Boston Management Services Pty Ltd v O'Donnell
[2017] FCCA 957
•12 May 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BOSTON MANAGEMENT SERVICES PTY LTD v O’DONNELL & ANOR | [2017] FCCA 957 |
| Catchwords: PRACTICE & PROCEDURE – Slip rule – application for extension nunc pro tunc of expiry date of deemed creditor’s petition – whether an adjournment amounted to an order to which slip rule could apply. |
| Legislation: Bankruptcy Act 1966, ss.52, 188, 222, 236 |
| Khera v National Australia Bank Ltd (1996) 71 FCR 133 Re Emmett: Ex Parte Beneficial Finance Corporation Ltd v Emmett [1991] FCA 632 Westpac Banking Corporation v Hingston (No 2) (2010) 117 ALD 552 Osborne v Gangemi (2011) 9 ABC(NS) 257 Moran v Robertson (2012) 6 BFRA 618 Re Mills; Ex parte Lloyd’s (1997) 73 FCR 551 Elyard Corp Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 Griffiths v Boral Resources (Qld) Pty Ltd (2006) 154 FCR 554 Flint v Richard Busuttil & Company Pty Ltd (2013) 216 FCR 375 Ramsay Health Care Australia Pty Ltd v Compton [2016] FCAFC 125 Wu v Li [2017] FCA 500 |
| Applicant: | BOSTON MANAGEMENT SERVICES PTY LTD |
| First Respondent: | THOMAS JOHN O’DONNELL |
| Second Respondent: | ANTHONY WARNER |
| File Number: | SYG 2070 of 2015 |
| Judgment of: | Judge Cameron |
| Hearing date: | 18 February 2016, 24 March 2017 |
| Date of Last Submission: | 24 March 2017 |
| Delivered at: | Sydney |
| Delivered on: | 12 May 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr R. D. Marshall SC |
| Solicitors for the Applicant: | Stewart & Associates |
| Counsel for the First Respondent: | Mr B. J. Skinner |
| Solicitors for the First Respondent: | Nicholas Eddy & Company |
| For the Second Respondent: | Submitting appearance, save as to costs |
ORDERS
Pursuant to s.222(1) of the Bankruptcy Act 1966 (“Act”), the personal insolvency agreement made in respect of the first respondent’s debts on 23 March 2015 be set aside.
The application for a sequestration order be dismissed.
The first respondent pay the applicant’s costs as taxed or assessed by the Court.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2070 of 2015
| BOSTON MANAGEMENT SERVICES PTY LTD |
Applicant
And
| THOMAS JOHN O’DONNELL |
First Respondent
| ANTHONY WARNER |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The first respondent, Mr O’Donnell, entered into a personal insolvency agreement (“PIA”) on 23 March 2015. The applicant (“Boston”) is Mr O’Donnell’s second largest creditor and it opposed the PIA. Boston has brought this proceeding and seeks an order that the PIA be set aside pursuant to s.222(1)(d) and (e) of the Bankruptcy Act 1966 (“Act”). It also seeks a consequential sequestration order against Mr O’Donnell’s estate.
The second respondent, Mr Warner, is the trustee appointed under the PIA.
For the reasons which follow, the PIA will be set aside but the application for a sequestration order will be dismissed.
Legislation
Part X of the Act contains ss.188 and 222. Section 188 relevantly provides:
188 Debtor may authorise trustee or solicitor to be controlling trustee
(1)A debtor who desires that his or her affairs be dealt with under this Part without his or her estate being sequestrated and:
(a)is personally present or ordinarily resident in Australia;
(b)has a dwelling-house or place of business in Australia;
(c)is carrying on business in Australia, either personally or by means of an agent or manager; or
(d)is a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;
may sign an authority in accordance with the approved form naming and authorising a registered trustee, a solicitor or the Official Trustee to call a meeting of the debtor’s creditors and to take control of the debtor’s property
Section 222 relevantly provides:
222 Court may set aside personal insolvency agreement
Setting aside on grounds of unreasonableness etc.
(1)If a personal insolvency agreement is in force, the Court may, on application by:
…
(c) a creditor;
make an order setting the agreement aside if the Court is satisfied that:
(d)the terms of the agreement are unreasonable or are not calculated to benefit the creditors generally; or
(e)for any other reason, the agreement ought to be set aside.
…
Application for sequestration order
(10)The trustee or a creditor may include in an application under subsection (1), (2) or (5) an application for a sequestration order against the estate of the debtor. If the Court, on the first-mentioned application, makes an order under this section setting the personal insolvency agreement aside, it may, if it thinks fit, immediately make the sequestration order sought.
(11)The making of an application by the trustee or a creditor for a sequestration order under this section is taken, for the purposes of this Act, to be equivalent to the presentation of a creditor’s petition against the debtor, but the provisions of subsection 43(1), sections 44 and 47, subsections 52(1) and (2) and Part XIA do not apply in relation to such an application.
…
Section 52(4) of the Act provides:
52 Proceedings and order on creditor’s petition
…
(4) A creditor’s petition lapses at the expiration of:
(a)subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or
(b)if the Court makes an order under subsection (5) in relation to the petition—the period fixed by the order;
unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn.
Section 52(5) provides that if application is made to the Court within twelve months of the presentation of a creditor’s petition, the Court may extend the expiry date of the petition by a period of up to twelve months.
Evidence
The applicant
According to the affidavit of Stephen Moss sworn on 23 July 2015, on 12 March 2014 Boston obtained judgment against Mr O’Donnell in the Local Court of New South Wales for $60,000.
Copies of several documents were annexed to Mr Moss’s affidavit and relevantly contained the following information:
a)on 16 February 2015, Mr O’Donnell signed a notice under s.188 of the Act appointing Mr Warner as controlling trustee of his estate in accordance with pt.X of the Act. In an initial advice to creditors, including Boston, dated 19 February 2015, Mr Warner advised that he intended to call a meeting of creditors to consider a draft PIA;
b)in a report to creditors dated 10 March 2015, Mr Warner reported that:
i)the meeting of creditors was to take place on 20 March 2015;
ii)Mr O’Donnell had advised that his financial difficulties arose in 2009 and that The Fiduciary Company Ltd (“Fidco”), his largest creditor, had lent him money to discharge obligations to other borrowers;
iii)in 2010 Mr O’Donnell became a director of The Solar Renewable Energy Corporation Pty Ltd (“Solar”) but, because of a downturn in solar business in 2012, it struggled and went out of business;
iv)Mr O’Donnell had guaranteed a loan from Boston to Solar and this was the basis of the Local Court judgment against him;
v)Mr O’Donnell had been a director and secretary of a company called Prudential Energy Pty Ltd (“Prudential Energy”) but resigned from both positions immediately before executing the s.188 notice appointing Mr Warner as trustee in control of his estate;
vi)Mr O’Donnell had advised that approximately two weeks prior to the s.188 appointment, he had transferred one hundred A Class shares in Prudential Energy to New Zealand Corporate Holdings Ltd (“NZ Corporate Holdings”). Mr Warner stated that he had sighted a nominee agreement dated 23 July 2012 which stated that Mr O’Donnell had held those shares as nominee and trustee for NZ Corporate Holdings and, although he, Mr Warner, had not obtained any legal advice on that agreement, he had concerns as to its validity. Mr Warner reported that Mr O’Donnell was unable to provide him with financial statements for Prudential Energy and, in the circumstances, he had been unable to ascertain whether that company had any value;
vii)Prudential Energy had offered to make a voluntary contribution towards Mr O’Donnell’s debts of $20,500;
viii)Prudential Energy’s contribution would be sufficient to pay for the anticipated expenses of Mr O’Donnell’s priority creditors, principally his trustee, leaving $2,460 for distribution amongst non-priority creditors;
ix)although in the event of a bankruptcy Mr O’Donnell’s non-priority creditors’ claims totalled $486,719, in the event of a PIA they would total only $147,552. This was because Fidco had advised that, although it would submit its claim in full were Mr O’Donnell to be made bankrupt, it would “subordinate” 90% of its claim should the PIA be accepted; and
x)he estimated that, notwithstanding Prudential Energy’s proposed voluntary contribution and the proposed “subordination” of 90% of Fidco’s claim, the likely dividend to creditors would still be only 1.67 cents in the dollar. In light of that low figure, Mr Warner advised that he could not recommend the proposed PIA to creditors; and
c)in a further advice to creditors, dated 23 March 2015, Mr Warner stated that at the meeting held on 20 March 2015, the majority of creditors had accepted the proposed PIA. Mr Warner advised that he had executed the agreement as trustee and would proceed to administer it and report to creditors.
On 23 December 2015, Boston’s solicitor, Mr A Stewart, deposed in an affidavit that there have been two companies known as The Fiduciary Company Ltd, one registered in the (British) Virgin Islands (“Fidco”) and the other in New Zealand, the latter having been deregistered on 25 February 2013. Mr A Stewart referred to an assertion made by one Gordon Ralph Stewart in an affidavit filed in this proceeding dated 14 September 2015 to the effect that he, Mr GR Stewart, was director of and associated with both of those companies.
Mr A Stewart affirmed a further affidavit on 16 February 2016. He annexed copies of documents produced by Mr Warner in answer to a notice to produce served on him. Amongst those documents were emails between one of Mr Warner’s employees and Mr GR Stewart. In an email dated 6 March 2015, Mr GR Stewart stated that he had discussed with Mr O’Donnell “subordinating” some of Fidco’s debt:
… in order to allow him to enter into a Part X agreement, on the basis that The Fiduciary Company Limited’s best chance of getting its money repaid is if [Mr O’Donnell] is able to continue in business.
Boston also introduced the following documents into evidence:
a)a notice to produce addressed to Mr Warner and documents produced in response (exhibit 1);
b)a notice of objection to subpoena filed by Mr GR Stewart (exhibit 2); and
c)a company extract for NZ Corporate Holdings (exhibit 3).
In exhibit 1, amongst the documents produced by Mr Warner in answer to the notice to produce was a copy of the nominee agreement which purported to have been signed by Mr O’Donnell on 23 July 2012. The agreement stated that Mr O’Donnell held one hundred Class A ordinary shares in Prudential Energy as nominee and trustee for NZ Corporate Holdings and would, on demand by the latter company, transfer the shares to it or to its order. Exhibit 3 disclosed that the sole director of NZ Corporate Holdings was Mr GR Stewart and that shares in that company were held by another company whose address was the same as Mr GR Stewart’s.
The minutes of the creditors’ meeting held on 20 March 2015 recorded the following concerning proofs of debt received:
Creditor
Amount of proof of debt
Amount admitted for voting purposes
Stephen Crawford
12,875.50
12,875.50
Fidco
376,852.63
225,823.00
Nicholas Eddy & Co
25,135.00
25,135.00
Boston
61,159.73
61,159.73
Totals
476,022.86
324,993.23
The minutes of that meeting further recorded that Mr Crawford, Fidco and Nicholas Eddy & Co, making up 81% of value, voted for the PIA to be accepted and that Boston, making up 19% of value, opposed acceptance.
The minutes also recorded that Mr GR Stewart had advised that Mr O’Donnell was not a director of Fidco, a shareholder or a beneficial owner of shares in Fidco.
The respondents
The respondents read no affidavits and tendered no documents.
Submissions
The applicant
In summary, Boston’s argument was that the PIA offered nothing to any of the creditors and that the bankruptcy of Mr O’Donnell appeared to be the better option. It argued that there will usually be a strong case for setting a PIA aside when the PIA would provide no financial benefit to creditors or when the amount offered to creditors was “so trivial”.
Boston submitted that the following facts and contentions were relevant to whether the Court would exercise its jurisdiction to set aside the PIA:
a)the return to creditors was derisory;
b)the terms of the PIA were unreasonable and not calculated to benefit creditors generally in that, after payment of priority creditors and the satisfaction of a costs order that arose after the s.188 authority was signed, nothing was left to be distributed to creditors under the PIA;
c)the creditors who supported the PIA had voted for something which would yield them nothing;
d)if Fidco was, in fact, not owed the amount claimed by it than it lost nothing from being “subordinated” for 90% of its debt;
e)there would be no irreversible harm done if the PIA was set aside;
f)Mr Warner had recommended, on good grounds, that the PIA be rejected;
g)two of the three creditors who voted in favour of the PIA were Mr O’Donnell’s accountant and his solicitor. It was argued that they were not at arm’s length (from Mr O’Donnell) and that if they had not voted, the votes for and against the PIA would have been equal - albeit that 79% in value would still have been in favour;
h)aspects of Mr O’Donnell’s affairs called for greater examination than Mr Warner had been able to undertake in the few days available to him, namely:
i)the unsecured loans which Fidco purportedly made to Mr O’Donnell were opaque and Mr Warner was not given a proper statement of account when assessing the relevant proof of debt;
ii)the New Zealand Fiduciary Company Ltd was in existence at the time of the purported loans to Mr O’Donnell and may have been the actual lender, rather than Fidco (the Virgin Islands Fiduciary Company Ltd);
iii)the loan agreements between Fidco and Mr O’Donnell did not identify which Fiduciary Company Ltd was party to the agreement but the agreement identified the lender’s address as being in New Zealand;
iv)if the lender was in fact the New Zealand Fiduciary Company Ltd then the purported debt would not exist because that company had been struck off;
v)there was no documentary evidence that Fidco had actually paid anything to Mr O’Donnell. Also, the second loan agreement purported to provide finance for a business defined as “A solar power business to be established by the Borrower, and to be incorporated (if not already incorporated)” while the security for the loan was expressed to be “A debenture over the business when it is incorporated” of which there was no evidence;
vi)Mr Warner had had insufficient time to investigate the nominee agreement which made NZ Corporate Holdings the beneficial owner of Mr O’Donnell’s shares in Prudential Energy but had expressed concern over it and noted that he also had not been able to determine if the shares in Prudential Energy had any value;
vii)suspicions attached to the transfer of the shares in Prudential Energy because, according to Mr Warner, Mr O’Donnell’s business ventures were struggling around the time he executed the nominee agreement, the shares were only transferred in the period before Mr O’Donnell signed the s.188 authority and the same Mr GR Stewart who was a director of Fidco was also the director of NZ Corporate Holdings;
viii)although Mr O’Donnell was no longer a shareholder of Prudential Energy, that company had nevertheless contributed $20,500 to the PIA;
i)Mr O’Donnell’s affairs were suspicions and worthy of investigation. It was not necessary to prove that there would be an advantage to creditors by bankrupting Mr O’Donnell; it was sufficient that the bankruptcy would afford them the possibility of economic advantage. In this regard, Boston submitted that the true nature of Mr O’Donnell’s relationships with those behind Prudential Energy, NZ Corporate Holdings and Fidco ought to be exposed. Boston argued that a bankruptcy trustee would be empowered to carry out that investigation and, if appropriate, make recoveries. Boston submitted that what it described as Mr O’Donnell’s purported borrowings from Fidco ought to be investigated and the latter’s bona fides as a creditor determined, the implication being that a potential reduction in the pool of creditors would be an advantage to the remaining creditors.
The respondents
Mr O’Donnell argued that Boston had made no complaint that material information had been omitted from his statement of affairs or incorrect information included. He further observed that no challenge had been made to Fidco’s proof of debt and no adjournment of the meeting of creditors had been sought so further enquiries could be made, including enquiries into which Fiduciary Company Ltd was the lender. He submitted that creditors had had full knowledge of his financial affairs when they voted and that there was no suggestion that any creditor would receive priority or advantage.
Mr O’Donnell submitted that the discretion under s.222(1)(d) and (e) was to be exercised cautiously, with the objectives of pt.X and the Act as a whole in mind, and that a large discrepancy between his indebtedness and the likely benefit under the PIA ought not necessarily be determinative of the present application. He argued that what is unreasonable in a particular case depends on the facts of that case.
Consideration
In Khera v National Australia Bank Ltd (1996) 71 FCR 133, the material provision was the then s.236 of the Act which relevantly provided:
(1)The Court may, upon application by the trustee, a creditor or the debtor, … if it is satisfied -
(a)…
(b)that the deed of arrangement cannot be proceeded with without injustice or undue delay to the creditors, the debtor or, if the debtor has died, the estate of the debtor; or
(c)that for any other reason the deed of arrangement ought to be terminated;
make an order terminating the deed.
(2)The Court shall not make an order terminating a deed on the ground specified in paragraph (l)(a) or (c) unless it is satisfied that it would be in the interests of the creditors to do so.
It can be seen that s.236(2) of the Act as it stood at the time of Khera’s case is similar in some respects to s.222(1)(d) of the Act as it is at present.
In Khera’s case, the decision to set aside the deed of arrangement was made because the general circumstances required it. Those circumstances included some matters which arose after the deed had been entered into and others which existed prior to that point but did not become known until after the deed had been executed. Justices Lockhart and Hill said of the reasoning of the trial judge, Kiefel J:
Her Honour concluded that where the circumstances of the case call for bringing a deed of arrangement to an early end and making a sequestration order against the debtor’s estate; where circumstances establish that the special resolution is “at least shadowy”; and where there is a real need for proper inquiry into the debtor’s affairs, and it is in the interests of creditors to make such inquiry, then the proper course to take is to terminate the deed and to make a sequestration order. (at 141)
It is apparent from the discussion which preceded that passage that their Honours agreed with Kiefel J’s view that circumstances calling for a deed of arrangement to be brought to an early end could be many and varied. However, it is unlikely that a small dividend from large debts would, alone, be sufficient to amount to such a circumstance: Re Emmett: Ex Parte Beneficial Finance Corporation Ltd v Emmett [1991] FCA 632 at [36]; Westpac Banking Corporation v Hingston (No 2) (2010) 117 ALD 552 at 568 [97].
In Osborne v Gangemi (2011) 9 ABC(NS) 257, Bromberg J said, after referring to Westpac Banking Corporation v Hingston (No 2) and the cases cited there:
The authorities to which I have referred demonstrate that a composition is likely to be set aside where the amount available for distribution is trivial or negligible when compared to the debtor’s total debts. That will be particularly so where the debtor’s affairs call for further investigation and insufficient information was available to creditors for them to have made an informed decision that a more advantageous outcome may not be achieved through the bankruptcy of the debtor. The closeness of the vote of creditors will be relevant and particularly so where the result may have been influenced by creditors who were not at arm’s length from the debtor or whose interests coincide with the debtor’s interest in avoiding bankruptcy, rather than the interests of creditors generally. The extent to which a composition has already been implemented, is a countervailing factor. (at 268 [47])
In Moran v Robertson (2012) 6 BFRA 618, Flick J, quoting Merkel J in Re Mills; Ex parte Lloyd’s (1997) 73 FCR 551 at 559 to 561, said that the following considerations articulated by Merkel J in that case were apposite to the exercise of the discretionary power conferred by s.222 of the Act:
(a)Whether, after considering all the circumstances of the case, a greater opportunity to inquire into the debtor’s affairs and a more comprehensive explanation by the debtor were called for …
(b)If circumstances arise which “give cause for a suspicion” or to “arguable” causes of action which may benefit creditors then that can suffice to set aside the composition …. It is not necessary to establish that the creditors will be, or even are more likely to be, advantaged by bankruptcy rather than the composition. It is sufficient if bankruptcy will afford:
a prospect or possibility of economic advantage to creditors sufficient to justify the conclusion that it is in their interests to make the declaration.
per Jenkinson J in Augustyn v Putnin (1988) 83 ALR 514 at 515 …
(c)If the amount offered under the composition is little or trivial there may be no harm of any consequence to creditors for the composition to be set aside if other factors warrant that course …
(d)A Court may be more disposed to set aside a composition if no payments to creditors have been made pursuant to the composition …
(e)A composition passed, inter alia, on the basis of a report to creditors as to the debtor’s financial affairs which is misleading will also be a relevant factor … (at 624-625 [16])
I accept Boston’s submissions. The amount which will be available to creditors is nugatory, a situation which appears may arise out of two matters:
a)the nominee agreement, by which Mr O’Donnell came to have no equitable interest in his shares in Prudential Energy for no apparent reason and at a time which appears to have had no relevance to anything in particular; and
b)the claim by Fidco, the background of which is far from clear, not least by there being no evidence before the Court which demonstrates payments by Fidco equivalent to the sum claimed.
The concerns arising out of those matters are exacerbated by:
a)the involvement of Mr GR Stewart in NZ Corporate Holdings and also in Fidco. His involvement suggests that a company associated with him may have been owed a debt but the significance of such a debt depends significantly on which Fiduciary Company Ltd was the lender, a matter which the documents before the Court do not illuminate;
b)the financing of the PIA by Prudential Energy which appears to be linked to Mr GR Stewart;
c)the outcome of the vote to accept the PIA depended on the votes of Mr O’Donnell’s solicitor, who acted for him in this proceeding, and his accountant, who do not appear to have been arm’s length creditors; and
d)the fact that in his report to creditors dated 10 March 2015, Mr Warner advised that he could not recommend the proposed PIA to creditors.
In circumstances where the amount offered under the PIA is trivial with the consequence that there is little likelihood of material harm to creditors if the PIA were to be set aside, the matters set out above at [25] and [26] point to a need for greater inquiry into Mr O’Donnell’s affairs than has occurred hitherto and to a need for a more comprehensive explanation by Mr O’Donnell of the circumstances by which his debts came into existence. Further, the absence of much in the way of evidence to support Fidco’s claim and the consequences for the remaining creditors were it to be found unenforceable or non-existent indicate that there is a prospect or possibility of economic advantage to the other creditors sufficient to justify the conclusion that it is in their interests to make the declaration sought by Boston.
As noted earlier, Boston has also sought a sequestration order against Mr O’Donnell’s estate. In Westpac Banking Corporation v Hingston (No 2) Cowdroy J said:
The court finds that as the composition is to be set aside, it is necessary to make any order for bankruptcy retrospective to the date of the acceptance of the debtor’s petition. By virtue of s 222(11) the requirements for the presentation of a creditors petition against a debtor are dispensed with regard to ss 43(1), 44, 47, 52(1), (2) and Pt XIA of the Bankruptcy Act. The effect of s 222(11) is to render it unnecessary to require the presentation of a creditors petition; to comply with the requirements of proving an act of bankruptcy within 6 months before the presentation of such a petition; or to provide affidavits of debt. Further, pursuant to s 222(11) the court is not required to consider whether the debtor is able to pay his or her debts.
Given the court’s finding that the composition is to be set aside, it follows that Westpac is entitled to an order of sequestration in respect of the estate of Dr Hingston. (at 570-571 [117]-[118])
The present application was filed on 24 July 2015. Judgment was reserved on 18 February 2016 and the Court was adjourned. The twelve month period provided by s.52(4) of the Act expired at the end of 23 July 2016 at which time judgment was still reserved. No application under s.52(5) for an extension of the expiry date of the creditor’s petition was made on or before 23 July 2016.
On 24 March 2017 Boston Management sought such an extension and relied on an affidavit sworn by Mr A Stewart on 16 March 2017 in which he deposed that the fact that a s.52(5) application had not been made on 18 February 2016 had been an oversight and, implicitly, that this had arisen out of his attention having been focussed on the presentation of Boston’s case. The submission was that an order should be made to vary the 18 February 2016 order adjourning the proceeding to also provide for an extension of time under s.52(5) up to 15 [sic] July 2017 for the determination of the deemed petition.
Boston acknowledged that under s.222(11) of the Act, for the purposes of an application under s.222(10), a creditor’s petition is deemed to have been presented to the Court on the day the application to set aside the PIA is filed. It also acknowledged that the exemptions in s.222(11) do not include an exemption from the s.52(4) one year time limit within which petitions should be determined. However, it was submitted that the failure to make an order on 18 February 2016 extending the life of the creditor’s petition represented a slip which could be remedied by the making of such an order nunc pro tunc.
Undoubtedly there is authority for the proposition that, in appropriate circumstances, the slip rule may be used as a basis to extend the life of a lapsed petition and that the rule extends to permit the correction of an order where the omission results from the inadvertence of a party’s legal representative: Elyard Corp Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 at 391 per Lockhart J; Griffiths v Boral Resources (Qld) Pty Ltd (2006) 154 FCR 554 at 562 [30]-[33]; Flint v Richard Busuttil & Company Pty Ltd (2013) 216 FCR 375 at 381 [26]; Ramsay Health Care Australia Pty Ltd v Compton [2016] FCAFC 125 at [21]-[23]. There is also authority for the proposition that in appropriate cases this Court can amend its orders under the slip rule: Flint v Richard Busuttil at 380 [25].
However, on 18 February 2016, subject to the pronouncement of judgment, the proceeding had concluded when judgment was reserved. The sound recording of that hearing, which was played in court during the extension of time application, records that after I pronounced that judgment would be reserved I directed my associate to “adjourn the Court”. Adjournment of the Court at that point was not an order in the proceeding any more than it would have been if an ex tempore judgment had been pronounced and the Court then adjourned. It was an adjournment of the Court rather than of the matter and consequently not an order of or for adjournment: Griffiths v Boral Resources at 567 [51] and 569 [61]-[63]. Nor does pronouncing that a matter is reserved for judgment amount to the making of an order: Griffiths v Boral Resources at 569-570 [64]-[ 67]. I conclude that no order was made on 18 February 2016 in respect of which the slip rule has any application. Consequently, no basis has been demonstrated for the extension of the expiry date of the creditor’s petition deemed by s.222(11) to have been made on 24 July 2015. I find that it lapsed at the end of 23 July 2016. The application for a sequestration order will therefore be dismissed.
Shortly before publishing these reasons for judgment, the decision of Rares J in Wu v Li [2017] FCA 500 came to my attention. With respect, I do not understand his Honour’s reasons in that case to compel a conclusion in this matter different from the one which I have reached.
Conclusion
The PIA will be set aside but the application for a sequestration order will be dismissed.
Mr O’Donnell is to pay Boston’s costs.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Cameron FM
Date: 12 May 2017
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