Re Sarikaya, David
[1997] FCA 816
•1 AUGUST 1997
FEDERAL COURT OF AUSTRALIA
CATCHWORDS
BANKRUPTCY - bankruptcy petition - judgment debt - order for compensation in proceedings by Accident Compensation Commission against debtor for obtaining property by deception - debtor’s application for adjournment to enable an application for adjournment to enable to reopen the conviction - Court’s discretion to go behind a judgment - whether final order - whether proven that the compensation ordered was payable to the Accident Compensation Commission
Bankruptcy Act 1966 (Cth) s 51(1)
Accident Compensation (WorkCover Insurance) Act 1993 (Vic) s 64(1)
Sentencing Act 1991 (Vic) s 86(1)
Re Verma; Ex Parte Deputy Commissioner of Taxation (1985) 4 FCR 181
Olivieri v Stafford (1989) 91 ALR 91
Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137
Wren v Mahoney (1972) 126 CLR 212
Re Estate of Nashat Gamali; Ex Parte Gamali v The Victorian WorkCover Authority, (Federal Court of Australia, Heerey J, 15 July 1997, unreported)
Re: DAVID SARIKAYA; Ex Parte: VICTORIAN WORKCOVER AUTHORITY
VP825 of 1996
MERKEL J
MELBOURNE
1 AUGUST 1997
IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VP 825 of 1996 ) GENERAL DIVISION )
BETWEEN: DAVID SARIKAYA
Judgment DebtorAND: VICTORIAN WORKCOVER AUTHORITY
Judgment Creditor
JUDGE: MERKEL J PLACE: MELBOURNE DATED: 1 AUGUST 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The estate of the judgment debtor, David Sarikaya, be sequestrated.
The petitioning creditor’s costs, including any reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VP 825 of 1996 ) GENERAL DIVISION )
BETWEEN: DAVID SARIKAYA
Judgment DebtorAND: VICTORIAN WORKCOVER AUTHORITY
Judgment Creditor
JUDGE: MERKEL J PLACE: MELBOURNE DATED: 1 AUGUST 1997
EX TEMPORE REASONS FOR JUDGMENT
The judgment creditor, the Victorian WorkCover Authority (“the Authority”) has petitioned the Court for a sequestration order against the estate of the judgment debtor, David Sarikaya. The petition is founded on a final judgment in the sum of $24,290, together with interest of $9,618.84, pursuant to s 3 of the Penalty Interest Rate Act 1983 (Vic). The judgment was obtained in the Broadmeadows Magistrates’ Court on 5 April 1993. The act of bankruptcy relied upon in the petition is the failure of the judgment debtor to pay or to secure payment of the judgment debt and interest as required by a bankruptcy notice dated 11 April 1996.
The certified extract of the judgment records that, in a proceeding by Pearl Rogers of the Accident Compensation Commission against the judgment debtor for obtaining property by deception, the judgment debtor pleaded guilty, was convicted and given a suspended sentence and was ordered to pay $24,290 compensation and costs in the amount of $6,042. The judgment debtor applied to the County Court to reopen the conviction but that application failed.
The order for compensation was made under s 86(1) of the Sentencing Act 1991 (Vic) which provides that, if a court convicts a person of an offence it may, on the application of the person suffering loss, order the offender to pay compensation for the loss. Extracts from the records of the Magistrates’ Court have been adduced in evidence and show that the order was made in favour of the Accident Compensation Commission of which the Victorian WorkCover Authority is the successor in law.
Initially I expressed some doubt as to the identity of the entity in whose favour the order for compensation was made, but I am now satisfied, on the totality of the evidence, that it is quite clear that the order was made in favour of and upon the application of the Accident Compensation Commission. I would add that, if there were any doubt whatsoever about that matter, it was open to the judgment debtor to adduce evidence to show that no order had been applied for or made in favour of the Commission or, alternatively, that the restitution which was the subject of the order was in truth and reality payable to some other entity or person. No such evidence has been adduced.
The judgment debtor has once again asked for an adjournment of these proceedings. In the past, I refused applications for an adjournment by the judgment debtor and made directions for the filing of all material upon which the judgment debtor wishes to rely in opposing the petition.
The primary ground put forward by counsel for the judgment debtor for the adjournment is that he wishes to issue proceedings in the Supreme Court to challenge the refusal by the County Court to reopen the conviction. At the present time no such proceedings have been issued notwithstanding that these proceedings have been on foot since August 1996 and the County Court’s refusal to reopen the matter occurred early in 1997. Of equal or even greater concern is that the judgment debtor has filed virtually no material before the Court to establish that there are arguable grounds, or indeed any grounds, for seeking to reopen the conviction or to challenge the refusal of the County Court to reopen the conviction. The furthest the evidence goes is an affidavit sworn by the judgment debtor's solicitor, which states:
“The basis of the Appeal is that sometime after 21/1/97, our client received anonymously new evidence impinging upon the prosecution case. Based on instructions I have received, it appears the debtor has an arguable case in the Supreme Court.”
The cases are fairly clear as to the manner in which the Court’s broad discretion to adjourn a petition in such circumstances ought to be exercised. In Re Verma; Ex Parte Deputy Commissioner of Taxation (1985) 4 FCR 181 at 187-188, Beaumont J made it quite clear that the onus is on the debtor to show the existence of a genuine dispute based on substantial grounds by adducing evidence establishing the substantial nature of the grounds of challenge and not merely by relying on assertions contained in the notice of objection. In the present case a solicitor has sworn an affidavit stating the grounds for adjournment but, in my view, that affidavit goes no further than a statement of mere assertion.
There is a well established jurisdiction in the Court to exercise a discretion to adjourn a petition to enable a substantive dispute to be determined elsewhere if one exists as to the debt. In some circumstances the dispute might be determined in this Court. In Olivieri v Stafford (1989) 91 ALR 91 at 102, Beaumont J said:
“As has been said, a Court of Bankruptcy is concerned to inquire into the ‘reality’ of the matter in hand. Here, the ‘reality’ of the matter is that the merits of the respondents’ claim have been demonstrated to the satisfaction of one judge of the District Court and another judge of that court has declined to disturb the judgment. As a matter of substance, it is appropriate, in all the circumstances, for a Court of Bankruptcy to treat what happened in the two hearings in the District Court as a trial of the merits of the respondents’ claim. That is to say, a Court of Bankruptcy should, I think, accept that a process of adjudication in the District Court has established that the underlying transactions created a true debt which could, in turn, provide a proper foundation for the entry of a judgment in respect of which a bankruptcy notice could properly issue.”
The Court does have a broad jurisdiction to go behind a judgment: see generally Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137 at 147-8 and Wren v Mahoney (1972) 126 CLR 212 at 224. The Full Court in Ahern at 148 said that it is:
“... well established that in general a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of a debtor where an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings provided that the appeal is based on genuine and arguable grounds.”
In the present case, there are three problems with the application for an adjournment. The first is that there is no appeal against conviction pending. The second, and probably the more important, issue is that there is no material upon which I could be satisfied that any proposed or prospective appeal is based on genuine and arguable grounds. This deficiency is exacerbated by the fact that the judgment debtor has pleaded guilty and has not adduced evidence suggesting that there is any proper basis for challenging the quantification of the restitution order which followed upon the plea. Further, there has now been an adjudication of the matter in the Magistrates Court and then in the County Court where that Court refused to exercise its discretion to allow an appeal out of time.
In these circumstances, it seems to me that it is not an appropriate exercise of the discretion of the Court to adjourn the matter. It therefore follows that I propose to hear and determine the petition.
I have heard full argument on the petition. The main submission advanced by the judgment debtor challenges the standing of the Authority to claim from the debtor an amount due to it on a final judgment. Heerey J recently considered a similar challenge in Re Estate of Nashat Gamali; Ex Parte Gamali v The Victorian WorkCover Authority, (Federal Court of Australia, Heerey J, 15 July 1997, unreported). His Honour concluded that a certified extract, almost identical to that in the present case, justified the issue by the Victorian WorkCover Authority of a bankruptcy notice when there was a failure to pay the judgment debt on the basis of the original order being a final order for the purposes of the Bankruptcy Act 1966 (Cth). His Honour rejected contentions similar to those put forward on behalf of the judgment debtor and in particular, that there was not a final order and that the Authority was not entitled to claim the amount of the judgment debt in the bankruptcy notice as the successor in law to the Accident Compensation Commission: see s 64(1) of the Accident Compensation (WorkCover Insurance) Act 1993 (Vic). I respectfully agree with and adopt the reasons given by Heerey J in Gamali.
The main point argued before me today is the contention on behalf of the judgment debtor that the extracts in evidence do not establish that the compensation ordered to be paid was payable to the Accident Compensation Commission. I am satisfied, from those extracts, the supporting material and the absence of any material whatsoever that would raise any doubt, as to that matter, that the underlying debt and the judgment debt was payable to the Commission as the entity suffering loss as a result of the deception the subject of the conviction and also that the Commission was the entity applying for compensation under s 86 of the Sentencing Act.
In my view, the judgment creditor has established the act of bankruptcy relied upon by it in its petition. I am also satisfied with the proof of the other matters of which s 51(1) of the Bankruptcy Act requires proof. I order that:
the estate of the judgment debtor David Sarikaya be sequestrated; and
the petitioning creditor's costs, including any, reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966.
I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel
Associate:
Dated: 1997
Counsel for the Judgment Debtor: Mr R A Fink Solicitor for the Judgment Debtor: David Tonkin Solicitor for the Judgment Creditor: Mr C C Hussey Solicitors acting for the Judgment Creditor: Hussey & Co Date of Hearing: 1 August 1997
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