Star v Green - [2009] FMCA 612

FEDERAL MAGISTRATES COURT OF AUSTRALIA

STAR v GREEN

[2009] FMCA 612

BANKRUPTCY – Application for annulment of sequestration order – liability of director for insolvent trading – no grounds for going behind default judgment – claimed indebtedness of company not wholly disproved – no evidence that sequestration order ought not have been made – delay in seeking annulment – discretionary reason for refusing annulment – challenge to actions of separate trustee for sale of home appointed by Supreme Court – not within Court’s jurisdiction – application refused.

Bankruptcy Act 1966 (Cth), ss.52, 153B, 154, 178
Conveyancing Act 1919 (Cth), 66G
Corporations Act 2001 (Cth), ss.95A, 588G, 588H, 588M

Cumins v Deputy Commissioner of Taxation (2008) 172 FCR 425
Davidova v Murphy [2009] FCA 601
Miller v Bondi Securities [1994] FCA 1304
Rigg v Baker (2006) 155 FCR 531
Sutherland v Hanson Construction Materials Pty Ltd (2009) 254 ALR 650
Wolff v Donovan (1991) 29 FCR 480

Applicant:

REBECCA JANE STAR

Respondent:

MARTIN JOHN GREEN

File Number:

SYG 455 of 2009

Judgment of:

Smith FM

Hearing date:

18 June 2009

Delivered at:

Sydney

Delivered on:

18 June 2009

REPRESENTATION

Counsel for the Applicant:

In Person

Counsel for the Respondent:

Mr P Raupach

Solicitors for the Respondent:

Searle & Associates

ORDERS

The application for annulment and other orders is dismissed.
The respondent creditors’ costs, including all reserved costs, be taxed and paid from the estate of the applicant bankrupt in the priority fixed by s.109(1)(a) of the Bankruptcy Act 1966 (Cth).
The respondent must serve a copy of this order on the trustee and the Official Receiver in Sydney within 2 days.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 455 of 2009

REBECCA JANE STAR

Applicant

And

MARTIN JOHN GREEN

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

Ms Star applies for the annulment of a sequestration order which was made against her estate on 23 March 2007, based on a liability arising from her involvement in a failed business. She now belatedly challenges that indebtedness, and also challenges actions of her trustee in bankruptcy which attempt to realise her equity in her family home.
She and her husband, Mr May, were directors of a company, Staymar Pty Ltd (‘Staymar’), which conducted the business of a Midas Car Care System franchise located at Mona Vale from June 2003 until around September 2004. Staymar was placed in liquidation on 7 June 2005, on a creditor’s petition of GIO Workers Compensation NSW Pty Ltd.
Ms Star and Mr May completed directors’ questionnaires concerning the affairs of Staymar and the reason for its insolvency, and Mr May was examined at a public examination on 1 and 14 June 2006. In Mr May’s responses to the questionnaire, he said: “I ceased trading for a number or reasons, but I first realised I had a problem about one month after commencing trading”. He gave the following causes of the failure of the company:
A lack of customers, whether I could have survived even with customers is moot,…

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.

Continue reading Star v Green

Details

AGLC: Star v Green [2009] FMCA 612
Case: [2009] FMCA 612
Decision Date: 18 June 2009

CaseChat Overview and Summary

Star brought an application to the Federal Circuit Court to have a bankruptcy order annulled and to make other orders. Green, the respondent, was a creditor of Star, the applicant, and sought to enforce the bankruptcy order. The central dispute was whether the bankruptcy order should be annulled and what orders should be made regarding the costs and service of the decision. The legal issues before the court were whether the bankruptcy order was validly made and, if so, whether there were grounds for its annulment. Additionally, the court had to determine the appropriate allocation of costs and the manner in which the decision should be communicated to the relevant parties.

The court found that the bankruptcy order was validly made and that there were no grounds for its annulment. The judge ruled that the applicant had not demonstrated any error in the making of the order or any other valid reason for its annulment. The court also found that the costs should be borne by the applicant and should be paid from the applicant’s estate, in accordance with the priority set out in section 109(1)(a) of the Bankruptcy Act 1966 (Cth). The judge ordered that the respondent must serve a copy of the order on the trustee and the Official Receiver in Sydney within two days.

Orders

Orders of the court

The application for annulment and other orders is dismissed.

The respondent creditors’ costs, including all reserved costs, be taxed and paid from the estate of the applicant bankrupt in the priority fixed by s.109(1)(a) of the Bankruptcy Act 1966 (Cth).

The respondent must serve a copy of this order on the trustee and the Official Receiver in Sydney within 2 days.

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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