Gerval v Pascoe [1999] FCA 1167

FEDERAL COURT OF AUSTRALIA

Gerval v Pascoe [1999] FCA 1167 JIMMI GERVAL v SCOTT PASCOE Q 7244 of 1999 SPENDER J 20 AUGUST 1999 BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q 7244 OF 1999

BETWEEN: JIMMI GERVAL

Applicant

AND: SCOTT PASCOE

Respondent

JUDGE: SPENDER J

DATE OF ORDER: 20 AUGUST 1999

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: (1) The bankruptcy of Jimmi Gerval be annulled; (2) Mr Gerval pay the costs of the petitioning creditor of and incidental to the petition, including all reserved costs, to be taxed if not agreed; (3) Mr Gerval, on this application, pay the costs of the petitioning creditor, if any, and of the trustee, including reserved costs, to be taxed if not agreed; (4) Mr Gerval pay the reasonable costs of the administration undertaken by the trustee of his estate, to be taxed if not agreed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q 7244 OF 1999

BETWEEN: JIMMI GERVAL

Applicant

AND: SCOTT PASCOE

Respondent

JUDGE: SPENDER J

DATE: 20 AUGUST 1999

PLACE: BRISBANE

REASONS FOR JUDGMENT 1 This is an application pursuant to s 153B of the Bankruptcy Act 1966. Section 153B provides: "If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy." 2 Mr Jimmi Gerval applies for the annulment of his bankruptcy. It is first necessary for him to meet the threshold test of satisfying the Court that the sequestration order ought not to have been made: re MacDonald; Ex parte Deputy Commissioner of Taxation 1996 33 ATR 1. Then, if that threshold is met, the Court has power to exercise the discretion conferred by s 153B: Re Gollan; Ex parte Gollan (1992) 40 FCR 38. 3 The obligation on the applicant for an annulment is to demonstrate, in the light of facts that existed at the time the sequestration order was made, that the Court ought not to have made the orders that it did. In this particular case, similar to the circumstances in Re Gollan (supra), there was no fault in any way in respect of the Court's decision on the material then before it. 4 However, the material before the Court now establishes to my satisfaction that the debtor was solvent at the time of the making of the sequestration order. While that circumstance is not necessarily determinative of whether a sequestration order ought to be made, it is, of course, a highly persuasive circumstance. In this particular case, had the material now before the Court been put before the Court at the time of the application for a sequestration order, the Court would not have made that order. In those circumstances, the threshold test has been satisfied. 5 The material clearly shows that, at the time of the sequestration order, and now, the applicant for annulment was solvent. In addition, there are further circumstances relevant to the exercise of the discretion favourably to Mr Gerval: the Trustee does not oppose the annulment, nor does any creditor; the petitioning creditor's debt has been paid in full; and the other creditors have either been paid in full or have been the subject of arrangements with Mr Gerval, satisfactory to them, as to the debts owing to them. Further, Mr Gerval, through his solicitor, has provided undertakings to the Court to make payments of the petitioning creditor's costs and the Trustee's reasonable costs, charges and expenses of the administration. 6 The one factor which disturbs me as a factor in the exercise of the discretion is the circumstance that there appears, at least prima facie, to have been a breach of s 272(c) of the Bankruptcy Act 1966 by Mr Gerval. Pursuant to that section: "A person who: