Australia and New Zealand Banking Group Ltd v Fakhoury [2004] FCA 704

FEDERAL COURT OF AUSTRALIA

Australia and New Zealand Banking Group Ltd v Fakhoury [2004] FCA 704 AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED v JOHN ZOA FAKHOURY N 92 OF 2004 GYLES J 18 MAY 2004 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 92 OF 2004

BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

APPLICANT

AND: JOHN ZOA FAKHOURY

RESPONDENT

JUDGE: GYLES J

DATE OF ORDER: 18 MAY 2004

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. A sequestration order be made against the estate of John Zoa Fakhoury. 2. The applicant creditor's costs including reserved costs (if any) be taxed (in accordance with the Federal Court Rules) and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966. 3. A stay be granted for a period of 14 days pursuant to the provisions of s 52(3) of the Bankruptcy Act 1966. 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 92 OF 2004

BETWEEN: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

APPLICANT

AND: JOHN ZOA FAKHOURY

RESPONDENT

JUDGE: GYLES J

DATE: 18 MAY 2004

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 In this matter, counsel for the respondent debtor has sought an adjournment of the hearing of the creditor's petition. The basis of the application for adjournment is that the debtor desires an opportunity of making inquiries in order to establish solvency. Counsel has read an affidavit of the debtor, sworn yesterday, which I have read on this application for adjournment although it has been indicated by counsel for the creditor that objection might be taken if it were read on a substantive basis. 2 Having considered the contents of that affidavit, I am not satisfied that there is any realistic opportunity for the debtor to establish solvency within an acceptable period of time. It is well established that matters of sequestration should be dealt with promptly where that is possible. I need not set out in these remarks the contents of the affidavit except to say that the affairs of the debtor are intertwined with the affairs of a group of companies each of which is in liquidation and in relation to each of which receivers and managers have been appointed. 3 The debt is extremely substantial and the affairs of the companies are no doubt complicated. There is nothing to indicate that any rights that the debtor may have in relation to those companies could total the approximately $40 million which would be required to establish solvency. The exercise that will be involved in assessing the affairs of the companies will, I would venture to predict, take months or years rather than days or weeks. The point is made for the debtor that it is the creditor in this case that has the greatest available knowledge of the affairs of these companies and that it has been unforthcoming in giving details to the debtor. I take that into account in considering the situation but I remain unconvinced that there is any realistic adjournment which could advantage the debtor and not disadvantage those with an interest in his bankruptcy. That interest is, of course, much wider than simply the petitioning creditor in this case. 4 I take into account that, in one sense, there is no prejudice to the creditor beyond delay and costs. However, as I have indicated, there is a general public interest in the proper disposition of these matters and the delay and costs that affect the petitioning creditor cannot be said to be of no significance. I therefore reject the application for adjournment. 5 I should also note that one basis for the application for adjournment was that the debtor is in Tasmania today. I do not see that as being a point in his favour but rather a point against him. This matter was first before the Court on 28 April. On that day an adjournment was granted on the basis that, amongst other things, evidence would be filed by Friday 14 May. That was not done. The affidavit in question was served yesterday afternoon and in a form that is not necessarily completely admissible. In those circumstances, for the debtor to not be available today is trifling with the Court. 6 I am satisfied that the debtor committed the act of bankruptcy alleged in the petition. So far as the matters pursuant to s 52 of the Act are concerned, I am satisfied that those matters have been proved. I should deal particularly with the question of s 52(1)(c). Counsel for the debtor points out that the original debt was $50,295,576. The affidavit debt which is relied upon by the petitioning creditor of today indicates an amount outstanding of $42,974,492 inclusive of interest and costs, credit having been given for an amount of $10,327,168, the debt having been reduced through the realisation of assets. 7 Cross-examination of the deponent of that affidavit reveals that, by affidavit of 27 April, he had sworn to realisations at that stage of $9,872,168.23, and an amount owing as at that date of $37,205,193.49. These discrepancies were put to the witness in cross-examination. He gave an explanation for each. The realisation was effected by a particular overdraft having been cleared and the discrepancy in amount owing, which is the more important discrepancy, was related to an error in the manner in which the bank had kept its records. 8 Counsel suggests that in these circumstances I cannot be satisfied about the evidence that has been led today. In my opinion, the evidence should be accepted. Explanations have been given that have indicated that there was an error in relation to the most important discrepancy and I do not have any basis upon which I can reject that evidence. I am therefore satisfied with the proof of all matters required by s 52 of the Act. In relation to all matters of what might be called formality, appropriate evidence has been led and no issue has been raised about any of those matters. 9 I therefore make a sequestration order against the estate of John Zoa Fakhoury. I order that the applicant creditor's costs including any reserved costs be taxed in accordance with the Federal Court Rules and paid from the estate of the respondent debtor in accordance with the Act. Under the Bankruptcy Regulations a copy of this sequestration order will be given to the Official Receiver in Sydney within two days. It is noted that the date of the act of bankruptcy is 10 January 2004. I note Exhibit A which is a consent to act as trustee which has been signed by the trustee, Scott Pascoe, and lodged with the Official Receiver in Sydney. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.