Yang v Mead & Anor [2009] FMCA 149 (24 February 2009)

Last Updated: 2 March 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

YANG v MEAD & ANOR

[2009] FMCA 149

BANKRUPTCY – Sequestration order – review – debtor’s petition – where applicant speaks little English – whether petition ought to have been accepted by Official Receiver – whether applicant misled as to the purpose of engaging the trustee and the effect of signing the petition – whether applicant solvent.

Bankruptcy Act 1966 (Cth), s.153B Federal Magistrates Court (Bankruptcy) Rules 2006

Yang v Mead [2008] FMCA 798 Re Deriu (1970) 16 FLR 420 Heinrich v Commonwealth Bank of Australia [2003] FCAFC 315

Applicant:

GRACE YANG

First Respondent:

COLIN ANTHONY MEAD

Second Respondent:

ROBERT WILLIAM WHITTON

File Number:

SYG 1861 of 2008

Judgment of:

Raphael FM

Hearing date:

24 February 2009

Date of Last Submission:

24 February 2009

Delivered at:

Sydney

Delivered on:

24 February 2009

REPRESENTATION

For the Applicant:

In Person

Counsel for the First Respondent:

Mr Bedrossian

Solicitors for the First Respondent:

Etheringtons Solicitors

ORDERS

(1) Application dismissed.
(2) Applicant to pay the costs of the First Respondent to be assessed or taxed pursuant to the Federal Magistrates Court (Bankruptcy) Rules 2006.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 1861 of 2008

GRACE YANG

Applicant

And

COLIN ANTHONY MEAD

First Respondent

ROBERT WILLIAM WHITTON

Second Respondent

REASONS FOR JUDGMENT

1. There comes before me today an application by the bankrupt, Grace Yang, to annul the sequestration order that followed from the presentation of her own petition on or about 13 June 2008, when Robert William Whitton was appointed her trustee. An application of this type is made under s.153B of the Bankruptcy Act 1966 (Cth) and in relation to a debtors petition, the Court must be satisfied that the petition ought not to have been accepted by the Official Receiver.
2. This application is the latest in a very long series of applications and pieces of litigation between the bankrupt and a Mr Colin Mead, the first respondent and judgment creditor. In short, Ms Yang has involved herself in disputes between Mr Mead and other members of her family, in particular, her sister who was married to Mr Mead. These excursions into litigation have not proved beneficial to Ms Yang. She has had costs orders made against her, even in proceedings in which she was not originally a party. She appears always to have conducted the proceedings herself, and never to have involved a lawyer, notwithstanding the very large sums of money allegedly involved. That this was a serious error appears to me to be self-evident.
3. In 2004 Mr Mead obtained a judgment against a company, which I understand was run or owned by Ms Yang and family in the sum of $738,335.93. That judgment, together with interest thereon, formed the basis of the bankruptcy notice NN0766/08 which was issued by the Official Receiver, and which claimed a debt, including interest, of $973,895.43. Ms Yang sought to set aside that bankruptcy notice.
4. The application was heard in this Court by Smith FM, who gave judgment on 6 June 2008: Yang v Mead [2008] FMCA 798. His Honour refused to set aside the bankruptcy notice on the grounds that Ms Yang had a counterclaim set off or cross-demand equal to or exceeding the amount of the judgment debt, and noted the complexity of Ms Yang's arguments, and the details of the previous litigation between herself, her family company and companies associated with Mr Mead.
5. Very shortly after the decision of Smith FM, Ms Yang approached Mr Robert William Whitton, a partner in Lawler Partners and a registered bankruptcy trustee. I heard evidence today from Mr Whitton. He told the Court that in June 2008 Ms Yang was referred to him by an accountant who he believed was called Mr John Vincent. He said that just prior to 10 June, Ms Yang came to see him accompanied by a male interpreter, and possibly other persons who he described as advisers. He was told about the bankruptcy notice which Smith FM had declined to set aside, and he was also told about Ms Yang's financial position.
6. Having received that information, he advised Ms Yang that he believed that she ought to present her own petition because she appeared to be insolvent. He agreed that if she did this he would consent to be her trustee, provided that her family made arrangements for the payment of his costs in the event that the estate had insufficient funds. Mr Whitton gave Ms Yang some papers which consisted of the debtor’s petition and a statement of affairs. He told her to take those papers away and to complete them and return them to him when she was ready. She did this and, on 10 June, she returned to his office. At that time, Mr Whitton spoke to her again and satisfied himself that she understood what was happening. She signed the petition, and he signed the consent to act as trustee. On 11 June, the documents appear to have been lodged with ITSA, and on 13 June the administration commenced.
7. Ms Yang tells the Court in her affidavits that she did not understand what she was getting herself into when she went to see Mr Whitton. She told the Court that she thought that Mr Whitton was an accountant, and she did not intend to utilise his services for the purposes of filing her own petition and having him as her trustee. She claims that she understands little English and she informed the Court that, approximately a week after the petition was accepted, she sought to have her decision reversed. Mr Whitton acknowledges this and indicated that although he believed there was nothing that could be done, he made inquiries of ITSA as to whether or not the arrangement could be reversed. He was told by ITSA that it could not and that his original advice to Ms Yang that she would have to make an application under s.153B to the Court was correct.
8. Ms Yang goes further in her application: she says that she is solvent, and that this is established by her statement of affairs. It is true that the statement of affairs exhibited to the affidavit of Mr Whitton indicates a surplus of some millions of dollars, but that surplus arises out of the existence of alleged debtors who have never been identified, and who Mr Whitton has been unable to confirm really exist.
9. The duty of the Court, in considering an application of this nature, is firstly to investigate whether or not the petition should have been accepted and, secondly, to consider whether it should exercise its discretion to grant the annulment: Re Deriu (1970) 16 FLR 420; Heinrich v Commonwealth Bank of Australia [2003] FCAFC 315 at [20] per Carr, Finn and Sundberg JJ).
10. I acknowledge that a petition that was presented on behalf of a person who understood no English whatsoever, and who did not know what the documents that she had signed were, or their import, could well be a petition that should not have been accepted. But I do not consider that the petition in this case was one such. The evidence of Mr Whitton was not seriously challenged by the debtor, and I have no reason to believe that he told the Court anything but the truth. What most impressed me about his evidence was the fact that he gave the papers to Ms Yang to take home and to consider in her own time, and then to return to him when she was ready. Ms Yang claims that the person who came with her on the day was not a good interpreter. That may be the case, but I am satisfied that Ms Yang was able to obtain sufficiently good interpretation services if she needed them and that her English is probably not as rudimentary as she would have the Court believe. After all, she has gone through what she accepts as some 15 or so pieces of litigation over the last 13 years, each time representing herself or representing her parents' interests.
11. Ms Yang returned to Mr Whitton a completed statement of affairs, and it seems to me that I can infer from that that she fully understood what she was doing. Mr Whitton said in the witness box that he explained to Ms Yang who he was, and the type of job that he did, and he was satisfied that she understood that he was consenting to be her trustee, and that she would be making herself bankrupt.
12. In these circumstances, I could not say that this was a petition that should not have been presented. Mr Bedrossian, who appears on behalf of the creditor, suggested in cross-examination of Ms Yang that there was a good reason why she had decided to ask Mr Whitton to revoke the appointment when she did. That was because she had appealed the decision of Smith FM, but had been told that the appeal would not be effective if she was a bankrupt by the time the appeal was heard. I make no comment on this other than to note it as a possibly reasonable explanation of Ms Yang's conduct.
13. I am also not satisfied that Ms Yang is solvent. There is a substantial judgment debt outstanding against her, which she has made no effort to pay over a number of years. I accept that she feels the debt is one that she should not have to pay, but so far as this Court is concerned it is in existence, and she is obliged to pay it.
14. In her statement of affairs Ms Yang disclosed 15 unsecured creditors totalling $2,229,516.00 and debtors which totalled $3,138,208.00 but were said to have an estimated realisable value of some $2 million more than that being $5,365,256.00. Mr Whitton told the Court that he had not obtained from Ms Yang any information as to why the realisable value was so much higher than the actual amount. In any event, he was unable to obtain any further information about who the debtors were and whether or not the money could be recovered.
15. There were other matters raised by Ms Yang in relation to her financial affairs. She has, it seems to me, confused her own personal position with that of companies with which she is associated including those involving her parents. I am not satisfied that Ms Yang is solvent. In fact, I think she is substantially insolvent. Mr Bedrossian provided evidence that, in addition to the judgment which founded the bankruptcy notice, there were several costs orders made against Ms Yang although none of them appear to have been assessed.
16. Taking all these matters into consideration, I am of the view that I should not accede to Ms Yang's request to nullify this sequestration order.
17. I order that the application be dismissed. The applicant is to pay the costs of the first respondent, to be assessed or taxed pursuant to the Federal Magistrates Court (Bankruptcy) Rules 2006.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: 27 February 2009