TT PTY LTD & LEDARN

[2018] FamCA 1140

FAMILY COURT OF AUSTRALIA

TT PTY LTD & LEDARN [2018] FamCA 1140

FAMILY LAW – ENFORCEMENT – where application made and the respondent then filed a debtors’ petition in bankruptcy – enforcement cannot follow.

Bankruptcy Act 1966 (Cth)

Family Law Act 1975 (Cth)

APPLICANT: TT Pty Ltd trading as TT Business

RESPONDENT: Ms Ledarn

FILE NUMBER: MLC 6423 of 2010

DATE DELIVERED: 13 March 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 13 March 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Felkel

SOLICITOR FOR THE APPLICANT: Lukaitis Lawyers

THE RESPONDENT: In person

Orders

1. The application in a case filed by the applicant is adjourned to 9.00am on 16 March 2018.

2. The costs of the applicant of this day are fixed in the sum of $1185 and reserved.

3. That the reasons this day be transcribed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym TT Pty Ltd & Ledarn has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 6423 of 2010

TT PTY LTD TRADING AS TT BUSINESS
Applicant

And

MS LEDARN
Respondent

REASONS FOR JUDGMENT

1. This is an application brought by way of an application in a case.  It has a history that goes back some time.  The moving party today is a company called TT Proprietary Limited.  It is represented by counsel.  The respondent to the proceedings is Ms Ledarn, to whom I shall refer as the respondent.

2. When the proceedings began, the application was brought against the respondent and her then former husband, Mr Ledarn.  I have some recollection of this matter, and it is immediately brought home by the fact that the document that I am looking at is number 223 on the Court file.  The file is in boxes.

3. Property proceedings between the respondent and Mr Ledarn were concluded by me after a hotly contested proceeding over businesses culminating in final orders being made in 2014.  For reasons that remain unclear, TT Proprietary Limited commenced a proceeding to recover a debt against both the respondent and Mr Ledarn.  That came before the Court on 4 April 2017.

4. Curiously, on that day all three parties were represented by counsel, and a minute of an order was drawn which was presented to Johns J, who made the orders by consent.  Those consent orders provided that within 30 days, the respondent pay a sum of $65,000 to TT Proprietary Limited by instalments of $5000 over a period of 12 months and then a final payment of $10,000.

5. It is common ground that Mr Ledarn thereafter took no part in the proceedings, and I do not need to refer to him again.  However, it is also common ground that the respondent did not make more than three payments.  It has now brought the current proceedings which are by way of enforcement of the outstanding debt.

6. I raise the question at this stage as to whether the 4 April 2017 orders were the proper exercise of the judicial power of the Commonwealth.  Notwithstanding it was a consent order and all parties were represented by counsel, the Court can only exercise a power if it exists.  It could not have been an exercise of a section 79 power because that had been exhausted by the final orders made in 2014.  Apart from a skirmish between the respondent and her former husband over costs, and perhaps some enforcement proceedings, there was no other power for the Court to exercise.

7. It is questionable how the orders of 4 April 2017 were made.  Even so, it must be seen that the minute itself could be seen as a contract between the respondent and TT Proprietary Limited.  Whether or not this Court has power to enforce a contract is another issue about which I do not need to make any further comment.

8. The application today by TT Proprietary Limited is for the enforcement of the outstanding debt by the sale of a property at Town WW.  That was the property that Ms Ledarn, the respondent, apparently owns.  This morning, the respondent has handed to the Court an affidavit sworn today, annexed to which is a debtor’s petition and consent by a trustee to act as the trustee on the acceptance of the petition.  What is not included in the annexures is her statement of financial affairs.

9. The applicant seeks to proceed with the application for enforcement orders, notwithstanding what I have said about my reservations about the validity of the April 2017 orders, on the basis that there is no evidence that the respondent is a bankrupt.  There is some sense in that because the document seeking the filing of the debtor’s petition was only filed this morning.  Commonsense dictates that it will only be a matter of time as to whether or not the debtor’s petition is accepted by the official trustee.

10. There are provisions in the Bankruptcy Act 1966 (Cth) which might enable the official receiver to reject the debtor’s petition, and those are set out in section 55.  It seems to me, however, that on the face of the documents I have read, it is unlikely that the debtor’s petition will be rejected.  I say that because the statement of financial affairs now produced shows that the only real property of the respondent is that at Town WW, which has been valued by her at $1.125 million but against which there is a first and second mortgage.  Both of those mortgages total $1.152 million.

11. In addition, there is said to be $3.6 million of unsecured creditors.  It is not clear where they come from, but they include the State Revenue Office and a firm of accountants who have acted for the respondent.  To a very large degree, therefore, the application by the respondent is put on the basis that all of this is academic.

12. If indeed she is made bankrupt by the acceptance of the debtor’s petition, this Court does not have power, in my view, to enforce the debt, let alone the order, if that is what it is, that was made on 4 April 2017.  Indeed, there may be a problem with the applicant having to refund the instalments received on the basis that it received a preference over other creditors.  That might be particularly so if the unsecured creditors amount to $3.6 million.

13. On that basis, it seems to me that as I can use some judicial knowledge that the official receiver acts promptly upon the receipt of debtor’s petitions.  An adjournment to Friday might very well solve a lot of problems and save a lot of heartache for a lot of people.  On that basis, the matter will be adjourned to 9 o’clock on 16 March 2018.

14. On the basis that the respondent provides to the solicitors for the applicant a copy of the acceptance by the official receiver, she is excused from attending.  On the basis that the creditor, through its solicitors, provides the Court with an indication that it is not proceeding any further with its application by virtue of accepting that the respondent has gone bankrupt, it is excused as well.  If not, I shall review the matter at that stage.

15. An application for costs has also been made.  That fits into the same category.  It may be academic.  Whilst counsel’s fee exceeds the scale, in my view, this is not an unusual situation, and, therefore, I should only fix the scale costs which, at this stage, would amount to an order for $1185.  I do not intend to make that order other than to reserve the costs.  If they become relevant, application for the formal order can be made at some stage in the future.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 13 March 2018.

Associate: 

Date:  27 March 2018