Somerville Legal v Boensch - [2019] FCCA 3637

FEDERAL CIRCUIT COURT OF AUSTRALIA

SOMERVILLE LEGAL v BOENSCH

[2019] FCCA 3637

Catchwords:
BANKRUPTCY – Application for a sequestration order – whether the respondent is able to pay his debts – whether there is sufficient cause as to why a sequestration order ought not to be made – sequestration order made – application allowed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.27, 43

Applicant:

SOMERVILLE LEGAL

Respondent:

FRANZ BOENSCH

File Number:

SYG 865 of 2019

Judgment of:

Judge Street

Hearing date:

12 December 2019

Date of Last Submission:

12 December 2019

Delivered at:

Sydney

Delivered on:

12 December 2019

REPRESENTATION

Solicitors for the Applicant:

Mr C Graham
Somerville Legal

The Respondent appeared in person.

ORDERS

A sequestration order is made against the estate of Franz Boensch.
The petitioning creditor’s costs be paid out of the bankrupt estate in accordance with the priority to which it is entitled in an amount to be taxed or agreed.

NOTES

The act of bankruptcy occurred on 1 March 2019.
A consent to act as trustee has been filed on behalf of joint trustees being Mr Christopher Palmer and Mr Liam Bailey as joint trustees.

DATE OF ORDERS: 12 December 2019

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 865 of 2019

SOMERVILLE LEGAL

Applicant

And

FRANZ BOENSCH

Respondent

REASONS FOR JUDGMENT

This is an application for a sequestration order within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (Cth) (“the Act”). The proceedings were commenced on 5 April 2019. The proceedings are based on a bankruptcy notice which relied upon two different judgments, being a judgment obtained from this Court on 4 April 2019 in the sum of $5,000.00 (“the FCCA judgment”) and a judgment obtained from the New South Wales Local Court on 18 January 2017 in the sum of $95,274.10 and arising out of a costs assessment (“the Local Court judgment”).
The proceedings have been the subject of an amended notice of grounds of opposition filed on 29 November 2019. The petitioning creditor has read an affidavit in support of the verification and service of the creditor’s petition and service of the bankruptcy notice sworn on 17 April 2019, an updated affidavit of debt affirmed on 11 December 2019 and an updated affidavit of search affirmed on 11 December 2019.
On the evidence before the Court, the Court is satisfied that an act of bankruptcy occurred on 1 March 2019. The petitioning creditor has established that the debtor committed an act of bankruptcy at a time when the debtor was ordinarily resident in Australia in accordance with the requirements of s 43 of the Act. The petitioning creditor has established an act of bankruptcy under s 43(1) of the Act, which permits the making of a sequestration order.
The issue in the present case is whether or not either the respondent is able to pay his debts or sufficient cause has been shown why a sequestration order ought not to be made.
There is no evidence which has been adduced to persuade the Court that the respondent is able to pay his debts. The evidence is to the contrary. There is no evidence to satisfy the Court that the respondent’s assets exceed his liabilities or as to his other outstanding creditors.
The respondent is seeking to establish that there is sufficient cause why a sequestration order ought not to be made. The respondent identified that he has recently applied for an extension of time to seek to challenge the FCCA judgment which has been the subject of an unsuccessful appeal to the Federal Court of Australia. Had the FCCA judgment been the basis for the making of the sequestration order, this Court may well have adjourned the proceedings. The petitioning creditor identified at the outset that the petitioning creditor relied upon the Local Court judgment. In these circumstances, the Court is satisfied that it was appropriate to proceed with the hearing as the Local Court judgment is not the subject of any identified proper basis why the Court should go behind the same.
Mr Boensch, representing himself, sought to go through the history of the proceedings, his disagreement with the cost assessment process and his disagreement with the competency of the services which he was provided with giving rise to the Local Court judgment.
Mr Boensch made assertions in respect of being provided unsolicited invoices, contrary to the Australian Consumer Law. That proposition is without content. Mr Boensch retained the services of the petitioning creditor. The petitioning creditor was involved in the provision of legal services to Mr Boensch over a substantial period of time in respect of complex litigation. It is apparent that the respondent was informed of the costs as the litigation was proceeding.
There was a deed entered into seeking to secure the costs because of Mr Boensch’s past. That deed, however, was the subject of an order in the Supreme Court of New South Wales setting aside the same. To that extent, Mr Boensch had some success in respect of his proceedings but only in that the petitioning creditor’s judgment debt is not secured.
There has been no appeal, however, in respect of the Local Court judgment. The Local Court judgment is not the subject of any identified basis why the Court should go behind it. The issues raised by Mr Boensch do not reveal a proper underlying basis to find that there is no underlying debt. On the face of the material, it is apparent that there were substantial legal services provided to Mr Boensch. On the face of the costs assessment, there has been a proper assessment in respect of which the petitioning creditor was entitled to move for judgment in the New South Wales Local Court. In the absence of any proceedings seeking to set aside the Local Court judgment, the Court is not satisfied that there is any basis to go behind the judgment as contended by Mr Boensch.
Nor is the Court persuaded that there is any counter-claim or set-off as advanced by Mr Boensch for alleged incompetent services. No such proceedings have been put on and there is no proper basis, on the material that the Court has been taken, to support that contention.
Mr Boensch suggested that the Local Court judgment amount was not due and payable because he disagreed with the cost assessment being a final certificate. It is not the assessment that was the final order. It is the order of the New South Wales Local Court that is the final order. It is apparent that there was a cost assessment to support the Local Court judgment and the Court finds that there is no basis to go behind it.
Mr Boensch also submitted that there had been a provision in the deed which was set aside that related to service other than by email. That has nothing to do with the requirements of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) in relation to which Mr Boensch was validly served with a bankruptcy notice and unsuccessfully pursued proceedings seeking to have the same set aside. It is apparent that Mr Boensch fervently believes that the amount is not due. That belief, however, is not a proper basis to identify why a sequestration order should not be made. There is the Local Court judgment against Mr Boensch, which is not the subject of any challenge, that supports the bankruptcy notice and that an act of bankruptcy has occurred.
At the commencement of the hearing, the Court explained to Mr Boensch the nature of the hearing and that the Court would have identified the evidence and then his submissions. Mr Boensch identified that he had provided some exhibits in support of his affidavits to the Court but the Court had no such exhibits before it. Mr Boensch delivered up to the Court the exhibits that he contended he provided to the Court registry, and the Court accepted the same into evidence.
The Court heard submissions from Mr Boensch for approximately 20 minutes, none of which identified any basis why a sequestration order ought not to be made. The Court indicated that it would provide Mr Boensch a further 10 minutes. In fact, the Court provided Mr Boensch a further half an hour to put submissions in relation to why other sufficient cause had been made out why a sequestration order should not be made. Nothing said in those submissions identified any proper basis why there was other sufficient cause not to make a sequestration order. The Court is satisfied that Mr Boensch had a real and meaningful opportunity to present his case submissions in answer to the creditor’s petition.
Mr Boensch, in the course of his submissions, addressed the affidavit of Mr Hemsworth sworn 10 December 2019 and his disagreement with the same. The disagreement identified no proper basis why a sequestration order ought not to be made. The Court is not satisfied that other sufficient cause has been made out as to why a sequestration order ought not to be made.
Accordingly, in these circumstances, the Court is satisfied that this is an appropriate matter in which to make a sequestration order and the application is allowed.

I certify that the preceding seventeen (17) paragraphs are a true copy of the transcript of the published oral reasons for judgment of Judge Street delivered in open Court on 12 December 2019 and the parties were provided sealed copies of the Court’s orders.

Associate:

Date: 24 December 2019