Grundy v Wattyl Australia Pty Ltd

[2002] FMCA 57

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GRUNDY  v WATTYL AUSTRALIA PTY LTD                   [2002] FMCA 57

BANKRUPTCY – Application for review of sequestration order – time for filing application for review.

Re Deriu (1970) FCR 420

Applicant: PHILLIP GRUNDY

Respondent: WATTYL AUSTRALIA PTY LIMITED

File No: SZ367 of 2001

Delivered on: 12 March 2002

Delivered at: Sydney

Hearing Date: 12 March 2002

Judgment of: Raphael FM

REPRESENTATION

Solicitor for the Applicant: Mr P Haylen of Haylen McKenzie

For the Respondent: Mr Grundy in person

Counsel for the Trustee: Mr B Skinner

ORDERS

1. Application for review dismissed. 

2. Applicant to pay respondent’s costs and also the costs of the trustee as agreed or taxed. 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 367 of 2001

PHILLIP GRUNDY

Applicant

And

WATTYL AUSTRALIA PTY LIMITED

Respondent

REASONS FOR JUDGMENT

1. This application purports to be a review of a sequestration order made by Registrar Tesoriero of this Court on 18 September 2001.  The application was filed on 25 February 2002.  The application in paragraph 8 asks that:

   The sequestration order for bankruptcy be annulled on the grounds set out in my sworn affidavit attached. 

2. An affidavit of the debtor was filed also on 25 February 2002.  It describes the history of the debt and certain discussions which the debtor had with various people including the trustee.  At paragraph 15 the affidavit says:

   I am therefore requesting that the Federal Magistrates Court annul the bankruptcy and give me the opportunity to repay the original debt without any additional cost to Wattyl Australia. 

3. Mr Skinner, who appears on behalf of the trustee, has referred to Court to the provision of the Federal Magistrates Court rules dealing with the time for application for review. In rule 20.01 of those rules, the time for review under the provisions of the Bankruptcy Act is stated to be 21 days. Under rule 20.02, an application for review must be listed for hearing within 14 days of filing.

4. The application for review in this case was not filed within 21 days; it was filed over five months after the sequestration order.  It was also not listed within 14 days, but that I would be prepared to disregard, as the date for listing is a date within the power of the court itself and the debtor should not be prejudiced by the failure of the court to comply with its own rules.

5. Because of the time delay it would have been necessary for the applicant to make an application to extend the time.  The court, in the exercise of its powers, may extend time in relation to these applications for review and indeed in relation to almost any matter coming before it.  Mr Skinner says that his client would not consent to such an application and Mr Haylen, who appears for the petitioning creditor, supports that view.

6. As Mr Grundy hasn't made an application for extension of time and hasn't supported such an application with an affidavit setting out why he believes time should be extended it would be difficult for me to consider that matter today.  Mr Grundy, in his submissions to me, referred to his affidavit and indicated that the reason why the matter was delayed was a combination of his own ignorance as to the original debt, the alleged responses by the trustee to his suggestion that he make such an application, to unsatisfactory legal advice and to hospitalisation.

7. I do not think that in the circumstances where an application for review has been delayed for five months evidence in this form is satisfactory and I would require much more from the debtor to persuade me to grant an extension of time. 

8. However, Mr Haylen also submits that an application for review is not the appropriate application to make in these circumstances.  It is his view, which is supported by Mr Skinner, that the appropriate application for Mr Grundy to make is for an annulment.  In support of that submission he cites Re Deriu (1970) FCR 420, a decision of Gibbs J. This case dealt with an application for a recision of a sequestration order which was a power granted to the court under section 37 of the Bankruptcy Act. That power is still in the Act but in respect of a matter such as this it is generally considered that the appropriate application should be for review.

9. Mr Skinner's submission is that the finding by his Honour that in this type of case the appropriate application is for annulment carries over to situations where there is a sequestration order that is capable of review and no timely application for review has been made.  Mr Haylen makes a further point, he says an application for review is closely limited as to time for the purposes of ensuring the proper administration of estates in bankruptcy and that when sequestration orders have been made and work has been done upon a bankrupt's estate for some period of time a late application for review is not appropriate and an application for annulment is to be preferred.  I think there is much force in this argument.

10. The Bankruptcy jurisdiction relies on the assistance of bankruptcy trustees who are entitled to feel confident that a sequestration order which has been made is unlikely to be challenged after the period for review has expired.  Before that time the trustee may not have done very much work or incurred very much in the way of costs but after that time he will begin to exercise his responsibilities as trustee of the estate, discover creditors, bring in the assets et cetera.

11. There is an additional reason why an application under section 154 for annulment is the more appropriate application to make and that is because it can be made at any time and provided the debtor complies with the requirements of the rules he would not have to jump the hurdle of delay.

12. Finally, as Mr Skinner rightly points out, an application under section 154 also provides safeguards to the trustee both in relation to the actions which he has carried out whilst trustee and in relation to his costs.  I would therefore agree with Mr Skinner and Mr Haylen that the appropriate application to have been made by this debtor would have been an application under section 154.  I will dismiss the application for review on the basis that it is out of time and that no satisfactory explanation of the delay has been provided.

13. Insofar as the “application for review” is in fact an application under section 154 because of the words used and referred to by me earlier in this judgment, I will also dismiss it on the grounds that the requirements of the application, in particular those of part 35.03 requiring notice to be given to creditors, has not been complied with.  This does not prevent Mr Grundy from taking out another application properly styled and properly compliant with the rules.

14. The applicant has failed in his application and I would therefore order that he pays the respondent's costs and also the costs of the trustee, such costs to be paid in accordance with the Federal Court rules and taxed if not agreed.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date: