Alexander, Vincent Harley v Pargiter, Russell Ashby

[1998] FCA 1030

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY NOTICE – extension of period of bankruptcy notice by Official Receiver -whether application for extension must be made to Official Receiver within original six month period of bankruptcy notice.

Bankruptcy Regulation   4.02A(2)(b)

VINCENT HARLEY ALEXANDER v RUSSELL ASHBY PARGITER

NG 7743 of 1998

LINDGREN J
SYDNEY
18 AUGUST 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7743  of   1998

BETWEEN:	VINCENT HARLEY ALEXANDER APPLICANT
AND:	RUSSELL ASHBY PARGITER RESPONDENT
JUDGE:		LINDGREN J
DATE OF ORDER:		18 AUGUST 1998
WHERE MADE:		SYDNEY

THE COURT ORDERS THAT:

1. The application be dismissed.

1. The applicant pay the respondent’s costs, including the respondent’s costs reserved on 30 July and 3 August 1998.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7573  of   1998

BETWEEN:	VINCENT HARLEY ALEXANDER APPLICANT
AND:	RUSSELL ASHBY PARGITER RESPONDENT
JUDGE:		LINDGREN J
DATE OF ORDER:		18 AUGUST 1998
WHERE MADE:		SYDNEY

BY CONSENT, THE COURT ORDERS THAT:

1. The hearing date of 4 September 1998 be vacated.

1. The application be dismissed, except as to costs.

THE COURT NOTES THAT:

1. The dismissal is without prejudice to the applicant’s right to contend on the costs hearing that the application was originally meritorious.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7743 of 1998

BETWEEN:	VINCENT HARLEY ALEXANDER APPLICANT
AND:	RUSSELL ASHBY PARGITER RESPONDENT

JUDGES:	LINDGREN J
DATE:	18 AUGUST 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

(ex tempore)

The applicant applies, by his application filed on 8 July 1998 for, relevantly, the following order:

“An order that Bankruptcy Notice unnumbered which was served on me on 1998 [sic] be set aside.  A copy of that Bankruptcy Notice accompanies this application.  (O 77 r13(2))”

Notwithstanding the nature of this order, the argument presented on behalf of the applicant makes it clear that his complaint is not about the issue or the form of the bankruptcy notice.  The validity of the bankruptcy notice is not in question.  But, however one might formulate the relief which the applicant might properly seek based on the case put on his behalf, in my view his application must be dismissed with costs for the reasons which will appear below.

The bankruptcy notice was issued on 16 May 1997.  The question which has been debated turns on Bankruptcy Regulation 4.02A which is as follows:

“4.02A (1) This regulation applies to the following kinds of bankruptcy notice:

(a)   a bankruptcy notice issued on or after the commencement date;

(b) a bankruptcy notice issued before the commencement date if, immediately before the commencement date, service of the bankruptcy notice would have been effective under rule 9 of the Bankruptcy Rules.

(2) Subject to subregulation (3), a bankruptcy notice must be served within:

(a) the period of 6 months commencing on the date of issue of the bankruptcy notice; or
(b) any further period that the Official Receiver allows (whether within or outside that period of 6 months).

(3) A bankruptcy notice may, in any event, be served within the period of 3
months commencing on the day on which this regulation commences.”

The “commencement date” referred to is defined in Bankruptcy Regulation 1.03 as meaning 16 December 1996.  Accordingly, reg 4.02A applied to the bankruptcy notice and required that it be served by 16 November 1997, or within any further period that the Official Receiver might allow, whether before or after 16 November 1997.

On 7 April 1998, nearly five months after 16 November 1997, the Official Receiver:

“pursuant to Bankruptcy Regulation 4.02A, extend[ed] the period for service of the Bankruptcy Notice issued against Vincent Harley Alexander, on 16 May 1997, to 16 October 1998.”

The bankruptcy notice and a copy of this “Extension of Time for Service of Bankruptcy Notice” dated 7 April 1998 were received by the applicant by mail on 26 June 1998.

The applicant submits that the service of the bankruptcy notice upon him was ineffective on two grounds.  First, he submits that although the extension provided for in par (b) of sub-reg 4.02A(2) may be allowed by the Official Receiver at a time outside the original period of six months, it must be applied for within that period.  This construction arises, according to the submission, from the “need for the Court to exercise control over the Official Receiver”.  It is put that it is not likely that Parliament intended a bankruptcy notice to be available indefinitely, subject only to the granting of an extension by the Official Receiver.

In my view, the construction contended for by the applicant reads an unjustified qualification into par 4.02A(2)(b).  The paragraph does not expressly or by implication suggest that the Official Receiver may grant an extension only if it is applied for during the original period of six months.  Moreover, it does not offend common sense to think that an extension might be applied for and granted long after the expiry of the original period of six months.  The terms of a bankruptcy notice (see reg 4.02 and Form 1) are able to work satisfactorily long after expiry of that period, since they require the debtor to do certain things within 21 days after “service” of the bankruptcy notice. 

The policy behind reg 4.02A seems to be to save the creditor the inconvenience and expense of procuring the issue of a fresh bankruptcy notice.  This view is consistent with the distinction between reg 4.02A and the former Bankruptcy Rule 9, which was as follows:

“9 (1)  Service of a bankruptcy notice may be effected within a period of 6 months after the day on which it is issued or within such extended period as the Court or the Registrar allows by an order made before the expiration of that period or of any extended period previously allowed.

(2)        Where a bankruptcy notice is served on a person after the expiration of 6 months after the day on which it is issued, a copy of the order, or the last order, as the case may be, extending the time for serving the notice shall be served on the person at the same time as the notice is served on the person.

(3)  Service of a bankruptcy notice on a person is of no force and effect unless service is effected within the period within which service may be effected under subrule (1).” (emphasis supplied)

Under the former Bankruptcy Rule 9, the order, and, therefore the application for it, had to be made during the currency of the operative period of the bankruptcy notice.   If the intention underlying the present regulation had been that the order, but not the application for it, might be made outside the six months period, the drafter would surely, against the background of the former Rule, have so provided expressly. 

The construction as formulated by the applicant would, taken literally, itself produce an untoward result which the drafter should not be taken to have intended.   That untoward result is that even if an extension was applied for and ordered within the six month period, an application for a further extension could not be sought outside that period, albeit during the currency of the extended period of the bankruptcy notice.  This would have been possible under former Bankruptcy Rule 9.  The drafter should not be taken to have intended to introduce such a new restriction.  But even if the construction advanced on behalf of the applicant were reformulated to encompass applications for extension made within the original period as extended, I would reject it for the other reasons which I have given above. 

The other ground relied on by the applicant is that the terms of the Official Receiver’s extension do not set out the grounds on which he acted or the material which was before him.   However, it is not a prerequisite of the validity of an extension that they should do so.

It follows that the application must be dismissed with costs.  The orders of the Court are that:

1. The application be dismissed;

2. The applicant pay the respondent’s costs, including the respondent’s costs reserved on 30 July and 3 August 1998.

[There followed discussion about the implications of the above orders for proceeding NG 7573 of 1998.] 

By consent, in proceeding NG 7573 of 1998, the Court orders that:

1. The hearing date of 4 September 1998 be vacated;

2. The application be dismissed, except as to costs.

I note that the dismissal is without prejudice to the applicant’s right to contend on the costs hearing in that proceeding that the application was originally meritorious.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren

Associate:

Dated:             26 August 1998

Solicitor for the Applicant:	Mr MP Newman of Newman & Associates
Counsel for the Respondent:	Mr M Thangaraj
Date of Hearing:	18 August 1998
Date of Judgment:	18 August 1998