Toyota Finance Australia Limited v Callipari - [2010] FMCA 941

FEDERAL MAGISTRATES COURT OF AUSTRALIA

TOYOTA FINANCE AUSTRALIA LIMITED v CALLIPARI

[2010] FMCA 941

BANKRUPTCY – Sequestration order – debt based on two judgments of the Magistrates’ Court of Victoria – an application to set aside judgments withdrawn – no proper basis to go behind the judgments – evidence shows that debtor is clearly insolvent – sequestration order made.

Applicant:

TOYOTA FINANCE AUSTRALIA LIMITED (ACN 48 002 435 181)

Respondent:

DOMENIC CALLIPARI

File Number:

MLG 820 of 2009

Judgment of:

Riley FM

Hearing date:

5 November 2010

Date of Last Submission:

5 November 2010

Delivered at:

Melbourne

Delivered on:

5 November 2010

REPRESENTATION

Counsel for the Applicant:

Mr Manly

Solicitors for the Applicant:

Kelly Hazel Quill Lawyers

Counsel for the Respondent:

Mr Mitchell

Solicitors for the Respondent:

Eggleston Mitchell Lawyers

Counsel for the Supporting Creditors:

Mr Tsirogiannis

Solicitors for the Supporting Creditors:

Mills Oakley Lawyers

ORDERS

A sequestration order be made against the estate of Domenic Callipari.

The costs of the proceeding, including reserved costs, of the applicant creditor and the supporting creditors be taxed, in default of agreement, in accordance with the Federal Court Rules and be paid from the bankrupt estate of Domenic Callipari in accordance with the Bankruptcy Act 1966.
Pursuant to s.52(3) of the Bankruptcy Act 1966, all proceedings under the sequestration order be stayed for 21 days.

AND THE COURT NOTES THAT:

The date of the act of bankruptcy is 12 May 2009.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 820 of 2009

TOYOTA FINANCE AUSTRALIA LIMITED

(ACN 48 002 435 181)

Applicant

And

DOMENIC CALLIPARI

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

This is a creditor’s petition. The original creditor was paid out and Toyota Finance Australia Limited has been substituted as the petitioning creditor. There are also two supporting creditors, Web Wealth Pty Ltd and Adrian Stirn. The matter has been adjourned on a number of occasions to give the debtor an opportunity to pay out the debts firstly of the original petitioning creditor, and more recently of Toyota Finance and Adrian Stirn.
The creditor's petition was initially filed on 2 July 2009. It has now been outstanding for about 17 months.
The debt of Web Wealth has been the subject of proceedings in the District Court of South Australia. The debtor was unsuccessful and judgment was given against him on 6 October 2010 for more than $1.1 million. The debtor has appealed against that decision. The appeal is outstanding.
The debt of the substituted creditor, Toyota Finance, is based on two judgments of the Magistrates’ Court of Victoria given on 16 August 2007. The first is for the sum of $38,987.60, and interest of $1679.35, and costs of $1681.50. The second is for a sum of $39,207.45, together with an amount of damages to be assessed, interest of $1685.12, and costs of $1681.50.
The solicitor for the respondent debtor has, on previous occasions, told the court that there was no challenge to Toyota Finance’s debt. The adjournments that have been granted in recent times were based on his assurances that there was $397,000 owing by the Australian Taxation Office (“ATO”) to the debtor. That sum would be sufficient to pay out the debts of Toyota Finance and Mr Stirn, which were $90,000 and $62,000 respectively. There was an amount of $35,000 paid from an ATO refund in reduction of the debt of Toyota Finance about 10 days ago. It seems that there is a dispute as to whether any further refund from the ATO should be payable to the debtor himself, or to a company of which he was a director, but which is now in liquidation, namely, Helimount Pty Ltd (In Liquidation). It has not been submitted to the court today that there is any reasonable prospect of the funds held by the ATO being released in the near term to the debtor.
What is said today to resist the sequestration order is that the costs set out in the two Magistrates’ Court judgments that have been already described are, on their face, not proper amounts for costs in the Magistrates’ Court. It is said that:
a.they were not the proper amounts on scale;
b.the judgments were default judgments, and obviously there had just been a rubber stamping of the documents that were put before the clerk of the courts; and
c.without proper consideration, the wrong amount of costs has been awarded.
The debtor previously applied for the two Magistrates’ Court judgments to be set aside. However, it is common ground that that application to set aside the judgments was withdrawn. It is said from the bar table by the debtor’s solicitor that they were withdrawn because there was an agreement that the substituted creditor would adjourn the petition. It seems that that agreement was in fact complied with, but that the period of the adjournment has now elapsed, and there has been no payment. The solicitor said from the bar table that he was not aware of the discrepancy in the amount of the costs until last night, and that is why further steps have not been taken to set aside at least the costs aspect of the judgments.
It seems to me that, on any view, there is no proper basis for this court to go behind the judgments in this case. The judgments have been outstanding for more than two years. The matter has been in this court since July last year. The debtor has been represented throughout that time. However, he has not taken the appropriate steps to deal with the costs issue in any effective way. I do not consider that it would be at all proper, in the interests of the administration of justice, for any further adjournment to be given.
There is before the court a statement of the debtor's financial position. It was filed on 3 November 2010. In that statement, the debtor swears that his only income is a government pension of $783.70. He says that he is owed $1 million by his former company, Helimount Pty Ltd (In Liquidation). That debt is disputed, and is not likely to be paid in the reasonably foreseeable future. The debtor also says that he is owed $397,000 from the ATO. That amount has already been discussed. It is apparently not likely to be made available to the debtor in the reasonably foreseeable future. The debtor also says that he has non-liquid assets of an interest of $12,000 in land at 90 Cummins Street, Hopetown.
It seems that the debtor himself concedes that he is not able to access his non-liquid assets in the reasonably foreseeable future. In any event, they are insufficient to pay out the debt of Toyota Finance and Mr Stirn, much less the debt of Web Wealth which is owed pursuant to the District Court of South Australian judgment, although, as I have said, that judgment is under appeal.
The debtor has also said that he owes $325,000 to Eggleston Mitchell Lawyers. That firm includes amongst its members Mr Mitchell, who is representing the debtor today. It seems that they are not demanding payment of their debt. The statement discloses that the debtor owes $90,000 to Toyota Finance. That debt was reduced by $35,000 about 10 days ago. Additionally, there is $62,000 that the debtor discloses that he owes to Mr Stirn. That leaves about $100,000 that is due and payable, leaving aside the alleged Web Wealth debt of over $1 million.
It seems to me that the evidence that is before me shows that the debtor is clearly insolvent. There is no reasonable prospect of him being able to pay out his debts to Toyota Finance and Mr Stirn in the reasonably foreseeable future. There is no reasonable basis upon which the court would go behind the judgments owed by the debtor to Toyota Finance.
In view of all the circumstances of this case, relying on the various affidavits that have been filed that satisfy the technical matters and based on all the material before me, it seems clear that the only reasonable course in this case is to proceed with the sequestration order.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Riley FM

Date: 7 December 2010