Shaw v Yarranova Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Shaw v Yarranova Pty Ltd [2016] FCA 88

File number: VID 774 of 2014
Judge: PAGONE J
Date of judgment: 15 February 2016
Catchwords: BANKRUPTCY – application to annul bankruptcy – sequestration order – whether applicant indemnified from paying debts set out in bankruptcy notice and creditor’s petition – whether respondent lacked legal standing to be named as creditor – whether applicant solvent – whether court should look behind judgment upon which sequestration order based – whether solicitors for respondent creditors had authority to act – exercise of discretion to annul bankruptcy – conduct of applicant relevant to exercise of discretion
Legislation: Bankruptcy Act 1966 (Cth) s 153B
Cases cited:

Bulicv Commonwealth Bank of Australia Limited [2007] FCA 307

Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18

Hacker v Weston [2015] FCA 363

Halliday v High Performance Personnel Pty Ltd (in liq) (1993) 67 ALJR 678

Hawksford v Hawksford [2005] NSWSC 463

Makhoul v Barnes (1995) 60 FCR 572

Marek v Tregenza (1963) 109 CLR 1

Ozer v Australian Liquor Marketers Pty Ltd [2001] FCA 1197

Re Flatau; ex parte Scotch Whisky Distillers Limited (1888) 22 QBD 83

Re Lawson (1939) 11 ABC 137

Re Sarina; ex parte Wollondilly Shire Council (1980) 32 ALR 596

Reaper v Baycorp Collections PDL (Australia) Pty Ltd [2014] FCA 13

Shaw v Yarranova and Another (Unreported, Supreme Court of Victoria, 2 June 2008)

Shaw v Yarranova Pty Ltd [2011] VSCA 55

Shaw v Yarranova Pty Ltd [2014] FCA 557

Stankiewicz v Plata [2000] FCA 1185

Wolff v Donovan (1991) 29 FCR 480

Wood v Inglis [2008] NSWSC 1147

Yarranova Pty Ltd v Shaw(No 2) [2014] FCA 616

Date of hearing: 21-22 April, 20-21 July and 21-23 December 2015
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Counsel for the Applicant: The applicant appeared in person
Counsel for the Respondents: Mr P Fary
Solicitor for the Respondents: Arnold Bloch Leibler
Solicitor for the Official Trustee in Bankruptcy: Ms N Angelo of Harris Carlson Lawyers

ORDERS

VID 774 of 2014
BETWEEN:

JOHN RASHLEIGH SHAW

Applicant

AND:

YARRANOVA PTY LTD (ACN 077 517 616)

First Respondent

NEWQUAY STAGE 2 PTY LTD (ACN 086 482 644)

Second Respondent

JUDGE:

PAGONE J

DATE OF ORDER:

15 FEBRUARY 2016

THE COURT ORDERS THAT:

1.The application be dismissed.

2.The applicant pay the respondents’ costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

PAGONE J:

  1. On 17 December 2014 Mr Shaw commenced this proceeding under s 153B of the Bankruptcy Act 1966 (Cth) to have annulled, or to have set aside, a sequestration order which had been made on 11 June 2014 by Gordon J in Yarranova Pty Ltd v Shaw(No 2) [2014] FCA 616. Mr Shaw’s application was accompanied by an affidavit dated 17 December 2014 setting out his grounds in general terms. Mr Shaw subsequently filed additional affidavits adding to…

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Details
Case
[2016] FCA 88
Decision Date

CaseChat Overview and Summary

In the Federal Court, Shaw filed an application to annul a sequestration order that had been made against him, contending that he had been indemnified from paying the debts set out in the bankruptcy notice and the creditor’s petition. The respondent, Yarranova Pty Ltd, opposed the application. The dispute turned on the interpretation and application of the Bankruptcy Act 1966, with specific attention to the provisions concerning the annulment of bankruptcy and the requisite standing of creditors.

The court was required to determine several legal issues. First, whether Shaw had been indemnified from the debts specified in the bankruptcy notice and creditor’s petition. Second, whether Yarranova Pty Ltd, as a named creditor, had the legal standing to pursue the sequestration. Third, whether Shaw was solvent, which is a relevant consideration in the annulment of a bankruptcy. Fourth, whether the court should examine the judgment upon which the sequestration order was based. Finally, the court needed to consider whether the solicitors for the respondent creditors had the authority to act on behalf of Yarranova Pty Ltd.

The court found that Shaw had not provided sufficient evidence to demonstrate that he had been indemnified from the debts in question. Additionally, it was established that Yarranova Pty Ltd lacked the legal standing to be named as a creditor, as it had not provided the necessary evidence of its claim. The court also determined that Shaw was not solvent, as he had not shown that he could meet his financial obligations. The court declined to look behind the judgment upon which the sequestration order was based, and found that the solicitors for Yarranova Pty Ltd had the requisite authority to act on behalf of their client. In exercising its discretion, the court considered Shaw's conduct and found it relevant to the decision. Ultimately, the application to annul the bankruptcy was dismissed.

The orders of the court were that the application be dismissed and that Shaw pay the respondents’ costs. The dismissal of the application and the costs order were made under Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The application be dismissed.

2. The applicant pay the respondents’ costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

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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