Boral Resources (Qld) Pty Ltd v Griffiths (No.2) - [2005] FMCA 1340

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BORAL RESOURCES (QLD) PTY LTD v GRIFFITHS (No.2)

[2005] FMCA 1340

BANKRUPTCY – Petition lapsed whilst judgment reserved – whether Federal Magistrates Court Rules 2001 allow extension of petition nunc pro tunc – whether order 35 Rule (7) of Federal Court Rules can apply – discretion exercised to vary earlier order – sequestration ordered.

Bankruptcy Act 1966, s.52
Federal Magistrates Court Rules 2001
Federal Court Rules

Re SVIR Ex Parte Commissioner of Taxation (1998) 83 FCR 314
Bankstown Grammar School Limited v Park (2000) FCA 1205
Elyard Corporation Pty Ltd v DDP Needham Sydney Pty Ltd (1995) 133 ALR 205
Re Howell: Ex Parte Deputy Commissioner of Taxation (1996) 70 FCR 261 Komesaroff v Law Institute of Victoria (1997) FCA 965
Re Langrage Ex Parte Bennett Carroll Gibbons(1999) FCA 879
Matthews v Colett (2000) FCA 224
Milson v Carter (1893) A.C. 638
El Shaddock and Associates Pty Ltd v Parramatta City Council (No. 2) (1982) 151 CLR 590 at 594

Applicant:

BORAL RESOURCES (QLD) PTY LTD

Respondent:

DAVID JAMES GRIFFITHS

File Number:

BRG506 of 2003

Judgment of:

Baumann FM

Hearing date:

19 April 2005

Delivered at:

Brisbane

Delivered on:

2 August 2005

REPRESENTATION

Counsel for the Applicant:

Mr P McQuade

Solicitors for the Applicant:

James Conomos Lawyers

Counsel for the Respondent:

Mr D Marks

Solicitors for the Respondent:

Cass Legal Group Lawyers

ORDERS

That the order of 11 November 2003 reserving the decision to a date to be advised be varied by the addition of an order that the period at the expiration of which the petition will lapse be a period of 24 months commencing on the date of presentation of the petition.
That a sequestration order be made against the estate of David James Griffiths in the usual way.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG506 of 2003

BORAL RESOURCES (QLD) PTY LTD

Applicant

And

DAVID JAMES GRIFFITHS

Respondent

REASONS FOR JUDGMENT

On 11 November 2003, I heard evidence in respect of a contested creditor's petition. At the conclusion of the hearing, I adjourned the matter to a date to be fixed to consider my decision. This is the effect of "reserving judgment".
As identified in reasons published on 15 March 2005 (paragraphs 22 to 23), when preparing those reasons I became aware that the creditor's petition had expired on 11 September 2004. I gave the parties an opportunity to make further submissions on whether I had the power under the "slip rule" to make an order remedying the position.
The petition lapsed on 11 September 2004 and it was not possible for me to exercise the power under s.52(5) of the Bankruptcy Act since, clearly under that provision, the power can only be exercised before the petition lapses.
It is settled law that s.52 of the Bankruptcy Act 1966 does not oust the jurisdiction of the slip rule (Re SVIR Ex Parte Commissioner of Taxation (1998) 83 FCR 314). Written submissions and oral submissions on 19 April 2005 were received from Mr McQuade representing the petitioning creditor and Mr Coulsen, who represented the debtor. I have considered carefully those submissions. I am satisfied that it is now established by a long line of consistent authority that the Federal Court of Australia has the discretion under its "slip rule" (Order 35, Rule 7) to extend the date for expiration of a creditor's petition in certain circumstances.
The "slip rule" operates nunc pro tunc as if the order was made within time. The position of the Federal Court of Australia is best summarised in my view by Lindgren J in Bankstown Grammar School Limited v Park (2000) FCA 1205, when he said at paragraph 4:
“However the court has power under the "slip rule" found in order 35 rule 7 of the Federal Court Rules to make an order nunc pro tunc remedying the position. It is sufficient for me to refer to the obiter dicta found in the Full court Decision in Elyard Corporation Pty Ltd v DDP Needham Sydney Pty Ltd (1995) 133 ALR 205, which related to a winding up application, and the availability of the slip rule was subsequently recognised in the context of creditors' petitions in bankruptcy in Re Howell: Ex Parte Deputy Commissioner of Taxation (1996) 70 FCR 261 (Burchett J.);, Komesaroff v Law Institute of Victoria (1997) FCA 965 (Heery J.); Re Langrage Ex Parte Bennett Carroll Gibbons(1999) FCA 879 (Kiefel J.); and Matthews v Colett (2000) FCA 224 (Spender J.).”
Order 35, Rule 7 is in a slightly different form than rule 16.5 of the Federal Magistrates Court Rules 2001, in that this Court's Rules do not include a like provision to order 35 sub-rule 7(3) which says:
“(3) A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission may at any time be corrected by the court.”
Despite the careful and considered submissions of Mr Coulsen, I am satisfied that Order 35 Rule 7(3) applies and can apply in this Court. A Court has an inherent jurisdiction “at any time to correct an error in the decree or order arising from a slip or accidental omission” (see Milson v Carter (1893) A.C. 638 at page 640; El Shaddock and Associates Pty Ltd v Parramatta City Council (No. 2) (1982) 151 CLR 590 at 594). I am satisfied this principle applies even in an inferior court such as the Federal Magistrates Court. Rule 16.05 of the Federal Magistrates Court is “insufficient” (using that term in the manner anticipated by rule 1.05 and section 43(2)(b) of the Federal Magistrates Court Act), to do justice in this case.
I am satisfied that rule 1.05(2) of the Federal Magistrates Court Act enables order 35 rule 7(3) of the Federal Court Rules to be applied in this court. To do so, further enables, in the context of the application of this rule to creditors' petitions under the Bankruptcy Act comity to be maintained between the superior Court, the Federal Court of Australia and this Court, which both exercise concurrent jurisdiction in bankruptcy.
Having satisfied myself that the rule can apply, it is a matter requiring the exercise of my discretion whether on the facts of this case the rule should apply. I have considered some of the Federal Court authorities earlier referred. Of particular relevance in my view are some of the following observations.
In Bankstown Grammar School Limited v Park (supra), the petition had expired between the date of the hearing and before judgment. Lindgren J indicated that had he been aware that that was likely to occur, he thought it likely Counsel would have advised him of the need to consider extending the petition. In that case, he ordered that the decision be reserved to a date to be fixed initially. He made an order which does not appear to have been the subject of contest that:
“The order of 10 August 2000 reserving my decision to a date to be advised be varied pursuant to order 35 rule 7 of the Federal Court Rules by the addition of an order that the period at the expiration of which the petition will lapse will be a period of 15 months.”
In that decision, he helpfully referred to some of the observations made in Elyard Corporation earlier referred to. In particular, in that case, Lockhart J at 392 made specific reference to section 52 of the Act and stated that provisions of this kind "reflect the intention of the Parliament that... petitions to sequestrate the estates of natural persons must be dealt with promptly". He went on to hold:
“This evident purpose of the Parliament is not denied at all by the exercise by the court of its powers under the slip rule to correct accidentally slips when justice requires this to be done.”
In Re Howell: Ex Parte Deputy Commissioner of Taxation (supra), Burchett J was confronted with the situation where the matter had been adjourned at the request of the debtor (opposed by the petitioning creditor) to a date after the expiry of the petition. The petitioning creditor's solicitor stated her oversight resulted in no application for extension being made on the date the matter was adjourned. In that case, his Honour extended using the slip rule to enable the matter to proceed in the appropriate way.
Similarly, in Komesaroff v Law Institute of Victoria (supra), Heerey J confronted with a petition which had expired between the hearing and whilst judgment was reserved, extended the petition.
I am acutely conscious of the remarks made by Kiefel J in Re Langridge: Ex Parte Bennet Carroll Gibbons (supra), that:
“I have considerable difficulty with the notion that the slip rule is, in reality, to be extended to correct the parties' error and not the court's own unintended error.”
However, she did in that case order that:
“The period at the expiration of which the petition will lapse will be set 24 months from the date of presentation of the petition."
That is the order sought in this matter by the petitioning creditor. In Matthews v Collett (supra), Spender J dealt with a situation where a petition had been listed for hearing. At the hearing of the petition he reserved a question of whether leave should be granted to amend the creditor's petition and if so, why a sequestration order should not then be made despite the amendment. Whilst awaiting determination by the court, the petition lapsed.
Interestingly, in that case, Spender J dealt with the merits of the application, ultimately finding that although he had the power to make the amendment required it would be futile to do so in view of the other factual findings. He indicated that "the slip or omission was applicable to the "accidental slip or omission" constituted by the petitioning creditors not applying for an order extending the life of the petition before it lapsed - it resulted only from a failure to avert to the matter while the application to amend the petition was reserved for consideration".
Importantly, in my view, Spender J applied the slip rule "not only because of what the evidence suggests was a slip or omission on behalf of the solicitors for the petitioning creditor, but also because of the court's unintended error".
At the conclusion of the hearing on 11 November 2003, I adjourned the matter to a date to be fixed for judgment to be delivered.
Although I acknowledge the delay in delivering judgment must necessarily fall at my feet, it must be conceded by the solicitors for the petitioning creditor that they were entitled to bring an application to extend at any time before the petition expired on 11 September 2004. They did not do so. I infer that as an oversight by them. Had I anticipated I would have taken so long to deliver the judgment (and after the date the petition was to lapse), then I would have brought that possible delay and the consequences to the attention of the parties on 13 November 2003. I did not do so.
The petitioning creditor could have then considered at that time making oral application to extend and it would have been very difficult for the debtor to have successfully opposed such relief at that time. In my view a combination of the omissions and accidental slips, both by the court and the solicitors for the petitioning creditor are precisely what was alluded to by Spender J in Matthews v Collett.
Furthermore, the justice of this case when I have given reasons why a sequestration order should be made must be taken into account. It is of course not only justice to the debtor which I am required to consider but also to the petitioning creditor, other possible creditors and the public interest as well. Therefore, consistent with the authorities referred to, I propose to make certain orders which would extend the petition.
I make the orders which appear at the commencement of these reasons.

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

Associate:

Date: