Weston v Pennisi

[2020] FCCA 1256

FEDERAL CIRCUIT COURT OF AUSTRALIA

WESTON v PENNISI [2020] FCCA 1256

Catchwords:
BANKRUPTCY – Where the income of a bankrupt exceeds the threshold amount as assessed by trustee – whether the bankrupt is liable to pay the trustee a contribution in respect of that assessment – whether the unpaid contribution amount is recoverable by the trustee as a debt – bankrupt is indebted to trustee.

Legislation:

Bankruptcy Act 1966 (Cth), ss.139P(1), 139W(4), 139ZG(5)

Bankruptcy Regulations 1996 (Cth), reg.6.17

Federal Circuit Court Rules 2001 (Cth), r.13.01(2)

Federal Court Rules 2011 (Cth), pt.40

Applicant: PAUL GERARD WESTON

Respondent: JOSEPH PENNISI

File Number: SYG 3092 of 2019

Judgment of: Judge Baird

Hearing date: 22 April 2020

Date of Last Submission: 17 April 2020

Delivered at: Sydney

Delivered on: 22 April 2020

REPRESENTATION

Counsel for the Applicant: Mr R Marshall Senior Counsel, and Mr E  Walker of Counsel (by video-conference)

Solicitors for the Applicant: Mr M Tierney (by telephone), Balog DC Solicitors

No appearance by or on behalf of the Respondent.

ORDERS

THE COURT ORDERS:

1. Judgment for the applicant against the respondent in the sum of $26,237.63, being inclusive of interest to judgment.

2. The respondent is to pay the applicant’s costs of the proceeding fixed in the sum of $12,000.00.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 3092 of 2019

PAUL GERARD WESTON

Applicant

And

JOSEPH PENNISI

Respondent

REASONS FOR JUDGMENT
(Ex tempore, revised from transcript)

Introduction

1. The Court is satisfied upon the application of the trustee, Mr Paul Gerard Weston, filed 2 November 2019, and upon reading the affidavits of Melissa McKenzie, sworn 3 December 2019; Paul Gerard Weston, sworn 7 November 2019, and Mark Stephen Tierney, sworn 16 April 2020, that it is appropriate to grant the relief sought in the application. 

Background

1. The matter was listed for directions before me on 7 February 2020.  Counsel for Mr Weston appeared, however there was no appearance by the Respondent, the bankrupt Mr Joseph Pennisi. 

2. On 7 February 2020, I made orders, including setting the matter down for final hearing before me today, and directing that Mr Weston serve a copy of the order on Mr Pennisi. 

3. The evidence before me shows that Mr Pennisi has been served, and that Mr Pennisi has been made aware, both on 10 February 2020 by email from Mr Weston’s solicitor, Mr Mark Tierney, and again by email on 6 April 2020, that the matter would be heard today, and that Mr Pennisi could and should be able to appear by telephone or digital hook-up.

4. By email dated 14 April 2020 at 1.54 pm, Mr Penissi informed Mr Tierney as follows (without alteration):

   Hi Mark, neither will be attending the hearing as there us no money.  Thanks.

   I understand “us” to mean “is”.  I am satisfied that the fact of today’s hearing has been brought to Mr Pennisi’s attention, and that the orders to be be sought by Mr Weston today have also been brought to his attention.

5. Mr Pennisi has neither appeared, nor has he indicated that he intends to file or rely on any material or submissions at this hearing.   

Mr Pennisi’s bankruptcy

1. On 19 February 2015, this Court made an order that Mr Pennisi’s estate be sequestrated, and appointed Mr Weston trustee of Mr Pennisi’s bankrupt estate.  On 10 July 2018, Mr Weston, as trustee, assessed Mr Pennisi of income contributions in the amount of $25,711.62. 

2. I have received in evidence a copy of the notice of assessment dated 10 July 2018. Having regard to the certificate of outstanding contribution dated 7 November 2019 placed in evidence before me today. Pursuant to s.139W(4) of the Bankruptcy Act (1966) (Cth), I am satisfied that notice of assessment dated 10 July 2018 was given to Mr Pennisi by post and email sent on that date. 

3. As at 22 November 2019, when this proceeding was commenced, there had been no payment made by Mr Pennisi towards the assessment.  There is no evidence before me that there has been any payment made by Mr Pennisi towards the assessment as at the date of hearing today.

4. On 12 August 2019, Mr Weston lodged an objection to Mr Pennisi’s discharge from bankruptcy with the Official Receiver.  I am informed by Mr Marshall SC, and I accept, that the objection is still on foot.  Exhibit 1 in evidence on this hearing in this Court establishes that the periods of income contribution referred to in the notice of assessment relate to the period before the notice of objection, and to periods that fall within the bankruptcy.

5. Notwithstanding those observations, Mr Weston is entitled to rely on and has tendered in Court, a certificate of outstanding contribution made in accordance with regs.6.17(1) and (2) of the Bankruptcy Regulations 1996 (Cth). I am satisfied that the certificate complies with the provisions of reg.6.17. Pursuant to s.139ZG(5) of the Act, that certificate is prima facie evidence of the existence of the debt, namely the contribution amount, and of the amount of that debt.

6. This application has thus been brought by Mr Weston to recover the contribution amount assessed as a debt. 

Legislative Framework

1. Section 139P(1) of the Act states that if the income that a bankrupt is likely to derive during a relevant period of assessment (as assessed by the trustee) exceeds the threshold amount applicable in relation to the bankrupt when that assessment is made, the bankrupt is liable to pay to the trustee a contribution in respect of that period.

2. Section 139W(1) of the Act requires the trustee to make an assessment of the income that is likely to be derived, or was derived, by the bankrupt during a contribution assessment period, and the contribution (if any) the bankrupt is liable to pay in respect of that period.  The trustee is also required to give to the bankrupt written notice setting out particulars of the assessment. 

3. Section 139ZG of the Act states that:

   (a)the contribution that a bankrupt is liable to pay is payable at such time as the trustee determines;

   (b)the total of any contributions that are not paid by the bankrupt is recoverable by the trustee as a debt due to the estate of the bankrupt;

   (c)the trustee may, in connection with proceedings to recover the debt, sign a certificate setting out the nature and the amount of the debt, and file the certificate in the Court in which the proceedings have been instituted; and

   (d)in such proceedings, the certificate is prima facie evidence of the existence of the debt and the amount of the debt.

4. Regulation 6.17 states that:

   (a)a trustee may give a certificate, signed and dated by the trustee, stating that:

   (i)an assessment has been made;

   (ii)the amount of the contributions the bankrupt is liable to pay;

   (iii)that a notice setting out the particulars of the assessment has been given; and

   (iv)the dates of the assessment and notice; and

   (b)in proceedings against the bankrupt for recovery of the amount of a contribution, the certificate is evidence that the bankrupt is liable to pay the amount of the contribution stated in the certificate, and may be tendered in evidence without further proof.

5. In the premises, as I have indicated, Mr Pennisi is indebted to the trustee, Mr Weston, and the trustee is entitled to judgment against Mr Pennisi in the sum of $25,711.63, plus interest and costs. 

Interest

1. The interest sought in the present matter has been calculated by Mr Tierney from the period of 22 November 2019 up to and including 22 April 2020, in total as $526.  I am informed that that calculation is based on the rate applicable in the Supreme Court of New South Wales under the Uniform Civil Procedure Code Uniform Civil Procedure Rules2005, and I accept that interest as appropriate.  I will award interest up to today in the sum of $526.

Costs

1. This then leaves the matter of costs. Pursuant to r.13.01(2) of the Federal Circuit Court Rules 2001, the Court may fix the amount of costs. I note pursuant to subparagraph (1), that a person who is entitled to costs in proceedings to which the Act applies, of which this is one, is entitled to costs in accordance with Part 40 of Federal Court Rules 2011, unless the Court otherwise orders.

2. I consider it is appropriate in the present case to fix an amount of costs.  Mr Tierney seeks a sum on behalf of the trustee, Mr Weston, fixed in the amount of $15,000, which is approximately two-thirds of the costs stated to be incurred.  I am minded to award costs and to fix the amount, noting in the present case, from the evidence in the matter, that Mr Pennisi has had the opportunity but has not taken it to minimise costs in the proceeding.  However, whilst Mr Tierney seeks costs on the basis of two‑thirds of senior counsel and junior counsel’s fees and his own fees in the matter, and has discounted them somewhat, I consider that a discount of 50 per cent is more appropriate in the circumstances.  Accordingly, I will order Mr Pennisi is to pay Mr Weston’s costs of the proceeding fixed in the sum of $12,000.00.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Baird

Associate:

Date: 4 June 2020