Bankstown Grammar School Limited v Park (No 2) [2000] FCA 1218

FEDERAL COURT OF AUSTRALIA

Bankstown Grammar School Limited v Park (No 2) [2000] FCA 1218 BANKRUPTCY – Creditor's petition – Court not satisfied that debt owing. CONTRACT – Construction – contract to pay school fees – school erroneously thinking guardian had signed earlier contract to pay fees, having him sign acknowledgment that school entitled to cease tuition if fees not paid – whether acknowledgment itself constituted undertaking to pay fees. Bankruptcy Act 1966 (Cth) subss 52 (1)(c), (2) BANKSTOWN GRAMMAR SCHOOL LIMITED v KENNETH PARK N 7933 OF 1999 LINDGREN J 1 SEPTEMBER 2000 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 7933 OF 1999

In the matter of Kenneth Park

BETWEEN: BANKSTOWN GRAMMAR SCHOOL LIMITED (ACN 003 130 630)

APPLICANT

AND: KENNETH PARK

RESPONDENT

JUDGE: LINDGREN J

DATE OF ORDER: 1 SEPTEMBER 2000

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The creditor's petition be dismissed. 2. The applicant pay the respondent's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 7933 OF 1999

In the matter of Kenneth Park

BETWEEN: BANKSTOWN GRAMMAR SCHOOL LIMITED (ACN 003 130 630)

APPLICANT

AND: KENNETH PARK

RESPONDENT

JUDGE: LINDGREN J

DATE: 1 SEPTEMBER 2000

PLACE: SYDNEY

REASONS FOR JUDGMENT (No 2)

INTRODUCTION 1 The applicant ("the School") petitions for a sequestration order against the estate of the respondent ("Mr Park"). The act of bankruptcy relied on is non-compliance with a bankruptcy notice. The bankruptcy notice was founded on a default judgment obtained by the School against Mr Park in proceeding 6309/98 in the Local Court, Bankstown on 19 January 1999 for $17,815.72. The balance owing according to the creditor's petition was $14,126.38. The debt was said to arise from services provided by the School to a pupil named Hyung Gun Kim ("the Pupil") whose parents lived in Korea. For a time the Pupil lived with Mr Park. 2 On 29 February 2000, Mr Park filed a notice of motion in the Local Court seeking an order setting aside the judgment. By that time, this proceeding was well progressed, the creditor's petition having been filed on 17 August 1999. I heard the evidence on the petition on 10 May 2000 and made directions for the subsequent filing and service of submissions and for the hearing on 10 August 2000 of oral elaboration on them. On 23 May 2000 the judgment was set aside. 3 On 10 August 2000 I reserved my decision to a date to be advised. On 21 August 2000, while judgment was reserved, I ordered by consent pursuant to Order 35 r 7 ("the slip rule") that my order of 10 August 2000 reserving my decision to a date to be advised, be varied by the addition of an order nunc pro tunc that the period at the expiration of which the creditor's petition would lapse (by the operation of subs 52(5) of the Banktuptcy Act 1966 (Cth) ("the Act")) be extended for a period of fifteen months commencing on 17 August 1999. I delivered separate reasons for the making of that order. 4 Mr Park accepts that the setting aside of the judgment had no effect on his earlier commission of the act of bankruptcy and that at that time he was personally present and ordinarily resident in Australia. Accordingly, the Court's power to make a sequestration order against his estate given by subs 43(1) of the Act is enlivened. 5 Subsections 52(1) and (2) of the Act provide as follows: "52(1)At the hearing of a creditor's petition, the Court shall require proof of: (a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient); (b) service of the petition; and (c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing; and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor. … (2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made; it may dismiss the petition." Two issues have been argued: (1) Should I be satisfied that Mr Park owes to the School the debt on which it relies? (2) Should I be satisfied that Mr Park is able to pay his debts?