Shaker v Gowers
[2006] FMCA 1282
•29 August 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SHAKER v GOWERS | [2006] FMCA 1282 |
| BANKRUPTCY – Application for review of Registrar’s Sequestration Order – whether debt – whether instalments arrangement. PRACTICE AND PROCEDURE – Extension of time – debtor failed to attend hearing – attendance at wrong court – debtor attended State Magistrates’ Court rather than Federal Magistrates Court – whether confusion sufficient excuse where Creditors Petition clearly referred to correct court and address. |
| Bankruptcy Act 1966, ss.52, 153B |
| Applicant Creditor : | SAID SHAKER |
| Respondent Debtor: | BEN GOWERS |
| File number: | MLG 478 of 2006 |
| Judgment of: | McInnis FM |
| Hearing date: | 29 August 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 29 August 2006 |
REPRESENTATION
| Applicant Creditor: | In person |
| Counsel for the Respondent Debtor: | Mr C.J. King |
| Solicitors for the Respondent Debtor: | Keogh & Co |
ORDERS
The application for an extension of time by the Debtor is refused.
The application filed 30 June 2006 is otherwise dismissed.
The Debtor shall pay the petitioning creditor and trustee's costs pursuant to Order 62 of the Federal Court Rules to be paid out of the estate of the Debtor pursuant to the provisions of the Bankruptcy Act 1966.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 478 of 2006
| SAID SHAKER |
Applicant
And
| BEN GOWERS |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This is an application filed by Said Roushdy Shaker (the Debtor) on 30 June 2006 seeking an extension of time to file and serve the application to review a decision of a Registrar of this court dated 31 May 2006. The application before this court seeks further upon the granting of an extension of time to file and serve the application for review an order setting aside a Sequestration Order made by the Registrar on 31 May 2006.
The Sequestration Order was made, amongst other orders on that day, by the Registrar which included the following:
“1. Leave be granted to amend paragraph 4 of the petition to substitute 27 March 2006 for 26 March 2006 as the date of commission of the act of bankruptcy.
2 Re-verification and re-service be dispensed with.
3 A sequestration order be made against the estate of SAID SHAKER.
4 The applicant's costs of and incidental to the petition be taxed pursuant to Order 62 of the Federal Court Rules and paid in accordance with the statute.”
The order made by the learned Registrar on 31 May 2006 noted the date of the act of bankruptcy is 27 March 2006. The application before this court prepared by the Debtor who is self-represented appears to be either an application for review of the order made by the Registrar on 31 May 2006, which of course would be a hearing de novo of the creditor's petition and the material relied upon.
It is perhaps arguable, though not specified in the application itself, that the debtor may otherwise seek annulment of the Sequestration Order pursuant to s.153B of the Bankruptcy Act 1966. In my view the application is more properly considered to be simply an application for review of the Registrar's decision and in seeking an extension of time within which to bring the application the applicant then would proceed to, if granted an extension of time, argue that the Sequestration Order should be set aside. I take that to be set aside on the basis that there is either no debt or that an arrangement is in place which the applicant has largely complied with to pay the debt by instalments.
It is noted that the applicant in these proceedings has sought to rely upon two affidavits. The first is an affidavit sworn by the Debtor on 30 June 2006. That affidavit simply provides as follows:
“1 I went to the Magistrates Court not knowing that court hearing was held at the Federal Court.
2 Also in previous court hearing my lack of understanding English I was unable to comprehend what was happening.”
Perhaps not surprisingly the court, when confronted with that affidavit material and upon hearing some evidence from the Debtor on 7 August 2006, ultimately decided to adjourn the proceedings to enable the Debtor to file and serve further affidavit material and indeed enable the petitioning creditor to likewise file and serve additional material.
The purpose of the adjournment was to achieve at least two outcomes. The first to provide the Debtor with a further opportunity to produce additional material both in relation to the extension of time and also in relation to what the court took the Debtor to be saying, that either the debt was not outstanding or that he had continued to make payments pursuant to instalment orders. The second purpose of the adjournment was to enable the petitioning creditor to likewise file and serve further affidavit material setting out in some detail the chronology of events and, in particular, setting out the amount now claimed to be owing by the Debtor to the petitioning creditor.
It should also be noted that the Trustee has appropriately been represented before this court and has otherwise sought to rely upon an affidavit sworn by Warren Brian White on 2 August 2006. To the extent that it is necessary I shall refer to that affidavit further in this judgment.
At the resumed hearing of this matter today I excused the Trustee's representative upon the basis that the Trustee's representative indicated the Trustee would abide by the court's decision save and except for any application the Trustee may wish to make in relation to the issue of costs.
The debtor, after the adjournment of this matter, has in fact filed and served a further affidavit sworn 18 August 2006. The petitioning creditor likewise pursuant to the orders made at the adjourned hearing has filed and served a further affidavit, namely an affidavit of James Michael Keogh sworn 24 August 2006.
The background in this matter can only be described as a somewhat unfortunate saga of events culminating in the Sequestration Order made by the court on 31 May 2006. It is indeed a saga which has resulted to a large extent in additional costs being incurred over a lengthy period of time and a debt remaining due and payable of an amount sufficient to provide a basis upon which the petition was presented to the court.
No issue is taken in relation to service of the bankruptcy notice upon which the petition is based. Nor indeed does there appear to be any issue taken in relation to the service of the creditor's petition in this instance. I note in passing that the creditor's petition clearly indicates that the hearing of the petition was to occur on 31 May 2006 at 2.15 pm and provides that the place of that hearing would be the Federal Magistrates Court, 305 William Street, Melbourne, Victoria.
It is perhaps useful before setting out in detail a chronology of events to note that this application which I take to be effectively an application for review of the Registrar's decision was filed out of time and does not comply with Rule 20.01 of the Federal Magistrates Court Rules which provides:-
“20.01 Time for application for review
(1) For subsection 104 (2) of the Act, application for review of the exercise of a power by a Registrar must be made within:
(b) for the exercise of a power of the Court under the Family Law Act mentioned in paragraph 20.00A (1) (b) - 28 days; and
(c) otherwise - 7 days.
(2) A time prescribed under subrule (1) may be extended in a proceeding:
(a) by the Court or a Registrar on any terms as the Court or Registrar thinks fit; or
(b) with the consent of the parties to the proceeding.”
It is common ground, however, that the application before this court having been filed on 30 June 2006, and relating as it does to orders made on 31 May 2006, appears to be out of time.
The applicant both in evidence before this court and his affidavit material has indicated, and for present purposes I accept, that he did not perhaps read completely the creditor's petition and did not, as he perhaps should have, correctly read the address at which the hearing was to take place on 31 May 2006. Instead, he assumed that the court hearing this matter was the same court that he had attended on numerous occasions in relation to the substantive debt, namely the State Magistrates Court.
It is not for the first time that this court has been confronted with a degree of confusion concerning the location of this court and indeed, confusion concerning this court and the State Magistrates Court.
The confusion, I am satisfied, arises directly as a result of the use of the words "Magistrates Court" in this Court's title. However, the creditor's petition itself makes clear the address to which the debtor should have attended. Although I accept his evidence that he had attended the wrong court I am not satisfied that that evidence of itself provides any or any reasonable excuse upon which this court could be satisfied that it is appropriate to the extent that it is required to grant an extension of time.
Parties who receive creditors' petitions have a duty to ensure that they read carefully the petition and note with an equal degree of care the court and the place at which the hearing is to occur. Whilst there has been an understandable confusion in terms of the description of the court with the State Magistrates Court, I do not accept that that confusion should necessarily provide an excuse for non-attendance at this court at the address on the creditor's petition on the date and time referred to in that petition which, as I have indicated, was received by the applicant.
It is my concluded view that the material before the court does not provide a proper basis upon which the court in the exercise of its discretion should extend time. However, if I am wrong in relation to the exercise of my discretion in refusing to grant an extension of time I further find that in any event the application to this court and upon the material and considering the petition, which I accept if an extension of time were granted would result in a hearing de novo of the creditor's petition is one where the Debtor has not satisfied me that there are any or any appropriate grounds upon which a Sequestration Order ought not to be made.
The debt appears to be a debt owing and the issue between the creditor and the debtor appears to arise from the significant and detailed chronology of events which led the debtor to assume that he could continue to pay off the primary debt by instalments. To understand those arguments raised by the debtor it is useful to recite the chronology of events which I am satisfied appear accurately in the affidavit of James Michael Keogh sworn 24 August 2006.
It is noted from that affidavit that this debt goes back to events which occurred on 15 March 2001 where the debtor appeared to have had a motor vehicle collision with a motorcycle of the creditor causing damage to the motorcycle in the amount of $7353.50. The affidavit of Mr Keogh deposes that the balance now owing by the bankrupt as at the date of swearing the affidavit is $6882.63.
It is important to understand the chronology of events leading to that conclusion and for convenience I shall incorporate in this judgment paragraphs 4 up to and including paragraphs 69 of the affidavit of Mr Keogh.
“4. On 18th June 2001 a Complaint was filed on behalf of the Judgment Creditor in the amount of $7,353.50 in the Melbourne Magistrates Court (“the Court”). The Complaint was personally served on the Bankrupt on 28th July 2001.
5. On 27th August 2001, a Default Order was granted by the Court ordering the Bankrupt to pay the Judgment Creditor’s claim of $7,353.00, plus interest of $164.50 and costs of $505.00. Now produced and shown to me marked “JMK1” is a true copy of such Order.
6. On 17th September 2001, a Summons for Oral Examination was issued by the Court. The Summons for Oral Examination was personally served on the Bankrupt on 7th October 2001.
7. On 3 December 2001, the Bankrupt failed to appear at the Court for the Summons for Oral Examination.
8. On 4th December 2001, the Court ordered a Warrant for the apprehension of the Debtor. Now produced and shown to me marked “JMK.2” is a true copy of such Order. On 8th January 2002, the arrest warrant was executed.
9. On 21st February 2002, the Bankrupt completed and swore an Examination of a Judgment Debtor statement. Now produced and shown to me marked “JMK3” is a true copy of such statement.
10. On 18th June 2002, a Warrant to seize property of the Bankrupt was issued.
11. On 28th October 2002, the Bankrupt filed and served an Application for Rehearing. On 2nd December 2002, the Application for Re-hearing was granted and the Order of 27th August 2001 was set aside. Costs of $272.00 were awarded to the Judgment Creditor with a stay of 30 days. Such costs were never paid. Now produced and shown to me marked “JMK4” is a true copy of such Order.
12. On 11th January 2003, the Debtor filed and Application for Instalment Order.
13. On 11th February 2003, the Court Order the Bankrupt to pay the Judgment Creditor’s claim of $3,500.00 plus interest of $677.00 plus costs of $2,099.00 with a stay of 28 days. Such costs were not paid by 9th March 2003. Now produced and shown to me marked “JMK5” is a true copy of such Order.
14. On 14 March 2003, the Bankrupt’s request for Instalment Order of $100.00 per month was refused by Magistrate Chant on the basis that the debt would not be satisfied in reasonable time.
15. On 23rd May 2003 a Warrant of seizure and sale was issued against the Bankrupt and an attempt to execute was returned “nulla bona” by the Sheriff.
16. On 8th August 2003 a Warrant to Seize Property specifically the residence of the Bankrupt at 4 Raimeno Street, Lalor was issued and served, and progressed to the setting of a date of sale by the Sheriff for 12th May 2004.
17. On 2nd April 2004, an Application for Instalment Order was filed and served by the Bankrupt.
18. On 19th April 2004, the Instalment Order Hearing was adjourned until 3rd May 2004 as the Bankrupt did not furnish a break up of weekly expenses.
19. On 3rd May 2004 the Instalment Order was refused by Magistrate McCoy as the Bankrupt had still not supplied a break up of weekly expenses.
20. On 12th May 2004, the Bankrupt lodged a Notice of Objection. This put the sale of the Bankrupt’s property by the sheriff on hold until 23rd June 2004 due to the Notice of Objection pending.
21. On 28th May 2004, the Bankrupt’s Notice of Objection was granted by the Court. It was ordered that the Bankrupt pay the varied sum of $6,276.00 together with costs of the Application which were fixed at $277.00 by instalments of $300.00 per month. The first instalment was due 15th June 2004. This effectively cancelled the Warrant for Seizure and Sale of the house. Now produced and shown to me marked “JMK6” is a true copy of such Order.
22. The Bankrupt had paid no monies whatsoever to the date of the said Order on 28th May 2004.
23. On 16th June 2004 the Bankrupt paid the first instalment of $300.00.
24. On 19th July 2004 the Bankrupt paid an instalment of $300.00.
25. On 18th August 2004 the Bankrupt paid an instalment of $300.00.
26. On 13th September 2004 the Bankrupt paid an instalment of $300.00.
27. On 12th October 2004 the Bankrupt paid an instalment of $300.00.
28. 15th November 2004 the Bankrupt defaulted on payment due under Instalment Order.
29. On 15th December 2004 the Bankrupt defaulted on payment due under Instalment Order.
30. On 15th January 2005 the Bankrupt defaulted on payment due under Instalment Order.
31. On 25th January 2005 the Judgment Creditor filed an Application to Set Aside Instalment Order consequent upon the defaults.
32. On 10th February 2005 the Judgment Creditor filed an Adjournment Notice due to lack of service on Bankrupt.
33. On 10th February 2005 personal service was effected on the Bankrupt. On 11th February 2005, we sent a letter to the Bankrupt informing him of the new court date.
34. On 15th February 2005 the Bankrupt defaulted on payment due under Instalment Order.
35. On 16th February 2005 we received Notice of Hearing from the Court and posted a copy to Bankrupt.
36. On 18th February 2005 the Judgment Creditor’s Application to set aside Instalment Order was struck out. The Bankrupt did not appear at Court on this day. The Application was struck out by Magistrate Smith because the Bankrupt was not summoned to attend Court. Magistrate Smith said he wanted to hear from the Bankrupt about his reasons for non-payment.
37. On 29th March 2005 a Summons for Or& Examination was heard before the Court. Once again the Bankrupt did not appear at Court. A warrant for the Debtors arrest was issued and executed.
38. On 12th April 2005 a Summons for Oral Examination was heard before the Court. The Bankrupt was present. Magistrate Smith Ordered the Debtor to pay varied amount of $150.00 per month with the 1st instalment due 30 April 2004 and costs were awarded to the Judgment Creditor of $368.70 with a stay 30 days. Such costs were never paid.
39. On 29th April 2005 the Bankrupt paid an instalment of $150.00.
40. On 31st May 2005 the Bankrupt paid an instalment of $150.00.
41. On 6 July 2005 the Bankrupt paid an instalment of $150.00. Such payment was 7 days late.
42. On 15th July 2005 1 caused a letter to be mailed on behalf of the Judgment Creditor to the Debtor demanding payment of arrears and costs. Now produced and show to me marked “JMK7” is a true copy of such letter.
43. On 5th August 2005 the Bankrupt paid an instalment of $150.00.
44. On 8th Aug 2005 1 caused a further letter to be mailed to the Bankrupt demanding payment of arrears and costs. Now produced and show to me marked “JMK8” is a true copy of such letter.
45. On 2lst November 2005 1 caused a letter to be mailed on behalf of the Judgment Creditor to Melbourne Magistrates’ Court requesting the matter to be re-listed and further Orders be made.
46. On 6th December 2005 the Bankrupt was personally served with Summons for Examination and Notice of Hearing.
47. On 13th December 2005 the Bankrupt was personally served with an Application to Set Aside Instalment Order and Affidavit of Maree Lauren Comito sworn 13th December 2005.
48. On 16th December 2005 the Application to Set Aside Instalment Order Hearing was adjourned until 28th February 2006 as Magistrate Smith did not accept the itemised calculation of the balance due under the instalment order as detailed to him by Counsel. The Bankrupt appeared in person and was ordered by Magistrate Smith to pay $150.00 within 7 days.
49. On 9th January 2006 the Bankrupt paid an instalment of $150.00 which was by specific Court Order of 16th December 2005, ordered to have been paid by 23rd December 2006.
50. On 22nd February 2006 the Bankrupt paid an instalment of $150.00.
51. On 28th February 2006 Magistrate Smith granted Application to Cancel the Instalment Order. The Bankrupt did not appear on this occasion. Now produced and shown to me marked “JMK9” is a true copy of such Order.
52. On 2nd March 2006 I caused a letter to be mailed by pre-paid post to the Bankrupt enclosing copy of the Order made on 28th February 2006 and advising him that the Instalment order made by the Court on 12th April 2005 had now been cancelled. Now produced and shown to me marked “JMK10” is a true copy of such letter.
53. On 2nd March 2006 a Bankruptcy Notice was filed with the Insolvency and Trustee Service of Australia.
54. On 5th March 2006 the Bankruptcy Notice was personally served on the Bankrupt.
55. On 8th March 2006 the Bankrupt paid a further sum of $150.00.
56. On 27th March 2006 the Bankrupt failed to pay the amount demanded in the Bankruptcy Notice, 21 days having elapsed after service.
57. On 5th April 2006 the Creditor’s Petition was filed at the Federal Magistrates Court and personally served on the Bankrupt on 10th February 2006.
58. On 13th April 2006 the Bankrupt paid a further sum of $150.00.
59. On 15th May 2006 the Bankrupt paid a further sum of $150.00.
60. On 27th May 2006 the Consent to Act as Trustee Declaration personally served on Bankrupt.
61. On 11th July 2006 the Bankrupt paid a further sum of $150.00.
62. On 14th August 2006 the Bankrupt paid a further sum of $l50.00.
63. Now produced and shown to me marked “JMK11” is a true copy of the Applicant Creditor’s trust statement in this matter showing all payments which have been paid by the Bankrupt. It is a true and correct record. I am informed today by the Judgment Creditor that no amounts have ever been paid to him by the Bankrupt.
64. I refer to the Affidavit of the Bankrupt filed herein and sworn the 18th day of August 2006 and say that the Bankrupt is well aware that the amount owing by him exceeds the amount set out in paragraph 6 of his said Affidavit as the Bankruptcy Notice was personally served on the Bankrupt on 17th March 2006 setting out the complete debt owing fully itemised in a detailed schedule of amounts due under judgments, interest due and payable and payments made.
65. In addition I have regularly written to the Bankrupt advising him of the balance due. Now produced and shown to me marked “JMK12” are true copies of further letters sent to the Bankrupt advising him of the balance still outstanding.
66. Now produced and shown to me marked “JMKI3” is a true copy of Examination of a Judgment Debtor Form completed and sworn on 16th December 2005 by the Bankrupt as to the Bankrupt’s financial circumstances as at the date of swearing. The Bankrupt was clearly insolvent at that date.
67. On or about 13th August 2004 the Bankrupt disposed of his residence to his son, but remains living therein as the various Affidavits of Service flied herein demonstrate. The Bankrupt has never accounted for the proceeds of such sale. I refer to the Affidavit of Mr. Warren White (“the Trustee”) sworn 2nd August 2006 and note that at the date of swearing, the Trustee was yet to receive a Statement of Affairs from the Bankrupt.
68. The Bankrupt repeatedly failed to make payments due under instalment orders, the second of which was discharged by the Melbourne Magistrates Court on 28th February 2006 as a result of such defaults.
69. There is no Instalment Order in place.”
It is interesting to note that in the debtor's own affidavit sworn 18 August 2006 he sets out what appears to be a chronology of payments. A comparative analysis between that chronology of payments and the list of payments which appear in exhibit JMK11 to the Keogh affidavit appear to be similar, if not identical. Indeed, the debtor in his own affidavit has indicated the total payments made were $3150. He refers to the principal money being $3500 and then asserts “so what is remaining is $350”.
The Debtor, however, then goes on to state the following:
“I also went over seas for two month starting on January 7th to the 11th of March 2006. During that period Keogh & Co tried to serve an affidavit to cancel the payment plan and try to get something better. It seems to me that Keogh & Co are trying to do the impossible for me not to pay, they even cancelled my last payment without my knowledge. I am so close to finishing the payments and all they want to do is start something new, now they want me to pay $4000 over the principal money, its like they want me to default a payment so they can hold it against me, they asked to seize the hose and that was rejected, they asked for my car and that was rejected and now I declare bankruptcy the want to dismantle my life for a late payment or something I don't know what I did to them and what they want from me.” (sic)
That quotation is inserted as it appears in the affidavit together with obvious typographical and English errors. Despite those errors,
I should indicate, I am satisfied, having heard the Debtor and having read the material he has sought to rely upon, that he has a reasonable command of English and certainly is able to speak and understand English. I am satisfied he has a reasonable ability to read and write English.
The thrust of what the Debtor asserts appears in the paragraph from his affidavit which I have referred to in this judgment. It seems clear to me from the chronology of events and having heard the evidence that there is some degree of common ground between the parties. Ultimately it appears to me on the chronology of events set out in the lengthy extract from the Keogh affidavit, and I so find, that there is indeed at the date of the swearing of the Keogh affidavit an amount due of $6,882.63. I am further prepared to accept that over the relevant period of time as asserted by the debtor he has made total payments of $3,150.
Although in his affidavit the Debtor refers to an absence from Australia between 7 January 2006 and 11 March 2006 it appears from his evidence that the absence may have been for the period December 2005 up to and including 2 March 2006. Not a great deal turns on the discrepancy save, and I note in the Debtor's own affidavit, that it would appear that during the course of that absence overseas he managed to make or arranged to make two payments or $150 each, one being made on 9 January 2006 and the second on 22 February 2006, both of which he explains as the result of an arrangement he made with his son who presumably remained in Melbourne. I conclude that he had the capacity during that period of time to continue to make instalment payments.
Nevertheless, in my view the chronology of events clearly demonstrates that despite the material from the Debtor, that the instalment orders that had previously been in place in the state Magistrates Court ultimately were discharged and as a result of default on the Debtor, the balance of the debt then became due and payable.
It is clear from the detailed chronology of events that correspondence was forwarded to the Debtor which significantly, on 2 March 2006, enclosed a copy of the order made in the state Magistrates Court on 28 February 2006 advising the debtor that the instalment order made by that court on 12 April 2005 had been cancelled. It is perhaps not surprising that on the same date of that letter the bankruptcy notice was filed and the proceedings otherwise took the course that they have taken as revealed in that detailed chronology included in this judgment.
In my view even if the court were minded to accept as a reasonable explanation the Debtor's evidence concerning his non-attendance at this court I am otherwise satisfied on the material before me that there is insufficient merit in the submissions made and the evidence produced by the debtor to persuade this court that the Sequestration Order made by the Registrar on 31 May 2005 should be interfered with by this Court or set aside.
Even if I were to read the application which has been filed by the applicant as being an application for annulment of the Sequestration Order pursuant to s.153B of the Bankruptcy Act I would otherwise not be satisfied that in this instance the Sequestration Order ought not to have been made.
There is little or no evidence provided by the Debtor in relation to solvency. There is no dispute in relation to service of the bankruptcy notice or the petition, nor indeed ultimately in my view, as I have found, is there any dispute as to there being a balance due and payable.
The Debtor's concern appears to be that the principal debt has increased significantly as a result of additional costs being added from time to time to the amount due and payable. It ought to be noted that although the Debtor is aggrieved by that process the fact remains that the petitioning creditor is liable for those additional costs for services rendered by the solicitors acting for and on behalf of the creditor and in the circumstances should not be expected to accept responsibility for those costs and is entitled to look to the Debtor for payment of those additional costs which have now resulted in the situation which
I accept to be the fact, that as of the date of the swearing of the affidavit of Mr Keogh the balance owing by the bankrupt is $6,882.63.
In my view there is no other sufficient cause on the material before me and no other basis upon which the court in exercising the discretion it undoubtedly has on a hearing de novo pursuant to s.52 of the Bankruptcy Act on which the Court would in any event otherwise on a hearing of an application to set aside the sequestration order and/or on a hearing of an annulment application to allow the application of the Debtor.
In those circumstances, even if the court were minded to accept in the exercise of its discretion that the Debtor has provided a reasonable excuse for his non-attendance at court on 31 May 2006 it is my view that on the material before me there is indeed no arguable case the Debtor can present. On that basis in the further exercise of the Court's discretion the application for extension of time should be refused.
It seems to me, however, that in the circumstances and out of an abundance of caution, in addition to refusing the application for an extension of time the court should otherwise dismiss the application and make appropriate orders in relation to costs.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 29 August 2006
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