Hrycenko (by His Legal Representative Hycenko) v Hrycenko
[2022] FedCFamC2G 2
•14 January 2022
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 2001Cases 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 387Division: 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 to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BURCHARDT
INTRODUCTORY
By an application in a case filed 18 November 2021, the applicant seeks an order pursuant to rule 16.05 of the Federal Circuit Court Rules 2001 (now rule 17.05 of the Federal Circuit and Family Court of Australia (General Federal Law) Rules 2021) that the orders made 14 May 2021 by this Court be amended nunc pro tunc by the addition of an order to have the effect, 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.
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?
The orders forwarded to chambers and which were subsequently made in chambers on 14 May 2021 relevantly provided for the filing of affidavit material by the parties to conclude by 5 July 2021 and for written submissions by the respondent 14 days before the hearing, by the applicant seven days before the hearing and any submissions in reply by two days before the hearing. The date allocated to the matter in those orders was 30 August 2021 at 10.15 am.
It should be noted that this, self-evidently, was the first one-day hearing the Court had available to it.
The matter was before the Court on 30 August 2021 and, over an objection from the creditor, I adjourned the matter on the application of the debtor until 29 September 2021, ordering the debtor to pay the creditor’s costs.
The matter was heard on 29 September 2021, and judgment was given on 28 October 2021. The sequestration order was, of course, made.
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.
At paragraph 16, relevantly, the affidavit continued:
As a result of those discussions, consent orders were sent to the Associate to his Honour Judge Burchardt prior to the scheduled directions hearing and the directions hearing was vacated by his Honour who considered the proposed consent orders and considered it appropriate they be made on the papers without an appearance. His Honour also listed the hearing and determination of the creditor's petition on 30 August 2021, some 3.5 months after the directions hearing. I have practiced as a legal practitioner since November 2005 when I was first admitted to practice. Since my admission I have practiced extensively and continuously in, amongst other areas, general commercial litigation and bankruptcy and insolvency. Based on my experience in legal practice, in my opinion while a period of 3.5 months in the context of general litigation and the delays in availability of courts to list a matter is not unusual, it is unusual in the context of bankruptcy proceedings where adjournments are usually for a period of 3-5 weeks. As a result of this delay between the directions made by consent in May 2021 and the final hearing, I did not become aware of the lapsing of the creditor's petition until 11 November 2021. The applicant's lawyer had not made application under section 52 of the Act prior to, or, after receipt of the orders, made by his Honour Burchardt J on 14 May 2021. The Court made no reference to the lapsing of the creditor's petition and neither had the applicant or his legal representatives. I believe therefore that neither party nor the Court turned their minds to the lapsing of the creditor's petition until this issue was raised by me in correspondence with Mr O'Donnell in November 2021. Had such an application been made, the Court may well have listed the hearing prior to 29 July 2021, which was over two months after the directions hearing in any event and the directions made on 14 May 2021 required additional material to be filed by 5 July 2021.
If I had become aware of the fact that the creditor's petition had lapsed on 29 July 2021 prior to the making of the sequestration order on 28 October 2021, I would have instructed Senior Counsel for the respondent to raise that matter at the hearing of the creditor's petition as a ground of opposition.
The Applicable Law
Relevantly section 43 of the Bankruptcy Act provides in subsection (1):
Subject to this Act, where:
(a) a debtor has committed an act of bankruptcy;
the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.
Section 52(1) provided the matters required to be proved on the presentation of the creditor’s petition before the Court, and gives the Court power, if satisfied by such proofs, to make a sequestration order. Relevantly, by section 52(4):
A creditor's petition lapses at the expiration of:
(a)subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or
(b)if the Court makes an order under subsection (5) in relation to the petition--the period fixed by the order;
unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn.
By subsection 52(5):
The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor's petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 24 months, commencing on the date of presentation of the petition as is specified in the order.
Despite some earlier confusion, I understand all parties to agree that the application now pressed under the slip rule is pressed under rule 16.05 of the Federal Circuit Court Rules 2001 (now rule 17.05 of the Federal Circuit and Family Court of Australia (Division 2) General Federal Law) Rules 2021), which relevantly provides in subrule 2 that:
The Court or a Registrar may vary or set aside a judgment or order after it has been entered if:
(e) it does not reflect the intention of the Court; or
(h) there is an error arising in the judgment or order from an accidental slip or omission..
This rule, like similar rules in other Courts, is commonly referred to as the slip rule. In L Shaddock and Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590 the High Court was concerned with a case in which through the inadvertence of Counsel, both before the appeal court in New South Wales and before the High Court, Counsel had failed to apply for interest on damages in respect of a particular period. The High Court, constituted by Mason A.C.J. and Wilson and Deane JJ, said at page 594:
Order 29, r. 11 is in the traditional form of a slip rule. It reflects the inherent jurisdiction of a court "at any time to correct an error in a decree or order arising from a slip or accidental omission" (see Milson v. Carter (1893) AC 638, at p 640 ). In terms, the rule provides, inter alia, that "an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court or a Justice on motion or summons". The rule extends to authorize an omission resulting from the inadvertence of a party's legal representative (see Fritz v. Hobson (1880) 14 ChD 542, at pp 561-562 ; Chessum &Sons v. Gordon (1901) 1 KB 694, at p 698 ; In re Inchcape (Earl) (1942) Ch 394, at pp 397-398 ; Coppins v. Helmers &Brambles Constructions ; Coppins v. Helmers &Brambles Constructions Pty. Ltd. (1969) 2 NSWR 279, at pp 281-282 ; Tak Ming Co. Ltd. v. Yee Sang Metal Supplies Co. (1973) 1 WLR 300, at p 304; (1973) 1 All ER 569, at p 571 ). This is so, regardless of whether the order has been drawn up, passed and entered (see Milson v. Carter (1893) AC, at p 640 ; Fritz v. Hobson (1880) 14 Ch D, at p 560 ). (at p595).
The Court did observe at page 597:
an order under the slip rule is not available as a matter of course. There is a discretion in the court to refuse an order if something has intervened which would render it inexpedient or inequitable that it be made (see Tak Ming (1973) 1 WLR, at p 306; (1973) 1 All ER, at p 572 ; and the cases there cited). In the present case, there was considerable delay in filing the notice of motion. The Court's decision was given on 28 October 1981 and the judgment entered at the end of November 1981. The motion to amend the order is dated 22 July 1982. The general principle in support of finality in litigation together with the fact that a party against whom judgment in a money sum is entered is entitled to regard that judgment as finally determining the extent of his liability combine to stress the importance of prompt action under the slip rule. The seriousness of the delay in this case is, however, minimized by the fact that the applicants promptly made known to the Council their claim for interest and the delay in making the application to the Court is, to no small extent, explained by the content of the correspondence between the parties during the months prior to the filing of the application.
In Emanuele v Australian Securities Commission [1997] 188 CLR 114. Kirby J said at page 152:
It is trite to say, but worth repeating, that the power of a court, such as the Federal Court, to correct obvious slips by orders in appropriate cases nunc pro tunc is one granted by legislation and the rules and implied in the express powers of the Court to avoid injustice. There is a reason for the tendency in the series of cases cited by McHugh JA in Woods v Bate and in other cases to like effect, for the reluctance of courts in recent times to invalidate acts done pursuant to a statutory provision because of a failure to comply with a prior procedural condition. Courts today are less patient with meritless technicalities. They recognise the inconvenience that can attend an overly strict requirement of conformity to procedural preconditions. In the morass of modern legislation, it is easy enough, even for skilled and diligent legal practitioners …to slip in complying with statutory requirements.
Although there is more to be said about the law, at this point it is appropriate to turn to the arguments put forward by the parties.
THE CREDITOR’S SUBMISSIONS
The applicant’s written submissions state at paragraph 6:
No application was made pursuant to s 52(5) of the Bankruptcy Act to extend the currency of the petition by reason of the inadvertence of the applicant’s legal advisors. The expiration of the petition was not raised with the Court by either party during the proceeding, and all parties and the Court proceeded on the basis that the petition was to be determined on its merits.
Having set out the relevant terms of section 52, the submissions went on to assert at paragraph 8:
the power to extend time can be exercised retrospectively under the slip rule even after the expiry of the period mentioned in s 52(5) or s 459R(2) in the case of a winding-up. (Authority was cited in support of that proposition)
The submissions referred to the judgment of Lockhart J in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385, where Lockhart J said relevantly:
The essential purpose of the slip rule is to give effect to the intention which the court would have had, if it were not for the failure which led to the accidental slip or omission.
The submissions went on to assert that the exercise of the discretion under the slip rule was summarised in Flint v Richard Busuttil & Co Pty Ltd (2013) 216 FCR 375 at [26]-[27] where the Full Court relevantly said, (citations of authority omitted):
The purpose of the slip rule is to avoid injustice to litigants by ensuring that the court’s judgment or order reflects its intention at the time the order was made or the judgment was published, or reflects the intention that the court would have had but for the failure that caused the accidental slip or omission. It may be exercised to prevent unintended consequences of the order and in this way give effect to the court’s intentions: It is not confined to errors or omissions of the court; it extends to errors or omissions resulting from the inadvertence of a party’s legal representative.
In Streimer v Tamas Shepherd J suggested that the slip rule could be used to retrospectively extend the life of a bankruptcy notice. Later, in DDB Needham Sydney Pty Ltd v Elyard Corporation Pty Ltd his Honour applied the rule to extend the time in which a winding up application could be determined. The Full Court dismissed an appeal from that decision in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd. On the appeal the Court accepted that the slip rule may be invoked “where the proposed amendment is one upon which no real difference of opinion can exist” but noted that it does not apply if the amendment is a matter of controversy and does not extend to mistakes resulting from a deliberate decision.
It should be noted that the Court went on to say, at [34]-[35]:
We respectfully disagree with the primary judge that the slip rule was engaged in the circumstances of this case. In our view it was not open to the federal magistrate to do as he did. We have come to this conclusion, in short, because the facts do not demonstrate that an accidental slip or omission was made or, if it was, that there was necessarily any error in the order made on 29 August 2012 as a consequence of it.
For the slip rule to apply there must be an order in need of correction.
The Court went on to consider the particular facts of that case, which were clearly germane to its conclusion. At [38]-[39], they noted:
On 29 August 2012 there was a directions hearing before the federal magistrate. If an application had been made on that day for an extension of the creditor’s petition under s 52 of the Bankruptcy Act, his Honour would have been required to consider whether it was just and equitable to extend the petition and, if so, in what terms the order should be made. We respectfully disagree with the conclusion of the primary judge that there is no doubt that the order would have been made. The review of the registrar’s decision was not without its complexity, but almost 3 months remained before the petition would lapse. Instead of extending the period of the creditor’s petition, the federal magistrate may have shortened the time for Ms Flint to file her submissions. He may have listed the creditor’s petition for hearing on a date in early November, conditionally, depending upon the outcome of the application before him. These steps would have reflected the expedition required and the public policy that inheres in the prompt dispatch of a creditor’s petition under s 52. The interests of creditors generally can be adversely affected by delays in the disposition of bankruptcy matters. Thus, if there was an error on the part of either the representative of the creditor in not making the application for an extension on (or before) 29 August or in the federal magistrate not adverting to the question, it is not clear what course would probably have been taken and, a fortiori, not clear that an order would have been made at that time extending the life of the creditor’s petition.
Furthermore, the evidence is not sufficient to support an inference of error or omission by the creditor’s lawyer or the federal magistrate.
Having noted criticism of the prior decision in Elyard, the Court went on to say, at [44]-[46]:
We would, however, make the following observations. Notwithstanding the logical force of the proposition that there is no room for the operation of the slip rule where an independent discretion must be exercised and the support of the authorities of Storey & Keers and Whitlock v Brew, there are two difficulties with accepting the proposition.
First, in Shaddock the High Court invoked the slip rule to amend an order to include an award of pre-judgment interest. Yet an award of interest is in the court’s discretion. Reference was made to Shaddock in both Storey & Keers and Amorin, but not to this point. In Newmont Yandal Spigelman CJ thought that some of the reasoning in Whitlock v Brew could not stand with later authorities including Shaddock. We respectfully agree.
Second, if the surrounding circumstances are such (as they can be taken to have been in Elyard) that it can be concluded that proper attendance to the matter (had the error not occurred) could only have resulted in the discretion being exercised in one way, it is difficult to see why the rule should not apply in the same way that it would if the discretion had been exercised and there had been a mere failure to record it.
As Lockhart J said in Elyard at 392:
The purpose of the rule is to avoid injustice.
The applicants’ written submissions go on to traverse other authority, including Ramsay Health Care v Compton (2016) 247 FCR 387. With the greatest respect, that case appears to be determined very much on its own particular facts, and it does not assist me in this matter. The next case referred to Luck v University of Southern Queensland [2018] FCAFC 102.
As the applicants’ written submissions correctly point out, in that case, the petition was presented on 9 April 2015, and on 22 March 2016 at the joint request of the parties, the hearing of the petition was adjourn till 31 May 2016, self-evidently after the petition expired. On 30 May 2016 (as is apparent from the judgment of Charlesworth J at [103]) the Legal Case Manager to the Court’s Registrar emailed the parties, noting that it had not been brought to the attention of the Registrar that the petition would lapse on 8 April 2016, and as at the date of the order made adjourning the petition, it was the registrar’s intention that the petition remain current and be dealt with at the time of the adjourned hearing. An intention to utilise the power to extend the lifetime of the petition, pursuant to rule 16.05 was foreshadowed, and in due course the order was made. In the judgment of Logan J at [7], his Honour observed:
A trilogy of cases determined by this Court at intermediate appellate level holds that resort to the slip rule is available even after the expiry of the period mentioned in s 52(5) of the Bankruptcy Act or, as the case may be, s 459R(2) of the Corporations Act so as to make an order which would have been made prior to the expiry of a specified time limit but which through inadvertence was not and which speaks from a date prior to the expiry of that time limit.
His Honour went on to say at [8]:
On the footing that resort to the slip rule was available, the present was, in my respectful opinion, a paradigm case for its application. There was at the relevant time a consensus between the parties, for their own separate reasons, that the creditor’s petition ought to be adjourned, rather than be the subject of any contest as to whether it should be allowed to lapse. It was only by inadvertence that neither the parties nor the registrar did not, in seeking or, as the case may be, in responsively ordering the adjournment of the petition prior to the expiration of the 12 month period additionally seek and order an extension of time.
Mortimer J came to a similar conclusion at [69].
Her Honour, Charlesworth J, came to a different conclusion, as it seems to me, based on the facts as she found them at [157]-[158].
Finally, the written submissions of the applicant traverse the decision in Endresz v Commonwealth of Australia [2019] FCAFC 197. In that case, once again, a Federal Circuit Court Judge made orders pursuant to rule 16.05, extending the life of the relevant petitions. The joint judgment of Rares and Marovic JJ contains a details consideration of antecedent authority. Their Honours did not accept a narrower approach towards the operation of the slip (see at [72]) and went on, saying in the same paragraph and following:
While we accept that the slip rule will not be available in every case to vary an earlier order by including an order under s 52(5) of the Act, we do not accept the narrow operation urged by the appellants.
The starting point is that the slip rule is available to vary an order to address an accidental slip or omission arising from the inadvertence of the court or a party. The purpose of the rule is to avoid injustice to the parties by ensuring the court’s orders reflect its intention at the time the orders were made or reflect the intention that the court would have had but for the accidental omission. However, resort to the slip rule is not available as a matter of course. The court retains a discretion to refuse to make an order by invoking that rule if something has intervened which would mean that it was “inexpedient or inequitable that it be made”.
At [81]-[82] their Honours continued:
The Full Court in Flint recognised the considerable constraints that apply where there is resort to the slip rule in circumstances where the exercise of an independent discretion is required. Whether the slip rule can be invoked where, through an accidental slip or omission an order was not made extending the life of a petition pursuant to s 52(5) of the Act before the expiration of 12 months from the date of presentation of a petition, will depend upon the circumstances. In particular, as s 52(5) of the Act requires the exercise of an independent discretion, the question of how the discretion would have been exercised had the order been made at the earlier time becomes a relevant factor. As the Full Court recognised in Flint, if the discretion could only be exercised one way it is difficult to see how the slip rule could not apply. But, if there is any room for debate as to the outcome of an exercise of the discretion under s 52(5) it is difficult to see how the slip rule could be engaged.
It follows that we do not accept that the slip rule can only be invoked to vary or set aside an earlier order to include an order extending the life of a creditor’s petition under s 52(5) of the Act in circumstances where the independent discretion required to be exercised by that section was in fact exercised prior to the expiry of the 12-month period commencing on the date of presentation of the petition.
At [84] their Honours went on to say:
We turn to consider the second issue raised by the appellants, whether the slip rule was correctly invoked by the FCCA Judge. In our opinion, based on the circumstances of this case, it was not. That is so for two reasons. First, at the time of making the February Orders there was no relevant accidental slip or omission made by the court or the parties. Secondly, even if there was an accidental slip or omission, this is not a case where we could conclude that, had the discretion in s 52(5) of the Act been exercised as at the time of the February Orders, it could have only been exercised in one way. There was certainly room for debate.
Their Honours went on to conclude at [87]-[88] that the evidence did not support the proposition that there was any accidental slip or omission in that case. In a separate judgment Charlesworth J said at [149]:
The distinguishing feature of this case is that it cannot be said that the discretion could only had been exercised in one way, had the necessity to make an order extending the life of the creditor’s petitions been adverted to be the FCCA judge prior to their expiry. That is a sufficient basis to conclude that the slip rule could not be exercised at a later time so as to add an order for extending the life of the petitions, expressed or operating nunc pro tunc. The appeal should be allowed on that basis.
Here the applicant’s written submissions assert at paragraphs 23-25:
The relevant circumstances in this case were that the creditor’s petition was to expire on 28 July 2021. The parties had by agreed by consent to have the matter heard and determined after the expiration of the petition. Neither the applicant, respondent nor the Court was cognisant of the fact that the petition would expire. Without an order extending time, the consent orders would have been “exercises in futility” (see Lindgren J in Elyard at 400).
There was an accidental slip or omission on the part of the applicant in failing to apply for an order extending time to hear the petition under s 54(5) at the same time the orders for directions were being made.
If the application had been made under s 54(5), the Court would have been required to consider whether it would be “just and equitable” to extend time. Both parties had approached the court seeking an adjournment. As such it fell into those special cases identified in Luck and Endresz where the exercise of the discretion was clear cut. This is, in the words of Logan J in Luck, a paradigm case for the use of the slip rule.
THE RESPONDENT’S SUBMISSIONS
The respondent’s submissions set out the relevant history and legislation including order 39.05 of the Federal Court Rules (which as earlier indicated is not the provision pursuant to which the matter has been determined, but which is in relevantly identical terms to the terms of r 16.05). The written submissions assert (paragraph 15) that s 33(1)(c) of the Bankruptcy Act is not a source of power to extend the life of a petition after it has lapsed, something I do not take to be in issue.
The written submissions went on to refer to the Full Court decision of Griffiths v Boral Resources (Qld) Pty Ltd (2006) 154 FCR 554. That case casts some doubt on the earlier decision of Elyard but nonetheless applied it. The Full Court did refer at [31] to the desirability of insolvency proceedings being speedily resolved and that the parties and their advisors to be aware of this. The Full Court decided that reservation of judgment neither implies an order of adjournment nor otherwise itself constituted an order.
The Full Court noted at [68], that if the magistrate had made an order
The only possible “error” would be the omission from the “order” of an extension pursuant to s 52 of the Bankruptcy Act. In that case it would be necessary to identify the accidental slip or omission which caused the error. The primary responsibility for making an application for such order rested upon the present respondent. Whether there was a slip or omission is a question of fact. In some cases, such as in Elyard, there may be direct evidence of an intention to make a relevant application, steps taken to bring about that result and a failure to carry the intention into effect. In other cases it may be possible to infer that such a step should have been taken, and that the failure to do so can properly be seen as an accidental slip or omission. Where the petition is likely to expire very shortly after the hearing, and prior to the preparation of a reserved judgment, such an inference may be available.
On the facts in that matter, the Court found that no such inference was available.
The written submissions went on to traverse the decisions in Flint v Richard Busuttil already referred to and Endresz. They then traversed the decision of Emanuele v ASC (1997) 188 CLR 114 to which I have already made reference. They traversed decisions in ASIC v Mitchell (No 4) [2021] FCA 1387 and Amorin Constructions Pty Ltd v Kamtech Electrical Services Pty Ltd (2008) 73 NSWLR 627; [2008] NSWSC 285 (the latter of which, of course, was the subject of detailed consideration in Endresz.
The written submissions then went on the assert at paragraph 34
There are three critical questions:
(a)Is the requirement that a sequestration order be made upon a (subsisting) petition one that is “merely procedural” or is it substantive – such that it cannot be cured by an order made nunc pro tunc under the slip rule?
(b)If the requirement is procedural, has it been demonstrated that “there is an error arising in the judgment or order from an accidental slip or omission”?
(c)If the requirement is procedural and the precondition to the exercise of power in rule 39.05 has been satisfied, should the court exercise its discretion whether to make any order or a particular order under it?
The gravamen of this submission is at paragraph 37 where it is asserted,
The respondent contends that a petition that has lapsed pursuant to s 52(4) of the Act is not, relevantly, “a petition” for the purposes of s 43 of the Act; such that the jurisdictional requirements of s 43 of the Act were not satisfied at the time when the sequestration order was made.
This was then contrasted with the position in Emanuele and the written submissions noted Mr O’Donnell’s evidence earlier did set out that if he had been aware the petition would expire before the hearing on 30 August 2021, he would have made an application. At paragraph 41 it was asserted “this is not an error arising in the judgment or order”.
The submissions went on to detail a number of propositions in support of that last contention including that it could not be assumed that if the Court had realised that the petition was listed on a date after, it was going to lapse and the trial would have extended time of its own motion and that the Judge might have listed the matter for trial within time. It was put to the Court and consistent with Endresz the slip rule could not be applied.
THE PARTIES ORAL SUBMISSIONS – THE APPLICANT
Counsel noted that the petition expired on 28 July 2021 and submitted that there was clear power under the slip rule to make the orders sought. He cited Ramsay Health Care v Compton (2016) 247 FCR 387; 2016 FCAFC 125 and Endresz at [76] in support of this proposition and submitted that those decisions were binding on the Court. It was submitted that the order made on 14 May 2021 contained the relevant error. This was an accidental slip or omission and as was the case in Endresz at [73] the failure of the solicitor can be corrected. It was submitted the case of Flint was a case on its own facts. The matter had been before this Court in May for hearing and extension should have been addressed. In this case the parties negotiated appropriate orders and the petition was due to expire on 28 July. The parties agreed to a hearing later than 23 July. It was just and equitable to extend time.
Counsel for the respondent submitted that the critical matter was whether there was an error in the judgment or order. The critical order was that of 14 May 2021. The petition was due to lapse on 28 July 2021 and there was no error in the order. Things could have happened within that time. The applicant could have applied to extend time. The error was the failure to apply in the 11 weeks. The Court had other options open to it. An earlier listing might have been possible or another Judge might have been able to hear the matter. Counsel referred to the written submissions that I have already extracted and emphasised that the application to apply the slip rule after the sequestration order was an exercise in bootstrapping.
Section 43 of the Bankruptcy Act required a petition presented by a creditor. There was no valid petition because it had lapsed. Counsel took the Court to the decision of Emanuele at page 118. Counsel noted that the judgment of the Chief Justice, Brennan CJ had not regarded the requirement or approval on the part of the Commission as procedural. Counsel also noted that Gaudron J who also dissented had expressly asserted that at page 139:
Though leave to make a winding up application may be granted at any point prior to, or simultaneously with, the making of a winding up order, it may not be granted thereafter, whether by the judge who made the order or by a Court exercising appellant jurisdiction.
Counsel submitted the Court cannot correct a slip in respect of a jurisdictional requirement after the order has been made.
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 petition
CONSIDERATION
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.
Notions that matters might be more readily brought forward or allotted to another Judge are fine in theory but ignore entirely the practical realities of the listing pressures in this Court. Even listing the matter when I did required shoehorning it into an otherwise bursting list as would, indeed, be the case for any other Judge in the Melbourne registry.
If the power under the slip rule is available, this is a paradigm example of its application. In my view, the failure to address the extension of the life of the petition in the order in 14 May 2021 represents an accidental slip on the part of the solicitor for the creditor which has led to an error in the order. In my view, the application should succeed.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Burchardt. Associate:
Dated: 14 January 2022
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