Thompson v Lane (Trustee) (No 3) - [2022] FCA 128

FEDERAL COURT OF AUSTRALIA
Thompson v Lane (Trustee) (No 3) [2022] FCA 128

File number: QUD 113 of 2021

Judgment of: LOGAN J

Date of judgment: 18 February 2022

Catchwords: BANKRUPTCY – application for annulment of bankruptcy – relevant discretionary factors under s 153B of Bankruptcy Act 1966 (Cth) – where application for annulment concerned bankruptcy grounded on acceptance of a debtor’s petition – where the Official Receiver declined to exercise discretion to reject debtor’s petition when presented – where debtor contends judgment debts invalid – where no evidence that judgments were result of fraud, collusion or miscarriage of justice – where no other reason to go behind judgment debts – where debtor likely insolvent at date of presentation of debtor’s petition – where debtor insolvent at time of hearing – where no proposal by debtor to discharge costs of administration of the debtor’s estate – where annulment not in the public interest or interest of creditors – application dismissed

Legislation:
Bankruptcy Act 1966 (Cth) ss 34A, 55, 77, 153B, 154

Body Corporate and Community Management Act 1997 (Qld) ss 153, 312

Corporations Act 2001 (Cth) s 95A

Property Law Act 1974 (Qld) s 85

Public Governance, Performance and Accountability Act 2013 (Cth)

Public Service Act 1999 (Cth)

Body Corporate and Community Management (Standard Module) Regulation 2020 (Qld) reg 166

Cases cited:
Briginshaw v Briginshaw (1938) 60 CLR 336

Colhoun v Green [1919] VLR 196

Grant v United Kingdom Switchback Railways Company (1888) 40 Ch D 135

HSBC Bank Australia Ltd v Wang [2021] QSC 58

Lewis v Doran (2004) 184 FLR 454

Lewis v Doran (2005) 219 ALR 555

McKean v Maloney [1988] 1 Qd R 628

Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676

Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132

Re Oates; Ex parte Deputy Commissioner of Taxation (1987) 17 FCR 402

Re Papps; Ex parte Tapp (1987) 78 FCR 524

Sandell v Porter (1966) 115 CLR 666

Thompson v Body Corporate for Arila Lodge & Ors [2019] QCA 267

Thompson v Body Corporate for Arila Lodge & Ors [2019] QCA 296

Whitton as Trustee of the Estate of Rose v Regis Towers Real Estate Pty Ltd (in administration) (2007) 161 FCR 20

Wren v Mahoney (1972) 126 CLR 212

Zaghloul v Jewellery & Gift Buying Service Pty Ltd t/as Nationwide Jewellers [2020] FCA 1045

Division: General Division

Registry: Queensland

National Practice Area: Commercial and Corporations

Sub-area: General and Personal Insolvency

Number of paragraphs: 87

Date of hearing: 30 August 2021

Counsel for the Applicant: The applicant appeared in person

Counsel for the First Respondent: Ms S Philippou

Solicitor for the First Respondent: Shand Taylor Lawyers

Counsel for the Second Respondent: Mr B Strangman

Solicitor for the Second Respondent: Grace Lawyers

Solicitor for the Interested Person: Mahoneys Solicitors

ORDERS

QUD 113 of 2021

BETWEEN:
EMMA NARELLE CATHRYN THOMPSON

Applicant

AND:
MORGAN LANE AS TRUSTEE OF THE BANKRUPT ESTATE OF EMMA NARELLE CATHRYN THOMPSON

First Respondent

BODY CORPORATE FOR…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] FCA 128
Decision Date: 18 February 2022

CaseChat Overview and Summary

The matter before the court was an application by the applicant, Thompson, seeking the annulment of their bankruptcy. The bankruptcy arose from the acceptance of a debtor’s petition, and the Official Receiver had declined to exercise their discretion to reject the petition when it was presented. The primary contention of the applicant was that the judgment debts upon which the bankruptcy was grounded were invalid, though they provided no evidence to support this claim nor any indication that the judgments resulted from fraud, collusion, or a miscarriage of justice. The court was required to determine whether there were grounds to annul the bankruptcy under the relevant discretionary factors outlined in section 153B of the Bankruptcy Act 1966 (Cth).

The court examined the various discretionary factors, including whether there was a reason to go behind the judgment debts and whether the applicant was likely insolvent at the time the debtor's petition was presented. It found that there was no evidence to suggest that the judgments were invalid and that there was no other reason to disregard them. Additionally, the court noted that the applicant was likely insolvent at the time of the presentation of the debtor's petition and remained insolvent at the time of the hearing. The applicant also failed to propose a scheme to discharge the costs of administering the estate. The court concluded that annulment was not in the public interest or in the interest of the creditors.

The court dismissed the application for annulment, emphasising that the discretionary factors did not favour the annulment of the bankruptcy. It found that the applicant had not demonstrated sufficient grounds for the exercise of the court's discretion under section 153B of the Bankruptcy Act. Consequently, the court ordered that the applicant’s annulment application be dismissed.

Orders

Orders of the court

1. The applicant’s annulment application be dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

File number:	QUD 113 of 2021
Judgment of:	LOGAN J
Date of judgment:	18 February 2022
Catchwords:	BANKRUPTCY – application for annulment of bankruptcy – relevant discretionary factors under s 153B of Bankruptcy Act 1966 (Cth) – where application for annulment concerned bankruptcy grounded on acceptance of a debtor’s petition – where the Official Receiver declined to exercise discretion to reject debtor’s petition when presented – where debtor contends judgment debts invalid – where no evidence that judgments were result of fraud, collusion or miscarriage of justice – where no other reason to go behind judgment debts – where debtor likely insolvent at date of presentation of debtor’s petition – where debtor insolvent at time of hearing – where no proposal by debtor to discharge costs of administration of the debtor’s estate – where annulment not in the public interest or interest of creditors – application dismissed
Legislation:	Bankruptcy Act 1966 (Cth) ss 34A, 55, 77, 153B, 154 Body Corporate and Community Management Act 1997 (Qld) ss 153, 312 Corporations Act 2001 (Cth) s 95A Property Law Act 1974 (Qld) s 85 Public Governance, Performance and Accountability Act 2013 (Cth) Public Service Act 1999 (Cth) Body Corporate and Community Management (Standard Module) Regulation 2020 (Qld) reg 166
Cases cited:	Briginshaw v Briginshaw (1938) 60 CLR 336 Colhoun v Green [1919] VLR 196 Grant v United Kingdom Switchback Railways Company (1888) 40 Ch D 135 HSBC Bank Australia Ltd v Wang [2021] QSC 58 Lewis v Doran (2004) 184 FLR 454 Lewis v Doran (2005) 219 ALR 555 McKean v Maloney [1988] 1 Qd R 628 Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132 Re Oates; Ex parte Deputy Commissioner of Taxation (1987) 17 FCR 402 Re Papps; Ex parte Tapp (1987) 78 FCR 524 Sandell v Porter (1966) 115 CLR 666 Thompson v Body Corporate for Arila Lodge & Ors [2019] QCA 267 Thompson v Body Corporate for Arila Lodge & Ors [2019] QCA 296 Whitton as Trustee of the Estate of Rose v Regis Towers Real Estate Pty Ltd (in administration) (2007) 161 FCR 20 Wren v Mahoney (1972) 126 CLR 212 Zaghloul v Jewellery & Gift Buying Service Pty Ltd t/as Nationwide Jewellers [2020] FCA 1045
Division:	General Division
Registry:	Queensland
National Practice Area:	Commercial and Corporations
Sub-area:	General and Personal Insolvency
Number of paragraphs:	87
Date of hearing:	30 August 2021
Counsel for the Applicant:	The applicant appeared in person
Counsel for the First Respondent:	Ms S Philippou
Solicitor for the First Respondent:	Shand Taylor Lawyers
Counsel for the Second Respondent:	Mr B Strangman
Solicitor for the Second Respondent:	Grace Lawyers
Solicitor for the Interested Person:	Mahoneys Solicitors