Terzakis v QBE Insurance
[2005] FMCA 1509
•14 October 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TERZAKIS v QBE INSURANCE | [2005] FMCA 1509 |
| BANKRUPTCY – Application to set aside sequestration order – whether bankrupt solvent – refusal by bankrupt to complete a statement of financial affairs – Court unable to determine bankrupt’s liabilities – no basis found for setting aside the sequestration order – application dismissed. |
| Bankruptcy Act 1966 (Cth) Federal Magistrates Act 1999 (Cth), ss.103(1), 104(2) Federal Magistrates Court Rules 2001 (Cth), rr.20.00A(1)(C), 20.01, 20.03 |
| Applicant: | BASILE TERZAKIS |
| Respondent: | QBE INSURANCE (AUSTRALIA) LTD (A.C.N. 003 191 035) |
| File Number: | MLG 821 of 2005 |
| Judgment of: | Connolly FM |
| Hearing dates: | 3 & 12 October 2005 |
| Date of Last Submission: | 12 October 2005 |
| Delivered at: | Melbourne |
| Delivered on: | 14 October 2005 |
REPRESENTATION
| Counsel for the Applicant: | Self-represented |
| Solicitors for the Applicant: | Not applicable |
| Counsel for the Respondent: | Mr S.P. Gardiner |
| Solicitors for the Respondent: | Hall & Wilcox |
| Counsel for the Trustee: | Mr M. Lhuede |
| Solicitors for the Trustee: | Piper Alderman |
ORDERS
The application for review filed 24 August 2005 be dismissed.
The applicant pay the respondent’s costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 821 of 2005
| BASILE TERZAKIS |
Applicant
And
| QBE INSURANCE (AUSTRALIA) LTD (A.C.N. 003 191 035) |
Respondent
REASONS FOR JUDGMENT
The proceedings
This is an ex tempore judgment arising out of an application for the review of a sequestration order made on 16 August 2005 by Registrar Agnew. The application is supported by a number of affidavits sworn by the applicant (bankrupt). The respondent (judgment creditor) relied on the same formal material that was before Registrar Agnew. The registered trustee in bankruptcy Warren Brian White (“the Trustee”) filed an affidavit on 28 September 2005.
The history of the matter
The debt arose on 27 April 2004 when Judge Ostrowski ordered the judgment debtor (the applicant) to pay the sum of $16,350 in costs with respect to the applicant’s failed action against the respondent in the County Court of Victoria at Melbourne. That action, which was based on a claim by the applicant that the respondent had failed to indemnify him under the terms of an insurance policy, was heard from the 29th to the 31st October 2003 and judgment was handed down on 6 November 2003. On 2 June 2004 a bankruptcy notice issued. It was ultimately served on the applicant on 24 May 2005 after a number of extensions. On 8 July 2005 the creditor’s petition was issued and then served on
27 July 2005. The petition was returnable on 16 August 2005. The applicant filed a notice of intention to oppose the petition and an affidavit on 4 August 2005. On 16 August 2005 Registrar Agnew made a sequestration order. Then on 24 August 2005 the applicant filed the application to review the Registrar’s decision to grant the sequestration order. The applicant filed a further affidavit on 19 September 2005. The respondent relied on the various formal documents as required by the Bankruptcy Act 1966 (Cth) and Federal Magistrates Court Rules 2001. The Trustee filed an affidavit on 28 September 2005.
The law
Section 103(1) of the Federal Magistrates Act 1999 (Cth) (“FM Act”) provides:
103 Delegation of powers to Registrars
(1) The Rules of Court may delegate to the Registrars any of the powers of the Federal Magistrates Court, including (but not limited to) all or any of the powers mentioned in subsection 102(2).
Rule 20.00A(1)(c) of the Federal Magistrates Court Rules 2001 (Cth) (“the FMC Rules”) states:
20.00A Delegation of powers to Registrars
(1) For subsection 103 (1) of the Act, the following powers are
delegated to each Registrar:
…
(c) a power of the Court under a provision of the Bankruptcy
Act mentioned in Schedule 4.
Section 104(2) of the FM Act provides:
Review of the exercise of Registrars’ powers
(2) A party to proceedings in which a Registrar has exercised any of the powers of the Federal Magistrates Court under subsection 102(2) or under a delegation under subsection 103(1) may:
(a) within the time prescribed by the Rules of Court; or
(b) within any further time allowed in accordance with the Rules of Court; …
The review conducted under rule 20.01(1)(a) and (2)(a) of the FMC Rules must be made as follows:
20.01 Time for application for review
(1) For subsection 104 (2) of the Act, application for review of the exercise of a power by a Registrar must be made within:
(a) for the exercise of a power of the Court under a provision
of the Bankruptcy Act mentioned in Schedule 4 — 21 days
…
(2) A time prescribed under subrule (1) may be extended in a
proceeding:
(a) by the Court or a Registrar on any terms as the Court or
Registrar thinks fit; or
Rule 20.03(a) of the FMC Rules states:
20.03 Procedure for review
The review of an exercise of power by a Registrar:
(a)must proceed by way of a hearing de novo.
Conclusions & findings
The application for review first came before the Court on 3 October 2005. The respondent opposed the application for review and the Trustee indicated he neither opposed nor consented to the application. The respondent argued that all formal requirements had been complied with and that there had not been any material filed by the applicant that would operate to satisfy the Court that it should dismiss the petition and set aside the sequestration order. Perhaps the most accurate way to describe the affidavit material filed by the applicant is that it contained some irrelevant material, some unintelligible remarks and in general indicated a dissatisfaction with the order made by the County Court.
Initially I told the parties that I would reserve my reasons for a short period. However whilst considering my decision in the matter I became alerted to the contents of the affidavit of the Trustee Mr White, sworn 27 September 2005 and filed 28 September 2005, which I had not previously read. Paragraphs 1 to 5 of that affidavit read as follows:
1. I am a partner of the firm PPB Chartered Accountants and a registered trustee in bankruptcy. I am the trustee of the bankrupt estate of Mr Basile Terzakis (the Bankrupt) who is the Applicant herein. I am able to swear positively to the matters hereinafter set forth from my own knowledge save where I state otherwise.
2. On 18 August 2005 the Bankrupt attended at my offices unannounced and without an appointment. I nevertheless met with him at that time. I explained to the Bankrupt that his assets vested in me as trustee of his Bankrupt Estate and handed to him a letter dated 18 August 2005 enclosing two copies of a Statement of Affairs form for completion, two copies of a Statement of the Bankrupt’s Rights and Obligations, and explanatory booklet entitled Prescribed Information and a copy of the Notice from the Official Receiver together with an extract from the National Personal Insolvency Index relating to the Bankrupt. The Bankrupt refused to accept those documents and further refused to answer my questions in relation to his bankruptcy. As a result I concluded that meeting. I subsequently caused to be posted those same documents to the Bankrupt by both ordinary and registered post. Australia Post records show that the registered mail was collected on 22 August 2005.
3. The Bankrupt has refused or failed to provide to me a Statement of Affairs as required by the Bankruptcy Act 1966. In the circumstances I have been unable to ascertain what liabilities, other than that of the Petitioning Creditor, may be provable in his bankruptcy.
4. I have identified two properties registered in the name of the Bankrupt being Certificate of Title Volume 5166 Folio 171 and Certificate of Title Volume 9651 Folio 479. Caveats have been lodged on the titles to those properties noting my interest. I have not as yet ascertained what those properties are worth or the value of any mortgages registered upon such titles. In addition, I have identified three accounts in the name of the Bankrupt held with the National Australia Bank Ltd. As at 2 September 2005 those accounts held approximately $103,000. I have had the accounts frozen save and except to the extent of $5,000 to enable the Bankrupt to meet ordinary living expenses.
5. In view of the Application herein I have not taken any substantive steps towards the administration of the Bankrupt Estate save as to ensure the property of the Bankrupt is secured and as may otherwise be required expressly by the provisions of the Bankruptcy Act.
In my view the contents of paragraph 4 in particular raised at the very least a strong possibility that the applicant was solvent and able to pay his debts. I also harboured some concerns about the applicant’s understanding of the proceedings and ultimately I determined that it was appropriate to hear further argument from the parties.
What became clear when the matter returned to Court on 12 October 2005 was that the applicant Mr Terzakis was relying on his dissatisfaction with the decision of the County Court that he failed to prove he suffered damages. It was also clear that he hadn’t sought to appeal the decision or to extend time for an appeal. So far as the issues of whether he was able to pay his debts and whether or not he was solvent, I offered the applicant the opportunity of an adjournment to enable him to complete the statement of affairs that he had previously declined to prepare. I am satisfied that the applicant understood the nature of what was being requested but nevertheless he refused that opportunity.
Accordingly I am satisfied that while it is the case that the applicant has $103,000 in three bank accounts and two properties registered in his name, I am unable to determine what his liabilities are and that inability stems from his refusal to cooperate. I am satisfied in all the circumstances that there is no basis for setting aside the sequestration order. The application should be dismissed with an order that the applicant pay the respondent’s costs.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Connolly FM
Associate: J. O’Brien
Date: 14 October 2005
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