BGC Construction v Genovese
[2007] FMCA 1842
•9 November 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BGC CONSTRUCTION PTY LTD v GENOVESE | [2007] FMCA 1842 |
| BANKRUPTCY – Appeal to Federal Court to set aside bankruptcy notice – creditor’s petition filed subsequent to appeal. PRACTICE & PROCEDURE – Proceedings commenced in Federal Court in respect of associated matter – whether proceedings to be transferred to Federal Court – factors to be considered – whether associated matter – whether same matter. |
| Bankruptcy Act 1999 (Cth), ss.43(1)(a), and 44 Federal Court of Australia Act 1976 (Cth), s.32 Federal Magistrates Act 1999 (Cth), ss.5, 18, and 19 |
| Genovese v BGC Construction Pty Ltd [2007] FCA 923 Explanatory Memorandum, Federal Magistrates Bill 1999, House of Representatives, the Parliament of the Commonwealth of Australia |
| Applicant: | BGC CONSTRUCTION PTY LTD |
| Respondent: | HERCOLE PIETRO GENOVESE |
| File number: | PEG 40 of 2007 |
| Judgment of: | Lucev FM |
| Hearing date: | 30 April 2007 |
| Date of last submission: | 30 April 2007 |
| Delivered at: | Perth |
| Delivered on: | 9 November 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr A R MacPherson |
| Solicitors for the Applicant: | Hotchkin Hanly |
| Respondent: | Mr H P Genovese in person |
ORDERS
That ground 4 of the Notice Stating Grounds of Opposition to the Creditors Petition (“Notice”) be dismissed.
That the Respondent (Genovese) pay the costs of the Applicant (BGC Construction Pty Ltd) in relation to these proceedings concerning ground 4 of the Notice, and if not agreed, such costs are to be taxed under Order 62 of the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 40 OF 2007
| BGC CONSTRUCTION PTY LTD |
Applicant
And
| HERCOLE PIETRO GENOVESE |
Respondent
REASONS FOR JUDGMENT
Facts
On 29 January 2007 this Court dismissed an application by the respondent to set aside the applicant’s bankruptcy notice.[1] An appeal by the respondent against the decision in Genovese was instituted on 16 February 2007.[2] The Federal Court Appeal was dismissed by the Federal Court on 19 June 2007.[3]
[1] Genovese v BGC Construction Pty Ltd (2007) 207 FLR 141; [2007] FMCA 71 (“Genovese”).
[2] “Federal Court Appeal”.
[3] Genovese v BGC Construction Pty Ltd [2007] FCA 923.
Between the institution of the Federal Court Appeal and its dismissal by the Federal Court the applicant presented the creditors petition in this matter on 9 March 2007.
By a Notice Stating Grounds of Opposition to Creditor’s Petition[4] filed on 5 April 2007 the respondent asserts that the applicant should not have commenced proceedings in this Court when there was an associated matter, the Federal Court Appeal, pending in the Federal Court.[5]
[4] “Notice of Opposition”.
[5] Notice of opposition, para. 4.
Issue
The issue in these proceedings is whether the Federal Court Appeal is an “associated matter” for the purposes of s.19(1) of the Federal Magistrates Act 1999 (Cth)[6].
[6] “FM Act”.
Legislation
Section 19 of the FM Act provides as follows:
(1) Proceedings must not be instituted in the Federal Magistrates Court in respect of a particular matter if proceedings in respect of an associated matter are pending in the Family Court or the Federal Court.
(2) Subsection (1) does not apply to:
(a) proceedings for a decree of dissolution of marriage; or
(b) proceedings instituted in the Federal Magistrates Court under:
(i) Division 13A of Part VII of the Family Law Act 1975; or
(ii) Part XIII or XIIIA of that Act.
(3) If:
(a) proceedings are instituted in the Federal Magistrates Court in contravention of subsection (1); and
(b) the proceedings are subsequently transferred to the Federal Court or the Family Court;
the proceedings are taken to be as valid as they would have been if subsection (1) had not been enacted.
The FM Act defines “proceeding” in s.5 of the FM Act as follows:
proceeding means a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connection with, a proceeding, and also includes an appeal.
It is also necessary to have regard for the purposes of this judgment to the provisions of s.18 of the FM Act, which provides as follows:
To the extent that the Constitution permits, jurisdiction is conferred on the Federal Magistrates Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Magistrates Court is invoked.
Legislation – Explanatory Memorandum
The Explanatory Memorandum to the Federal Magistrates Bill 1999[7] deals with the clauses of that Bill which became ss.18 and 19 of the FM Act, and is in the following terms:
“Clause 18 gives the Federal Magistrates Court jurisdiction to deal with all matters associated with any matter that is within the jurisdiction of the court. The purpose of this provision is to avoid multiple proceedings by conferring jurisdiction on the Court in associated matters, which may be outside the jurisdiction of the Court, which must be disposed of at the same time as the matter before the Court so that the matter may be completely and finally determined. This provision is based on section 32 of the Federal Court of Australia Act 1976.
…
Subclause 19(1) provides that proceedings must not be instituted in the Federal Magistrates Court if associated proceedings have been commenced in the superior Court. This is to ensure that matters are completed in the court in which they commenced and that parties do not seek to have the same matter dealt with in the Federal Magistrates Court by filing similar proceedings in that court.
…
Subclause 19(3) ensures that inappropriate proceedings commenced in the Federal Magistrates Court may be validly transferred to the relevant superior court. For example, if associated proceedings are commenced in the Federal Magistrates, the Court will be able to transfer them to the Federal Court or Family Court, and the proceedings will be deemed to have been validly commenced in the superior court.”[8]
[7] Explanatory Memorandum, Federal Magistrates Bill 1999, House of Representatives, The Parliament of the Commonwealth of Australia (“Explanatory Memorandum”).
[8] Explanatory Memorandum, at paras. 30, 31 and 33.
Explanatory Memorandum analysed
It is necessary to consider the purpose of s.19 of the FM Act. The purpose of s.19(1) of the FM Act is explained by the Explanatory Memorandum, as being to “ensure that matters are completed in the Court in which they commenced and that parties do not seek to have the same matter dealt with” in this Court and in the Federal Court.[9] The Explanatory Memorandum describes the purpose of s.19(3) as being to ensure that “inappropriate proceedings” commenced in this Court may be transferred to the Federal Court.[10] The purpose, evidently, is to ensure that the “same matter” is not dealt with in two different courts.
[9] Explanatory Memorandum, para. 31.
[10] Or in family law matters, to the Family Court: Explanatory Memorandum, para. 33.
The Federal Court Appeal is not the “same matter” as this Court is now asked to deal with. The matter before this Court is the creditor’s petition for issuance of a sequestration order. The matter before the Federal Court was an appeal, and an appeal against the refusal of this Court to set aside a bankruptcy notice, such a notice being a precondition to, but separate from and antecedent to, the presentation of a creditor’s petition.[11] This Court’s decision in Genovese related to a single narrow point, that is whether the judgments and orders relied upon to found the bankruptcy notice were valid. That depended upon whether the matter was still pending at the date the relevant orders for judgment were made, and whether it was capable of hearing and determination by the relevant court. In Genovese this Court found that there was no doubt that the action was pending and that the relevant order could have been extracted upon application.[12]
[11] Bankruptcy Act 1966 (Cth), s.43(1)(a) (“Bankruptcy Act”).
[12] Genovese, FLR at 148 per Lucev FM; FMCA at para. 40 per Lucev FM.
In this case, none of the grounds raised in opposition to the creditors petition were relevant to the disposition of the appeal. This confirms that they are not the same matter. Further confirmation of that fact can be derived from the fact that the remedies or outcomes from the two matters are entirely different: the Federal Court Appeal if successful would have resulted in the setting aside of the bankruptcy notice, whereas in this matter a sequestration order will or will not issue. Indeed, if the respondent, as appellant, had been successful in the Federal Court Appeal and had the bankruptcy notice been set aside, there would be no basis for the creditor’s petition and the issuance of a sequestration order, whether in this Court or in the Federal Court.
The narrow view of associated matter adopted above for the purposes of s.19(1) of the FM Act is confirmed by contrasting it with the meaning of “associated matter” for the purposes of s.18 of the FM Act.
Section 18 of the FM Act is designed to avoid multiple proceedings by giving jurisdiction to the Court to deal with matters otherwise outside of its jurisdiction associated with matters within its jurisdiction, so that those matters outside of jurisdiction are capable of being dealt with and disposed of by a single court. As the Explanatory Memorandum makes clear it is the equivalent in this Court to s.32 of the Federal Court of Australia Act 1976 (Cth)[13].
[13] “FCA Act”.
Under s.32 of the FCA Act and s.18 of the FM Act, the associated matter must arise from the same substratum of fact. In this case, the substratum of fact is different because a sequestration order can not issue unless there is a bankruptcy notice. In that sense, the subject matter of the Federal Court Appeal and these proceedings are different, and they are not the same matter.
A further reason
A further reason that the interpretation of s.19 of the FM Act ought be construed narrowly, and related only to the “same matter”, is that the broad view of “associated matter” argued for by the respondent is inconsistent with the requirement that a creditors petition be presented within six months of the relevant act of bankruptcy.[14] If a broad view of “associated matter” is adopted, manipulative use of the appeal process might usurp the intent underlying the legislative provisions concerning the presentation of creditors petitions within a specified time. That cannot have been the intention of Parliament and any interpretation of s.19 of the FM Act which gives rise to that possibility ought be avoided.
[14] Bankruptcy Act, s.44.
Conclusion
The Federal Court Appeal and the current proceedings in relation to the creditors petition are not, or not in relation to, the “same matter”. The reference to “associated matter” in s.19(1) of the FM Act is to be interpreted as meaning the “same matter”. The purpose of s.19(1) is to prevent the same matter being heard by this Court and the Federal Court (or the Family Court in appropriate cases).
In the circumstances of this case, the respondent’s opposition to the creditors petition on the ground that the Federal Court Appeal is an associated matter must fail. Therefore, ground 4 of the Notice of Opposition must be dismissed, with costs.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate: M Hewitt
Date: 9 November 2007
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