Svingos v Workcover Corporation [2009] FMCA 899 (12 August 2009)

Last Updated: 14 September 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SVINGOS v WORKCOVER CORPORATION

[2009] FMCA 899

BANKRUPTCY – Annulment of sequestration order pursuant to s.153B of the Bankruptcy Act – undertakings given – annulment granted.

Bankruptcy Act 1966 (Cth), s.153B

Boles v Official Trustee in Bankruptcy [2001] FCA 639; (2001) 183 ALR 239 Delph Sing v Wood & Ors [1918] HCA 69; (1918) 25 CLR 497 Hawthorne v Carter (Trustee), in the matter of Hawthorne (Bankrupt) [2006] FCA 1097 Rafaraci v Pearce Heers [2003] FCA 1307 Sandell v Porter [1966] HCA 28; (1966) 115 CLR 666

Applicant:

ANGELO SVINGOS

Respondent:

WORKCOVER CORPORATION ABN 83 687 563 395

Trustee in Bankruptcy:

ALAN GEOFFREY SCOTT

Supporting Creditor:

RESOURCECO PTY LTD ACN 068 976 803

Supporting Creditor:

CITY PAVERS

File Number:

ADG 246 of 2008

Judgment of:

Simpson FM

Hearing date:

10 August 2009

Date of Last Submission:

12 August 2009

Delivered at:

Adelaide

Delivered on:

12 August 2009

REPRESENTATION

Counsel for the Applicant:

Mr G. Gretsas

Solicitors for the Applicant:

Gretsas & Associates

Counsel for the Trustee:

Mr J. Clarke

Solicitors for the Trustee:

Cowell Clarke

Counsel for Resourceco:

Mr J. Stewart-Rattray

Solicitors for the Respondent:

Stewart-Rattray Lawyers

Counsel for City Pavers:

Mr F. Turner

Solicitors for City Pavers:

Scales & Partners

ORDERS

UPON NOTING the applicant, Angelo Svingos’ undertaking to the Court provided by way of his affidavit filed on 14 August 2009

AND UPON FURTHER NOTING that the Court accepts the undertaking of Angelo Svingos the applicant that:

(a) He will pay the agreed or taxed fees and disbursements plus GST and charges payable pursuant to the Bankruptcy (Estate Charges) Act 1997 (Cth) of his Trustee Mr Alan Geoffrey Scott (“the Trustee”);
(b) He will not seek to warn or otherwise seek to remove caveats registered by the Trustee over the properties at 13-15 Deloraine Road, Edwardstown SA comprised in Certificate of Title Register Book Volume 5275 Folio 986 (“the depot”) and 238 Oaklands Road, Morphettville SA comprised in Certificate of Title Register Book Volume 5668 Folio 70 (“the home”) (collectively called “the Properties”) until the agreed or taxed fees and disbursements of the Trustee have been paid and charges the Properties in favour of the Trustee to pay the amounts referred to in (a).
(c) He will not seek to further mortgage (including seeking further advances from existing mortgagees), charge or otherwise encumber the Properties without the written consent of the Trustee or Court Order.
(d) He will lodge within 60 days of this order, or such further time the Deputy Commissioner of Taxation may grant or such extended time as the Court may further order all outstanding income tax returns up to and including 30 June 2008 and pay all moneys owing on all assessments issued within such time as the Deputy Commissioner of Taxation allows.
(e) He will lodge all his outstanding Business Activity Statements (“the BAS”) up to and including June 2009 within 60 days of this Order or such further time as the Deputy Commissioner of Taxation may grant or such extended time as the Court may further order and make all payments owing on each BAS within such time as the Deputy Commissioner of Taxation allows.
(f) Subject to receiving the written consent of City Pavers to enter upon their land, that within 14 days of receiving such consent by his solicitor Mr Gretsas, he will at his cost engage an employee or agent (but not himself) to attend upon the property at 122-138 Railway Terrace, Mile End SA to remove at his cost the rubble previously dumped there by him at his own cost;
(g) Within 21 days he will make application to at least two financial institutions for sufficient finance to pay the proofs of debt of Origin Energy in the sum of $68.46, Southern Region Waste Resource Authority in the sum of $889.15, SITA Resourceco Alternative Fuels Pty Ltd in the sum of $6,713.46, Adelaide Hills Recycling in the sum of $7,008.50, Kemm Environmental Pty Ltd in the sum of $7,333.90, Resourceco Pty Ltd in the sum of $61,475 and the Deputy Commissioner of Taxation in the sum of $93,375.95 (“the claims of the creditors”) and will pay the claims of the creditors in full within 14 days of such finance being approved.
(h) In the event that the applications for finance in (g) to pay the claims of the creditors are unsuccessful or not approved within 42 days of this Order, he will immediately thereafter list and market to sell a sufficient amount of his plant and equipment to pay the claims of the creditors;
(i) In the event that the debts in (g) are not paid within 60 days of this Order, he will list market and sell the depot and will apply the net proceeds of sale to pay the claims of the creditors;
(j) He will not terminate his instructions to Mr Gretsas for a period of 60 days from this Order; and
(k) He will not contact or approach the Trustee, or his employees, agents or his solicitor personally, by telephone, email, facsimile transmission, letter or any other form of communication by himself or his employees or agents (save for his solicitor Mr Gretsas) until further order of the Court. If at the expiration of 60 days Mr Gretsas is no longer representing Mr Svingos, and further, no other solicitor is representing Mr Svingos, then Mr Svingos will only communicate with the Trustee, or his employees, agents or his solicitors by letter sent by ordinary prepaid post, or registered mail, or express post.

THE COURT ORDERS THAT:

(1) The bankruptcy of Angelo Svingos be and is hereby annulled pursuant to section 153B of the Bankruptcy Act, 1966 (Cth).
(2) Mr Svingos pay Mr Scott’s legal costs of this application to be taxed if not agreed.
(3) Liberty to apply on 24 hours business notice.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE

ADG 246 of 2008

ANGELO SVINGOS

Applicant

And

WORKCOVER CORPORATION

Respondent

ALAN GEOFFREY SCOTT

Trustee in Bankruptcy

RESOURCECO PTY LTD ACN 068 976 803

Supporting Creditor

CITY PAVERS

Supporting Creditor

REASONS FOR JUDGMENT

Introduction

1. I have before me an application for annulment pursuant to s.153B of the Bankruptcy Act 1966 (Cth) (“the Act”) of a sequestration order of the estate of the applicant, Angelo Svingos, made by a Registrar at this Court on 2 February 2009. The application was filed on 10 February 2009. The creditors’ petition relied on a judgment debt in the sum of $5,335.00 obtained in the Magistrate’s Court on 3 June 2008.
2. The applicant was not present or legally represented at the hearing of the creditors’ petition on 2 February 2009. On the evidence before me, I am satisfied on the balance of probabilities that although in September 2008 the applicant had been served with the bankruptcy notice upon which the creditors’ petition was based, the applicant did not receive copies of the creditors’ petition, the affidavits verifying the petition, the consent to act as trustee or a copy of the orders for substituted service and therefore did not know that there was a creditors’ petition hearing on 2 February 2009. The reason why the applicant did not receive the notification referred to was because the creditors’ petition and the other documents were posted to an address that did not exist, namely, 11 Deloraine Road, Edwardstown. The applicant’s correct postal address was 13 – 15 Deloraine Road, Edwardstown, at which premises he conducted a business called AAA Demolition and Cartage.
3. The petitioning creditor had correctly served the creditors’ petition and other documents as provided for in an order for substituted service made by the Registrar on 8 December 2008. The orders were in the following terms:
   • (1) Personal service on the respondent of creditors’ petition ADG246 of 2008, copies of the affidavits verifying the petition and a copy of any consent to act as trustee be dispensed with.
   • (2) In lieu of personal service, a copy of the creditors’ petition, copies of the affidavits verifying the petition, a copy of any consent to act as trustee and a sealed copy of this order be served on the respondent by prepaid ordinary post addressed to the respondent care of 11 Deloraine Road, Edwardstown, South Australia 5039.
   • (3) The documents be accompanied by a letter that states the date of posting.
   • (4) Service in accordance with this order shall be deemed good and sufficient service of the said documents upon the respondent.
   • (5) If service is affected in accordance with this order, the said documents shall be deemed to be served on the respondent on the seventh day after the date on which the method of service referred to in paragraph 2 hereof has been effected.
   • (6) The hearing date of the petition is amended to 2 February 2009 at 2.15 pm.
   • (7) Costs of an incidental to this application are reserved.
4. It will be seen that these orders for substituted service were different in a significant respect to the orders of 22 September 2008 for substituted service of the bankruptcy notice. Those orders were as follows:
   • (1) Personal service upon the respondent of Bankruptcy Notice number 205 of 2008 be dispensed with.
   • (2) In lieu of personal service, a copy of the bankruptcy notice together with a sealed copy of this order be served upon the respondent as follows:
     • (a) by prepaid ordinary post addressed to the respondent at 11 Deloraine Road, Edwardstown South Australia 5039.
     • (b) by prepaid ordinary post addressed to the respondent at care of 13 to 15 Deloraine Road, Edwardstown South Australia 5039.
   • (3) In each instance referred to in paragraph 2, the documents be accompanied by a letter that states the date of posting.
   • (4) Service in accordance with this order shall be deemed good and sufficient service of the bankruptcy notice upon the respondent.
   • (5) The bankruptcy notice shall be deemed to be served on 3 October 2008 upon the condition that the method of service referred to in paragraph 2 hereof occur on or before 26 September 2008.
   • (6) Costs of and incidental to the application be reserved.
5. It will be seen that substituted service of the Bankruptcy Notice required posting to both 11 and 13 – 15 Deloraine Road, Edwardstown whereas substituted service of the creditor’s petition required posting only to the 11 Deloraine Road address. The affidavit evidence before the Registrar on the application for substituted service of the creditor’s petition contained an error. The process server deponent believed that the property at which he was attempting service, namely, the premises of AAA Demolition and Cartage, was 11 Deloraine Road when, in truth, it was 13 – 15 Deloraine Road. The Registrar was unaware at the time that she made the sequestration order on 2 February 2009 that the creditors’ petition had been posted to an address that was not the applicant’s address. Had the Registrar known this, the Registrar would be bound to adjourn the creditors’ petition so that appropriate arrangements could be made for personal service or for substituted service of the documents to the correct address. (Hawthorne v Carter (Trustee), in the matter of Hawthorne (Bankrupt) [2006] FCA 1097).
6. It is, of course, a fundamental principle that a party should be served with an originating process (Rafaraci v Pearce Heers [2003] FCA 1307 at para.24.) In my view the sequestration order ought not to have been made but that is not an end to the matter.
7. Section 153B of the Act says that in circumstances where a sequestration ought not to have been made, the Court may – I stress that it says “may” not “shall” – make an order annulling the bankruptcy. This Court has a discretion to exercise and in doing so must take into account the whole circumstances in the exercise of its discretion. (Delph Sing v Wood & Ors [1918] HCA 69; (1918) 25 CLR 497 at 499.) An important discretionary consideration is the solvency of the applicant. The test of solvency is that laid down in Sandell v Porter [1966] HCA 28; (1966) 115 CLR 666 at page 670 where Barwick CJ said:
   • “An essential step in making out that a payment is a preference within s.95 is to establish by evidence to the satisfaction of the Court that the payer was, at the time of the payment, insolvent. Insolvency is expressed in s.95 as an inability to pay debts as they fall due out of the debtor’s own money. But the debtor’s own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time – relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor’s financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor’s inability, utilising such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. Whether this state of affairs has arrived is a question for the Court and not one as to which expert evidence may be given in terms though no doubt experts may speak as to the likelihood of any of the debtor’s assets or capacities yielding ready cash in sufficient time to meet the debts as they fall due.” (emphasis added)
8. The applicant here says that he was solvent at the time of bankruptcy. The Trustee in bankruptcy and the remaining supporting creditor, City Pavers, agrees. The applicant says his net asset position at the date of bankruptcy was as follows:
   • Assets: $2,286,418.65
   • Secured creditors ( current): $242,132.56
   • Unsecured creditors: $244,857.00

Giving net assets of: $1,799,429.09

9. The applicant has real estate in his own name in which he has substantial equity. He also has significant plant and equipment in his business that could be used as security for loans. I accept also that the applicant is presently earning less now than he would have had had he not been declared bankrupt. The bankruptcy resulted in a Caterpillar excavator being repossessed by a secured creditor with the result that the applicant was unable to complete his obligations in relation to a major demolition contract. Instead of receiving $363,000, the contract sum, he received only $205,000. The applicant is currently negotiating other substantial contracts.
10. For the last couple of months the applicant has been undertaking demolition work in relation to private residences. He demolishes approximately two houses per week and is paid between $8,000 and $11,000 per house. He expects this work to continue and I accept that he is justified in having this expectation.
11. Since the sequestration order was made the applicant, with the consent of the trustee, has been able to utilise some of his income, in particular an instalment payment of $90,000, to pay off some of his debts and to continue operating. A further instalment of $90,000 was used by the applicant to pay one of the secured creditors.
12. As previously mentioned at the time of the sequestration order the applicant had unsecured debts of $242,857 that related to 16 creditors.
13. The present status of the applicant’s unsecured debts are as follows:
    • City Pavers (This is a claim that is disputed

by the applicant and is a claim for rent

pursuant to an old agreement) $35,200.00

• The Deputy Commissioner of Taxation $93,375.95
• Origin Energy $68.46
• Southern Region Waste Resource Authority $889.15
• Sita Resource Eco Alternative Fuels Pty Ltd $6,713.46
• Adelaide Hills Recycling $7,008.50
• Chem Environmental Proprietary Limited $7,333.90
• Resourceco Proprietary Limited $61,475.00

Total $212,064.42

14. The applicant proposes the following orders:
    • “(1) Upon the following undertaking of the applicant:
      • (a) subject to his right to seek a taxation pursuant to section 162(6A) of the Bankruptcy Act 1966 and Regulation 8.09(1) of the Bankruptcy Regulations 1996 and any appeal there from (“the Taxing legislation”) that he will pay the agreed or taxed fees and disbursements of his trustee, Mr Alan Geoffrey Scott;
      • (b) that he will not seek to have removed the caveats lodged by Mr Scott over the properties at 13 to 15 Deloraine Road, Edwardstown comprised in Certificate of Title register book volume 5275 folio 986, (“the depot”) and 238 Oaklands Road, Morphettville, South Australia, comprised in Certificate of Title register book volume 5668 folio 70 until the agreed or taxed fees and disbursements of Mr Scott have been paid by way of bank cheque or an amount sufficient to cover the claimed fees and disbursements of Mr Scott are secured to the reasonable satisfaction of Mr Scott;
      • (c) that he will lodge within a reasonable time all his outstanding income tax returns up to and including 30 June 2008;
      • (d) that he will lodge all his outstanding business activity statements up to and including January 2009;
      • (e) subject to receiving the written consent of City Pavers to enter upon their land that within a reasonable period he will attend upon the property at 122-138 Railway Terrace, Mile End, South Australia 5031 and will remove the rubble previously dumped there by him at his own cost;
      • (f) that within 14 days of reaching an agreement as to fees and disbursements of Mr Scott or failing an agreement within 14 days of the taxation of Mr Scott’s fees and disbursements he will make application to at least two financial institutions for sufficient finance to pay the agreed or taxed fees and disbursements of Mr Scott as the case may be, (“the Scott finance application”);
      • (g) in the event that the Scott finance application is unsuccessful or not approved within three weeks of the initial application for finance then he will immediately thereafter list and market and sell a sufficient amount of his plant and equipment to pay the agreed or taxed fees and disbursements of Mr Scott;
      • (h) that within 21 days he will make application to at least two financial institutions for sufficient finance to pay the proofs of debt of Origin Energy in the sum of $68.46; Southern Region Waste Resource Authority in the sum of $889.15; Sita Resource Eco Alternative Fuels Pty Ltd in the sum of $6713.46; Adelaide Hills Recycling in the sum of $7008.50; Chem Environmental Pty Ltd in the sum of $7333.90; Resource Eco Pty Ltd in the sum of $61,475; and the Deputy Commissioner of Taxation in the sum of $93,375.95 (“the claims of the creditors”);
      • (i) in the event that the aforesaid applications for finance to pay the claims of the creditors are unsuccessful or not approved within five weeks of this order then he will immediately thereafter list and market and sell a sufficient amount of his plant and equipment to pay the claims of the creditors; and
      • (j) in the further event that he cannot sell his plant and equipment within a reasonable time then he will list, market and sell the depot and will apply the net proceeds of the sale to pay the agreed or taxed fees and disbursements of Mr Scott and to pay the claims of the creditors as the case may be.
    • the bankruptcy of Angelo Svingos is and is hereby annulled.
      • (2) Mr Svingos pay Mr Scott’s legal costs of this application to be taxed if not agreed; and
      • (3) Liberty to apply on 72 hours’ notice.
15. Should the Court be inclined to grant the annulment, the applicant proposes to seek finance as is clear from the proposed undertakings that were contained in his draft minutes of orders. The applicant says that he has been unable to seek finance to date as he did not know the approximate amount that he had to borrow as firstly, he did not know until shortly prior to the hearing on 10 August 2009, that is, two days ago, the amount of the Trustee’s claimed fees and disbursements. Secondly, he did not know whether the Court would require him to pay unsecured creditors, whether their claims were disputed or undisputed and thirdly, he did not know whether the Court would require the Deputy Commissioner of Taxation to be paid in full without regard to the possibility of that liability being reduced as a result of the imminent filing of the outstanding income tax returns and business activity statements.
16. Counsel for the Trustee in Bankruptcy recognised that the usual role of his client was not to take an active role in relation to an annulment application. He nevertheless submitted that this was an appropriate case for the trustee to take a more active stand and present submissions on the relevant facts and law.
17. The original contradictor, WorkCover Corporation, had been excused from further attendance on 21 April 2009 as the debt to it had been satisfied. The only supporting creditor who filed a notice of appearance, Resourceco Pty Ltd, excused themselves on the day of the hearing on 10 August 2009. A supporting creditor who had not filed a notice of appearance, namely, City Pavers, appeared on the day of the hearing by Counsel, but obviously that supporting creditor had had no prior involvement in the proceedings.
18. Counsel for the trustee submitted that the application for annulment pursuant to s.153B should be refused as discretionary factors suggested that the administration of the estate should continue to be conducted by the Trustee. The significant discretionary factor that Counsel for the Trustee pointed to was the applicant’s lack of cooperation with the Trustee and the applicant’s failure to comply with Court orders. Counsel for the Trustee referred me to the following affidavits filed on behalf of the Trustee, the Trustee’s affidavit filed on 18 February 2009, the affidavit of Georgio, filed on 6 March 2009, the affidavit of the Trustee filed on 10 March 2009, the affidavit of the Trustee filed on 20 April 2009, and the affidavit of the Trustee filed on 14 May 2009.
19. Since I heard argument two days ago, I have now had the opportunity of rereading those affidavits and the other material that is on the Court file. The documentation that is being used in this hearing is voluminous. The affidavits that the Trustee in Bankruptcy referred me to disclosed that firstly, on 5 February 2009, the applicant was advised that a sequestration order had been made. This was three days after the order had been made. The applicant said that he should not have been made bankrupt. Next, the affidavits show that on 9 February 2009, the applicant obtained a cheque from the applicant’s overdraft account without the Trustee’s authorisation.
20. The Trustee ensured that the cheque was stopped. On 10 February 2009, the applicant again told the Trustee that he should not have been made bankrupt. The next matter that comes from the affidavits is that on or about 11 February 2009, the applicant made a complaint to the police fraud squad regarding the Trustee’s conduct. Apart from contacting the Trustee, the police took no further action. The affidavits show that on 23 February 2009, the Trustee received a completed statement of affairs from the applicant.
21. The affidavits show that on 25 February 2009, the applicant applied to the Magistrates Court to have set aside the judgment debt on which the creditor’s petition was based. The application was ultimately dismissed.
22. The affidavits state that in March 2009, the applicant sent three letters of complaint to the Bankruptcy Regulation Branch of the Insolvency and Trustee Service concerning the trustee and one of his staff. Those complaints were also ultimately dismissed.
23. The affidavits show that the applicant failed to comply with the Court order of 10 March 2009, which was an order that sought to rectify a problem in relation to the application. The application that was originally lodged by the applicant was an application for review, but he later indicated that he was seeking annulment of the sequestration order. The Court made this order on 10 March 2009:
    • 1. The applicant do file and serve by 9 April 2009,
      • a. an affidavit identifying the grounds upon which he seeks an annulment of the sequestration order of 2 February 2009; and
      • b. such further affidavits on which he intends to rely on at the hearing of the application for annulment.
24. The next significant matter that the affidavits depose to is that on 20 April 2009, the Trustee had not received any formal approach from the bankrupt, with respect to dealing with proofs of debt, creditors generally, or any request from him to continue to trade. Affidavits go on to say that as at 20 April 2009, the bankrupt had failed to respond to the Trustee’s letter of 25 March 2009 requesting details of insurance over the applicant’s property. The further matter that concludes the information that I have obtained from the affidavits that were referred to me by Counsel for the Trustee, Counsel for the Trustee however brought to my attention a letter dated 28 April 2009, a letter from solicitors for the Trustee addressed to the applicant, Mr Svingos. The letter was in these terms:
    • “I refer to previous communications and our attendance before Magistrate Simpson in the Federal Magistrates Court on 21 April 2009. As I’ve mentioned in court on several occasions and again last Tuesday, an annulment of your bankruptcy (which will bring to an end, and you will be free to conduct your financial affairs in business) is for the court to make an order on your application where you will have to prove that the order for your bankruptcy ought not to have been made in the first place. Alternatively, your trustee be satisfied that all of your debts in bankruptcy have been paid in full.
    • Your debts in bankruptcy mean all debts that creditors approved in and includes interest payable on such debts, and the cost, charges and expenses incurred by Mr Scott in the administration of your bankruptcy including his remuneration. If Mr Scott is satisfied of this fact, he can file a certificate without court order to annul your bankruptcy. With respect, the material filed in court to date demonstrates that the bankruptcy order should have been made and that the only way your debt can be properly dealt with (including any you may dispute) is by a trustee in bankruptcy. At the end of the day, you must seek your own legal advice on this point.
    • In summary, I have advised Mr Scott that the only way to proceed to an annulment is for Mr Scott to annul your bankruptcy after all of your debts (and some may end being compromised) have been paid together will all interest costs and remuneration. The creditors that are listed in the exhibit to Mr Scott’s affidavit, that was provided to you last Friday, 17 April 2009, are creditors that have responded to Mr Scott’s correspondence and advertising. They are called proofs of debt. We now know (only as at last Tuesday) that WorkCover Corporation of South Australia, have been paid in full and no longer proceeding with the claim. Lucas Waste Management Proprietary Limited has also advised that they have been paid in full. You mentioned in court last Tuesday that there was an arrangement with the Australian Taxation Office and that all other creditors, apart from Adelaide Hills Recycling and City Pavers (which were disputed by you) had been paid.

You were unaware of the creditor, Barry Stoodley Proprietary Limited, but said that you would make arrangements to pay that claim. Mr Scott has now sought clarification from all of these creditors (other than WorkCover and Lucas Waste Management) because of your assertions. If you have received any receipts for payments of these claims, can you please forward them to me? You also advised the court that you would be seeking legal advice and that you had the financial resources to do that. I strongly urge you to do that as soon as possible and have your lawyer telephone me, so we can move forward in a positive way to conclude this matter, as soon as possible, and in a way that can minimise costs and expenses.

What needs to be done in the short-term are two things. Firstly, the trustee (with the assistance of your solicitor) resolving all outstanding creditors’ claims. This may mean compromising some of those claims, if the creditors will agree. If the creditors will not agree then the trustee must adjudicate the claim, which will then allow you or the creditor to file documents in court to review that decision. This process is time consuming and expensive and is best avoided if a compromise is possible. Secondly, you will need to arrange for finance to pay out the balance of your creditors (together with accrued interest) together with the trustee’s costs and expenses.
I again reiterate the urgency for you to brief a solicitor and have him or her contact me as soon as possible. It would be best if we can agree on a course of action to bring this matter to a speedy resolution, rather than you spending time and money in having prepared and filing affidavits in court and then spending further time and money in arguing the matter. I look forward to hearing from your solicitor.”

25. Now, it is reasonable to conclude from all of this material, both the affidavits and the contents of that letter from solicitors for the Trustee addressed to Mr Svingos, that the applicant was not as cooperative with the Trustee as he should have been. In addition, he lodged complaints with the police and regulatory bodies that, on the material before me, do not appear to have been justified. That is the general impression I have from the material that is before me. This action (and sometimes inaction) by the applicant has, no doubt, made this a difficult administration for the Trustee. It also, no doubt, has resulted in the trustee and his staff having to spend additional time on this administration than would otherwise have been the case.
26. I take into account, however, that the applicant is, and I do not say this in any insulting way, an uneducated and unsophisticated man. He is clearly not knowledgeable in legal matters and at all times that he appeared before me was exhibiting, in my view, obvious signs of stress as a result of the crisis caused to his business as a result of his bankruptcy. He clearly feels wronged in having the sequestration order made without first being heard and I have some sympathy for him in this regard. Whilst a different approach by the applicant after finding out about the sequestration order might have resulted in a speedier annulment, it cannot be denied that the bankruptcy has had a devastating impact on the applicant personally as well as financially.
27. The applicant has spent a lot of time since finding out about the sequestration order, in trying to arrange for creditors to be paid, and to a certain extent he has been successful. I must acknowledge that at a relatively early time, back on 23 February 2009, he provided the Trustee with a statement of affairs, although there is some criticism, I believe, made by the Trustee that the statement of affairs does not contain all of the material that it should. More recently, with the assistance of his solicitor and Counsel, Mr Gretsas, the applicant has now provided the Court with much of the necessary information about his financial affairs. It is a pity it did not occur at a much earlier point in time.
28. I do not consider that the applicant’s lack of cooperation with the Trustee here, to be in the same league as Mr Boles’ lack of cooperation in Boles v Official Trustee in Bankruptcy [2001] FCA 639; (2001) 183 ALR 239 (“Boles’ case”) a case cited by Counsel for the Trustee. I do not believe that the lack of cooperation in this case is as severe as Mr Boles’ conduct in that case. But, in any event, the additional discretionary considerations in Boles’ case strongly support the conclusion that in that case the application for an annulment should be dismissed. Many of the factors that were present in Boles’ case are not present here and the Court must, of course, consider all of the surrounding circumstances. No two cases will be the same. The circumstances here, as detailed above, lead me to the conclusion that the sequestration order should be annulled, pursuant to s.153B, providing that the applicant gives the undertakings referred to above, or such undertakings to similar effect as are acceptable to the Court.
29. In making the decision to grant the application to annul, I do not ignore the submissions put by Mr Turner, Counsel for the remaining supporting creditors, City Pavers. City Pavers claims a debt of $35,200, for rent, pursuant to a verbal agreement. It was properly acknowledged by Counsel for City Pavers that the dispute between City Pavers and the applicant would need to be decided in another court as there is a clear triable issue. Counsel for City Pavers submitted that should the Court be inclined to grant an annulment, it should be conditional on the applicant providing City Pavers with security for the alleged debt.
30. In circumstances where, as here, the alleged debtor has a bona fide basis for disputing an unsecured debt, I do not consider it appropriate to make it a condition of an annulment, pursuant to s.153B, that the debtor provides security. An unsecured creditor’s position should not be improved over other unsecured creditors, merely because he became a supporting creditor on the application to annul.
31. For the above reasons I propose to make the orders to be found at the beginning of these reasons subject to the undertaking, also to be found at the beginning of these reasons, being given by the applicant.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Simpson FM

Associate: J. Semler

Date: 11 September 2009