Abignano v Wenkart

[1999] FCA 801

FEDERAL COURT OF AUSTRALIA

Abignano v Wenkart [1999] FCA 801

BANKRUPTCY - alleged formal defects in creditors petition - application to cure formal defects brought mid-hearing - application to amend brought on last day of six month limitation period for amendment of petition - insufficient time to consider prospects of success of a special leave application before the High Court - doubt whether if leave to amend petition were later given amendment could be regarded as being within time - nunc pro tunc

Bankruptcy Act (Cth) 1966

GENNARO ABIGNANO & ANOR v THOMAS RICHARD WENKART
NG 8467 of 1998

MADGWICK J
5 MAY 1999
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 8467 OF 1998

BETWEEN:	GENNARO ABIGNANO First Applicant
GENALLCO PTY LIMITED Second Applicant
AND:	THOMAS RICHARD WENKART Respondent
JUDGE:	MADGWICK
DATE OF ORDER:	5 MAY 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The matter is adjourned for further directions at 9.30 am on 20 August 1999.

2.The parties have liberty to apply on 48 hours notice.

3.Leave is granted to file the creditor's petition as amended.

4.The costs for today are reserved.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 8467 OF 1998

BETWEEN:	GENNARO ABIGNANO First Applicant
GENALLCO PTY LIMITED Second Applicant
AND:	THOMAS RICHARD WENKART Respondent

JUDGE:	MADGWICK
DATE:	5 MAY 1999
PLACE:	SYDNEY

REASONS FOR ORDERS MADE
(revised from transcript)

HIS HONOUR:

1. In this matter, the respondent ("debtor") opposed the bankruptcy petition on a number of grounds.  Three grounds, as to the sufficiency of the form of the petition, were debated before me and a further objection was developed, but in the events that followed, not fully debated. 

2. Difficulties with the petition, of the kind adumbrated by counsel for the debtor, emerged in the course of hearing, and in due course an application to amend the petition was made.  The amendment sought cured the petition of its formal defects but left for resolution the fourth of the principal difficulties foreshadowed by counsel for the debtor. 

3. The debtor opposed the application for amendment on the ground that to permit it would effectively have enabled a second petition to be presented and that the amendment sought was so major as to go beyond the scope of amendments to initiating process of this kind ordinarily permitted by the Court. 

4. This application was brought on the last day of the six month limitation period for possible amendments and therefore, proceeding under time constraints, the parties presented brief oral submissions as to the allowance of the application to amend.  There was a good deal to be said on both sides of that argument, but two underlying considerations ultimately persuaded me to allow the application. 

5. First, counsel for the debtor foreshadowed that if all formal objections to the petition fail, then the court would be asked in due course to adjourn the proceedings pending the outcome of an application for special leave to appeal which had been made to the High Court in respect of a judgment of the New South Wales Court of Appeal affirming the judgment debt on which the bankruptcy notice in question was founded.  This application is expected to be determined in August 1999.  Counsel for the applicant ("petitioning creditors") foreshadowed weighty arguments that might be developed in relation to that application.  To disallow the proposed amendments would have required me to consider such an adjournment application.  That in turn would have required that I form a view of the prospects of special leave being granted and for that purpose study and fully comprehend several Full Court judgments with which I was unfamiliar.  None of this could have been achieved with any reasonable degree of fairness to the parties within the pressing time constraints.  Equally, counsel for the debtor would ordinarily be entitled quietly to consider the application to amend the petition. 

6. Second, the time for compliance with the bankruptcy notice in earlier proceedings in this Court was extended by Hill J to expire on 5 November 1998, which was six months ago (to the day).  Given the strict timelines required under the Bankruptcy Act (Cth) 1966, if I had disallowed the application then a real doubt would exist, if I later came to determine that application that I could do so nunc pro tunc such that the petition could be regarded as having been amended by today.  That being so, the petitioning creditors would lose the benefit of the relation-back period in question, which was clearly important to them.  It is obvious that firstly, the judgment debt is in a very substantial amount, and secondly, that there are keenly-felt commercial considerations and perhaps others motivating the various parties to this litigation.  It would be unfortunate if the creditors, having the benefit of a judgment which might ultimately withstand all appellate tests, were to be put to the expense, inconvenience and perhaps the prejudice of needing to issue a further bankruptcy notice and thus losing an available relation-back period. 

7. The formal defects asserted in the petition are in no way attributable to any act or omission of the petitioning creditors but are more likely to be derived from an insufficient appreciation by their legal advisers of the strictures of this aspect of insolvency law.  If I refused the application to adjourn the proceedings pending the outcome of the special leave application in the High Court, my decision would undoubtedly provoke an appeal by the judgment debtor.  In the ordinary course, such an appeal would probably not be heard before the determination of the special leave application.  Therefore, a refusal by me of the adjournment which would be sought might be rendered nugatory by the pressure of business in this Court. 

8. All in all, I regard the matter as somewhat unusual, counsel for the applicants having accepted that leave to amend the petition should be made conditional upon the hearing of the petition being adjourned until after the determination of the special leave application.  Since all other considerations of substance about the petition, including the adequacy of service and whether there has been an impermissible mixing of a judgment and another debt to found the bankruptcy notice remain available, I do not believe that the applicants have been prejudiced in any material sense.

9. It seems to me, therefore, that the just and proper thing is to grant leave to amend the petition (which will also involve the swearing and filing of an affidavit verifying the petition as amended) today. 

10. I reserve the costs of today's proceedings.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

Associate:

Dated:  5 May 1999

Counsel for the Applicant:	C Curtis
Solicitor for the Applicant:	Bruce & Stewart
Counsel for the Respondent:	D Hammerschlag
Solicitor for the Respondent:	Solomon Garland Partners
Date of Hearing:	5 May 1999
Date of Judgment:	5 May 1999