Steeline Roofing Products v Dobson

[2013] FCCA 620

FEDERAL CIRCUIT COURT OF AUSTRALIA

STEELINE ROOFING PRODUCTS v DOBSON [2013] FCCA 620

Catchwords:
BANKRUPTCY – Sequestration order – where applicant claimed debt now lower than statutory threshold amount – where debt above statutory threshold amount at time of issue of bankruptcy notice – where debt to supporting creditors above statutory threshold amount – whether act of bankruptcy committed – whether to make sequestration order.

PRACTICE AND PROCEDURE – Application to transfer matter to Brisbane Registry – where oral application made at first return date – where formal application requested – where formal application made at late stage – whether to transfer proceedings.

Legislation:  

Bankruptcy Act 1966 (Cth) ss.41(1)(a), 52, 52(2)(b)

Applicant: STEELINE ROOFING PRODUCTS

Respondent: FRANCIS PHILIP DOBSON

File Number: SYG 589 of 2013

Judgment of: Judge Raphael

Hearing date: 17 June 2013

Date of Last Submission: 17 June 2013

Delivered at: Sydney

Delivered on: 17 June 2013

REPRESENTATION

For the Applicant: In person by telephone

Solicitors for the Respondent: Aston Reid Lawyers

ORDERS

1. Application to have the matter transferred to the court’s Brisbane registry be dismissed.

2. A Sequestration Order be made against the estate of Francis Philip Dobson.

3. The Applicant’s costs be fixed in the amount of $6371.36 and paid from the estate of the Respondent in accordance with the Act.

4. The Supporting Creditor’s (Hi-Reach Rentals) costs to be paid from the estate of the bankrupt assessed in the sum of $1,000.00.

5. Under the Bankruptcy Regulations a copy of this sequestration order be given to the Official Receiver in Sydney within 2 days.

6. That the date of the act of bankruptcy is 13 November 2012.I order that the applicant’s costs be fixed in the amount of $6371.36 and paid from the estate of the respondent in accordance with the Act.

THE COURT NOTES:

1. That the date of the act of bankruptcy is 13 November 2012.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYG 589 of 2013

STEELINE ROOFING PRODUCTS

Applicant

And

FRANCIS PHILIP DOBSON

Respondent

REASONS FOR JUDGMENT

1. In this matter the applicant creditor, Steeline Roofing Products, seeks a sequestration order against the estate of Mr Francis Philip Dobson.  Mr Dobson has filed an application containing two heads.  The first is that the matter be transferred to Brisbane for adjudication and the second is that the bankruptcy petition be struck out on the grounds that the debt is less than $5,000.00.  The matter has a considerable history.  The bankruptcy petition was presented on 25 March 2013, and the matter came first before Registrar Tesoriero on 18 April 2013.  As I understand it, at that time Mr Dobson made an oral application that the matter be transferred to Brisbane.  There was some suggestion made that a formal application would have to be presented accompanied by an affidavit, and an indication was given by the Registrar that on the face of the matter the proceedings were in order.  In any event, no such application was made until 6 June 2013, but on 3 May 2013 the matter came before the court and was adjourned until 17 May 2013 when it would appear that the matter of the transfer to Brisbane was raised again.  The matter was adjourned on that date, requiring the applicant to file a notice of opposition by 31 May 2013 and the case appears to have been adjourned until 17 June 2013.  The notice of opposition was, in fact, filed on 3 May 2013 together with an affidavit from Mr Dobson.

2. During all this time there were two supporting creditors who appeared represented by Mr Hanrahan.  Their debts, which are evidenced by judgment, well exceed the $5,000.00, so it would appear that even if I was minded to strike out the petitioning creditor, the supporting creditors could have taken over.

3. Whilst it is trite law that a bankruptcy petition may be filed in any part of this court’s jurisdiction, this court in Sydney has made it clear in the past that it is inimical to petitions being filed outside the state in which the debtor lives without good cause. And it is fair to say that had Mr Dobson made his application promptly, as required by the Registrar’s order and had the matter come before me, I would in all probability have transferred it to Brisbane because it is not, in my view, fair to a debtor to have to conduct these proceedings so far away from home.

4. However, Mr Dobson did not make the application until some months after the matter first appeared before the court, and in those circumstances, particularly given the nature of his notice of grounds of opposition and the existence of a supporting creditor, I believe that it is in the interests of justice that I proceed today with the hearing of the petition. Mr Dobson is present by telephone and has made submissions.

5. In regard to Mr Dobson’s claim that the debt has been reduced below $5,000.00 this is of no matter. The sum of $5,000.00 is an amount referred to in s.41(1)(a) of the Bankruptcy Act 1966 (Cth)[1] under the heading ‘Bankruptcy Notices’.  It refers to the ability of the Official Receiver to issue a bankruptcy notice.  A bankruptcy notice cannot be issued for a sum less than $5,000.00.  In this case the bankruptcy notice was issued for a sum twice that amount and Mr Dobson had not complied with the bankruptcy notice or reduced the sum to under $5,000.00 by the time that compliance was required.  In those circumstances his argument that he may now have reduced the debt below $5,000.00, something which the applicant rejects, has no merit.  He has committed an act of bankruptcy and that is the basis upon which the petition is presented.

   [1] The “Act”.

6. Nothing I have heard today from Mr Dobson would permit me to grant him some relief under s.52(2)(b) of the Act and therefore, because I am satisfied that the respondent committed the act of bankruptcy alleged in the petition, and because I am satisfied of the proof of the other matters required by s.52 of the Act, I will make a sequestration order against the estate of Francis Philip Dobson.

7. I order that the applicant’s costs be fixed in the amount of $6,371.36 and paid from the estate of the respondent in accordance with the Act.  I order that the supporting creditor, Hi-Reach Rentals’, costs be paid from the estate of the bankrupt assessed in the sum of $1,000.00.  I note that a consent to act as trustee has been signed by Mr Maxwell William Prentice, but I am not satisfied that Mr Prentice can conduct the trusteeship from Brisbane and I believe that it is not appropriate that the trustee be based in a capital city so far away from the debtor.  I will therefore not permit Mr Prentice to be nominated as the trustee, but this matter can be taken up with ITSA and if they so wish they may nominate a trustee themselves.  The court notes that the date of the act of bankruptcy is 13 November 2012.

I certify that the preceding seven (7) paragraphs are a true copy of the reasons for judgment of Judge Raphael

Date:  21 June 2013