Hrycenko (by His Legal Representative Hycenko) v Hrycenko

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Hrycenko (by His Legal Representative Hycenko) v Hrycenko [2022] FedCFamC2G 2

File number(s): MLG 2739 of 2020
Judgment of: JUDGE BURCHARDT
Date of judgment: 14 January 2022
Catchwords: BANKRUPTCY – Application to extend time for preparation of creditor’s petition – application made after sequestration order made – whether court has power to extend the petition nunc pro tunc in these circumstances – lapse of petition due to inadvertent error by solicitor for the applicant – where court would undoubtedly have extended time had it been sought – orders made as sought by the creditor.
Legislation: Bankruptcy Act 1966 (Cth)
Federal Circuit and Family Court of Australia (General Federal Law) Rules 2021
Federal Circuit Court Rules 2001
Cases cited: Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty Ltd (2008) 73 NSWLR 627; [2008] NSWSC 285
ASIC v Mitchell (No 4) [2021] FCA 1387
Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385
Emanuele v Australian Securities Commission [1997] 188 CLR 114
Endresz v Commonwealth of Australia [2019] FCAFC 197
Flint v Richard Busuttil & Co Pty Ltd (2013) 216 FCR 375
Griffiths v Boral Resources (Qld) Pty Ltd (2006) 154 FCR 554
L Shaddock and Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590
Luck v University of Southern Queensland [2018] FCAFC 102
Ramsay Health Care v Compton (2016) 247 FCR 387
Division: Division 2 General Federal Law
Number of paragraphs: 67
Date of last submission/s: 14 December 2021
Date of hearing: 14 December 2021
Place: Melbourne
Counsel for the Applicant: Mr Bevan
Solicitor for the Applicant: Kennedy Guy Solicitors
Counsel for the Respondent: Mr P Fary SC
Solicitor for the Respondent: NOH Legal

ORDERS

MLG 2739 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF VICTOR HRYCENKO
BETWEEN:

GEORGE HRYCENKO (BY HIS LEGAL REPRESENTATIVE NICHOLAS HYCENKO)

Applicant
AND:

VICTOR HRYCENKO

Respondent

ORDER MADE BY:

JUDGE BURCHARDT

DATE OF ORDER:

14 JANUARY 2022

THE COURT ORDERS THAT:

1.Pursuant to Order 39.05 of the Federal Circuit Court Rules 2001 the orders made 14 May 2021 be amended nunc pro tunc by the addition of an order that:

(a)Pursuant to section 52(5) of the Bankruptcy Act 1966 (Cth) that the time for expiration of the Creditor’s Petition in this proceeding be extended up to and including 15 July 2022.

2.Any application for costs to be filed and served together with submissions of no more than 3 pages on or before 21 January 2022. 

3.Any submissions in reply limited to 3 pages be filed and served on or before 28 January 2022.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation…

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Details
Case
[2022] FedCFamC2G 2
Decision Date

CaseChat Overview and Summary

The case of Hrycenko (by His Legal Representative Hycenko) v Hrycenko involved an application to extend the time for the preparation of a creditor's petition. The application was made after a sequestration order had been made. The central issue was whether the court had the power to extend the petition nunc pro tunc in these circumstances, given the lapse of the petition due to an inadvertent error by the solicitor for the applicant. The case was heard in the Supreme Court of Victoria.

The court had to decide whether it had the power to extend the petition nunc pro tunc, considering the inadvertent error by the applicant's solicitor. The court considered the established authority on the matter, which held that the court has the power to extend the life of a lapsed petition in appropriate circumstances. The court also examined the specific circumstances of this case, including the substantial delay caused by the debtor's actions and the inadvertent error made by both parties. The court concluded that had the applicant sought an extension of time, it would have been just and equitable to grant it.

The court held that it had the power to extend the petition nunc pro tunc and that it was appropriate to do so in this case. The court reasoned that all parties proceeded on the assumption that the petition was properly before the court and to be heard and determined. The court found that there was no basis to summarily dismiss the petition due to the delay, which was substantially caused by the debtor. Consequently, the court granted the application as sought by the creditor.

Orders

Orders of the court

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Background

Background to the litigation

That application is opposed by the respondent debtor. For the reasons that follow, I think that the Court has power to make the order that the applicant seeks and that it is appropriate that such order be made. The Uncontroversial Factual Background Following the substantial litigation between the late George Hrycenko (now represented by his son Nicholas Hycenko) and the debtor Victor Hrycenko, another son of George’s, the Supreme Court of Victoria gave judgment in favour of George in a very substantial amount of money. On 27 April 2020, relying upon the judgment, the creditor served a bankruptcy notice on the respondent on 27 April 2020. On 28 April 2020, the debtor sought to set aside the bankruptcy notice. On 16 July 2020, Juridical Registrar Ryan dismissed the debtor’s application, and on 29 July 2020, the creditor’s petition was presented. It was therefore due to expire on 28 July 2021 subject to any exercise of the Court’s powers to extend. On 6 August 2020, the respondent debtor filed an application for review of Judicial Registrar Ryan’s orders and sought that the bankruptcy notice be set aside. On 3 September 2020, Judicial Registrar Gitsham made orders adjourning the hearing of the petition to 17 September 2020 and making sequential orders as to the filing of materials. On 8 September 2020, probate was granted for the estate of George Hrycenko naming Nicholas Hycenko as his executor. On 17 September 2020, Judicial Registrar Gitsham made orders relevantly adjourning the hearing of the petition to a date to be fixed after the determination of the review of Judicial Registrar Ryan’s decision, already referred to, requiring the parties to notify Registrar Gitsham no later than seven days after the determination of the matter as to what the outcome of the proceeding was and to seek a further date. The review was held promptly on 2 October 2020, and, on 19 February 2021, Judge McNab provided his reasons for judgment. His Honour dismissed the application for review. On 24 February 2021, the solicitor for the creditor wrote to the Court advising the result of the bankruptcy review determination, and, on 1 April 2021, Judicial Registrar Gitsham referred the matter to a Judge of this Court for hearing and determination at a directions hearing on 17 May 2021. On 14 May 2021, the solicitor for the debtor emailed the solicitor for the creditor relevantly asserting:Further to below, we have been able to confirm with Mr Evans QC that he is not available until 23 July 2021. We will request the Court to list the hearing on the first available date after 23 July 2021. If Mr Bevan remains briefed, are there any unavailable dates for him after 23.07.2021? In antecedent email communication earlier on the same day, Mr El-Hissi for the debtor had suggested to Mr O’Donnell for the creditor the submissions should be filed by the respondent 14 days prior to hearing with reply submissions seven days prior to hearing. Arising from that correspondence, Mr El-Hissi wrote to my associate on 14 May 2021 relevantly referring to the directions listing on 17 May 2021 and asserting:We attach a signed proposed minute of order for his Honour’s consideration. Would you kindly advise whether his Honour is minded to make the proposed orders in Chambers?We also confirm Mr Evans QC is briefed in this matter for the Respondent, and Mr Bevan for the Applicant. We have confirmed that Mr Evans is available (generally) after 23 July 2021. Would his Honour kindly indicate when the Court could accommodate a 1 day hearing in this matter after 23 July 2021?

Evidence

Evidence Before The Court

At no point until the filing of the application in the case which is presently before the Court did any party, or, for that matter, the Court itself, raise the question of the likely expiry date of the petition itself. The Evidence about the Expiry Date From the affidavit of James Luke Francis O’Donnell filed 23 November 2021, it emerges at paragraph 21:The creditor’s petition was due to expire on 23 July 2021. The effect of Burchardt J’s orders was to list the final hearing of the creditor’s petition to a date after the expiry of the petition. I had not realised this was the case. The expiry of the creditor’s petition had not been raised with me by counsel, the solicitor’s for the respondent or the court. Had I been aware that the petition would expire before the final hearing on 30 August 2021. I would have made application or sought amended orders by consent extending time pursuant to s 52(5) of the Bankruptcy Act 1966 (Cth). On 27 August 2021, the respondent emailed their two grounds of other sufficient cause upon which they were opposing the sequestration order. The grounds did not raise anything with respect to the expiry of the creditor’s petition. At paragraph 24 the affidavit relevantly continued:On 29 September 2021, the matter returned for final hearing where judgment was reserved. [73-74] is a copy of His Honour Judge Burchardt’s orders dated 29 September 2021. The currency of the creditor’s petition was not raised by the applicant, respondent or third-party creditor. Everyone appears to have been unaware that the petition was stale. The affidavit went on to assert that on 16 November 2021 Mr O’Donnell received an email from Mr El-Hissi relevantly asserting a ground of appeal, being the fact that the petition had lapsed at the time the sequestration order was made. At paragraph 30 the affidavit continued:I did not realise that the creditor’s petition had expired until I received Mr El-Hissi's email of 16 November. At no stage during the proceedings was the expiration of the creditor’s petition raised at court, in correspondence between the parties or in discussions with counsel. Had I realised that the creditor’s petition was going to expire prior to 30 August 2021, being the day set down for the final hearing, I would have arranged for an application to be made pursuant to s 52(5) of the Bankruptcy Act 1966 extending time. The failure to bring the necessary application in time was due to the inadvertence of the applicant creditor’s legal representatives. Mr El-Hissi has also filed an affidavit on 8 December 2021. Relevantly at paragraphs 14 and following, under the heading Why the ground was not raised in hearing below Mr El-Hissi deposed.I note that the orders providing the timetabling for the hearing of the creditor's petition were made on 14 May 2021. Between that directions hearing and the hearing on 30 August 2021, the creditor's petition had lapsed. The creditor did not make an application to extend the petition under section 52 of the Bankruptcy Act 1966 (Cth).While I am aware in general terms of the provisions of s 52(4) of the Bankruptcy Act 1966 (Cth), I did not become aware of the lapse of the creditor's petition in the present case until 11 November 2021, after the sequestration order had been made.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Counsel then turned to the second proposition and submitted that there must be an error in the relevant order. It is not the Court’s role to monitor the expiration of the petition. The Court might not have extended the petition. This was not a case like Luck where there was only a two-week gap. Here, it was 11 weeks, and an application could have been made to the Court. It was not inevitable that it would be made on 14 May. It was not an error of the Court but rather an error of the solicitor to apply prior to expiry of the petitionCONSIDERATION From all the wealth of authority to which I have been referred, I would take it to be established that:(a)the Court has power to extend the life of a petition which has lapsed in appropriate circumstances. This is established by Ramsay and Endresz. (b)whether the power is available will depend upon the particular circumstances of each case; (c)the respondent’s strong submission as to the distinction between jurisdictional and procedural characterisation is not supported by the majority decision in Emanuele; (d)there must be an error in the relevant order for the Court’s power under the slip rule to arise; (e)whether there is an error in the order may be proved either by direct evidence or by inference (see Griffiths at [68]). In this case, the following pertinent facts, in my view, are not open to challenge. The petition was presented on 29 July 2020 and therefore lapsed, prima facie, on 28 July 2020. A relatively substantial period of delay was occasioned solely by the conduct of the debtor in seeking to challenge the decision of the Registrar in relation to the setting aside of the bankruptcy notice and resulting in, ultimately, the decision of Judge McNab. Thereafter, it was the respondent debtor who suggested, via his legal representatives, to the applicant that the matter not be listed before 23 July 2021 to suit the convenience of senior Counsel of the debtor. The debtor did not turn their mind to the expiration or lapse of the petition (see the affidavit of Mr El-Hissi). Likewise, the solicitor for the applicant did not turn his mind to the expiration of the petition. Likewise, again, neither did I. In asking for a listing of the matter within five days of the expiration, the parties plainly committed an inadvertent error. It must have been readily foreseeable, had they turned their minds to the matter, that the Court would be unable, given its general listing pressures, to be able to accommodate the matter prior to 28 July, let alone giving a decision. Contrary to the submissions advanced by Counsel for the debtor, I have no doubt whatever, having considered the matter further (I expressed a slightly more nuanced view during the trial), that I would have extended the time for the hearing of the petition. All parties proceeded on the footing that the petition was properly before the Court and to be heard and determined. Orders were made by consent for the filing of material. There is no conceivable basis upon which I would have in effect summarily dismissed the petition merely because of a delay that was most substantially caused by the conduct and requirements of the debtor himself. If the applicant had sought an extension of time in the 14 May 2021 Orders I would certainly have regarded it as just and equitable to make it.