McNally v Fazio (No.2)
[2015] FCCA 1935
•17 July 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MCNALLY v FAZIO (No.2) | [2015] FCCA 1935 |
| Catchwords: BANKRUPTCY – Whether an order extending the life of the creditor’s petition after the expiration of the period of 12 months from the date of presentation may be made. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.52(4) and (5) |
| Fazio v Centrelink [2008] FMCA 594 Fazio v McNally [2014] WASCA 79 Fazio (Executor) v Passmore [2011] FCA 273; (2011) 193 FCR 348; (2011) 9 ABC(NS) 75 Fazio v Westpac Banking Corporation [2014] WASCA 80 Flint v Richard Busuttil & Company Pty Ltd & Anor [2013] FCAFC 131; (2013) 216 FCR 375, (2013) 305 ALR 522; (2013) 11 ABC(NS) 599 Griffiths v Boral Resources (Qld) Pty Ltd [2006] FCAFC 149; (2006) 154 FCR 554; (2006) 235 ALR 247; (2006) 4 ABC(NS) 270 Heywood v Sharpe [2014] FCCA 2999; (2014) 291 FLR 217 McNally v Fazio [2015] FCCA 277 The Owners of Strata Plan 58041 vTemelkovski [2014] FCCA 2962 Verge (Trustee), in the matter of Underdown (deceased) (a bankrupt) v Fazio (No. 3) [2014] FCA 92 |
| Applicant: | BRIAN MCNALLY |
| Respondent: | ARTURO SALVATORE FAZIO |
| File Number: | PEG 104 of 2014 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 13 July 2015 |
| Date of Last Submission: | 13 July 2015 |
| Delivered at: | Perth |
| Delivered on: | 17 July 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr R Lennon |
| Solicitors for the Applicant: | Park Linfoot Legal Solutions |
| For the Respondent: | No appearance |
ORDERS
Pursuant to r.39.05(h) of the Federal Court Rules 2011 (Cth), applied pursuant to s.43(2)(b) of the Federal Circuit Court of Australia Act 1999 (Cth) and r.1.05(2) of the Federal Circuit Court Rules 2001 (Cth), the Court varies its order of 12 March 2015 by adding the following order:
(3)Pursuant to s.52(5) of the Bankruptcy Act 1966 (Cth) the period at the expiration of which the creditor’s petition filed in these proceedings will lapse will be 24 months commencing on 1 May 2014.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 104 of 2014
| BRIAN MCNALLY |
Applicant
And
| ARTURO SALVATORE FAZIO |
Respondent
REASONS FOR JUDGMENT
Issue
The issue to be determined in these proceedings is whether an order extending the life of the creditor’s petition after the expiration of the period of 12 months from the date of presentation should be made.
The hearing of the application for an order extending the life of the creditors petition
On 3 June 2015 the Court made the following orders:
1.The respondent’s letter of 29 May 2015 addressed to the presiding Judge in these proceedings be taken to be his notice of appearance in these proceedings and that the respondent’s address for service in these proceedings be the post office box address given in the letter of 29 May 2015, namely, PO Box 419 Willetton WA 6955.
2.The proceedings be adjourned to 2.15pm on 13 July 2015 for an interlocutory hearing on a matter raised on the Court’s own motion, namely, whether time needs to be extended to prevent the creditors petition from lapsing pursuant to s.52(4) of the Bankruptcy Act 1966 (Cth)(“Bankruptcy Act”) and whether time may be extended pursuant to s.52(5) of the Bankruptcy Act, or r.16.05(2) of the Federal Circuit Court Rules 2001 (Cth) or, if applicable, r.39.05 of the Federal Court Rules 2011.
3.In relation to the hearing of the interlocutory issue of the extension of time in order 2:
a.the applicant file and serve any further affidavits and outline of submissions by 17 June 2015;
b.the respondent file and serve any further affidavits and outline of submissions by 3 July 2015; and
c.the applicant file and serve any affidavits in reply and outline of submissions in reply by 10 July 2015,
provided that the affidavits need not be affidavits evidencing further proof pursuant to s.52(1) of Bankruptcy Act or for the purposes of rr.4.04, 4.05 and 4.06 of the Federal Circuit Court(Bankruptcy) Rules 2006 (Cth).
4.That the parties have leave to inspect in the Registry the transcript of proceedings of 10 February 2015, 12 March 2015, 1 May 2015 and today, and to obtain copies of that transcript by payment of any necessary fee for copying of the transcript.
5.The hearing of creditor’s petition be adjourned pending the hearing and judgment of the interlocutory issue raised in order 2.
6.Costs reserved.
The applicant creditor, Mr McNally, subsequently filed:
a)the affidavit of Ryan Eamonn Lennon affirmed 17 June 2015 (“Mr Lennon’s June 2015 Affidavit”);
b)an Outline of Submissions for Extension of Operation of the Creditors Petition filed on 17 June 2015 (“Outline of Submissions”); and
c)an affidavit of Jack Andrew Carroll sworn 19 June 2015 (“Mr Carroll’s Affidavit”), being an Affidavit of Service of the Outline of Submissions and Mr Lennon’s Affidavit.
Mr Carroll’s Affidavit attests to service on the respondent debtor, Mr Fazio, of the Outline of Submissions and Mr Lennon’s Affidavit at the address for service specified in order 1 of the Court’s orders of 3 June 2015. The Court accepts that the Outline of Submissions and Mr Lennon’s Affidavit were served upon Mr Fazio at that address as described in Mr Carroll’s Affidavit.
Mr Fazio did not file or serve any further affidavits or an outline of submissions by 3 July 2015 as ordered in the Court’s orders of 3 June 2015.
In the orders of 3 June 2015 the hearing of the application for an order extending the life of the creditor’s petition was set down for 2.15pm on 13 July 2015.
On 10 July 2015 Mr Fazio sent to the Deputy Associate to the presiding Judge, by facsimile, a letter dated 9 July 2015 (“Mr Fazio’s Letter”), annexing a letter dated 8 July 2015 from a Consultant Psychiatrist at the Fremantle Hospital and Health Service, Dr Adam Roberts (“Dr Roberts’ Letter”).
Mr Fazio’s Letter was as follows:
PROCEEDINGS PEG 104 OF 2014 FOR HEARING MONDAY 13th July 2015
Please find enclosed a medical report from Dr Roberts only made available this afternoon, explaining Mr Fazio’s inability to deal with the aforementioned application and his inability to attend at the said hearing, on mental health grounds.
Having only seen your letter dated 3 June 2015 and the enclosed orders on the matter, we reasonably expect the court will make the right decision on the issue in Mr Fazio’s absence, especially given the application is of the court’s own motion.
Signed by but prepared for and sent on behalf of
Arturo Fazio
Dr Roberts’ Letter was as follows:
To Whom It May Concern
Re: Arturo Fazio
10 Hannah Place
Leeming WA 6149
DOB: 05/08/64
Mr Arturo Fazio has been a patient at the Alma Street Centre since 2007, suffering from chronic depression and a severe bereavement reaction following the death of his wife.
He has a background history of early childhood trauma and is now estranged from his family or (sic) origin.
Arturo has a number of significant stressors, including housing, financial and physical health issues.
He is currently under my outpatient care in the Melville Community Mental Health Team.
If you require further information, can you please ask Arturo to forward your request to me.
Yours sincerely
Dr Adam Roberts
Consultant Psychiatrist Melville Team
Alma Street CentreFREMANTLE HOSPITAL AND HEALTH SERVICE
The Court will mark Mr Fazio’s Letter and Dr Roberts’ Letter together as Exhibit 1.
In its terms, Mr Fazio’s Letter did not seek an adjournment of the hearing for an order extending the life of the creditor’s petition, and was not taken as such by the Court. Nor did Dr Roberts’ Letter indicate that Mr Fazio was incapable of attending the proceedings or dealing with the subject matter of the proceedings. Mr Fazio is a not inexperienced self-represented litigant over many years in a variety of courts: see for example, Fazio v McNally [2014] WASCA 79 (“McNally”); Fazio v Westpac Banking Corporation [2014] WASCA 80 (“Westpac Banking Corporation”); Verge (Trustee), in the matter of Underdown (deceased) (a bankrupt) v Fazio (No. 3) [2014] FCA 92; Fazio (Executor) v Passmore [2011] FCA 273; (2011) 193 FCR 348; (2011) 9 ABC(NS) 75; Fazio v Centrelink [2008] FMCA 594 (“Centrelink”), and one not unfamiliar with the requirements in relation to applications for adjournment on medical grounds: see McNally at [14] per Pullin and Newnes JJA; Westpac Banking Corporation at [9] per Pullin and Newnes JJA; Centrelink at [3]-[25] per Lucev FM. In the above circumstances, the Court proceeded to hear the application for an order extending the life of the creditor’s petition.
The Court also notes that since the matter was referred to the Court by a Registrar of the Court Mr Fazio has not appeared, and that on previous occasions Mr Chiat from the Public Trustee’s Office has appeared, the Public Trustee having been appointed Plenary Administrator of the estate of Mr Fazio by the State Administrative Tribunal (“SAT”) on 12 December 2014, an appointment which was subsequently revoked by SAT on 28 April 2015 (as to which see further at [20] below), thereby entitling Mr Fazio to appear personally at the hearing on 3 June 2015.
The Court also proceeded to hear the application for an order extending the life of the creditors petition because there was nothing relevant to the law and facts to be applied by the Court in relation to which Mr Fazio could necessarily assist the Court. That is evident from the Court’s consideration of the law and the substance of the matter hereafter.
Litigation history
The application for a creditor’s petition was filed on 1 May 2014, and that is the date of presentation.
There were significant difficulties in relation to the service of the creditor’s petition, and up to and including 13 January 2015 there were eight separate appearances before a Registrar of this Court, before the matter was referred to a Judge of the Court by order of a Registrar on 13 January 2015. The Court notes that on 21 October 2014 a Registrar of the Court made orders allowing the creditor’s petition to be served by way of substituted service. A further substituted service order was made by a Registrar of the Court on 17 November 2014. By effect of the substituted service orders made on 21 October 2014 and 17 November 2014 the creditor’s petition was served on 14 December 2014: see order 3 of the orders of 17 November 2014; Affidavit of Ryan Eamonn Lennon, Affidavit of Service, affirmed 24 November at [3]-[4].
The matter first came before a Judge of the Court on 10 February 2015, and on that date the matter was adjourned for reasons delivered extemporaneously in McNally v Fazio [2015] FCCA 277 as follows:
1.In the Court’s view it is appropriate to adjourn today’s hearing. It is appropriate on a number of bases.
2. Firstly, of course, is the relatively recent appointment of the Public Trustee as the plenary administrator of Mr Fazio’s affairs, as a consequence of which the Trustee comes late to this litigation. That is not said in any critical sense. It is simply a matter of fact.
3. Secondly, it is the case, it would appear, that the Public Trustee’s role and appointment will remain uncertain, at least until a review of the order appointing the Public Trustee as plenary administrator (which was made on 12 December 2014 by the State Administrative Tribunal) is heard, which the Court is informed will be on 11 March 2015.
4.Thirdly, the Court considers it is appropriate in the circumstances that the Public Trustee be given the opportunity to have the property in which the Respondent resides valued with a view to determining a future course of conduct which might include the sale of the property (which is a property at 10 Hannah Street in Leeming in the State of Western Australia), and which the Court has been told is already the subject of an order for possession of the property by Westpac, to whom it would appear the respondent has a debt which exceeds $720,000. In those circumstances, the Court considers it appropriate that the Public Trustee have some time to get a valuation and determine whether or not the property is to be sold, and, if so, how.
5. Finally, the Court also considers it appropriate that the matter be adjourned to allow the parties to consider the judgment of this court in The Owners of Strata Plan 58041 v Temelkovski [2014] FCCA 2962, which again comes late in the piece, being delivered on 19 December 2014, which raises issues as to the service of a creditors petition on a person suffering from an incapacity. And that is a matter which the Court suspects both parties might need to give some further consideration to.
6. It is regrettable, that in the circumstances, a matter which has had a reasonably long history already before Registrars of this Court and in respect of which there appear to have been, a number of difficulties with respect to the issue of service on the respondent, has to be adjourned for the reasons that the Court has given. The matter of adjournment is, of course, a matter in the discretion of the Court: it is a wide discretion that the Court exercises in that regard: Cann v Commonwealth Bank of Australia (No. 3) [2011] FMCA 303 at paras.9-11 per Lucev FM; Myers v Myers [1969] WAR 19 at 21 per Jackson J. In the circumstances of this case, and for the reasons the Court has given, the interests of justice require that an adjournment be ordered.
7. The matter is adjourned for mention to not before 4 pm on 12 March 2015 with the costs of today reserved.
On 12 March 2015 the matter was again adjourned, on this occasion to 11 May 2015, because of a scheduled hearing in the State Administrative Tribunal on 28 April 2015, which was a hearing concerning an application by Mr Fazio to revoke the order appointing the Public Trustee as Plenary Administrator of Mr Fazio’s estate.
At the hearing on 12 March 2015 the issue of an adjournment arose in the context of a report which was to be prepared by the abovementioned Consultant Psychiatrist, Dr Roberts. The following exchanges occurred at the hearing:
HIS HONOUR: All right. We could adjourn it to – I think it’s the third week of May. It’s the week of the 13th – sorry, of April, 13th to 17th. Or, alternately, I think it’s the third week of May. I’m just wondering which of those dates you think might be better in the circumstances.
MR CHIAT: I think my friend would prefer it if it was 17 April. I would’ve thought the third week in May is probably the more sensible because what is likely to happen procedurally is that the SAT proceedings will only come on for hearing towards the end of April, once SAT has received Dr Roberts’ report. They will be listed before then, but obviously they’re anticipating some delay between the appointment with Dr Roberts and the production of a report. There is also, of course, the possibility that at the ..... SAT proceedings, because Mr Fazio is seeking orders revoking the administration order, that he may be successful in that application. If that is the case, then I think the whole issue of service and capacity falls away completely, and the Public Trustee’s order will be revoked, and Mr Fazio would then, no doubt, represent himself. But the question of whether – raised by the Temelkovski decision will fall away in its entirety.
HIS HONOUR: So if we were to adjourn it to May, we might not have the pleasure of your company. It’s a possibility.
MR CHIAT: You may not.
HIS HONOUR: All right. Mr Lennon, I’m inclined to adjourn it to May because I think that if we bring it back in April, we may simply be in essentially the same position. Now, I appreciate that the client that you represent isn’t going to be overly enamoured of that, but I think from a purely practical point of view, in terms of this court progressing it, if we adjourn it to May or not, Mr Fazio’s status, whether he acts for himself or through a lawyer or whether the Public Trustee continues to act for him, and so on and so forth. I just think that’s the practical course, unless you’ve got something to say against it at this stage.
MR LENNON: I don’t, your Honour. The only reason I would want it in April was if it would proceed. I completely accept the point that it’s - - -
HIS HONOUR: All right.
MR LENNON: - - - the only point we’re going to proceed on then is the Temelkovski issue - - -
HIS HONOUR: Yes.
MR LENNON: - - - if any point at all, so I accept that it is more logical to send it off to May - - -
HIS HONOUR: All right.
MR LENNON: - - - to allow it to be fully dealt with.
HIS HONOUR: All right. All right, gentlemen, there will be an order adjourning the matter to a directions hearing at 9.30 am on 11 May 2015, and depending on what’s happening on that day or that week, and depending on what’s happening generally with respect to the matter, we will try and endeavour to deal with some issue, if there’s some issue to deal with during the course of that week. At this stage, the week looks reasonably clear, so that might be fortuitous. It may be that we simply continue to deal with it on the day of the directions hearing and go into hearing or whatever the case might be. Be a bit flexible about that. Secondly, costs of today reserved?
MR LENNON: Yes, your Honour.
MR CHIAT: Yes, your Honour.
Transcript, 12 March 2015, pages 3-4.
Mr Lennon’s June 2015 Affidavit deals with the hearing on 12 March 2015 and says as follows:
3. On 12 March 2015 I appeared on the Applicant's behalf at a directions hearing in this matter (Hearing).
4. At the Hearing the Respondent's then representative the Public Trustee requested the Court adjourn the Hearing to allow an Application to have it removed as the Respondent's plenary administrator determined by the State Administrative Tribunal.
5. At the Hearing the Court provided 3 alternate times available for the Hearing to be adjourned to, being 13 April 2015, 17 April 2015 or the third week of May 2015.
6. The Public Trustee requested that it be adjourned to the third week of May 2015.
7. I on the Respondent's behalf requested that if the Hearing was adjourned it be adjourned to 17 April 2015, if it would allow the matter to proceed and be finalised. However, [I] accepted that it [would be] more logical to adjourn the Hearing to May 2015 because of the timing of the State Administrative Tribunal hearing.
8. The Hearing was adjourned to 11 May 2015.
9. I did not, on 12 March 2015, turn my attention to the expiry of the Applicant's Creditor's Petition being before 11 May 2015 had I done so I would have made an application for the operation of the Creditor's Petition to be extended.
Mr Lennon’s June 2015 Affidavit at [3]-[9].
On 11 May 2015 Counsel for the Public Trustee, Mr Chiat, advised the Court that at the SAT hearing on 28 April 2015 the Public Trustee’s appointment as the Plenary Administrator of Mr Fazio’s estate was revoked by order of the SAT on that day. In those circumstances, the Court ordered that Mr Fazio file and serve a notice of appearance by 25 May 2015, and the Court made orders providing for service by various means at various addresses and for the matter to be adjourned to a further directions hearing at 9.30am on 3 June 2015. The Court then further observed that:
HIS HONOUR: … I have done that, Mr Lennon, because clearly Mr Fazio hasn’t been involved in the proceedings for some time, and it may be that there are matters which he would seek to put on the record, and perhaps have an opportunity to do that, and address the court with respect to that, rather than the court now simply making orders. But I can say to you that, all other things being equal, we will, at that directions hearing, list it in the bankruptcy week in July.
Transcript, 11 May 2015, page 4.
When the matter returned to the Court on the morning of 3 June 2015 for directions the Court observed to Counsel for Mr McNally (there being no appearance by Mr Fazio) that there might be an issue with respect to the creditor’s petition having lapsed, the Court having then realised that that might be an issue. The matter was stood down until the afternoon of 3 June 2015, and having heard from Counsel for Mr McNally, the orders set out at [2] above were then made.
The Law
Section 52(4) and (5) of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”) provides as follows:
(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.
(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.
Although disquiet has been expressed as to the invocation of the slip rule in extending the life of a creditor’s petition under s.52(5) of the Bankruptcy Act, there can be no doubt that, presently at least, the slip rule provides a legal foundation for the Court to extend the life of a creditor’s petition in an appropriate case: Griffiths v Boral Resources (Qld) Pty Ltd [2006] FCAFC 149; (2006) 154 FCR 554; (2006) 235 ALR 247; (2006) 4 ABC(NS) 270 at [29]-[33] per Spender ACJ, Dowsett and Collier JJ (“Griffiths”); Flint v Richard Busuttil & Company Pty Ltd & Anor [2013] FCAFC 131; (2013) 216 FCR 375, (2013) 305 ALR 522; (2013) 11 ABC(NS) 599 at [43]-[46] per Allsop CJ, Katzmann and Perry JJ (“Richard Busuttil”).
In Griffiths the Full Court of the Federal Court found that the reservation of judgment by a Federal Magistrate, without more, did not constitute an order of the Federal Magistrates Court, and therefore there was no question of there being an error, slip or omission in an order so as to invoke the slip rule: Griffiths at [63] per Spender ACJ, Dowsett and Collier JJ.
The question ultimately becomes whether or not there was an error, slip or omission warranting the invocation of the slip rule. In Griffiths the Full Court of the Federal Court observed as follows at [68] per Spender ACJ, Dowsett and Collier JJ:
68Even assuming that the magistrate made an order on that date, we consider that the conditions precedent to the invocation of the slip rule did not arise. 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.
In Griffiths the Full Court of the Federal Court went on to observe that where the petition was heard on 11 November 2003 and at the time at which judgment was reserved almost 10 months remained until the petition lapsed it could not be inferred that the respondent ought to have applied for an extension of time, and that the failure to do so was an accidental slip or omission, and that with 10 months to run it was most unlikely that anybody would have anticipated that judgment might not be given within the lifetime of the petition, and therefore the failure to take the step of applying for an extension of the life of the creditor’s petition at that stage was not an error, slip or omission: Griffiths at [69] per Spender ACJ, Dowsett and Collier JJ.
Recently, in this Court, in Heywood v Sharpe [2014] FCCA 2999; (2014) 291 FLR 217 Judge Manousaridis at [21]-[23] (footnotes omitted) (“Heywood”) observed as follows:
21 As I have indicated earlier in these reasons, there are a number of cases where it has been held that the slip rule is available to permit the Court to make an order under s 52(5) of the Act even after the time for making the order permitted by s 52(4) has passed (post-expiry extension order).The relevant cases up to October 2006 were identified by the Full Federal Court in Griffiths v Boral Resources (Qld) Pty Ltd.The Full Federal Court, although expressing discomfort with the use of the slip rule to make a post-expiry extension order, confirmed that the slip rule was available to be used in that way. The Full Federal Court held, however, that the rule could be invoked only where there is a judgment or order, and only if it can be shown that it was due to an accidental slip or omission that no order under s 52(5) of the Act was made at the time of that judgment or order.
22 The availability of the slip rule to make a post-expiry extension order was recently considered by the Full Federal Court in Flint v Richard Busuttil & Company Pty Ltd.In that case a creditor's petition was filed on 24 November 2011. On 29 August 2012 a Judge of this Court (then a Federal Magistrate) made directions for the filing of submissions. The Judge made a sequestration order on 7 December 2012, more than twelve months after the date on which the creditor's petition had been filed. On the same day, immediately before his Honour made the sequestration order, his Honour made an order extending the life of the creditor's petition up to 23 November 2013. It was submitted that the operation of the slip rule was not engaged in the circumstances of that case.
23 The Full Federal Court found the slip rule had not been engaged. The Court noted that, because of the manner in which the Judge dealt with the rule, the petitioning creditor did not put on any evidence in support of the invocation of the slip rule; and, because the only order to which the slip rule could be applied was made some three months before the twelve month period prescribed by s 52(4) of the Act expired, it was not possible to infer that, if an application to extend the period were made on 29 August 2012, the Judge would have extended it. Nor was it possible to infer that the creditor did not, on 29 August 2012, apply for an order under s 52(5) of the Act, or that the Judge himself did not make such order because of some accidental slip or omission. The Full Federal Court also observed that the fact that a post-expiry extension order is one that could only have been made in the exercise of the court's discretion did not prevent the application of the slip rule; at least not where it is to be concluded that, had the matter been raised, it could only have resulted in the discretion being exercised one way.
Consideration
Mr McNally submits that the slip rule may be invoked to extend the life of a creditor’s petition after it has lapsed, and that the Court may do so because, had the Court’s attention been drawn specifically to that issue at the directions hearing on 12 March 2015, the Court would have extended the life of the creditor’s petition rather than let it lapse.
In this matter there was an order made by the Court on 12 March 2015. That order was as follows:
1.The matter be adjourned to a directions hearing at 9.30am on 11 May 2015.
2.Costs of today be reserved.
In this matter, there is evidence that had Mr McNally’s lawyers realised that the creditor’s petition would lapse on 1 May 2015, they would have raised the matter with the Court on 12 March 2015. If the issue of the lapsing of the creditor’s petition had been raised on 12 March 2015 the Court is in no doubt that it would have extended the life of the creditor’s petition. The reasons that the Court would have extended the life of the creditor’s petition had it been raised with the Court on 12 March 2015 are as follows:
a)there was not a significant period of time in which to have the creditor’s petition listed for hearing, and for a judgment to be prepared and delivered. As is evident from the exchange with the then Counsel for Mr Fazio’s estate on 12 March 2015 there was only one week in April 2015 into which the hearing of the creditor’s petition could be listed prior to 1 May 2015, and given the difficulties with the history of the matter (some of which are otherwise adverted to in these Reasons for Judgment) it is not clear that the creditor’s petition would actually have been heard in that week in April in any event;
b)there had been considerable difficulties with service on Mr Fazio, with service of the creditor’s petition only being effected on 14 December 2014, almost seven and a half months after the creditor’s petition’s presentation;
c)in light of the decision in The Owners of Strata Plan 58041 vTemelkovski [2014] FCCA 2962 there were, as at 12 March 2015, still doubts as to whether service of the creditor’s petition on Mr Fazio might, or might not, have been properly effected, and that may have been dependent upon the state of Mr Fazio’s capacity as at 20 December 2014; and
d)given the issues with respect to the possible revocation of the SAT order for the appointment a plenary administrator to Mr Fazio’s estate, and the possibility of the revocation of that order on 28 April 2015, there:
i)were doubts as to the effect of Mr Fazio being represented by a plenary administrator under an order the subject of an application for revocation;
ii)was insufficient time to properly deal with the creditor’s petition in the event that the appointment of the plenary administrator to Mr Fazio’s estate was revoked by SAT on 28 April 2015, as it subsequently was; and
iii)was no opportunity, in any event, to list the matter between 28 April 2015 and 1 May 2015, being the date of the revocation hearing before SAT and the date on which the creditor’s petition was due to lapse.
It follows from what the Court has said above that the Court would have extended the life of the creditor’s petition if it had been asked to do so, or if the Court had realised that it may be necessary to do so, at the hearing on 12 March 2015.
The Court can utilise the slip rule to make an order extending the life of the creditor’s petition, and the Court will do so in this case. The power for the Court to make an order in these circumstances is that contained in r.39.05(h) of the Federal Court Rules 2011 (Cth) (“FCC Rules”) which, because of s.43(2)(b) of the Federal Circuit Court of Australia Act 1999 (Cth) and r.1.05(2) of the Federal Circuit Court Rules 2001 (Cth) can be applied in the circumstances where there is no slip rule as such in the FCC Rules: see Heywood at [9] per Judge Manousaridis; Griffiths at [15] per Spender ACJ, Dowsett and Collier JJ. The order of 12 March 2015 should therefore be varied to add an order, pursuant to s.52(5) of the Bankruptcy Act, extending the life of the creditor’s petition to 24 months commencing on 1 May 2014.
Conclusions and orders
The Court has concluded that it will make an order extending the life of the creditor’s petition in these proceedings to 24 months commencing on 1 May 2014.
The Court will hear the parties as to costs.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Associate:
Date: 17 July 2015
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