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Flint v Richard Busuttil & Co Pty Ltd

Flint v Richard Busuttil & Co Pty Ltd

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FEDERAL COURT OF AUSTRALIA
Flint v Richard Busuttil & Co Pty Limited [2013] FCAFC 131

Citation: Flint v Richard Busuttil & Co Pty Limited [2013] FCAFC 131

Appeal from: Flint v Busuttil & Co Pty Limited [2013] FCA 575

Parties: DENISE CHARLENE FLINT v RICHARD BUSUTTIL & CO PTY LIMITED and FRANK LO PILATO AS TRUSTEE OF THE PROPERTY OF DENISE CHARLENE FLINT, A BANKRUPT

File number: ACD 77 of 2013

Judges: ALLSOP CJ, KATZMANN & PERRY JJ

Date of judgment: 19 November 2013

Catchwords:
BANKRUPTCY – creditor’s petition – sequestration order – whether power to extend life of creditor’s petition retrospectively by invoking the slip rule despite s 52(5) of the Bankruptcy Act 1966 (Cth) – primary judge followed Griffiths v Boral Resources (Qld) Pty Ltd (2006) 154 FCR 554.

PRACTICE AND PROCEDURE – “slip rule” – whether slip rule applies – federal magistrate failed to make order extending life of creditor’s petition before statutory period had lapsed – whether slip rule can be invoked to extend life of petition retrospectively.

Legislation: Bankruptcy Act 1966 (Cth) ss 33(1)(c), s 52(4), 52(5), 154, 153B
Corporations Act 2001 (Cth) s 459R(1)
Federal Court of Australia Act 1976 (Cth) s 28
Federal Court Rules 2011 (Cth) r 39.05
Federal Magistrates Act 1999 (Cth) s 43(2)(b)
Federal Magistrates Court (Bankruptcy Rules) 2006 (Cth) r 1.03(2)
Federal Magistrates Court Rules 2001 (Cth) rr 1.05(2), 16.05

Cases cited:
Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty Ltd (2008) 73 NSWLR 627
Austral Brick Company Pty Ltd v Daskalovski [1998] FCA 782
Brew v Whitlock (No 3) [1968] VR 504
DDB Needham Sydney Pty Ltd v Elyard Corporation Pty Ltd (1995) 131 ALR 213
DJL v Central Authority (2000) 201 CLR 226
Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385
Gould v Vaggelas (1985) 157 CLR 215

Griffiths v Boral Resources (Qld)Pty Ltd (2006) 154 FCR 554

Kyriackou v Shield Mercantile Pty Ltd (No 2) [2004] FCA 1338
L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590
Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13
Newmont Yandal Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc (2007) 70 NSWLR 411
Pattison v Hadjimouratis (2006) 155 FCR 226

Re Macks; Ex Parte Saint (2000) 204 CLR 158
Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264

Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446
Streimer v Tamas (1981) 37 ALR 211
Symes v Commonwealth (1987) 89 FLR 356
Symons v Bateman [1999] FCA 658
Whitlock v Brew (1968) 118 CLR 445

Date of hearing: 1 November 2013

Place: Sydney (via videolink to Canberra)

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 58

Counsel for the Appellant: Mr J T Johnson

Counsel for the Respondent: Mr W Sharwood

Solicitor for the Respondent: Rod J Barnett & Associates

Counsel for the Trustee: Mr J Kohn

Solicitor for the Trustee: Bradley Allen…

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.

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Details

Case: [2013] FCAFC 131
Decision Date: 19 November 2013

CaseChat Overview and Summary

Denise Flint sought leave to appeal against the decision of the Federal Circuit Court of Australia (the Court) that her creditor’s petition had been validly extended, and that the subsequent sequestration order made on the petition was valid. Flint had applied to set aside a bankruptcy notice issued by Richard Busuttil & Co Pty Ltd (Busuttil) on 4 April 2011, which was founded on a judgment debt in favour of Busuttil. Flint’s application to set aside the notice was dismissed on 19 October 2011. On 24 November 2011 Busuttil filed a creditor’s petition. The petition was adjourned at Flint’s request and lapsed on 23 November 2012. The federal magistrate subsequently extended the life of the petition by order on 7 December 2012, and the Court made a sequestration order on 7 June 2013. Flint appealed against the decision of the Court, contending that the extension order was invalid, and that the sequestration order was therefore invalid.
The Court was required to determine whether the federal magistrate had the power to extend the life of the creditor’s petition by invoking the so-called “slip rule” after the statutory period had lapsed. The Court considered that the relevant statutory provisions did not permit retrospective extension of the life of the petition, and that the federal magistrate did not have the power to make such an order. The Court held that the primary judge erred in extending the life of the petition by invoking the slip rule, and that the subsequent sequestration order was therefore invalid. The Court noted that the slip rule was a rule of court that permitted a court to extend the time for taking a procedural step if there was a “good reason” for the delay. The Court held that the slip rule could not be invoked retrospectively to extend the life of the petition, as that would be contrary to the clear terms of the relevant statutory provisions.
The Court allowed the appeal, set aside the orders made by the Court on 7 June 2013, and in lieu thereof dismissed the creditor’s petition. The Court ordered that Busuttil pay Flint’s costs of the appeal, and that Flint pay Busuttil’s costs. The Court further ordered that Flint and Busuttil pay the fair and reasonable remuneration and costs of Frank Lo Pilato in the administration of Flint’s estate, and that Lo Pilato be entitled to indemnify himself for 75% of such reasonable remuneration and costs from the assets of the estate held by him.

Orders

Orders of the court

1. Appeal allowed.

2. Set aside orders 2 and 4 made by the Court on 7 June 2013 and in lieu thereof order:

(a) the creditor’s petition of the applicant dated 24 November 2011 be dismissed;

(b) the applicant pay the respondent’s costs.

3. The respondent pay the appellant’s costs of the appeal.

4. The appellant and the respondent in the proportion of 75:25 respectively pay the fair and reasonable remuneration and costs of Frank Lo Pilato in the administration of the estate of the appellant pursuant to the orders made by the Court on 7 June 2013 up to and including 1 November 2013 as if the administration was being conducted under the Bankruptcy Act 1966 (Cth) and, subject to the application of Div 2 of Pt VIII of that Act, for the review of claims for remuneration and costs.

5. Without prejudice to order 4 above, Frank Lo Pilato be entitled in the first instance to indemnify himself for 75% of such reasonable remuneration and costs from the assets of the estate of the appellant held by him pursuant to the orders of 7 June 2013, but subject to the responsibility to repay to the appellant such part of the costs and remuneration that may be found not to be fair or reasonable.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

In this case an order was made to extend the petition after the petition had lapsed. The order was made in reliance on the rules of court incorporating what is commonly known as the slip rule. A sequestration order was later made based on the petition. The substantive question on this appeal is whether the slip rule was properly invoked. If it was not, then the primary judge had no power to make the sequestration order.The facts The appellant, Denise Flint, was served with a bankruptcy notice on 4 April 2011. The notice was founded on a judgment debt in favour of the respondent (“Busuttil”), the corporate name of a firm of solicitors which had acted for Ms Flint and whose fees she had not paid. Ms Flint applied to the Federal Magistrates Court (now the Federal Circuit Court of Australia) to have the notice set aside. That application was dismissed by the district registrar on 19 October 2011. On 10 November 2011 Ms Flint filed an application for review of the district registrar’s decision (“application for review”). Two weeks later, on 24 November 2011, also in the Federal Magistrates Court, Busuttil filed a creditor’s petition. The application for review and the creditor’s petition were jointly managed by the federal magistrate. The creditor’s petition was adjourned on multiple occasions at Ms Flint’s request. On 29 August 2012 the federal magistrate made the following order: Written submissions of no more than 3 pages, for both CAG20/2011 and CAG61/2011, be filed by the respondent within 21 days. The matter will then be determined in Chambers based on the Affidavit material and Submissions of each party. The order was entered the same day. CAG20/2011 was the application for review, CAG61/2011 the creditor’s petition. It seems that the federal magistrate’s intention was to determine both the review application and a further application by Ms Flint to adjourn the hearing of the creditor’s petition. Submissions were not forthcoming until 28 September 2012 at which time Ms Flint sought additional time to “properly instruct a legal adviser”. The federal magistrate did not deliver his judgment until 7 December 2012. In the meantime (on 23 November 2012) the creditor’s petition lapsed. The solicitor for Busuttil had written to the federal magistrate on 22 October 2012 alerting him to their concern that time was running, but did not apply for an extension of the petition. Nor had the federal magistrate made any such order of his own motion. On 7 December 2012 the federal magistrate dismissed the review application. With respect to the proceedings involving the creditor’s petition he made the following orders:(1) Pursuant to s 52(5) of the Bankruptcy Act 1966 (Cth) the creditor’s petition, filed on 24 November 2011, shall be extended, and subject to further order of the Court, shall expire not before 23 November 2013.(2) The Court requests the Registry of the Court to list the creditor’s petition before Registrar of the Court at the earliest possible time.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citation:	Flint v Richard Busuttil & Co Pty Limited [2013] FCAFC 131
Appeal from:	Flint v Busuttil & Co Pty Limited [2013] FCA 575
Parties:	DENISE CHARLENE FLINT v RICHARD BUSUTTIL & CO PTY LIMITED and FRANK LO PILATO AS TRUSTEE OF THE PROPERTY OF DENISE CHARLENE FLINT, A BANKRUPT
File number:	ACD 77 of 2013
Judges:	ALLSOP CJ, KATZMANN & PERRY JJ
Date of judgment:	19 November 2013
Catchwords:	BANKRUPTCY – creditor’s petition – sequestration order – whether power to extend life of creditor’s petition retrospectively by invoking the slip rule despite s 52(5) of the Bankruptcy Act 1966 (Cth) – primary judge followed Griffiths v Boral Resources (Qld) Pty Ltd (2006) 154 FCR 554. PRACTICE AND PROCEDURE – “slip rule” – whether slip rule applies – federal magistrate failed to make order extending life of creditor’s petition before statutory period had lapsed – whether slip rule can be invoked to extend life of petition retrospectively.
Legislation:	Bankruptcy Act 1966 (Cth) ss 33(1)(c), s 52(4), 52(5), 154, 153B Corporations Act 2001 (Cth) s 459R(1) Federal Court of Australia Act 1976 (Cth) s 28 Federal Court Rules 2011 (Cth) r 39.05 Federal Magistrates Act 1999 (Cth) s 43(2)(b) Federal Magistrates Court (Bankruptcy Rules) 2006 (Cth) r 1.03(2) Federal Magistrates Court Rules 2001 (Cth) rr 1.05(2), 16.05
Cases cited:	Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty Ltd (2008) 73 NSWLR 627 Austral Brick Company Pty Ltd v Daskalovski [1998] FCA 782 Brew v Whitlock (No 3) [1968] VR 504 DDB Needham Sydney Pty Ltd v Elyard Corporation Pty Ltd (1995) 131 ALR 213 DJL v Central Authority (2000) 201 CLR 226 Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 Gould v Vaggelas (1985) 157 CLR 215 Griffiths v Boral Resources (Qld)Pty Ltd (2006) 154 FCR 554 Kyriackou v Shield Mercantile Pty Ltd (No 2) [2004] FCA 1338 L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 Newmont Yandal Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc (2007) 70 NSWLR 411 Pattison v Hadjimouratis (2006) 155 FCR 226 Re Macks; Ex Parte Saint (2000) 204 CLR 158 Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264 Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 Streimer v Tamas (1981) 37 ALR 211 Symes v Commonwealth (1987) 89 FLR 356 Symons v Bateman [1999] FCA 658 Whitlock v Brew (1968) 118 CLR 445
Date of hearing:	1 November 2013
Place:	Sydney (via videolink to Canberra)
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	58
Counsel for the Appellant:	Mr J T Johnson
Counsel for the Respondent:	Mr W Sharwood
Solicitor for the Respondent:	Rod J Barnett & Associates
Counsel for the Trustee:	Mr J Kohn
Solicitor for the Trustee:	Bradley Allen…