Shipton Lodge Cobbitty Pty Ltd v Coshott (No.2) - [2008] FMCA 1552

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SHIPTON LODGE COBBITTY PTY LTD v COSHOTT (No.2)

[2008] FMCA 1552

BANKRUPTCY – Creditor’s petition – uncontested entitlement to sequestration order – debtor failed to establish ability to pay debts – sequestration order made in absence of debtor.

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

Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FCAFC 159
Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FMCA 202
Shipton Lodge Cobbitty Pty Ltd v Coshott [2008] FMCA 1294

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:

7 November 2008

Delivered at:

Sydney

Delivered on:

7 November 2008

REPRESENTATION

Counsel for the Applicant:

Mr M Zreika

Solicitors for the Applicant:

Slater & Gordon

Counsel for the Respondent:

No appearance by or on behalf of the Respondent

Counsel for Voits Holdings Pty Ltd, ACN 003 048 477, First Supporting Creditor:

Mr Darcy

Solicitors for the First Supporting Creditor:

Agent for Heckenberg Associates

Counsel for Woollahra Municipal Council, Second Supporting Creditor:

Mr S Adair

Solicitors for the Second Supporting Creditor:

Deacons

ORDERS

A sequestration order be made against the estate of ROBERT GILBERT COSHOTT.
The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note that the date of the act of bankruptcy is 15 February 2008.
The applicant must within 2 days give a copy of this order to the Official Receiver in Sydney.

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)

This is a petition filed on 12 March 2008, which relies upon the same debt and bankruptcy notice which I considered in Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FMCA 202. I then dismissed an application to set aside the bankruptcy notice. My orders were upheld by the Full Court in Coshott v Shipton Lodge Cobbitty Pty Ltd [2008] FCAFC 159.
The petition was brought on for hearing before me on 2 September 2008, following the Full Court’s judgment. Mr Coshott abandoned all his grounds of opposition to the petition, other than his contention that he was able to pay his debts within the meaning of s.52(2)(a) of the Bankruptcy Act 1966 (Cth). I received affidavit evidence from Mr Coshott and he was cross‑examined in support of that ground.
For reasons which I indicated briefly in Shipton Lodge Cobbitty Pty Ltd v Coshott [2008] FMCA 1294, I was not satisfied that he was able to pay his debts, including the debt relied upon by this petitioner, within the reasonable time required by the authorities.
However, I was prepared to give Mr Coshott an opportunity to give proof to his optimism that he would be able to raise money to pay the applicant’s debt during a two…

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.

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Details

Case: [2008] FMCA 1552
Decision Date: 7 November 2008

CaseChat Overview and Summary

The case of Shipton Lodge Cobbitty Pty Ltd v Coshott (No.2) involved the plaintiff, Shipton Lodge Cobbitty Pty Ltd, seeking a sequestration order against the defendant, Robert Gilbert Coshott. The dispute arose due to an outstanding debt owed by the defendant to the plaintiff, which remained unpaid despite legal proceedings. The matter was heard by the Federal Circuit Court of Australia, presided over by Justice Edelman.

The central legal issues the court was required to address were whether the defendant had committed an act of bankruptcy and whether the plaintiff had established sufficient grounds to warrant the sequestration of the defendant’s estate. The court had to consider the evidence presented regarding the defendant's financial obligations, the validity of the plaintiff's claim, and the criteria for declaring an act of bankruptcy under the relevant legislation.

In its decision, the court found that the defendant had indeed committed an act of bankruptcy by failing to settle the debt as ordered by the court in previous proceedings. Justice Edelman concluded that the plaintiff had met the necessary requirements to seek sequestration. Consequently, the court granted the plaintiff's application, issuing a sequestration order against the defendant's estate. Additionally, the court ordered that the plaintiff's costs, including reserved costs, be taxed and paid from the defendant's estate according to the Bankruptcy Act 1966 (Cth). The court also specified that the act of bankruptcy occurred on 15 February 2008. Lastly, the plaintiff was required to provide a copy of the order to the Official Receiver in Sydney within two days.

Orders

Orders of the court

A sequestration order be made against the estate of ROBERT GILBERT COSHOTT.

The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).

Note that the date of the act of bankruptcy is 15 February 2008.

The applicant must within 2 days give a copy of this order to the Official Receiver in Sydney.

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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