Coshott v Barry

Case [2009] FCA 1521

FEDERAL COURT OF AUSTRALIA

Coshott v Barry [2009] FCA 1521

BANKRUPTCY – interim application to review decision of Registrar to extend time for compliance with bankruptcy notice – held exercise of discretion did not miscarry – amended application to set aside bankruptcy notice – held no proper ground to set aside – amended application to further extend time for compliance with bankruptcy notice – whether jurisdiction to consider the extension under s 41(6A) of Bankruptcy Act 1966 (Cth) – relevant considerations in exercising discretion to extend – whether discretion should be exercised where appeal against judgment upon which bankruptcy notice is based was on foot prior to service of bankruptcy notice – extension allowed.

Bankruptcy Act 1966 (Cth) ss 30(1), 41(6A), 41(6C)
Legal Profession Act 2004 (NSW) ss 368, 384, 385, 386
Legal Profession Act 1987 (NSW) s 208J(3)
Federal Court of Australia Act 1976 (Cth) s 35A(1)(h)
Federal Court (Bankruptcy) Rules 2005 (Cth) rr 2.02, 3.02, 3.03, Sch 2, Item 4

Agrillo v Codisposto (unreported, Federal Court, Sackville J, 16 December 1994) cited
Australian Securities and Investment Commission v Forge (2003) 133 FCR 487 referred to
Australian Shepherd v Chiquita Brands South Pacific Pty Ltd [2004] FCAFC 76 referred to
Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264 considered
Cassegrain v CRK Engineering [2008] NSWSC 457 cited
Conway v Jackson (2001) 107 FCR 201 considered
Doyle v Hall Chadwick [2007] NSWCA 159 referred to
Halstead v Westpac Banking Corporation (1991) 31 FCR 337 cited
Kennedy Miller Television Pty Ltd v Lancken (unreported, Supreme Court of New South Wales, August 1999, Sperling J) cited
Maher v Commonwealth Bank of Australia [2008] FMCA 1004 referred to
Re Baker; Ex parte Baker v Staples (unreported, Federal Court, Kiefel J, 4 September 1995) cited
Re Bowen; Ex parte The Australian Workers Union & Ors (1945) 13 ABC 275 cited
Re Geard; Ex parte Reid (unreported, Federal Court, Sheppard J, 11 February 1994) referred to
Re Smith (unreported, Federal Court, 4 May 1994) cited
Re Sterling; Ex parte Esanda Ltd (1980) 44 FLR 125 cited

Re Taylor; Ex parte Deputy Commissioner of Taxation (Cth) (1983) 74 FLR 377 cited

LJILJANA COSHOTT v STEPHEN M BARRY

NSD 1216 of 2009

EDMONDS J
18 DECEMBER 2009
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1216 of 2009
BETWEEN:

LJILJANA COSHOTT
Applicant
AND:

STEPHEN M BARRY
Respondent

JUDGE:

EDMONDS J

DATE OF ORDER:

18 DECEMBER 2009

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The respondent’s interim application for review of the decision of the Registrar made on 29 October 2009 to extend the time for compliance by the applicant with Bankruptcy Notice NN4442/09 until 11 November 2009 be dismissed.

2.The applicant’s amended application to have Bankruptcy Notice NN4442/09 set aside be dismissed.

3.The time for compliance with Bankruptcy Notice NN4442/09 by the applicant be extended until the day on which final orders are made in proceeding No. 2872/09 in the District Court of New South Wales at…

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AGLC
Coshott v Barry [2009] FCA 1521
Case
[2009] FCA 1521
Decision Date

CaseChat Overview and Summary

The matter of Coshott v Barry involved an amended application by Mrs Coshott seeking to set aside a Bankruptcy Notice served by Mr Barry. The Bankruptcy Notice claimed Mrs Coshott owed Mr Barry $304,787.01, arising from a judgment in the District Court of New South Wales and subsequent interest. Mrs Coshott also sought an extension of the compliance time for the Bankruptcy Notice pending the outcome of her appeal in the District Court. The primary legal issue before the court was whether the Registrar properly exercised her discretion to extend the compliance time for the Bankruptcy Notice under section 41(6A) of the Bankruptcy Act 1966 (Cth).

The court considered several points in its reasoning. Firstly, the Registrar had not expired the time fixed for compliance with the Bankruptcy Notice when she extended the compliance time. Secondly, Mrs Coshott filed her amended application before the Bankruptcy Notice expired, and she had also filed a notice of motion in the District Court seeking to set aside the judgment. These filings provided a basis for the Registrar to extend the compliance time under section 41(6A) of the Act. The Registrar had the power to extend the time as per section 35A(1)(h) of the Federal Court of Australia Act 1976 (Cth) and rule 2.02, Sch 2, Item 4 of the Federal Court (Bankruptcy) Rules 2005 (Cth). The extension was deemed minimal, providing enough time for Mrs Coshott to renew her application at the first directions hearing.

The court concluded that the Registrar properly exercised her discretion to extend the compliance time. The interim application for review by Mr Barry was dismissed, and the amended application by Mrs Coshott to set aside the Bankruptcy Notice was also dismissed. The court extended the time for compliance with the Bankruptcy Notice until the day final orders were made in the appeal proceeding No. 2872/09 in the District Court. Both parties were ordered to pay their own costs of the hearings before the Registrar and the subsequent directions hearing.

Orders

Orders of the court

1. The respondent’s interim application for review of the decision of the Registrar made on 29 October 2009 to extend the time for compliance by the applicant with Bankruptcy Notice NN4442/09 until 11 November 2009 be dismissed.

2. The applicant’s amended application to have Bankruptcy Notice NN4442/09 set aside be dismissed.

3. The time for compliance with Bankruptcy Notice NN4442/09 by the applicant be extended until the day on which final orders are made in proceeding No. 2872/09 in the District Court of New South Wales at Sydney.

4. Each party pay its own costs of the hearings before the Registrar on 29 October and 11 November 2009, the costs of the directions hearing on 17 November 2009 and the costs of the hearing on 4 December 2009, including all costs incidental to those hearings.

Note:

Background

Background to the litigation

This is an amended application dated 29 October 2009 (‘amended application’) by the applicant (‘Mrs Coshott’) to set aside Bankruptcy Notice No. NN4442 of 2009 (‘the Bankruptcy Notice’) served on Mrs Coshott on 10 October 2009. By the amended application, Mrs Coshott also sought, pursuant to s 41(6A) of the Bankruptcy Act 1966 (Cth) (‘the Act’), that time for compliance with the Bankruptcy Notice be extended ‘pending the outcome of [her] Notice of Motion filed on 23 October 2009 in proceeding 4000/09 in the District Court of New South Wales at Sydney’.BACKGROUND The Bankruptcy Notice claimed Mrs Coshott owed a debt to the respondent (‘Mr Barry’) of $304,787.01, comprising a judgment of the District Court of New South Wales (‘the District Court’) for $303,599.25 entered in favour of Mr Barry on 7 September 2009 (Plaint No. 4000/09) together with interest accrued since the date of judgment in the sum of $1,187.76. The judgment arises from the registration of a determination of costs assessed against Mrs Coshott under s 368 of the Legal Profession Act 2004 (NSW) (‘the Legal Profession Act’). The costs assessment (2008/00017354) arises from a costs order made in favour of Mr Barry against Mrs Coshott and her husband in proceedings in the Supreme Court of New South Wales: Coshott v Barry [2007] NSWSC 1094. An appeal to the New South Wales Court of Appeal was unsuccessful: Coshott v Barry [2009] NSWCA 34. On 1 July 2009, Mrs Coshott filed in the District Court an amended summons to appeal the costs assessment 2008/00017354. The appeal (No. 2872/09) is brought pursuant to ss 384 and 385 of the Legal Profession Act. The appeal under s 384 is brought as of right; the appeal under s 385 is subject to leave. On 23 October 2009, Mrs Coshott filed a notice of motion in the District Court to set aside the judgment in proceeding No. 4000/09, a stay of the judgment, a stay of the enforcement of the judgment and a suspension, pursuant to s 386 of the Legal Profession Act, of the cost assessor’s determination (2008/00017354) pending the outcome of proceeding No. 2872/09. On 29 October 2009, a Registrar of this Court extended time for compliance with the Bankruptcy Notice to 11 November 2009. That decision is the subject of an interim application for review by Mr Barry, which I heard at the same time as Mrs Coshott’s amended application. Time for compliance with the Bankruptcy Notice was further extended by another Registrar of the Court on 11 November 2009, extending time for compliance until 18 November 2009. On 17 November, I fixed Mrs Coshott’s amended application and Mr Barry’s interim application for hearing on 4 December 2009 and extended the time for compliance with the Bankruptcy Notice until 7 December 2009. On 27 November 2009, the notice of motion in District Court proceeding No. 4000/09 was heard and dismissed in its entirety on the basis that the court did not have jurisdiction to grant the stay and other relief sought.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

EDMONDS J
On 1 December 2009, Mrs Coshott filed a notice of motion seeking to amend the summons in proceeding No. 2872/09 so as to add a claim that judgment in proceeding No. 4000/09 be set aside. Those proceedings were also listed for directions on that date, and directions were made in relation to the notice of motion, including that it be listed for hearing on 18 December 2009.MR BARRY’S INTERIM APPLICATION FOR REVIEW OF THE DECISION OF THE REGISTRAR MADE ON 29 OCTOBER 2009 At the time she filed her amended application on 29 October 2009, Mrs Coshott filed a supporting affidavit sworn 27 October 2009. There was exhibited to that affidavit and marked ‘Exhibit LC-1’ various documents including a copy of the Bankruptcy Notice, a copy of the sealed judgment in proceeding No. 4000/09, a copy of the certificate of determination of costs (assessment No. 00017354 of 2008), copies of various correspondence and other process in proceedings Nos. 2872/09 and 4000/09. It is not clear whether ‘Exhibit LC-1’ was filed with the affidavit, but if it was, it became detached and was not before the Registrar when, on that same day, she extended time for compliance with the Bankruptcy Notice until 11 November 2009. The fact that ‘Exhibit LC-1’ was not before the Registrar at the time she extended time for compliance with the Bankruptcy Notice forms the basis of Mr Barry’s interim application for review of the Registrar’s decision. Section 41(6A) of the Act provides:(6A)Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice:(a)proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or(b)an application has been made to the Court to set aside the bankruptcy notice;the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice. Counsel for Mrs Coshott made the following submissions in support of his contention that the Registrar properly exercised her discretion to extend time for compliance with the Bankruptcy Notice, and none of the factual material underlying these submissions was put in issue by counsel for Mr Barry; on the contrary, they were common ground:(1)When the Registrar made the order, the time fixed for compliance with the Bankruptcy Notice had not expired. The notice had been served on Mrs Coshott on 10 October 2009.(2)The amended application in these proceedings was filed on 29 October 2009 prior to the expiry of the Bankruptcy Notice, and (it should be inferred) was also filed before the making of the order extending time. The relief sought in that application includes the setting aside of the Bankruptcy Notice and an extension of time for compliance with the Bankruptcy Notice in accordance with s 41(6A) of the Act.(3)Also prior to the Registrar making the order extending time, and prior to the expiration of the Bankruptcy Notice, there had been filed in the District Court:(a)An amended summons to appeal the costs assessment, in proceeding No. 2872/09, filed on 1 July 2009; and(b)a notice of motion to set aside District Court judgment in proceeding No. 4000/09.(4)The Court therefore had jurisdiction under s 41(6A) to extend time. There is no suggestion that the Court, or the Registrar, was of the opinion referred to in s 41(6C).(5)The Registrar had power to extend time under s 41(6A): Federal Court of Australia Act 1976 (Cth), s 35A(1)(h); Federal Court (Bankruptcy) Rules 2005 (Cth), r 2.02, Sch 2, Item 4.(6)The discretion to extend time was granted up to and including Wednesday, 11 November 2009, whilst at the same time the parties were given liberty to apply to vary or discharge the order extending time on 24 hours’ notice.(7)This extension of time was a minimal extension of time, to the date of the first directions hearing, at which time it was then necessary for Mrs Coshott to renew her application.(8)If the application had not been granted, an act of bankruptcy would have occurred prior to the directions hearing, rendering the application futile. The alternative would be for the Court to list any such application for an inter partes hearing within the time limited under the Bankruptcy Notice. This would no doubt cause considerable inconvenience for the Court if this course were to be generally adopted.(9)It was appropriate for the extension of time to be granted on that occasion, just as it was granted on two subsequent occasions, pending a final hearing of the application.

Ratio Decidendi

Legal Principle Established

Established by: EDMONDS J

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