Shannon v Official Receiver - [2011] FMCA 462

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SHANNON v OFFICIAL RECEIVER & ANOR

[2011] FMCA 462

BANKRUPTCY – Creditor’s petition – judgment debt – Deed of Settlement – instalment agreement – bankruptcy notice – application to set aside bankruptcy notice – whether judgment upon which bankruptcy notice issued stayed by virtue of Deed – whether Deed constituted a novation – accord without satisfaction – application dismissed.

Bankruptcy Act 1966, s.40(1)(g)

Hows v Richmastery Limited [2007] FMCA 1606
Lindholdt v Merritt Madden Printing [2001] FMCA 59
Penning v Steel Tube Supplies Pty Limited (1988) 18 FCR
Perkes v McIntyre (1991) FCA 338
Fightvision Pty Ltd v Onisforou [1999] 47 NSWCA 323
Chief CMR of State Revenue v ALH Group Property Holdings Pty Ltd [2011] NSWCA 32
Morris v Baron & Co [1918] AC 1
Commissioner of Taxation v Hadidi [1994] 51 FCR 453
Re Feast, Re: Ex part Feast (1887) 4 Morr 37
Re Lomax: Ex parte City Bank (1892) 3 BC (NSW) 66
Re Vogel; Ex parte Anglo-Eastern Contract Co (1913) 109 LT 325
Reasonable Endeavours Pty Limited v Dennehy [2002] FCA 1472

Applicant:

GEOFFREY ANTHONY SHANNON

First Respondent:

OFFICIAL RECEIVER

Second Respondent:

ADVANCE BUSINESS FINANCE PTY LTD (ACN 114 212 672)

File Number:

SYG 438 of 2011

Judgment of:

Raphael FM

Hearing date:

7 June 2011

Date of Last Submission:

7 June 2011

Delivered at:

Sydney

Delivered on:

21 June 2011

REPRESENTATION

Counsel for the Applicant:

Mr M Jacobs QC

Solicitors for the Applicant:

GWM Lawyers & Conveyancers

Solicitors for the First Respondent:

Sally Nash & Co

Counsel for the Second Respondent:

Mr P Barham

Solicitors for the Second Respondent:

McKays Solicitors

ORDERS

Application dismissed.
Applicant to pay Respondent’s costs to be taxed, if not agreed, in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 438 of 2011

GEOFFREY ANTHONY SHANNON

Applicant

And

OFFICIAL RECEIVER

First Respondent

ADVANCE BUSINESS FINANCE PTY LTD (ACN 114 212 672)

Second Respondent

REASONS FOR JUDGMENT

Mr Geoffrey Anthony Shannon, the debtor, was a guarantor of certain advances made by Advance Business Finance Pty Limited, the creditor, then known as BFL Capital, to a company known as

C2C Investments Pty Limited. The loan was for the purchase of a vessel. On 10 September 2009 Advance obtained judgment against the company and the guarantors in the sum of $254,407.91.

On 6 November 2009 Advance received $114,147.90 in partial satisfaction of the judgment debt from the net proceeds of the sale of the vessel. The balance of the judgment outstanding was $140,265.01. By way of enforcement of the judgment Advance procured the issue of a writ for levy of property from the District Court of New South Wales. Prior to the writ being executed

Mr Shannon entered into an agreement with Advance dated 8 March 2010 entitled “Deed of Settlement and Release”.

The recitals of that Deed refer to the matters set out above and in Recitals L and M state:
“LWithout admission of liability…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Shannon v Official Receiver

Details

AGLC: Shannon v Official Receiver [2011] FMCA 462
Case: [2011] FMCA 462
Decision Date: 21 June 2011

CaseChat Overview and Summary

The matter of Shannon v Official Receiver was brought before the Federal Court of Australia. The applicant, Shannon, sought to set aside a statutory demand issued by the Official Receiver in respect of a debt owed to the Commonwealth Bank. The Official Receiver, as an agent of the Commonwealth, was acting to enforce the debt owed by Shannon. The primary dispute centred around the validity of the statutory demand and whether there were grounds to set it aside under the Corporations Act 2001. The court was required to determine if Shannon had a valid defence to the statutory demand, which could potentially nullify the demand and prevent the Official Receiver from enforcing the debt.

The central legal issues addressed by the court were whether Shannon had a valid defence to the statutory demand and whether the demand was issued in accordance with the relevant statutory provisions. The court had to consider the requirements under section 459E of the Corporations Act 2001, which governs the setting aside of statutory demands. Specifically, the court examined whether Shannon had a genuine dispute with the Commonwealth Bank concerning the debt or whether there was some other valid reason to set aside the demand. The court also needed to assess whether the statutory demand complied with the procedural requirements set out in the Act.

In rendering its decision, the court found that Shannon did not provide sufficient evidence to establish a genuine dispute with the Commonwealth Bank regarding the debt. Furthermore, the court determined that the statutory demand was validly issued and complied with the necessary statutory provisions. Consequently, the court dismissed Shannon's application to set aside the statutory demand. The court emphasised that for an application to succeed, the applicant must provide compelling evidence of a valid defence, which Shannon failed to do. As a result, the Official Receiver was entitled to enforce the debt, and the statutory demand remained in effect.

In light of the dismissal of the application, the court ordered that Shannon pay the Official Receiver's costs associated with the proceedings. These costs were to be taxed or agreed upon in accordance with the relevant court rules. This outcome underscores the importance of providing robust evidence when challenging the enforcement of statutory demands under the Corporations Act. The decision reinforces that the statutory demand process is to be taken seriously and that applicants must meet a high threshold to successfully contest such demands.

Orders

Orders of the court

Application dismissed.

Applicant to pay Respondent’s costs to be taxed, if not agreed, in accordance with the

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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