The Hills Shire Council v Stankovic
[2009] FMCA 478
•12 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| THE HILLS SHIRE COUNCIL v STANKOVIC | [2009] FMCA 478 |
| BANKRUPTCY – Whether court should dismiss a petition where debtor has an interest in an asset worth $5,000,000.00 – whether debtor is solvent – whether there is other sufficient cause not to make a sequestration order – whether court should stay proceedings under an order. |
Bankruptcy Act 1966, ss.33(1)(6), 52(2)
Federal Magistrates Court (Bankruptcy) Rules 2006
| Sarina, Re; Ex parte Wollondilly Shire Council [1980] 43 FLR 163 Sandell v Porter (1966) 115 CLR 666 Cain v White (1933) 48 CLR 639 |
| Applicant: | THE HILLS SHIRE COUNCIL |
| Respondent: | MILOVAN STANKOVIC |
| File Number: | SYG 1333 of 2008 |
| Judgment of: | Raphael FM |
| Hearing date: | 12 May 2009 |
| Date of Last Submission: | 12 May 2009 |
| Delivered at: | Sydney |
| Delivered on: | 12 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Ash |
| Solicitors for the Applicant: | Watson & Watson |
| For the Respondent: | Mr Stankovic in person |
| Solicitors for the Supporting Creditor: | Kent Attorneys |
ORDERS
Pursuant to s.33(1)(6) of the Bankruptcy Act 1966 I amend the name of petitioning creditor to “The Hills Shire Council”.
A sequestration order be made against the estate of Milovan Stankovic.
All proceedings under this order are stayed for a period of 21 days.
The Applicant creditor’s costs (including any reserved costs) be taxed (in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006) and paid from the estate of the Respondent Debtor in accordance with the Act.
Liberty to apply on 2 days notice.
THE COURT NOTES
The date of the act of bankruptcy is 30 December 2007.
A Consent to Act as Trustee has been signed by Mr Terry Grant Van Der Veld and Mr Jason Shane Cronan and has been lodged with the Official Receiver in Sydney.
Under the Bankruptcy Regulations a copy of the sequestration order be given to the Official Receiver in Sydney.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1333 of 2008
| THE HILLS SHIRE COUNCIL |
Applicant
And
| MILOVAN STANKOVIC |
Respondent
REASONS FOR JUDGMENT
The applicant creditor now seeks a sequestration order against the debtor. The amount of the debt owed is approximately $22,000.00. The debtor resists on two grounds. First he says that he is solvent and second he says that there is other sufficient cause why I should not make the sequestration order. Insofar as his solvency is concerned he puts forward the fact that he owns, at least in part, a piece of land which has a value admitted by the council to be at least $5,000,000.00. I am prepared to accept the evidence given by the debtor that there is only one mortgage on the property of approximately $100,000.00. However, the existence of an asset is not the appropriate test for solvency. It is now well established that the applicant must show an ability to pay his debts as and when they fall due from funds available to him or capable of being made available within a reasonable time; Sarina, Re; Ex parte Wollondilly Shire Council [1980] 43 FLR 163, Sandell v Porter (1966) 115 CLR 666 at [670].
The debtor has sworn to the fact that he is an invalid pensioner existing on a pension of approximately $567.90 per fortnight and so it is clear that he has no available moneys with which to pay this debt, other than the land. In this regard he has put forward some evidence that he has received an offer of a line of credit from the ANZ of approximately $500,000.00. As I explained in my decision relating to the grant of the adjournment, the offer from the ANZ Bank that was produced to this court was incomplete and there would appear to be another document which sets out the conditions upon which it is proposed that this loan be given. Because I have so little evidence about the loan I do not believe that I could take it into account to the extent that I would decline to grant the sequestration order to which I believe Mr Ash has established his client is entitled; Cain v White (1933) 48 CLR 639. I note that the land is held in joint names and that Mr Stankovic is awaiting a decision upon a property settlement application with his former wife. The land is unlikely to be sold for some time.
However, I am prepared to give Mr Stankovic some assistance. The court is empowered to grant a stay of any sequestration order for a period of a maximum of 21 days. Mr Stankovic has told me that all he needs to do in order to have this loan from the ANZ Bank materialise is to obtain his wife's signature on the documentation and present it to the ANZ Bank. He further tells me that if he receives the payment from the ANZ Bank he will pay, under protest, the Baulkham Hills Shire Council which I understand is now know as “The Hills Shire Council”, and in those circumstances if I am not prepared to dismiss the application for other sufficient cause I would propose to make a sequestration order subject to such a stay.
Coming to “other sufficient clause”, the debtor's submissions in this regard are a combination of his complaint against the council for bringing litigation against him over the hoarding of rubbish upon his land and the fact that as he has a significant asset he would say that the council has not properly sought to recover its debt by a manner other than this particular one. He also argues that he has an appeal on foot against certain decisions of the New South Wales Land and Environment Court. A court in bankruptcy is always reluctant to become too deeply involved in the litigation which parties have had previously and which have resulted in orders that end up being the subject of bankruptcy notices and then petitions. In this particular case, as I understand it, there has been a long running dispute between Mr Stankovic and the council over the land in question. But the matter which impresses me most is the fact that the costs order which is the basis of the petition does not relate to the proceedings which Mr Stankovic is seeking to appeal and that those costs were assessed in 2007 and we are now in 2009. It may well be that even if Mr Stankovic is successful in his appeal, and I understand that he really is making a cross appeal against some appeal from the council in relation to the 2008 litigation, this will not necessarily have the effect of reversing the costs order upon which this petition is based. I am unable to see how raising the matters which include the existence of the appeal, constitutes other sufficient cause for the purposes of s.52(2) of the Bankruptcy Act 1966 (the “Act”). Mr Stankovic has not satisfied me that the council has brought this case for an improper motive, and as I have already said, I am not satisfied that a successful appeal would alter the situation. For that reason I would not dismiss the petition for other sufficient cause.
I have heard from Mr Kent, a solicitor and a supporting creditor. Mr Kent claims that he is owed approximately $244,677.00 plus interest on bills of costs rendered to Mr Stankovic between January and July 2008 which Mr Stankovic has not requested be the subject of assessments. These are certainly bills of costs for which Mr Kent could prove in Mr Stankovic's bankruptcy but they are not bills which are yet the subject of any judgment of a court. The existence of this other creditor does reinforce the view I have taken that I should not exercise my discretion to dismiss this petition.
1.Pursuant to s.33(1)(6) of the Bankruptcy Act 1966 I amend the name of petitioning creditor to “The Hills Shire Council”.
2.A sequestration order will be made against the estate of Milovan Stankovic.
3.All proceedings under this order are stayed for a period of a period of 21 days.
4.The Applicant creditor’s costs (including any reserved costs) be taxed (in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006) and paid from the estate of the Respondent Debtor in accordance with the Act.
5.Liberty to apply on 2 days notice.
THE COURT NOTES
i) The date of the act of bankruptcy is 30 December 2007.
ii)A Consent to Act as Trustee has been signed by Mr Terry Grant Van Der Veld and Mr Jason Shane Cronan and has been lodged with the Official Receiver in Sydney.
iii)Under the Bankruptcy Regulations a copy of the sequestration order be given to the Official Receiver in Sydney.
I certify that the preceding five (5) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 20 May 2009
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