Rose v Majak (No 2)

Case [2022] FedCFamC2G 1025

Federal Circuit and Family Court of Australia

(DIVISION 2)

Rose v Majak (No 2) [2022] FedCFamC2G 1025

File number(s): SYG 1133 of 2022
Judgment of: JUDGE CAMERON
Date of judgment: 1 December 2022
Catchwords:  BANKRUPTCY – Creditor’s petition – insolvency.  
Legislation:

Bankruptcy Act 1966 (Cth) ss 43, 52

Bankruptcy Regulations 2021 (Cth)

Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth)
Cases cited Sandell v Porter (1966) 115 CLR 666
Division: Division 2 General Federal Law
Number of paragraphs: 17
Date of hearing: 1 December 2022
Place: Sydney
Counsel for the Applicant: Mr G. McDonald
Solicitor for the Applicant: Byrnes Legal
For the Respondent: The respondent appeared in person

ORDERS

SYG 1133 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF ZOFIA MAJAK
BETWEEN:

ALAN WESLEY ROSE

Applicant
AND:

ZOFIA MAJAK

Respondent

order made by:

JUDGE CAMERON

DATE OF ORDER:

1 December 2022

THE COURT ORDERS THAT:

1.A sequestration order be made against the estate of Zofia Majak.

2.The applicant creditor’s costs be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

THE COURT NOTES THAT:

1.The date of the act of bankruptcy is 15 July, 2022.

2.A consent to act as trustee signed by Andrew Barnden has been filed in Court.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

Judge Cameron

Introduction

  1. On 4 August 2022 the applicant, Mr Rose, presented a creditor’s petition seeking a sequestration order against the estate of the respondent, Ms Majak, on the ground that she had failed to comply, on or before 15 July 2022, with the requirements of a bankruptcy notice BN254429 (“Bankruptcy Notice”) served on her on 22 October 2021.  The Bankruptcy Notice required Ms Majak to pay Mr Rose $30,000, being costs ordered in proceedings in the Family Court of Australia (“Family Court”). On 8 July 2022, an order was made in this Court extending to 15 July 2022 the time for Ms Majak to satisfy the Bankruptcy Notice.  The judgment debt grounding the bankruptcy notice remains outstanding, it would seem.

  2. In the creditor’s petition, rather than relying on the debt cited in the Bankruptcy Notice, Mr Rose alleged that Ms Majak owed him $67,638.33 arising out of a $184,166.25 judgment of the District Court of New South Wales (“District Court”) in his favour on 15 November 2019. The $67,638.33 pleaded in the creditor’s petition was said to be the outstanding balance of that judgment debt and Ms Majak has not advanced an argument or led any evidence…

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AGLC
Rose v Majak (No 2) [2022] FedCFamC2G 1025
Case
[2022] FedCFamC2G 1025
Decision Date

CaseChat Overview and Summary

The case of Rose v Majak (No 2) involved a creditor petitioning for the sequestration of Ms Majak’s estate due to an alleged outstanding debt. The matter was heard in the Federal Circuit and Family Court of Australia, with the primary focus on whether Ms Majak could pay her debts as and when they fall due. This determination was crucial under the relevant statutory provisions of the Bankruptcy Act 1966 (Cth), which require the court to consider the debtor's ability to meet their financial obligations. The decision also took into account the various legal proceedings the parties had been involved in, particularly those related to property disputes and apprehended violence orders.

The court had to decide whether Ms Majak had committed an act of bankruptcy, as defined by the statute, and whether the debt claimed remained outstanding. Additionally, it needed to consider whether the debt was provable under the act and whether the creditor had satisfied the necessary requirements for the petition to be heard. The court examined the evidence presented regarding the nature of the debt, the act of bankruptcy, and the financial circumstances of the debtor. It also needed to determine whether Ms Majak could pay her debts as and when they fall due, a crucial aspect in deciding whether to make a sequestration order.

In its reasoning, the court found that Ms Majak had indeed committed an act of bankruptcy, and the debt alleged in the creditor's petition remained outstanding. The court accepted the date of the act of bankruptcy as 15 July 2022 and noted the filing of a consent to act as trustee, signed by Andrew Barnden. The court concluded that the creditor had met the requirements for the petition, and therefore, it was appropriate to make a sequestration order against Ms Majak’s estate. The court also observed that while Ms Majak proposed to seek constitutional writs in the High Court for review of the decisions made in the Federal Circuit and Family Court, no such application had been filed, and it was not appropriate to adjourn the matter to permit that to be done at that point.

The court's final orders were that a sequestration order be made against Ms Majak's estate, and the debtor became a bankrupt as of the date of the order. The creditor was required to provide a copy of the sequestration order to the Official Receiver within two days of the order being made.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Ms Majak has also indicated that she proposes to seek constitutional writs in the High Court for review of the decisions of the Federal Circuit and Family Court of Australia (Division 1) in her case. However, I am told that no application of that sort has been filed and it would not be appropriate to adjourn this matter to permit that to be done at this point, given that such proceedings could have been filed by now or at least readied, or appropriate to delay the relief to which the applicant is entitled. Conclusion I am satisfied that the respondent committed an act of bankruptcy and that the debt alleged in the creditor's petition remains outstanding. The Court notes that the date of the act of bankruptcy is 15 July 2022. The Court also notes that a consent to act as trustee, signed by Andrew Barnden, has been filed with the Court.

Ratio Decidendi

Legal Principle Established

The relevant statutory provisions are ss.43 and 52 of the Bankruptcy Act 1966 (Cth) (“Act”), which provide: 43 Jurisdiction to make sequestration orders (1) Subject to this Act, where:(a) a debtor has committed an act of bankruptcy; and (b) at the time when the act of bankruptcy was committed, the debtor:(i)was personally present or ordinarily resident in Australia;(ii)had a dwelling‑house or place of business in Australia;(iii)was carrying on business in Australia, either personally or by means of an agent or manager; or (iv)was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.(2)Upon the making of a sequestration order against the estate of a debtor, the debtor becomes a bankrupt, and continues to be a bankrupt until:(a) he or she is discharged by force of subsection 149(1); or (b)his or her bankruptcy is annulled by force of subsection 74(1) or 153A(1) or under section 153B. ...52 Proceedings and order on creditor’s petition(1) At the hearing of a creditor’s petition, the Court shall require proof of:(a)the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);(b) service of the petition; and(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.(1A)If the Court makes a sequestration order, the creditor who obtained the order must give a copy of it to the Official Receiver before the end of the period of 2 days beginning on the day the order was made.(1B) Subsection (1A) is an offence of strict liability.(2)If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:(a) that he or she is able to pay his or her debts; or(b)that for other sufficient cause a sequestration order ought not to be made;it may dismiss the petition.Background Facts Notwithstanding the lengthy nature of the parties' submissions, both written and oral, the issues presented for consideration today do not require lengthy reasons. The threshold question is whether Ms Majak can pay her debts as and when they fall due by assets realisable in a relatively short time: Sandell v Porter (1966) 115 CLR 666 at 670. The parties have been involved in a multiplicity of proceedings which were discussed at some length today. Two of the disputes in which the parties have been involved are particularly important to present considerations, namely: (a)property proceedings in the Family Court and subsequent proceedings in that court in its guise as the Federal Circuit and Family Court of Australia (Division 1); (b)Supreme Court of New South Wales (“Supreme Court”) proceedings related to apprehended violence orders (“AVO”) made in the Local Court of New South Wales (“Local Court”) at various registries and associated appeals and costs associated with those various proceedings. I will return to these cases shortly.