[2002] FMCA 6

BANKRUPTCY - Creditor's petition - formal requirements for making of sequestration order - order made.

Bankruptcy Act 1966 (Cth), s.52(1)

(1) The estates of ABDUL KHALIK SHAH and NAZREEN FAIREEN SHAH be sequestrated.

(2) The petitioning creditors' costs, including any reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).

(a) The date of the act of bankruptcy is 25 April 2001.

(b) A copy of this order is to be provided to the Official Receiver in Sydney within two days of the date of this order.

1. On Tuesday, 27 November 2001 I made orders for the sequestration of the estates of ABDUL KALID SHAH and NAZREEN FAIREEN SHAH. I now provide reasons for my decision. These two matters came before me on Tuesday, 27 November 2001 at Sydney from the Registrar's bankruptcy list. Both matters were contested creditor's petitions. Mr Shah appeared in person and there was no appearance by his wife Nazreen Faireen Shah in the other matter. Mr Shah purported to represent his wife but this was objected to by Mr Tees, for the petitioning creditor. I was told that Mr Shah had been purporting to represent his wife for some time but there had been no appearance by her and no authority from her for Mr Shah to represent her. I directed that the matter proceed on the basis that Mr Shah was representing himself but that there was no appearance by his wife. Hence the matter concerning Nazreen Shah proceeded on an undefended basis.

2. The only basis upon which Mr Shah resisted the creditor's petition was that he alleged that he was able to pay his debts and that the creditor had agreed to accept a lesser amount than the amount claimed under the bankruptcy notice. I was told that debt arose from a judgment in the Local Court and was one of a number of debts incurred by Mr Shah in a failed business venture. Mr Shah told me that he had been able to pay off all of his creditors with the exception of the petitioning creditor. He had attempted to set aside the judgment of the Local Court but that was unsuccessful. I was also told that several instalment orders had been made for payment of the judgment debt but these had been discharged following non-compliance. The creditor pressed for the sequestration order before me.

3. Mr Shah deposed that he had assets available in Fiji which would permit him to pay the judgment debt but that it is not possible for him to remove more than $20,000 per annum from Fiji. The amount due under the bankruptcy notice was $24,000 so it appeared that it would take Mr Shah two years to withdraw sufficient funds from Fiji in order to pay the debt. This was unacceptable to the petitioning creditor. Mr Shah sought to introduce evidence of without prejudice discussions between himself and the petitioning creditor but I did not permit him to do so, on the basis that the discussions were privileged. In any event, it seemed that those discussions had not resolved the matter and the petitioning creditor was pressing for immediate payment or sequestration.

4. I then permitted Mr Shah to make an oral application for an extension of time to comply with the bankruptcy notice in order to seek to reinstate the instalment orders that he had apparently previously obtained but then lost through non compliance. I did not grant that application on the basis that it appeared that there had been several earlier instalment orders which had not been complied with and an attempt to set aside the decision of the Local Court had previously failed. In the circumstances it did not appear to me that there was any reasonable prospect that a further attempt to obtain an instalment order would be successful. It would have been vigorously opposed by the petitioning creditor.

5. I then satisfied myself that the debtors had committed the acts of bankruptcy alleged in the petition against them and satisfied myself with the proof of the other matters of which subsection 52(1) of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act") requires proof. The only issue which required further consideration was whether the petitioning creditor should have filed updated affidavits of search and debt. Affidavits of search and debt had previously been filed immediately before the matters came on before a Registrar but some time had passed since the adjournment of the hearing of the creditor's petition. I decided not to require updated affidavits of search and debt on the basis that, where upon the hearing of a petition, the evidence required under s.52(1) has been adduced, it is not necessary, in the event of the hearing being adjourned, to give at such adjourned hearing similar evidence under the same subsection: Re Winby; ex parte Winby (1886) 3 Mor 108.

6. I then made sequestration orders against the estates of both debtors and ordered that the petitioning creditor's costs, including reserved costs, if any, be taxed and paid in accordance with the Bankruptcy Act. I finally noted that the act of bankruptcy of both debtors is 25 April 2001 and that, under the Bankruptcy Regulations, a copy of the Court's orders must be given to the Official Receiver in Sydney within two days of entry of the order. No consent of the trustee was required on the basis of the creditor's intention that the Official Receiver would act as trustee.

I certify that the preceding six (6) paragraphs are a true copy of the reasons for judgment of Driver FM