FEDERAL MAGISTRATES COURT OF AUSTRALIA
WK MARBLE & GRANITE PTY LTD v ATANASOVSKI	[2010] FMCA 226	

BANKRUPTCY – Creditor’s petition – adjourned to allow debtor to realise equity in home co-owned with estranged wife.	

Bankruptcy Act 1966 (Cth), s.52(2)(a)	

Applicant:	Wk Marble & Granite Pty Ltd
ACN 074 331 981	

Respondent:	Tony Atanasovski
T/as Sydney Home Loan Centre	

File Number:	SYG 1869 of 2009	

Judgment of:	Smith FM	

Hearing date:	23 March 2010	

Delivered at:	Sydney	

Delivered on:	23 March 2010	

REPRESENTATION
Counsel for the Applicant:	Mr C Trieu	

Solicitors for the Applicant:	CCSG Legal Pty Ltd	

Counsel for the Respondent:	Mr W Ward	

Counsel for Elite Cruise Company Pty Ltd ACN 101 176 158, First Supporting Creditor:	No appearance	

Counsel for Gasparre Tiling Pty Ltd, Second Supporting Creditor:	Mr J Merewether
Merewether & Co, Solicitors (city agent)	

Solicitors for the Second Supporting Creditor:	Whitfields Solicitors	

ORDERS
(1)	The petition is adjourned for further hearing on 30 April 2010 at 10.15am.  
(2)	The respondent must file and serve all additional evidence in support of his notice of opposition and any further adjournment application no later than 4pm on 27 April 2010.  
(3)	Costs reserved.  

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
Sydney	
SYG 1869 of 2009
Wk Marble & Granite Pty Ltd
ACN 074 331 981	
Applicant

And

Tony Atanasovski T/as Sydney Home Loan Centre	
Respondent

REASONS FOR JUDGMENT
(revised from transcript)
1.	This is a creditor’s petition filed on 5 August 2009, in which WK Marble & Granite Pty Ltd (“WK Marble”) relies upon a judgment against Mr Atanasovski obtained in June 2009 in the sum of $19,722.47.  The petition asserts an act of bankruptcy occurring on 13 July 2009, arising after the service of a bankruptcy notice relying upon the same judgment debt.  
2.	The petition has been adjourned several times by consent, with Mr Atanasovski being represented by a solicitor on one occasion and by himself on another.  On the last two occasions, he has been represented by his present counsel, acting on direct client instructions.  
3.	Two supporting creditors have indicated an interest in the proceedings, being the Elite Cruise Company Pty Ltd, who, I am told by another creditor from the bar table, is owed in the region of $15,000, and the other supporting creditor, Gasparre Tiling Pty Ltd (“Gasparre Tiling”), who is claiming indebtedness of $105,463.18 on a judgment obtained in the Local Court.  Gasparre Tiling has filed an interim application to be substituted as petitioner, but has not yet moved on that application.  
4.	Mr Atanasovski today seeks a further adjournment of the petition.  He relies on information in an affidavit he swore on 22 March 2010, and additional oral evidence was given by him.  
5.	Mr Atanasovski’s financial position is only obscurely shown on the current evidence.  It appears that he is in business as a mortgage broker personally in his own name under a business name, and also through at least one corporation, Sydney Home Loans Pty Ltd.  He has put evidence before the Court suggesting that the company’s accounts and also his own personal accounts might be in some disarray going back three years, at least in relation to their income tax affairs.  There is, however, no evidence of any major business insolvency occurring at this point, and prima facie the debts relied upon do not appear to arise out of Mr Atanasovski’s business affairs.  
6.	In support of the adjournment application, Mr Atanasovski points to his ownership with his wife of a valuable home at Sandringham.  There is evidence before me that this home has been the subject of estimated values of $4 million to $4.5 million, and that Mr Atanasovski and his wife, through Mr Atanasovski’s company, have borrowed money in the region of $2.7 million.  The title of the property shows security covering those borrowings, and also has caveats which might provide security to two other creditors, not including Gasparre Tiling.  Mr Atanasovski has given evidence today that these concern claims in the region of $122,000 only, which appear to relate to personal liabilities to his brother‑in‑law and also to an investor.  
7.	On the evidence of Mr Atanasovski, he and his wife therefore have a very substantial equity remaining in their home, which is clearly more than ample to pay the present creditors shown on the evidence before me, if it can be realised for that purpose.  
8.	Mr Atanasovski explains his failure to avail himself of that equity before today, by reference to the breakdown of his marriage, and the separation from his wife late last year.  He tells me that she has left the family home, and desires its sale.  She would cooperate in this, but is resisting its use as security to pay business or other debts of Mr Atanasovski.  He asserts that he has investigated methods of selling the home, and has decided that at this point the best prospects of an early sale are by private treaty with a prospective purchaser, with whom he is currently conducting negotiations.  He is sanguine that a contract with this purchaser will be entered into within four weeks.  The basis for his optimism is not apparent on any evidence before me, but I accept that he has that optimism.  Mr Atanasovski tells the Court that he would hope that if this contract can be entered into, and if it can be settled in the normal course, his current creditors will be able to be paid in full, including their costs, in two to three months’ time.  
9.	Evidence of this type may frequently not be sufficient to cause a bankruptcy court to decline to make a sequestration order.  The proposal expects creditors to wait for a substantial period, and to accept contingencies which may well not result in their being paid within a reasonable period of time.  Certainly, where the indebtedness and an act of bankruptcy are not contested, a creditor has a prima facie entitlement to expect the making of a sequestration order in the situation shown in the evidence today.  
10.	Mr Atanasovski relies upon only the ground in s.52(2)(a) of the Bankruptcy Act 1966 (Cth) in his notice of opposition to the petition, which appears to assert an ability to pay his debts within the terms of that paragraph.  However, the evidence in support of the ground is plainly insufficient to satisfy me, and the grounds of opposition would fail if I proceeded to hear the petition today.  As I have explained, the asset which is pointed to is far from liquid.  The evidence is completely lacking in a full statement of Mr Atanasovski’s financial affairs so as to provide the Court with a clear and complete picture of his income, expenses, liabilities and assets in his personal accounts.  It is plainly lacking in evidence establishing that all his unsecured creditors will be paid within a reasonable period of time, that is, in the near future.  
11.	However, I have been persuaded by the evidence today that it is in the interests of creditors generally, as well as in the interests of Mr Atanasovski and his wife, to give them a further opportunity to improve the evidence in support of the ground of opposition.  In particular by presenting to the Court clear evidence of the sale of the house or of a procedure which will produce the sale of the house and the payment of all creditors without any unreasonable delays.  
12.	In my opinion, on the current evidence, there is little prospect of creditors receiving payment through an insolvency of Mr Atanasovski in a time scale earlier than the proposal being put to the Court by Mr Atanasovski today.  Rather, there must be considerable uncertainty whether an insolvency administration would become, as well as very expensive to the estate of Mr Atanasovski, significantly protracted by reason of the necessity of a trustee in insolvency to obtain the cooperation of Mr Atanasovski’s estranged wife or face involvement in matrimonial litigation.  It is clearly in the interests of Mr Atanasovski and his wife, and their creditors, to continue to cooperate in relation to the sale of the house and distribution of its proceeds.  
13.	I accept Mr Atanasovski’s evidence that he believes that his wife is, at present, genuinely cooperating in that endeavour.  However, it will be necessary before I grant a further adjournment, for him to establish her consent to his proposals for the urgent payment of his creditors, including by way of affidavit from her which verifies her cooperation, or at least evidence of her signature on an executed contract for sale.  Similarly, a proposal to borrow from Mr Atanasovski’s son would need to be supported by affidavit from the son, verifying his involvement and explaining how this proposal would come about.  
14.	I am by no means confident that Mr Atanasovski will be able to achieve a contract for sale in the proposed five weeks’ adjournment of the petition.  Nor does his record of involvement in the proceedings in this Court before today, give me confidence that he will apply himself to file evidence necessary to obtain a further adjournment.  However, he should be on clear notice from today’s proceedings and this judgment that he will face a significant onus of persuasion on the next occasion, to avoid the making of a sequestration order on that day.  
15.	For the above reasons, I propose to adjourn the hearing of the petition for the period requested by Mr Atanasovski.  
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate:  Lilian Khaw

Date:  12 April 2010