Sims v Suda Ltd (No.3)
[2016] FCCA 3302
•20 December 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SIMS v SUDA LTD (No.3) | [2016] FCCA 3302 |
| Catchwords: WORDS AND PHRASES – “other sufficient cause”. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.40, 43, 51, 52 Federal Circuit Court (Bankruptcy) Rules 2006 (Cth), Part 4, rr.4.02, 4.04, 4.06 Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) |
| Cases cited: Baker v Perpetual Trustee Company Limited [2012] FCA 553; (2012) 204 FCR 593 |
| Applicant: | DOUGLAS ARTHUR SIMS |
| Respondent: | SUDA LTD |
| File Number: | PEG 448 of 2016 |
| Judgment of: | Judge Lucev |
| Hearing date: | 1 December 2016 |
| Date of Last Submission: | 1 December 2016 |
| Delivered at: | Perth |
| Delivered on: | 20 December 2016 |
REPRESENTATION
| For the Applicant: | In person |
| Counsel for the Respondent: | Mr M A MacLennan |
| Solicitors for the Respondent: | Bennett+Co |
| For the Trustee in Bankruptcy: | Mr G B Dudley (the Trustee in Bankruptcy) |
ORDERS
The Applicant’s application filed 27 September 2016 for review of a Registrar’s decision of 19 September 2016 to issue a sequestration order against the Applicant be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 448 of 2016
| DOUGLAS ARTHUR SIMS |
Applicant
And
| SUDA LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application by the applicant, Douglas Arthur Sims (“Mr Sims”), for review of a decision of a Registrar of this Court dated 19 September 2016 to issue a sequestration order (“Sequestration Order”) against Mr Sims. For the reasons that follow, Mr Sims’ application for review of the Registrar’s decision is to be dismissed.
Adjournment application
When the matter came on for hearing on 1 December 2016 Mr Sims made an application for an adjournment. At hearing the Court dismissed the adjournment application. The Reasons for Judgment in relation to the adjournment application are to be published electronically from Chambers at a later time.
Background
On 27 March 2015, the Federal Court delivered judgment in Sims v Suda Ltd (No. 2) [2015] FCA 281 (“Suda (No. 2) – Federal Court 2015”) summarily dismissing Mr Sims’ claim against the respondent (in those and in these proceedings) Suda Ltd, and ordering Mr Sims to pay Suda Ltd’s costs on an indemnity basis.
A certificate of taxation was subsequently issued in Suda (No. 2) – Federal Court 2015 in the sum of $30,284.00 (“Debt”). The Debt forms the basis for the making of the Sequestration Order which underlies Mr Sims’ present application.
Suda Ltd demanded payment of the Debt by Mr Sims in writing on 13 and 24 August 2015: affidavit of Rachel Megan Ross (“Ms Ross”) sworn 6 October 2015 (“Ross October 2015 Affidavit”), Annexures “RMR-1” and “RMR-2”. Mr Sims did not respond to Suda Ltd’s letters of demand, nor did he pay the Debt.
Suda Ltd served Mr Sims with Bankruptcy Notice BN 184276 on 1 September 2015 (“Bankruptcy Notice”) seeking payment of the Debt. The date for compliance with the Bankruptcy Notice was 22 September 2015.
On 18 September 2015 (prior to the expiration of the time for compliance with the Bankruptcy Notice) Mr Sims filed an application in this Court seeking to set aside the Bankruptcy Notice. That application to set aside the Bankruptcy Notice (in proceedings number PEG 427 of 2015) was heard and dismissed by a Registrar of this Court on 1 October 2015.
Following the dismissal of the Mr Sims’ application to set aside the Bankruptcy Notice, Suda Ltd filed a creditor’s petition seeking a sequestration order against Mr Sims’ estate pursuant to s.43 of the Bankruptcy Act (in proceedings number PEG 450 of 2015) (“Creditor’s Petition”). The sequestration order was sought on the grounds that Mr Sims had committed an act of bankruptcy pursuant to s.40(1)(g) of the Bankruptcy Act, namely that on or before 1 October 2015, being the date upon which Mr Sims’ application to set aside the Bankruptcy Notice was dismissed, Mr Sims failed to comply with the requirements of the Bankruptcy Notice, or to alternatively satisfy the Court that he had a counter-claim, set off or cross demand equal to or more than the sum claimed in the Bankruptcy Notice, being a counter-claim, set off or cross demand that he could not have set up in the action in which the judgment referred to in the Bankruptcy Notice was obtained.
Following the filing of the Creditor’s Petition, Mr Sims filed an application for a review of the Registrar’s decision to dismiss his application to set aside the Bankruptcy Notice. The application for review was heard and dismissed by this Court on 27 October 2015: Sims v Suda [2015] FCCA 2934 (“Sims FCC 2015”). An appeal to the Federal Court against Sims FCC 2015 was dismissed on 7 September 2016 in Sims v Suda Ltd [2016] FCA 1086 (“Sims Federal Court 2016”).
The hearing of the Creditor’s Petition was adjourned on a number of occasions pending determination of Mr Sims’ application for a review and subsequent appeal, however, following the dismissal of the appeal in Sims Federal Court 2016, Suda Ltd sought to have the hearing (“Sequestration Order Hearing”) of the Creditor’s Petition re-listed and, on 19 September 2016, obtained the Sequestration Order against Mr Sims’ estate. The background to the making of the Sequestration Order is also set out in Sims v Suda Ltd (No. 2) [2016] FCCA 2781 (“Sims (No. 2) FCC 2016”).
Consideration
Section 52 of the Bankruptcy Act
Section 52(1) and (2) of the Bankruptcy Act relevantly provides as follows:
(1) At the hearing of a creditor's petition, the Court shall require proof of:
(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b) service of the petition; and
(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.
Approach to consideration of application
The hearing before this Court is a hearing de novo, and the Court must, in effect, hear the Creditor’s Petition afresh: Totev v Sfar [2008] FCAFC 35; (2008) 167 FCR 193; (2008) 247 ALR 180; (2008) 5 ABC(NS) 691 at [13]-[14] per Emmett J and [93] per Cowdroy J (“Totev 2008”), read with r.20.03(a) of the Federal Circuit Court Rules 2001 (Cth) (“FCC Rules”). Suda Ltd must therefore satisfy the Court of all the matters contained in s.52(1) of the Bankruptcy Act and Part 4 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (“FCC Bankruptcy Rules”). (Although the new Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) came into effect on 1 April 2016, the Creditor’s Petition and supporting affidavits were filed in accordance with the FCC Bankruptcy Rules).
The Court may dismiss the Creditor’s Petition if Mr Sims is able to satisfy the Court of the matters in s.52(2) of the Bankruptcy Act. It is not for the Court or Suda Ltd to speculate as to the grounds on which Mr Sims asserts that the Sequestration Order ought be set aside: Totev v Sfar [2006] FCA 470; (2006) 230 ALR 236; (2006) 4 ABC(NS) 325 at [40] per Allsop J (“Totev 2006”); Kumar v Bathini [2015] FCA 632 at [21] per Mortimer J. If Mr Sims is unable to clearly articulate the grounds of his opposition by reference to the relevant legal considerations set out in the Bankruptcy Act and the relevant authorities, Suda Ltd need only satisfy the Court that it has met the procedural requirements of the Bankruptcy Act.
The Court will therefore look to see, firstly, whether the requirements for the issuance of a sequestration order under s.52(1) of the Bankruptcy Act have been satisfied, then, secondly, whether Mr Sims has articulated any argument sufficient to satisfy the Court that he is able to pay his debts: Bankruptcy Act, s.52(2)(a), and, if not, then thirdly, whether there is some “other sufficient cause” which would enliven the Court’s discretion to dismiss the Creditor’s Petition: Bankruptcy Act, s.52(2)(b).
Satisfaction of requirements for issuing sequestration order
Pursuant to s.52(1) of the Bankruptcy Act, at the hearing of a creditor’s petition the Court requires proof of:
a)the matters stated in the Creditor’s Petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
b)service of the Creditor’s Petition; and
c)the fact that the debt or debts on which the petitioning creditor relies is or are still owing,
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
At the Sequestration Order Hearing Suda Ltd satisfied a Registrar of the Court of the matters in s.52(1) of the Bankruptcy Act, and at the hearing of this application relied on the following affidavits filed pursuant to r.20.03(b) of the FCC Rules in the Sequestration Order Hearing:
a)as to s.51(1)(a) of the Bankruptcy Act - the affidavit of Stephen John Carter (“Mr Carter”) sworn 6 October 2015 at page 5 (Part 2) of the Creditor’s Petition and the Ross October 2015 Affidavit (filed in accordance with rr.4.02(2) and 4.04(1)(a)(ii) of the FCC Bankruptcy Rules);
b)as to s.51(1)(b) of the Bankruptcy Act - the affidavit of Ms Cheryl Lorraine Harrison (“Ms Harrison”) sworn 19 October 2015 confirming service of the Creditor’s Petition and other relevant documents (filed 20 October 2015 in accordance with r.4.06(2) of the FCC Bankruptcy Rules); and
c)as to s.51(1)(c) of the Bankruptcy Act - the affidavit of Mr Carter sworn 16 September 2016 and filed 19 September 2016 in accordance with r.4.06(4) of the FCC Bankruptcy Rules.
In addition, Suda Ltd relied upon the following further affidavits:
a)the affidavit of Ms Harrison sworn 8 September 2015 confirming service of the Bankruptcy Notice (filed in proceedings PEG 450 of 2015 in accordance with r.4.04(1)(b) of the FCC Bankruptcy Rules);
b)the affidavit of Amanda Sue Templeton sworn 30 November 2016, that was sworn and filed no earlier than the day before the hearing of this application confirming that the National Personal Insolvency Index has been searched (pursuant to r.4.06(3) of the FCC Bankruptcy Rules) and attesting that there are no other outstanding or current creditors petitions or adjudications concerning Mr Sims; and
c)the further affidavit of Mr Carter sworn 30 November 2016, that was sworn as soon as practicable before the hearing of this application (in accordance with the requirements of r.4.06(4) of the FCCBankruptcy Rules), confirming that the Debt is still owing.
On the basis of the various affidavits filed by Suda Ltd, the Court accepts that there are affidavits:
a)verifying the Creditor’s Petition;
b)of search of court records;
c)of service of the Bankruptcy Notice;
d)of search of the National Personal and Insolvency Index; and
e)of debt still owed,
which fulfil the various requirements of s.52(1) of the Bankruptcy Act and Part 4 of the FCC Bankruptcy Rules.
On the basis of the affidavits filed by Suda Ltd the Court is satisfied as to the matters required to be proved for the making of a sequestration order against the estate of Mr Sims: Bankruptcy Act, s.52(1).
Whether Mr Sims is solvent
Solvency means being “able to pay all … debts, as and when they become due and payable”: Bankruptcy Act, s.5(2). Solvency is relevantly expressed in terms of a debtor being “able to pay his or her debts”: Bankruptcy Act, s.52(2)(a).
If Mr Sims can prove to the Court that he is solvent the Court may dismiss the Creditor’s Petition: Re Sanders; Knudsen and Yates (t/a The Hargreaves Practice) v Sanders [2003] FCA 1079; (2003) 1 ABC(NS) 408 (“Re Sanders”) at [22] per Bennett J (“Re Sanders”).
Solvency requires that Mr Sims be able to pay debts as they fall due out of his own money. This includes both cash on hand and money reasonably quickly realisable by asset realisation. Temporary lack of liquidity will not generally constitute insolvency: Sandell v Porter& Anor (1966) 115 CLR 666; (1966) 40 ALJR 71; CLR at 670 per Barwick CJ.
Account must be taken of debts “which will fall due in the reasonably immediate future pursuant to existing obligations”: Re Sanders at [27] per Bennett J, and whether Mr Sims will be able to pay them: Re Sanders at [26] per Bennett J; International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 at [8]-[10] per Katz J (“International Alpaca”); Bank of Australasia v Hill (1907) 4 CLR 1514; (1907) 14 ALR 51; CLR at 1527 per Griffith CJ. In this case that would include costs orders made against Mr Sims which have not yet been quantified: see, for example, at [27] below. Even where assets exceed liabilities it is possible to find that a person is not able to pay their debts within the meaning of s.52(2)(a) of the Bankruptcy Act: Re Sanders, affirmed on appeal in Sanders v Knudsen & Yates trading as The Hargreaves Practice [2004] FCAFC 305 at [14] per Whitlam, Branson and Sackville JJ; Re Lakatos; Ex parte Lakatos v Deputy Commissioner of Taxation (1996) 33 ATR 145. What has to be proved is that assets are available to be realised and capable of ready realisation likely to result in payment of outstanding debts within a reasonable time: Re Sanders. In assessing solvency the Court ought not take account of realisable assets required for Mr Sims to live a reasonably comfortable and dignified existence: International Alpaca at [15]-[16] per Katz J.
If Mr Sims is in a position to pay debts owed within a reasonable time, no sequestration ought be made: Re Sarina, Ex parte Council of the Shire of Wollondilly (1980) 43 FLR 163; (1980) 30 ALR 266; FLR at 165 per Deane J; Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372; (1980) 32 ALR 596; FLR at 376 per Bowen CJ, CA Sweeney and Lockhart JJ.
In this application, Mr Sims provided no evidence of his:
a)cash flow; or
b)assets and liabilities,
while Suda Ltd provided evidence of Mr Sims’ liabilities by way of various debts (including the Debt) owed to various parties.
Mr Sims is presently indebted:
a)to Suda Ltd in the fixed sum of $167,198.05: affidavit of Ms Ross sworn 10 November 2016 at [7] (“Ross November 2016 Affidavit”);
b)to Dr James Jooste in the fixed sum of $275,400.01: Ross November 2016 Affidavit at [9]; and
c)to the late Mr Peter Jooste QC in the fixed sum of $21,545.50: Ross November 2016 Affidavit at [8].
In addition, costs orders have been made against Mr Sims (which have not yet been quantified) in favour of:
a)Suda Ltd: Ross November 2016 Affidavit at [7.9];
b)Dr James Jooste: Ross November 2016 Affidavit at [9.2]; and
c)the late Mr Peter Jooste QC: Ross November 2016 Affidavit at [8.2].
Separately, on the face of the application, Mr Sims also lists eleven additional creditors (including the Australian Taxation Office) to whom he says he is indebted.
It is plain upon a consideration of the matters set out above that Mr Sims is not solvent, having evinced no evidence, and demonstrating no means, by which he may pay his outstanding debts, either presently or within a reasonable time. There is therefore no basis for dismissing the Creditor’s Petition on the basis that Mr Sims is able to pay his debts.
Whether other sufficient cause for Sequestration Order not to be made
The term “other sufficient cause” in s.52(2)(b) of the Bankruptcy Act is construed broadly by the Courts: Totev 2008 at [87] per Cowdroy J; Totev 2006 at [44] per Allsop J. In Totev 2006 at [37] per Allsop J (citing Cain v Whyte (1933) 48 CLR 639; (1933) 6 ABC 117; (1933) 6 ALJ 457 (“Cain”)) the Federal Court observed that:
On proof of the matters in s 52(1) of the Act, the Court will generally proceed to make a sequestration order unless the debtor is able to persuade the Court that the public interests in dealing with the insolvent debtor and the rights of individual creditors are outweighed by other considerations.
In Cain CLR at 648 per Rich J (with whom Starke, Dixon, Evatt and McTiernan JJ agreed: CLR at 648) the High Court, in dismissing an appeal, agreed with the judgment of the Court of Bankruptcy (District of Southern Queensland), which had observed as follows: CLR at 645-646:
…To my mind, the High Court of Australia did not intend to put a limit on the meaning of the words “other sufficient cause” in Dowling v. Colonial Mutual Life Assurance Society (1915) 20 CLR 509, and I do not propose to be the first to say that such wide words as “other sufficient cause” are necessarily limited to meaning a cause in the nature of fraud or abuse of the provisions of the bankruptcy law. I can well conceive that “other sufficient cause” might arise in connection with any particular case. To my mind, it is the duty of the Bankruptcy Judge to examine in each case, if the question is raised, whether there is other sufficient cause than the fact that the debtor is able to pay his debts in full, for refusing to make an order.
I rule then that I am fully entitled to examine the contention put forward by Mr. Philp on behalf of the debtor that there is, in the present case, other sufficient cause sufficient to justify the dismissal of this petition. I approach that question with the full appreciation that, prima facie, on proof of the matters mentioned in sec. 56 (2), the Court will proceed to make an order for sequestration, and that it is for the debtor to show some cause overriding the interest of the public in the stopping of unremunerative trading, and the rights of individual creditors who are unable to get their debts paid to them as they become due. Something has to be put before the Court to outweigh those considerations before it can be said that sufficient cause is shown against the making of a sequestration order. …
In Re Svir; Ex parte Commissioner of Taxation (1998) 83 FCR 314; (1998) 39 ATR 113; (1998) 154 ALR 710; FCR at 317 per Burchett J (“Svir”) the Federal Court (after referring to the above passage from Cain) highlighted the need to have regard to the interests of the public and creditors when assessing whether an “other cause” raised by an applicant is “sufficient” for the purposes of exercising its otherwise wide discretion under s.52(2) of the Bankruptcy Act:
This exposition of the law emphasises the width of the discretion conferred by the 1966 Act upon the Court. At the same time it points to a fundamental limitation imposed by the nature of the jurisdiction in bankruptcy, which requires the Court to keep in mind, not only the interests of the individual parties before it in the particular case, but also the public interest, which may be adversely affected by the propping up of insolvency. However, in the present case that factor does not provide the bar to an exercise of discretion in the debtor's favour that it would provide in many cases, since the debtor has a paucity of creditors, other than the petitioning creditor, who would be likely to have any reason for concern. Of course, that merely removes a bar; it does not provide a positive ground constituting “other sufficient cause” why a sequestration order ought not to be made.
In summary, it can be said that an “other sufficient cause” for the purposes of dismissing a creditor’s petition is not limited and that the Bankruptcy Act confers a discretion on the Court which in its terms is unconfined: Baker v Perpetual Trustee Company Limited [2012] FCA 553; (2012) 204 FCR 593 at [35] per Katzmann J.
At the Sequestration Order Hearing before a Registrar of this Court Mr Sims indicated an intention to oppose the Creditor’s Petition on the grounds that he:
a)was not insolvent and had cash reserves to pay the sum set out in the Creditor’s Petition; and
b)had a continuing indemnity granted by Suda Ltd which indemnified him against the Debt the subject of the Creditor’s Petition.
Mr Sims did not rely upon either of these grounds of opposition in the hearing before this Court. In any event, however, Mr Sims has, for reasons set out above, not demonstrated that he is solvent. In relation to the alleged indemnity, that is a matter which was the subject of a judgment of the District Court of Western Australia in Sims v Suda Ltd [2014] WADC 161; (2014) 87 SR(WA) 62 (“Sims District Court 2014”) in which the District Court of Western Australia found that Mr Sims was not entitled to be indemnified for the costs of proceedings brought in the Federal Court, and that the indemnity did not extend to anything done by Mr Sims in his role as an officer of any of Suda Ltd’s subsidiaries, but rather extended only to legal proceedings or a claim directly or indirectly connected with his role as an officer or employee of Suda Ltd: Sims District Court 2014 at [91] per Davis DCJ. Sims District Court 2014 was the subject of an appeal by Mr Sims, but it does not appear to have proceeded any further than an order of the Supreme Court of Western Australia, Court of Appeal that the appeal be dismissed unless Mr Sims filed and served his appellant’s case by a particular time (on 2 April 2015): Sims v Suda Ltd [2015] WASCA 65. Mr Sims has previously argued that the indemnity clause the subject of judgment in Sims District Court 2014 protected him against the Debt. In an application by Mr Sims to set aside the Bankruptcy Notice this Court held that the indemnity clause in Mr Sims’ employment contract with Suda Ltd did not cover a situation where Mr Sims sued his former employer and was ordered to pay costs as a result of having those proceedings struck out: Sims FCC 2015 at [31]-[32] per Judge Smith.. On appeal in Sims Federal Court 2016 the Federal Court held that there was no error in this Court’s judgment in Sims FCC 2015: Sims Federal Court 2016 at [24]-[33] per Siopis J.
The Court further notes that in Sims Federal Court 2016 the Federal Court observed that an alleged “contracted irrevocable continuing indemnity” which was the subject of an application for special leave to appeal to the High Court had been dismissed by the High Court: Sims Federal Court 2016 at [23] per Siopis J.
The judgments in Sims District Court 2014, Sims FCC 2015, Sims Federal Court 2016 and the refusal by the High Court of special leave to appeal probably explain why the alleged contractual indemnity was not relied upon before this Court at hearing. In any event, to do so would have been futile, given that Sims Federal Court 2016 is binding upon this Court: Suh & Ors v Minister for Immigration & Citizenship & Anor [2009] FCAFC 42; (2009) 175 FCR 515; (2009) 108 ALD 470 at [29] per Spender, Buchanan and Perram JJ. Furthermore, comity between federal and state courts is an important consideration in deciding cases, and this Court ought not, even by indirect means such as now sought by Mr Sims, be seen to be re-litigating an issue already determined by the District Court of Western Australia in Sims District Court 2014: Sims v Jooste & Ors (No. 2) [2016] FCCA 1468 at [29] per Judge Lucev; Pegasus Leasing Limited v Cadoroll Pty Limited & Ors (1996) 59 FCR 152 at 157 per Lee and Tamberlin JJ.
At the hearing of this application Mr Sims did not rely upon the solvency or indemnity issues, but rather alleges a “fraud a bar” and asserts that Suda Ltd had funded its defence in Suda (No. 2) - Federal Court 2015, being the proceedings in which the Debt arises, with capital which Mr Sims claims to have been unlawfully obtained: Transcript, page 6; Mr Sims’ Outline of Submissions at [4.1]-[4.5], [7.9], [9.5] and [13.1].
In Sims (No. 2) FCC 2016 at [6] and [7] per Judge Lucev, the Court has already determined (albeit on an interlocutory basis) that:
a)the allegation of an action funded by capital unlawfully obtained is not relevant to proof of any matters relevant to the exercise of the Court’s discretion under s.52(2)(b) of the Bankruptcy Act; and
b)in circumstances where the Federal Court struck out Mr Sims’s pleading and summarily dismissed his application in Suda (No. 2) – Federal Court 2015 on the basis that the claim had no reasonable prospects of success, which was unsuccessfully appealed by Mr Sims: Sims Federal Court 2015, how Suda Ltd funded its defence of those proceedings is not relevant.
Mr Sims sought to rely upon the following affidavits, namely:
a)an affidavit sworn and filed on 27 September 2016 (“Sims September 2016 Affidavit”);
b)an affidavit sworn and filed on 11 October 2016 (“Sims October 2016 Affidavit”);
c)an affidavit sworn on 1 November 2016 (“Sims 1 November 2016 Affidavit”);
d)an affidavit sworn on 2 November 2016 (“Sims 2 November 2016 Affidavit”); and
e)an affidavit sworn on 11 November 2016 (“Sims 11 November 2016 Affidavit”).
In the Court’s view the affidavits are, in their entirety, not admissible, for the following reasons:
a)all of the paragraphs of Mr Sims’ Affidavits ought to be struck out on the basis that they are irrelevant, save for [1], [2] and [3] of Sims 1 November 2016 Affidavit and [17] of Sims 2 November 2016 Affidavit, being irrelevant because in circumstances where the Federal Court has dismissed Mr Sims’ application in Suda (No. 2) – Federal Court 2015 on the basis that the claim had no reasonable prospect of success, Suda Ltd is entitled to its costs, they being the Debt the subject of these proceedings, irrespective of how Suda Ltd funded its legal representation in the case;
b)[1], [2] and [3] of Sims 1 November 2016 Affidavit are inadmissible on the basis that they are scandalous (as to when pleadings or affidavit material are scandalous, see Sims v Jooste& Ors(No. 3) [2016] FCCA 1751 at [24]-[29] per Judge Lucev and Sims v Jooste & Ors (No. 4) [2016] FCCA 2641 at [12] and [16] per Judge Lucev), together with [3], [4] and the “Conclusion” in Sims September 2016 Affidavit and [4]-[10] and [13]-[15] of Sims 2 November 2016 Affidavit, and all of Sims 11 November 2016 Affidavit;
c)[2]-[6] and the “Conclusion” of Sims September 2016 Affidavit are inadmissible as argument, as is [3] of Sims 1 November 2016 Affidavit and [4]-[10] and [13]-[15] of Sims 2 November 2016 and all of Sims 11 November 2016 Affidavit; and
d)[3]-[7] of Sims September 2016 Affidavit are inadmissible as opinion, as is [4] of Sims 1 November 2016 Affidavit and [4]-[10] and [13]-[15] of Sims 2 November 2016 and all of Sims 11 November 2016 Affidavit.
Mr Sims’ various Affidavits, and his Outline of Submissions, suffer from the same vice which Mr Sims has continually exhibited in proceedings before this Court, the Federal Court, the Supreme Court of Western Australia (including that Court’s Court of Appeal) and the District Court of Western Australia, in that the affidavits and submissions are vague, discursive and rambling, often scandalous, and give rise to no discernible cause of action, or no proper proof of any relevant fact, and in the context of these proceedings therefore provide no “other sufficient cause” for dismissing the Creditor’s Petition.
In the Court’s view, in light of the dozens of decisions of this Court, the Federal Court, the District Court of Western Australia, the Supreme Court of Western Australia (including that Court’s Court of Appeal), which have dealt with the allegations made by Mr Sims which have again been made for the purposes of these proceedings, nothing short of properly formulated and considered advice from a competent commercial solicitor or a barrister indicating the nature of a cause of action, the prospects of success of such an action (particularly as to what relief might be obtained), including in what jurisdiction any action might be brought, and the timeframes within which it might be expected that such an action could be brought and could proceed, would suffice to establish an “other sufficient cause” for the purposes of s.52(2)(b) of the Bankruptcy Act. There is no evidence that such advice has been sought or given. There is, in short, no sensible claim or cause of action discernible on the material before the Court, such as to give rise to the prospect that Mr Sims might, within a reasonable time, be put in funds arising from litigation, so as to constitute an “other sufficient cause” to warrant this Court exercising its discretion to dismiss the Creditor’s Petition.
It is not in the public interest to allow insolvent debtors to prosecute litigation generally, unless the insolvent debtor can demonstrate that the state of insolvency is likely to be of only short duration: Re James & Anor; Ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (No. 2) (1994) 51 FCR 14 at [22] per Olney J; International Alpaca Management at [54] per Katz J. It is readily apparent that even if Mr Sims were able to finally formulate and bring some cause of action, that action would not be decided within any reasonable time, and probably not, to borrow a phrase from Robert Frost’s “The Road Not Taken”, “… ages and ages hence”.
In all of the above circumstances, the Court considers that Mr Sims has failed to establish an “other sufficient cause”, either at all, or sufficient, to warrant the dismissal of the Creditor’s Petition.
In any event, and having regard to:
a)the amount of Mr Sims’ known indebtedness of $464,143.56;
b)the amount of Mr Sims’s known indebtedness to parties other than Suda Ltd as the petitioning creditor, being $296,945.51;
c)the number of creditors the quantum of whose debts (being costs in various legal proceedings) remain to be determined: see [27] above;
d)the number of other creditors to whom Mr Sims is indebted; and
e)Mr Sims’ failure to proffer any evidence of solvency,
the Court would not, even if an “other sufficient cause” had been established (which it has not been), exercise its discretion to set aside the Sequestration Order or dismiss the Creditor’s Petition.
In this case, the public interest, and the interests of creditors other than the petitioning creditor Suda Ltd, do not favour those interests continuing to be adversely affected by the propping up of Mr Sims’ insolvency: Svir at 317 per Burchett J.
Conclusion and orders
The Court has concluded that Mr Sims’ application filed 27 September 2016 for review of a Registrar’s decision of 19 September 2016 to issue a sequestration order against Mr Sims must be dismissed.
The Court will hear the parties as to costs.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Date: 20 December 2016
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