Dib v Green (No.2)

[2009] FMCA 1225

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DIB & ANOR v GREEN (No.2) [2009] FMCA 1225

BANKRUPTCY – Costs – where application did not comply with rules.

Bankruptcy Act 1966, s.30
Federal Magistrates Court (Bankruptcy) Rules 2006
Bankruptcy Regulations

First Applicant: MOHAMMED DIB

Second Applicant: SANAA DIB

Respondent: MARTIN GREEN

File Number: SYG 2496 of 2009

Judgment of: Raphael FM

Hearing date: 3 December 2009

Date of Last Submission: 3 December 2009

Delivered at: Sydney

Delivered on: 3 December 2009

REPRESENTATION

Counsel for the Applicants: Mr D Allen

Solicitors for the Applicants: Bounce Legal

Counsel for the Respondent: Ms N Obrart

Solicitors for the Respondent: Kent Attorneys

ORDERS

1. Respondent to pay the Applicant’s costs, such costs to exclude the costs of preparation of the original application and affidavit in support but not the filing fee.  The costs are to be taxed if not agreed pursuant to the Federal Court Magistrates (Bankruptcy) Rules 2006.

2. Costs order to be addressed to and paid by the assignee of the debt whose name is Salah Eddine Dib of Unit 12, 128-130 Wangee Road Greenacre New South Wales 2190. This order is made pursuant to s.79 of Federal Magistrates Act.

3. No order for costs of this application.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2496 of 2009

MOHAMMED DIB

First Applicant

SANAA DIB

Second Applicant

And

MARTIN GREEN

Respondent

REASONS FOR JUDGMENT

1. On 10 November 2009 I heard an application originally set down for hearing before Lloyd-Jones FM.  It was an application to set aside a bankruptcy notice.  The application had been issued by the debtor on 16 October 2009.  It sought orders setting aside the bankruptcy notice and an interim order extending time for compliance.  The contents of applications of this type are governed by Rules 2.01 and 3.02 of the Federal Magistrates Court (Bankruptcy) Rules 2006. Rule 2.01(3) requires an application to state each section of the Bankruptcy Act1966 (Cth) (the “Act”) or each regulation of the Bankruptcy Regulations under which the proceeding is brought and the relief sought.  Rule 3.02 deals with applications to set aside bankruptcy notices and requires the application to be accompanied by a copy of the bankruptcy notice and an affidavit stating the grounds in support of the application. 

2. The application dated 16 October 2009 makes no mention of any section of the Act which is relied upon. And the affidavit which accompanies it, whilst lengthy, goes into issues about a writ of levy on property. With the benefit of hindsight or, more accurately, the evidence and submissions in the application that I heard, I can see that the affidavit points towards the argument raised by the applicant that the person who had issued the bankruptcy notice, Mr Green, in his capacity as a liquidator, was not the true creditor. However, that was never said in terms and there was no reference to that in the application.

3. The matter first came before a Registrar on 27 October 2009. The Registrar referred the matter to Lloyd-Jones FM but, before he did it, he asked the applicant what section he was relying upon and was told that the applicant was relying on s.30 of the Act and that the respondent was not the true creditor. The matter was then sent over to Lloyd-Jones FM who made directions, the first of which was that the respondent was to file and serve his evidence by 3 November and the second was that the applicant was to file written submissions by 6 November and the matter was to be heard on 10 November. This is a very short timetable. I do not know what transpired before Lloyd-Jones FM and no transcript of that hearing has been produced to me, so I shall make no attempt to guess whether or not his Honour was told that the respondent understood what the applicant’s case was.

4. The applicant complied with the orders and filed submissions by 6 November. They, again, referred to section 30 of the Act but they made it clear that the applicant was claiming that the real creditor was not the person named in the bankruptcy notice, but was his assignee.

5. Section 30 is a general power of the Court. In the practice it says:

   “Section 30(1) is not a provision limiting the court’s jurisdiction. It is facultative, giving the court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not words of limitation, but extension. Re Bilen; ex parte Sistrom [1985] FCA 120.”

   The power to set aside the bankruptcy notice is, as Mr Allen submits on behalf of the applicant, an example of the general powers and inherent jurisdiction of the Court, which s.30 merely confirms and extends. So it could be said that the reference to s.30 was otiose in the circumstances. However, I do not think that it really would have put off the respondent.

6. On 10 November, at the hearing, I was informed by counsel for the respondent that the respondent had concerns about the manner in which the applicant had made known its complaint concerning the bankruptcy notice. Today that counsel agreed with me that she was offered the opportunity of an adjournment but declined it, and it was clear from the quality of her submissions that she was well prepared for the case being made by the applicant. Unfortunately, notwithstanding her preparation, I came to the view that the law was against her, and that the bankruptcy notice had, indeed, been wrongly issued, and was, therefore, set aside.

7. The respondent now seeks that the usual order for costs, namely that they should follow the event, be varied, and that the costs should be awarded to the respondent because of the applicant’s failure to comply with the rules, and what is said to be their conduct in keeping the respondent in the dark as to the true nature of the claim. It is argued that the bankruptcy rules are there for a purpose, that being to allow any recipient of an application to know full well the case it is to meet, and I agree that this is a proper purpose and that the rules should not be flouted.

8. Having considered the file, I have come to the conclusion that, on 27 October, the respondent was aware that the major challenge to the bankruptcy notice would be in regard to the person who had issued it. And this was made clear, in a very short way I agree, in the applicant’s submissions that were served in accordance with the timetable. I do not think there is very much in the complaint that the applicant relied on s.30, as opposed to relying upon the inherent jurisdiction of the Court to set aside a bankruptcy notice that was invalid by reason of the fact that the named creditor was not a creditor.

9. On the other hand, I do think that there should be some penalty for the failure to comply with the rules, which, at the very least, would have caused inconvenience to the respondent up until the time of the first directions hearing. I will order that the applicant’s have their costs excluding those for preparation of the application which did not comply.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date:  10 December 2009