Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq)
[2012] FCA 1425
FEDERAL COURT OF AUSTRALIA
Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2012] FCA 1425
Citation: Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2012] FCA 1425 Parties: PEI XU v WAN ZE PROPERTY DEVELOPMENT (AUST) PTY LTD (IN LIQUIDATION) ACN 131 642 147
KE QIN REN v WAN ZE PROPERTY DEVELOPMENT (AUST) PTY LTD (IN LIQUIDATION) ACN 131 642 147
File number: NSD 1339 of 2012
NSD 1341 of 2012Judge: BUCHANAN J Date of judgment: 5 December 2012 Date of hearing: 5 December 2012 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 11 Counsel for the Applicants: Mr M R Ellicott Solicitor for the Applicants: James Lee Solicitors Counsel for the Respondent: Mr D C Eardley Solicitor for the Respondent: Downeys Lawyers Pty Ltd
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1339 of 2012
BETWEEN: PEI XU
ApplicantAND: WAN ZE PROPERTY DEVELOPMENT (AUST) PTY LTD (IN LIQUIDATION) ACN 131 642 147
Respondent
JUDGE:
BUCHANAN J
DATE OF ORDER:
5 DECEMBER 2012
WHERE MADE:
SYDNEY
THE COURT:
1.NOTES the undertaking given to the Court by the applicant.
2.NOTES the undertaking is in substitution for all previous undertakings given to the liquidator or the Supreme Court of New South Wales.
3.GRANTS liberty to the applicant to apply to vary the undertaking on seven days’ notice.
4.NOTES that the undertaking is up to and including 5 June 2013, unless that period is varied pursuant to an application pursuant to liberty to apply.
5.RELIES on the undertaking given by Counsel for the applicant that the solicitor for the applicant will file a written undertaking on their behalf with the Court to prosecute the Supreme Court proceedings with all due dispatch.
THE COURT ORDERS THAT:
6.The written undertaking referred to in Order 5 above is to be filed by 4 pm on Thursday, 6 December 2012.
7.Time to comply with the Bankruptcy Notice is extended up to and including 5 February 2013.
8.The proceedings are listed before Robertson J at 9.30 am on 5 February 2013.
9.The parties have liberty to apply.
10.Costs are reserved.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1341 of 2012
BETWEEN: KE QIN REN
ApplicantAND: WAN ZE PROPERTY DEVELOPMENT (AUST) PTY LTD (IN LIQUIDATION) ACN 131 642 147
Respondent
JUDGE:
BUCHANAN J
DATE OF ORDER:
5 DECEMBER 2012
WHERE MADE:
SYDNEY
THE COURT:
1.NOTES the undertaking given to the Court by the applicant.
2.NOTES the undertaking is in substitution for all previous undertakings given to the liquidator or the Supreme Court of New South Wales.
3.GRANTS liberty to the applicant to apply to vary the undertaking on seven days’ notice.
4.NOTES that the undertaking is up to and including 5 June 2013, unless that period is varied pursuant to an application pursuant to liberty to apply.
5.RELIES on the undertaking given by Counsel for the applicant that the solicitor for the applicant will file a written undertaking on their behalf with the Court to prosecute the Supreme Court proceedings with all due dispatch.
THE COURT ORDERS THAT:
6.The written undertaking referred to in Order 5 above is to be filed by 4 pm on Thursday, 6 December 2012.
7.Time to comply with the Bankruptcy Notice is extended up to and including 5 February 2013.
8.The proceedings are listed before Robertson J at 9.30 am on 5 February 2013.
9.The parties have liberty to apply.
10.Costs are reserved.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1339 of 2012
BETWEEN: PEI XU
ApplicantAND: WAN ZE PROPERTY DEVELOPMENT (AUST) PTY LTD (IN LIQUIDATION) ACN 131 642 147
Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1341 of 2012
BETWEEN: KE QIN REN
ApplicantAND: WAN ZE PROPERTY DEVELOPMENT (AUST) PTY LTD (IN LIQUIDATION) ACN 131 642 147
Respondent
JUDGE:
BUCHANAN J
DATE OF ORDER:
5 DECEMBER 2012
WHERE MADE:
SYDNEY
REASONS FOR JUDGMENT
These matters were referred to me as duty judge by the District Registrar by orders made on 29 November 2012. The issues between the two applicants and the respondent arise from a bankruptcy notice issued to the applicants at the instance of the respondent on 20 August 2012. The bankruptcy notice is founded upon a judgment delivered by the Supreme Court of New South Wales on 29 June 2012 and reflected in orders made by that court on 19 July 2012. On 6 September 2012 an application was made to set aside the two bankruptcy notices. Since that time, extensions of time to comply with the bankruptcy notices have been granted by Registrars of the Court, the last such extension being granted by the District Registrar on 29 November 2012 until today.
The applicants allege that they were inadequately represented in relation to the matters upon which the judgment is founded. They further allege that the judgment was procured by fraud. They have sought leave to appeal from the New South Wales Court of Appeal. If leave is granted, that will provide an avenue to challenge some aspects of the judgment. They have also made an application to the Supreme Court of New South Wales for leave to proceed against the respondent. They propose, whether or not leave is granted, to proceed against other parties to the earlier proceedings in the Supreme Court. Their position, as it is proposed to be put before the Supreme Court, is contained in a draft statement of claim which is Exhibit JL11 to an affidavit affirmed by Mr Lee, the solicitor for the applicants, on 4 December 2012.
The steps that have so far been taken may not, in terms, satisfy the provisions of s 41(6A)(a) of the Bankruptcy Act 1966 (Cth), but the application to set aside the bankruptcy notice satisfies s 41(6A)(b).
The applicants are prepared to proceed in this Court with their application to set the bankruptcy notice aside. That does not appear to me to be a particularly attractive course in light of the proposal to proceed to the same end in the Supreme Court of New South Wales but, ultimately, that is not a matter for me to determine. That will be a matter which will require consideration by the docket judge if the applicants desire to pursue that course. In the meantime, there does not appear to me, subject to the matters which follow, to be any reason to doubt that serious steps are being taken in the Supreme Court of New South Wales, both by the application for leave to appeal and by the application for leave to proceed against the respondent, to seek to set aside the judgment given in the Supreme Court earlier this year. Prima facie, therefore, a further extension of time to comply with the bankruptcy notice is justified.
The liquidator, in the name of the respondent, however, opposes any extension of time. Two particular concerns have been expressed about the prospect that time might be further extended. One concerns the relation-back date arising from an act of bankruptcy. The liquidator’s position is that it is appropriate that today mark a relevant act of bankruptcy arising from the service of the bankruptcy notice and that no further time be granted. The second concern was that the applicants, if a further extension of time was granted, might arrange to dissipate their assets or remove them from Australia. In support of the liquidator’s position an undertaking was offered to the Court, if necessary, that the liquidator would not present a creditor’s petition based on the bankruptcy notice for at least five months.
On the other hand, counsel for the applicants pointed out that if an act of bankruptcy is committed today, because no further extension of time is granted and the bankruptcy notice has not been complied with, then it will be open to any other creditor who meets the statutory requirements to present a creditor’s petition arising from the commission of the act of bankruptcy. The example that was given related to parties in the Supreme Court proceedings who at present have the benefit of an order for indemnity costs, but the point seems to me to hold good for other creditors as well.
Over the course of an adjournment in the proceedings today the applicants provided instructions, vouched for by both their solicitor and counsel, to give written undertakings in a form to which they have each subscribed. Those undertakings restrict their right to deal with their assets until 5 June 2013. Although that date does not appear in the undertakings themselves, that is the date that the Court was told represented the period for which they were intended to be current and I accept them on that basis. I will mark the written undertakings Exhibit 1 in each proceeding. Counsel for the applicants also accepted that if a further extension of time is granted his solicitor would be in a position to provide a written undertaking that proceedings in the Supreme Court to set aside the judgment in that court are to be prosecuted with all due dispatch.
Use of a bankruptcy notice is a summary procedure. It is a useful and convenient procedure in many cases but is always subject to the exercise of rights to set the bankruptcy notice aside upon proper grounds and in a timely fashion. Section 41(6A) contemplates extensions of time to comply with a bankruptcy notice in certain circumstances. In the present case, the application to set aside the bankruptcy notice was made in a timely fashion. I am not satisfied, within the meaning of s 41(6C), in the light of the undertakings from the applicants which have been provided in writing and in the light of the undertaking to prosecute the proceedings in the Supreme Court with all due dispatch, that the proceedings to set aside the judgment or order have not been instituted bona fide or will not be prosecuted with due diligence.
At the present time, therefore, it does not appear to me to be appropriate to withhold a further extension. The extension of time in which to comply with a bankruptcy notice will be until 5 February 2013 on which date the matter will be returnable before Robertson J at 9.30 am. The extension of time is based upon the undertakings provided in writing and offered by counsel.
Counsel for the liquidator sought costs of the proceedings today. I am not satisfied that it is appropriate to award costs against the applicants at this stage. The question of whether costs of the interlocutory processes should be awarded will be a matter for the docket judge in due course.
I make the following orders in each matter:
THE COURT:
1.NOTES the undertaking given to the Court by the applicant.
2.NOTES the undertaking is in substitution for all previous undertakings given to the liquidator or the Supreme Court of New South Wales.
3.GRANTS liberty to the applicant to apply to vary the undertaking on seven days’ notice.
4.NOTES that the undertaking is up to and including 5 June 2013, unless that period is varied pursuant to an application pursuant to liberty to apply.
5.RELIES on the undertaking given by Counsel for the applicant that the solicitor for the applicant will file a written undertaking on their behalf with the Court to prosecute the Supreme Court proceedings with all due dispatch.
THE COURT ORDERS THAT:
6.The written undertaking referred to in Order 5 above is to be filed by 4 pm on Thursday, 6 December 2012.
7.Time to comply with the Bankruptcy Notice is extended up to and including 5 February 2013.
8.The proceedings are listed before Robertson J at 9.30 am on 5 February 2013.
9.The parties have liberty to apply.
10.Costs are reserved.
I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. Associate:
Dated: 18 December 2012
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