Commonwealth Bank of Australia v Qureshi [2009] FMCA 1111

1. There comes before me today an application for a sequestration order against Zia Ul-Islam Qureshi. Mr Qureshi is not in court. On 29 October he swore an affidavit filed in this court on 30 October saying that due to his ongoing illness he is unable to attend court. Mr Qureshi's ongoing illness, whilst embarrassing, has not caused him to be bedridden but I note the views of his medical attendants who have provided reports dated 25 May 2009 and 27 October 2009 that because of this condition he is unfit to attend court. I say only this, that it would appear that Mr Qureshi has had symptoms for which he consulted his specialist urologist first in September 2000, and it would appear that he has not taken any urgent steps to act upon what would seem to be his doctor's recommendations. I any event, I am not convinced that Mr Qureshi's appearance today would have swayed my views having taken into account all the evidence and the submissions of the applicant creditor as well as Mr Qureshi's submissions which are contained in the balance of the affidavit.
2. The background to this matter is familiar. A bank has obtained a very substantial judgment against a former customer. The customer objected to the claim and there was a lengthy trial before Einstein J in the Supreme Court of New South Wales which resulted in the judgment. The date of that decision was 28 August 2007. In the chronology, which I have placed with the papers, there is a reference to a finding of his Honour's which I do not propose to further publicise in these reasons but which can be found in that document.
3. On 29 August 2007 the final orders were made and entered in the Supreme Court and, on 31 August 2007, a bankruptcy notice was taken out. That bankruptcy notice was served on 13 September 2007. On 25 September 2007 Mr Qureshi filed a notice of appeal without appointment in the New South Wales Court of Appeal and sought a stay of the orders of Einstein J. The stay application was heard by Mason P and was refused.

Mr Qureshi told Mason P that he had made an application to set aside the bankruptcy notice. In the chronology previously referred to there is an extract from his Honour's decision where he says at [5] to [7]:

"If the bankruptcy notice is not set aside and a petition is presented then the parties will understand my present intention on the material that I have presently seen to protect the judgment debtor provided he prosecutes his appeal diligently.

I would therefore hope that he will understand it is in his interests to file a notice of appeal more quickly than 25 December, and I would hope that the bank would understand that if he does that then unless it intends to move to have the proceedings summarily dismissed as an abuse of process then it may be prepared to agree to a stay of the bankruptcy proceedings after the presentation of the petition. That will be a matter for the bank in the first instance. It will be a matter for this court if agreement is not reached between the parties and it becomes necessary for a further application for a stay to be made.

I do want Mr Qureshi to understand that if he comes to this court seeking a stay against the making of a sequestration order the court would expect him to have exercised more expedition than he has so far in prosecuting his right of appeal."

1. The bankruptcy notice was the subject of an application to set aside. That application was dismissed by this court and the appeal against the decision was dismissed by Emmett J in the Federal Court on 13 December 2007. Notwithstanding the admonishment of Mason P Mr Qureshi's appeal was deemed discontinued on 24 December 2007. But he was able to have the court provide him with more time on 4 February. He complied with the court's orders and filed a notice of appeal with appointment on 7 February 2008. On 25 February 2008 Mr Qureshi was successful in an expedition motion in the Court of Appeal. However, the actual appeal was not heard until late July 2009. This was after a number of applications by Mr Qureshi for more time and for adjournments which are detailed in the chronology that I have referred to. In the meantime, the bankruptcy petition, which is before me today, had been issued and was extended by Registrar Kavallaris until 7 November 2009 on 26 May 2008. Today is 3 November and I am informed by Mr Zahra, who appears for the creditor, that the Court of Appeal decision has not been handed down and there is no indication that it will be handed down before the petition otherwise expires.
2. It is settled law that a court in bankruptcy will be reluctant to make a sequestration order against a debtor when the primary debt in respect of which the order is sought is still the subject of an appeal, particularly when it is the subject of an appeal of first instance, i.e. an appeal to the court immediately superior to the court in which the decision was made; Ahern v Deputy Commissioner of Taxation [1987] FCA 312; 76 ALR 137. But this principle is not one in respect of which there can be no variation and this court has in the past been prepared to make sequestration orders even though there is an extant appeal. See Boumelhem v Commonwealth Bank of Australia [2008] FCA 1568 and Sexton v Tagget [2007] FMCA 1438.
3. What the court has to do in these instances is to balance the public interest in proceedings with the bankruptcy of an otherwise insolvent person with that person's right to challenge the debt in respect of which the petition has been issued. Mr Qureshi, in his affidavit, whilst arguing that bankruptcy would cause him professional and personal embarrassment, and might affect the education of his children, also says:
   • "I can say on oath, that I have not attempted to move assets in the last two years, or at any time, as I have none. I am currently a tenant in a rented house in Roselands, and struggle to keep the rent paid.
   • ...
   • The Respondent claims that it's "clawback period" terminates on 7 November 2009. But as demonstrated, there are no assets that can be "clawed back", and I respectfully state there is no prejudice to the bank."
4. This would appear to me to be an admission that Mr Qureshi is not a person of any means. If I acceded to his request, the effect would be that the bankruptcy petition would become stale and would lapse in four days time. If that occurred, and Mr Qureshi was unsuccessful in his appeal, the bank would have to recommence bankruptcy proceedings by issuing another bankruptcy notice and another petition, a state of affairs which I do not think is reasonable, bearing in mind the very lengthy time that Mr Qureshi has had to argue against the decision of Einstein J.
5. If Mr Qureshi had acted as he had been advised by Mason P a decision in this matter would have been received a very long time ago. I further note that no stay of execution has been granted in respect of the judgment, that Mr Qureshi had opportunities to try and apply for such a stay but either did not take them or they were unsuccessful and, therefore, to a great extent, he is the author of his own misfortunes with regard to this petition.
6. I have considered the evidence of the applicant, including two affidavits of Christine Elizabeth Hilder, sworn 22 October 2009 and 3 November 2009, the latter providing Mr Qureshi with notice of today's hearing. The former affidavit provides some further information concerning the dilatoriness of Mr Qureshi in proceeding with the appeal. In all the circumstances, I am not prepared to exercise my discretion to grant Mr Qureshi an adjournment which would effectively bring the proceedings to an end. I have heard Mr Zahra and am satisfied that the respondent committed the act of bankruptcy alleged in the petition.
7. I am satisfied with the proof of the other matters required by s.52 of the Bankruptcy Act 1966 (the "Act"). I make a sequestration order against Zia Ul-Islam Qureshi. I order that the applicant's costs, including reserved costs if any, be taxed and paid from the estate of the respondent in accordance with the Act. Under the Bankruptcy Regulations a copy of this sequestration order be given to the Official Receiver in Sydney within two days. The court notes that the date of the act of bankruptcy is 9 October 2007. I note that a Consent to Act as Trustee has been signed by Mark Robinson and has been lodged with the Official Receiver in Sydney.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Raphael FM.

In paragraphs 4 and 9 of these Reasons for Judgment the spelling of Mr Zahra has been amended.