WESTPAC BANKING CORPORATION ABN 33 007 457 141 v BOURKE
[2011] FMCA 1032
•21 December 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WESTPAC BANKING CORPORATION ABN 33 007 457 141 v BOURKE | [2011] FMCA 1032 |
| BANKRUPTCY – Contested creditor’s petition – whether the debtor has advanced a reason for the Court to refrain from making a sequestration order considered. |
| Bankruptcy Act 1966, s.52 |
| Applicant: | WESTPAC BANKING CORPORATION ABN 33 007 457 141 |
| Respondent: | MICHAEL VINCENT BOURKE |
| File Number: | SYG 656 of 2011 |
| Judgment of: | Driver FM |
| Hearing date: | 21 December 2011 |
| Delivered at: | Sydney |
| Delivered on: | 21 December 2011 |
REPRESENTATION
| Solicitors for the Applicant: | Mr R Adams Henry Davis York |
The Respondent appeared in person by telephone
ORDERS
A sequestration order is made against the estate of Michael Vincent Bourke.
The applicant creditor’s costs are to be fixed in the amount of $5,302.50 and are to be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that the date of the act of bankruptcy is 30 November 2010.
The Court notes that a Consent to Act as Trustee has been signed by Mr Scott Darren Pascoe on 11 March 2011.
Pursuant to s.52(3) of the Bankruptcy Act 1966 (Cth), all proceedings under the sequestration order be stayed for a period of 21 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 656 of 2011
| WESTPAC BANKING CORPORATION ABN 33 007 457 141 |
Applicant
And
| MICHAEL VINCENT BOURKE |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
I have before me a creditor’s petition filed on 7 April 2011 seeking a sequestration order and other orders against Michael Vincent Bourke. The petition is supported by the affidavit of Yvonne Chan made on 30 March 2011 verifying paragraphs 1, 2 and 3 of it and the affidavit of Lucy Garritano made on 7 April 2011 verifying paragraph 4 of the creditor’s petition. I also have before me the affidavit of Krystyna Aggett made on 20 December 2011, being a final affidavit of debt and the affidavit of Yvonne Chan made on 20 December 2011, being the final affidavit of search.
The petitioning creditor also relies on the affidavit of Barry Moore Marsh, being an affidavit of service of the creditor’s petition, and two affidavits verifying service of the bankruptcy notice, the first of those being the affidavit of Noel Richard McCoy made on 8 February 2011 in proceedings SYG2615 of 2010, and the second being the affidavit of Mr Bourke made on 1 December 2010 in the same proceedings. The last was marked as exhibit A1. I note that a Consent to Act as Trustee was signed by Scott Pascoe on 11 March 2011.
The petition is opposed by Mr Bourke who relies upon a Notice of Grounds of Opposition filed in Court on 20 September 2011. The grounds of opposition identified in that notice are:
1. The Applicant is a judgment creditor who on the basis of a [judgment] debt obtained by way of default judgment.
2.The Respondent who is the judgment debtor has a valid defence and intends to file an application to set aside the judgment debt and/or commence separate proceedings to establish by way of offsetting claim in relation to the Judgment Debt.
3.The basis of the offsetting claim will be grounds upon which the Default judgment will be set aside.
4.The Judgment Creditor relies in a contract of guarantee and says:
(a)the contract of guarantee is a [separate] contract to the primary loan contract pursuant to which the Judgment Creditor advanced money to the Judgment Debtor;
(b)the contract of guarantee was not a contract for the benefit of the Judgment Debtor and is defeasable pursuant to the terms of the Contracts Review Act (NSW);
(c)further and in the alternative, the judgment creditor in realising certain securities and in respect of which the Judgment Debtor is now said to be liable for any short fall says that the Judgment Creditor failed to exercise its duty of care for realising the securities for their proper value;
(d)in the Premises the Judgment Debtor is not indebted to the Judgment Creditor for the amount alleged or at all.
[5]. The Judgment Debtor being presently hospitalised seeks an adjournment of these proceedings for the purpose of filing an affidavit setting out further particulars of the medical circumstances and the steps being taken by him to set aside the Default Judgment and to establish his offsetting claim.
The notice is supported by an affidavit of Mr Bourke made on 18 November 2011 and filed on 23 November 2011. That affidavit is accompanied by two volumes of annexures. Mr Bourke was not required for cross-examination.
I also received as an exhibit[1] a document being a notice of motion, which I am told is in the course of being filed in the Supreme Court of New South Wales seeking to set aside the default judgment supporting the bankruptcy notice and the creditor’s petition.
[1] exhibit R1
The background to this matter is that the applicant (“the bank”) provided finance to a company known as Satellite Centres of Australia to develop a retirement village near Maitland. During the course of that project further finance was required, and the bank required a personal guarantee from Mr Bourke and his wife and a mortgage over certain property owned by him.
There were problems in the project and the company was placed in external administration. The bank formed the view that it would not recover its investment from the further development of that project and sought to enforce its personal guarantee.
Proceedings were instituted in the Supreme Court of New South Wales which resulted in a default judgment against Mr and Mrs Bourke on 31 August 2010. The judgment was not satisfied and a bankruptcy notice was issued. Following service of that bankruptcy notice proceedings were instituted in this Court by Mr Bourke to set aside the bankruptcy notice. However, those proceedings were dismissed because of the non-appearance at a hearing by Mr Bourke. The creditor’s petition was then presented.
The matter has a reasonably long procedural history in this Court.
It came before a registrar on 9 May 2011 and was adjourned to 12 August 2011. It was further adjourned to 23 August 2011. There was a further adjournment before a registrar on 13 September 2011. There was again an adjournment until 20 September 2011, and a further adjournment to 18 October 2011. At that time the matter was referred to me.
After hearing from the parties[2], I adjourned the petition for hearing today. In granting that further adjournment I took into account that Mr Bourke has been suffering serious health issues and sought time to take proceedings to set aside the default judgment of the Supreme Court.
[2] at that time Mr Bourke was legally represented, although his solicitor had not filed a notice of appearance
The affidavit relied upon by Mr Bourke filed on 23 November 2011 makes extensive allegations against the bank, but acknowledged that, at that time, no proceedings had been commenced to deal with the default judgment.
Today Mr Bourke told me that he had commenced proceedings in the Supreme Court and faxed to the court documents which became exhibit R1. I accept that a notice of motion has been presented to the Supreme Court and is in the course of being filed. The motion seeks to set aside the default judgment of the Supreme Court on the basis that the bank has engaged in unconscionable conduct.
Mr Bourke made submissions orally today about his allegations of unconscionable conduct. He asserts that he anticipated that, upon giving a personal guarantee and a mortgage over his own property, he would have six months grace in order to achieve progress with the development of the retirement village. He says that he was not given that time before the company was placed into external administration, and he lost control of the project. He further alleges that the project was incompetently managed by the project manager and the bank is responsible for the deterioration in value of the development that was the consequence of that incompetent management.
He further alleges that the property over which he gave a mortgage was sold for less than its commercial value. The property was apparently sold in around March 2010 for $430,000 and Mr Bourke asserts that it had been valued at $1.2 million. I understand that the property was acquired by Mr Bourke for approximately $400,000.
Even assuming that the property sold by the bank was sold for less than its commercial value, the fact is that the judgment debt is for an amount of $7,226,948.05. The bank states, and I accept, that as at yesterday an amount of $6,609,497.63 remains outstanding. The moneys recovered by the bank have been obtained from the sale of Mr Bourke’s property and the development of the retirement village. The bank is entitled to rely upon the personal guarantee it holds and the judgment debt it has obtained.
I accept that Mr Bourke is an honest man and that he has genuine grievances over the management of the development project by the external managers of the company and the project manager of the development. That concern, however sincerely held, does not, in my view, provide any serious support for the action belatedly taken in the Supreme Court to seek to set aside the default judgment. In my view, that action has little or not prospect of success, and no further purpose would be served in delaying the provision of relief to the bank on its petition.
I am satisfied that Mr Bourke committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters, of which s.52(1) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) required proof. I am not satisfied that any of the issues raised by Mr Bourke in opposition to the petition provide a sufficient reason for the Court to refrain from making a sequestration order.
I order that a sequestration order is made against the estate of Michael Vincent Bourke. The applicant creditor’s costs are to be fixed in the amount of $5,302.50 and are to be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act.
The Court notes that the date of the act of bankruptcy is 30 November 2010. The Court further notes that a Consent to Act as Trustee has been signed by Mr Scott Darren Pascoe on 11 March 2011.
Pursuant to s.52(3) of the Bankruptcy Act 1966 (Cth), all proceedings under the sequestration order will be stayed for a period of 21 days.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Driver FM
Date: 22 December 2011
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