Soueid v Soobramoney
[2008] FMCA 1011
•9 July 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SOUEID v SOOBRAMONEY | [2008] FMCA 1011 |
| BANKRUPTCY – Annulment of sequestration order – debtor attempted to pay debt – sequestration order ought not have been made – most creditors support annulment – opposition of single creditor insufficient – sequestration order annulled. |
| Bankruptcy Act 1966 (Cth), s.153B |
| Applicant: | MARGARET TANNOUS SOUEID |
| Respondent: | MUNSAMY SOOBRAMONEY T/AS M.S.D BUILDING & MAINTENANCE |
| File Number: | SYG 1281 of 2008 |
| Judgment of: | Smith FM |
| Hearing date: | 9 July 2008 |
| Delivered at: | Sydney |
| Delivered on: | 9 July 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr B Levet |
| Solicitors for the Applicant: | Aitken Lawyers |
| Counsel for the First Respondent: | Mr P McManus |
| Solicitors for the Respondent: | Adams & Partners, Lawyers |
| Counsel for the Trustee: | Ms M Teh |
| Solicitors for the Trustee: | Sally Nash & Co., Solicitors |
ORDERS
The sequestration order made on 7 April 2008 against the estate of the applicant is annulled pursuant to s.153B(1) of the Bankruptcy Act 1966 (Cth).
Note the agreement between the applicant and the respondent recorded in paragraphs 1 and 2 (first occurring) of the letter from the respondent’s solicitor dated 4 July 2008 (Exhibit 1) in relation to payment of the respondent’s debt and his costs in relation to the petition and this application.
Note that the applicant’s solicitor has undertaken to the Court to pay the amount of $52,203.68 to the solicitor for the respondent immediately upon the making of this order, on account of the respondent’s debt.
Liberty to the Official Receiver for the Bankruptcy District of the State of New South Wales to apply for orders in relation to its costs, fees, and expenses in the event that any difficulty arises in relation to the operation of s.154 of the Bankruptcy Act 1966 (Cth).
The applicant must within 2 days give a copy of this order to the trustee and to the Official Receiver pursuant to r.7.05.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1281 of 2008
| MARGARET TANNOUS SOUEID |
Applicant
And
| MUNSAMY SOOBRAMONEY T/AS M.S.D. BUILDING & MAINTENANCE |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This is an application for annulment of a sequestration order made by Registrar Kavallaris on 7 April 2008. The petitioning creditor relied on a debt of $52,203.68, including interest, under a Local Court judgment entered on 21 September 2007, and non-compliance with a bankruptcy notice in relation to that judgment.
After some adjournments, the petition was listed before Registrar Kavallaris on 7 April 2008. There was no appearance by the debtor, and the sequestration order was made by default, upon the Registrar being satisfied as to the relevant matters. There is no dispute that it was open to her to be so satisfied.
The present application invokes the Court's power under s.153B of the Bankruptcy Act to annul the bankruptcy, upon being satisfied that “a sequestration order ought not have been made”. It has been held that the circumstances as at the date of making the sequestration order should be considered, although the Court may use hindsight assisted by further evidence which was not before the Court when making the sequestration order. It has also been held that the Court has discretion not to annul the bankruptcy, even if satisfied that the sequestration order ought not have been made.
In the present case, the debtor presents evidence, which is uncontested, that she was endeavouring to arrive at Court with a bank cheque in the amount of the debt relied upon in the petition in time to avert the sequestration. Due to misadventures beyond her control, she was unable to do this, and she arrived at the Registry after the bankruptcy list had concluded. The bank cheque which she had sought to present to the petitioning creditor remains in the possession of her solicitor, and he is able to undertake to the Court immediately to pay it to the petitioning creditor upon annulment of the sequestration order.
It appears that agreement as to the payment of the petitioning creditor's costs has also been arrived at, as has an agreement for the payment of some additional moneys owed.
In the circumstances, I am satisfied that it is more probable than not that the sequestration order would not have been made by the Registrar, had the Registrar been aware of the applicant's intention to pay the debt, her actions aimed at arriving at agreement with the petitioning creditor, and her capacity to pay the debt relied upon in the petition.
I am satisfied that the sequestration order ought not have been made.
There is extensive evidence before me as to the applicant debtor's financial circumstances at the relevant time and today. It is unnecessary for me to recite all of that evidence. It is found in the affidavit before me from the applicant, and affidavits sworn on behalf of the Official Receiver for the Bankruptcy District for the State of New South Wales, who was the trustee appointed under the sequestration order.
A number of creditors were disclosed in the applicant's evidence. Evidence has been led that agreements have been arrived at with some creditors for the payment of their debts, and, in relation to most of them, for the eventual payment of their debts over a period when the applicant's business is expected to improve. There is evidence that there are reasonable prospects of this happening, and that the debtor’s business has assets of substantial value. Certainly, on the evidence before me, it appears that all those creditors have taken sensible business decisions that they would prefer to see her continuing in business and paying their debts, rather than that her business should be administered in insolvency. The business is a newly renovated brothel, and I can understand their position.
The one exception to the lack of opposition to an annulment of the sequestration order is a creditor, Mainway Pty Ltd. It has been represented by solicitors, and has been on notice of today’s application. They have set out their client's position in a letter dated 9 July 2008:
Following the Official Trustee’s request, our client lodged a Proof of Debt for the moneys claimed to be owing to it. Our client takes the view that it should be for the Official Trustee to make a determination in respect of our client’s claim rather than for your client to seek to make such determination herself. In our client’s view, there are compelling reasons why the Official Trustee would accept the Proof of Debt and your client should not be released from her bankruptcy until such time as all her creditors, including our client, have been repaid in full.
This letter does not present sufficient reasons why the Court should not annul the bankruptcy. It seems to suggest that a dispute about the proof of Mainway Pty Ltd’s claimed debt would preferably be determined by the trustee, rather than in litigation which appears to be currently on foot. Its proof of debt has not yet been admitted by the trustee, and the debt appears to be genuinely disputable.
On the limited evidence which is currently before me concerning the background to that debt, I am not satisfied that an annulment should be withheld for the reason presented in this letter. I am not satisfied that it would not be more appropriate for the alleged indebtedness to Mainway Pty Ltd to be resolved in the normal processes of civil litigation. In the absence of any appearance by Mainway Pty Ltd today to make submissions in opposition, I do not propose to treat its opposition expressed in the letter as reason for declining to annul the bankruptcy.
On all the evidence before me, I am satisfied that I have power under s.153B of the Bankruptcy Act to annul the bankruptcy, and that it would be an appropriate exercise of discretion to do that.
I have settled the terms of appropriate orders with the parties and shall proceed to make them.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Michael Abood
Date: 25 July 2008
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