StockCo Agricapital Pty Limited, in the matter of Webb (Bankrupt) v Webb

Introduction 1 This is an application by a secured creditor for an order under s 33(1)(b) of the Bankruptcy Act 1966 (Cth) (the Act) allowing an amendment of a Creditor's Petition. That subparagraph in the Act provides that the Court may at any time allow the amendment of, relevantly, a written process under the Act. The secured creditor is StockCo Agricapital Pty Limited and it had a charge over two pieces of land owned by the debtors, Scott Daniel Webb and Aliza Maria Webb, as joint tenants. The charge arose as a result of a Master Livestock Agreement (MLA) between the secured creditor and the debtors. The secured creditor filed a Creditor's Petition in this Court on 29 August 2023. The Creditor's Petition did not refer to the secured creditor's charge. 2 The Creditor's Petition sought a sequestration order under s 43 of the Act against the debtors and contained the following grounds: 1. The respondent debtors owe the applicant creditor the amount of $373,008.40 being the sum of the amounts ordered to be paid pursuant to the Record of Monetary Judgment entered in the District Court of South Australia in case number CIV-23-000740 on 19 May 2023 (Monetary Judgment). 2. The applicant creditor does not hold security over the property of the respondent debtors. 3. At the time when the act of bankruptcy was committed, the respondent debtors were ordinarily residents in Australia. 4. The following act of bankruptcy was committed by the respondent debtors within 6 months before presentation of this petition: The respondent debtors failed to comply on or before 24 July 2023 with the requirements of a bankruptcy notice served on each of the First and Second Respondents on 2 July 2023 or to satisfy the Court the respondent debtors had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross demand that the respondent debtors could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained. 5. The applicant creditor provides the following information, to the extent it is known to the applicant creditor, for use by the Australian Financial Security Authority: • any alias used by the respondent debtors: Unknown. • the date of birth of the respondent debtors: Unknown. • the business name of the respondent debtors: Unknown. • the business address of the respondent debtors: Unknown. 3 The amendment which is sought by the secured creditor deletes para 2 as it presently exists and substitutes the following: 2. The applicant creditor is the holder of a charge against the property of the respondent debtors described as 44 Finniss Road, Victor Harbor SA 5211 (being Certificate of Title Volume 6136 Folio 977) and 19 Douglas Court, Tiddy Widdy Beach SA 5571 (being Certificate of Title Volume 5549 Folio 731) (collectively, the Properties) to the value of all amounts owing to them by the respondent debtors. The estimated combined value of the Properties is $1,214,000. The estimated unsecured debt owing to the Applicant after payment of the prior-ranking registered mortgagees' debt (which is estimated to be $855,000) is $14,000. 4 Section 44 of the Act is in the following terms: (1) A creditor's petition shall not be presented against a debtor unless: (a) there is owing by the debtor to the petitioning creditor a debt that amounts to the statutory minimum or 2 or more debts that amount in the aggregate to the statutory minimum, or, where 2 or more creditors join in the petition, there is owing by the debtor to the several petitioning creditors debts that amount in the aggregate to the statutory minimum; (b) that debt, or each of those debts, as the case may be: (i) is a liquidated sum due at law or in equity or partly at law and partly in equity; and (ii) is payable either immediately or at a certain future time; and (c) the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition. (2) Subject to subsection (3), a secured creditor shall, for the purposes of paragraph (1)(a), be deemed to be a creditor only to the extent, if any, by which the amount of the debt owing to him or her exceeds the value of his or her security. (3) A secured creditor may present, or join in presenting, a creditor's petition as if he or she were an unsecured creditor if he or she includes in the petition a statement that he or she is willing to surrender his or her security for the benefit of creditors generally in the event of a sequestration order being made against the debtor. (4) Where a petitioning creditor is a secured creditor, he or she shall set out in the petition particulars of his or her security. (5) Where a secured creditor has presented, or joined in presenting, a creditor's petition as if he or she were an unsecured creditor, he or she shall, upon request in writing by the trustee within 3 months after the making of a sequestration order, surrender his or her security to the trustee for the benefit of the creditors generally. (6) A secured creditor to whom subsection (5) applies who fails to surrender his or her security when requested to do so by the trustee in accordance with that subsection is guilty of contempt of court. 5 The secured creditor did not set out in the Creditor's Petition particulars of his or her security (s 44(4)). It has not included in the Creditor's Petition a statement that it is willing to surrender its security for the benefit of creditors generally in the event of a sequestration order being made against the debtors. It is not willing to surrender its security and, in those circumstances, it is a creditor only to the extent by which the amount of debt owing to it exceeds the value of its security (s 44(2)).

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