Heinrich v Commonwealth Bank of Australia [2003] FCA 539

FEDERAL COURT OF AUSTRALIA

Heinrich v Commonwealth Bank of Australia [2003] FCA 539

BANKRUPTCY – application to annul sequestration order – application dismissed.

Bankruptcy Act 1966 (Cth), s 153B Commonwealth Bank of Australia v Heinrich [2000] SASC 20 referred to Re Deriu (1970) 16 FLR 420 cited Re Frank; Ex parte Piliszky (1987) 16 FCR 396 cited Stankiewicz v Plata [2000] FCA 1185 applied Re Williams (1968) 13 FLR 10 followed Cook (1946) 13 ABC 245 cited Re Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347 followed Re Scott [1975] Qd R 125 cited Re McCollom; Ex parte The Bankrupt (1987) 71 ALR 626 cited Heinrich v Commonwealth Bank of Australia [1999] SASC 210 cited Bank SA v Ferguson (1998) 151 ALR 729 cited Re Papps; Ex parte Tapp (1997) 78 FCR 524 cited STEPHEN GLENN HEINRICH v COMMONWEALTH BANK OF AUSTRALIA S 7015 of 2002 MANSFIELD J 6 JUNE 2003 ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY S 7015 OF 2002

BETWEEN: STEPHEN GLENN HEINRICH

APPLICANT

AND: COMMONWEALTH BANK OF AUSTRALIA

RESPONDENT

JUDGE: MANSFIELD J

DATE OF ORDER: 6 JUNE 2003

WHERE MADE: ADELAIDE

THE COURT ORDERS THAT: 1. The application is dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY S 7015 OF 2002

BETWEEN: STEPHEN GLENN HEINRICH

APPLICANT

AND: COMMONWEALTH BANK OF AUSTRALIA

RESPONDENT

JUDGE: MANSFIELD J

DATE: 6 JUNE 2003

PLACE: ADELAIDE

REASONS FOR JUDGMENT

introduction 1 The applicant Stephen Glenn Heinrich (Mr Heinrich) was made bankrupt by sequestration order made on 6 September 2000 on the petition of the respondent Commonwealth Bank of Australia (CBA). He now seeks an order under s 153B of the Bankruptcy Act 1966 (Cth) (the Act) annulling the bankruptcy. Section 153B empowers the Court to make such an order if it is satisfied that the sequestration order ought not to have been made. 2 The sequestration order was based upon the indebtedness of Mr Heinrich to the CBA determined by a judgment of the Supreme Court of South Australia on 24 February 2000 (the judgment) in Supreme Court Action No.1648 of 1993 (the debt action): Commonwealth Bank of Australia v Heinrich [2000] SASC 20. It determined that, as at 11 January 2000, Mr Heinrich was indebted to the CBA in the sum of $673,358.81 together with interest from that date. 3 Mr Heinrich contends that the sequestration order ought not to have been made because: (1) he is not, and at no material time has been, indebted to the CBA as it claims; and (2) the judgment was wrongly procured, based upon a certificate of indebtedness from an officer of the CBA Eric Hampton (Mr Hampton) dated 1 November 1999 (the certificate) when in fact he was not so indebted to the CBA. 4 The certificate certified the amounts due and owing by Mr Heinrich to the CBA at 1 November 1999 as $660,643.08. The increase in that sum to 11 January 2000 simply reflects interest accrued for the period between the certificate and 11 January 2000. The certificate was prepared from a ledger of the CBA, which was called in evidence and in submissions 'the shadow ledger'. The shadow ledger showed: Balance at 15 June 1998 $322,352.24 Interest written back on 15 June 1998 $253,648.06 Interest calculated monthly thereafter to 1 November 1999 $84,642.78 5 In support of his contentions, Mr Heinrich claims that: (1) the judgment was procured upon 'fraudulent documents claiming a false account indebtedness'; (2) a further certificate of indebtedness presented in support of the sequestration order was fraudulent because it was not based upon the true records of the CBA, but upon a certificate prepared from the shadow ledger (that certificate is not the certificate of 1 November 1999, but a later certificate of 8 June 2000 provided by an officer of the CBA Neil Smith) (Mr Smith); and (3) the judgment was procured upon inadmissible evidence, namely the certificate. 6 Counsel appearing for Mr Heinrich at the hearing refined the submission. He said that the facts proposed to be proved by Mr Heinrich on the application would show that the sequestration order ought not to have been made because: (1) the judgment was based upon inadmissible evidence, namely the certificate, because it reflected fraudulently false evidence as to the indebtedness of Mr Heinrich to the CBA; and (2) Mr Heinrich was not insolvent because he had assets sufficient to have paid the amount of his actual indebtedness to the CBA at the time of the sequestration order. Contrary to the assertion of Mr Heinrich in certain documents that at no material time was he indebted to the CBA at all, through counsel at the hearing he did not dispute that he has some ongoing indebtedness to the CBA, but was unable to identify what it was. He asserted nevertheless that he had sufficient assets to pay whatever real indebtedness he may have had to the CBA.