Sutcliffe v Commonwealth Securities (No.1)
[2003] FMCA 567
•21 August 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SUTCLIFFE v COMMONWEALTH SECURITIES (No.1) | [2003] FMCA 567 |
| BANKRUPTCY – Application to review Registrar’s decision – whether debt is still owing – whether section 52(1)(c) has been satisfied – debt paid by third party. |
Bankruptcy Act 1966, ss.52(1), 52(1)(c)
Martin v Commonwealth Bank of Australia [2001] FCA 87
| Applicant: | BRIAN ANDREW SUTCLIFFE |
| Respondent: | COMMONWEALTH SECURITIES LTD |
| File No: | MZ 811 of 2003 |
| Delivered on: | 21 August 2003 |
| Delivered at: | Melbourne |
| Hearing Dates: | 19 & 21 August 2003 |
| Judgment of: | Phipps FM |
REPRESENTATION
| Mr Sutcliffe appeared on his own behalf |
| Counsel for the Respondent: | Mr P. Fary |
| Solicitors for the Respondent: | Russell Kennedy |
ORDERS:
That the Registrar’s Order of 1 July 2003 be set aside.
That the creditors petition filed 14th April 2003 be dismissed.
That costs be reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 811 of 2003
| BRIAN ANDREW SUTCLIFFE |
Applicant
and
| COMMONWEALTH SECURITIES LTD |
Respondent
REASONS FOR JUDGMENT
This is an application to review a decision of the Registrar made on 1 July 2003. The order on 1 July 2003 was an order that the estate of the debtor be sequestered.
The application for review is a hearing de novo (Martin v Commonwealth Bank of Australia [2001] FCA 87). Being a hearing de novo, the creditor's petition must be heard anew and must be decided on the facts as they exist at the date of the hearing.
Section 52(1)(c) of the Bankruptcy Act 1966 sets out the matters which require proving at the hearing of the creditor's petition. They include the fact that the debt or debts on which the petitioning creditor relies is or are still owing.
The debt on which the creditor relies is a judgment debt or a debt which is the foundation of an order made in the Magistrates Court of Victoria at Melbourne on 25 October 2002 for a total amount of $4631.48, less an amount of $500.00 which was paid and so a total debt of $4131.48. It is common ground that debt was owing on 1 July 2003. On 28 July 2003 a payment was received into a bank account of the debtor for that sum of money. The evidence shows that came about in this way.
The debtor, Mr Sutcliffe, lives with his mother and he is her carer. He has limited income and assets of his own, however his mother has significant assets. Mr Sutcliffe, with the agreement of his mother, filled out a withdrawal slip signed either by herself or by Mr Sutcliffe using a power of attorney. He withdrew from his mother's bank account the amount of $4131.48 in the form of a bank cheque payable to the creditor, Commonwealth Securities Ltd. He then took it to a branch of the Commonwealth Bank and paid it into a Commonwealth Securities account with a reference number Mr Sutcliffe had had in the past.
Commonwealth Securities had some difficulty in identifying where the amount paid should be credited. It took advice and as a result of that advice concluded that it might not be entitled to the money. Initially, it concluded that it was not entitled to the payment because it considered it was a payment from Mr Sutcliffe. At that time, 28 July 2003, he was bankrupt, therefore any money he paid would be vested in the trustee. They have held the money in a suspense account, in effect, holding the money as stakeholders.
The facts I find in relation to that payment are that it was a payment made by Mrs Sutcliffe, the debtor's mother. It was paid by her directly to the bank. If Mr Sutcliffe remained bankrupt no doubt there would be issues about whether it was a preference, but as at today, as at the time of this hearing, the bank has been paid by a third party and therefore the debt of $4131.48 no longer exists.
Having made that finding of fact I need go no further because the provision of subsection 52(1)(c) is not satisfied, the contrary is proved. Therefore the petition must be dismissed with the consequential order or the primary order that the order made by the Registrar on 1 July 2003 be set aside. That leaves the question of costs. As I indicated earlier, I propose reserving the question of costs. It depends on findings of fact which I need to consider.
I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate:
Date:
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