Hussein v Kubica
[2013] FCCA 1817
•29 October 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HUSSEIN v KUBICA | [2013] FCCA 1817 |
| Catchwords: BANKRUPTCY – Application to extend time for compliance – where applicant did not make application until statutory time for compliance had expired. |
| Legislation: Federal Circuit Court (Bankruptcy) Rules 2006 |
| Applicant: | MOHAMED HUSSEIN |
| Respondent: | HALINA KUBICA |
| File Number: | SYG 2345 of 2013 |
| Judgment of: | Judge Raphael |
| Hearing date: | 29 October 2013 |
| Date of Last Submission: | 29 October 2013 |
| Delivered at: | Sydney |
| Delivered on: | 29 October 2013 |
REPRESENTATION
| For the Applicant: | In person |
| Counsel for the Respondent: | Mr N Moore |
| Solicitors for the Respondent: | Colin Daley Quinn |
ORDERS
Application dismissed.
Applicant to pay the Respondent’s costs to be taxed if not agreed in accordance with the Federal Circuit Court (Bankruptcy) Rules 2006.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2345 of 2013
| MOHAMED HUSSEIN |
Applicant
And
| HALINA KUBICA |
Respondent
REASONS FOR JUDGMENT
The Bankruptcy Act 1966 (Cth) (“Act”) provides a code whereby persons who have obtained judgment against their debtors are able to enforce that judgment by way of a bankruptcy notice and creditor’s petition. Section 40(1)(g) of the Act allows a creditor to serve a bankruptcy notice upon the debtor. It is in the following form:
“40(1)(g) Acts of bankruptcy
(1) A debtor commits an act of bankruptcy in each of the following cases:
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i) where the notice was served in Australia--within the time specified in the notice; or
(ii) where the notice was served elsewhere--within the time fixed for the purpose by the order giving leave to effect the service;”
Section 41 of the Act deals with the requirements of bankruptcy notices and the ability of a debtor to seek that time for compliance with those notices be extended. Relevantly, s.41(1) requires a bankruptcy notice to be issued in an amount not less than $5,000.00 and s.41(3) requires that a bankruptcy notice can only be issued by a person who has a final judgment which has not been stayed. Sub-section 41(6A) is in the following form:
“41(6A) Bankruptcy notices
(6A) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice:
(a) proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or
(b) an application has been made to the Court to set aside the bankruptcy notice;”
In this matter s.41(7) might also have some relevance:
“(7) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.
The parties to this proceeding were formally husband and wife. It would appear that they have had a bitter dispute in the Family Court of Australia. On 21 December 2012 a costs assessment order was issued to Mr Hussein out of the Family Court ordering him to pay to Ms Kubica $71,668.05. There had been an earlier order for payment of the sum of $1,800.00 by 26 November 2012.
On 22 April 2013 Ms Kubica issued a bankruptcy notice against Mr Hussein claiming $73,468.05 plus interest of $3,977.80, at total of $77,455.85. In the schedule of post judgment interest calculation it is clear that the principal sum was made up of the two orders that I have just referred to. They were attached to the bankruptcy notice.
On 12 May 2013 Mr Hussein wrote to Ms Kubica’s solicitors. He acknowledged receipt of the bankruptcy notice. He told them that he was more than willing to pay the sum contained therein, but he didn’t have any income at the present time. He offered to pay $7.00 a week off the debt. Mr Hussein did not make an application to the Family Court or any other court for either a stay of the order or for payment of the order by instalments. Had he done so successfully the effect would have been to stay the costs order so that no bankruptcy notice could issue thereunder whilst soever he was paying the instalments.
Mr Hussein believes that the litigation in which he was involved was his wife, and in which he was unsuccessful resulting in the costs order against him, was less than transparent. He believes that his wife hid from the court her assets, in particular profits from the business which she was running. He has agitated this matter in the Family Court and it would appear that he has appealed against the orders that were originally made. These gave him some portion of the family assets but presumably insufficient so far as he was concerned.
The appeal must have been unsuccessful because Mr Hussein tells the court that he has applied for special leave to the High Court to appeal. But, this was something that was not done until September 2013, way after the time for compliance with the bankruptcy notice had expired. He also says that he has now taken out applications to stay the orders for costs, but again, this is long after time for compliance was required.
The position in relation to a matter such as this is clear. As it is said in the bankruptcy service:
“The institution of proceedings to set aside the judgment or the making of the application to set aside the bankruptcy notice under section 41(6A)(a) or (b) before the time for compliance with the bankruptcy notice expires is a jurisdictional requirement without which the Court cannot extend time for compliance: Re Riordan Ex Parte Riordan v Direct Acceptance Corp Limited (1995 63 FCR 147) Foster J. Re Bleyer; Ex Parte TCN Channel 9 Pty Limited (Unreported Federal Court of Australia, Gummo J, 2 March 1992) [and the other authorities there cited].”
The service continues:
“Where the power of section 41(6A)(a) is used “the time for compliance with the bankruptcy notice can only be extended where proceedings to set aside the order on which the bankruptcy notice was issued were made prior to the time fixed for compliance with the requirements of the notice: see Streimer v Tamas (1981 54 FLR 253) [and the other authorities there cited]…where the ground of power set out in section 41(6A)(b) is used “the failing of the application to set aside the bankruptcy notice within the specified time is a condition precedent to the exercise of the court’s power to extend time, and if it is not met, the application must be dismissed Re Sterling Ex Parte Esanda Limited (1980 44 FLR 125).”
Mr Hussein is not seeking to set aside this bankruptcy notice on the ground that it is void for some reason and so the only grounds upon which he can seek to set it aside are those contained in s.41(6A). He has not made that application within the time limited for compliance and he has not sought to set aside the original decision within that time either. In those circumstances the court has no jurisdiction to consider this application and it must be dismissed. The applicant must pay the respondent’s costs to be taxed if not agreed in accordance with the Federal Circuit Court (Bankruptcy) Rules 2006.
I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Judge Raphael
Associate:
Date: 6 November 2013
0
4