Li v Wu

• Jurisdiction: Australia Federal only
• Judge: GRIFFITHS J
• Judgment Date: 09 June 2020
• Neutral Citation: [2020] FCA 776
• Date: 09 June 2020
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Li v Wu [2020] FCA 776

File number:	ACD 84 of 2019
Judge:	GRIFFITHS J
Date of judgment:	9 June 2020
Catchwords:	BANKRUPTCY AND INSOLVENCY – creditor’s petition seeking sequestration order under s 43 of the Bankruptcy Act 1966 (Cth) (Act) against the estate of the respondent – petition opposed on the basis of an asserted offsetting claim under s 52(2) of the Act – whether the respondent could demonstrate “other sufficient cause” why a sequestration order ought not to be made for the purposes of s 52(2)(b) - respondent’s estate sequestrated under the Act
Legislation:	Bankruptcy Act 1966 (Cth), ss 40(1)(g), 43, 52(1), 52(2) Court Procedure Rules 2006 (ACT), r 76 Federal Court (Bankruptcy Rules) 2016 (Cth), r 4.06
Cases cited:	Baker v Perpetual Trustee Company Limited [2012] FCA 553 International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 Li v Wu [2012] FCA 164 Li v Wu [2013] FCA 1067 Li v Wu [2013] FCA 1265 Li v Wu [2016] FCCA 2836 Li v Wu [2019] ACTCA 14 Ling v Enrobook Pty Ltd [1997] FCA 226; 74 FCR 19 Mann v Paterson Constructions [2019] HCA 32 Wu v Li [2015] FCAFC 109 Wu v Li [2017] FCA 500 Wu v Li (No 2) [2017] FCA 501 Wu v Li [2018] ACTSC 224 Wu v Li [2019] FCCA 1190 Qun Xiong (Kenny) Yu v Todaytech Distribution Pty Ltd [2006] FCA 131 Rigg v Baker [2006] FCAFC 179; 155 FCR 531 Russell v Polites Investments Pty Ltd [2012] FCA 11 Stec v Orfanos [1999] FCA 457 Stratton v Bowles (No 2) [2015] FCA 43
Date of hearing:	Determined on the papers
Date of last submissions:	13 May 2020
Registry:	Australian Capital Territory
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	General and Personal Insolvency
Category:	Catchwords
Number of paragraphs:	111
Solicitor for the Applicant:	WMG Legal Pty Ltd
Solicitor for the Respondent:	McInnes Wilson Lawyers

ORDERS

		ACD 84 of 2019
BETWEEN:	MR YU XIN LI Applicant
AND:	MR TAO WU Respondent

JUDGE:	GRIFFITHS J
DATE OF ORDER:	9 June 2020

THE COURT ORDERS THAT:

1. The estate of Tao Wu be sequestrated under s 43(1) of the Bankruptcy Act 1966 (Cth).

2. The applicant creditor’s costs be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).

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

REASONS FOR JUDGMENT

GRIFFITHS J:

Introduction

1. The applicant (Mr Li) filed a creditor’s petition on 7 November 2019. He seeks a sequestration order under s 43 of the Bankruptcy Act 1966 (Cth) against the estate of the respondent (Mr Wu). The judgment debt underlying the bankruptcy notice (BN226119) arose from ongoing litigation between the parties, which dates back to 2012. Mr Wu opposes the petition on the basis of an asserted offsetting claim under s 52(2) of the Bankruptcy Act.

2. The lengthy history of litigation between the parties has included previous proceedings in this Court, in the Full Court of this Court, the Federal Circuit Court of Australia and the Supreme Court of the Australian Capital Territory (ACTSC), including the Court of Appeal in that jurisdiction. Some of that litigation will be described later in these reasons.

Procedural history of the current proceeding

3. As the following history demonstrates, neither party has been diligent in complying with the various orders of the Court in the current proceeding.

4. On 29 November 2019, Registrar Lackenby made various orders by consent, including that Mr Wu file and serve a notice stating grounds of opposition to the creditor’s petition and any supporting affidavits by 13 December 2019. Mr Li was directed to file and serve any affidavits and an outline of submissions intended to be relied upon by 24 January 2020. Mr Wu was directed to file and serve any affidavits and submissions in reply by 21 February 2010. An order was made for the matter to be set down for hearing before a judge of the Court on a date after 6 March 2020. The orders dated 29 November 2019 were varied on 13 February 2020, with the relevant dates for the first three matters being extended to 19 February 2020, 16 March 2020 and 27 March 2020 respectively. The matter was then listed for hearing in Canberra for one day on 31 March 2020.

5. On 2 March 2020, Mr Wu filed a notice stating grounds of opposition to the creditor’s petition on the ground that he claimed to have an offsetting claim against Mr Li which provided a basis for the Court to find that there is “‘other sufficient cause’ for a sequestration order not to be made”, as provided for in s 52(2) of the Bankruptcy Act. It was stated in that notice that Mr Wu would seek leave to rely upon affidavits which had been filed in other earlier proceedings between the parties, being an affidavit of Henry Joseph Kazar sworn 9 September 2015 in proceeding ACD138/2013 and an affidavit of Mr Wu sworn 24 October 2015, which was filed in the same proceeding. The notice also indicated that Mr Wu would rely upon a further affidavit by him to be sworn in the week commencing 2 March 2020. In fact, as will shortly emerge, none of those steps were carried out. Copies of the first two affidavits were not filed at all by Mr Wu and his own affidavit was not filed until 27 April 2020.

6. By consent orders dated 27 March 2020, Mr Wu was directed to file and serve any affidavits in reply and an outline of submissions not exceeding 10 pages by 10 April 2020. The parties were also directed to provide a list of objections to evidence which required Court rulings by 17 April 2020. With the consent of the parties, the hearing listed for 31 March 2020 was vacated and an order was made that the matter be determined on the papers.

7. By further orders dated 2 April 2020, which were also made by consent, the Court ordered that the applicant was to file the affidavits required by rules 4.06(3)-(4) of the Federal Court (Bankruptcy Rules) 2016 (Cth) on 24 April 2020.

8. On 26 March 2020 (i.e. 10 days after the Court’s deadline as varied by the orders made on 13 February 2020), Mr Li filed an eight page outline of written submissions. The outline stated that Mr Li relied on the following affidavits in support of the creditor’s petition:

1. an affidavit by Mr Li’s solicitor, Stephen Gavagna dated 7 November 2019;

2. an affidavit of service of Sebastian Alonso Marquez Musso dated 21 November 2019;

3. a second affidavit of Mr Gavagna “of March 2020”, which appears to be a reference to his affidavit affirmed on 26 March 2020;

4. a document described as an affidavit of search of the National Personal Insolvency Index which it was said would be prepared and filed by Mr Li in accordance with rule 4.06(3) of the Federal Court (Bankruptcy) Rules 2016 no earlier than 30 March 2020; and

5. a document described as an affidavit verifying that the debt is still owing, which it was stated would be prepared and filed by Mr Li in accordance with rule 4.06(5) of the Federal Court (Bankruptcy) Rules 2016 no earlier than 30 March 2020.

9. ...