Super Vision Resources Ltd v Xu

[2020] FCCA 758

FEDERAL CIRCUIT COURT OF AUSTRALIA

SUPER VISION RESOURCES LTD v XU [2020] FCCA 758

Catchwords:
BANKRUPTCY – Application for a sequestration order – whether that for other sufficient cause a sequestration order ought not to be made – sequestration order made.

Legislation:

Bankruptcy Act 1966 (Cth), ss.27, 43, 52

Applicant: SUPER VISION RESOURCES LTD

Respondent: LAWRENCE XU

File Number: SYG 2093 of 2019

Judgment of: Judge Street

Hearing date: 2 April 2020

Date of Last Submission: 2 April 2020

Delivered at: Sydney

Delivered on: 2 April 2020

REPRESENTATION

Counsel for the Applicant: Mr J Knackstredt via video link

Solicitors for the Applicant: Ashurst

Counsel for the Respondent: Mr JT Johnson via video link

Solicitors for the Respondent: Tanglin Lawyers

ORDERS

1. The hearing proceed via video link using Microsoft Teams pursuant to Part 6 Division 5 of the Federal Circuit Court of Australia Act 1999 (Cth).

2. The hearing be recorded by Microsoft Teams and by Auscript via the Judge’s microphone and is not to be otherwise recorded.

3. The Microsoft Teams recording link will be made available to the parties on the ECF under the “Transcripts” tab and is to be made available to any member of the public who request access to the link and who must comply with order 2.

4. A sequestration order is made against the estate of Lawrence Xu.

5. 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 agreed or taxed.

THE COURT NOTES THAT:

1. The act of bankruptcy occurred on 12 July 2019.

2. A consent to act as trustee has been filed by David John Kerr.

DATE OF ORDER: 2 April 2020

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2093 of 2019

SUPER VISION RESOURCES LTD

Applicant

And

LAWRENCE XU

Respondent

REASONS FOR JUDGMENT

1. This is an application for a sequestration order within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (Cth) (“the Act”) arising out of a judgment obtained in the Supreme Court of New South Wales on 10 April 2019 in which judgment was entered for the petitioning creditor against the respondent in these proceedings in the amount of HK$132,591,924.78. The bankruptcy notice was issued in Australian currency of $22,731,559.58.

2. Evidence has been read by the petitioning creditor in support of the verification of the petition, service of the bankruptcy notice, service of the creditor’s petition, updated affidavit of search and updated affidavit of said debt.

3. The Court is satisfied that the requirements under sub-s 43(1)(a) of the Act have been made out and that there has been an act of bankruptcy that occurred on 12 July 2019.

4. In relation to the requirements of sub-s 43(1)(b) of the Act, it is not in dispute that the applicant was in Australia at the time of the act of bankruptcy. It is relevant to the history of the proceedings that there was put in issue whether the applicant was able to establish the criteria under sub-s 43(1)(b) of the Act.

5. Evidence has been filed that identifies passenger cards filed over a substantial period of time by the respondent identifying the same address to which the respondent attended as identified on a ASIC search in respect of a holdings company in which the respondent was involved. To the extent relevant, the Court is also satisfied that the applicant had a dwelling place or was ordinarily resident in Australia or had a place of business in Australia within the meaning of s 43 of the Act.

6. There is no dispute that the requirements of sub-s 52(1) of the Act have been established.

7. Mr Johnson of counsel on behalf of the respondent has properly conceded that the only real issue is whether other sufficient cause can be made out. In that regard, Mr Johnson identified that there is evidence of other security held by the petitioning creditor and that there have been some obviously unsuccessful attempts to resolve the matter and that the present climate is one in respect of which there have been amendments extending the period in respect of the bankruptcy notice in respect of fresh applications for a sequestration order.

8. But for the history of the proceedings there may have been considerable force in Mr Johnson’s last issue. The first two issues do not make out any other sufficient cause given the very substantial amount the subject of the judgment and the bankruptcy notice.  

9. Materially, in this case, the proceedings were commenced on 14 August 2019. A notice of opposition was filed on 9 October 2019, well before any issue arose in respect of the current circumstances. That notice advanced a ground of opposition that Mr Johnson has properly abandoned in light of the evidence that has been adduced. It is that history of the proceedings that diminishes the force that might otherwise have been placed on what the Court will describe as the discretionary consideration identified by Mr Johnson which could have permitted the court to dismiss the petition or to adjourn the petition.

10. The Court is not satisfied that either course would be appropriate in the circumstance of the present case. The petitioning creditor is entitled to a sequestration order and the respondent has not satisfied the Court that the respondent is able to pay his debts. Nor has the respondent satisfied the court of other sufficient cause why a sequestration order ought not to be made.

11. Accordingly, the Court makes a sequestration order against the estate of Lawrence Xu.

I certify that the preceding eleven (11) paragraphs are a true copy of the transcript of the published oral reasons for judgment of Judge Street delivered in open Court on 2 April 2020 and the parties were sent a sealed copy of the Court’s orders

Associate:  

Date:  23 April 2020