Grguric v MERCEDES-BENZ Financial Services Australia Pty Ltd

[2010] FMCA 1020

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GRGURIC v MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD & ANOR [2010] FMCA 1020

BANKRUPTCY – Application for annulment on review of sequestration order – consideration of factors going to annulment.

Federal Magistrates Court (Bankruptcy) Rules 2006, reg.7.03
Bankruptcy Act 1966, s.153B

Vaucluse Hospital Pty Ltd v Phillips (2006) FMCA 44

Applicant: IVAN GRGURIC

First Respondent: MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD (FORMERLY DAIMLERCHRYSLER SERVICES AUSTRALIA PTY LTD)

Second Respondent: OFFICIAL TRUSTEE IN BANKRUPTCY

File Number: SYG 2779 of 2003

Judgment of: Raphael FM

Hearing date: 14 December 2010

Date of Last Submission: 14 December 2010

Delivered at: Sydney

Delivered on: 14 December 2010

REPRESENTATION

Solicitors for the Applicant: Sage Solicitors

Solicitors for the Respondent: Harris Freidman

ORDERS

1. The bankruptcy of the applicant Ivan Grguric NSW 1162/4/9 shall be annulled pursuant to s.153B of the Bankruptcy Act 1966 on the grounds that the Sequestration Order should not have been made.

2. Prior to the release of funds in Commonwealth Bank Cash Deposit Account Numbered 35933703 in the name of Sage Solicitors there be paid to the Second Respondent the sum of $8,179.78 being the trustee’s costs and disbursements in relation to the administration of the estate together with the sum of $2,200.00 including GST being the agreed costs of the Second Respondent’s solicitors in relation this application.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 2779 of 2003

IVAN GRGURIC

Applicant

and

MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD (FORMERLY DAIMLERCHRYSLER SERVICES AUSTRALIA PTY LTD)

First Respondent

OFFICIAL TRUSTEE IN BANKRUPTCY

Second Respondent

REASONS FOR JUDGMENT

1. There comes before me an application dated 9 November 2010 for orders in relation to a sequestration order that had been made on 2 March 2004 against Mr Ivan Grguric.  I am indebted to the submissions of Mr Condon for the applicant, and Mr Friedman for the respondent, in regard to the history of this matter.  It would seem that ever since Mr Grguric was made bankrupt he has argued that the debt involved (and later the debts of persons who filed proofs of debt in his bankruptcy) were debts incurred not by him but by his son of the same name.  For reasons which I find difficult to comprehend, very little was done in relation to the bankrupt’s estate, notwithstanding that he did not file a statement of affairs.  The one thing that did happen was when Mr Grguric and his wife sold their property his unencumbered one half share was placed, but with the consent of the official trustee, into a holding account in the name of his solicitors where it remains to this day.

2. During the course of 2010 Mrs Grguric obtained an assignment from the petitioning creditor and, not surprisingly, now consents to the orders which are being requested from this court.  Mr Friedman appears for the Official Trustee in bankruptcy and has provided a report in the form of an affidavit of Mr Christopher Chan.  That report reveals that there are outstanding creditors of a person named Ivan Grguric to the tune of about $285,000.00.  But Mr Tannous, in his affidavit, deposes to having served each of those companies with a standard form of notice pursuant to reg.7.03 of the Federal Magistrates Court (Bankruptcy) Rules 2006 and none of them have sought to appear in court today.  Mr Friedman tells me that his client, the official trustee, neither consents nor opposes the application.

3. The situation I am therefore faced with is that the assignee of the petitioning creditor consents to the application and the applicant himself indicates, in an unopposed way, that he was not the debtor at the relevant time and that his son who was the debtor, has, in his own insolvency proceedings, accepted responsibility for these debts. 

4. It is common today in applications of this nature to put the proposed orders in the alternative. From the point of view of the debtor the most advantageous alternative is a review of the decision to make the sequestration order because, if that is successful, the costs of the trustee in bankruptcy are not payable. The alternative is to seek an order annulling the bankruptcy pursuant to s.153B of the Bankruptcy Act 1966 (the “Act”).  In those circumstances the trustee retains an indemnity against his previous actions and is entitled to his costs.

5. The balancing of the court’s discretion in relation to these matters was comprehensively dealt with by Riethmuller FM in Vaucluse Hospital Pty Ltd v Phillips (2006) FMCA 44 and I have taken his Honour’s views into account. I note that the sequestration order was made in 2004, a very long time ago, and no application of this type has been made until today, six years later, even though it is said that Mr Grguric has been maintaining the position he puts today right from the start. I think this is a very significant matter in relation to the exercise of my discretion. Because, if Mr Grguric had been successful early on there would have been very little in the way of costs for him to have paid the official receiver. I also believe that it is in the interest of justice that applications of this type be made as quickly as possible and that, perhaps, making an annulment order as opposed to a review would encourage potential applicants to seek the assistance of the Court at the earliest possible opportunity. Faced as I am with the uncontested evidence of the applicant and the respondent’s neutrality and, in particular, with the failure of any of the notified creditors to appear, I am satisfied that it is appropriate to make an order bringing this bankruptcy to an end. I make the following orders:

   (i)The bankruptcy of the applicant Ivan Grguric NSW 1162/4/9 shall be annulled pursuant to s.153B of the Bankruptcy Act 1966 on the grounds that the Sequestration Order should not have been made.

   (ii)Prior to the release of funds in Commonwealth Bank Cash Deposit Account Numbered 35933703 in the name of Sage Solicitors there be paid to the Second Respondent the sum of $8,179.78 being the trustee’s costs and disbursements in relation to the administration of the estate together with the sum of $2,200.00 including GST being the agreed costs of the Second Respondent’s solicitors in relation this application

I certify that the preceding five (5) paragraphs are a true copy of the reasons for judgment of Raphael FM

Date:  23 December 2010