Engwirda and Associates Pty Ltd v Rundle
[2004] FMCA 355
•9 June 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ENGWIRDA & ASSOCIATES PTY LTD v RUNDLE | [2004] FMCA 355 |
| BANKRUPTCY – Creditors petition – service – extension of time. |
| Applicant: | FRANK ENGWIRDA & ASSOCIATES PTY LTD |
| Respondent: | REG RUNDLE (AKA REGINALD STEWART RUNDLE) |
| File No: | BZ182 of 2004 |
| Delivered on: | 9 June 2004 |
| Delivered at: | Brisbane |
| Hearing date: | 10 May 2004 |
| Judgment of: | Jarrett FM |
REPRESENTATION
| For the Applicant: | Mr. F. Engwirda (director of the applicant, with leave) |
ORDERS
The application is dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BZ182 of 2004
| FRANK ENGWIRDA & ASSOCIATES PTY LTD |
Applicant
And
| REG RUNDLE (aka REGINALD STEWART RUNDLE) |
Respondent
REASONS FOR JUDGMENT
The applicant applies for the following orders:
1. That leave be given to the applicant to extend the time within which the applicant may serve a creditor's petition on the respondent until 31 May 2004.
2. Alternatively,
(a) that the Court declare that the period of time within which the applicant's creditor's petition may be served upon the respondent commenced on 7 November 2003, on which date the Court dismissed the respondent's application numbered 520/2003 which was filed in the registry pursuant to s 41(5) and s (41)(6A).
(b) That pending the hearing of this application, the Court allow further time from the date of this application until the hearing date.
3. That, in lieu of personal service, leave be given to the applicant to effect service of the creditor's petition at the address for service provided in the respondent's application numbered 520/2003 and that service at that address to be deemed adequate service.
The applicant appeared by a director, Mr Frank Engwirda. Mr Engwirda swore an affidavit upon which the applicant relied in support of the relief that it claims.
The application was not served upon the respondent. Notwithstanding that, I determined to deal with the application.
Background
The application arises out of a longstanding dispute between the applicant and the respondent. The material before me reveals that:
a)On 25 January 2002 the applicant obtained a judgment against the respondent in the Magistrates Court of Queensland at Southport.
b)On 11 June 2003 the applicant applied for an order from this Court that it have leave to serve upon the respondent in Japan a bankruptcy notice founded upon the judgment.
c)On 9 July 2003 this Court made an order for leave to effect service of the bankruptcy notice in the particular way specified therein upon the respondent in Japan and ordered that service would be deemed to have occurred on 20 August 2003.
d)Service was carried out in accordance with the terms of the order for service.
e)The bankruptcy notice allowed the respondent 35 days in which to respond, calculated from the deemed date of service. Hence, it is said that the last day for compliance with the bankruptcy notice was 24 September 2003.
f)On 23 September 2003 the respondent filed an application in the Federal Magistrates Court pursuant to s.41(5) and 41(6A) of the Bankruptcy Act1966 (“the Act”) seeking orders that the bankruptcy notice be set aside and that time for compliance with the bankruptcy notice be extended.
g)The application filed by the respondent set out that the orders pressed were sought “on the ground stated in the accompanying affidavit”. No accompanying affidavit was filed with the application.
h)
On 8 October 2003 the respondent's application came before the Federal Magistrates Court and directions were made for the further conduct of the application. It was adjourned to
7 November 2003. No interlocutory order was made extending the time within which to comply with the bankruptcy notice on that occasion.
i)The respondent failed to comply with the directions issued by the Court for the orderly disposition of his application.
j)On 7 November 2003 there was no appearance by or on behalf of the respondent and this Court dismissed his application with costs.
Notwithstanding that the application asks for an order extending the time within which the applicant may serve a creditor's petition on the respondent, I take the application to be an application to extend the time within which the applicant may present a creditor's petition against the respondent.
Section 44(1) of the Act sets out the conditions on which a creditor may present a petition against a debtor. Of particular relevance in this case is s 44(1)(c) which is in the following terms:
"44(1)A creditor's petition shall not be presented against a debtor unless:
…
(c)The act of bankruptcy on which the petition is founded was committed within six months before the presentation of the petition."
Before determining whether an extension of time is available to the applicant, it is necessary to identify the date of bankruptcy relied upon by the applicant so that one might then ascertain the six month period within which a creditor's petition might be presented.
The act of bankruptcy relied upon by the applicant is the respondent’s failure to comply with the bankruptcy notice deemed to have been served upon him on 20 August 2003. The bankruptcy notice allowed 35 days for compliance and, for the purposes of this application I accept the applicant's argument that the bankruptcy notice had to be complied with on or before 24 September 2004. I also accept that it was not complied with either on or before that date or at all.
The effect of the respondent's application to set aside the bankruptcy notice and extend time within which it might be complied with needs to be considered. It is clear from the authorities that merely filing an application to set aside a bankruptcy notice or applying for an order extending the time within which it might be complied with does not, of itself, extend that time[1]. Nor does it stay the operation of the bankruptcy notice. Ultimately the respondent's applications were dismissed and no interlocutory orders were made for an extension of time. In those circumstances, it seems to me that the act of bankruptcy was committed when the bankruptcy notice was not complied with on or before 24 September 2004.
[1] James v Abraham (1981) 34 ALR 657
In his application to set aside the bankruptcy notice the respondent did not rely upon the provisions of s.41(7) of the Act. Hence, no automatic extension of time within which to comply with the bankruptcy notice arose pursuant to that section.
Accordingly, the applicant had until 25 March 2004 to present a creditor's petition. It did not do so.
It falls then, to consider whether this Court has power to extend the time within which the creditor's petition might be presented against the debtor and, if it does so, whether in the circumstances of this case it should make such an order.
Although the applicant did not identify the statutory authority upon which he relied for the orders sought in paragraph 1 of his application, it appears to me that the only possible source of power for that order is .33(1) of the Act. Unfortunately for the applicant, it has consistently been held that s 33(1) does not provide power to "extend" the time in which a creditor's petition might be presented. The requirements of s.44(1)(c) that a petition be founded upon an act of bankruptcy that was committed within six months before the presentation of the petition is “a condition precedent to the due presentation of the petition”: Re Lou Moss (also known as Louis Moss) ex parte; Tyaraf Pty Ltd [1985] FCA 403; Re Tavella (1953) 16 ABC 166.
The issue was most recently considered by the Full Court of the Federal Court of Australia in Shephard v Chiquita Brands South Pacific Ltd [2004] FCAFC 76. The Full Court there held that the trial Judge's finding that s.33(1)(c) did not authorise an extension of time within which to present a petition was correct.
Accordingly, the application to extend the time within which to present a creditor's petition must be dismissed.
I turn now to consider the orders sought in paragraph 2 of the application. I was not directed to any power within the Act to declare that the period of time within which the applicant's creditor's petition might be served upon the respondent commenced on some date other than the day on which the act of bankruptcy was committed. The act of bankruptcy was committed on 25 September 2003 when the respondent failed to comply with the bankruptcy notice issued on 26 May 2003. As I have recorded above, the respondent applied to set the bankruptcy notice aside but secured no order extending the time within which to comply with the bankruptcy notice. Nor did the automatic extension provided in s.41(7) of the Act apply. The respondent's application was dismissed on 7 November 2003. In these circumstances, it is plain that the act of bankruptcy was committed on 25 September 2003 and the time for presentation of the creditor's petition expired on 25 March 2004.
There is no power in the Bankruptcy Act to make the order for which the applicant applies.
Although it was not put to me in these terms, it is possible to construe the application as one to extend time within which the respondent might comply with the bankruptcy notice. If I made such an order and, for example extended the time to the date of these reasons, the time for the presentation of a creditor’s petition would commence to run from that date (assuming non-compliance with the bankruptcy notice).
By s.41(6A)(b) of the Act the Court may extend the time for compliance with a bankruptcy notice. Section 41(6A)(a) and (b) prescribe the necessary conditions, one of which must exist, to enliven the Court's jurisdiction to make an order to extend the time for compliance. Whether such an order can be made on the application of the petitioning creditor was expressly left open in Shephard v Chiquita Brands at [36] and [63].
The power to extend the time provided in that section is, however, a power that is intended to be in aid of the application to set aside the judgment or bankruptcy notice as the case might be: Shephard v Chiquita Brands at [40] and [54]. Once the application to set aside the bankruptcy notice or judgment has been disposed of the power to extend time is spent. In Re Udowenko; Ex parte Mitchell (1996) 69 FCR 299 Lindgren J. said:
In my view, it is clear on the proper construction of sub-s 41(6A) that the condition of the existence of the power to extend time is not satisfied by the mere institution of a proceeding or making of an application to set aside, which has been dismissed or otherwise ceased to subsist as a current proceeding or application before the time for compliance with a bankruptcy notice has expired; cf McLean v ANZ Banking Group Ltd (1993) 42 FCR 300 (Ryan J). The reason is that the purpose of an extension of time under sub-s 41(6A) is limited to that of supporting a proceeding or application, that is to say, one which was instituted or filed before expiration of the time for compliance with the bankruptcy notice. Further, some support for this view of the provision is found in the use of the perfect form of the verb ("have been instituted" and "has been filed") in paras 41(6A) (a) and (b) which suggests a proceeding which has been instituted, or an application which has been made, before the expiration of the time for compliance with the bankruptcy notice, and which still subsists at the time when the occasion for exercise of the power to extend time arises."
That reasoning was approved by the Full Court in Shephard v Chiquita Brands at [40] (Hill and Marshall JJ) and [54] (Sackville J).
Just as in Shephard v Chiquita Brands, it is unnecessary for me to decide whether the order can be made on the application of the petitioning creditor because there is presently no application on foot to set aside the bankruptcy notice or the judgment upon which it is founded. That application made by the debtor was disposed of on 7 November 2003. The present application was not filed until 6 April 2004.
Accordingly, even if I was able to view the application as one pursuant to s.41(6A) of the Act for an order to extend the time within which the debtor might comply with the bankruptcy notice, the application would nonetheless fail because there is presently no extant application before the Court to set aside the bankruptcy notice or the judgment.
Accordingly, the application is dismissed.
I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Jarrett FM
Associate: Susan Haysom
Date: 9 June 2004
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