Ex parte; Max Christopher Donnelly v Max Christopher Donnelly

[1992] FCA 725

Re: DOUGLAS RICHARD TREASE; Ex parte MAX CHRISTOPHER DONNELLY; JENNIFER MAREE
TREASE and GREGORY CHARLES BOTTERILL
And: MAX CHRISTOPHER DONNELLY
No. W 3459 of 1991
FED No. 725
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
BANKRUPTCY DIVISION
Foster J.(1)

CATCHWORDS

Bankruptcy - Application to set aside summons under s 81(1) of the Bankruptcy Act 1966 (Cth) - application of Bankruptcy Rules - whether inquiries need be made as to subject matter of questioning at public examination pursuant to s 81 of the Act prior to issue of summons - whether application and affidavit must be served prior to issue of summons under s 81(1) of the Act - whether prejudice to witnesses relevant in application to set summons aside - whether failure to serve affidavit a "mere irregularity" capable of cure.

Bankruptcy Act 1966 (Cth) - s 81, s 81(1), s 81(1)B, s 306 Bankruptcy Rules 1968 - r 129, r 129(1), r 129(1)(d), r 129(1)(d)(ii), r 195, r 195(3)

HEARING

SYDNEY

#DATE 8:7:1992

Counsel for the Applicant: M. Sneddon (Solicitor)

Instructed by: Cornwall Stodart

(Melbourne)

Counsel for the Respondent: R. Newlinds

Instructed by: Kemp, Strang and Chippindall

ORDER

THE COURT ORDERS THAT:

1. the summons under s 81(1) of the Bankruptcy Act 1966

(Cth) requiring the personal attendance of Gregory

Charles Botterill to attend the Court be set aside;

2. the applicant Jennifer Maree Trease pay the costs of the Trustee;

3. the Trustee, Max Christopher Donnelly, pay the costs of the applicant Gregory Charles Botterill.

Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

I have before me applications brought by Jennifer Maree Trease and Gregory Charles Botterill, who are both residents of the State of Victoria, to set aside summonses issued against each of them under s 81(1) of the Bankruptcy Act 1966 (Cth) (the "Act"). These matters have been referred to the Court during the course of examination proceedings before the Registrar. Both these persons have attended before the Registrar today in answer to the summonses served upon them. It was, however, made clear in correspondence between the trustee's solicitor and their solicitor that objection would be taken to the summonses which had been issued and an application be made in respect of each summons that it be set aside.

1. The parties being in attendance, the trustee has sought to maintain the summonses despite some conceded defects in relation to their issue. It is clear that Court time was set aside today and tomorrow for the examination of the bankrupt, Douglas Richard Trease as well as the examination under s 81(1) of the two persons who are the applicants before me. It has been submitted that each of the applicants has attended at some personal inconvenience. Originally there was some dispute as to conduct money, but that matter has since been resolved. The Court has advised that each of these applicants is desirous of returning for domestic reasons to Victoria as soon as possible.

2. It has not been put, however, that there is any particular matter of prejudice involved in their being here in accordance with these summonses now that they are in fact in Sydney. The summons to Jennifer Maree Trease was one requiring her personal attendance and also the production of documents enumerated in the summons. The summons to Gregory Charles Botterill merely required his personal attendance for the purpose of answering questions. The questions that might be asked of either of these parties are, of course, limited by the provisions of s 81 to questions, "In relation to the bankruptcy".

3. The summonses were issued on 25 June. They were served on the parties on 26 June. Complaint was made on their behalf by their solicitor in a letter directed to the solicitor for the trustee. The subject matter of complaint was that there had been a failure to comply with the provisions of r 129 of the Bankruptcy Rules 1968 in relation to the issue of each of the summonses. These matters and other matters were canvassed in correspondence to which it is not necessary to make any detailed reference. The letters are annexed to affidavits which are before me.

4. The situation was reached that opposition to the summonses for failure to comply with the rule was maintained on behalf of the applicants by their solicitor. No application was made to set the summonses aside pursuant to r 195 before the day nominated for the examination in the summonses, that day being today. Today application was made to set the summonses aside in circumstances as I have indicated that the parties have in fact attended before the Registrar pursuant to the requirements of the summons.

5. Reliance is placed upon the failure to take any steps after service on 26 June up until today by counsel for the trustee. He submits that the proceedings constituted by the application to set aside are proceedings that fall within r 195(3) as being an application to set aside a proceeding as irregular. Consequently he says these proceedings should not be allowed as the application was not made within reasonable time after the irregularity came to the knowledge of the applicant. The question of what is or is not a reasonable time is of course a question of fact to which I shall return.

6. I deal first with the summons addressed to Jennifer Maree Trease. It appears from what has been placed before me that this summons was served upon her after it had been issued by the Registrar, together with the application for the summons dated 24 June, filed on behalf of the trustee, Max Christopher Donnelly, and an affidavit in support by Mr Donnelly of 23 June. It has been put to me on behalf of Mrs Trease that there has been a failure to comply with r 129(1)(d) in respect of the issue of this summons. Specifically it was submitted that it was issued in circumstances where no inquiries had been made of her prior to its issue concerning the subject matter of her proposed examination and without any precedent request to her to provide the books and documents set out in the summons.

7. It may be noted that s 81 of the Act does not stipulate any such requirement. The submission, however, is founded upon the content of r 129. The requirements of r 129 in so far as they apply to the issue of a summons by the Court or the Registrar would appear to be requirements imposed by the rule in relation to the exercise of the discretion to issue the summons which clearly arises under s 81(1). I do not read the rule, however, as providing any restriction on the otherwise unfettered discretion provided by the section itself. The rule, in my view, must be read as making provision for certain matters to be taken into account in the exercise of that discretion.

8. Indeed, the rule merely stipulates what should be set out in the affidavit in support of the application for the exercise of that discretion. It contemplates that there will be placed before the Registrar by way of affidavit evidence of inquiries that have been made of the persons to be summonsed prior to the application to the summons being made. To that extent it would appear that the rule making authority had in mind that it was appropriate that before an application be made to summon a witness to give evidence concerning the bankruptcy of the bankrupt that there be inquiries made as to matters which would be the subject matter of questioning at the examination and as to matters concerning documents and books which might have some bearing upon the bankruptcy.

9. The rule clearly contemplates that those inquiries be made and the results of them be put before the Registrar as material appropriate for the Registrar to consider in the exercise of his discretion. The rule does not, of course, limit the exercise of the discretion to situations where such inquiries have been made and have produced adverse results or the like. It merely makes provision for certain material being placed before the Registrar in the ordinary course of an application for a summons.

10. Whilst it is obviously correct that the inquiries contemplated by r 129(1)(d) were not made of Mrs Trease, this topic is not left untouched by the affidavit of Mr Donnelly. Mr Donnelly says in his affidavit in paragraph 9:
    

"I have been unable to contact Jennifer Maree Trease in order to put questions to her regarding her husband's

bankrupt estate."

1. All r 129(1)(d)(ii) says in respect of matters that should be included in the affidavit in support of the application for a summons that where no request has been made to the person sought to be summonsed to provide the relevant information that the reason for this should be stated. I am satisfied that the paragraph which I have cited provides a reason and that to that extent the requirements of r 129(1) were in fact complied with in relation to the issue of the summons against Mrs Trease. It appears that the copy of the application and of Mr Donnelly's affidavit were served upon Mrs Tease at the same time as the summons.

2. It may be that r 129(2) contemplates that the application and affidavit be served before a summons is issued. No specific objection has been taken in this regard although the matter has been canvassed to some extent in argument. The objection that is made in relation to the summons served on Mrs Trease is an objection based upon r 129(1)(d). It has not been suggested that she has or would have had any objection to the production of the books or classes of books specified in the application.

3. Accordingly, there does not appear to be any difficulty of a practical nature arising from the fact that she was not apparently afforded the opportunity of setting out grounds of objection to the production of the books, documents or particular classes of them before the issue of the summons. No submission has been put to me that if she be required to answer to the summons, the summons not having been set aside, that there would be any specific objections in relation to the particular documents that she has been asked to produce.

4. Insofar as there might be said to be some problem associated with the applications of rr 129(2) and 129(3) to the summons issued in respect of Mrs Trease, I am satisfied that those problems fall within the ambit of r 195. They do not render the proceedings relating to the issue of the summons void and I would not be disposed to direct that, pursuant to r 195(1), they had that effect.

5. In any event, in the situation where no specific matter of prejudice relating to the summons itself has been put before me I would be disposed to make an order pursuant to r 195(2)(b) relieving the trustee of the consequence of non-compliance with these particular rules. Mrs Trease is in attendance before the Court and in all the circumstances it seems appropriate that her examination should proceed in the ordinary way.

6. I therefore reject the application to set aside the summons in respect of Mrs Trease.

7. In relation to the summons against Mr Botterill, it is conceded that the Registrar did not have before him any document other than the application for the issue of the summons itself. It was not supported by the affidavit contemplated by r 129(1)(d).

8. It has been put to me that I should treat the omission of this affidavit as being a mere irregularity capable of being cured by the application of r 195 or s 306 of the Act itself. In support of this a submission has been put to me that as the summons to Mr Donnelly has included in it no requirement under s 81(1)B that he produce documents that the absence of the affidavit contemplated by r 129(1)(d) and the absence of the inquiries that that rule contemplates as having taken place before the making of the affidavit should be regarded as of little consequence.

9. It is pointed out that the requirement of the affidavit under r 129(1)(d) and its service upon the person sought to be summonsed has a greater relevance to the requirements of r 129(2) in so far as that rule provides that a person served with an application and accompanying affidavit for the issue of a summons for his attendance and production of documents would be appraised by the contents of the affidavit of matters in connection with those documents and the request for their production which would enable him or her to take advantage of the right to lodge with the Registrar a notice of objection to their production in accordance with r 129(2). He or she would also be enabled by the service upon him, or her, of the affidavit to utilise that affidavit in preparing the affidavit contemplated by r 129(2)(b) in support of grounds of objection to the production of those documents. It is put that where in fact no documents are sought and the summons is simply one for personal attendance and to answer questions in relation to the bankruptcy, the absence of any prior inquiries of the person to be summonsed and the absence of any affidavit in support of the application setting out the nature of those inquiries and their results is of insufficient consequence to require the setting aside of the summons for failure to supply to the Registrar the affidavit contemplated by r 129(1)(d).

10. There is considerable weight in this submission when one views the matter simply as one of the practicalities of the situation. The situation which pertains here, however, is that the summons to Mr Botterill was issued apparently by the Court in circumstances where there was before the issuing authority only an application. The issuing of a summons in those circumstances was obviously in contravention of r 129(1)(d) which requires that the application must be supported by the relevant affidavit.

11. The question is not one of whether there is some defect in the affidavit. The question relates to the failure to place before the Court at the time of the application any accompanying affidavit is in compliance with r 129(1)(d). Although I have been tempted to regard the failure to support the application with an affidavit as being a matter that I can treat as a mere irregularity, I have come to the conclusion that it would be inappropriate for me so to do. In the circumstances I think I must view the issue of this particular summons as having been vitiated by a failure to comply with r 129 in circumstances where it is not possible to make any order which can overcome the effect of that circumstance.

12. I therefore propose to set aside the summons against Mr Botterill.

13. I propose, for reasons which I think I have already sufficiently given, to order that in respect of the application by Mrs Trease which was unsuccessful that she should pay the trustee's costs. In relation to Mr Botterill there was in my view a failure to issue the summons, in accordance with the rule no affidavit having been filed in support of it, in circumstances where the rule clearly required it.

14. He was entitled to take the objection that he took and that objection has been successful. It may have been that he could have taken the objection earlier, but when I consider the time frame in which this matter has arisen I do not think it can be said really that much could have been achieved at an earlier point of time. He is a resident of Victoria. He attended the Court in accordance with the summons and sought to have it set aside on that day. Although I have had some hesitation about this I think general justice of the situation requires that he be allowed the costs of the hearing in relation to the setting aside of the summons today. I propose to order that his costs be paid.