The Owners of Strata Plan No.70691 v Milakovic [2010] FMCA 779 (14 September 2010)

Last Updated: 11 October 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

THE OWNERS OF STRATA PLAN No.70691 v MILAKOVIC

[2010] FMCA 779

BANKRUPTCY – Creditor’s petition – grounds of opposition not supported by evidence – sequestration order made.

Bankruptcy Act 1966 (Cth), ss.52(2)(a), 309(2)

McClymont & Anor v The Owners Strata Plan No 12139 [2009] FMCA 1079

Applicant:

THE OWNERS STRATA PLAN NO.70691

Respondent:

MLADJAN MILAKOVIC

File Number:

SYG1121 of 2010

Judgment of:

Smith FM

Hearing date:

14 September 2010

Delivered at:

Sydney

Delivered on:

14 September 2010

REPRESENTATION

Counsel for the Applicant:

Ms M Teh

Solicitors for the Applicant:

Grace Lawyers Pty Ltd

Counsel for the Respondent:

Mr J Merewether

Solicitors for the Respondent:

Merewether & Co, Solicitors (city agent)

ORDERS

(1) A sequestration order be made against the estate of Mladjan Milakovic.
(2) The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
(3) Note that the date of the act of bankruptcy is 12 May 2010.
(4) Note that a consent to act as trustee has been signed by Roderick Mackay Sutherland and has been lodged with the Official Receiver in Sydney.
(5) The applicant must within 2 days give a copy of this order to the Official Receiver in Sydney.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG1121 of 2010

THE OWNERS OF STRATA PLAN NO.70691

Applicant

And

MLADJAN MILAKOVIC

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. The applicant body corporate moves on a creditor’s petition filed on 21 May 2010 against Mr Milakovic. The petition alleges indebtedness in the sum of $18,265.17. An affidavit of debt filed today indicates that that has been reduced by $1,000. The indebtedness is based upon a Local Court default judgment obtained on 15 October 2009 in the sum of $10,663.88, together with further interest on that judgment and some further unpaid strata levies.
2. Although Mr Milakovic has filed a notice of grounds of opposition challenging his indebtedness, he has put forward no evidence upon which the Court would have any reason for going behind the default judgment in the Local Court. I therefore am not persuaded that I should not accept the affidavits verifying the petition in relation to indebtedness.
3. The petition relies on an act of bankruptcy occurring on 12 May 2010, being 21 days after 21 April 2010. The act of bankruptcy is alleged to have occurred by reason of non-compliance with a bankruptcy notice requiring payment within 21 days after 21 April 2010, being bankruptcy notice NN364 of 2010. The bankruptcy notice relied upon the default judgment of the Local Court, which I have referred to above.
4. The deemed date of service of the bankruptcy notice was fixed by an order for substituted service made by a Registrar under s.309(2) of the Bankruptcy Act 1966 (Cth) on 26 March 2010. From evidence later filed in support of an application for substituted service of the petition, I assume that this was based on evidence that Mr Milakovic was refusing to indicate an address where he could be served personally. In any event, compliance with the order for substituted service of the bankruptcy notice is now established by two affidavits showing service personally and by post on real estate agents who claimed to have authority to accept documents on his behalf.
5. I am satisfied that the act of bankruptcy occurred as claimed in the petition, and can see no grounds for doubting the validity of the bankruptcy notice and its service.
6. Although Mr Milakovic’s notice of grounds of opposition alleges that the debtor “has not committed an act of bankruptcy”, no submissions in support of that contention have been made to me by Mr Milakovic’s legal representative today. He suggested that there was some uncertainty as to the authority of the signatory to the bankruptcy notice and petition, who claimed to be the solicitor for the body corporate. However, no challenge to the solicitor’s retainer has been made, and no submissions were elaborated to explain that contention. I see no reason, as currently advised, to doubt the solicitor’s assertion of authority (cf. McClymont & Anor v The Owners Strata Plan No 12139 [2009] FMCA 1079 at [4]).
7. I am therefore satisfied that the petitioning creditor has made out an entitlement to a sequestration order.
8. The petition has been listed on a number of occasions before the Registrar, and Mr Milakovic has been legally represented on three previous occasions. He is therefore deemed to have been served with the petition. I am also satisfied by affidavits that the orders for substituted service of the petition were complied with.
9. On at least two of the previous occasions, Mr Milakovic has been directed to file evidence in support of his notice of opposition and further adjournment applications.
10. He has filed one affidavit purporting to be signed on 24 August 2010. This deposes to hopes that funds to pay this debt will be raised by the sale of properties claimed to be owned at Brighton Le Sands and King Street, presumably in Enmore or Newtown. However, no proper valuation evidence is provided, and the assertion of equity in these properties remains just that.
11. No further evidence has been filed to indicate what occurred at an auction sale of one of the properties, which the affidavit said was proposed for 11 September 2010. I am informed from the bar table that, in fact, the property was sold, but at an amount less than the mortgage owed to Westpac Bank. If that were true, then the outcome of the auction would not assist proof of solvency.
12. In my opinion, Mr Milakovic has been given more than ample opportunity to present to the Court evidence of an ability to pay his debts within a reasonable period of time, if not from current funds available to him. He has not presented that evidence.
13. I am not satisfied that he is able to pay his debts within the meaning of s.52(2)(a) of the Act. Nor am I satisfied that there is any other sufficient cause for declining to make a sequestration order today.
14. I am not satisfied that there is any good reason for further adjourning the petition.
15. I consider it appropriate to make a sequestration order today.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate:

Date: 8 October 2010