Griffiths v Boral Resources (Qld) Pty Ltd

[2005] FCA 1890

FEDERAL COURT OF AUSTRALIA

Griffiths v Boral Resources (Qld) Pty Ltd [2005] FCA 1890

DAVID JAMES GRIFFITHS v BORAL RESOURCES (QLD) PTY LTD (ACN 009 671 809)

QUD 311 OF 2005

DOWSETT J
22 NOVEMBER 2005
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 311 OF 2005

BETWEEN:	DAVID JAMES GRIFFITHS APPLICANT
AND:	BORAL RESOURCES (QLD) PTY LTD (ACN 009 671 809) RESPONDENT
JUDGE:	DOWSETT J
DATE OF ORDER:	22 NOVEMBER 2005
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.The applicant be given leave to appeal in accordance with paragraphs 1 and 2 of the draft notice of appeal, being exhibit 1. 

2.Costs be costs in the cause.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 311 OF 2005

BETWEEN:	DAVID JAMES GRIFFITHS APPLICANT
AND:	BORAL RESOURCES (QLD) PTY LTD (ACN 009 671 809) RESPONDENT

JUDGE:	DOWSETT J
DATE:	22 NOVEMBER 2005
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. This is an application for leave to appeal, the applicant having been out of time by about four days at the time at which he purported to file a notice of appeal. It is properly conceded that in the event that an arguable ground of appeal is demonstrated, it would be an appropriate exercise of the discretion to give leave. The applicant seeks leave to appeal on a number of grounds. The first is that the time prescribed by subs 52(4) of the Bankruptcy Act 1966 (Cth) (the “Act”) had, by the time the magistrate gave judgment, expired without any extension being granted pursuant to subs 52(5).

2. The other grounds focus upon the validity of the debt, which was the subject of the bankruptcy notice.  It seems that the bankruptcy notice was based upon a judgment recovered in the District Court in the amount of $60 947.75.  This judgment was given on 21 July 2003.  The hearing of the subsequent proceedings in bankruptcy took place on 11 November 2003.  However, for some reason, the magistrate did not give judgment in the matter until 15 March 2005.  At some stage, he realised that the petition had expired on 11 September 2004.  He gave the parties an opportunity to make further submissions as to whether he could exercise power under the slip rule to remedy the position.  He subsequently decided that he could do so, exercising the power impliedly conferred upon the Magistrates Court pursuant to O 35 r 7 of the Federal Court Rules.

3. I should say that the other grounds of appeal were that the judgment ought not to have been entered because the bankrupt claimed to have a defence to it, namely a counter-claim arising out of alleged defects in the product provided by the petitioning creditor.  There was also an allegation of part payment.  It seems that the bankrupt failed on both issues before the District Court judge.  It may be taken that such claims as he had were subsumed in the judgment.  For that reason, it is not really necessary that I deal with them.  However I will make some brief comments.

4. The part payment was of the sum of $14 560.46.  Before the magistrate, the bankrupt sought to demonstrate that he had cheque stubs and a bank statement, which suggested that the cheque had been drawn and presented.  However he told me that witnesses on behalf of the judgment creditor denied ever having received the cheque.  The magistrate appears not to have dealt with this matter, but, as was pointed out by counsel for the judgment creditor, it would have the effect only of reducing the amount owing pursuant to the judgment debt.  There would still have been a failure to comply with the bankruptcy notice, and the judgment creditor would still have been entitled to apply for a sequestration order.  In any event, the bankruptcy notice presumably reflected the judgment debt.  The contrary was not suggested.  That the bankrupt wished to re-litigate a question previously resolved against him was hardly a basis for resisting a sequestration order.

5. As to the claim that the material provided by the respondent was defective, the magistrate considered evidence to that effect, concluding that the claim was doubtful and that the debtor had not acted diligently in prosecuting the claim.  In those circumstances, the magistrate chose to proceed to make the sequestration order.  That was an exercise of discretion.  The bankrupt has not demonstrated that the discretion miscarried.  In those circumstances, I would not be inclined to allow leave to appeal with respect to either allegation.

6. However the magistrate’s decision to extend the life of the petition pursuant to the slip rule appears to be directly inconsistent with the wording of subs 52(5), which permits an extension only if application is made prior to the expiry of the 12 month period prescribed in subs 52(4). At first blush, it would seem that there is no other power to extend such time. However, notwithstanding earlier decisions broadly in accordance with the approach which I have suggested, the Full Court decided in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 that the slip rule applied to a similar section contained in the Corporations Law authorising extension of the life of a petition, even after expiry of the period.

7. That decision has been applied on numerous occasions at first instance in bankruptcy and company liquidation cases, although some doubt has, from time to time, been expressed as to its correctness.  Although I understand the rationale underlying the approach taken in Elyard I, too, have some doubt as to the basis of the decision.  If the decision were directly in point (ie in a winding up application) I would follow it.  As a judge sitting at first instance, I would also be inclined to follow the line of authorities in bankruptcy which has adopted the decision in Elyard. However, considerations are different on an application for leave to appeal. Where there is no directly binding authority, it would be an extreme step to deny a person the right to appeal to the Full Court to have the direct applicability of the decision in question tested. I do not see that the short delay of which the applicant was guilty in the present case should prevent him from ventilating the question. It is an important question. It has broad application to the administration of the Bankruptcy Act and, notwithstanding decisions to the contrary, it is important that there be a directly binding determination by the Full Court as to the proper interrelationship between s 52 of the Act and the slip rule.

8. In those circumstances, I will give leave to appeal in accordance with paragraphs 1 and 2 of the draft notice of appeal filed on 21 November 2005.  I will make the draft notice of appeal exhibit 1.  I will give leave to appeal only in respect of paragraphs 1 and 2.  Costs in the cause.

9. I should also add that as the appeal will consider the applicability of the decision in Elyard to proceedings under the Bankruptcy Act, there would be no point in the appeal being heard by a single judge.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Associate:

Dated:             22 December 2005

Counsel for the Applicant:	The Applicant appeared in person.
Counsel for the Respondent:	Mr P McQuade
Solicitor for the Respondent:	James Conomos Lawyers
Date of Hearing:	22 November 2005
Date of Judgment:	22 November 2005