Black v Craigend - [2002] FMCA 87

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BLACK v CRAIGEND

[2002] FMCA 87

BANKRUPTCY – application to extend time for compliance with bankruptcy notice – time for compliance already expired – application to set aside bankruptcy notice – power of the court to extend time for compliance

Bankruptcy Act 1966 (Cth) ss. 41(6A), (7)

Scott Ronald Monk v Australia New Zealand Banking Group Limited (FCA, unreported 30 November 1993, Lockhart J).
Guss v Johnstone [2000] HCA 26

Applicant:

RICHARD BLACK

Respondent:

CRAIGEND DEVELOPMENTS PTY LIMITED

File No:

SZ249 of 2002

Delivered on:

24 April 2002

Delivered at:

Sydney

Hearing Date:

24 April 2002

Judgment of:

Raphael FM

REPRESENTATION

For the Applicant:

Mr Black in person

Counsel for the Respondent:

Mr A Thurn

Solicitors for the Respondent:

McBride Harle Martin

ORDERS

Application dismissed.
Applicant pay the respondent’s costs in the amount of $500 pursuant to Part 21, rule 21.02(2)(a) of the Federal Magistrates Court Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ249 of 2002

RICHARD BLACK

Applicant

And

CRAIGEND DEVELOPMENTS PTY LIMITED

Respondent

REASONS FOR JUDGMENT

On 17 April 2002 there came before me Mr Richard Black. Mr Black was the applicant in an ex parte motion to extend time for compliance with a bankruptcy notice which was served upon him on 25 March 2002. By common consent it is agreed that the bankruptcy notice expired on 15 April 2002 and therefore the application which Mr Black made was not in compliance with sections 41(6A) or 41(7) of the Bankruptcy Act 1966 (Cth).
When I heard Mr Black's application on that day I indicated to him that I was concerned as to whether I could extend the time for compliance with a bankruptcy notice when the time in respect of which compliance had already expired. I made orders adjourning the application until today and requiring Mr Black to inform the solicitors for the creditor of this application. I also provided Mr Black with a copy of the judgment in Scott Ronald Monk v Australia New Zealand Banking Group Limited (FCA, unreported 30 November 1993, Lockhart J).
Mr Black appeared before me today, there also appeared Mr Thurn on behalf of the creditor and Mr Black proceeded on the basis that he wished to argue his application. He also asked for leave to amend the application to include an additional matter. That was an application to strike out or dismiss the bankruptcy notice on the grounds that it was issued in abuse of process. Mr Black made submissions in relation to the original application but after requesting Mr Thurn to advise me if he wished to deal with the second matter today, I was informed that he was not in a position to meet that application. The earliest notice of the application had been given to his firm in a facsimile dated 23 April 2002 which became exhibit 2 to these proceedings.
In that regard reference is made by Mr Black to the final paragraph of the letter which states:
“As to your application for costs, there has been disentitling conduct on your clients behalf by using the threat of a bankruptcy notice to apply undue influence to make me withdraw a professional complaint properly made against Mr Gruzman, to give an undertaking not to make professional complaint against Ms Marano and to give up my claim for expenses in compliance with the subpoena, which Bryson J found that I was entitled to.”
With respect to Mr Black, that hardly indicates an application to amend. Before me today Mr Black pressed his application and tendered a letter dated 5 February 2002 which became exhibit 5 to these proceedings from the creditor’s solicitors, McBride Harle Martin. This put forward certain terms for settlement of the dispute between the parties. I should make it clear at this point that Mr Black is himself a solicitor and practises under the name of RD Black and Associates in Cronulla. Mr Black was admitted in 1980.
In his submissions, Mr Black, said that he would be seeking leave to require Ms Marano and Mr Gruzman to give evidence in relation to his application for me to dismiss the bankruptcy notice on the grounds of abuse of process. It seems to me that in regard to this application to amend, it is not the appropriate course of action to take. The application to set aside a bankruptcy notice on the grounds set out in sections 41(6A) and section 41(7) are discrete applications for which special forms have been created. An application for the setting aside of the bankruptcy notice on the grounds of abuse of process is a very serious matter and one which should be properly considered and fully supported by affidavit evidence.
I am not prepared to allow an amendment of the application that was made on 16 April to include that type of application. I believe that it should be made separately and only after Mr Black has given the matter very serious consideration.
Dealing now with the application itself, Mr Black gave evidence. He stated that after he was served with the bankruptcy notice on 25 March he sought some advice. He went to the Federal Court Registry on level 16 of this building before the time for compliance with the bankruptcy notice had expired. He said that he asked the Registry for advice and assistance or to speak to a Registrar. He was told the Registry did not provide legal advice and it was suggested to him that he discuss the matter with ITSA. He was given a ‘post it’ note with the name and address and telephone number of ITSA upon it and that became exhibit 1 in these proceedings.
Mr Black said he phoned ITSA and asked for advice. He was told by them that they could not give him advice. Mr Black then took his problems to Ms Sally Nash a solicitor who is well known in the state of New South Wales for her expertise in bankruptcy matters. She apparently gave him some oral advice and then on, I believe, 15 April (although it is not entirely clear from Mr Black's evidence), she wrote him a letter. A copy of that letter has not been tendered. Mr Black said that on the same day, 15 April, he went to the Supreme Court to seek review of the cost assessor’s decision out of time.
These bankruptcy proceedings arise out of claims for costs made by the creditor against Mr Black, which were the subject of costs assessments in the Supreme Court of New South Wales. Apparently his summons was not heard on that day. Mr Black said that the advice he received from Ms Nash was to make an application to extend time for compliance with the bankruptcy notice. He said that he had no experience himself of taking matters before the Federal Court and that he did not know that he was out of time.
He blames the registry. He says that if he had been given the correct information he would have made the application to set aside the bankruptcy notice on the day he attended at the registry when he was given the ‘post it’ note and asked to speak to ITSA.
When Mr Black was before me on 17 April 2002, we debated the type of application that he would be making. I pointed out to him that the form that he had completed appeared to be an application under s.41(6A) but that was an application based upon the fact that proceedings to set aside the original judgment had been instituted or other grounds except those contained in section 41(7).
Section 41(7) is an application to set aside a bankruptcy notice on the ground of a counter-claim or set-off or cross-demand being in existence. Mr Black told me that his reason for wishing the bankruptcy notice to be set aside at that time was that he had claims against the creditor which arose out of the same circumstances in respect of which costs orders had been made against him. It seemed to me that this was a counter-claim, set-off or cross-demand and therefore the application should properly have been made under section 41(7).
It is clear from the authorities, including the authority of Monk v ANZ previously referred to and the High Court authority of Guss v Johnstone [2000] HCA 26, a joint decision of a full bench, that there is no power in the court to extend time under either s.41(6A) or 41(7) where the application to extend time has not been made within the time for compliance with the bankruptcy notice. The act of bankruptcy has been committed and there is nothing the court can do under those sections or under s.30 of the Bankruptcy Act to extend the time. This is in contrast with the position where an application has been made to extend time within the period.
I asked Mr Black whether he had any authority to put to me as to why I should not be bound by those I did not receive from him any indication that such authority existed. In the circumstances, I believe I have no alternative but to dismiss the application. I have already explained why I am not prepared to allow the application to be amended to include the claim to set aside the notice on the grounds of abuse of process.
In normal circumstances the costs in this matter would follow the event and I would be making an order for Mr Black to pay the costs of the respondent. However, Mr Black did tender in evidence a letter which he wrote to the solicitors for the creditor dated 18 April 2002. In that letter, he said the following:
“I am not proceeding with the application to extend time for compliance and will advise the Federal Court of this. There is no need for you to attend on 24 April, if the bankruptcy notice has been paid.”
I should note here that Mr Black has paid the amount claimed in the bankruptcy notice and did so on 18 April 2002.
This letter was exhibit 3. There was marked exhibit 4, a facsimile letter of 18 April from the creditor's solicitors to Mr Black. It would seem that that letter is the letter to which Mr Black responded in the letter marked exhibit 3. In that letter the creditor's solicitors said the following:
“You have committed an act of bankruptcy. We can't understand why you have enclosed in your letter dated 17 April a cheque dated two and a half months before it was received by us today. We will accept the cheque as payment of the balance of the amount outstanding by you to our client, however we note this leaves the outstanding issue of costs in respect of a preparation, issue and service of the bankruptcy notice. Please confirm that you will agree to an order that you pay our client's costs in respect of the bankruptcy proceedings.”
It would appear that Mr Black took that paragraph to mean that the creditor's solicitors intended to appear today and to argue for costs on the bankruptcy notice. Therefore, Mr Black proceeded with his application to extend time. When I questioned Mr Thurn about his authority to seek costs of the bankruptcy notice, he was unable to provide me with any.
I therefore see very little reason why the respondent is here today, although that is not to say that I have not been helped by Mr Thurn’s appearance. But if they had not been here, Mr Black may not have raised the contentious issue of the abuse of process.
I believe in all the circumstances, it is not appropriate that I make an order for costs of the appearance today. However, I did order that the application be served upon the respondents and that would have required the respondents to undertake some action in relation to it. As the application has been dismissed, I think that the respondents to the application are entitled to some costs and I assess those in accordance with the power given to me, under Part 21, rule 21.02(2)(a) of the Federal Magistrates Court Rules, in the sum of $500.
The costs are to be paid no later than 28 days from the date of this order or the day before the date of hearing of any application to set aside the bankruptcy notice, whichever is the earlier.

I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: