Kusumanadi, in the matter of Artemas v Artemas

1. The application is dismissed.
2. The Applicants, jointly and severally, pay the costs of the Respondent, J P Downey & Co, in the sum of $1,250. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

NORTH J: 1 Before the Court is an application to review orders made by a registrar of the Court on 3 October 2017. The registrar made a sequestration order against the estate of Julia Artemas, the respondent debtor. The order was made on the application of Joeng Kusumanadi and Muljati Sulimihardja, the applicant creditors. 2 The circumstances in which the order was made and the reasons for it are set out by the registrar in transcript as follows: On the 23rd of August 2017, the applicant creditors presented to the court a creditor's petition against the respondent debtor. The creditor's petition pleads that the respondent owes the applicants $400,000 pursuant to a judgment debt ordered by the Supreme Court of Victoria on the 26th of April 2017 and relies on, as in that bankruptcy, the respondent signing an authority under section 188 of the Bankruptcy Act 1966. That authority was signed on the 17th of May 2017 and authorised a registered trustee to call a meeting of the debtor's creditors and to take control of the debtor's property. At an adjourned meeting of creditors held on 6 July 2017, the respondent's proposal for a personal insolvency agreement was not accepted, and a resolution was passed that the debtor present a petition for bankruptcy. Creditors were advised of the non-acceptance of the proposal by letter from the controlling trustee Mr Downey, dated 13 July 2017. The creditor's petition presented to the court on the 23rd of August 20 2017 was served on the respondent on 6 September 2017. Following its presentation to the court, the applicant creditors have done all they are required to do under the Bankruptcy Act and the court's rules, and are prima facie entitled to the orders they seek. Today, the respondent appeared, as did a creditor, Mr Anan Wadija. Both the respondent and Mr Wadija made application for the petition to be adjourned. Leaving to one side whether or not Mr Wadija has standing to appear at the creditor's petition, I allowed him, represented by Mr Herbert of council [sic], to make application for an adjournment. The application was supported by an affidavit sworn today by Mr Wadija's agent in Australia, Mr Topalidis. In short, Mr Wadija makes application for an adjournment of the creditor's petition to allow him time to make application to set aside a ruling of Mr Downie that rejected Mr Wadija as a creditor and that the meeting of creditors be reinstated. Initially, counsel for Mr Wadija failed to identify any statutory provision that permitted Mr Wadija to make any such set aside application. Mr Herbert of council [sic] has now identified two sections of the Bankruptcy Act that would provide a statutory basis for such an application to be made. However, there is no evidence before the court as to why any such application has not been made before today. The meeting of creditors was held three months ago, and nothing has been done to challenge Mr Downey's decision. And although I accept that this was, in part, caused by a need to translate documents, what has happened in the intervening period is that another creditor has filed a creditor's petition based on an act of bankruptcy which has been committed and to which there is no opposition. The respondent also makes application for an adjournment of the petition on the basis that she wished to reconvene the part 10 meeting. No material was filed in support of that application, nor was any statutory or other provision identified which permits the respondent to recommence the part 10 process. In any event, I am not satisfied that the creditor's petition should be adjourned simply because the respondent debtor is unhappy with the result of a creditor's meeting following the signing of an authority under section 188. The central question on the return of a creditor's petition is the solvency of the debtor. In this petition, the debtor has committed an act of bankruptcy and is prima facie insolvent, and the respondent is not opposing the petition on the ground that she is solvent. The court has a discretion to adjourn the creditor's petition. However, in the circumstances of this petition, I am not satisfied and proper ground for an adjournment has been made out by the respondent or by Mr Wadija. And in circumstances where the respondent is clearly insolvent and the petitioning creditor has done what it is obliged to do, the applications for an adjournment should be refused and the petition should proceed. In coming to this conclusion, I have also taken into account that Mr Wadija can file a proof of debt in the debtor's bankruptcy, and any material he may have relied on to challenge Mr Downie's decision can be used to prove that debt. [Emphasis added.] 3 Also before the Court is an application brought by Mr Widjaja, and other creditors, against J P Downey & Co seeking an order pursuant to s 104(2) of the Bankruptcy Act 1966. 4 Mr J Topalides, an accountant who said he was the Australian agent of Mr Widjaja, sought leave to appear on behalf of the applicants in this matter. Leave was refused on the basis that Mr Topalides is not an Australian lawyer. 5 Mr Widjaja claims to be a creditor of Julia Artemas. J P Downey & Co was the controlling trustee for the Part X process under the Bankruptcy Act 1966. In the course of that process, Mr Downey rejected the claim of Mr Widjaja that he was a creditor of Ms Artemas. Mr Widjaja has since, as it seems, commenced proceedings in Jakarta in order to enforce his debt. 6 The purpose of the applications before the Court is to allow time for Ms Artemas to challenge the decision of Mr Downey not to accept Mr Widjaja's claim to be a creditor. She hopes that Mr Widjaja will exercise his vote, as a creditor at meetings, to her benefit. 7 There is a fundamental flaw the applications. The decision of Mr Downey was open to challenge under the Insolvency Practice Rules (Bankruptcy) 2016. However, under s 90-80 there is a strict time limit of 60 days from when Mr Widjaja became aware of the decision in the circumstances of this case. 8 It has been held in McIntosh v The Official Trustee in Bankruptcy [2014] FCCA 2502 at [11] that the time cannot be extended by the Court. 9 The decision of Mr Downey was made at the creditors' meeting on 6 July 2017. Mr Topalides, who attended the meeting, informed Mr Widjaja of the decision by telephone on 10 July 2017. By the time the matter reached the registrar for the hearing of the application for a sequestration order on 3 October 2017, the time available to challenge that decision had passed. That means that the application brought by Mr Widjaja against J P Downey & Co is bound to fail because the decision of Mr Downey cannot now be challenged and could not have been challenged as at 3 October 2017. It also means that the basis for the adjournment of the application for a sequestration order for that purpose could not succeed. It follows that both of the present applications are dismissed. 10 Mr Kusumanadi sought costs of the application for review on an indemnity basis because the application was bound to fail. Indemnity costs are saved for circumstances in which the conduct of the matter is outside the bounds of reasonableness. Whilst the argument of the Mr Kusumanadi succeeded, that argument was not forecast to the other side until today. There may have been grounds for indemnity costs if, as soon as the application had been filed the other side had been put on notice that if they continue, then indemnity costs would be claimed. Furthermore the matter was argued, albeit at a directions hearing on the 4 December 2017, without that argument being raised. In those circumstances, costs are allowed on the usual party-party basis. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.