Simons v Simons
[2012] FMCA 1045
•8 November 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SIMONS v SIMONS | [2012] FMCA 1045 |
| BANKRUPTCY – Adjournment of creditor’s petition – petition based on debt owing to former wife under property settlement – pending application to vary or set aside orders under s.79A of the Family Law Act – difficulties assessing prospects of success and likely course of proceedings – absence of evidence of debtor’s current financial situation – short adjournment of petition ordered. |
| Bankruptcy Act 1966 (Cth), ss.52(1), 52(2), 52(2)(b), 52(5) Family Law Act 1975 (Cth), s.79A, 79A(1)(a), 79A(1)(b) |
| Applicant: | DIANE CIONA SIMONS |
| Respondent: | ADAM MARK SIMONS |
| File Number: | SYG 1495 of 2012 |
| Judgment of: | Smith FM |
| Hearing date: | 8 November 2012 |
| Delivered at: | Sydney |
| Delivered on: | 8 November 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Roset |
| Solicitors for the Applicant: | Manion McCosker |
| Counsel for the Respondent: | Mr P G Mylne |
| Solicitors for the Respondent: | Mylne Lawyers |
ORDERS
The petition is adjourned for further hearing on 14 December 2012 at 10:15 am.
Any additional evidence intended to be relied upon by the respondent debtor going to the merits of his pending s.79A application must be filed and served no later than 22 November 2012.
The respondent debtor must no later than 6 December 2012 file affidavits which attach and verify a statement of his affairs completed in accordance with the approved form under s.6A of the Bankruptcy Act, and which inform the court as to his efforts to obtain expedition in relation to his s.79A application and its likely future course.
The applicant creditor must file and serve any affidavits in reply no later than 11 December 2012.
Any additional written submissions and lists of authorities must be filed and served no later than 4 pm on 13 December 2012.
Costs reserved.
The applicant must give a copy of these orders to the Official Receiver within 2 working days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1495 of 2012
| DIANE CIONA SIMONS |
Applicant
And
| ADAM MARK SIMONS |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
This judgment explains my reasons for ordering a brief adjournment of the hearing of this petition. The petition was filed on 10 July 2012, based on a bankruptcy notice issued in May of this year. Both are based upon a liability of the debtor husband, Mr Simons, arising under consent orders made in the Family Court by Cohen J on 12 November 2009.
The orders resolved a variety of matters, including child support, related proceedings in the District Court, and applications by Mrs Simons for property orders and spousal maintenance orders. In relation to the financial affairs of the parties, the wife’s applications were addressed by Order 3 made by Cohen J. Under this consent order, Mr Simons committed himself to making weekly payments of $1000 per week for about the next four years. The Order also provided that if Mr Simons failed to pay any instalment, and his default persisted for 90 days, then the remainder of the total amount of $208,000 “shall be payable forthwith”. In fact, defaults did occur during 2010 which were never rectified, and the present bankruptcy proceedings are based on an admitted liability under Order 3 now in the amount of $228,737.15 including interest.
The evidence which was before the Family Court when the consent orders were made in 2009 is not before me, except in a very limited way in a statement of financial affairs which Mr Simons had filed, and some background provided by a psychiatrist’s report in 2008. These pieces of evidence paint a picture of a business man who had been successful and able to support his family in a relatively affluent lifestyle, but whose businesses had come under stress, if not failure, as a result of a mental illness. These circumstances had been accepted by an income support insurer, who was making payments to Mr Simons at the time of the settlement which provided almost his only income. The evidence now before me suggests that this income came to an end soon after the consent orders were made, and that Mr Simons thereafter struggled to make any payments to Mrs Simons.
The evidence before me at present is unclear as to how the parties who negotiated the consent orders thought that Mr Simons would be able to pay the instalments required under Order 3, although it seems that they might have hoped that this would be achieved in new business endeavours. On the limited present evidence it is difficult to see any improvidence or manifest unreasonableness affecting Order 3, at least, such as should have been obvious to Mrs Simons and to the judge who approved the orders. However, it appears that Mr Simons wishes to make out such a case in proceedings which he has commenced under s.79A of the Family Law Act 1975 (Cth), in response to the current bankruptcy proceedings. In that application, he seeks order from a Family Law court to discharge or vary the order by way of property settlement made in 2009.
Mr Simons also wishes to explore his mental condition on the day of the consent orders, based on some evidence that appears to establish that he had a stressful preceding night and morning. That evidence also appears to me unlikely to point towards good grounds which would be accepted under s.79A(1)(a).
There may be more substance arising from a concern whether there were unforeseen circumstances which arose after 2009, which might satisfy the precondition in s.79A(1)(b), and might hold a possibility of a variation order. However, Mr Simons’ present evidence has not focused upon such a case.
All these points remain arguable, and I shall hear further submissions on the merits of the s.79A application at the adjourned hearing. I shall observe today only that the evidence before me appears at least not to cast complete doubt about the genuineness of the s.79A application proceedings or its prospects, although I have been invited to reflect upon Mr Simons’ delay in bringing his application when making that assessment.
It appears to be common ground that defaults under the instalment order made in 2009 occurred fairly soon thereafter, and that Mrs Simons made sporadic efforts to try to extract money, but these do not appear to have been seriously pursued into the bankruptcy court until she commenced the present bankruptcy proceedings this year.
The petition was listed for hearing today, with a timetable allowing evidence in support of a notice of opposition and any application for further adjournment. Mr Simons’ position today is that he does not dispute the legal foundations for the making of a sequestration order under s.52(1) of the Bankruptcy Act 1966 (Cth), in that he accepts the existence of a relevant final judgment and outstanding debt under that judgment in the amount of $228,737.15, and a relevant act of bankruptcy occurring on 26 June 2012.
Mr Simons’ notice of opposition seeks adjournment of the petition pending the outcome of his s.79A application, which was filed in the Family Law division of this Court on 17 September 2012, or alternatively an application that the petition be transferred to that division for concurrent listing before the trial judge hearing that application.
The latter course at present has no attraction to me.
Nor today am I satisfied that the petition should be adjourned indefinitely pending the outcome of the s.79A application. I have not been persuaded today that Mr Simons has such prospects of success as would justify a possibly very lengthy delay before the petition is to be heard.
However, I am reluctant today to refuse any adjournment and to proceed to make a sequestration order immediately. This reluctance arises for several reasons. In short, I consider that, at least, Mr Simons should have a further opportunity to present further evidence and submissions which would justify a longer delay, in particular to inform the bankruptcy court as to his current financial position and the current progress and likely course of the s.79A application, as well as better addressing the merits of his application.
Part of my hesitation is that the whole matter has the flavour of a family law proceeding, and I think considerations of family law cannot be ignored when deciding whether this petition should be adjourned to await the outcome of the s.79A application.
Moreover, the prospects of the foundation of the petition being removed under s.79A give rise to what appears to me to be somewhat ejusdem generis circumstances, which might come within s.52(2)(b) of the Bankruptcy Act as an “other sufficient cause” not to make a sequestration order. The lines of cases concerning going behind judgment debts, or adjourning petitions pending appeals, or assessing counter‑claims by the debtor against the creditor in other courts, do not appear to me to have direct application to considering the implications of a s.79A application on a petition brought by a former spouse by way of enforcement of a property settlement. I have not yet been referred to any authorities which have formulated the appropriate test of the merits of such an application which should be applied. Exactly what the test of prospects should be, if only to support an adjournment application, is something upon which I would prefer to give more reflection, and also to balance other circumstances bearing on the discretions available under s.52(2).
Importantly, those other considerations include obtaining a clear picture as to the time scale for the prospective proceedings under s.79A, and also a much clearer picture as to Mr Simons’ current financial position. He will be forced to reveal his financial position fully in those s.79A proceedings, and also to his bankruptcy trustee and creditors if he were made bankrupt during their pendency. It therefore appears appropriate to direct that he do so in the pending bankruptcy proceedings, if he wishes to obtain a possible lengthy adjournment of the petition. A full and satisfying disclosure of his financial position to the bankruptcy court is needed so that it can be satisfied that, apart from Mrs Simons, there are no other creditors who are at risk of harm arising from possible insolvency during a lengthy adjournment.
The Court today is not in a position to bring its own knowledge as to the likely course and duration of the s.79A proceedings, due to the somewhat peculiar situation of the Federal Magistrates Court in Sydney. This has led to my exclusion from involvement in family law for the eight years for which I have held that commission, and a total geographic separation of the two divisions of the Court in Sydney. I am informed that the s.79A application will be brought for directions on 28 November 2012 before a Registrar or Federal Magistrate, at which questions of expedition and progress of the s.79A application might be addressed.
I am inclined at least to let this listing occur, and to adjourn the petition before me into late December, where I shall receive further submissions from the parties whether there should be a lengthier adjournment of the petition. In this respect, I note that the petition will expire under s.52(5) in July 2013, but might be able to be extended for another 12 months.
Of course, such a protraction of the petition would not be tolerated in bankruptcy proceedings, if there are creditors who are at risk during that period, particularly if it appears that Mr Simons may be currently trading while insolvent. For that reason I consider that it is important for Mr Simons to provide the Court with complete and reliable information about his financial situation, before contemplating any lengthy adjournments. It also appears to me important that Mrs Simons and her family should be given this information, so that she can address whether it is in her interests and the interests of her family to pursue her former husband into bankruptcy.
For all the above reasons, I have adjourned the petition part‑heard until 14 December 2012, and made the other directions set out above.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Smith FM
Date: 14 November 2012
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