Hovan v GOYCOLEA-SILVA
[2003] FMCA 97
•6 March 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HOVAN v GOYCOLEA-SILVA | [2003] FMCA 97 |
| BANKRUPTCY – Application to set aside a bankruptcy notice based on a debt for costs – where time for compliance had been extended – where an application was made to the Supreme Court to reinstate the proceedings in which the assessment was challenged – where an appeal has been lodged in the Federal Court – whether proceedings to set aside order have been instituted bona fide – whether this court has jurisdiction to grant any further extensions of time once the appeal has been lodged and the matter is no longer before this court – whether the matter had been dealt with expeditiously and with due diligence. |
Federal Court Act 1976 (Cth)
Legal Profession Act 1987 (NSW)
Bankruptcy Act 1966 (Cth), ss.41(6A), (6C)
Streimer v Tamas (1981) 37 ALR 211
| Applicant: | GEORGE L HOVAN |
| Respondent: | MARIA SOLEDAD GOYCOLEA-SILVA |
| File No: | SZ 1281 of 2002 |
| Delivered on: | 6 March 2003 |
| Delivered at: | Sydney |
| Hearing date: | 6 March 2003 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Counsel for the Applicant: | Mr M Foley |
| Solicitors for the Applicant: | Foleys Attorneys & Solicitors |
| Counsel for the Respondent: | Mr J Johnson |
| Solicitors for the Respondent: | Sally Nash & Co |
ORDERS
Application dismissed.
Applicant to pay the respondent’s costs to be taxed if not agreed under the Federal Court Act 1976 (Cth) and in accordance with the Federal Court Rules, including reserved costs. In respect to the costs of today, they should be limited to two-thirds of the costs taxed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ 1281 of 2002
| GEORGE L HOVAN |
Applicant
And
| MARIA SOLEDAD GOYCOLEA-SILVA |
Respondent
REASONS FOR JUDGMENT
This matter first came before me by way of an application on the part of the debtor to set aside a bankruptcy notice. I heard the application on 18 February 2003 and gave an ex tempore judgment which has now been reduced to writing and copies of which have been passed to both parties. I concluded that the alleged invalidities in the bankruptcy notice did not satisfy me that the notice should be set aside. But in what now appears to have been an excess of sentimentality I gave the debtor a further period of time in which to comply with the notice in the belief that he might actually make payment. He did not do so.
Instead, the debtor consulted a solicitor and commenced a flurry of activity which has resulted in the matter coming before me again. The debt upon which the bankruptcy notice was based was a debt for costs due by the debtor to the creditor and assessed in accordance with the provisions of the Legal Profession Act 1987 (NSW), that occurred in 1999. In accordance with the provisions of s.208J of that Act a person who has an assessment of costs may register the assessment with a Local Court and it becomes the judgment of that Court. That is what happened. When the judgment wasn't paid a bankruptcy notice was issued.
What has occurred since 18 February 2003 is that the applicant debtor has made an application to the Local Court to set aside the judgment. He has also made an application to the Supreme Court to reinstate the proceedings in which the assessment was challenged – these being proceedings numbered 12959 of 1999 – and for good measure he has appealed against my judgment to the Federal Court. He now comes before me again and requests that I further extend time for compliance on the grounds which are out in s.41(6A) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) that “before the expiration of the time fixed for compliance with the requirements of the bankruptcy notice proceedings to set aside the judgment of order in respect of which the bankruptcy notice was issued have been instituted by the debtor.” It is noteworthy that these proceedings were not instituted before my judgment of 18 February.
Section 41(6A) is subject to the provisions of s.41(6C) which states that:
“ If the Court is of the opinion that the proceedings to set aside a judgment or order have not been instituted bone fide; or are not being prosecuted with due diligence the Court shall not extend the time for compliance with the bankruptcy notice.”
Mr Foley, who appears on behalf of the debtor, argues that the application is bone fide and has been dealt with expeditiously. I have absolutely no doubt that now that the matter is in the hands of Mr Foley it is being dealt with expeditiously. But I do not think that that is the only criteria to which the Bankruptcy Act refers. In my view the Bankruptcy Act refers more to the conduct of the debtor prior to the time of the hearing. If that is looked at, his conduct is dilatory in the extreme. He has had almost four years in which to re-agitate the matter in the Supreme Court.
The proceedings in the local court at Byron Bay, seem to me, at the moment, to be misconceived. The local court is no more than the registration agent for a judgment already obtained in other proceedings. Other than being able to establish that the original decision had been overturned or was obtained by fraud, I cannot see any reason why the local court could possibly set it aside.
This leaves the appeal against my order. There obviously must be some mechanism by which a debtor can avoid having committed an act of bankruptcy when a decision about the validity of a bankruptcy notice is the subject of an appeal. It may be that the dicta of the Federal Court in Streimer v Tamas (1981) 37 ALR 211, would allow to a Full Bench, extending the time for compliance before dismissing the notice, pursuant to s.30 of the Act. Or it may be that the applicant should be permitted to seek an extension from the Federal Court. I have real doubts as to whether I have any jurisdiction to grant any further extensions of time once an appeal has been lodged, because the matter is no longer before this court.
In this particular case the matter was brought hastily before Federal Magistrate Driver. He knew nothing of it. My judgment of 18 February 2003 had not been published. From there, the matter came again before me and I raised the question of jurisdiction. Mr Johnson would argue that there is no need to consider that matter, because the applicant does not come within s.41(6A), and that is the only section upon which he says he relies. The applicant did indeed say that, and I am prepared to deal with the matter on that basis.
So far as I am concerned, the applicant has not shown to my satisfaction that he has prosecuted these matters with due diligence.
I would not make a finding that the proceedings have not been instituted bona fide, but I would note the delay and I would note that nothing did happen until the debtor was the subject of these bankruptcy proceedings.
In those circumstances I dismiss the application and I order that the applicant pay the respondents costs to be taxed if not agreed under the Federal Court Act 1976 (Cth) and in accordance with the Federal Court Rules, including reserved costs. In respect to the costs of today, they should be limited to two-thirds of the costs taxed.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
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