Todaytech Distribution Pty Ltd v Yu - [2005] FMCA 1162

FEDERAL MAGISTRATES COURT OF AUSTRALIA

TODAYTECH DISTRIBUTION PTY LTD v YU

[2005] FMCA 1162

BANKRUPTCY – Petition opposition by the debtor – sequestration order made.

Bankruptcy Act 1966 (Cth), ss.51, 52
Sentencing Act1991 (Vic)
Crimes Act1958 (Vic)

Applicant:

TODAYTECH DISTRIBUTION PTY LTD

Respondent:

QUN XIONG (KENNY) YU

File Number:

MLG 357 of 2005

Judgment of:

Hartnett FM

Hearing date:

1 August 2005

Delivered at:

Melbourne

Delivered on:

17 August 2005

REPRESENTATION

Counsel for the Applicant:

Mr A. Ritchie

Solicitors for the Applicant:

R B Legal Pty Ltd

Counsel for the Respondent:

Mr T. Best

Solicitors for the Respondent:

David K K Cheung

ORDERS

A sequestration order be made against the estate of Qun Xiong (Kenny) Yu.
The petitioning creditor’s costs, including reserved costs, if any, be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that Paul Anthony Pattison will act as trustee of the bankrupt estate of the respondent.
The Court notes that the date of the act of bankruptcy is 12 January 2005.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 357 of 2005

TODAYTECH DISTRIBUTION PTY LTD

Applicant

And

QUN XIONG (KENNY) YU

Respondent

REASONS FOR JUDGMENT

Proceedings commenced in this Court by the filing of a creditor's petition by the applicant on 8 April 2005. That creditor's petition is founded upon an act of bankruptcy said to be committed by the respondent debtor within six months before the presentation of the petition in that the respondent debtor allegedly failed on or before 12 January 2005 (as amended by order of Registrar Agnew made 19 May 2005 substituting the 12 January 2005 for 13 January 2005) to comply with the requirements of bankruptcy notice number VN1964/2004 and dated 3 December 2004 duly served upon the respondent on 22 December 2004.
The bankruptcy notice claimed payment of a debt of $62,958.27 payable by the respondent debtor pursuant to a judgment obtained by the applicant creditor against the respondent debtor in the Supreme Court of Victoria at Melbourne on 5 November 2004 in the amount of $226,492 of which $163,533.73 was paid by the respondent debtor, leaving a debt owing pursuant to the judgment of $62,958.27.
It was also claimed in paragraph 4 of the petition dated 23 March 2005 that the respondent debtor has failed in the alternative to satisfy the court that he had a counterclaim set-off or cross-demand equal to or exceeding the amount of $62,958.27 still owing pursuant to the judgment that he could not have set up in the proceeding.
Service of the petition occurred on 20 April 2005. The matter was first before the Court on 19 May 2005 wherein it was adjourned to 6 June 2005. The respondent was ordered to file and serve a notice of opposition and any affidavits in support by 2 June 2005. The respondent has to this date failed to file and serve any notice of opposition.
The matter was adjourned on 6 June to 20 June 2005 and thereafter adjourned to 18 July, 25 July 2005 and this date. The Court is satisfied that all the affidavits necessary for the making of a sequestration order have been filed. The affidavit verifying paragraphs 1, 2 and 3 of the petition and that verifying paragraph 4 together with the affidavit of debt and affidavit of search filed 1 August 2005 – the affidavit of debt being sworn by Mark Knox on 28 July 2005, and the affidavit of search being sworn by Josephine Giliberto on 29 July 2005 satisfy me of the matters of which s.52(1) of the Bankruptcy Act requires proof.
There is also filed by the petitioning creditor a Consent to Act and Trustee Declaration filed 8 April 2005. Paul Anthony Pattison of Pattison Business Advisers and Insolvency Specialists, being a registered trustee within the meaning of section 5 of the Bankruptcy Act 1966 (Commonwealth) ("the Act") consents to act as trustee of the bankrupt estate of the respondent. That consent is made pursuant to section 156A of the Act.
The judgment given in the Supreme Court by Master Wheeler on 5 November 2004 was obtained as a result of the applicant’s (plaintiff) summons filed 28 October 2004 and the respondent’s (defendant) failure to comply with the order of Master Kings of 7 October 2004 resulting in a judgment of that Court that:
1. The defendant pay the plaintiff's damages assessed at $226,492 (including interest in the nature of damages for the period 14 March 2003 to this day of $29,338.64); and
2. The defendant pay the plaintiff's costs of proceeding (including reserved costs and of this summons).
The general form of judgment given named the parties as being Todaytech Distribution Pty Ltd plaintiff, and Qun Xiong (Kenny) Yu defendant, and between Qun Xiong (Kenny) Yu plaintiff by counterclaim, and Todaytech Distribution Pty Ltd defendant by counterclaim. The applicant relies upon an affidavit of Jonathan Bloom affirmed 17 June 2005. Mr Bloom is a director of RB Legal Pty Ltd the Solicitors for the applicant, and had the care and conduct of the proceedings in the Supreme Court on behalf of the applicant.
The proceedings in the Supreme Court arose out of the embezzlement of monies by the respondent from the applicant during his employment by the applicant as Victorian state manager of the applicant’s business. The respondent was convicted in the County Court of Victoria at Melbourne on 2 December 2004 of theft. Marked with the letters JB5 and annexed to the affidavit of Mr Bloom is a copy of the respondent's notice of conviction and particulars of offences as provided by the County Court registry.
The particulars of offence state that the respondent at Melbourne in the State of Victoria and between 15 August 2002 and 29 October 2002 stole $241,546.60, being property belonging to Todaytech Group Ltd. The respondent was convicted and sentenced to imprisonment for a term of 12 months which, pursuant to section 27 of the Sentencing Act 1991 (Vic), was suspended for a period of two years. The offence of which he was convicted was theft, contrary to section 74 of the Crimes Act1958 (Vic). The respondent pleaded guilty to one count of theft from the applicant.
Following that conviction the respondent was personally served with the bankruptcy notice on 22 December 2002, that being the latest at which the respondent was clearly aware of the order of Master Wheeler made 5 November 2004.
In respect of the counterclaim in the Supreme Court, it was the applicant who sought an adjournment of the respondent's (defendant) counterclaim to a date to be fixed in an affidavit sworn by Mr Bloom on 22 November 2004. The applicant also relies upon an affidavit of Mr Charles Rechnitzer sworn 17 June 2005 in these proceedings the contents of which are unchallenged.
The defence and counterclaim filed in the Supreme Court by the respondent and annexed and marked KY1 to the affidavit of the respondent sworn 20 June 2005 in paragraph 51 therein says:
The defendant refers to and repeats paragraphs 6 to 46 hereof as if they were set out here under seriatim.
The respondent then counterclaimed the sum of $593,432.22 together with damages, interest and costs. The respondent has failed to prosecute that counterclaim. Indeed, the defence to the claim was struck out in the Supreme Court and it is that defence that the respondent relies upon by way of his counterclaim. The respondent provides to the court in these proceedings no evidence deposing to the factual matters on which his counterclaim is based. He has had more than adequate opportunity since the service upon him of the bankruptcy notice.
Given the theft conviction there appears no merit in the respondent making any further application to the Supreme Court to proceed with his alleged counterclaim.
The respondent deposes in affidavit sworn by him on 29 July 2005 to his belief that his counterclaim against the plaintiff is still on foot and that it needs to be re-pleaded, given that his defence was struck out pursuant to the order made by Master Wheeler made on 5 November 2004. No issue of a counter-claim being one that could not have been set up in the action in which the judgment or order was obtained was raised in response to the service upon the respondent of the bankruptcy notice. Indeed a counterclaim was set up on the action or proceeding in which the judgment was obtained and such counterclaim was not prosecuted diligently or at all by the respondent. The respondent has further made application to a Master for order for payment of judgment debt by instalments.
In the application made for payment of judgment debt by instalments, the ground on which the application is made is that the judgment debtor is currently impecunious but has prospect of employment which will allow him to make regular repayments each month. The judgment debtor's statement of financial situation accompanying that summons describes him as being in receipt of a gross wage of $700 from his employment with Sakura House Japanese Restaurant.
The Court was told at the hearing that the respondent is currently overseas pursuing business opportunities. The Court is satisfied that the matter should proceed and is satisfied that the debtor committed the act of bankruptcy alleged in the petition. I make a sequestration order against the estate of Qun Xiong (Kenny) Yu.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Hartnett FM

Associate: Tracey Jones

Date: 17 August 2005