Carr v Swart
[2008] FMCA 73
•21 January 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CARR v SWART | [2008] FMCA 73 |
| BANKRUPTCY – Application to extend time for compliance with Bankruptcy Notice – where judgment is subject to a special leave application to High Court – where there is an additional and independent act of bankruptcy. |
| Bankruptcy Act 1966, s.40(1)(d)(2) Federal Magistrates Court (Bankruptcy) Rules 2006 |
| Ahern v Deputy Commissioner of Taxation (1987) 76 ALR 137 Re Errol Hugh Pollnow And Queensboro Pty Limited v Garden Mews St Leonards Pty Limited (unreported Burchett J, 19 October 1988) Porter v OAMPS Limited [2004] FMCA 272 |
| Applicant: | MALCOLM DOUGLAS CARR T/AS FORSHAWS NEILL SOLICITORS |
| Respondent: | DANIEL FREDERICK VICTOR SWART |
| File number: | SYG1201 of 2007 |
| Judgment of: | Raphael FM |
| Hearing date: | 21 January 2008 |
| Date of last submission: | 21 January 2008 |
| Delivered at: | Sydney |
| Delivered on: | 21 January 2008 |
REPRESENTATION
| For the Applicant: | In Person |
| For the Respondent: | In Person |
ORDERS
Application dismissed.
Applicant debtor to pay the costs of the respondent creditor to be taxed, if not agreed in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG1201 of 2007
| MALCOLM DOUGLAS CARR T/AS FORSHAWS NEILL SOLICITORS |
Applicant
And
| DANIEL FREDERICK VICTOR SWART |
Respondent
REASONS FOR JUDGMENT
There comes before me today an adjourned application that the time for compliance with the bankruptcy notice, which had originally been extended by order of Housego FM until after a decision of the New South Wales Court of Appeal, be further extended until 28 October 2008. The matter originally came before me on 20 December 2007 but the respondent to the application had not had the proper time to consider it. By agreement the matter was adjourned until today.
The applicant debtor, Mr Carr, is a solicitor of the Supreme Court of New South Wales. He is English. In about 1998 he seems to have been both an investor in and solicitor to a joint venture arrangement involving the respondent creditor, amongst others. The joint venture arrangement utilised a firm of solicitors in the United Kingdom. The money paid into the joint venture arrangement by the Australian parties appears to have been lost along with a lot of other people's money. The debtor blames the English solicitors. The creditor blames the debtor and brought proceedings against him in the Supreme Court of New South Wales. Those proceedings were heard by Palmer J and were successful.
An appeal by the debtor against Palmer J's decision was made to the Court of Appeal. Prior to the hearing of the appeal the bankruptcy notice which is the subject of this decision had been issued. Housego FM heard an application by Mr Carr to extend the time for compliance with the bankruptcy notice pending the decision of the Court of Appeal. She agreed to that course of action. The extension of time in those circumstances is a common order supported by authority such as Ahern v Deputy Commissioner of Taxation (1987) 76 ALR 137; Re Errol Hugh Pollnow And Queensboro Pty Limited v Garden Mews St Leonards Pty Limited (unreported Burchett J, 19 October 1988).
The decision of the Court of Appeal was unfavourable to Mr Carr although it is fair to say that Mr Swart, the creditor, was not happy with it either. This was because the Court of Appeal held that, whilst Mr Carr was responsible to Mr Swart for the money invested, Mr Swart had no grounds for redress against Mr Carr's professional negligence insurers, Law Cover. Both parties have now made application to the High Court for special leave to appeal. Mr Carr seeks a further extension of time for compliance with his bankruptcy notice until after the hearing of the special leave application and presumably, if it is successful, the hearing of the appeal.
Mr Carr comes before me today not only making the argument adumbrated above but also with some further information concerning the funds which were lost. It is a convoluted and complex story contained in his most recent affidavit which I have filed in court. It is possible that some of this money, namely $4 million, resides in a Swiss bank account. But there is no certainty of this. Mr Carr says that he is going to bring cases in England to recover the money and repay Mr Swart. Mr Carr has a history of litigation in relation to these funds which indicates that he is quite prepared to spend his own money to recover them and I accept his word from the bar table that he proposes to take the action in England he says he intends.
On the other hand there is an outstanding judgment. That judgment was given by a well respected Justice of the Supreme Court of New South Wales and upheld by three Judges of the Court of Appeal. Nothing has been said to me that would really assist me to come to any decision as to the likelihood of success in Mr Carr's application for special leave. A considerable amount of the argument seems to revolve around the proper jurisdiction. Whilst it is quite possible that the Court of Appeal completely misunderstood this aspect of the matter, one would have to say that, in respect of such distinguished company, it is unlikely.
I dealt with the law in relation to an application of this type in some detail in Porter v OAMPS Limited [2004] FMCA 272. That decision encompasses views which I still hold, namely, the committal of an act of bankruptcy does not prevent a debtor from continuing his appellant proceedings and as the court has control over the timing of the hearing of any creditor's position, at which stage the situation regarding an appeal will be clearer, it is generally more appropriate not to accede to the type of application made here but to review the matter in some detail at the hearing of any petition.
Mr Carr says that within four months he believes that he can conclude his English proceedings successfully. Even if Mr Swart takes out a petition today it is unlikely to be heard by the court for six to eight weeks at which time Mr Carr will be able to provide the court with further information concerning those proceedings that may induce the person hearing the petition to adjourn it. I therefore decline to further extend the time for compliance.
The decision which I have taken may in actual fact be otiose because, as Mr Swart points out, he is the beneficiary of a notice from the sheriff of the non‑return of a writ dated 29 May 2007. The return of a writ unsatisfied constitutes an act of bankruptcy under s.40(1)(d)(2) of the Bankruptcy Act 1966 (the “Act”) so, even if I was to grant Mr Carr's application, Mr Swart could proceed on the basis of this act of bankruptcy. The existence of another and independent act of bankruptcy only reinforces the view which I have taken. The application is dismissed. Applicant debtor is to pay the costs of the respondent creditor to be taxed, if not agreed, in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.
I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 21 January 2008
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