Boston Management Services Pty Ltd v O'Donnell - [2017] FCCA 957

FEDERAL CIRCUIT COURT OF AUSTRALIA

BOSTON MANAGEMENT SERVICES PTY LTD v O’DONNELL & ANOR

[2017] FCCA 957

Catchwords:
BANKRUPTCY – Application to set aside personal insolvency agreement and for the making of a sequestration order – relevant considerations – application for sequestration order taken to be equivalent to the presentation of a creditor’s petition.

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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] FCCA 957
Decision Date: 12 May 2017

CaseChat Overview and Summary

Boston Management Services Pty Ltd (the applicant) sought to set aside a Personal Insolvency Agreement (PIA) entered into by Mr O'Donnell (the respondent) and also sought the making of a sequestration order against the respondent's estate. The application was heard in the Federal Court of Australia.

The primary legal issues before the Court were whether the PIA should be set aside, and if so, whether a sequestration order should be made. Relatedly, the Court considered whether an application for a sequestration order should be treated as equivalent to the presentation of a creditor's petition for the purposes of the *Bankruptcy Act 1966* (Cth), and whether the slip rule could be applied to extend the expiry date of a deemed creditor's petition where an adjournment had been granted.

The Court reasoned that an application for a sequestration order, in the context of seeking to set aside a PIA, was akin to the presentation of a creditor's petition. It further held that an adjournment of proceedings did not constitute an "order" to which the slip rule could be applied to retrospectively extend the expiry date of a deemed creditor's petition. The Court found that the applicant had not established grounds to set aside the PIA.

Consequently, the Court dismissed the application to set aside the PIA and refused to make a sequestration order against the respondent's estate.

Orders