

LOCKHART J,

This is a petition by the Deputy Commissioner of Taxation seeking a sequestration order against the estate of Jeffrey Ronald O'Sullivan. Mr O'Sullivan represents himself and he seeks an adjournment of the petition for sufficient time to enable him to sell his only asset of value, his house in Dudley Street, Bondi.

His case is that if he is able to sell that house he should realise sufficient from the proceeds of sale to discharge all his debts and leave an equity. The house is one that is registered in his name alone; it is mortgaged to the Australia and New Zealand Bank Limited and his indebtedness to the bank, though not all apparently presently due and payable,

is $111,000 - I adopt approximate figures

He also owes a Mr Pillinger $40,000 arising out of previous transactions between them, which led Mr Pillinger to lodge a caveat against the title of the property; but that claim has apparently been settled on the basis that it is withdrawn and Mr O'Sullivan pays him $40,000. The Deputy Commissioner of Taxation is owed approximately $137,000. Therefore, the indebtedness of Mr OfSullivan is approximately $290,000.

The value of the property is uncertain; there is no cogent evidence before the Court as to what it is really worth. It would appear that the property was put up for sale by auction in the middle of May 1994. A bidder offered $300,000 but the property was passed in. Mr OrSullivan says the auction was arranged at very short notice and he doubts that if bid of $300,000 is a true reflection of the proper value of the property.

purchase the property in the sum of $340,000, but he has	through a real estate agent, offers from two people to Subsequent to the auction, Mr O'Sullivan has obtained,
declined the offers. There is also evidence that he obtained a valuation from another firm of real estate agents in the eastern suburbs of Sydney in March of this year, valuing the property at about $285,000. That would seem to be a low valuation, as it was obtained for the purpose (or if not for the purpose, certainly has been used for the purpose) of presenting the picture to Mr O1Sullivan's former wife that the proceeds of sale of the property would, in effect, approximately equal his indebtedness, so that there would be no money left over for either of them.
His former wife has brought proceedings in the Family Court for a distribution of property in her favour. A caveat has been lodged against the title to the land which either has now been withdrawn or is about to be withdrawn and some hearing in the Family Court is imminent with respect to the ex-wife's claim. It would appear that the present state of information available to the former wife of Mr O'Sullivan through her solicitor is that there will be nothing left at the end of the day when the house has been sold for anybody except creditors of Mr OISullivan. That doubtless explains to a fair degree why, assuming the evidence be correct that I have heard today, his former wife is not proposing to pursue the Family Court proceedings.
The petition has been in the list on several occasions before Registrars of the Court, and on each occasion it has been adjourned on Mr Sullivan's application, either on the basis that he is proposing to sell the property, or to refinance it. The refinancing arrangements appear to have been prosecuted by Mr OISullivan, but they have not reached fruition because he has formed the view that it would be unduly financially burdensome on him to engage in that exercise. He believes it is a better exercise to sell the house.
The Deputy Commissioner of Taxation, who is the only creditor who appears, opposes the adjournment and seeks to have a sequestration order made. There is no doubt that Mr O'Sullivan is insolvent. The only real question is whether it would ultimately be in Mr O'Sullivan's interests and in the interests of his creditors, and I must not ignore the fact that his former wife may have a claim against any property of his, to adjourn the petition rather than proceed to make a sequestration order today, assuming the petitioning creditor can prove his case.
Some of the features of the evidence that I have mentioned cause me disquiet and are unsatisfactory. I am not persuaded that it is in the interests of the creditors and of Mr O'Sullivan himself to further adjourn this petition. I am
petition to be further adjourned, so as to leave the sale of not persuaded that the correct course to take is to allow the the property in Mr O'Sullivanfs hands.
There has been ample opportunity for the property to be sold or for refinancing to take place and it has not occurred and, I must confess, I have disquiet about the role of Mr O'Sullivan in relation to the claim by his former wife. I think these matters are best dealt with in the formal way of bankruptcy. Accordingly, I refuse to adjourn the petition.
I am satisfied that the debtor committed the act of bankruptcy alleged in the amended petition. I am satisfied with the proof of the other matters of which S. 52 of the Act requires. I make a sequestration order against the estate of the debtor and order that costs, including reserved costs, be taxed and paid according to the Act.

I certify that this and the

preceding four (4) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate &d SA -

Dated: 24 August 1994

The Debtor appeared for himself.

Solicitor for the Debtor	Lyons & ~yons
Counsel for Petitioning Creditor :	Mr M L Brabazon
Solicitors for Petitioning Creditor:	Australian Government Solicitor
Date of Hearing	24 August 1994
Date of Judgment	24 August 1994