Retail Decisions Pty Ltd v Ali
[2011] FMCA 726
•6 October 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RETAIL DECISIONS PTY LTD v ALI | [2011] FMCA 726 |
| BANKRUPTCY – Review of decision of Registrar to make a sequestration order – debtor alleging identity fraud – debtor not attending Court – debtor asserting solvency – fraud not established – consideration of Court’s discretion to make sequestration order. |
| Bankruptcy Act 1966, ss.33(1), 52(1) Federal Magistrates Court Bankruptcy Rules 2006, r.4.06 Evidence Act 1995, s.140 |
| Wolff v Donovan (1991) 29 FCR 480 Australia & New Zealand Banking Group Ltd v Foyster [2000] FCA 400 Sandell v Porter (1966) 115 CLR 666 |
| Applicant: | RETAIL DECISIONS PTY LTD (A.C.N. 005 970 570) T/AS MOTORPASS |
| Respondent: | RASHID ALI T/AS DANGEROUS TREE EXPERT |
| File Number: | MLG 254 of 2010 |
| Judgment of: | Burchardt FM |
| Hearing date: | 22 August 2011 |
| Date of Last Submission: | 22 August 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 6 October 2011 |
REPRESENTATION
| Counsel for the Applicant: | Ms K. Burke |
| Solicitors for the Applicant: | Forbes Dowling Lawyers |
| Counsel for the Respondent: | Mr T. Greenway |
| Solicitors for the Respondent: | Dinley Lawyers |
ORDERS
That the proceeding be adjourned for hearing on 15 December 2011 at 10.15 am.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 254 of 2010
| RETAIL DECISIONS PTY LTD (A.C.N. 005 970 570) T/AS MOTORPASS |
Applicant
And
| RASHID ALI T/AS DANGEROUS TREE EXPERT |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application to review the decision of Registrar Caporale to make a sequestration order against the estate of Mr Ali on 4 May 2010. I will refer to Mr Ali as the applicant.
Mr Ali’s application to review was filed on 24 May 2010, at which time he was not legally represented, and was accompanied by an affidavit sworn by him on the same date. It asserted relevantly that he had never been issued with any fuel card by the creditor, Retail Decisions (as I will call the company) and that he had been the subject of identity fraud.
That assertion is one he has continued to iterate throughout the proceedings and which forms part of the basis upon which he says a sequestration order ought not now be made.
Additionally, Mr Ali says he is solvent and can pay his debts as and when they fall due and for that reason the Court should exercise its discretion not to make a sequestration order.
I have come to the conclusion, reluctantly bearing in mind its character, that Mr Ali’s denials of the receipt of fuel cards from Retail Decisions are not true and further that I am not satisfied that he is indeed solvent.
Nonetheless, and for the Reasons that follow, I propose to adjourn the hearing of the petition for two months to give Mr Ali an opportunity to regularise his affairs with both the creditor and the trustee.
Formal matters
The matters required to be addressed by s.52(1) of the Bankruptcy Act 1966 (“the Act”) are not in issue. I would have been minded to exercise the Court’s power to waive further compliance pursuant to r.4.06 of the Federal Magistrates Court Bankruptcy Rules 2006 but in fact the applicant filed updated affidavits by leave on the day of the hearing which comprehensively, subject to the challenges to the debt, satisfy the Court that the requirements of s.52(1) have been met.
Some procedural issues
It is readily apparent that the time from the filing of the petition on
19 February 2010 until these Reasons for Judgment has been substantial. There have been a number of adjournments for a variety of reasons. These have included alleged confusion on the part of legal representatives as to the Court’s intentions, alleged ill health on the part of Mr Ali, and other matters. It should be emphasised that in making these comments I make no criticism of anyone. I merely set out the background.
When the matter came on for hearing on 22 August 2011 the primary witness of Retail Decisions attended Court and was available for cross-examination and was cross-examined.
Mr Ali did not attend Court. I was informed that he was unwell. I was further informed that on the preceding Friday Mr Ali’s representatives had been notified that he was not required for cross-examination. Counsel for Retail Decisions explained that this was at least in part because of anticipated ill health on the part of Mr Ali.
Counsel for Mr Ali, who as it happened was the party with whom I raised it first, had already told the Court that his client could not attend owing to poor health in any event. This assertion was entirely consistent with earlier affidavit material filed both by the applicant and by his instructing solicitor.
In circumstances where Mr Ali is alleging fraud, it is plainly very unfortunate that he was unable to attend and be cross-examined. In the end both parties at least implicitly adopted the position that the Court would have to make such findings of fact as it could on the evidence as it stands (including subpoenaed materials which, as requested, I have read). This is not by any means a satisfactory situation, but given that as best I understand it there is no confidence that Mr Ali would be able to attend even if the matter were to be adjourned, it appears an unavoidable outcome in the circumstances.
The debt issue
It should be clearly remembered at this stage what the issue is. Mr Ali does not say whether or not someone made an application for a fuel card (and five subsequent other fuel cards) in 2008 to 2009 from Retail Decisions through an agent that Retail Decisions then employed. Rather he says that whether such applications were made or not, they were fraudulently made by someone else.
Scarcely surprisingly in these circumstances the bulk of Retail Decisions’ evidence consisted of business records. No request was made for the author of some of the critical business records to attend for cross-examination and no submission was made that those business records did not constitute admissible evidence of their contents.
It should be noted that matters have been somewhat complicated by the fact that owing to the various adjournments Ms Kloufetos, the deponent on behalf of Retail Decisions, has executed what in effect is the same affidavit on various occasions.
In her first relevant affidavit filed on 8 November 2010, leaving aside formal matters, she stated that:
“I have reviewed the First Respondent’s records of the fuel card contract made on or about 1 August 2008 between the Applicant and the First Respondent. These records show that the Applicant personally applied for and completed a fuel card application. Now produced and shown to me and marked “NK-1” is a true copy of the printed application.”
She went on to depose that Mr Ali had known about the outstanding claim since 18 August 2009 when he was personally served with the bankruptcy notice, and that at no stage did the applicant contact the first respondent about that notice or the subsequent petition until
4 May 2010. She went on to depose that at no stage did Mr Ali advise the first respondent of his suspicions in relation to Anthony Michael Zonino.
While the assertion about service was hearsay, the fact is that the affidavit of service is on the Court file in any event.
The other two assertions were responses to matters asserted by Mr Ali to which I shall return. The exhibit PK-1 annexed to that affidavit is a “24 x 7 Direct Application Form” which was approved on 6 August 2008. As the evidence emerged at trial, it is apparent that 24 x 7 was then an agent for Retail Services and in effect carried out credit reference checks for Retail Decisions. The application form, in which Ms Kloufetos had no part, records the name of “Ali Rashid”, the date his business commenced, his ABN, his business trading name and his trading address and telephone number amongst other matters. In her next affidavit filed on 27 July 2011 Ms Kloufetos deposed that in January 2009 Retail Decisions appointed Australian Receivables Limited (“ARL”) as its recovery agent to pursue the debt due from Mr Ali. She deposed that the ARL employee who managed the account was Lisa Busch and tendered as an annexure Ms Busch’s relevant notes. No challenge was made to the assertion by Ms Kloufetos that the matter of Ms Busch conducting the recovery activity was indeed admissible evidence and I note that at paragraph 2 she deposed “I make this affidavit from my own knowledge except where otherwise stated, having made all due enquiries.” Her recitation of the identity of
Ms Busch is not qualified in any way and I am entitled to and do accept it as admissible evidence.
Likewise, I am entitled to accept that the notes appended to the affidavit are indeed what they are asserted by Ms Kloufetos to be, namely contemporaneous notes made by Ms Busch. In the circumstances those notes are admissible clearly as business records.
The notes commence on 15 January 2009 and there is a note added by Ms Kloufetos in these terms “PLEASE SEND FIELD CALL. I HAVE CONFIRMED ADDRESS WITH PARENTS”. In cross-examination before me Ms Kloufetos confirmed that she had indeed spoken with
Mr Ali’s father who confirmed the address at which he was living.
Ms Busch’s notes, being exhibit PK-1, assert inter alia:
“On 14 February 2009 at 9.40am, our agent received a telephone call from the debtor (from a mobile phone number which is not that on exhibit PK-1 to Ms Kloufetos’ first relevant affidavit filed 8 November 2010).
Relevantly Mr Ali was asserted to have stated:
“He further stated that he has never avoided paying the debt, he has just been too ill to do anything about it.”
The debtor stated he has already provided his work details. He further stated that he intends to pay the debt in full in two to three weeks ...”
The admissibility of this particular paragraph is open to some question since it appears to infer that the agent may not have been Ms Busch herself. The matter is not immediately entirely clear.
Whatever the status of that extract, further extracts in PK-2 (effectively repeated as PK-3) take the matter further. Ms Busch’s notes read for 17 February 2009:
“SPOKE WITH RASHID … ASKED HOW HE WILL BE ABLE TO PIF 07/03 ... HE SAID CASH? ADVISED NOT WHAT
I MEANT AND ASKED IF CAN PIF NOW, HE SAID NO.
I ASKED WHERE THE MONEY WILL BE COMING FROM THAT WILL ALLOW HIM TO PIF ON 07/03 ... HE WAS UNABLE TO GIVE A STRAIGHT ANSWER BUT KEPT SAYING IT WILL BE PAID. BLUNTLY TOLD HIM CANNOT TAKE HIM AT HIS WORD DUE TO BAD HISTORY, HE ASKED WHAT
I MEANT AND I ADVISED NOT A SINGLE CENT PAID SINCE ACCOUNT OPENED AND NOT HOLDING LEGAL ACTION UNTIL 07/03 AS NOTHING TO MAKE US BELIEVE HE WILL FOLLOW THROUGH AND PAY THEN … ADVISED LEGAL TO BE ISSUED ... HE ASKED TILL THE END OF THE WEEK TO TRY GET THE MONEY ... AGREED TO HOLD TILL FRI ... HE TOOK MY FULL NAME AND DIRECT LINE.”
A further excerpt dated 18 February 2009 records the following:
“RASHID PHONED AND ASKED FOR OUR BANK ACCOUNT DETAILS, PROVIDED SAME AND FAX NO TO FAX RCPT TO ME, HE SAID HE CAN MAKE A PMNT ON FRIDAY BUT NOT THE FULL AMOUNT ... AGREED IF 1/2 PAID (AT LEAST $13500) THIS FRIDAY WILL HOLD TILL 10/03 FOR BAL.”
A further extract dated 25 February 2009 is a note added by
Ms Kloufetos:
“DEAR LISA THE AMOUNT HAS GONE UP AS THE CUSTOMER HAD USED FALSE CREDIT CARDS.
THE AMOUNT OUTSTANDING IS $34,329.32.”
It should be noted that that extract was amplified by Ms Kloufetos in cross-examination. She confirmed that six cards in total had been issued to Mr Ali and that this arose out of cards being used to which
Mr Ali was not entitled. This last piece of information (the misuse of cards) was plainly hearsay and I record it just to complete the picture while bearing in mind that the evidence is plainly inadmissible.
The final affidavit filed relevantly for these purposes by Ms Kloufetos was filed on 19 August 2011. In it she deposed that in the period from 8 September 2008 to 8 March 2009 Retail Decisions sent a number of Motorpass statements to Mr Ali seeking debts due under his Motorpass contract. Those extracts, which are plainly on their face all addressed to the home of Mr Ali at 52 Redford Street, Kingston, Queensland, are voluminous.
The other affidavits filed on the day of trial by Ms Kloufetos, being exhibits A1, A2 and A3, do not take the matter any further save that they clarify that the document PK-1, being the account of the agent’s call on 14 February 2009, was plainly hearsay.
Mr Ali’s first affidavit filed on 24 May 2010 denies that he had ever applied for a card from Motorpass and that he had ever received anything from the Court or even a bill in regard to the debt owing.
He squarely raised the issue of identity fraud and denied in summary that he was in any way responsible for the debt. In a further affidavit filed on 22 September 2010 he repeated that denial and, having said that he had been unsuccessful in obtaining a copy of the fuel card application form and details of when the form was obtained, completed and filed said at paragraph 14:
“Nevertheless, I suspect that the person who applied for the fuel card and caused the debt to be incurred was Anthony Michael Zonino (“Mr Zonino”). I believe Mr Zonino has unlawfully used my personal details to incur the debt.”
Mr Ali went on to say that he had reported the matter to the Queensland Police and was waiting to receive a copy of the file.
The next and more comprehensive material filed by Mr Ali was his affidavit filed on 2 August 2011. He deposed that the petition was based on a default judgment entered in the Magistrates’ Court of Victoria on 8 May 2009. He denied that he was liable or indebted to Retail Decisions for the amount in the Judgment. He went on to depose that on 29 July 2011 he had applied to the Magistrates’ Court of Victoria to set aside the default Judgment. He deposed that the rehearing application was scheduled for 18 August 2011. (I should interpolate and say that when the matter came before the Court counsel informed me that the hearing had been held and that the trustee had refused his consent to the matter continuing and that the application had therefore been dismissed as incompetent).
Insofar as the status of the debt is concerned, Mr Ali relied upon an affidavit sworn in support of the unsuccessful application in the Magistrates’ Court of Victoria which is exhibit RA-1 to this affidavit. He went on to deal with matters pertaining to solvency to which I shall return.
Exhibit RA-1 includes an affidavit apparently dated 28 July 2011. Relevantly Mr Ali deposed that:
a)In early 2008 he took steps to advertise the rental of three caravans which were situated on his home property at 52 Redford Street, Kingston.
b)In about February three men moved into the caravans one of whom was Anthony Zonino.
c)All three tenants were unemployed and on Centrelink benefits. Mr Ali deposed “I did not know them when they moved in and have not seen them since. The men asked me if their mail could be sent to 52 Redford Street. I agreed. From then on the men would often check the mail box.”
d)He did not regularly check his mail box and denied receiving the various statements Ms Kloufetos had said he received.
e)He pays his utility bills by asking one of his children to read them to him and by paying in cash at the post office. He has never possessed a credit card or bank card and uses a pass book account.
f)He keeps a post office box which he uses for most of his business expenses and documents.
g)If he had received the monthly invoices he would have immediately contacted Motorpass to discuss what was happening as he had never applied for the fuel card and had no knowledge of it.
In paragraph 35 of the affidavit exhibit RA-1 Mr Ali deposed:
“I deny that I am indebted to the plaintiff. To my knowledge, the plaintiff bases its claim upon an application form that was applied for over the telephone by a man claiming to be Mr Tarek Ali, acting on behalf of Mr Rashid Ali. Now produced and shown to me and marked RA-5 is a true copy of the application form and transcript of the telephone conversation. I have never applied for a fuel card or authorised any other person to apply for a fuel card on my behalf. Further I never signed any fuel card application form.”
It should be understood that the application form does not state in terms that the applicant was a Mr Tarek Ali. He was rather listed as the “contact person”. The registered name was “Ali Rashid” and the business trading name was “A Dangerous Tree Expert”.
The transcript of the conversation (marked Exhibit A-4) between the operator and the caller (whoever that person was) who ordered the card shows the following exchange:
“Operator: You have agreed on behalf of A Dangerous Tree Expert to apply for a Motorpass Card with Retail Decisions.
Ali: “Yes.”
There is no indication as to the earlier conversation that must have taken place nor any explanation for its absence. It is all that the Court has. (A fuller version of the conversation appears to be part of exhibit RA-5 to the affidavit RA-1, but adds nothing relevant).
It should be noted that exhibit RA-3 shows that Mr Ali received extensive correspondence from a home loan broker and other entities addressed to his house address without difficulty.
Decision on the Debt Issue
An allegation of fraud and identity theft is a serious matter that is required to be addressed in the context of the emphasis in s.140 of the Evidence Act 1995. While it is true that the applicant bears the onus of proof of establishing existence of the debt, (see Wolff v Donovan (1991) 29 FCR 480, a case in which the Court at first instance appears to have been faced with an argument on the affidavits which is effectively the position here), that burden needs to be examined in the context of the particular facts of the case.
In substance, it was Mr Ali and he alone who was the possessor of the relevant evidence to either prove or disprove his assertions as to the identity theft.
Bearing in mind, nonetheless, that the applicant does bear the burden of proof, the following matters lead me to conclude that it has discharged that burden:
a)The admissible evidence of the concessions made by somebody purporting to be Rashid Ali in February 2009 is in my view decisive. They follow a confirmation of the whereabouts of Mr Ali by his parents to an agent of the creditor, which although hearsay is in the circumstances described in my view an admission against interest.
b)The applicant’s account of his interrelationship with Mr Zonino is entirely deficient. There is no explanation of:
i)why he asserts that it was Mr Zonino rather than either of the other two persons who rented caravans from him who effected the fraud;
ii)when Mr Zonino moved out, assuming he presumably did at some point;
iii)there is no elaboration of Mr Ali’s assertion that “I never saw them again”;
iv)there is no explanation as to why he knew that they were taking his (Mr Ali’s) mail – this is indeed not asserted in terms but may only be inferred.
c)The inherent improbability of Mr Zonino or some third party gaining access to his business name, his ABN number and/or his contact details including his home phone number.
d)The inherent improbability of Mr Ali’s account of his failure to collect the vital and relevant mail relating to the Court proceeding and his indebtedness, bearing in mind his ready receipt of other documentation contrary to his alleged normal practice.
e)The at least superficial interrelationship between the very large amounts of money run up as petrol bills and the substantial number of cars and vehicles that Mr Ali in fact owns, both for his own private use and business.
In the end, however, I should emphasise that it is the business records that are decisive. There is no reason to suppose that Ms Busch inaccurately recorded the conversations she had and there is no earthly reason why anybody should have sought to misrepresent themselves on that number not once but twice both as Mr Ali and as his father.
On the balance of probabilities, and applying commonsense to what is nonetheless a serious matter attracting the operation of s.140, I am quite satisfied that despite his denials, Mr Ali did indeed apply for, obtain and use the Motorpass card that he was given. I note, although there is no medical evidence to support them, the assertions made by both Mr Ali and his instructing solicitor that Mr Ali’s mental health has been poor and this may well go to explain the subsequent unreasoning denial of what I am satisfied are the true facts.
The issue of solvency
The issue of solvency is naturally primarily within the knowledge of Mr Ali. In his affidavit filed 2 August 2011, he sets out a list of assets and liabilities which, if accepted, would show a subtotal of assets in the value of $889,500 and liabilities in the total sum of $441,372. The liabilities are mortgages on the three properties he owns, in the sum of about $400,000, and the default judgment, the subject of this petition.
In his affidavit, Mr Ali deposes that two of the properties, both in
Juers Street, Kingstonin Queensland, are investment properties leased to tenants on a monthly periodic tenancy, whereas his property at
52 Redford Street, Kingston, is his family home.
He deposes that between September 2010 to March 2011 he fell into arrears on the three mortgages, partly because he believed he was unable to work when bankrupt, and partly because his health deteriorated. The Bendigo and Adelaide Bank, which is the mortgagee in each instance, took possession of 40 Juers Street on 28 March 2011 but did not sell it. That is because Mr Ali entered into a repayment proposal pursuant to which he was to repay the arrears and other costs.
He deposes that between March 2011 and July 2011 he paid a total of $40,210 to achieve this outcome, and exhibits deposit slips supporting that proposition. He goes on to say at paragraph 12 of his affidavit:
“I have now paid the outstanding arrears and continue to make monthly repayments of $3100.”
He produced account statements of each mortgage showing in total the sum of $400,947.20 I have already referred to.
He also produces as an attachment a letter from a valuer,
Mr Brosnan, confirming the values of the properties upon which his estimates are made.
No issue has been taken that the valuation is hearsay, and I think correctly so. It would be admissible as a business record in any event.
Mr Ali goes on to provide what he describes as approximate values on the various vehicles he owns in the sum of $63,500. He also values on his own estimate alone certain tools of trade.
While the chattels to which he deposes must be worth something, I am not able to accept Mr Ali’s unsupported evidence in his own case as to their value. His affidavit does not assert that he is an expert in these matters. I merely note the chattels appear to be unencumbered and would realise something if sold.
At paragraph 23 of his affidavit, Mr Ali deposes that:
“I am currently on a disability pension and a carer pension for my wife who has been diagnosed with schizophrenia. I receive a combined fortnightly pension of $1,100. As soon as I am able,
I plan to return to work in my business with my son Tony Rossi, also known as Tony Ali.”
It should be noted that the inability to work is ascribed to various medical conditions which are supported by the affidavit of the treating practitioner, but which do not include any reference to depression.
On any view, if the properties to which Mr Ali makes reference are indeed his and encumbered in the amounts he asserts and are of the value he asserts, he has a substantial surplus of assets over liabilities.
I am prepared to accept on the basis of his materials that that is the case. I further accept that he is the owner of a number of cars and other chattels which could be sold for some amount of money, although I am not able to say how much.
I have been referred by counsel for Retail Decisions to the decision of Hely J in Australia & New Zealand Banking Group Ltd v Foyster [2000] FCA 400. I would respectfully adopt what his Honour said at [17] to this effect:
“The onus of proving sufficiency of assets lies on the respondent. It is not sufficient for the respondent simply to establish that he has assets which exceed his liabilities in value. It must also be established that the assets are available to be realised and that they are capable of ready realisation.”
His Honour went on to indicate at [18]-[19] that even if a debtor establishes solvency, the Court retains a discretion whether or not to dismiss the petition. At [18] his Honour said:
“Trojan (Trojan v Corporation of Hindmarsh (1987) 16 FCR 37) decides that even if a debtor establishes solvency, the Court retains a discretion whether or not to dismiss the petition.
The Full Court said, at p 48:
The principle laid down in the Sarina case would not necessarily be satisfied by a sterile demonstration of an ability to achieve a payment which was not in reality at all likely to be compelled. Section 52(2)(a) envisages a situation which will probably bear fruit in payment. It is not easy to see any other reason why the legislature saw fit to make a demonstration of ability to pay only a discretionary ground of dismissal of a petition, and not an absolute bar to its success.”
Counsel for Retail Decisions pointed to a number of inadequacies in the case presented by Mr Ali. In particular she referred to the fact that Mr Ali is apparently servicing very substantial mortgages on an income of only $1,500 per month. That assertion is in fact incorrect. Mr Ali has said he receives a combined fortnightly pension with his wife of $1,100. The household is therefore being conducted on about $2,200 per month.
The mortgage on his own home is, according to the materials deposed to by him, of the order of $90,000. At current interest rates of about
7 per cent, that would be a total of slightly in excess of $500 a month, a figure not wholly unrealisable.
What might be more difficult to understand is how the two Juers Street properties, together valued at $535,000, discharge a mortgage in excess of $300,000 (the total is just over $310,000). On rough estimates, and assuming a net return of approximately 4 per cent by way of illustration, that would produce around about $20,000 in rental income offset against a mortgage of about $21,000.
The figures I give are illustrative only. They are not intended to be expert evidence provided out of the Court’s own experience. Nonetheless, there is no evidence before the Court from the applicant as to what rental he receives from the various properties, nor what the net receipts to him are after all outgoings such as the land tax (if any) and other outgoings such as rates and the like.
In the ultimate, I am not satisfied that the figures establish with sufficient clarity that Mr Ali is solvent. He has to service very substantial debts out of an income which it is not in any way clear would be sufficient to meet the outgoings.
Although I am conscious that Mr Ali’s instructing solicitor has had difficulty from time-to-time obtaining instructions, there has been no application for an adjournment. I am entitled to accept that the materials before the Court are the most that Mr Ali feels it appropriate to place. I have not been provided with any detailed account of
Mr Ali’s expenditure and that of his wife, who I note very regrettably has significant health problems which may themselves involve significant expense.
If one takes a step back, it is somewhat counterintuitive that a person living on a disability pension/carer’s pension asserts that he is well-able to service an ongoing combined mortgage debt in excess of $400,000. I am not satisfied, taking the materials as a whole, that the applicant has demonstrated solvency.
Should the Court in any event make a Sequestration Order?
For the reasons given, I am satisfied that Mr Ali does indeed owe the amount claimed by Retail Decisions and is not solvent. That is not the end of the matter.
While he has not established that he is solvent in the sense of having money to meet his debts as they fall due, the question is whether he could pay his debts out of money reasonably readily available to him within the well-known Sandell v Porter test. (Sandell v Porter (1966) 115 CLR 666).
Mr Ali says he could reasonably readily sell one of his properties or draw down further funds on it. In the light of my earlier findings it is debatable whether he could draw down further funds, because there must be real issues as to whether he could satisfy any further borrowings.
Could he then sell one of the properties within a reasonable period of time? He deposes that his two properties in Juers Street are rented on monthly tenancy. That does not mean, however, that the properties are necessarily readily saleable, even though there is substantial equity in them. There is no evidence before the Court as to whether or not buyers in the regions of Queensland where these properties are situated would be readily available, although one might infer that that is so from the quoted values. Furthermore, although the tenancies are monthly ones, from which one would assume that any tenants could be reasonably readily evicted were that be necessary to achieve the sale, there is no evidence as to whether or not the presence of tenants would make the prices higher or lower and their sale more difficult or less so.
While it may be possible for Mr Ali to realise the necessary funds by sale of the property it is by no means clear that this is so.
Likewise, although I accept that the various chattels to which he has deposed must have some re-sale value, there is no evidence that these would be readily purchased by third parties, or what their sale price would be. On balance, I do not think that Mr Ali has satisfied the Court that he has funds sufficiently readily available to him to meet the test of solvency either.
In these circumstances, I note the unsatisfactory history of the litigation’s conduct by Mr Ali, notwithstanding the allowances that need to be made for his various health difficulties. The fact is that he became aware that he was bankrupt when service of the bankruptcy notice took place, and his application to set aside the judgment upon which that notice was based did not happen until a very considerable time thereafter. While I have noted his explanation in his affidavit material for this delay, it does not seem to me to be in any way compelling. I am also obliged to pay regard to the fact that
Mr Ali has advanced a defence to the action, namely fraud, that I have rejected. I am entitled to bear this in mind in the exercise of my discretion in any event.
In all the circumstances, I think that a sequestration order should be made but, as a matter perhaps of overmuch fairness to Mr Ali, I will order that the execution of the petition in effect be delayed by adjourning the further hearing of the petition pursuant to s.33(1) of the Act for a period of two months. Mr Ali is in a position to demonstrate the error of my findings as to his solvency by paying the debt together with the costs of this proceeding and to come to an arrangement with the trustee during the intervening period.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate:
Date: 6 October 2011
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