Savage v Soloman (No 2)
[2021] FedCFamC2G 384
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Savage v Soloman (No 2) [2021] FedCFamC2G 384
File number(s): CAG 62 of 2018 Judgment of: JUDGE RILEY Date of judgment: 13 December 2021 Catchwords: BANKRUPTCY – application to review sequestration order made by a registrar – court having gone behind the judgment and declared that the underlying debt was owing in truth and reality – bankrupt seeking to file further affidavits to challenge the declarations – court being functus officio – court declining to entertain further affidavits – bankrupt being insolvent – application to review dismissed. Cases cited: Savage v Soloman [2021] FedCFamC2G 278 Division: Division 2 General Federal Law Number of paragraphs: 10 Date of hearing: 13 December 2021 Place: Melbourne Advocate for the applicant: Paul Thompson Solicitor for the applicant: Kennedy & Cooke Lawyers Advocate for the respondent: Rocco Ardino Solicitor for the Respondent: Morgan Ardino & Co Solicitors ORDERS
CAG 62 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF THE BANKRTUPCT ESTATE OF PHILLIP AZIZ SOLOMAN
BETWEEN: ROBIN BARRY SAVAGE
Applicant
AND: PHILLIP AZIZ SOLOMAN
Respondent
ORDER MADE BY:
JUDGE RILEY
DATE OF ORDER:
13 DECEMBER 2021
THE COURT ORDERS THAT:
1.The application for review filed on 31 March 2020 and amended on 12 June 2020 be dismissed.
THE COURT ORDERS BY CONSENT THAT:
2.The respondent pay the applicant’s costs of the application to review fixed in the sum of $7,000.
AND THE COURT NOTES THAT:
A.The court was satisfied today that the respondent is insolvent.
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).
EX TEMPORE REASONS FOR JUDGMENT
JUDGE RILEY:
These are the reasons for orders made on 13 December 2021. Below is an amalgam of statements I made on that day, albeit not in the form of an ex tempore judgment. These reasons have been prepared because the bankrupt has filed an application for leave to appeal out of time from the orders made on 13 December 2021, and possibly also from the orders made on 18 November 2021.
By way of background, the bankrupt filed an application to review a sequestration order made by a registrar against the bankrupt's estate. The bankrupt argued that the court should go behind the judgment debt on which the bankruptcy notice was based. The court considered that it was appropriate to do so in this case. The court conducted a trial within a trial on the question of whether the debt was owed in truth and reality. That trial was conducted on 5 October 2021.
On 18 November 2021, the court delivered judgment on the trial within a trial and made declarations and orders as follows:
THE COURT DECLARES THAT:
1.By a written agreement dated 9 August 2012, the respondent borrowed $60,000 from the applicant for three months at an interest rate of 3% per month.
2.The $60,000 plus interest remains due and owing.
THE COURT ORDERS THAT:
3.The matter be adjourned to 16 December 2021 at 10am for further hearing.
4.By 4pm on 2 December 2021, the respondent file and serve:
a. any affidavit; and
b. written submissions,
regarding the question of solvency and any other issue remaining in the proceeding.
5. By 4pm on 9 December 2021, the applicant file and serve:
a. any affidavit; and
b. written submissions,
regarding the question of solvency and any other issue remaining in the proceeding.
6. By 4pm on 14 December 2021, the respondent file and serve:
a. any affidavit in reply; and
b. any further written submissions.
7. The parties’ costs be reserved.
8. Each party have liberty to apply.
Written reasons were given for the declarations in Savage v Soloman [2021] FedCFamC2G 278. (I note that, although the bankrupt was represented by experienced counsel, there was no challenge to the interest rate.)
The remaining issues in the matter were due to be determined on 16 December 2021. However, on 29 November 2021, the bankrupt emailed my chambers seeking leave to file further affidavits going to the question of whether there was in truth and reality a debt. The petitioning creditor said by email that he opposed such leave being granted. My chambers told the parties by email that the court appeared to be functus officio on the question of whether there was in truth and reality a debt.
It seemed that the bankrupt did not accept that, so the matter was brought on for directions on 13 December 2021, at which time I said basically the following.
I have read your outline of submissions, Mr Ardino. They proceed on the basis that I have a discretion. They try to persuade me to exercise that discretion in favour of your client. The thing about the court being functus officio is that the court has no discretion. The trial that we had previously was a trial within a trial and I eventually made declarations. I cannot just unwind those declarations. I do not have power to do that, except by consent, which the petitioning creditor does not give.
In relation to solvency, the bankrupt has filed an affidavit saying in effect that, if the court accepted that the debt was only $7,000, he would be solvent. However, the court has declared that the debt is $60,000 plus interest.
The bankrupt also said in his affidavit that he has a job, and a surplus of income of about $1,000 per week. That would take him about 60 weeks to repay the principal much less the interest. The test of solvency requires the debts be repaid as and when they fall due or within a reasonable time thereafter. More than sixty weeks is not a reasonable time. That means that the bankrupt is not solvent. Moreover, the bankrupt has over $100,000 in costs orders against him. That means that he is hopelessly insolvent.
The parties reached agreement on the costs of the application to review the registrar’s order. As there were no other issues, the parties were content for the matter to be finalised on 13 December 2021 and did not require the hearing on 16 December 2021. The application to review was dismissed on 13 December 2021.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of Judge Riley delivered on 13 December 2021. Associate:
Dated: 24 February 2022
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