Fishburn & Ors v Dunlop [2009] FMCA 1331 (10 November 2009)

Last Updated: 11 October 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FISHBURN & ORS v DUNLOP

[2009] FMCA 1331

BANKRUPTCY – Contested creditor’s petition – whether the Court should go behind the judgment debt and whether the debtor is insolvent considered.

Bankruptcy Act 1966 (Cth), s.52 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth)

First Applicant:

MICHAEL GEORGE FISHBURN

Second Applicant:

JOHN JAMES WATSON

Third Applicant:

CHRISTOPHER MARTIN O’BRIEN

Fourth Applicant

SAMUEL BOYD COUPER

Respondent:

JAMES HENRY DUNLOP

File Number:

SYG 1581 of 2009

Judgment of:

Driver FM

Hearing date:

10 November 2009

Delivered at:

Sydney

Delivered on:

10 November 2009

REPRESENTATION

Solicitors for the Applicant:

Ms V Otavski Fishburn Watson O’Brien

The Respondent appeared in person

ORDERS

(1) The petitioning creditor is relieved of any further need to comply with the formal requirements of rule 4.06 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).
(2) A sequestration order be made against the estate of James Henry Dunlop.
(3) The petitioning creditor’s costs, including reserved costs if any, be fixed in the amount of $2,750.
(4) The Court notes that the date of the act of bankruptcy is 11 June 2009.
(5) 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 1581 of 2009

MICHAEL GEORGE FISHBURN

Applicant

And

JAMES HENRY DUNLOP

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. I have before me a creditor’s petition filed on 2 July 2009 seeking a sequestration and other orders against James Henry Dunlop. The petition is supported by an affidavit of personal service of a bankruptcy notice, which provides the relevant act of bankruptcy. The debt arises from a judgment of the Local Court registering a costs assessment in respect of unpaid legal costs. I understand from hearing from the parties that those costs arose out of legal proceedings concerning the debtor’s land which he was attempting to use but which led him into dispute with his local council.
2. Also supporting a petition is an application for substituted service, which was granted by Registrar Morgan who made orders on 5 August 2009 and the affidavits of Stephen Geoffrey Campbell made on
   28 August 2009, and Rachel Anne Metcalf made on 18 August 2009, satisfy me that the orders for substituted service were complied with. Finally, I have an affidavit of search of 10 November 2009 by Victoria-Jane Otavski, the solicitor for the petitioning creditor, and an affidavit of debt made on 23 October 2009 by Samuel Boyd Couper, which establishes that the amount of $42,749.85 remains unpaid.
   I understand that an order was made for payment into court of that amount arising out of the judgment debt but that order has not been complied with.
3. The petition is opposed by Mr Dunlop on the basis that he is not insolvent, that he disputes the judgment debt and that he is attempting to obtain a development approval for his land, which would permit him to raise funds to deal with this and any other debts he may have. The grounds of opposition are supported by several affidavits by Mr Dunlop, which I received, and supporting documents. I accept from that material that Mr Dunlop has concerns about the costs assessment leading to the judgment debt but while he has, in correspondence, disputed aspects of that cost assessment, he did not pursue any formal process to have it set aside or varied, and neither has he sought to challenge the judgment debt, although he expressed an intention to do so.
4. As for his solvency I accept that he owns property and he wishes to deal with that property to remove timber on it in order to raise funds, but that will require a further process of approval by his local council. Included in Mr Dunlop’s evidence was a letter from his bank indicating that he had a line of credit available, sufficient to pay the judgment debt, but Mr Dunlop told me from the bar table that that credit was effectively committed for other purposes.
5. I am not satisfied that Mr Dunlop is in a position to pay the debt now, or in a reasonable time. I am not satisfied that he is solvent. I am also not satisfied that there is a sufficient basis advanced by Mr Dunlop to go behind the judgment debt, which has not been challenged by any formal process. I am satisfied that the formal procedures for the making of a sequestration order had been met under the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) and the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth). I am satisfied that Mr Dunlop committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters which s.52(1) of the Bankruptcy Act requires proof.
6. I am not satisfied that any of the grounds of opposition in the notice filed by Mr Dunlop provide a reason for the Court to refrain from making a sequestration order.
7. Accordingly, I will make a sequestration order against the estate of James Henry Dunlop and I order that the petitioning creditor’s costs, including reserved costs, if any, be taxed and paid in accordance with the Bankruptcy Act.
8. I note that the date of the act of bankruptcy was 11 June 2009.
9. Section 52(3) of the Bankruptcy Act provides that the Court may, if it thinks fit, upon such terms and conditions as it thinks proper, stay all proceedings under a sequestration order for a period not exceeding 21 days. It would be appropriate, in this case, to exercise that power in Mr Dunlop’s favour. He has in my view been distracted from dealing with the immediate issue of the judgment debt by concerns about the development of his property. It may be that the issue of the debt could be dealt with within that period of 21 days and, in any event, Mr Dunlop needs to focus clearly on the issue at hand and to consider his options.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Driver FM

Associate:

Date: 6 October 2011