Application By Benjamin Peter Piggott
[2009] FMCA 1061
•26 October 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| APPLICATION BY BENJAMIN PETER PIGGOTT | [2009] FMCA 1061 |
| BANKRUPTCY – Extension of time for holding of creditors meeting – power to extend time – exercise of discretion – factors. |
| Bankruptcy Act 1966, ss.33, 33(1)(c), 188, 194, 194(1), 222 |
| Application of Malcolm Melvyn Posner [2007] FMCA 610 Council of the New South Wales Bar Association v Eddy (2006) 151 FCR 34; [2006] FCA 254 Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 Pretorius v Daltons Carpet Tiles Pty Ltd (1984) 1 FCR 346 Re Gowing; Ex parte Deputy Registrar in Bankruptcy (1985) 11 FCR 111 |
| Applicant: | BENJAMIN PETER PIGGOTT AS CONTROLLING TRUSTEE OF THE ESTATE OF JEROME PATRICK ANGELO |
| File Number: | PEG 177 of 2009 |
| Judgment of: | Lucev FM |
| Hearing date: | 26 October 2009 |
| Date of Last Submission: | 26 October 2009 |
| Delivered at: | Perth |
| Delivered on: | 26 October 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr. C Stokes |
| Solicitors for the Applicant: | Chris Stokes & Associates |
ORDERS
This application be made returnable instanter.
The time for holding of the Meeting of Creditors pursuant to Section 194 of the Bankruptcy Act 1966 be extended from 8 September 2009 to 9 September 2009.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 177 of 2009
| BENJAMIN PETER PIGGOTT AS CONTROLLING TRUSTEE OF THE ESTATE OF JEROME PATRICK ANGELO |
Applicant
REASONS FOR JUDGMENT
(Ex tempore reasons edited from the transcript)
This is an application under s.33 of the Bankruptcy Act 1966 (Cth)[1] to extend the time set by s.194(1) of the Bankruptcy Act, in which the controlling trustee must call a meeting of creditors. The application seeks to have been made returnable instanter and the Court is prepared to deal with it on that basis.
[1] “Bankruptcy Act”.
The controlling trustee has filed two affidavits, one sworn on 25 September 2009, and the other sworn on 23 October 2009 which is the subject of an undertaking by counsel for the applicant to be filed. The latter deals with service on the creditors and the former deals with the substance of the application to which the Court now turns.
The affidavit sworn on 25 September 2009 deposes to the following:
a)that there was a requirement to hold a meeting of creditors by 8 September 2009;
b)that the controlling trustee miscalculated the date for holding the meeting of creditors as being 9 September 2009 and issued a notice of meeting accordingly;
c)that the controlling trustees report to creditors dated 27 August 2009 was sent with the notice of meeting on 27 August 2009;
d)the error as to the date for the meeting of creditors was brought to the attention of the controlling trustee by an ITSA officer during a routine audit on 4 September 2009;
e)the controlling trustee chaired the meeting of creditors held on 9 September 2009 at which a resolution was passed that, despite the meeting been held out of time, it was still held at a date, time and place convenient to the creditors (in accordance with s.64Q of the Bankruptcy Act);
f)at the meeting of creditors, creditors unanimously and without objection resolved that the debtor be required to execute a personal insolvency agreement for the purposes of s.204 of the Bankruptcy Act; and
g)the controlling trustee subsequently on 17 and 18 September 2009 received seemingly conflicting advice concerning the validity of the meeting of creditors held on 9 September 2009.
The Court infers that as a consequence of that conflicting advice received by the controlling trustee it was necessary to make the present application which was made on 25 September 2009.
Grounds for extension of time application
The grounds for the extension of time application are set out in the controlling trustee’s affidavit sworn 25 September 2009, as follows:
(a) The date fixed for the holding of the meeting of creditors was solely as a result of an error of calculation on my part and had nothing whatsoever to do with either the Debtor, or the creditors;
(b)The date fixed for the holding of the said meeting was outside the time limit by only one day and in these circumstances it is respectfully submitted that there has been “substantial compliance” with the requirements of Part X of the Bankruptcy Act;
(c)The resolution passed by the creditors at the meeting of creditors was unanimous in adopting the Debtor’s proposal as set out in the Personal Insolvency Agreement subsequently executed;
(d)A further resolution was passed at the meeting of creditors (unanimously and without objection) that despite the meeting being held outside the required time period prescribed by Section 194, it was still being held at a time, date and place that was convenient to a majority of creditors (in accordance with Section 64Q of the Bankruptcy Act); and
(e)None of the creditors at the said meeting nor have any creditors to date raised any objection to the fact that the meeting was being held one day outside the requisite time period under Section 194.[2]
[2] Affidavit of Benjamin Peter Piggott sworn 25 September 2009 at para.23.
Power to extend time
The power to extend time vested in this Court is a power under s.33(1)(c) of the Bankruptcy Act to extend time for purposes including the s.194 meeting of creditors; that power has been referred to and upheld in Re Gowing; Ex parte Deputy Registrar in Bankruptcy[3] and in Application of Malcolm Melvyn Posner.[4]
[3] (1985) 11 FCR 111 at 112 and 113 per Beaumont J.
[4] [2007] FMCA 610 at paras.5-8 per Lucev FM (“Posner”).
In Pretorius v Daltons Carpet Tiles Pty Ltd,[5] the appellants sought to argue that an authority under s.188 of the Bankruptcy Act had a continuing operation enabling the time limits in s.194 to be fulfilled. The Full Court of the Federal Court unanimously held that the time limits established by s.194 for the calling of a meeting of creditors can only be extended by an order made under s.33(1)(c).[6]
[5] (1984) 1 FCR 346 at 352 and 353 (“Pretorius”).
[6] In that regard see also Council of the New South Wales Bar Association v Eddy (2006) 151 FCR 34 at 39-40 per Edmonds J; [2006] FCA 254 at para.30 per Edmonds J (“Eddy”).
There was a suggestion in some advice received by the controlling trustee that s.222 of the Bankruptcy Act applied to this case.
Section 222 deals solely with the setting aside of a personal insolvency agreement and does not impact upon the issue of time or extension of time in which to hold a valid meeting of creditors.
As Pretorius and Eddy make clear, it is only under s.33(1)(c) that time for a meeting of creditors under s.194 can be validly extended.
Exercise of discretion
In terms of the exercise of the discretion to extend time, no criteria for extending the time for a meeting of creditors under s.194 is set out in the Bankruptcy Act.
In the Court’s view, it is appropriate to apply principles similar to those ordinarily applied by courts in determining whether to extend time, namely to have regard to:
a)the fact that relevant time limits ought not be likely ignored;
b)the length of the delay and whether there is an acceptable reason for the delay;
c)the merit of the substantive matter; and
d)whether there is prejudice suffered by an affected party.[7]
[7] Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-349 per Wilcox J.
In this case the relevant time limits have not been ignored at all. The controlling trustee sought to comply with the time limit but miscalculated. This was a case of “simple human error”.[8]
[8] Posner at para.9 per Lucev FM.
The length of the delay in holding the meeting of creditors was absolutely minimal, being one day. Further, the length of the delay from the time the miscalculation was discovered until the application to extend time was made is three weeks. That is not an undue delay, particularly when considered in the context of:
a)the fact that the meeting of creditors had been notified for 9 September 2009 and was held on that date;
b)advice as to the validity of the meeting of creditors was subsequently obtained within nine days of the meeting of creditors;
c)the advice obtained seemingly conflicted;
d)it was one week after the last of the two seemingly conflicting advices was given that the present application to extend time was made.
That context shows that active steps were being taken to deal with the fact that a meeting of creditors was held out of time, and both in that context and overall the length of the delay was reasonable.
There is an acceptable reason for the delay, given that proper advice was sought, obtained and considered within a matter of three weeks from discovery of the default to the making of the application for an extension of time to rectify the default.
The merit of the substantive matter is confirmed by the passage of the substantive resolution put to the meeting of creditors to adopt the debtor’s proposal, as set out in the personal insolvency agreement.
No party affected seems to oppose the application for an extension of time. No prejudice is suffered by any affected party. There is no suggestion:
a)that the substantive resolution would not have been passed if the meeting of creditors had been heard a day earlier, within time; or
b)of any other kind of prejudice.
Finally, the Court bears in mind that ultimately the extension is for one day only and that, procedurally, the process followed by the controlling trustee substantially complied with the requirements of Part X of the Bankruptcy Act.
In conclusion, therefore, and in the circumstances the Court considers that it is appropriate to extend time for the holding of the creditors meeting by one day from 8 September 2009 to 9 September 2009.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Lucev FM FM
Associate: S. Dinon
Date: 28 October 2009
4
5
1