Kardy J. v The Chase Manhattan Bank Australia Ltd [1995] FCA 194

NOT FOR DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA) GENERAL DIVISION ) BANKRUPTCY DISTRICT OF THE ) No NP 3043 OF 1994 STATE OF NEW SOUTH WALES ) Re: JAMES KARDY Debtor Ex parte: THE CHASE MANHATTAN BANK AUSTRALIA LIMITED (formerly known as CHASE AMP BANK LIMITED) Creditor CORAM: Lindgren J PLACE: Sydney DATE: 21 March 1995

REASONS FOR JUDGMENT Before the Court this morning is a creditor's petition. The proceedings arise out of a judgment debt recovered by the petitioning creditor on 13 March 1991 in the District Court at Parramatta in a sum of $47,914.32 plus $140 for costs. A bankruptcy notice was issued on 26 April 1994 and there is evidence that this was served on the debtor on 23 June 1994 at 11 Boronia Road, Greenacre. That bankruptcy notice called for compliance within 14 days. It was not complied with. The creditor's petition was presented on 11 October 1994. This was served on the debtor on 1 November 1994. Although subsequently a question was raised as to service, this is no longer persisted in. The creditor's petition had a return date of 2 December 1994. On that occasion the proceedings were before the Registrar and the matter was adjourned to 14 December 1994 on which date the debtor telephoned the Registry and there was a further adjournment to 16 December 1994. On that occasion the debtor appeared as did the solicitor for the judgment creditor. Before the Registrar on 16 December 1994 there was apparently some discussion as to service and it was noted by the Registrar that the debtor acknowledged receipt of the creditor's petition and accompanying documents and had them with him in Court. Therefore, so it was noted, personal service was dispensed with. It was also noted on that occasion that the debtor admitted liability to the petitioning creditor, and I might add that before me today also the debtor has conceded the indebtedness. There was a further adjournment to 28 February 1995 on which occasion the matter came before Registrar Quinn and was referred to Beazley J who was sitting as Duty Judge. The matter was stood over yet a further time into her Honour's list on 14 March 1995 on which occasion apparently the matter was stood over to today before the Duty Judge in which capacity I have heard the matter. The debtor has filed two documents on which he relies and which I treat as a notice of opposition to the creditor's petition. One is a statement of facts bearing date 27 February 1995 and the other is a statement of facts bearing date 14 March 1995. I have read them both carefully. Earlier this morning the debtor indicated the nature of his opposition to the making of a sequestration order. First, he said that he had not been served with the documents which gave rise to the judgment debt. Secondly, he said that the creditor had breached an arrangement entered into with him. In relation to the first ground the debtor has said several times during the hearing that there is no dispute that he owes the money the subject of the judgment debt. Moreover, he has not applied to set aside the judgment and has not explained why he has not done so. In these circumstances, whether there was an irregularity preceding the obtaining of the judgment or not, I would not embark upon a detailed consideration of the alleged irregularity; see Re Ferguson; Ex parte E.N. Thorne & Co Pty Ltd (In Liquidation) (1969) 14 FLR 311. In relation to the second matter, the debtor has, in oral submissions, elaborated upon the arrangement which he says was made with the creditor. He says that this was an arrangement made in October/November 1990. The nature of it is extremely vague. The arrangement seems to have been that the Debtor's house would be sold for an amount which would yield sufficient money to pay out both the Commonwealth Bank which was first mortgagee and the present petitioning creditor. In fact, the debtor has tendered in Court this morning a transfer dated 7 February 1991 from the Commonwealth Bank of Australia as mortgagee exercising power of sale showing a consideration of only $950,000. I say "only" in view of the fact that, according to the debtor's submission from the bar table, the arrangement made was that it would be sold for full market value which he asserts to have been of the order of $1,600,000. I am not satisfied, on the basis of the generalised assertion of a vague arrangement of that kind, that the case is one in which a sequestration order should not be made. Unfortunately, it is commonly complained by mortgagors that mortgagees sell mortgaged properties for less than their market value. But having regard to the right at law of a mortgagee, in the absence of special circumstances, to sell the mortgaged property when the occasion for sale arises, usually, at least, the mortgagor is without remedy. Certainly there is no obligation on a mortgagee to defer exercising the power of sale until a hoped for upturn in the market occurs enabling a "peak price" to be realised. I am not persuaded that the debtor has made out a ground why the sequestration order should not be made. In these circumstances, although one must always have some sympathy for a person in the debtor's position, I propose to make the orders to which I think the petitioning creditor is entitled. I am satisfied that the debtor committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters of which subsection 52 (1) of the Bankruptcy Act 1966 requires proof. I make a sequestration order against the estate of the debtor. I order that the petitioning creditor's costs, including any reserved costs, be taxed and paid in accordance with the Act. I direct that a draft of this order be delivered to the Registrar within 7 days in accordance with sub-r 124 (2) of the Bankruptcy Rules. I certify that this and the preceding 4 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren. Associate: Dated: 4 April 1995 Heard: 21 March 1995 Place: Sydney Decision: 21 March 1995 Appearances: The debtor appeared in person. Mr P Newton, solicitor, of Heidtman & Co, solicitors, appeared for the Creditor.