Helfenbaum v St George Bank Ltd [2001] FCA 1392

FEDERAL COURT OF AUSTRALIA

Helfenbaum v St George Bank Ltd

[2001] FCA 1392 BANKRUPTCY – sequestration order – discretion to make – solvency - onus

Bankruptcy Act 1966 (Cth) ss 40(1)(d) and 52(2)(a) Insolvency Act 1915 (Cth) s 49(8) International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 – referred to King v Commercial Bank of Australia Limited (1921) 29 CLR 141 - discussed Sarina v Council of the Shire of Wollondilly (1980) 32 ALR 596 - discussed St George Bank Ltd v Helfenbaum [1999] FCA 1337 - discussed JEFFREY LEON HELFENBAUM v ST GEORGE BANK LIMITED V 627 of 2001 WILCOX, von DOUSSA and FINKELSTEIN JJ MELBOURNE 7 AUGUST 2001

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 627 of 2001

On appeal from a single judge of the Federal Court of Australia

BETWEEN: JEFFREY LEON HELFENBAUM

Appellant

AND: ST GEORGE BANK LIMITED

Respondent

JUDGES: WILCOX, von DOUSSA and FINKELSTEIN JJ

DATE OF ORDER: 7 AUGUST 2001

WHERE MADE: MELBOURNE

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

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 627 of 2001

On appeal from a single judge of the Federal Court of Australia

BETWEEN: JEFFREY LEON HELFENBAUM

Appellant

AND: ST GEORGE BANK LIMITED

Respondent

JUDGES: WILCOX, von DOUSSA and FINKELSTEIN JJ

DATE: 7 AUGUST 2001

PLACE: MELBOURNE

REASONS FOR JUDGMENT

WILCOX J: 1 I agree with the reasons for judgment of Finkelstein J. I add one observation. Section 52(2)(a) of the Bankruptcy Act 1966 (Cth) confers a discretion upon the court to dismiss a bankruptcy petition where it is satisfied, the onus being on the debtor, that the debtor is able to pay his or her debts. The Full Court commented on this provision in Sarina v Council of the Shire of Wollondilly (1980) 32 ALR 596 at 600 as follows: "The power conferred upon the court by section 52(2) is permissive, not mandatory, although it seems that the occasions on which the discretion not to dismiss the petition might be exercised would not be frequent. It may in a proper case require the refusal of a sequestration order, yet permit the adjournment of the petition rather than its dismissal. The variety of circumstances that may arise in particular cases renders plain the undesirability of seeking to define parameters of the exercise of the power." 2 I accept that approach and agree it is undesirable to seek to define parameters on the exercise of the power. However, it is important that debtors who seek to rely on this discretion understand the necessity to provide clear proof of their assets and their value and of the extent of their liabilities. The debtor must also establish that the assets can be realised quickly enough to enable them to be used for payment of the debtor's debts as they fall due. It is not sufficient to raise a series of possibilities about recovery of debts and realisation of assets and invite a trial judge to speculate about them. Also, if a claim against the debtor is disputed, the debtor has the onus of negativing that claim. Because of the failure of the appellant to follow these rudimentary rules, the trial judge rightly declined to exercise his power under s 52(2)(a). I certify that the preceding two (2) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.