Ross v Jones, in the matter of McCloskey [2001] FCA 797

FEDERAL COURT OF AUSTRALIA

Ross v Jones, in the matter of McCloskey [2001] FCA 797 BANKRUPTCY – application by wife for annulment of former husband's bankruptcy consequent upon acceptance of debtor's petition – proceedings pending in Family Court of Australia – transfer of annulment application to Family Court of Australia Bankruptcy Act 1966 (Cth) s 35A, s 153B Federal Court Rules O 77 r 42 Re Sharpe; ex parte Powell v Donnelly (Lindgren J, 17 October 1996, unreported) followed Re Maas; ex parte Maas v Brien (Whitlam J, 17 July 1997, unreported) referred to Mitchell v McGillivray [2001] FCA 326 referred to Re Sabri; ex parte Sabri v Brien (1995) 60 FCR 131 followed IN THE MATTER OF CHARLES EDWARD MCCLOSKEY (A BANKRUPT) GLYNIS PAULINE ROSS v MICHAEL GREGORY JONES N 7209 OF 2001 STONE J 29 JUNE 2001 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 7209 OF 2001

IN THE MATTER OF CHARLES EDWARD MCCLOSKEY (A BANKRUPT)

BETWEEN: GLYNIS PAULINE ROSS

APPLICANT

AND: MICHAEL GREGORY JONES

RESPONDENT

JUDGE: STONE J

DATE: 29 JUNE 2001

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 This proceeding concerns an application for an order pursuant to s 153B of the Bankruptcy Act 1966 (Cth) ("Act") annulling the bankruptcy of Charles Edward McCloskey, the former husband of the applicant. Mr McCloskey was made bankrupt on his own petition which was presented on 2 April 2001. On 12 June 2001 I heard an application made by the applicant that this proceeding be transferred to the Family Court pursuant to s 35A of the Act. At the conclusion of the hearing I made the following orders: 1. an amended application, including particulars of the grounds upon which the annulment is sought, be filed by 4 pm on 12 June 2001; 2. this proceeding be transferred to the Family Court of Australia pursuant to s 35A of the Bankruptcy Act 1966 (Cth); 3. on the applicant giving the usual undertaking as to damages, the respondent be restrained from advertising for sale or from selling, disposing of or otherwise encumbering any assets or property which form part of the estate of the bankrupt, Charles Edward McCloskey without first giving the applicant seven days written notice.; 4. costs in the Federal Court of Australia to be determined by the Family Court of Australia. At the time I said that I would provide my reasons for making those orders at a later date. These are my reasons. 2 The application was supported by an affidavit sworn by the applicant on 30 April 2001. The following summary of facts is drawn from that affidavit which was not challenged by the respondent, the trustee of Mr McCloskey's estate. 3 The applicant and Mr McCloskey were married on 22 September 1979. There are four surviving children of the marriage, aged between seven and fifteen. The parties separated on 5 December 1998 and the marriage was dissolved by decree of the Family Court of Australia on 26 April 2000. The applicant (a medical practitioner specialising in endocrinology) and Mr McCloskey (a registered pharmacist) jointly own two properties in Ashfield, Sydney. One property ("Hardy Street property") is the former matrimonial home in which the applicant resides with the children of the marriage. Mr McCloskey resides in the other property ("Chandos Street property"). The parties have joint responsibility for the children who are to live with the applicant with contact allowed to Mr McCloskey. 4 The applicant alleges that lodging the debtor's petition was an abuse of process done merely to frustrate related proceedings in the Family Court of Australia ("Family Court"). The applicant alleges that Mr McCloskey was not insolvent when the debtor's petition was presented. The applicant claims that the matter should be transferred to the Family Court under s 35A of the Act so that the issue of the assets and liabilities of Mr McCloskey (and their true value) can be assessed in one place. It was submitted that, given the small amount of the deficiency and the claims made by the applicant, the matter should not be attracting costs in two courts. 5 The Family Court proceedings relate to an application filed by the applicant on 3 March 2000, seeking orders in relation to the children and the transfer of both the Hardy Street property and the Chandos Street property to the wife. Mr Freeman, counsel for the applicant, drew my attention to financial statements sworn by Mr McCloskey on 19 April 2000 and 25 January 2001. Without going into the details of those statements, they appear to show a substantial excess of assets over liabilities. The Family Court matter was fixed for hearing over three days commencing on Monday, 5 February 2001 but was postponed to Monday, 2 April 2001.