Woollahra Constructions Pty Ltd v James

[2013] FMCA 95

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WOOLLAHRA CONSTRUCTIONS PTY LTD v JAMES [2013] FMCA 95

BANKRUPTCY – Hearing of petition – whether debtor’s evidence establishes he is solvent.

Bankruptcy Act 1966 (Cth), s.52

Applicant: WOOLLAHRA CONSTRUCTIONS PTY LTD

Respondent: NICHOLAS JAMES

File Number: SYG 2884 of 2011

Judgment of: Raphael FM

Hearing date: 11 February 2013

Date of Last Submission: 11 February 2013

Delivered at: Sydney

Delivered on: 11 February 2013

REPRESENTATION

Solicitors for the Applicant: Holding Redlich

Solicitors for the Respondent: Clamenz Evans Ellis

ORDERS

1. A Sequestration Order be made against the estate of Nicholas James.

2. The Applicant Creditor’s costs (including any reserved costs) be taxed (in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006) and paid from the estate of the Respondent Debtor in accordance with the Act.

3. Under the Bankruptcy Regulations a copy of this sequestration order be given to the Official Receiver in Sydney within 2 days.

THE COURT NOTES:

1. That the date of the act of bankruptcy is 6 December 2011.

2. A consent to act as a trustee has been signed by Barry Anthony Taylor and has been lodged with the Official Receiver in Sydney.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 2884 of 2011

WOOLLAHRA CONSTRUCTIONS PTY LTD

Applicant

And

NICHOLAS JAMES

Respondent

REASONS FOR JUDGMENT

1. There comes before me today for hearing a bankruptcy petition against Nicholas James.  The petition itself was presented on 15 December 2011 by another creditor.  The present creditor was substituted by order of this court on 4 May 2012.  Thereafter, the matter came back to this court on several occasions.  It would appear that the debtor was the object of a judgment obtained in the District Court of New South Wales by one Napoleon Perdis for a sum in excess of $1 million and efforts were being made to have that default judgment set aside. I am advised that this has occurred, but notwithstanding the occurrence, certain writs which were issued by Mr Perdis against properties secured by the debtor are still found to be current. The debtor claims that obtaining the setting aside of the judgment will enable him to refinance his properties and he comes to the court today seeking a further adjournment.

2. Given the time which this matter has already taken to reach finality and given the fact that I had no affidavit evidence which could reasonably be claimed to indicate a speedy repayment of the debt I determined that the matter should proceed on the basis of the evidence currently before me.  It consisted of two affidavits of the debtor dated 3 August 2012 and 7 September 2012.  Both of these affidavits have annexed to them a significant number of documents which relate to properties owned by the debtor but as Mr Haines for the creditor points out they are all in fact owned by the debtor together with one other person, Tamara King, as a joint tenant with the exception of one property in respect of which Ms King is tenant-in-common.  This means that even if there was any equity in those properties it is not all for the benefit of the debtor.

3. Mr Haines submits that the evidence put forward by Mr James goes no further than showing that he is entitled to these shares in the property. He states that the evidence is that all those properties either have a mortgage or a caveat or a writ against them; some of them all three. He says there is no admissible evidence of their true value as at today or around this time. At best there are some appraisals from real estate agents. One important factor that is missing is any evidence as to the net value of any of these properties after deducting amounts secured upon them. There is also no evidence that the mortgages are being repaid.

4. In these circumstances I am unable to make a finding that Mr James is solvent. There is no evidence from him that he is able to pay his debts as and when they fall due and there is clearly a substantial debt owing to the applicant which is acknowledged. I am therefore satisfied that the respondent committed the act of bankruptcy alleged in the petition. I am satisfied of the proof of the other matters required by s.52 of the Bankruptcy Act 1966[1].  I make a sequestration order against the estate of Nicholas James.  I order that the applicant’s costs including reserved costs, if any, be taxed and paid for from the estate of the respondent in accordance with the Act.

   [1] “Act”

5. Under the Bankruptcy Regulations a copy of the sequestration order is to be given to the Official Receiver in Sydney within two days.  The court notes that the date of the act of bankruptcy is 6 December 2011 and I note that a second Consent to Act as Trustee on behalf of this substituted creditor has been signed by Barry Anthony Taylor and lodged with the Official Receiver in Sydney.

I certify that the preceding five (5) paragraphs are a true copy of the reasons for judgment of Raphael FM.

Associate: 

Date:  15 February 2013