The Owners - Strata Plan No 48216 v Kimber

[2019] FCCA 2331

FEDERAL CIRCUIT COURT OF AUSTRALIA

THE OWNERS - STRATA PLAN NO 48216 v KIMBER

[2019] FCCA 2331

Catchwords:

BANKRUPTCY – Creditors petition. 

Legislation:

Bankruptcy Act 1966 (Cth), s.52

Cases cited:

Kimber v The Owners Strata Plan No 48216 (No. 2) [2018] FCA 406

Applicants:

The Owners - Strata Plan No 48216

Respondent:

Janelle Mary Kimber

File Number:

SYG 2766 of 2018

Judgment of:

Judge Cameron

Hearing date:

28 February 2019

Date of Last Submission:

28 February 2019

Delivered at:

Sydney

Delivered on:

1 March 2019

REPRESENTATION         

Solicitors for the Applicant:

Mr D. Radman of Grace Lawyers Pty Ltd

The Respondent appeared in person

Ms M. Poole, Supporting Creditor, appeared in person (by telephone)

ORDERS

(1)     The respondent have leave to file and serve on or before 12 noon on
14 March 2019 any further evidence of solvency on which she may rely.

(2)     The leave to file evidence granted in order 1 is limited to evidence relating to solvency.

(3)     The further hearing of the matter stand over to 15 March 2019 at 10.15am.

(4)     The parties have liberty to apply on 3 days’ notice.

1. FEDERAL CIRCUIT COURT

OF AUSTRALIA

AT Sydney

SYG 2766 of 2018

The Owners - Strata Plan No 48216

Applicants

And

Janelle Mary Kimber

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1.      The applicants move on a creditor’s petition filed on 28 September 2018 seeking a sequestration order against the respondent’s estate.  The respondent Ms Kimber opposed the petition on the basis that she was solvent and able to pay the debt.  She alleged in this regard that she had complied and continued to comply with an instalment order made by the Local Court of New South Wales (“NSW”) on 7 September 2018 for repayment of the underlying debt.

CREDITOR’S PETITION

2.      The evidence adduced by the applicants disclosed the following matters:

a)        on 7 May 2014 judgment was entered against Ms Kimber in the Local Court of NSW in the total amount of $10,767, including interest.  As recorded by Markovic J in Kimber v The Owners Strata Plan No 48216 (No. 2) [2018] FCA 406 at [35], the claim was for “costs associated with defending the application brought by Ms Kimber”;

b)        on 19 February 2016 bankruptcy notice number 188465 addressed to Ms Kimber was issued requiring her to pay the judgment debt of $10,767, plus interest of $1,602.48, within 21 days of service of the notice upon her;

c)        the bankruptcy notice was served personally on Ms Kimber on
17 March 2016;

d)        on 27 March 2018 Markovic J dismissed an application to set aside the bankruptcy notice but extended the time for compliance with it to 3 April 2018.  Ms Kimber’s appeal from her Honour’s decision was unsuccessful;

e)        Ms Kimber did not comply with the requirements of the bankruptcy notice by 3 April 2018;

f)        on 28 September 2018 the creditor’s petition, its substance appropriately verified, was presented.  The amount outstanding was stated to be $9,322.12, which took account of a $5,000 payment made by Ms Kimber on 21 September 2018.  Filed with the creditor’s petition were affidavits of search and of service of the bankruptcy notice, together with a trustee’s consent to act.  These documents were served on Ms Kimber by email on
16 October 2018;

g)        Ms Kimber filed a notice of appearance on 11 December 2018; and

h)        affidavits of final debt and of final search were filed on 26 and 27 February 2019 respectively. 

3.      The applicants also adduced evidence that they have been involved in several pieces of litigation with Ms Kimber in which they had been awarded their costs together with evidence of a costs order in a related defamation proceeding in the Supreme Court of NSW involving employees of the applicants’ strata managing agent.

4.      The applicants calculated the solicitor-client costs of those matters to exceed $235,000 and estimated the party-party figure to be slightly more than $140,000. 

MS KIMBERS’S CASE

5.      Ms Kimber’s case was that she was solvent, in that she could pay the outstanding amount under the bankruptcy notice and, in any event, satisfied its requirements by obtaining an order from the Local Court that she could pay its judgment by instalments.  Ms Kimber’s affidavit evidence relevant to her pleaded allegations was limited to her affidavit affirmed on 24 January 2019, which disclosed that she was paying instalments at the rate of $280 per month and had paid a lump sum of $5,000 on 21 September 2018.

6.      Ms Kimber also relied on her affidavit affirmed on 21 February 2019.  In that affidavit, she deposed that:

a)        she had been subject to a conspiracy and a campaign of debt creation and collection to advantage the applicants’ strata managers and solicitors;

b)        certain persons intended to deprive her of her right to own her own property by unjust means;

c)        certain office bearers of the owners corporation were unduly influenced by the strata managers;

d)        “the intoxicated recklessness of persons in control has manipulated the formation of a complicit committee to protect the status quo”;

e)        the “body corporate…is mostly made up of investor owners who have been either uninformed or misinformed about a longstanding state of affairs across five years involving [Ms Kimber] and the acts and omissions of the strata managers and office bearers across who unlawfully engaged a solicitor in 2009 and also 2013 and 2018 took/take unwarranted legal actions against me involving intentionally undisclosed solicitors’ costs”;

f)        legal action was taken without proper authorisation having been given;

g)        a campaign of “debt bondage” had been waged against her;

h)        “the true nature of legal actions has not been disclosed by the strata manager and solicitor who are misrepresenting to [the] body corporate and judicial decision-makers that legal actions are for the recovery of unpaid levies”;

i)         Ms Kimber faced a hostile environment in the owners corporation which led to a campaign of character assassination being waged against her; and

j)         “manipulated bookkeeping entries created a false arrears status causing serious disadvantage and creating bias.  My standard levies were not overdue and were formally assigned to the owners funds and wrongfully paid against invoices for 18 months.  Grace Lawyers’ unassessed costs were illegally billed to my account during Local Court proceedings and before costs were ordered.  Almost $3000 more than the costs order was applied to my account, with interest mounting and mounting.”

7.      The affidavit also canvassed earlier litigation and annexed copies of documents relating to earlier proceedings, correspondence between
Ms Kimber and the strata managers and between Ms Kimber and the State Attorney General’s Department, strata committee meeting notices and minutes of meetings and ledger pages relating to Ms Kimber’s strata unit.  According to one of the annexed emails, as at 16 November
Ms Kimber was not in arrears in the payment of her strata levies and her indebtedness to the strata body reflected only the amount outstanding under the Local Court judgment and the various costs which have been made against her.

CONSIDERATION

8.      The contents of Ms Kimber’s affidavit of 21 February 2019 tended to reflect a significant part of her address to the Court and her grievances concerning how her disagreements with the owners corporation were dealt with by its agents and her contention that their actions were motivated by desire to force her from her property.  Although Ms Kimber said from the bar table, and I am willing to accept, that she can pay the amount outstanding related to the Local Court judgment, she did not give any substantive indication of an ability to pay the costs which she will undoubtedly be required to pay once they have been taxed or assessed in default of agreement.

9.      Ms Kimber also contended that, as far as the bankruptcy notice part of the matter was concerned, she had dealt with that adequately by obtaining an order for payment by instalments. Issues raised by
Ms Kimber’s opposition to the creditor’s petition engage s.52(2) of the Bankruptcy Act 1966 (“Act”) which provides:

52  Proceedings and order on creditor’s petition

…

(2)       If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a)       that he or she is able to pay his or her debts; or

(b)       that for other sufficient cause a sequestration order ought not to be made;

it may dismiss the petition.

10.    While I accept that Ms Kimber can satisfy, from liquid or reasonably promptly realisable assets, the remainder of the Local Court debt which is the foundation of this proceeding, the same cannot be said in relation to the costs which she has been ordered to pay, albeit they are not yet liquidated sums.  It is to be noted that Ms Kimber did not require for cross-examination the solicitor employed by the solicitors for the applicants who deposed in an affidavit the costs orders and no attempt was made other than what was essentially abuse of the applicants’ solicitors and those instructing them to demonstrate the claimed costs were excessive or that Ms Kimber would not in the reasonably foreseeable future be indebted to the beneficiaries of those costs orders, principally the applicants, for a sum in the order of the assessment of party and party costs appearing in the solicitor’s affidavit to which I have referred.  I am also aware of the existence of a supporting creditor, Ms Poole, although her affidavit regarding her claim on Ms Kimber was not read.

11.    I am satisfied on the evidence available to the Court that Ms Kimber is not able to pay her debts payable now or in the reasonably immediate future from funds presently available or available reasonably promptly. 

12.    As for the Local Court instalment order, that has no relevance to
Ms Kimber’s obligations under the bankruptcy notice and does not amount to sufficient cause for a sequestration order not to be made. I should also note that I am satisfied that Ms Kimber committed an act of bankruptcy and that the matters of which s.52(1) of the Act requires proof have been proved.

13.    That being said, however, I was greatly troubled by Ms Kimber’s inability to come to grips with what is probably the largest aspect of this case and that is the unpaid costs orders. It was apparent to me that
Ms Kimber, at the hearing yesterday, focused solely on her ability to pay the debt associated with the Local Court order and did not seem aware of her need to address the question of the outstanding costs.  I am much troubled by the possibility that were a sequestration order to be made today, a significant injustice would be done to Ms Kimber, although it does seem that in many ways she is the author of her own misfortune. 

14.    In the circumstances, I am going to adjourn this matter for two weeks to give Ms Kimber an opportunity to adduce any evidence which she might be able to of an ability to pay the costs orders which I am satisfied she will have to pay in the reasonably foreseeable future.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Judge Cameron

Associate: 

Date: 22 August 2019