Tri-State Petroleum Pty Ltd v Mapstone
[2006] FMCA 1529
•17 October 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TRI-STATE PETROLEUM PTY LTD v MAPSTONE | [2006] FMCA 1529 |
| BANKRUPTCY – Application under s.40(1)(g) of the Bankruptcy Act 1966 (Cth) for non-compliance with a Bankruptcy Notice – notice stating grounds of opposition to petition – no grounds found. |
| Bankruptcy Act 1966 (Cth), ss.40(1)(g), 149 Bankruptcy Regulations 1996 (Cth), reg.1.03, 13.07, 13.10 Corporations Act 2001 (Cth), s.206B |
| Applicant: | TRI-STATE PETROLEUM PTY LIMITED |
| Respondent: | CHRISTOPHER JOHM MAPSTONE |
| File Number: | SYG2285 of 2006 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 10 October 2006 |
| Delivered at: | Sydney |
| Delivered on: | 17 October 2006 |
REPRESENTATION
| Advocate for the Applicant: | Mr M J Hurley of Kells The Lawyers |
| Advocate for the Respondent: | Respondent in person |
ORDERS
The application under s.40(1)(g) of the Bankruptcy Act 1966 (Cth) for non-compliance with a Bankruptcy Notice should be granted.
Costs be reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG2285 of 2006
| TRI-STATE PETROLEUM PTY LIMITED |
Applicant
And
| CHRISTOPHER JOHN MAPSTONE |
Respondent
REASONS FOR JUDGMENT
The Proceedings
This is an application under s.40(1)(g) of the Bankruptcy Act 1966 (Cth) (“the Act”) for non-compliance with a Bankruptcy Notice.
A Creditor’s Petition was filed on 17 August 2006, returnable before a Registrar of this Court on 28 September 2006. On that date, Registrar Tesoriero adjourned the matter to 10 October 2006 and granted the respondent leave to file and serve any additional affidavits by
6 October 2006. On 10 October 2006, the matter was referred to me by Registrar Tesoriero.
The Creditor’s Petition sets out the following background information:
The applicant creditor, Tri-State Petroleum Pty Limited of 191 Rocky Point Road Ramsgate NSW 2217, applies to the Court for a sequestration order under section 43 of the Bankruptcy Act /966 against the estate of CHRISTOPHER JOHN MAPSTONE of 171 Woollooware Road, South Burraneer, NSW, 2230,
1. The respondent debtor owes the applicant creditor the amount of $1,773,333.00 being for the amount due under a final judgment obtained in the Supreme Court of New South Wales at Sydney on 18 August 2005 together with interest pursuant to the Civil Procedure Act 2005 from 5 May 2004 until 18 August 2005 which amounts to $205,949.55 making a total of $1,979,282.55 being the amount the respondent debtor was unable to account for in his role as sole director, secretary, sole commissioned agent and sole signatory of the bank accounts of the applicant creditor.
2. The applicant creditor does not hold security over the property of the respondent debtor.
3. At the time when the act of bankruptcy was committed, the respondent debtor:
(a) was personally present in Australia;
(b) was ordinarily resident in Australia;
(c) had a dwelling house or place of business in Australia;
(d) was carrying on business in Australia either personally or by an agent or manager;
(e) was a member of a firm or partnership carrying on business in Australia by means of partners or agent or manager.
4. The following act of bankruptcy was committed by the respondent debtor within 6 months before presentation of this petition:
The respondent debtor failed to comply on or before 10 July 2006 with the requirements of a bankruptcy notice served on him on 16 June 2006 or to satis& the Court that be bad a counter claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross demand that he could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.
An affidavit of service made under oath by Kenneth James Ramshaw was filed in these proceedings on 17 August 2006. It contains a copy of the Bankruptcy Notice, NN1490 of 2006, which was issued by the Official Receiver for the Bankruptcy District of New South Wales on 10 April 2006. Annexed to the Bankruptcy Notice is a sealed copy of the orders of McLaughlin AJ on 18 August 2005 in respect of Supreme Court of New South Wales proceedings 2721 of 2004. The third clause of the Bankruptcy Notice requires Christopher John Mapstone (“the debtor”) within 21 days after service of the Notice:
a)To pay to the creditor the amount of the debt; or
b)To make an arrangement to the creditor’s satisfaction for settlement of the debt.
Filed in Court on 10 October 2006 is an affidavit of search sworn on
9 October 2006 by Christopher Hewitt indicating that on that day, he had searched the National Personal Insolvency Index and noted three references in the Index to the debtor other than this petition. However, there was no debt agreement in relation to the debt on which the applicant relied, in the Index, on the day the petition was presented. Further, an Affidavit of Debt filed in Court on 10 October 2006 and sworn on the same day by George Peter William Jack, states on oath:
1. I am a director of the applicant and, as such, have access to the books and records of the applicant and am authorised to make this affidavit on the applicant’s behalf.
2. The amount of $1,979,282.55 owing by the respondent debtor to the applicant creditor under a judgment obtained in the Supreme Court of New South Wales on 18 August 2005 (and entered on 23 August 2005) is still wholly due and unsatisfied.
Mr Hurley, solicitor for the applicant, submits that the Bankruptcy Notice (NN1490 of 2006) that was issued on 10 April 2006 was served on the debtor on 16 June 2006. There was no application made within the 21 day period to set it aside. The date of bankruptcy, inclusive of the date service was effected 16 June 2006, was Friday, 7 July 2006. The date stipulated in the Creditor’s Petition as the last day for the debtor to comply with the Notice was Monday, 10 July 2006.
Mr Hewitt’s affidavit sworn on 27 September 2006 and filed on
9 October 2006 stated that he enquired at the Supreme Court Registry on 27 September as to whether an application had been made to set aside the judgment of 18 August 2005. None had been. Mr Hurley informed the Court that was still the case at the time of this hearing. Mr Hurley submits that all the statutory matters have been met and there are no valid grounds of defence to those statutory matters.
There has been an act of bankruptcy and a failure to comply with the bankruptcy notice. Consequently, the applicant seeks that a sequestration order be made.
Mr Mapstone, appearing as a self-represented litigant, indicated to the Court that on 27 September 2006 he filed a Notice Stating Grounds of Opposition to Application, Interim Application or Petition and that he intends to oppose the petition on the following grounds:
1.The Applicant filed an Affidavit on 17 August2006, marked as “ARS 01” to verify the respondent made no application in relation to Bankruptcy Notice No 1490 of 2006. Attached is a copy of an Affidavit filed in the Supreme Court of NSW on 4 September 2006, marked as “ARS 02”, which contains a facsimile record and the returned copy of the Affidavit, in relation to NN 1490/06 and date stamped by the Federal Court Registry as 10 July, 2006.
2.The original order 2721/04, to which the Applicant refers has been dismissed and which the Respondent will oppose, states an amount of $1,773,333.00 plus interest in an amount of $205,949.55. The current petition SYC 2285/2006 applies for a claim of $1,979,282.55, which is the total of the 2 amounts from the original order. There has been no new or revised order received by the Respondent to claim the addition of the original claim and the calculate interest The Applicant wrote to the Court on March 24, 2006 and advised the court of “problems regarding the manner in which the interest calculation is referred to“. The matter was dismissed, and was re-listed as the current application.
3. In a related matter, proposed by the Applicant and brought by ASIC as Supreme Court Action No 3863 of 2006, the Magistrate dismissed the State of Claim, heard 1 September, 2006 heard also 13 September and dismissed 14 September, 2006.
4. In the matter of Court Action 3863 of 2006, the Magistrate looked to the Affidavit of George Peter William Jack, dated 30 August, 2006, which was filed by Conrad Grey for Australian Securities and Investments Commission. The body of the Affidavit is similar and contains references to earlier submissions and further contains references to earlier submissions and further new points, some without specific supporting evidence.
5. In the attached Affidavit of George Peter William Jack, attached and marked as “ARS 04”, the Magistrate commented on the circumstantial evidence presented and in reading the affidavit the Counsel for the Plaintiff/Applicant agreed on the evidence as presented. The Magistrate rejected claims in the Affidavit of George Peter William Jack, being clause(s) No: 40.44,46. The Magistrate further made comment on clause 42 and the statement “based upon my knowledge of Tri-State’s affairs” - to which the magistrate conclude that Mr Jack had been appointed to take control of the company in 2002 - after which the company had ceased trading as an “importer and wholesaler of refined petroleum products” - stated in the ASIC Statement of Claim, attached and marked as “ABS 05”, therefore there was a question as to the knowledge Mr Jack may hold on the company affairs.
6. I attach my Affidavit of 31 August, 2006, attached and marked as “ARS 06” whereby it is sworn there has not been any comment by the combined Plaintiffs, the Australian Securities and Investments Commission/Tri-State Petroleum Pty Limited as a reply to the Affidavit.
7. In the matter of 3863 of 2006, Supreme Court of New South Wales, Equity Division, Sydney, the Magistrate made mention there was no Tri-State Petroleum Pty Limited constitution in evidence.
8.The claim by Tri-State Petroleum Ply Limited, using the ASIC as the vehicle, attempted to prove the Defendant/Respondent was a Bankrupt, whilst managing corporations, ASIC further sought to have the Defendant/Respondent disqualified from managing corporations - which was incorrect and is supported by an Affidavit attached and marked as “ARS 07”. In the action by ASIC, corporations have been contacted and advised officially by ASIC that Christopher John Mapstone was an undischarged Bankrupt, which was proven to be incorrect.
Mr Mapstone also filed the following affidavits in support of his application:
a)Affirmed on 25 September 2006 and filed on 27 September 2006 (“first affidavit of Mr Mapstone”);
b)Affirmed on 10 October 2006 and filed in Court on the same date (“second affidavit of Mr Mapstone”).
Mr Mapstone brought to the Court’s attention to other proceedings in the Equity Division of the Supreme Court of New South Wales which he says are related to these proceedings. The Supreme Court proceedings are identified as 3863 of 2006 with Australian Securities and Investment Commission as plaintiff and Christopher John Mapstone as defendant. I will refer to these proceedings as the ASIC proceedings and to the statement of claim:
The Defendant (“Mapstone”):
(a) became a bankrupt on or about 2 August 1990;
(b) filed a statement of affairs on or about 16 January 2001;
(c) was automatically discharged from his bankruptcy on
17 January 2004, by reason of the operation of s.149(4) of the Act.
Particulars
The plaintiff will rely at the hearing of its application upon the extract from the National Personal Insolvency Index exhibited as “CJ 7” to the affidavit of Ms Caroline Jefferies sworn on 21 July 2006 and reg.1.03, 13.07 and 13.10 of the Bankruptcy Regulations 1996 (Cth).
(d) was, by reason of his status as an undisclosed bankrupt during the period of 2 August 1990 and 17 January 2004 automatically disqualified from managing corporations during that period pursuant to s.206B(3) of the Corporations Law and Corporations Act 2001 (Cth).(first affidavit of Mr Mapstone)
I understand that in the ASIC proceedings is an application that
Mr Mapstone be disqualified from holding a position as a director of a company. Those proceedings were dismissed as they contained a significant error concerning Mr Mapstone’s discharge from a previous bankruptcy. However, those proceedings are unrelated to the proceedings before this Court and to the Supreme Court proceedings, 2721 of 2004, the judgment of which still stands and is the judgment upon which the Bankruptcy Notice NN1490 of 2006 is based.
On 14 September 2006, ASIC advised the parties, after receiving subpoenaed material from the National Personal Insolvency Index of the Insolvency and Trustee Service Australia, that due to an error on that database Mr Mapstone was discharged from bankruptcy on
17 January 1994 and not 2004 as pleaded. The proceedings were subsequently dismissed by White J. Mr Mapstone referred this Court to various pieces of evidence rejected by His Honour and I will return to those arguments.
Initially, the applicant commenced these bankruptcy proceedings in the Federal Court of Australia in proceedings NSD2300 of 2005. This was based on Supreme Court proceedings 2721 of 2004, and a judgment of McLaughlin AJ on 18 August 2005. Those proceedings were withdrawn by the applicant creditor because of major problems with the pleadings. The circumstances are explained by letter from
Mr Hurley to the Registrar of the Federal Court on 24 March 2006, which states:
On 14 March 2006 these proceedings were stood over to 11 April 2006 for the purpose of our client’s consideration of the issues relating to its bankruptcy notice. In particular, we confirm that on 14 March 2006 Registrar Hedge pointed out to us the problems regarding the manner in which the interest calculation is referred to in the bankruptcy notice.
Having had the opportunity to consider the matter further and in light of the current state of the case law, we concede that it will be difficult for our client to proceed based on its bankruptcy notice. Accordingly, rather than waiting until 11 April 2006, pleas treat this letter as our client’s application to have this matter re-listed before the court at the earliest possible date.
Once the matter is re-listed, we will be applying to have the proceedings dismissed with no order as to costs. We undertake to inform the respondent debtor, who is unrepresented, of the date of the next court hearing.
Consequently, the Federal Court proceedings were dismissed by Registrar Segal on 3 April 2006 with the following orders:
1.The petition against the respondent debtor is dismissed.
2.There is no order as to costs.
3.A copy of this order is to be provided to the Official Receiver in Sydney within two days.
Importantly, Mr Hurley referred me to an affidavit of Mr Mapstone filed in the Federal Court which states:
I have instituted proceedings to set aside the order annexed hereto and marked with “A” in respect of the Supreme Court of New South Wales proceedings 2721 of 2004. (Mr Mapstone’s first affidavit, annexure ARS02/5)
I now move to the status of the proceedings before this Court.
The current Federal Magistrates Court proceedings, SYG2285 of 2006, commenced by way of a Creditor’s Petition filed on 17 August 2006 as set out at [2] above. This Petition is based on Bankruptcy Notice NN1490 of 2006 and Supreme Court proceedings 2721 of 2004, also relied upon in the Federal Court proceedings referred to at [11] above. Mr Mapstone relies on his two affidavits filed in this Court.
Mr Mapstone indicated to the Court that he would attempt through his affidavits to establish an accurate picture of exactly how the company in question operated. Mr Mapstone submits that Mr Jack has not been able to provide any evidence stating what remuneration Mr Mapstone received when he acted as sole director, operator and creator of the company. He submits that no evidence has been presented to indicate how the company operated. He claims that at all times, the shareholders operated in a covert manner and sought to have
Mr Mapstone (as a director of the company) repatriate funds in United States dollars to an account in Hong Kong. Mr Mapstone states that he did pay a dividend and this is evidenced by a document annexed to his second affidavit and marked “GY02”.
Shortly after he paid the initial dividend, the company was drawn into proceedings in the Supreme Court of Victoria where the company was being pursued by a liquidator of a previous customer who sought payment of two million dollars as a preferred creditor. Mr Mapstone submits that the company did provide all documents to their lawyers for approximately three years. At the conclusion of those proceedings, Mr Mapstone was removed as director of the company. He also states that he has no information as to the outcome of those proceedings.
Mr Mapstone then addressed the Court in relation to the Federal Court bankruptcy proceedings referred to at [11] above. In those proceedings, Mr Jack filed an affidavit which sets out the assumptions and calculations used by him to establish a debt and the interest calculations on that debt. However, the interest was not entered as a separate figure and was included together with the debt amount as a lump sum. Mr Mapstone argues that there were errors in these calculations. However, the same erroneous calculations have been relied upon in the current application before this Court.
An earlier affidavit filed by Mr Mapstone on 8 July 2006 in the Federal Court proceedings states that he filed an application to set aside the Supreme Court orders in proceedings 2721 of 2004: Second affidavit of Mr Mapstone, annexure GY10-3. This affidavit is also referred to at [12] above. Mr Hurley submits that the affidavit of Christopher Hewitt (sworn on 27 September 2006 and filed on 9 October 2006) clearly establishes that there are no outstanding applications in the Supreme Court in respect of proceedings 2721 of 2004 and that there has been no activity in that matter since August 2005. Mr Hurley submits that Mr Mapstone has not put forward any evidence to suggest otherwise.
I accept the submission that there are no errors in the present application before this Court. It is quite clear from the judgment annexed to the Bankruptcy Notice, that the amounts relied upon are clearly shown on the face of the Supreme Court order of 18 August 2005, in the form of a compensatory amount and interest amount, in proceedings 2721 of 2004. The affidavit of debt, sworn by Mr George Peter William Jack on 10 October 2006 and filed in Court on that date, deposes that those amounts are still outstanding. I note the submissions made by Mr Mapstone, however I am not satisfied that any issue has been raised which would require me to exercise any discretion in favour of the respondent. Consequently, I believe an order for sequestration should proceed.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.
Associate:
Date: 16 October 2006
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