FEDERAL COURT OF AUSTRALIA
Hudson v Sigalla [2015] FCAFC 140
Citation: Hudson v Sigalla [2015] FCAFC 140 Appeal from: Frank Hudson v Andrew Sigalla (No 2) [2015] FCCA 542 Parties: FRANK HUDSON v ANDREW SIGALLA File number: NSD 480 of 2015 Judges: ALLSOP CJ, JAGOT AND KATZMANN JJ Date of judgment: 24 September 2015 Catchwords: BANKRUPTCY – Construction of s58(3) Bankruptcy Act 1966 (Cth) – When leave under s58(3)(b) is required – Whether leave required for a creditor to sue a person (who was a bankrupt) after the bankruptcy has been annulled by composition under ss 73 and 74 Bankruptcy Act Legislation: Bankruptcy Act 1966 (Cth) ss 5, 43, 57A, 58, 73, 74, 75, 82, 149
Corporations Act 2000 (Cth) ss 471B and 500(2)
Gambling Regulation Act 2003 (Vic)Cases cited: Allanson v Midland Credit Ltd [1977] FCA 66; 30 FLR 108
Battenberg v Union Club [2005] NSWSC 242; 189 FLR 206
Battenberg v Union Club [2006] NSWCA 72; 66 NSWLR 1
Coyle v Cassimatis (unreported, Supreme Court of Queensland, Court of Appeal, 1 November 1993)
House v The King [1936] HCA 40; 55 CLR 499
Hudson v Sigalla [2014] FCCA 1652
Hudson v Sigalla (No 2) [2015] FCCA 542
Oates v Commissioner of Taxation [1990] FCA 726; 27 FCR 289
Quinn v Official Trustee in Bankruptcy [1996] FCA 443; 63 FCR 136
Re AJ Benjamin Ltd (In liq) [1969] 2 NSWR 374
Re Hudson; Ex parte ANZ Bank [1994] FCA 569; 50 FCR 281
Re McMaster; Ex parte McMaster [1991] FCA 773; 33 FCR 70
Re Oates; Ex Parte Deputy Commissioner of Taxation (1987) 17 FCR 402
Re Rose; Ex parte Devaban Pty Ltd [1994] FCA 1082
Re Sydney Formworks [1965] NSWR 646
Truthful Endeavour Pty Ltd v Condon (Trustee), in the matter of Rayhill (Bankrupt) [2015] FCAFC 70
7 Steel Building Solutions Pty Ltd v Wright [2011] FCA 32Date of hearing: 7 September 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 56 Counsel for the Appellant: DR Pritchard SC with CD Wood Solicitor for the Appellant: Marque Lawyers Counsel for the Respondent: M Cashion SC with CA Botsman Solicitor for the Respondent: Kemp Strang
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 480 of 2015
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN: FRANK HUDSON
AppellantAND: ANDREW SIGALLA
Respondent
JUDGES:
ALLSOP CJ, JAGOT AND KATZMANN JJ
DATE OF ORDER:
24 SEPTEMBER 2015
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.There be no order as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 480 of 2015
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN: FRANK HUDSON
AppellantAND: ANDREW SIGALLA
Respondent
JUDGES:
ALLSOP CJ, JAGOT AND KATZMANN JJ
DATE:
24 SEPTEMBER 2015
PLACE:
SYDNEY
REASONS FOR JUDGMENT
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- Hudson v Sigalla [2015] FCAFC 140
- Case
- [2015] FCAFC 140
- Decision Date
CaseChat Overview and Summary
The court examined section 58(3) in the context of Division 4 of Part IV of the Act, which concerns the effect of bankruptcy on property and proceedings. Section 58(1) vests the property of the bankrupt (with certain exceptions) in the trustee upon the making of a sequestration order or when the petition is accepted by the Official Receiver. The status of being a bankrupt continues until discharge or annulment. The court noted that the effect of annulment depends on the specific question at hand. The concept of annulment was thoroughly analysed in Battenberg v Union Club, where it was held that annulment reversed the fact that the person had become bankrupt. The Full Court agreed with the primary judge's conclusion that the annulment of the bankruptcy had the effect of treating the bankruptcy as not having occurred.
The Full Court dismissed the appeal and made no order as to costs. The court found that the primary judge’s reasoning was sound and that the appeal did not merit a different outcome. The decision underscores the importance of uniformity in the interpretation of annulment under the Bankruptcy Act and clarifies the legal position regarding the effect of annulment on provable debts.
Orders
Orders of the court
1. The appeal be dismissed.
2. There be no order as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
It is unclear whether the primary judge’s conclusion about the release of provable debts came from a reading of the composition and the effect of s 75(1) of the Act (which made the composition binding on all the creditors), or whether it was from an argument based on s 75(2) (to which we will come). Nor is it clear that the matter was fully argued before him. Whatever the basis of that conclusion, the primary judge was of the view that s 58(3) was not engaged because the bankruptcy had been annulled.Consideration Section 58(3) finds its place in Div 4 of Pt IV of the Act concerning the effect of bankruptcy on property and proceedings. Section 58(1) provides for the vesting of the property of the bankrupt (with certain exceptions) in the trustee when the debtor becomes a bankrupt: either upon the making of a sequestration order: s 43(2), or on the first instant of the day on which the petition is accepted by the Official Receiver: s 57A of the Act. The status of being a bankrupt upon the making of a sequestration order continues until discharge under s 149(1) or annulment under s 74(5), s 153A(1), or s 153B: s 43(2). See Quinn v Official Trustee in Bankruptcy [1996] FCA 443; 63 FCR 136 at 138; and Allanson v Midland Credit Ltd [1977] FCA 66; 30 FLR 108 at 112 and 113. The precise effect or significance of an annulment depends upon the question at issue: see generally Battenberg v Union Club [2005] NSWSC 242; 189 FLR 206 (and on appeal: [2006] NSWCA 72; 66 NSWLR 1); Re Oates; Ex Parte Deputy Commissioner of Taxation (1987) 17 FCR 402; Oates v Commissioner of Taxation [1990] FCA 726; 27 FCR 289; Re Hudson; Ex parte ANZ Bank [1994] FCA 569; 50 FCR 281; Coyle v Cassimatis (unreported, Supreme Court of Queensland, Court of Appeal (1 November 1993)). The concept of annulment was the subject of careful analysis (both as to its history and contemporary meaning) by Giles JA in Battenberg in the Court of Appeal: 66 NSWLR at 9-19 [35]-[81]. At [81] Giles JA said:Accidents of history may have been at work, but it is important that there be uniformity in this area, and I consider that I should follow the recent cases and, so doing, hold that annulment of the respondent's bankruptcy reversed the fact that he had become bankrupt. The judge was correct in the emphasised portions of his [70].The paragraph of Campbell J’s judgment to which Giles JA referred was as follows:70 The task of the Court in the present case is to decide whether, today, the condition for the plaintiff's ceasing to be a member of the defendant, namely that he is someone who on 19 May 1997 became bankrupt, has occurred. The Bankruptcy Act 1966 (Cth) has provisions in sections 73 and 74, which have the effect that, today, the bankruptcy which once applied to the plaintiff is one which has been ‘annulled’. Subject to exceptions which the Bankruptcy Act 1966 (Cth) creates, and exceptions which arise as a matter of the general law, in the eyes of the law it is treated as not having occurred. None of the exceptions in the statute itself operate to give it any residual operation which is relevant to this case. Recognising today that in law the plaintiff was never bankrupt does not involve any upsetting of vested property rights or other vested rights. There is no action which was taken in reliance upon the bankruptcy being on foot and valid, which is relevant to the present case.(emphasis added by Giles JA)