FEDERAL CIRCUIT COURT OF AUSTRALIA
| BURRELL v REAVILL FARM PTY LTD & ORS | [2014] FCCA 1449 |
| Catchwords: BANKRUPTCY – Application to set aside bankruptcy notice on the ground that debtor has counter-claim equal to or greater than the amount claimed in the bankruptcy notice – whether debtor has sufficiently substantial grounds that he has a counter-claim equal to or greater than the amount demanded in the bankruptcy notice. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.27(1), 30, 33(1), 41(6A), 41(7), 52(1), 153B, 306, 306(1) Federal Circuit Court of Australia Act 1999 (Cth), ss.57(1), 81(1)(a) |
| Applicant: | JOHN LLEWELLYN BURRELL |
| First Respondent: | REAVILL FARM PTY LTD (ACN 001 817 492) |
| Second Respondent: | CHAMPIONS QUARRY PTY LTD (ACN 127 774 949) |
| Third Respondent: | JEFFREY FRANCIS CHAMPION |
| Fourth Respondent: | DIANA CHRISTINE CHAMPION |
| Fifth Respondent: | MACABIL PTY LTD (ACN 078 825 863) |
| File Number: | SYG 43 of 2014 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 12 May 2014 |
| Delivered at: | Sydney |
| Delivered on: | 8 July 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Livingston |
| Solicitors for the Applicant: | Burrell Solicitors Pty Ltd |
| Counsel for the Respondents: | Ms V. McWilliam |
| Solicitors for the Respondents: | Ronayne Lawyers |
ORDERS
The proceedings commenced on 8 January 2014 for an order to set aside bankruptcy notice BN 168177 issued on 13 December 2013 (bankruptcy notice) are not invalid because the applicant failed to comply with r.3.02 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (Bankruptcy Rules).
Pursuant to r.1.06(1) of the Federal Circuit Court Rules 2001 (Cth) (FCCR) the Court dispenses with the requirement that on 8 January 2014 the applicant comply with r.3.02 of the Bankruptcy Rules.
Pursuant to r.3.05(1) of the FCCR the time for complying with r.3.02 of the Bankruptcy Rules…
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- Case
- [2014] FCCA 1449
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether Mr Burrell's application to set aside the bankruptcy notice was invalid due to his failure to comply with rule 3.02 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth). Specifically, the court had to consider if compliance with this rule was mandatory, and if not, whether the court possessed the power under rule 1.06(1) of the Federal Circuit Court Rules 2001 (Cth) to dispense with compliance or under rule 3.05 of the Federal Circuit Court Rules 2001 (Cth) to extend the time for compliance. The court also needed to assess whether Mr Burrell had sufficiently established grounds for a counter-claim, set-off, or cross-demand.
Justice Manousaridis reasoned that while Mr Burrell had not fully complied with rule 3.02 of the Bankruptcy Rules, particularly regarding the attachment of the bankruptcy notice and the detailed particulars of his counter-claim, these were not fatal defects. The court found that rule 1.06(1) of the Federal Circuit Court Rules 2001 (Cth) allowed it to dispense with compliance with the Bankruptcy Rules in the interests of justice, and rule 3.05 permitted the extension of time for compliance. The judge concluded that the failure to comply with rule 3.02 did not render the application a nullity, and that the court had the power to grant relief. However, the court ultimately dismissed Mr Burrell's application to set aside the bankruptcy notice, finding that he had not sufficiently demonstrated a counter-claim, set-off, or cross-demand that met the required threshold.
Consequently, the court ordered that the proceedings were not invalid due to Mr Burrell's failure to comply with rule 3.02 of the Bankruptcy Rules, and pursuant to rule 1.06(1) of the Federal Circuit Court Rules 2001 (Cth), dispensed with the requirement for full compliance. The court also extended the time for compliance with rule 3.02 to 18 March 2014. Despite these procedural concessions, the court dismissed Mr Burrell's application to set aside the bankruptcy notice and his interim application, ordering him to pay the respondents' costs.
Orders
Orders of the court
1.
The proceedings commenced on 8 January 2014 for an order to set aside bankruptcy notice BN 168177 issued on 13 December 2013 (bankruptcy notice) are not invalid because the applicant failed to comply with r.3.02 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (Bankruptcy Rules).
2.
Pursuant to r.1.06(1) of the Federal Circuit Court Rules 2001 (Cth) (FCCR) the Court dispenses with the requirement that on 8 January 2014 the applicant comply with r.3.02 of the Bankruptcy Rules.
3.
Pursuant to r.3.05(1) of the FCCR the time for complying with r.3.02 of the Bankruptcy Rules is extended to 18 March 2014.
4.
The interim application filed in Court on 12 May 2014 is otherwise dismissed.
5.
The application filed on 8 January 2014 is dismissed.
6.
The applicant pay the respondents’ costs of the application including the costs of the interim application.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY
SYG 43 of 2014
JOHN LLEWELLYN BURRELL
Applicant
And
REAVILL FARM PTY LTD (ACN 001 817 492)
First Respondent
CHAMPIONS QUARRY PTY LTD (ACN 127 774 949)
Second Respondent
JEFFREY FRANCIS CHAMPION
Third Respondent
DIANA CHRISTINE CHAMPION
Fourth Respondent
MACABIL PTY LTD (ACN 078 825 863)
Fifth Respondent
REASONS FOR JUDGMENT
Introduction
1.
Before the Court are two applications. The first, which was filed on 8 January 2014, seeks an order that a bankruptcy notice issued against the applicant, Mr Burrell, be set aside or, in the alternative, that the time for compliance with its requirements be extended. The ground on which Mr Burrell seeks these orders is that he has a counter-claim against the respondent creditors equal to or exceeding the amount demanded in the bankruptcy notice.
2.
The second application is an interim application Mr Burrell filed on 12 May 2014. The application was filed in response to contentions made by the respondents that the application Mr Burrell filed on 8 January 2014 did not comply with r.3.02 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (Bankruptcy Rules), and that such failure rendered Mr Burrell’s application incompetent. In his interim application Mr Burrell seeks an order that the proceedings commenced by the application filed on 8 January 2014 are not invalidated because of any formal defect.
3.
When the matter came before me on 12 May 2014, counsel agreed I should deal with both the interim application and, if Mr Burrell were to succeed on that application, with Mr Burrell’s application filed on 8 January 2014. Counsel also agreed I should deal with Mr Burrell’s interim application on the assumption that Mr Burrell did not comply with r.3.02(3) of the Bankruptcy Rules, although it was agreed that Mr Burrell’s right to submit he did comply with that rule would be preserved to the extent it became relevant to any issue.
4.
In these reasons, therefore, I do the following. First, I set out the facts and procedural history out of which the applications arise. As will be seen below, there are two sets of facts. One concerns Mr Burrell’s dealings with the respondents. That is relevant because Mr Burrell alleges that an essential element of his asserted counter-claim – the making of misrepresentations – occurred in the course of those dealings. The other set of facts concerns Mr Burrell’s involvement in two property developments. That set of facts is relevant for two reasons. First, the judgment debt referred to in the bankruptcy notice arose in connection with one of those property developments. Second, it is an essential element of Mr Burrell’s asserted counter-claim that the misrepresentations allegedly made by the respondents prevented Mr Burrell from completing the second property development; and it is the value of the foregone profit from that development that Mr Burrell claims is the amount of his asserted counter-claim.
5.
I then consider whether Mr Burrell failed to comply with r.3.02 of the Bankruptcy Rules, and, if so, whether Mr Burrell’s not having complied with r.3.02 means the Court has no power to determine the claims made in the application. Finally, assuming the Court does have the power to determine Mr Burrell’s application, I consider whether I am satisfied Mr Burrell has a counter-claim, set-off or cross demand equal to or exceeding the amount demanded by the bankruptcy notice.
Facts
Mr Burrell’s dealings with the respondents
6.
Mr Burrell is a solicitor who, since 2003, has conducted his practice through an incorporated law practice, Burrell Solicitors Pty Ltd.
7.
In around February 2010 Mr Burrell commenced legal work on instructions from Mr Champion, the third respondent. Mr Champion and the fourth respondent, his wife, control the first, second, and fifth respondents, each of which is a company.
8.
Mr Burrell’s legal work related to seeking development approval for a proposed expansion of an existing sandstone quarry at Tuckurimba, near Lismore. The quarry is on land of which the first respondent, Reavill Farm Pty Ltd (Reavill), and another company controlled by Mr Champion, Tucki Hills Pty Ltd, are the registered proprietors. The legal work consisted in representing the respondents in two proceedings before the Land and Environment Court of New South Wales (LEC).
9.
From the outset Mr Champion and the other respondents had difficulty paying the legal fees associated with the second of the LEC proceedings. Mr Burrell has deposed to conversations he says he had with Mr Champion about the payment of fees. Mr Burrell alleges that in the course of those conversations Mr Champion made a number of representations about the capacity and willingness of the respondents to pay the relevant fees.
10.
Throughout 2010 the legal fees being incurred in relation to the LEC proceedings were accumulating. On 5 January 2011 Mr Burrell issued a statement of account to Reavill that showed total costs and disbursements of $357,958.30 had been incurred, and towards which the respondents had made payments totalling $103,850.41. On 28 February 2011 Mr Burrell issued a further statement of account that showed that total costs and disbursements had increased to $725,723.94 towards which the respondents had made payments totalling $243,469.91.
11.
After 27 February 2011 Mr Burrell and Mr Champion had a number of discussions about the payment of outstanding fees, particularly those owing to senior counsel. Counsel had indicated on 16 February 2011 he would not do any further work unless payment of his outstanding fees was secured.
12.
Mr Burrell and Mr Champion reached an agreement by 4 April 2011, being the day on which submissions were due to be made to the LEC. That resulted in the respondents signing a number of documents, the details of which are described in the reasons for judgment in Burrell Solicitors Pty Ltd v Reavill Farm Pty Limited & Ors (No.2).[1]
13.
The LEC proceedings were decided against the respondents in May 2011. Mr Burrell had further discussions with Mr Champion about the payment of his and counsel’s fees. These discussions ended on 27 September 2011 when Mr Champion sent a letter to Mr Burrell attaching a letter from Reavill in which a number of allegations were made against Mr Burrell. By letters dated 30 September 2011, Mr Burrell notified Reavill and the second, third, and fourth respondents that he had ceased to act for them.
14.
In November and December 2011 Mr Burrell caused Burrell Solicitors Pty Ltd to apply for assessments of the costs that had been incurred in the LEC proceedings. On 22 August 2013, after the hearing of objections, two judgments were entered in the Supreme Court of New South Wales against the respondents, one for $188,005.11, and the other for $349,302.42.
Mr Burrell’s property developments
15.
While acting for the respondents in the LEC proceedings, Mr Burrell was managing a property development venture that had begun in 2003 but which before 2011 had fallen into difficulties. The venture concerned the development of medical suites in Kogarah. Mr Burrell undertook the venture through JR & JB Pty Limited (JR) as trustee of the Sojara Trust.
16.
JR borrowed money for the purposes of the venture from a number of entities. One was Tanilba Beach Pty Limited (Tanilba), a company controlled by Mr Bruce Webster. The repayment of the loan was secured by a mortgage over a property in Kurnell (lot 89) that Mr Burrell, through JR as trustee of a family trust, had acquired in 1997 together with an adjoining lot (lot 88). Lot 89 contained a residence in which Mr Burrell lived until October 2012. Mr Burrell became registered as proprietor of lot 88 in 2002 following a property settlement with his former wife. Both lots 89 and 88 were subject to first-ranking mortgages. Lot 89 was mortgaged to RHG Mortgage Corporation Limited (RHG), and lot 88 was mortgaged to the Laiki Bank (now known as the Beirut Hellenic Bank).
17.
The Kogarah venture encountered difficulties from late 2007 to early 2008, after stage 1 of the venture had been completed, when the project financier withdrew funding for stage 2. According to Mr Burrell:[2]
Development of stage 2 then foundered and I put considerable time and effort into reviving the project over the next five years during 2008 to 2012 without success. On a few occasions it seemed that completing the project would be possible. Matters came to a head in April 2012, when after months of due diligence to establish a sale and joint venture, all was cancelled the day before contracts were set to be signed when the lead investor’s wife was diagnosed with terminal brain cancer.
18.
In the meantime, in or about the middle of 2010, Mr Burrell resolved to apply for the consolidation of lots 88 and 89 and to subdivide the consolidated lots into two new lots 888 and 889. Mr Burrell lodged a development application for consolidation in January 2011 and the approval was granted on 12 September 2011.
19.
Mr Burrell failed to make mortgage payments to RHG in August-December 2011. In October 2011, Mr Burrell made a “Hardship Application” to RHG to capitalise the arrears. Mr Burrell renewed the application in March 2012. In May or June 2012 an employee of RHG informed Mr Burrell that RHG approved the hardship application “subject to the consent of the second mortgagee Tanilba Beach”. Tanilba, however, refused to consent. That led to RHG refusing the hardship application.
20.
In 2010 Mr Burrell proposed to Mr Webster that Mr Webster discharge the mortgage Tanilba held over lot 89 in return for Mr Burrell paying Tanilba $600,000, being $300,000 principal, and $300,000 interest. Mr Webster did not accept this proposal. Before 13 September 2012, Tanilba commenced proceedings against Mr Burrell in the Supreme Court of New South Wales, and obtained judgment against Mr Burrell on 13 September 2012 in the amount of $780,264.32
21.
On 30 October 2012, RHG went into possession of lot 89. In December 2012, Mr Burrell was advised that RHG had sold lot 89 to Tanilba for $750,000. Mr Burrell was subsequently informed by email from Mr Webster that the sale of lot 89 was settled on 1 February 2013. After 1 February 2013, but before 26 November 2013, Tanilba applied $277,066.42 towards the judgment debt, leaving a balance of $503,197.90. The evidence does not reveal how that sum was calculated.
22.
By notice dated 26 November 2013 Tanilba informed Mr Burrell that it had assigned to the respondents “all its right title and interest in the debt of is [sic] $575,689.58 as at 26 November 2013” between Mr Burrell and the respondents.
Proceedings before this Court
23.
On 13 December 2013, the respondents arranged for the issue of a bankruptcy notice against Mr Burrell demanding payment of $503,197.90. That represents the amount of the judgment of $780,264.32 Tanilba recovered from Mr Burrell on 13 September 2012 less the $277,264.32 Tanilba applied against that debt. The bankruptcy notice was served on Mr Burrell on 18 December 2013.
24.
On 8 January 2014 Mr Burrell filed an application with this Court seeking an order to set aside the bankruptcy notice or, in the alternative, an order to extend the time for compliance with its requirements. The application was supported by an affidavit of Mr Burrell. In that affidavit, Mr Burrell deposed that on 24 December 2013 he commenced proceedings against the respondents in the Supreme Court of New South Wales. He deposed that he commenced what Mr Burrell describes as a “counter-claim” by summons “as a matter of convenience with limited assistance with counsel due to the timing of the summer vacation”. Mr Burrell further deposed that the summons was due to be before the Supreme Court on 7 February 2014 for directions, at which time he expected that directions would be made for the pleading of his counter-claim.
25.
Mr Burrell, nevertheless, described in his affidavit of 8 January 2014 the counter-claim he asserted against the respondents as follows:
6. [T]he nub of the counterclaim is that by agreement between the respondents, Burrell Solicitors P/L and myself, I undertook significant legal work for the respondents through the corporate vehicle for my legal practice, Burrell Solicitors P/L, on promises made by the respondents to me for payment for my services which were not kept and which I believe on reasonable grounds were misleadingly and deceptively made.
7. Further, the respondents later entered into written agreements for the payment of these legal fees which they subsequently breached and from which they ultimately resiled, and are thereby in breach of contract.
8. As a consequence I have personally suffered loss and damages in excess of the debt claimed in the bankruptcy notice.
. . .
10. In the period from February 2010 to September 2011, I undertook complex legal work for [all but the fifth respondents] including conducting two cases in the Land & Environment Court and assisting with a Part 3A Application to the Minister for development consent for a sandstone quarry near Lismore. Burrell Solicitors P/L received part payment for this work. Later the legal costs were assessed, certificates were issued and judgments entered into against the respondents on 22 August 2013 for the outstanding balance in the total sum of $537,307.64.
11. There are presently legal proceedings in the Supreme Court of NSW matter #2011/365912 in respect of this legal work and judgment debt, being conducted by the respondents against Burrell Solicitors P/L and defended, alleging breach of retainer and other matters in which the respondents are claiming reimbursement of amounts paid or owing of $1,246,676.13.
26.
Mr Burrell’s application came before a Registrar of this Court on 28 January 2014, and directions were made for the filing of further evidence.
27.
On 14 February 2014, the solicitor for the respondents sent a letter to Mr Burrell by email in which he identified what he claimed were fatal problems with Mr Burrell’s application to set aside the bankruptcy notice. First, it was said Mr Burrell had failed to comply with the Bankruptcy Rules because neither the application nor Mr Burrell’s affidavit in support had attached to it a copy of the bankruptcy notice, Mr Burrell’s affidavit did not state when the bankruptcy notice was served, and his affidavit did not specify full details of the counter-claim. It was further said that the information Mr Burrell provided about his counter-claim did not establish a prima facie case because the claim Mr Burrell asserted, if it existed, was one that belonged to Burrell Solicitors Pty Ltd, not Mr Burrell.
28.
On 18 March 2014, Mr Burrell filed two affidavits, both sworn on 17 March 2014. In those affidavits, Mr Burrell deposed:
a) as to the date on which he was served with the bankruptcy notice;
b) as to matters relating to whether or not the bankruptcy notice was attached to the application commencing these proceedings;
c) that he had filed a statement of claim and supporting affidavit in the Supreme Court proceedings; and
d) of facts on which he relies for his counter-claim.
Failure to comply with r.3.02 of the Bankruptcy Rules
29.
I now turn to consider whether Mr Burrell complied with r.3.02 of the Bankruptcy Rules on 8 January 2014 when he filed his application to set aside the bankruptcy notice. That rules provides as follows:
(1) An application to set aside a bankruptcy notice must be accompanied by:
(a) a copy of the bankruptcy notice; and
(b) an affidavit stating:
(i) the grounds in support of the application; and
(ii) the date when the bankruptcy notice was served on the applicant; and
(c) a copy of any application to set aside the judgment or order in relation to which the bankruptcy notice was issued and any material in support of that application.
(2) If the application is based on the ground that the debtor has a counter-claim, set-off or cross demand mentioned in paragraph 40(1)(g) of the Bankruptcy Act, the affidavit must also state:
(a) the full details of the counter-claim, set-off or cross demand; and
(b) the amount of the counter-claim, set-off or cross demand and the amount by which it exceeds the amount claimed in the bankruptcy notice; and
(c) why the counter-claim, set-off or cross demand was not raised in the proceeding that resulted in the judgment or order in relation to which the bankruptcy notice was issued.
(3) The application and supporting documents must be served on the respondent creditor within 3 days after the application is filed.
30.
First, the respondents submit Mr Burrell did not comply with r.3.02(1)(b)(ii). That is correct. Mr Burrell’s affidavit sworn on 8 January 2014 does not refer to the day on which the bankruptcy notice was served on him. This omission, however, is trivial; the application Mr Burrell filed stated that the bankruptcy notice had been served on him on 18 December 2013.
31.
Second, the respondents submit Mr Burrell did not attach to his application a copy of the bankruptcy notice, and thus he did not comply with r.3.02(1)(a). Mr Burrell disputes this. He has sworn an affidavit on 17 March 2014 in which he deposes that he instructed his clerk to file the application together with the bankruptcy notice. Mr Burrell also deposes that on the day the application was filed he had a conversation with a Registrar about the application seeking an interim order under s.41(7) when there was no need to claim such an order, and the Registrar saying that he would make a note on the file, yet the Registrar did not mention that the application was not accompanied by a copy of the bankruptcy notice.
32.
I am not satisfied the application was accompanied by a copy of the bankruptcy notice. There is no record on the Court file of a bankruptcy notice having been filed on 8 January 2014 other than the application that was filed stating that “a copy of that Bankruptcy Notice accompanies this application”. There is no record on the Court file of the sort Mr Burrell deposed the Registrar said he would make in relation to the application seeking an order under s.41(7) of the Bankruptcy Act 1966 (Cth) (Act). And the copy of the bankruptcy notice Mr Burrell annexed to his affidavit of 17 March 2014 is incomplete. Accordingly, I am not satisfied Mr Burrell complied with r.3.02(1)(a) of the Bankruptcy Rules.
33.
Third, the respondents submit Mr Burrell’s affidavit of 8 January 2014 also does not comply with r.3.02(2). I agree. First, although Mr Burrell in his affidavit of 8 January 2014 describes the nature of the asserted counter-claim, he does not state “the amount of the counter-claim” or “the amount by which it exceeds the amount claimed in the bankruptcy notice”. Second, although Mr Burrell purports to describe the “nub of his counterclaim”, his description does not rise above an assertion that he has a counter-claim against the respondents. As I will show later in these reasons, the mere assertion that a debtor has a counter-claim cannot satisfy the Court that the debtor has a counter-claim. Third, the affidavit does not state why Mr Burrell did not raise the asserted counter-claim in the proceeding in which the judgment referred to in the bankruptcy notice was entered.
Is compliance with r.3.02 mandatory?
34.
Counsel for the respondents submits that the requirements of r.3.02 of the Bankruptcy Rules are mandatory so that if an application to set aside a bankruptcy notice is made without the rule being complied with, the application is a nullity. Counsel especially relies on the decision of Edmonds J in O’Meara v Deputy Commissioner of Taxation.[3]
35.
Counsel for Mr Burrell, on the other hand, submits that r.3.02 is not mandatory in the sense contended for by counsel for the respondents. It is a rule whose breach can be forgiven by the Court either under the general dispensing power of r.1.06 of the Federal Circuit Court Rules 2001 (Cth) (FCCR) or under s.306 of the Act or s.57(1) of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act). Counsel for Mr Burrell further submits that O’Meara v Deputy Commissioner of Taxation is not authority for the proposition that an application to set aside a bankruptcy notice is a nullity if r.3.02 is not complied with.
Power to relieve compliance under r.1.06(1) FCCR
36.
The jurisdiction of this Court in matters relating to the Act is conferred by a number of provisions of the Act. At the most general level is s.27(1) of the Act which confers on the Federal Court and this Court “concurrent jurisdiction in bankruptcy”. At a slightly less general level is s.30, and in particular sub-section (1), which confers on the Court, among other things, “full power to decide all questions, whether of law or of fact, in any case of bankruptcy”, and empowers the Court to make “such orders . . . as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter”. Then, there are provisions that grant or, perhaps more accurately, particularise, discrete heads of power. These include the power to extend the time for compliance with the requirements of a bankruptcy notice (s.41(6A)), the power to make a sequestration order (s.52(1)), the power to annul a bankruptcy (s.153B), and so on.
37.
The Act also contains provisions that may be described as procedural. One is s.33(1) of the Act which empowers the Court to adjourn proceedings before it, or to allow the amendment of any written process, proceeding or notice, or extend any time limited by the Act, either before its expiration or, if the Act does not expressly provide to the contrary, after its expiration. Another provision is s.306(1) which provides that “[p]roceedings under this Act are not invalidated by a formal defect or an irregularity unless the court . . . is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court”.
38.
The Act does not, however, exhaust the provisions that regulate the exercise of the Court’s jurisdiction under the Act. Also relevant – indeed, pervasive – are the Bankruptcy Rules. Those rules have been made by the Judges of this Court in exercise of the power conferred by s.81(1)(a) of the FCCA Act. And that fact bears some reflection. Paragraph (a) of s.81(1) of the FCCA Act authorises the Judges of the Court to make rules of court “for or in relation to the practice and procedure to be followed in the” Court. The Bankruptcy Rules, therefore, are simply rules that are intended to govern the practice and procedure of the Court in relation to its bankruptcy jurisdiction.
39.
One implication that may be drawn from this is that, as with all rules and forms of procedure, the Bankruptcy Rules are “not ends in themselves, but means to an end, which is the attainment of justice”.[4] Although this observation was made just over one hundred years ago in relation to rules of court in general, it has modern relevance, particularly to the practice and procedure of this Court, given that the objects of the FCCA Act include enabling this Court to operate as informally as possible in the exercise of judicial power, and to enable the Court to use streamlined procedures.[5] This, by itself, suggests that the Court has power to apply the Bankruptcy Rules, as with all other rules of court, with a degree of flexibility.
40.
The Court’s ability to apply the Bankruptcy Rules with a degree of flexibility is not, however, left to implication. Rule 1.03(2) of the Bankruptcy Rules provides that the “other rules of the Court apply, so far as they are not inconsistent with these Rules, to a proceeding to which the Bankruptcy Act applies”. The “other rules of the Court” include the FCCR. Those rules include r.1.06(1) of the FCCR which provides that the Court “may in the interests of justice dispense with compliance, or full compliance, with any of these Rules at any time”. They also include r.3.05 of the FCCR which empowers the Court to “extend or shorten a time fixed by these Rules” even if “the time fixed has passed”.
41.
Rule 1.06(1) and r.3.05 of the FCCR apply to “these Rules”, namely, the FCCR. On a literal reading, they do not apply to the Bankruptcy Rules. In my opinion, however, to read r.1.06(1) and r.3.05 of the FCCR literally would not be warranted, given the existence of s.33(1) of the Act. As I note above, that subsection empowers the Court to extend time limited by the Act. The Act, however, “does not purport to apply to the Rules of Court”.[6] It would be odd if the Court had power to extend times limited by the Act, but no power to extend time limited by the rules of procedure contained in the Bankruptcy Rules. In my opinion, therefore, both r.1.06(1) and r.3.05 of the FCCR apply to the Bankruptcy Rules.
42.
And it is at this point that I turn to the authorities on which counsel for Mr Burrell relies; because those authorities have held that rules equivalent to r.1.03(2) of the FCCR authorise a court to dispense with compliance with a court’s bankruptcy rules. First, there is the decision of Gyles J in Hussain and Another v King Investment Solutions Pty Ltd.[7]
43.
In Hussain, a person who applied to set aside a bankruptcy notice failed to serve the application within the three days required by r.30.02(4) of the
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
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