FEDERAL COURT OF AUSTRALIA

Levy, as Executor of the Estate of Rand (Deceased), in the matter of Harpur (Debtor) v Harpur [2014] FCA 688

IN THE MATTER OF PAUL HENRY HARPUR

THE COURT ORDERS THAT:

1.    The personal insolvency agreement of Paul Henry Harpur made under Part X of the Bankruptcy Act 1966 (Cth) and dated 8 January 2014 be set aside.

2.    A sequestration order be made against the estate of Paul Henry Harpur.

3.    The applicants’ costs of the proceeding, including reserved costs, be taxed and paid from the bankrupt estate in accordance with the provisions of the Bankruptcy Act 1966 (Cth) and the Bankruptcy Regulations 1996 (Cth).

THE COURT NOTES:

That a trustee consent to act declaration has been made by David James Lofthouse and Michael Carrafa and that Kenneth Stuart Sellers and Alice Fay Ruhe no longer seek to act as trustees for the estate of the first respondent.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF PAUL HENRY HARPUR

REASONS FOR JUDGMENT

1    On 8 January 2014, the first respondent (Mr Harpur) made a Personal Insolvency Agreement (PIA) pursuant to Part X of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act). This is an application brought by the applicants under the Bankruptcy Act for orders:

(i)    setting aside the PIA on grounds specified by s 222(1)(d) of the Bankruptcy Act, that the terms of the PIA are unreasonable and are not calculated to benefit the creditors generally; and

(ii)    the making of a sequestration order against Mr Harpur’s estate as contemplated by s  222(10) of the Bankruptcy Act.

2    Section 222(1) and (10) relevantly provide as follows:

(1) If a personal insolvency agreement is in force, the Court may, on application by:

(a) the Inspector-General; or

(b) the trustee; or

(c) a creditor;

make an order setting the agreement aside if the Court is satisfied that:

(d)    the terms of the agreement are unreasonable or are not calculated to benefit the creditors generally; or

(e) for any other reason, the agreement ought to be set aside.

…

(10)    The trustee or a creditor may include in an application under subsection (1), (2) or (5) an application for a sequestration order against the estate of the debtor. If the Court, on the first-mentioned application, makes an order under this section setting the personal insolvency agreement aside, it may, if it thinks fit, immediately make the sequestration order sought.

3    The second and third respondents (the Trustees) are the joint and several trustees appointed under the PIA. The applicants are creditors of Mr Harpur and in support of their application they rely on the affidavit of Frank Levy dated 5 February 2014. Other creditors, namely Forvale Pty Ltd and Dominic, Nicola, Francesco and Salvatore Cullia also support the applicants’ application.

4    Despite being notified of this hearing, no other creditor of Mr Harpur has appeared.

5    The applicants and Mr Harpur have provided minutes of proposed consent orders in the following terms:

1.    The personal insolvency agreement of Paul Henry Harpur dated 8 January 2014 be set aside.

2.    A sequestration order be made against the estate of Paul Henry Harpur.

3.    David James Lofthouse and Michael Caraffa be jointly and severally appointed as Trustees of the estate of Paul Henry Harpur.

4.    The Applicants’ cost of this proceeding, including reserved costs, be taxed and paid from the bankrupt estate in accordance with the provisions of the Bankruptcy Act 1966 (Cth) and the Bankruptcy Regulations 1966 (Cth).

6    The Trustees neither consent nor oppose the consent orders sought by the applicants and Mr Harpur. The Court has also been informed that consent to act declarations have been made by David James Lofthouse and Michael Caraffa. Those declarations indicate that each of those persons is a registered trustee willing to act as the trustee of Mr Harpur should a sequestration order be made.

7    Counsel for the Trustees has informed the Court that the Trustees do not intend to act as the trustees of Mr Harpur’s estate should a sequestration order be made.

8    On the basis of the consent of the applicants and Mr Harpur to the Court making the proposed orders, informed by the contents of Mr Levy’s affidavit and applying the principles to which I referred in Osborne v Gangemi [2011] FCA 1252 at [42] to [47], I am satisfied in accordance with the terms of s 222(1) and (10) of the Bankruptcy Act that:

    the terms of the PIA are unreasonable and are not calculated to benefit Mr Harpur’s creditors generally; and

    that it is appropriate that an order sequestrating Mr Harpur’s estate be made.

9    For those reasons, I am prepared to make orders substantially in the form of proposed orders 1, 2 and 4. I do not consider it necessary that an order in the form of proposed order 3 be made. Section 156A(3)(a) will operate of its own force to appoint a trustee of Mr Harpur’s sequestrated estate. I am, however, prepared to note in the orders that I make that Mr Lofthouse and Mr Carrafa have consented to act as trustees and that the Trustees no longer seek to do so.

Associate:

Dated:    26 June 2014