Casella v Commonwealth Bank of Australia Ltd

[2000] FCA 1355

FEDERAL COURT OF AUSTRALIA

Casella v Commonwealth Bank of Australia Ltd [2000] FCA 1355

BANKRUPTCY – application to set aside bankruptcy notice – whether time for lodgment of application should be extended

Bankruptcy Act 1966 (Cth), s 31
Federal Court Rules, O 77 r 8

DOMINIC CASELLA AND LILIANA CASELLA v COMMONWEATLH BANK OF AUSTRALIA LTD
W7035 of 2000
W7036 of 2000

R D NICHOLSON J
14 SEPTEMBER 2000
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DEPUTY DISTRICT REGISTRY	W7035 of 2000 W7036 of 2000

BETWEEN:	DOMINIC CASELLA AND LILIANA CASELLA APPLICANTS
AND:	COMMONWEALTH BANK OF AUSTRALIA LTD RESPONDENT
JUDGE:	R D NICHOLSON J
DATE OF ORDER:	14 SEPTEMBER 2000
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1.The notice of motion be refused.

2.The applicants pay the respondent’s costs of the motion to be taxed in action W7054 of 2000.

3.In the event costs provided for in order 2 cannot be taxed in action W7054 of 2000, such costs to be taxed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DEPUTY DISTRICT REGISTRY	W7035 of 2000 W7036 of 2000

BETWEEN:	DOMINIC CASELLA AND LILIANA CASELLA APPLICANTS
AND:	COMMONWEALTH BANK OF AUSTRALIA LTD RESPONDENT

JUDGE:	R D NICHOLSON J
DATE:	14 SEPTEMBER 2000
PLACE:	PERTH

REASONS FOR RULING

1. This matter arises on a notice of motion in matter No.W 7035 of 2000.  The motion purports to be brought on behalf of Dominic Casella and Liliana Casella.  However, file W 7035 is a file which came into being as the result of the lodgment on 19 April 2000 of an application to set aside a bankruptcy notice in respect of Dominic Casella.  Mrs Casella likewise lodged such an application on that date and file W 7036 of 2000 was created.  Today Mr Casella appears on behalf of himself and Mrs Casella and accepts that any judgment and order that I should reach on the motion before me brought in the name of both Mr and Mrs Casella should be applicable both in file W 7035 and in file W 7036.

2. The applications referred to came to be lodged in the following circumstances.

3. On 7 March 2000 bankruptcy notices were issued in respect of each of Mr and Mrs Casella.  I will refer to them together as “the applicants”.  These were based on a judgment obtained in the Supreme Court on 8 December 1999.  That judgment was entered as a result of consent orders executed by them.

4. On 29 March 2000 the bankruptcy notice was served on Mr Casella so that his act of bankruptcy was committed 21 days after service of that notice, namely, 18 April 2000.  Service of the notice occurred on Mrs Casella on 3 April so that her relevant act of bankruptcy was committed on 23 April 2000.

5. The applications lodged on 19 April by the applicants to set aside the notices came on before a Deputy District Registrar on 12 May 2000.  They were each dismissed.  The circumstances in which they were dismissed are set out in an affidavit of Mr Casella which is filed in support of the motion.  Objection is taken to the affidavit on the grounds of relevance and preserving that objection, but placing it aside for the moment, I turn to the contents of that affidavit in the relevant respects.

6. The evidence is that Mr Casella arranged with a mutual friend, Mr Tee, a Public Notary, who was not a legal practitioner, to appear for him in support of the applications to set aside the bankruptcy notices.  Mr Casella's evidence is that because of that arrangement, he was not told of the date of the hearing before the Deputy District Registrar on the basis that Mr Tee had assured him he would be appearing on behalf of the applicants.  Subsequently Mr Casella ascertained Mr Tee did not appear in support of the applications.  It is on those circumstances in particular that Mr Casella relies in support of the motion seeking review of the decision of the Deputy District Registrar made on 12 May 2000.

7. The motion is brought pursuant to O 77 r 8 of the Rules of the Federal Court so far as they relate to bankruptcy proceedings. Relevantly O 77 r 8(2) provides that such an application for review must be made within 21 days of the date of the decision. Relevantly, also, r 8(4) provides that where the decision relates to a matter mentioned in s 31 of the Bankruptcy Act 1966 (Cth) it must be reviewed by a judge sitting in court. This is such a matter. In the event that the decision of the Deputy District Registrar, which is for the purposes of r 8(1) a relevant "decision", is overturned the motion seeks that the bankruptcy notices issued on 7 March 2000 against the applicants be set aside.

8. There is dispute as to the precise date on which the applicants became aware their applications had been dismissed.  However, it is accepted that the bankruptcy petition which issued on 13 June 2000 was served on Mr Casella on 26 June 2000 and on Mrs Casella on 20 June 2000.  The documents accompanying that service included documents detailing the dismissal of their applications to set aside the bankruptcy notice. 

9. On 18 July 2000 the first return date for the bankruptcy petition occurred.  Mr Casella was then represented and directions were made.

10. The second return date for the bankruptcy petition was 1 August 2000.  Before the District Registrar on that date Mr Casella moved to set aside the dismissal of the applications by the Deputy District Registrar.  This in turn was dismissed by the District Registrar.  His reasons were threefold:  firstly, no basis for setting aside the notice appeared; secondly, in any event the matter was outside the time limit in the rules; thirdly, he said the matter lay beyond his jurisdiction because of the requirements of O 77 r 8(4) that the matter should be heard by a Judge.  I take it, therefore, that the ratio of his decision was that he lacked jurisdiction.

11. Other orders were made on 1 August 2000 which resulted in the matter coming back before the District Registrar on 5 September 2000.  Opportunity was given to the applicants to file further affidavit material concerning the status of properties and the creditor’s petition was set down for 10 am on 15 September 2000.  That is a date which is now tomorrow morning.

12. The notice of motion was filed at 4 pm on 13 September 2000.  The Court declining to hear it ex parte on that date, it has been set down and is being heard today.

13. The affidavit which supports the notice of motion is an affidavit originally prepared by the solicitors who acted for Mr Casella in this proceeding and the related proceeding concerning the petition which is number 7054.  Those solicitors no longer act for him. 

14. From the bar table Mr Casella sought to introduce additional evidence relating to the conduct of those solicitors.  No objection to that evidence was taken save that it is said it can have no effect on the outcome of the motion today.  On that basis I infer that I may take into account without objection from the applicant that evidence given from the bar table.

15. That evidence is to the effect that at the first return date of the bankruptcy petition on 18 July 2000 Mr Casella instructed his then solicitors to apply to set aside the bankruptcy notice.  When on 1 August 2000 he applied to set aside the bankruptcy notice before District Registrar Jan, it was in utilisation of a form of affidavit prepared by those solicitors.  It is that affidavit which, with slight adjustment, has been utilised in support of motion in the present proceedings.  It is said by Mr Casella and for him that had his solicitors not been negligent, they would have lodged the application in the proper way and then had it set down.

16. He therefore now seeks an adjournment of the notice of motion in order that a further affidavit can be filed in respect of the alleged conduct of the solicitors as a further reason supporting the motion that the decision of the Deputy District Registrar should be overturned.  That is, Mr Casella seeks to make the case that not only Mr Tee but also the solicitor concerned were at fault and have occasioned the circumstances by which he has not brought his motion until 13 September 2000. 

17. Adjournment of the motion is strenuously opposed on behalf of the respondent.  This is done, as I have said, on the basis that even if all the evidence which I have recounted in outline is placed into affidavit form, it can have no determinative impact on the outcome of this motion.  Furthermore, it is said for the respondent that the application for an adjournment should be seen only as a tactic to prejudice the hearing of the petition tomorrow morning.  Additionally, it is said the Court should have in mind that from 1 August 2000, on Mr Casella's own statement, he had his affidavit prepared for him and ready to go in support of his application for review pursuant to O 77 r 8.  However, no action was taken until the filing of the motion on 13 September 2000 and any further evidence concerning the involvement of the solicitors cannot and does not explain that delay, nor support an extension. 

18. There is one further additional fact which the proposed affidavit may arguably address.  It is the intention of the applicants to issue proceedings in the Supreme Court of Western Australia against the respondent alleging that the consent orders which led to the entry of judgment in the Supreme Court on 8 December 1999 were the product of consents which were not given voluntarily, but rather were the products of undue influence, misleading and deceptive conduct and a host of other alleged influences.  It is said for Mr Casella that the outcome of those proceedings will be that the applicants will have a counterclaim, set-off or cross demand which could set up in opposition to the final judgment or order or alternatively which would vitiate the final judgment or order on which the notice is based. 

19. The principal obstacle which the applicants face is that O 77 r 8(2) provides, as has been said, that an application for review of a decision must be made within 21 days of the date of the decision.  The 21 days from the decision of the Deputy District Registrar on 12 May 2000 expired on 3 or 4 June 2000. 

20. It is accepted for the respondent that, even accepting the evidence given from the bar table, some of the period of the delay from 12 May 2000 to 13 September 2000 may be explained.  In that respect, the evidence in relation to Mr Tee arguably explains a delay from 12 May 2000 to 26 June 2000.  However, the evidence of the alleged negligent conduct by the legal practitioner does not explain the absence of the making of an application following the decision of the District Registrar as to jurisdiction on 1 August 2000.  There is therefore a large period of time for which no explanation appears in the evidence even including in that evidence one of the matters which would be the subject of the further affidavit.

21. The other matter which would be the subject of the further affidavit is also but a promise of litigation to be instituted.  No explanation is given as to why that litigation was not commenced within the time period to which I have referred.  The litigation remains proposed litigation only and does not, in that status, weigh significantly in the exercise of the discretion relating to extension of time.  One of the matters which weighs exceptionally importantly in applications for extension of time is not only the satisfactory explanation for delay, but also the establishment of a basis for setting aside the notice.  That is absent from the affidavit material and is not before the Court.

22. These matters all must also be considered in the context that the motion is brought on 13 September 2000, as it were on the eve of the hearing of the petition.  There has been considerable opportunity since the matters became known to Mr Casella on 1 August 2000 for the appropriate application to have been brought and for any case to have been made.

23. Considering all these circumstances I am of the view that, even taking into account the matters submitted from the bar table as if they were evidence, there is not a case made out which would merit the extension of time to the large degree sought to enable the application for review to be heard.  Consequently, I am also of the view that the evidence to which I have referred does not support the exercise of a discretion to adjourn the hearing of that motion to enable further affidavit material to be filed to the effect of the evidence given from the bar table.

24. For those reasons I consider that the notice of motion should be refused.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Ruling herein of the Honourable Justice R D Nicholson.

Acting Associate:

Dated:             14 September 2000

Mr D Casella appeared on behalf of the applicants
Counsel for the Respondent:	Mr A J McLean
Date of Hearing:	14 September 2000
Date of Ruling:	14 September 2000