Royal Plywood Pty Ltd v Zhang
[2009] FMCA 623
•23 June 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ROYAL PLYWOOD PTY LTD v ZHANG | [2009] FMCA 623 |
| BANKRUPTCY – Creditor’s petition – opposition based on denial of service – inadequate application for adjournment on medical grounds – process server’s evidence accepted – adjournment refused – sequestration order made. |
| Bankruptcy Act 1966 (Cth), ss.52, 52(1)(a) Federal Magistrates Court Rules 2001 (Cth), r.4.06 |
| De Robillard v Carver (2007) 159 FCR 38 |
| Applicant: | ROYAL PLYWOOD PTY LTD ACN 057 029 893 |
| Respondent: | WEN ZHANG |
| File Number: | SYG 980 of 2009 |
| Judgment of: | Smith FM |
| Hearing date: | 23 June 2009 |
| Delivered at: | Sydney |
| Delivered on: | 23 June 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Radman |
| Solicitors for the Applicant: | Grace Lawyers Pty Ltd |
| Counsel for the Respondent: | Mr D Mockler |
| Solicitors for the Respondent: | Stewart Cuddy & Mockler |
| Counsel for Cemex Australia Pty Limited, Supporting Creditor: | Ms M Bautista |
| Solicitors for the Supporting Creditor: | Sally Nash & Co. |
ORDERS
A sequestration order be made against the estate of WEN ZHANG.
The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note that the date of the act of bankruptcy is 9 April 2009.
Note that a consent to act as trustee has been signed by Roderick Mackay Sutherland and has been lodged with the Official Receiver in Sydney.
The applicant must within 2 days give a copy of this order to the Official Receiver in Sydney.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 980 of 2009
| ROYAL PLYWOOD PTY LTD ACN 057 029 893 |
Applicant
And
| WEN ZHANG |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
This is a petition for a sequestration order against Mr Zhang. The petition was filed on 24 April 2009, and relies upon a default judgment of the District Court entered on 11 November 2008 in the sum of $250,143.37. Mr Zhang appears on the judgment as the second defendant, the first defendant being his company which is now in liquidation.
The petition alleges an act of bankruptcy on 9 April 2009, due to non‑compliance with a bankruptcy notice relying on the same judgment debt, plus some interest. It is alleged the bankruptcy notice was served on Mr Zhang on 19 March 2009 at an address in Corea Street, Sylvania. A process server has sworn an affidavit deposing to this occurring in person to a person who was asked: “are you Wen Zhang?”, and the male replied: “yes”. Prima facie that affidavit of service is sufficient. The process server is present at Court, but has not been required to go into the witness box for cross‑examination.
The petition is supported by relevant affidavits verifying debt and search, and there are up‑to‑date r.4.06 affidavits. I am satisfied that the evidence presented by the petitioner is sufficient for the Court to be satisfied as to the requirements under s.52 and the other provisions of the Bankruptcy Act 1966 (Cth) and rules for the making of a sequestration order.
Mr Zhang instructed a solicitor in relation to the petition, who appeared before the Registrar on 22 May 2009 and obtained an adjournment in a contested hearing on that issue. According to the Registrar’s notes, she was told that the solicitor had only recently received instructions, and that there was an issue in relation to service. Directions were made on that occasion for a notice of opposition to be filed by 3 June 2009. The matter was adjourned to 5 June 2009.
On that day Mr Zhang’s solicitor again appeared. He had filed a notice of opposition which contains the following four assertions:
1.Wen Zhang does not reside at [the home unit in] Corea Street, SYLVANIA NSW, although he owns the said property.
2.Wen Zhang has not been served with a Bankruptcy Notice or Creditor’s Petition in relation to the debt to which this action relates.
3.Wen Zhang denies that he owes the money claimed by the Applicant and did not commit the act of Bankruptcy said to be alleged in the Creditor’s Petition.
4.Wen Zhang is able to pay his debts as they fall due.
It is supported by an affidavit of Mr Zhang, and no other evidence. The affidavit of Mr Zhang sworn on 4 June 2009 makes assertions which are lacking particulars and reference to supporting evidence. In effect it is an affidavit only in support of another brief adjournment. He asserts that he resides at an address in Lovedale, New South Wales, which I am informed is a location in the lower Hunter Valley, and that “I have resided at my current address for over three years”. He concedes that he owns the Corea Street property where he is alleged to have been served with the bankruptcy notice and petition documents, but he asserts: “I have not received or been served with a Creditors Petition or Bankruptcy Notice in relation to any debt owing to Royal Plywood Pty Ltd”.
Paragraphs 6 and 7 of his affidavit state:
6.Xilin Yan resides in property owned by me at [the address in] Corea St, Sylvania NSW. He has resided at that property for over twelve months. Mr Yan does not speak English very well and would not understand if asked questions without the use of an interpreter.
7.I have not received any documentation from Mr Yan in relation to these proceedings.
No evidence from Mr Yan is presented to the Court, confirming that he received documents addressed to Mr Zhang from a process server, nor accounting for any reason why he did not give them to Mr Zhang or inform him of their existence. Indeed, it is not asserted that he was, in fact, mistakenly served by the process server. Analysed carefully, the assertions in the affidavit are, in my opinion, inconclusive in relation to whether proper service was or was not effected at that address on Mr Zhang.
Mr Zhang’s affidavit of 4 June 2009 suggests that he expected to be in a position to give instructions to his solicitor after 5 June 2009 to allow the preparation of his case in opposition to the petition, and on that ground he sought a brief adjournment. It also said: “I intend to instruct [my solicitor] to take action to contest any debt claimed by Royal Plywood Pty Ltd”.
The Registrar on 5 June 2009 directed the “respondent to file affidavits of evidence by 15 June 2009”, and directed a date for evidence in reply. The orders expressly stated that “the opponents be available for cross‑examination on Tuesday, 23 June 2009”. That is today. It must have been clear to Mr Zhang’s solicitor, and I assume he conveyed this to Mr Zhang, that he would need to present his evidence and prepare for a contested hearing today.
Today, the petition was referred to me by the Registrar. Mr Zhang remains represented by his solicitor, who tendered a document purporting to be a facsimile of a medical certificate dated yesterday, 22 June 2009, by a doctor practising at Healthpac Medical Centre, 10 Park Road, Hurstville. This was his only evidence in support of an application for a further adjournment of the petition. The certificate states:
THIS IS TO CERTIFY THAT I have today examined:
Mr Wen Zhang
[street address]LOVEDAEL 2321
who is, in my opinion, suffering from Headache
and will not be fit for duty
from Monday, 22 June 2009 to Wednesday, 24 June 2009 inclusive.
The medical certificate raises many concerns. An important concern is how Mr Zhang, if he resides at Lovedale and was incapacitated for work and for coming to Court, was able to attend on a doctor in Hurstville yesterday, yet could not come to Court today even for a brief period. In the light of other evidence to which I shall refer, I consider that the certificate tends to confirm that Mr Zhang is, in fact, living in the region of Hurstville, and more likely than not at Sylvania.
A second problem with the certificate is that its reference to “suffering from Headache” is hardly a medical diagnosis of an incapacitating condition. Even if the doctor accepted Mr Zhang’s assertion that he had that symptom, and was of opinion that it prevented his performing work for three days, the certificate gives no support for an incapacity preventing someone briefly to attend Court if they live in the region of Hurstville. It certainly provides no support for any inference that there was an incapacity to instruct a solicitor before yesterday in relation to the presentation of affidavit evidence, and to provide instructions upon which the process server would have been cross‑examined. The inference from the absence of such evidence, and of Mr Zhang’s solicitor declining to cross‑examine the process server, is that no instructions have been given by Mr Zhang to his solicitor to allow his opposition to the petition to be presented in accordance with the Registrar’s directions.
In all the circumstances, I am not satisfied that the medical certificate provides sufficient evidence of an incapacity by Mr Zhang to attend Court today to give instructions and be cross‑examined on his assertions made in support of the grounds of opposition. I draw the inference from the circumstances of the making of the application for adjournment in the absence of better evidence supporting the opposition to the petition and the adjournment application, and from Mr Zhang’s failure better to instruct his solicitor, that Mr Zhang is seeking to stall the hearing of the petition without proper grounds for an adjournment. I am unable to find good reason to allow a further adjournment of the application today, and propose, therefore, to proceed to determine the petition.
I have given Mr Zhang’s solicitor a full opportunity to present arguments and evidence in support of the grounds of opposition. But in the absence of his client, and of better instructions, he was left with effectively no answer to the evidence presented by the petitioner.
In particular, there is no satisfactory evidence now before me that Mr Zhang did not reside at the relevant time at the address in Corea Street, Sylvania. There is now a body of evidence to the contrary. In this respect, I note a number of documents tendered by the petitioner which are inconsistent with Mr Zhang’s assertion that he has not lived there for the last three years. These include: a White Pages entry; a title search confirming ownership of the property; an application for commercial credit signed on 18 June 2007 in which Mr Zhang gave the address at Sylvania as his “home address”; company searches performed on 14 January 2009, in which his address at Sylvania was provided as the current address for Mr Zhang, as director of the company; and an affidavit of service by a different process server deposing to service on a person at the Sylvania address who acknowledged that he was Wen Zhang, where this identify was confirmed to the process server by an English speaking daughter.
All this evidence, like the medical certificate itself, tends strongly to disprove the assertion which is made in the ground of opposition that the bankruptcy notice was not duly served. On the evidence before me, I prefer the affidavit of the process server, who is in attendance for cross‑examination today.
In relation to service of the petition, Mr Zhang has instructed a solicitor who has filed an unconditional appearance. He therefore is deemed to have been served with those documents pursuant to the relevant Federal Court rules which are adopted by the rules of this Court (see De Robillard v Carver (2007) 159 FCR 38 at [86]). Moreover, for the reasons above, I would also accept the affidavit of the process server that the petition was, in fact, properly served on Mr Zhang at his address at Sylvania.
The assertion in the notice of opposition that the debt relied upon in the judgment, bankruptcy notice and petition was not owed, is entirely unsupported by any particulars or evidence. I can find no reason to doubt the default judgment of the District Court which is before me, and not to accept the affidavits of debt pursuant to s.52(1)(a) of the Bankruptcy Act.
Similarly, in relation to the assertion that Mr Zhang is “able to pay his debts as they fall due”, no evidence in support of this assertion has been presented to the Court. There is no evidence as to Mr Zhang’s financial position, but there is a supporting creditor who has filed an appearance asserting a debt in the sum of $391,485.47. All the evidence currently before me points to the strong possibility that Mr Zhang is insolvent, owing large debts.
For all the above reasons, I am not satisfied that there is any ground in the Court’s discretion for declining to make a sequestration order today, nor for the reasons given above am I persuaded that I should adjourn the making of that order.
I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Lilian Khaw
Date: 6 July 2009
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