T.L. Dalgrin as Executrix of the Estate of the late N.R. Black
[2007] FMCA 1145
•18 July 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| T.L.DALGRIN AS EXECUTRIX OF THE ESTATE OF THE LATE N.R. BLACK | [2007] FMCA 1145 |
| BANKRUPTCY – Order of administration in bankruptcy. |
| Bankruptcy Act 1966 (Cth) |
| Re Nonmus (Recamie) (1929) 1 ABC 30 Re Pink: Elvin v Nightingale [1927] 1 Ch 237 Sandell v Porter (1966) 115 CLR 666 |
| Applicant: | TRACEY LEE DALGRIN AS EXECUTRIX OF THE ESTATE OF THE LATE NEIL ROBERT BLACK |
| File number: | BRG462 of 2007 |
| Judgment of: | Burnett FM |
| Hearing date: | 11 July 2007 |
| Delivered at: | Brisbane |
| Delivered on: | 18 July 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr D.J. Morgan |
| Solicitors for the Applicant: | Peter Jones & Co |
ORDERS
That a sequestration order be made against the estate of the late Neil Robert Black.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG462 of 2007
| TRACEY LEE DALGRIN AS EXECUTIVE OF THE ESTATE OF THE LATE NEIL ROBERT BLACK |
Applicant
REASONS FOR JUDGMENT
Introduction
In this application Tracey Lee Dalgrin as executrix of the estate of the late Neil Robert Black applies to the court for an order of administration in bankruptcy of the estate of the late Neil Robert Black who died on 24 August 2006. The application is one made pursuant to section 247 of the Bankruptcy Act.
Orders were made on 29 June 2007 directing that a copy of the application be served on parties to the Supreme Court proceedings referred to in affidavit material but despite that matter there was no appearance by any such party.
Background
The late Neil Robert Black died at Traralgon Victoria on 24 August 2006. He left a will dated 4 April 2005 for which probate was granted to the executrix named therein, Tracey Lee Dalgrin, by the Supreme Court of Queensland on 11 December 2006.
The executrix now applies for an order pursuant to section 247 of the Bankruptcy Act1966 for the estate to be administrated as an insolvent estate.
The deceased conducted a business repairing radiators and air conditioning systems under various company names. In particular the principal entity appears to have been Amalgamated Radiators (Aust) Pty Ltd in respect of which the deceased held all issued shares. It appears from the ASIC company extract that the company had a liquidator appointed on 11 January 2006 following a creditor’s voluntary winding up application.
Aside from the ten ordinary shares held in Amalgamated Radiators the assets of the deceased at the time of death also owned:
a)real estate valued at $515,000.00
and
b)funds held in trust of Peter Jones & Co solicitors $70,730.03
There were also interests in superannuation funds however those funds are the subject of claims by persons other than the executrix of the estate.
The deceased’s liabilities were listed as:
Commonwealth Bank loan $330,000.00
Claim by Automotive Imports $206,866.48
Claim by Acton Distribution $118,557.33
Claim by P.A. Lucas (liquidator of Amalgamated
Radiators $466,693.98
Claim by Davies Knox Maynard Accountants $2,040.50
Rates – Gold Coast City Council $2,227.97
Body Corporate levies due “The Heath” $13,605.10
Executor’s legal and other expenses $10,000.00
The excess of liabilities over assets is $564,261.33. That factor does not take account of the secured position of the Commonwealth Bank. In fact after allowing for the discharge of the Commonwealth Bank debt there is a sum of $255,730.30 available for distribution to the unsecured creditors which total $819,991.36.
The principal liabilities of the deceased’s estate include a number of contingent liabilities. In particular they are:
a)claim by Automotive Imports Pty Ltd;
b)claim by Acton Distribution Pty Ltd; and
c)claim by P.A. Lucas, liquidator of Amalgamated Radiators.
The value of those claims is $792,117.79. The principal concern of the Registrar and reason for transferring the application to this Court concerned the issue of whether or not the deceased’s estate is insolvent in circumstances where the principal liabilities are contingent liabilities.
Section 247 of the Bankruptcy Act relevantly provides:
“(1) Subject to this section, a person administering the estate of a deceased person may present a petition for an order for the administration of the estate under this Part, accompanied by a statement, in duplicate, of the deceased person’s affairs and of his or her administration of the deceased person’s estate.
(1A) Upon hearing the petition, the court may make, or refuse to make, the order sought as it thinks fit.
(2) A petition under this section shall not be presented unless, at the time of his or her death, the deceased person:
(a) was personally present or ordinarily resident in Australia;
(b) had a dwelling house or place of business in Australia;
(c) was carrying on business in Australia, either personally or by means of an agent or manager; or
(d) was a member of a firm or partnership carrying on business in Australian by means of a partner or partners, or of an agent or manager.”
The commentary concerning this section is not particularly expansive. For instance in Australian Bankruptcy Law and Practice, Darvill Vernon[1] the authors simply note that the provisions of section 247(1A) afford the court the “widest possible discretion”.[2] In his submissions Mr Morgan of Counsel made the observation that there were no recent authoritative statements of principle related to the application of section 247 within this jurisdiction but noted English practice makes it clear that contingent liabilities of the estate should be taken into account when determining insolvency: Williams, Mortimer & Sunnucks’ Executors, Administrators and Probate[3].
[1] McDonald Henry & Meek, Australian Bankruptcy Law and Practice, Darvill Vernon 5th Edition
[2] There is also brief commentary in Lewis’ Australian Bankruptcy Law, LBC 11th Ed 1999, Dennis Roe at pg 258.
[3] 18th edition at paragraph [50 – 41] – [50-55].
At para 40-42 the learned authors in Williams observed,
“The estate of a deceased person is insolvent if the assets, when realised, will not be sufficient to meet in full all the debts and other liabilities (including the funeral, testamentary and administration expenses) to which it is subject. Whether an estate is insolvent is a question of fact as to which the court may direct an inquiry. …where there is any doubt as to whether or not an estate is solvent, it should be administered in accordance with the rules applicable to insolvent estates until all the expenses and debts have been paid in full.”
At para 50-46 the learned authors noted that an insolvency administration order is the equivalent to a bankruptcy order in the case of a living individual.
In all respects the present application has the character of an application pursuant to section 55 of the Act concerning the presentation of a debtor’s petition.
Abundant authority exists concerning the definition of insolvency. The most frequently cited is Sandell –v- Porter[4] where at 670 Barwick CJ observed,
“Insolvency is expressed in section 95 as an inability to pay debts as they fall due out of the debtor’s own money. But the debtor’s own moneys are not limited to the cash resources immediately available. they extend to moneys which he can procure by realisation by sale or mortgage or pledge of his assets within a relatively short time – relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor’s financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor’s inability, utilising such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. Whether that state of affairs has arrived is a question for the court…”
[4] (1966) 115 CLR 666.
These principles have long been accepted as applicable to insolvent estates of deceased persons: In Re Pink: Elvin v Nightingale[5]: Re Nonmus (Recamie)[6].
[5] [1927] 1 Ch 237.
[6] (1929) 1 ABC 30.
Contingent debts although of themselves not sufficient to found a creditor’s petition are taken into account. For instance questions of contingent debts are considered in the context of section 52(2)(a) of the Act.
It follows in my view that in the circumstances of an application brought by an executrix a like approach should be adopted.
When regard is had to the three principle contingent debts and in particular to the debt the subject of the proceedings presently in the Supreme Court of Queensland it is apparent the estate is insolvent. The present proceedings in the Supreme Court in respect of which the deceased is a Defendant, requires special mention. In those proceedings the Plaintiff seeks to enforce a guarantee given by the deceased in support of a debt incurred by Amalgamated Radiators in the sum of $143,388.81. The Applicant’s submissions before me that the executrix does not intend to defend the proceeding leads to the irresistible conclusion that there is no real defence available to that proceeding and that that particular creditor will succeed in full in its claim against the estate.
Allowing that claim in full, and assuming the sum of $143,388.81 otherwise discharges the claim allowed in the list of assets and liabilities of the estate a deficit of $240,951.16 remains. That sum is made up of:
Assets: | ||
| Balance of proceeds of sale of secured asset | $185,000.00 | |
Money in trust | $70,730.03 | $255,730.03 |
Liabilities: | ||
Claim by Automotive Imports | $206,866.40 | |
Claim by Acton Distribution | $118,557.33 | |
Claim by P.A. Lucas[7] | $143,388.81 | |
Accountants fees | $2,040.50 | |
Rates | $2,222.97 | |
Body Corporate | $13,605.10 | |
Executrix’ expenses | $10,000.00 | $496,681.19 |
Excess of Liabilities over Assets: | ($240,951.16) |
[7] This assumes that $143,388.81 represents a discount on original estimate of $466,693.98.
The evidence otherwise establishes the matters required by s247(2).
It is in my view appropriate that an order be made.
Conclusion
The Applicant executrix seeks an order pursuant to section 247 of the Bankruptcy Act for the administration of the estate under the Act. The evidence demonstrates that the estate is insolvent. In all other respects the formal requirements of section 247(2) of the Act have been satisfied. At the time of his death the deceased person:
a)was personally present or ordinarily resident in Australia;
b)had a dwelling house or place of business in Australia;
c)was carrying on business in Australia; and
d)was a member of a firm or partnership carrying on business in Australia.
In the circumstances it is appropriate that a sequestration order be made.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Burnett FM
Associate: Bev Schmidt
Date: 18 July 2007
0