Ziman v McKellar - [2018] FCCA 3401

FEDERAL CIRCUIT COURT OF AUSTRALIA

ZIMAN v MCKELLAR

[2018] FCCA 3401

Catchwords:

BANKRUPTCY – Application for sequestration order – whether preconditions for making sequestration order satisfied – whether order on the basis of which the creditor’s petition is based represents a true debt – whether there is any sufficient cause why sequestration order ought not be made – sequestration order made.

Legislation:

Australian Constitution ss.72, 75
Bankruptcy Act 1966 (Cth), ss.32, 40(1)(g), 43, 52(1)
Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), rr.4.02, 4.04, 4.05, 4.06 13.01, 13.02, 13.03C, 13.04
Federal Circuit Court Rules 2001 (Cth), rr.1.06, 13.01C, 13.03C

Cases cited:

Burrell v Reavill Farm Pty Ltd & Ors [2014] FCCA 1449
Cheung v Burness (Trustee) [2016] FCA 1381
Corney v Brien (1951) 84 CLR 343
Guss v Veenhuizen (No 2) [1976] HCA 57; 136 CLR 47
House v The King (1936) 55 CLR 499
Katter v Melhem (No 2) [2014] FCA 1176
London Scottish Benefit Society v Chorley, Crawford and Chester (1884) 13 QBD 872
Lowbeer v De Varda [2018] FCAFC 115
Penfold v Penfold [1980] HCA 4
Re McBain; ex Parte Australian Catholic Bishops Conference [2002] HCA 16
Wilkie v Brown [2016] NSWCA 128
Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212

Applicant:

DEREK ERROL ZIMAN

Respondent:

DONALD CAMPBELL MCKELLAR

File Number:

SYG 2016 of 2018

Judgment of:

Judge Manousaridis

Hearing date:

14 November 2018

Date of Last Submission:

14 November 2018

Delivered at:

Sydney

Delivered on:

23 November 2018

REPRESENTATION

Counsel for the Applicant:

Mr I Chatterjee

Solicitors for the Applicant:

Ziman and Ziman Solicitors

Respondent, in person

ORDERS

The estate of Donald Campbell McKellar is sequestrated under the Bankruptcy Act 1966 (Cth).
The applicant’s creditor’s costs (including reserved costs) be taxed and 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 16 June 2018.
A copy of this order is to be provided to the official receiver in Sydney within two business days.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2016 of 2018

DEREK ERROL ZIMAN

Applicant

And

DONALD CAMPBELL MCKELLAR

Respondent

REASONS FOR JUDGMENT

Introduction

Before me is an application for a sequestration order against the estate of the respondent, Mr McKellar. The act of bankruptcy on which the applicant, Mr Ziman, relies is Mr McKellar’s failure to comply with the requirements of a bankruptcy notice issued on 15 May 2018.
The bankruptcy notice is based on an order made on 10 May 2018 by another judge of this Court (FCC Judge) that Mr McKellar pay Mr Ziman’s costs fixed in the amount of $11,924 (Order). The Order was made in a separate proceeding Mr Ziman brought in which he sought a sequestration order against the estate of Mr McKellar based on a different debt. In the circumstances I will set out later in these reasons, the FCC Judge made the Order in the absence of Mr McKellar…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Ziman v McKellar

Details

AGLC: Ziman v McKellar [2018] FCCA 3401
Case: [2018] FCCA 3401
Decision Date: 23 November 2018

CaseChat Overview and Summary

In *Ziman v McKellar*, the applicant, Ziman, sought a sequestration order against the respondent, McKellar. The application was based on a prior court order that McKellar owed Ziman a debt. McKellar opposed the sequestration order, arguing that the debt underlying the prior order was not a "true debt" and that there was sufficient cause why the sequestration order ought not to be made. The matter came before Judge Manousaridis in the Federal Court of Australia.

The primary legal issues before the Court were whether the preconditions for making a sequestration order had been satisfied, specifically whether the debt upon which the creditor's petition was founded represented a true debt, and whether there was any sufficient cause why a sequestration order should not be made.

Judge Manousaridis reasoned that the prior court order, which established McKellar's liability to Ziman, was binding and determined the existence of the debt. The Court found that McKellar had not demonstrated that the debt was not a "true debt" or that there was any sufficient cause to refuse the sequestration order. The Court applied the principles governing applications for sequestration orders, including the requirement for a liquidated debt and the consideration of any sufficient cause to the contrary.

Consequently, Judge Manousaridis made the sequestration order against McKellar.

Orders