Davidson v Official Receiver & Anor - [2021] HCATrans 208

[2021] HCATrans 208

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M40 of 2021

B e t w e e n -
SAM DAVIDSON
Applicant
and
OFFICIAL RECEIVER
First Respondent
PHILIP NEWMAN AS TRUSTEE OF THE BANKRUPT ESTATE OF WILLIAM STEPHEN VLAHOS
Second Respondent
Application for special leave to appeal

GORDON J
STEWARD J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA BY VIDEO CONNECTION TO MELBOURNE

ON FRIDAY, 3 DECEMBER 2021, AT 12.26 PM

GORDON J: In accordance with the remote hearing protocol, I will announce the appearance of the parties.

MR M.G.R. GRONOW, QC appears with MR P.F. AGARDY for the applicant. (instructed by Comlaw Barristers and Solicitors)

MS B.E. SLOCUM appears for the first respondent. (instructed by Colin Biggers & Paisley)

MR M.J. GALVIN, QC appears with MR C.M. FENWICK for the second respondent. (instructed by Nicholas O’Donohue & Co).

GORDON J: Yes, Mr Gronow.

MR GRONOW: Thank you, your Honour. I should, before I go further, correct a mistake in our footnote 19, paragraph 11 of the application, the quote is actually from paragraph 44 of the Full Court’s reasons, not paragraph 7. I apologise for that error, I have only just spotted it myself.

GORDON J: That is fine, Mr Gronow.

MR GRONOW: Thank you, your Honour. We have two grounds of appeal. The first one is that we say that the notice under section 139ZQ is statute barred because, even though it was issued prior to the six‑year time limit expiring, the time for complying with it, and setting it aside, and enforcing it was outside that time. We say that, in order to be valid due to the words of section 139ZQ, there must be a subsisting claim, in this case under section 120 of the Bankruptcy Act, in order to actuate the notice.

The notice does not give rise to a new claim, rather it provides an administrative shortcut for a trustee, with the assistance of the Official Receiver, to enforce a claim that would otherwise exist under section 120, and is designed to be quicker and cheaper than bringing proceedings under section 120.

GORDON J: Can I just ask two questions about that? I had understood by reading 139ZQ that there is an ability to challenge the underlying premise of the notice, consistent with its shortcut. Do you accept that?

MR GRONOW: Yes, your Honour.

GORDON J: So, that would seem to suggest – I wonder whether actually you do need to have a subsisting claim under 120 in that sense – there is no doubt that section 120 is the premise. And then the second is the impact of section 139ZQ(8) and its interaction with 120(7) giving rise to a different kind of action. So, under 127(3) the limitation period is very different from that in relation to the one under 139ZQ(8).

MR GRONOW: I accept that there could be differences in some case and, indeed, I have given the example…

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.

Continue reading Davidson v Official Receiver & Anor

Details

AGLC: Davidson v Official Receiver & Anor [2021] HCATrans 208
Case: [2021] HCATrans 208
Decision Date

CaseChat Overview and Summary

This matter concerned an application for special leave to appeal to the High Court of Australia. The applicant, the trustee of the bankrupt estate of William Stephen Vlahos, sought to challenge a decision of the Full Court of the Federal Court of Australia. The dispute centred on the validity and enforceability of a notice issued by the trustee under section 139ZQ of the *Bankruptcy Act 1966* (Cth), which allows a trustee to administratively seek the recovery of property transferred by a bankrupt.

The primary legal issues before the High Court were whether a notice issued under section 139ZQ of the *Bankruptcy Act* is statute-barred if the time for complying with, setting aside, or enforcing the notice falls outside the six-year limitation period prescribed by section 120 and section 127(3) of the Act. The applicant argued that for a section 139ZQ notice to be valid, there must be a subsisting claim under section 120 at the time of enforcement, and that the phrase "that is void against the trustee" in section 139ZQ(1) implies a voidable transaction that requires a timely proceeding to be set aside. A secondary issue concerned whether the term "trustee of a bankrupt" in section 139ZQ includes the trustee of a discharged bankrupt.

The applicant contended that the expiry of the six-year limitation period under section 127(3) bars not only the remedy but also the right, rendering a transaction valid for all purposes once the time limit has passed, unless a proceeding has been commenced within that period. It was argued that an application under section 139ZQ(8) constitutes a proceeding under section 120, and thus is subject to the time limitations. The applicant further submitted that the trustee of a bankrupt in section 139ZQ does not extend to a discharged bankrupt unless expressly provided for by the legislation.

The High Court refused special leave to appeal, finding no reason to doubt the correctness of the Full Court's conclusion. The Court ordered that the applicant pay the costs of the respondents.

Orders