FEDERAL CIRCUIT COURT OF AUSTRALIA
COMMONWEALTH BANK OF AUSTRALIA v KALKBRENNER	[2013] FCCA 1914	

Catchwords: 
BANKRUPTCY – Creditor’s Petition – Notice Stating Grounds of Opposition to Petition – Application in a Case to transfer proceedings – no appearance by respondent debtor or legal representative at final hearing – no grounds of opposition to the Petition made out – Sequestration Order made. 	

Legislation:
Bankruptcy Act 1966 (Cth), ss.40, 43, 44, 47, 52
Federal Circuit Court (Bankruptcy) Rules 2006 (Cth), rr.4.02, 4.04, 4.06	

Cain v Whyte (1933) 48 CLR 639
Deputy Commissioner of Taxation v Debaugy (2012) 263 FLR 193
Re Cosimo Longo; Ex parte Cosimo Longo [1995] FCA 1324
Rookharp Pty Ltd v Webb & Anor (2011) 254 FLR 410	

Applicant:	Commonwealth Bank Of Australia Acn 123 123 124	

Respondent:	Robert George Kalkbrenner	

File Number:	SYG 2075 of 2013	

Judgment of:	Judge Lloyd-Jones	

Hearing date:	6 November 2013	

Delivered at:	Sydney	

Delivered on:	17 December 2013	

REPRESENTATION
Counsel for the Applicant:	Mr J. M. White	

Solicitors for the Applicant:	Ms R. Carter of K & L Gates 	

The Respondent:	There was no appearance by or on behalf of the respondent at the final hearing.	

ORDERS
(1)	A Sequestration Order be made against the estate of the Respondent Debtor, Robert George Kalkbrenner.
(2)	The Applicant Creditor’s costs, including any reserved costs, be paid from the estate of the Respondent Debtor, fixed in the amount of $13,772.62.
(3)	A copy of this Sequestration Order be given to the Official Receiver in Sydney within 2 days.  
THE COURT NOTES THAT:
(4)	The date of the act of bankruptcy is 27 August 2013.
(5)	A consent to act as trustee has been signed by Geoffrey Reidy and has been lodged with the Official Receiver in Sydney. 
(1)	
FEDERAL CIRCUIT COURT 
OF AUSTRALIA 
AT Sydney	
SYG 2075 of 2013
Commonwealth Bank Of Australia Acn 123 123 124	
Applicant

And

Robert George Kalkbrenner	
Respondent

REASONS FOR JUDGMENT
Introduction 
1.	On 4 September 2013, the Applicant Creditor, the Commonwealth Bank of Australia ACN 123 123 124 (“CBA”) filed a creditor’s petition (the “Petition”) in this Court against the Respondent Debtor, Robert George Kalkbrenner.  The debt founding the Petition arose pursuant to a judgment of the District Court of NSW, entered on 27 May 2013 in proceedings No. 2012/240731 in the amount of $148,475.42.  This matter first came before a Registrar of the Court on 8 October 2013 where it was adjourned to 28 October 2013 when the Duty Registrar referred the matter to this Court for consideration.  After a brief hearing during which both parties were represented and a brief summary of the status of the matter was provided to the Court, the following orders were made:
	1.  The respondent debtor file and serve all evidence relied upon by 4 November 2013.
	2.  The matter be listed for hearing on 6 November 2013 at 10.15am in court 6D, John Maddison Tower, 88 Goulburn Street, Sydney.  
Notice Stating Grounds of Opposition to Petition
2.	On 15 October 2013 Anthony Chimonis of Business Support Services (Legal) of Burwood Road, Hawthorne East, Victoria, filed on behalf of Mr Kalkbrenner a Notice Stating Ground of Opposition to the Petition (the “Notice of Opposition”) indicating that the Petition would be opposed on the following grounds.  
	1. The Applicant obtained the judgment against the Respondent on which the bankruptcy Notice was based following an ex parte hearing on 22 May 2031 in proceedings numbered 2012/240731 in the District Court of New South Wales at Sydney (“the Proceedings”).
	2.  The judgment was on a guarantee executed by Mr Kalkbrenner to secure the repayment of loan funds provided to Slate Pattern and Paving Pty Limited (deregistered) by the applicant in the sum of $125,000 in March 2012 for the purpose of the purchase of a concrete pumping vehicle for the sum of $160,000.  The borrower defaulted in June 2012, and the vehicle was seized and sold by auction by the applicant for the sum of $26,636.  The applicant sued the respondent for the alleged difference between the debt and the sale proceeds.
	3.  The respondent defended the Proceedings.
	4.  The respondent, who was at that time and all material times a resident of Victoria, was not present in person or by counsel during the hearing of the claim on 22 May 2013.
	5.  On 20 May 2013, a proposed expert defence witness, Mr J Pydde who was to give evidence about the true market value of the vehicle at the time of the auction, viz, $100,000 underwent a coronary procedure at Monash Medical Centre in Victoria and was therefore unable to appear to give evidence at the hearing on 22 May 2013.
	6.  The respondent became aware of the possible unavailability of Mr Pydd on 19 May 2013 and instructed his then solicitors, Commercial and Legal Solutions of Moorabbin, Victoria, to apply for an adjournment of the hearing on the ground that an indispensable witness was unavailable, by reason of illness to attend to give evidence.  A Notice of Motion and affidavit evidence in support was prepared by 21 May 2013.
	7.  The respondent’s solicitor’s arranged for an agent , Pope and Spinks, solicitors, to appear at the hearing of the Proceedings, to apply, and to adduce the affidavit evidence in support of an adjournment of the hearing.  The adjournment application was dismissed by the trial judge.  The agent had no instructions to appear to defend the Proceedings and was excused from further attendance.  The Proceedings were then heard and determined ex parte.
	8.  By reason of the refusal of the adjournment, the respondent was deprived of the opportunity to present testimony disproving the quantum of the applicant’s claim.
	9.  On 25 May 2013, the respondent suffered the first of three successive strokes and became unable, by reason of physical and intellectual impairments, to provide instructions to file an appeal against the refusal of the adjournment and against the verdict until about October 2013, well after the time for filing an appeal had expired.
	10.  The bankruptcy notice was served upon the respondent on 6 August 2013.  The respondent was unable, by reason of his disabilities to apply to set aside the Bankruptcy Notice.  
	11.  The respondent proposes to file an application to the New South Wales Court of Appeal within 14 days for leave to appeal out of time.  The substantive grounds of appeal will include:
	a)  the trial judge erred in not granting the respondent’s application to vacate the hearing date to enable a witness on quantum to be called;
	b)  the trial judge erred in permitting or requiring the final haring of the matter to proceed ex parte in the circumstances;
	c)  the trial judge erred in determining that the respondent was indebted to the plaintiff in the sum of $148,475.42.
	d)  the judgment ought to be set aside on the ground that the hearing miscarried by reason of denial of procedural justice to the respondent.
	His application for leave will be based upon his physical and intellectual disabilities during the period from 23 May 2013 until approximately October 2013.
	12.  Further or alternatively, the respondent will contend that this court should enquire into and consider the merits and reliability of the judgment in the Proceedings in the circumstances, in order to determine whether or not the debt claimed in the Bankruptcy Notice is sufficiently established by that judgment.
	13.  The respondent will contend that in the circumstances he has on offsetting counterclaim, set-off or cross-demand within the meaning of section 40(1)(g) of the Bankruptcy Act 1966 arising from:
	a) the failure of the applicant to exercise its power of sale under the under the loan agreement to the borrower in good faith,
	b) unconscionability within the meaning of Competition and Consumer Act 2010 under section 20, alternatively section 21 of the Australia Consumer Law, alternatively under the general law, including unconscionability arising from the exercise of the power of sale in bad faith; alternatively
	c) unconscionability within the meaning of sections 12CA, 12CB and 12CC of the Australian Securities and Investment Commission Act 2001 in relation to the provision of financial services; and
	d) the negligent conduct of that sale, whereby the interests of the borrower and the respondent were sacrificed.
	14. The respondent proposed to apply to set aside the Bankruptcy notice.  
Application in a Case
3.	On 4 November 2013 a document was faxed to the Court Registry from Mr Chimonis, received at 5:09pm.  The contents of that facsimile transmission were as follows:
a)	Letter from Business Support Services to the Federal Court Registry, Re: Commonwealth Bank of Australia – Robert George Kalkbrenner – No 2075 of 2013;
	Please find enclosed an Affidavit in support of Bankruptcy – Application in Case.  The hearing is listed for Wednesday 6 November, 2013.
b)	Application in a Case seeking the following order:
	
	Orders Sought
	That the Creditor’s Petition listed for hearing on 6th November 2013 be transferred to the Federal Circuit Court of Melbourne 3000.   
	Affidavit
	This application is supported by an affidavit made by Anthony Chimonis dated 4th November 2013 and Dr Pallavi Sharma dated 4th November 2013 and filed in the Court on 4th November 2013 is support of Application in a case.
c)	Affidavit of Anthony Chimonis sworn 4 November 2013, stating:
	I, Anthony Chimonis, of Suite 501-737 Burwood Road, Hawthorne East, Victoria 3123, Solicitor make oath and say as follows:
	1.  I am the Solicitor having the care and control of this matter and am authorised to make this Affidavit on behalf of the Respondent.
	2. Save where I say to the contrary I make this Affidavit from my own knowledge.
	3. I crave leave to refer to the Affidavit of Doctor Pallavi Sharma sworn 1st day of November, 2013.
	MEDICAL REPORT
	4. The Affidavit of Doctor Palliva Sharma deposes to insurmountable evidence of the Respondent’s current medical condition.
	BANKRUPTCY – APPLICATION IN A CASE
	5.  That the Respondent makes application for the Bankruptcy be heard in Victoria.  The Respondent has at all material times resided in Victoria signed with the Plaintiff all the purported loan documents in Victoria and requests the opportunity to be heard in Victoria.  There is no Prejudice to the Plaintiff with the matter being heard in Victoria as it is a national organisation and verily believe its legal advisors also have offices in Melbourne.  Furthermore, the Respondent intends to appeal the decision of the District Court.
	6.  It is respectfully requested that this Honourable Court grant the Respondent’s request for this matter to be transferred to Melbourne.  
d)	Affidavit of Dr. Pallavi Sharma;
e)	Exhibit “PS1”, being medical reports and diagnosis of the respondent.
4.	The Court’s Registry on Tuesday, 5 November 2013 forwarded an email to Mr Chimonis advising him that the Application in a Case had been received, but not filed.  The Registry advised:
	Mr Chimonis
	Your application has been received but not filed.
	Instructions from chambers were that you seek leave in court tomorrow to file your documents.
Hearing
5.	The Court’s Registry received, at 8:25am on the morning of the hearing on 6 November 2013, a facsimile transmission sent by Mr Chimonis indicating “that due to certain matters that there would be no appearance for the Respondent this morning.”  At the scheduled hearing time, Mr White appeared for CBA and there was no appearance by or on behalf of Mr Kalkbrenner.  The matter was called in the court precinct, but there was no appearance for the respondent.  
6.	Mr White made the following submissions in response to the Notice of Opposition.  By reason of what happened at the hearing in the District Court in May 2013, Mr Kalkbrenner claims that there was a witness who would have placed a much higher market value on the equipment sold by CBA than the price for which it was actually sold by CBA.  This leads to an argument that there was a sale of a secured asset at a significant undervalue for which CBA ought to be liable.  Mr White contends in response that, even taking the Notice of Opposition at its highest (Notice of Opposition at [5]), its contention is that a defence witness, Mr Pydde, was to give evidence.  The evidence he would have given is that the vehicle in question was sold at auction by CBA for the sum of only $26,636, but he valued it at $100,000.  That places a difference in the perceived value and sale price of $73,364.  That is the amount which Mr Kalkbrenner says ought to be brought into play to reduce the amount of the judgment debt.  The judgment debt as set out in the Petition is for the sum of $148,475.  If one was to subtract the market differential value of $73,364 that would still leave a balance of $75,111. The amount remains a substantial debt in any event.
7.	The question of whether a bankruptcy court should go behind a judgment arises when there is a substantial basis for questioning whether there is in truth and reality a debt owing.  This was addressed by his Honour Cooper J in Re Cosimo Longo; Ex parte Cosimo Longo [1995] FCA 1324 at [16], where he stated:
	16. The existence of a judgment is prima facie evidence of a debt (Re Frazer Ex parte Central Bank of London (1892) 2 QB 633 at 636). However a judgment is never conclusive in bankruptcy and the court has a discretion to go behind a judgment to determine whether there is in truth and reality a debt due (Wren v. Mahony [1972] HCA 5; (1972) 126 CLR 212 at 224-225). Before the court will exercise the discretion there must be established substantial reasons for questioning whether there is in truth and reality a debt owing to the creditor; the court will not inquire into the validity of a judgment debt as a matter of course (Simon v. O'Gormon Pty. Ltd. [1979] FCA 75; (1979) 27 ALR 619 at 633; Re David Ex parte Lahood (1979) 26 ALR 306 at 307). The requirement may more readily be met where there has been no adjudication on the merits, for example a default judgment and there exists a bona fide allegation that no real debt lies behind the judgment (Corney v. Brien [1951] HCA 31; (1951) 84 CLR 343 at 357-358; Petrie v. Redmond (1942) 13 ABC 44 at 49; Re Vojnovski (1970) ALR 355 at 359; Oliveri v. Stafford (1989) 24 FCR 413 at 422). 
8.	Mr White referred the Court to the decision of Barnes FM (as she was then) in Rookharp Pty Ltd v Webb & Anor (2011) 254 FLR 410 at [168]-[169] where her Honour stated:
	Going behind a judgment
	168.  It is not in dispute that the court has power to go behind a judgment that forms the basis for a bankruptcy notice (and hence for a creditor’s petition) to determine whether it is founded on a real debt on the basis that a sequestration order should not be made on the petition of a person who is not a real creditor. What is in issue is whether in truth and reality there is a debt due which can found a bankruptcy notice. 
In Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212 at 224-5; [1972] HCA 5 at [16] Barwick CJ (with whom Windeyer and Owen JJ agreed) pointed out:
	...the emphasis is upon the paramount need to have satisfactory proof of the petitioning creditor’s debt. The Court’s discretion in my opinion is a discretion to accept the judgment as satisfactory proof of that debt. That discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner.
	169. However the court will only go behind a judgment in this manner in order to determine whether the petitioning creditor’s debt should be struck out altogether, not merely to determine whether the judgment debt should be reduced, but rather to ascertain whether the creditor has a debt upon which the bankruptcy proceedings can be founded (see Oliveri v Stafford and Others (1989) 24 FCR 413; [1989] FCA 486 and Re Longo; Ex parte Longo (1995) 57 FCR 523; [1995] FCA 1324). The issues about calculation of interest and a payment of $10,000 are not such, even if made out, as to warrant going behind the judgment insofar as that is intended to be submitted for the debtor.
9.	Mr White argues that on its face and taking the Notice of Opposition at its highest, the exercise of pursuing the Notice of Opposition would still have been futile.
10.	When this matter was referred to this Court on 28 October 2013 both parties were represented by counsel.  Submissions were made on behalf of the respondent in respect of medical evidence concerning Mr Kalkbrenner’s health and it was indicated to the Court that affidavit material would be available by 4 November 2013.  Orders were made that Mr Kalkbrenner file and serve all evidence relied upon by 4 November 2013 and listing the proceedings for final hearing on 6 November 2013 at 10.15am.  On 4 October 2013 a notice of appearance was filed by the Mr Kalkbrenner’s legal representative, Mr A. Chimonis of Business Support Services (Legal). No correspondence has been received by the Court indicating any change in the status of Mr Kalkbrenner’s representation.  As indicated at [3]-[4] above, on 4 November 2013 the Court Registry received a facsimile transmission attaching an Application in a Case.  This document was received by the Court’s Registry, but was not filed.  On instruction from chambers the Registry advised Mr Kalkbrenner the most appropriate method of filing the Application in a Case would be to seek leave to file it in court at the scheduled hearing on 6 November 2013.  On the morning of the hearing at 8:25am the Court’s Registry received an email transmission which contained the following message:
	…We wish to advise that due to certain matters that there will be no appearance for the Respondent this morning.
	We apologise for short notice in this matter.
This notification was not supported by any explanation or affidavit material.  There was no indication that the solicitors had ceased to act or were without instructions.  Accordingly, in circumstances where a qualified legal practitioner, who was on the record in the proceedings, failed to properly indicate to the Court his reasons for not appearing at a final hearing, the Court is left with no choice but to proceed with the hearing of the Petition.  A petitioning creditor who has satisfied the requirement of s.52(1) of the Bankruptcy Act 1966 (Cth) is prima facie entitled to a sequestration order (Cain v Whyte (1933) 48 CLR 639 at 645-646).
 Evidence
11.	I now turn to the Petition itself.  CBA sought to rely upon the following evidence at the hearing of the Petition:
a)	Creditor’s Petition filed 4 September 2013;
	1.  The Respondent Debtor owes the Applicant Creditor the amount of $148,475.42 pursuant to a judgment debt of the District Court of New South Wales entered on 27 May 2013 in proceedings number 2012/240731.
	2.  The Applicant Creditor does not hold security over the property of the Respondent Debtor.
	3.  At the time when the act of bankruptcy was committed, the Respondent Debtor:
	(a) was ordinarily resident in Australia;
	4.  The following act of bankruptcy was committed by the Respondent Debtor within 6 months before the presentation of this petition:
	The Respondent Debtor failed to comply on or before 27 August 2013 with the requirements of a bankruptcy notice served on him on 6 August 2013 or to satisfy the Court that he had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross-demand that the Respondent Debtor could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.
b)	Affidavit verifying Creditor’s Petition sworn by Carl Vanjour on 29 August 2013;
c)	Affidavit of Service of the bankruptcy notice BN 161910 issued 19 June 2013, together with judgment/order dated 27 May 2013, sworn by Geoffrey Dunlop on 12 August 2013;
d)	Affidavit of Search sworn by Simone Jay Chatterton on 4 September 2013;
e)	Trustee’s Consent to Act Declaration of Mr Geoffrey Reidy signed 30 August 2013;
f)	Affidavit of Service of Creditor’s Petition sworn by Geoffrey Dunlop on 20 September 2013;
g)	Affidavit of Search sworn by Maria Marta Yum on 6 November 2013;
h)	Affidavit of Debt sworn by Carl Vanjour on 5 November 2013;
i)	Short Form Bill of Costs prepared by Brendan William Wyhoon, partner and Maria Yum, contact solicitor of K&L Gates Solicitors;
j)	Exhibit “A1”, being an email from Anthony Chimonis, sent Wednesday 6 November 2013 at 8.25am – advising “that due to certain matters there will be no appearance for the Respondent this morning” to Tanja Djukic, Senior Coordinator of the Registry of this Court.     
Formal Requirements for Issuance of a Sequestration Order
12.	The Court may make a sequestration order upon proof of the matters set out in s.52(1) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”), and subject to the jurisdiction to make sequestration orders under s.43 of the Bankruptcy Act and the conditions on which the creditor may petition under s.44 of the Bankruptcy Act being met. 
13.	Section 52(1) of the Bankruptcy Act provides as follows:
	(1)	At the hearing of a creditor’s petition, the Court shall require proof of:
	(a) The matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient),
	(b)  service of the petition; verified by an affidavit of service,
	(c) the fact that the debt or debts on which the petitioning creditor relies or is still owing;
	And, if it is satisfied with the proof of these matters, may make a sequestration order against the estate of the debtor.
14.	Section 43 of the Bankruptcy Act provides that the Court may make a sequestration order when:
	(a)	A debtor has committed an act of bankruptcy (Bankruptcy Act s.43(1)(a)); and
	(b)	Relevantly, at the time when the act of bankruptcy was committed, the debtor was personally present and an ordinarily resident in Australia (Bankruptcy Act s.43(1)(b)(i)).
15.	Section 44 of the Bankruptcy Act provides that the creditor’s petition is not to be presented, unless:
	(a)	The debt is more than $5,000;
	(b)	The debt is a liquidated sum due at law and payable immediately (Bankruptcy Act s.44(1)(b)); and
	(c)	The act of bankruptcy in which the petition is founded was committed within 6 months before the presentation of the petition (Bankruptcy Act s.44(1)(c)).
16.	The applicant creditor is also obliged by the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (“the FCC (Bankruptcy) Rules”) to put before the Court affidavits:
a)	Verifying the petition (Bankruptcy Act s.47(1), FCC (Bankruptcy) Rules r.4.02);
b)	As to search of records of the Court and of the Federal Court as to any application in relation to the Bankruptcy Notice (FCC (Bankruptcy) Rules rr.4.04(1)(a) and 4.04(2));
c)	Of service of the Bankruptcy Notice (FCC (Bankruptcy) Rules r4.04(1)(b));
d)	Of service of the documents required to be served under the FMC (Bankruptcy) Rules r.4.05 (FCC (Bankruptcy) Rules r.4.06(2));
e)	A search of the National Personal Insolvency Index no earlier than the day before the hearing date of the petition (FCC (Bankruptcy) Rules r.4.06(4)); and
f)	Of debt which the creditor still relies as owing (FCC (Bankruptcy) Rules r.4.06(4)).
Some of the requirements under the FCC (Bankruptcy) Rules overlap with those under the Bankruptcy Act.
17.	In relation to the matters requiring formal proof the Court finds as follows:
a)	The matters stated in the petition are supported by the:
i)	Affidavit of Geoffrey Dunlop sworn 12 August 2013 accompanying the petition (Bankruptcy Act ss.47 and 52(1)(a), FCC (Bankruptcy ) Rules r.4.02).  The bankruptcy notice was served on the respondent on 6 August 2013 at 4.30pm; and
ii)	Affidavit of Carl Vanjour sworn 29 August 2013 attached to the Creditor’s Petition verifying paragraphs 1, 2, 3 and 4 of the Creditor’s Petition; and
b)	The debt upon which CBA relies is still owing (Bankruptcy Act s.52(1)(c));
c)	The respondent debtor has committed an act of bankruptcy (Bankruptcy Act s.42(1)(a)) on 27 August 2013 pursuant to s.40(1)(g) of the Bankruptcy Act;
d)	At the time the act of bankruptcy was committed, the respondent:
i)	Was personally present in Australia; and 
ii)	Ordinarily resided in Australia (Bankruptcy Act s.43(1)(b));
e)	The debt owed by the respondent is $148,475.42, being a sum more than $5,000.00 (Bankruptcy Act s.44(1)(a));
f)	The debt of $148,475.42 is a liquidated sum, payable immediately (Bankruptcy Act s.44(1)(b));
g)	The respondent, Robert George Kalkbrenner, failed to comply on or before 27 August 2013 with the requirements of a bankruptcy notice served on him on 6 August 2013 (Bankruptcy Act s.44(1)(c));
h)	Searches of the records of this Court and the Federal Court have been made and no application has been made in either court in relation to the Bankruptcy Notice;
i)	The Bankruptcy Notice No. 161910 of 2013 was served on the respondent, Robert George Kalkbrenner, by personally serving it on him;
j)	That at least five days before the date fixed for the hearing of the petition:
i)	The Petition (FCC (Bankruptcy) Rules r.4.05(a));
ii)	A copy of the affidavit verifying the petition (FCC (Bankruptcy) Rules r.4.05(c)); 
iii)	A copy of the affidavit of search of court records (FCC (Bankruptcy) Rules r.4.05(c)); and 
iv)	A copy of the affidavit of service of the Bankruptcy Notice (FCC (Bankruptcy) Rules r.4.05(d)).
were served on the respondent, Robert George Kalkbrenner, personally; Affidavit of Geoffrey Dunlop sworn 20 September 2013;
k)	The National Personal Solvency Index was searched on 6 November 2013 (the same business day the petition was heard) (FCC (Bankruptcy) Rules r.4.06(3)) and that details of references in that index to the respondent are before the Court (FCC (Bankruptcy) Rules r.4.06(3)(a));
l)	A copy of the relevant extract of the Index is attached to the affidavit of search of Maria Marta Yum sworn 6 November 2013 (FCC (Bankruptcy) Rules r. 4.06(3)(b)(i)).  
m)	There is an affidavit of final debt of Carl Vanjour sworn 5 November 2013, being a person with knowledge of the facts sworn the day of the hearing of the petition that the debt on which the applicant creditor relies is still owing (FCC (Bankruptcy) Rules r.4.06(3)(c)). 
In the circumstances, the Court is satisfied that a sequestration order should be made against the estate of Robert George Kalkbrenner.
18.	A trustee’s consent to act declaration, sworn by Mr Geoffrey Reidy has been filed in these proceedings.
19.	Mr White submitted to the Court a Short Form Bill of Costs in the following form:
	Item Description		Amount	
	Solicitor’s Fees of making of Sequestration Order		$2,362	
	Fee for issue of Bankruptcy Notice		$440	
	Filing fee for Creditor’s Petition		$4,375	
	Agent’s Fees for Service		$230	
	Fee for Online Searches		$95.62	
	Fee for Court Attendance seeking Adjournment 		$270	
	Counsel’s fees for 2 Days		$6,000	
			$13,772.62	
	
20.	The decision in Deputy Commissioner of Taxation v Debaugy (2012) 263 FLR 193 per Lucev FM (as he was then) at [16]-[18] addresses the issue of costs.  His Honour stated:
	Costs in bankruptcy proceedings
	16. The position with respect to costs in proceedings under the Bankruptcy Act 1966 (Cth) in this Court was summarised in Maurice Blackburn Cashman v Grizonic & Anor (No. 2) where the Court said:
	The Court has a general power to order the payment of costs pursuant to s 79 of the Federal Magistrates Court Act 1999. Section 32 of the Bankruptcy Act 1966 provides that the Court "may, in any proceeding before it ... make such order as to costs as it thinks fit". Thus the award of costs is in the discretion of the Court. Under the Federal Magistrates Court Rules (see Rule 29.08 of the Federal Magistrates Court Rules 2001 and now Rule 13.01(1) of the Federal Magistrates Court (Bankruptcy) Rules 2006), unless the Court otherwise orders, a person who is entitled to costs in a proceedings to which the Bankruptcy Act 1966 applies is entitled to costs in accordance with Order 62 of the Federal Court Rules. Rule 21.04 of the Federal Magistrates Court Rules 2001 and Order 62 Rule 15 of the Federal Court Rules both provide that when costs are reserved, those costs follow the event, unless the Court otherwise orders.
	17.  An order for costs ordinarily refers to professional legal costs actually incurred in the conduct of the litigation. Usually, costs follow the event, and a successful litigant receives costs unless there are special circumstances justifying some other order.…
	18.  At the relevant times, r.13.01(1) of the Federal Magistrates Court (Bankruptcy) Rules 2005 (Cth) provided that a person was entitled to costs in a proceeding to which the Bankruptcy Act applies in accordance with O.62 of the then Federal Court Rules, unless the Court otherwise ordered. Rule 13.03(1) of the FMCA Bankruptcy Rules, to which r.13.01(1) of the FMCA Bankruptcy Rules is subject, then provided that if, as happened here, the Court makes a sequestration order against a debtor’s estate, a lawyer may charge for costs the amount stated in Item 43B of Schedule 2 to the then FC Rules applying on the date when the petition was presented…
(footnotes omitted)
21.	The total amount of costs sought in respect of these proceedings by CBA is $13,772.62 which increased pursuant to the adjournment of the proceedings in order for the respondent debtor to prepare for the presentation of material and arguments relating to the Notice of Opposition.  Ultimately, there was no appearance at the adjourned hearing nor was there any explanation for this non-appearance.  Consequently, CBA should be awarded its extra costs for counsel’s fees incurred as a result of the adjournment and make orders accordingly.  
I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Judge Lloyd-Jones

Associate:  

Date: 17 December 2013