Shipton Lodge Cobbitty Pty Ltd v Coshott

[2008] FMCA 1294

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SHIPTON LODGE COBBITTY PTY LTD v COSHOTT [2008] FMCA 1294

BANKRUPTCY – Creditor’s petition – adjournment to allow debtor to raise money from assets.

Bankruptcy Act 1966 (Cth), s.52(2)(a)

Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FCAFC 159
Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FMCA 202
Australia & New Zealand Banking Group Pty Ltd v Foyster [2000] FCA 400

Applicant:

SHIPTON LODGE COBBITTY PTY LTD

ACN 071 860 092

Respondent: ROBERT GILBERT COSHOTT

File Number: SYG 590 of 2008

Judgment of: Smith FM

Hearing date: 2 September 2008

Delivered at: Sydney

Delivered on: 2 September 2008

REPRESENTATION

Counsel for the Applicant: Mr S Lewis

Solicitors for the Applicant: Slater & Gordon

Counsel for the Respondent: Respondent in person

ORDERS

1. The petition is adjourned for hearing on 7 November 2008 at 10.15am, on the condition that the respondent debtor shall provide security for payment of the applicant’s costs in this proceeding, in proceeding SYG3992 of 2007, and in Federal Court proceeding NSD 318 of 2008, in such form as may be agreed between the parties or, failing agreement, in a form acceptable to the District Registrar of the Court, in the following amounts: 

   (i)$20,000 on or before 4pm on 16 September 2008. 

   (ii)$5,000 on or before 4pm on 23 September 2008. 

2. Liberty to either party to have the matter listed for directions on a date allowing 3 days notice to the other party. 

3. The respondent debtor must file and serve any further evidence in support of his opposition to the petition no later than 4pm on 31 October 2008.  No other evidence shall be admitted without the leave of the Court. 

4. The respondent debtor must pay the applicant’s costs incurred by reason of the adjournment as agreed or taxed pursuant to the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth). 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 590 of 2008

SHIPTON LODGE COBBITTY PTY LTD

ACN 071 860 092

Applicant

And

ROBERT GILBERT COSHOTT

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. I have before me a petition for a sequestration order to be made against Mr Coshott.  The petition relies upon the same debt and bankruptcy notice which I upheld in Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FMCA 202. My orders in that matter were taken on appeal by Mr Coshott, but the appeal was dismissed at the end of an oral hearing on 5 August 2008 by Moore, Marshall and Buchanan JJ (Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FCAFC 159).

2. The petition had been filed before the hearing of the appeal and adjourned, but was listed today for hearing. 

3. Mr Coshott now admits that the creditor has established all the matters required to be established before the making of a sequestration order, but he relies upon one ground of opposition under s.52(2)(a) of the Bankruptcy Act 1966 (Cth). That is, that he “is able to pay his debts”. 

4. He has filed an affidavit seeking to establish this, and has been cross‑examined on it.  The net effect of this evidence, in my opinion, falls short of satisfying the onus of proof which Hely J discussed in Australia & New Zealand Banking Group Pty Ltd v Foyster [2000] FCA 400. Most of the “realisable” assets which he relies on are not at all shown to be “capable of ready realisation”, and his contingent assets are very far from this.  He also has admitted to substantial liabilities, and there is apparently a prospect of further contingent liabilities. 

5. It is very difficult for the Court today to be satisfied that he is able to pay his debts with sufficient speed so as to disprove a presumption of insolvency arising from the absence of payment of the debt relied on in the petition.  However, Mr Coshott’s evidence has raised in my mind a real possibility that he has equity in his home jointly owned with his wife, which could be drawn upon to raise sufficient cash to pay the creditor’s debt, and also to allow the speedy payment of the costs orders that he has incurred in the bankruptcy proceedings and the appeal, once those costs have been assessed. 

6. His evidence about the availability of that asset does not persuade me to dismiss the petition today, but I propose to adjourn the petition for an eight week period or thereabouts, which he has indicated to the Court with confidence would be sufficient for him to raise the funds.  I consider that this is an appropriate case where a debtor’s optimism in relation to his available assets should be put to proof by way of an adjournment of the petition. 

7. Mr Coshott should be in little doubt that if his optimism proves unfounded, the Court will seriously be contemplating a sequestration order on the adjourned date of the hearing. 

8. Mr Coshott’s record of litigation reflected in the history of the present debt, and to some extent in his other evidence, leaves me with a real concern whether the creditor will be forced to pursue further litigation and bankruptcy proceedings to recover costs orders which have been made or are inevitable in relation to the bankruptcy proceedings, even if the judgment debt is paid.  I therefore propose to make the adjournment conditional on the giving of security for these costs in an appropriate amount. 

9. I shall therefore grant an adjournment on the conditions shown in my orders. 

10. Order 3 is made on the assumption that security will have been lodged. 

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate:  Lilian Khaw

Date:  12 September 2008