Nilant v Macchia
[1997] FCA 966
•15 September 1997
FEDERAL COURT OF AUSTRALIA
BANKRUPTCY - discharge of bankrupt - debtor’s statement of affairs - whether Court has power to abridge time required to elapse between filing of statement and automatic discharge from bankruptcy.
Bankruptcy Act 1966 (Cth) ss 33(1)(c), 149(3)
Re Rohde (1993) 42 FCR 149 overruled.
CHARLES PHILIPPE LOUIS NILANT as trustee of the Bankrupt Estate of Mario Silverio Macchia v MARIO SILVERIO MACCHIA
No. WAG 51 of 1997
SPENDER, CARR & FINN JJ
PERTH
15 SEPTEMBER 1997
| IN THE FEDERAL COURT OF AUSTRALIA | ) |
| WESTERN AUSTRALIA DISTRICT REGISTRY | ) WAG 51 of 1997 |
| GENERAL DIVISION | ) |
On appeal from a single Judge of the Federal Court of Australia
BETWEEN: CHARLES PHILIPPE LOUIS NILANT as trustee of the Bankrupt Estate of Mario Silverio Macchia
AppellantAND: MARIO SILVERIO MACCHIA
Respondent
| JUDGES: | SPENDER, CARR & FINN JJ |
| PLACE: | PERTH |
| DATED: | 15 SEPTEMBER 1997 |
MINUTE OF ORDERS
THE COURT ORDERS THAT:
The appeal be allowed.
The orders made on 11 April 1997 be set aside and the matter be remitted to Lee J for further consideration.
The respondent pay the appellant’s costs of the appeal and of the proceedings before Lee J to date.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
| IN THE FEDERAL COURT OF AUSTRALIA | ) |
| WESTERN AUSTRALIA DISTRICT REGISTRY | ) WAG 51 of 1997 |
| GENERAL DIVISION | ) |
On appeal from a single Judge of the Federal Court of Australia
BETWEEN: CHARLES PHILIPPE LOUIS NILANT as trustee of the Bankrupt Estate of Mario Silverio Macchia
AppellantAND: MARIO SILVERIO MACCHIA
Respondent
| JUDGES: | SPENDER, CARR & FINN JJ |
| PLACE: | PERTH |
| DATED: | 15 SEPTEMBER 1997 |
REASONS FOR JUDGMENT
The Court:
Introduction
This is an appeal from an order of a Judge of this Court abridging the time limited by s 149(3) of the Bankruptcy Act 1966 (Cth) (“the Act”) for the period of the respondent’s bankruptcy to a date being 13 months from the date on which he filed his statement of affairs.
Factual Background
On 11 April 1991 the respondent committed an act of bankruptcy by failing to comply with a bankruptcy notice. On 16 May 1991 a creditor’s petition was presented, based on that act of bankruptcy. In his reasons for judgment, the learned trial judge set out the rest of the factual circumstances of this matter as follows:
“On 19 July 1991 Mr Macchia and his brother signed authorities under s188 of the Act (the PtX proceeding) authorizing the respondent ("the Trustee") to take control of their joint and several property and to convene a meeting of their respective creditors.
Pursuant to sub-para188(2)(c)(i) of the Act Mr Macchia gave the Trustee a statement of his affairs and a joint statement of the affairs of Mr Macchia and his brother as joint debtors, each statement prepared as at 9 July 1991.
The notice convening the meeting of creditors pursuant to s194 of the Act advised the joint and several creditors of the debtors that it was proposed by the debtors that there be a composition of their debts by the payment to the creditors of a sum of $50,000.
At the meeting of the creditors held on 8 and 29 August 1991 the composition proposal was rejected and it was resolved by the creditors that the debtors lodge their petitions in bankruptcy within 7 days.
Mr Macchia's brother lodged a petition and became bankrupt on 4 September 1991. Mr Macchia presented his own petition on the same day but by operation of sub-s55(3A) of the Act the Registrar was required to refer the petition to the Court for a direction to accept or (reject) it.
On 16 September 1991 I directed the Registrar to reject Mr Macchia's petition and ordered that the estate of Mr Macchia be sequestrated on the creditor’s petition. I further ordered that the estates in bankruptcy of Mr Macchia and his brother be consolidated.
At the time the order was made Mr Macchia had prepared a statement of his affairs, and a joint statement of affairs with his brother, as at 9 July 1991 and a further statement of his affairs to support the petition presented by him to the Court on 4 September 1991. It does not appear that after my order of 16 September 1991 any further joint statement of affairs was prepared by the joint bankrupts.
Pursuant to the order made on 16 September 1991 the property of Mr Macchia became vested in the Trustee who was also the Trustee of the bankrupt estate of Mr Macchia's brother. On 2 October 1991 the Trustee handed to Mr Macchia a letter advising Mr Macchia that he had been made bankrupt on 16 September 1991 and enclosed an "explanatory document" in which the relevant provisions of s54 were set out, namely, that a person against whom a sequestration order is made must file a statement of affairs with the District Registry within 14 days from the day on which he is notified of the bankruptcy and must furnish a copy to the Trustee.
On 6 October 1992 the Trustee advised Mr Macchia that he had not received a copy of Mr Macchia's statement of affairs as required by s54 of the Act and informed Mr Macchia that pursuant to s149 of the Act discharge from bankruptcy would not occur until 3 years from the filing of the statement of affairs.
On 9 October 1992 Mr Macchia replied to the Trustee that he had provided a statement of affairs on 16 July 1991 and again on 4 September 1991 and asked that the Trustee obtain a copy of these statements from the Registrar as soon as possible.
In a letter to the Trustee dated 23 October 1992 Mr Macchia again referred to his debtor's petition and the statement of affairs that he had "lodged" with that petition. In the same letter Mr Macchia informed the Trustee that he had obtained employment in a remote part of the State.
By letter dated 28 October 1992 the Trustee informed Mr Macchia that he had been made bankrupt on a creditor’s petition (an incorrect date of bankruptcy of 9 September 1991 being stated) and not on the debtor's petition with which a statement of affairs had been supplied. The Trustee asked Mr Macchia to file a statement of affairs.
On 3 December 1993 the Trustee applied to the Court for an order that Mr Macchia be committed for contempt pursuant to sub-s54(3) of the Act for failure to file a statement of affairs as required by para54(1)(a). Before the application came on for hearing Mr Macchia filed a statement of affairs on 21 January 1994. Pursuant to s149 of the Act discharge from bankruptcy would occur on 22 January 1997 if the period of bankruptcy were not extended by an objection lodged by the Trustee.
By letter dated 26 October 1994 the Trustee delivered to Mr Macchia an Income Assessment Questionnaire in respect of the year ending 30 June 1994 and asked that it be completed by Mr Macchia and returned. On 4 November 1994 Mr Macchia returned the form duly completed in which the gross income for the year ended 30 June 1994 was shown as $59,498. The anticipated income for the year ended 30 June 1995 was $9,000.
By a letter dated 15 February 1995 the Trustee purported to make an assessment under s139W of the Act that Mr Macchia was liable to contribute to his estate from his income a sum of $10,677 arising out of the income derived in the years ended 30 June 1993 and 30 June 1994. The Trustee stated that Mr Macchia was to make payments of $890 per month from 28 February 1995. No payments have been made.
It may be noted that pursuant to s139W of the Act, as soon as practicable after the start of "each contribution assessment period" the Trustee was required to make an assessment of the income likely to be derived by the bankrupt during that period; of "the actual income threshold amount" applicable to the bankrupt; and of the contribution (if any) that the bankrupt is liable to pay under s139S of the Act in respect of that period. As defined in s139K of the Act the "contribution assessment period" of Mr Macchia's estate commenced on 1 July 1992 and on 1 July in each year thereafter. The Trustee was provided with sufficient information by Mr Macchia in October 1992 for an assessment to be made pursuant to sub-s139W(4) and for the Trustee to give to Mr Macchia written notice setting out particulars of that assessment. It is to be noted that the obligation to make an assessment, or to provide notice thereof, under s139W is not made dependent on the Trustee's belief that a contribution is payable.
On 12 October 1995 Mr Macchia filed this application. The application was opposed by the Trustee. It was listed for hearing on 20 May 1996. On 17 May 1996 the Trustee, pursuant to s149B of the Act, filed an objection to the discharge of Mr Macchia from bankruptcy. The ground of objection relied upon was para149D(1)(f) of the Act, namely, that Mr Macchia had failed to pay to the Trustee an amount that he was liable to pay under s139ZG of the Act. It may be noted that the reference to s139ZG in s149D(1)(f) appears to be inapt given that s138ZG is concerned with the manner of payment and not liability for payment. It is sub-s139P(1) or sub-s139Q(1) that creates the liability to pay a sum to which s139ZG refers.
The hearing was adjourned to allow Mr Macchia to seek a review of the Trustee's objection. On 12 June 1996 pursuant to sub-s149K(1) of the Act Mr Macchia requested the Inspector-General to review the decision of the Trustee to file the notice of objection. On 18 June 1996, pursuant to s149J of the Act, the Trustee withdrew the objection. By letter dated 20 June 1996 the Trustee advised Mr Macchia that the Trustee had "re-assessed" "income contributions" for the contribution assessment period ending 30 June 1993 and 30 June 1994. The effect of the "re-assessment" was that no amount was payable as a contribution by Mr Macchia for the period ending 30 June 1993, the amount previously demanded being $1,289, and $8,985 was said to be payable as a contribution for the period ending 30 June 1994 in place of the sum previously demanded, $9,388. The Trustee directed that the sum set out in the notice be paid by 28 June 1996.
On 3 July 1996 the Trustee lodged a notice of objection to Mr Macchia's discharge from bankruptcy based on non-payment of the sum claimed in the assessment notice dated 20 June 1996.
Apparently Mr Macchia requested the Inspector-General to review the decision of the Trustee to file the notice of objection filed on 3 July 1996 and on 19 September 1996 the Inspector-General confirmed the Trustee's decision.
Under s149A of the Act the effect of the objection filed by the Trustee was to extend the period of bankruptcy from 3 to 8 years from 21 January 1994, that is, to 21 January 2002.
On 19 March 1997 the Trustee filed another notice of objection to discharge, the ground for which was said to be s149D(1)(n) of the Act, namely, the failure of Mr Macchia, whether intentionally or not, to disclose to the Trustee a beneficial interest in property. It was claimed by the Trustee that Mr Macchia had succeeded to a share in the estate of his deceased mother who, the Trustee claims, died intestate on 21 March 1995. The principal property of the estate was real estate. Before Mrs Macchia died a caveat was lodged against the title to that property by a sister of Mr Macchia. In that caveat Mr Macchia's sister claimed the whole of the beneficial interest in the land.”
The Statutory Framework
Section 33 of the Act relevantly provides as follows:
“33(1) The Court may:
. . .(c)extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act, or any time fixed by the Court or the Registrar under this Act (other than the time fixed for compliance with the requirements of a bankruptcy notice), for doing an act or thing or abridge any such time.” (Emphasis added)
Section 149 of the Act relevantly provides:
“149(1) Subject to section 149A, a bankrupt is, by force of this subsection, unless sooner discharged in accordance with Division 3, discharged from bankruptcy in accordance with this section.
. . .
(3) If the bankrupt became a bankrupt before the commencement of section 27 of the Bankruptcy Amendment Act 1991, and subsection (2) does not apply in relation to the bankrupt, the bankrupt is discharged at:
(a) the end of the period of 3 years from the date on which the bankrupt filed his or her statement of affairs; or
(b) the commencement of that section;
whichever is the later.”
Section 27 of the Bankruptcy Amendment Act 1991 commenced on 1 July 1992 nearly ten months after the respondent became a bankrupt. It is common ground that s 149(2) did not apply to the respondent.
Section 149A(1) provides that if an objection to the discharge of a bankrupt has taken effect in accordance with s 149G then, unless it is withdrawn or cancelled, the reference to the period of three years from the date on which the bankrupt filed his or her statement of affairs in s 149(3) is taken to be a reference to the “prescribed number of years” from the “prescribed date”. Section 149A(2) provides that for the purpose of the preceding subsection, the prescribed number of years, if an objection is made on certain grounds, including the ground of failure to pay an amended contribution assessment [see s 149D(1)(f)], is eight years and that the prescribed date relevant to the present matter, is the date “from” which the bankrupt filed his or her statement of affairs [s 149A(2)(b)(ii)]. The word “from” is obviously an error and should be read as “on”: see Cooper Brookes (Wollongong) Pty Ltd v. Federal Commissioner of Taxation (1981) 147 CLR 297.
The Decision at First Instance
The learned trial judge drew upon a line of authority, starting with the decision of Burchett J in Re Rohde (1993) 42 FCR 149, for the proposition that this Court may make an order under s 33(1)(c) of the Act that the time provided by s 149 of the Act be abridged, where the circumstances of the case justify such an order.
His Honour noted that it was likely that the circumstances, to be regarded as sufficient to justify the use of that power, would have “some special characteristic” although his Honour said that it was not a requirement of paragraph 33(1)(c) “that the power be exercised only in special or extraordinary circumstances”. His Honour observed that the respondent was “the author of his own misfortune” in continuing to maintain, in the face of the appellant’s advice that he was obliged to file a further statement of affairs, that he had complied with the requirements of the Act when he presented his own petition. His Honour rejected the submission, made on behalf of the respondent, that the requirements of s 54(1) were met by the respondent on 4 September 1991 when he filed his statement of affairs in support of his own petition. Section 54(1) relevantly then provided as follows:
“54(1) Where a sequestration order is made, the person against whose estate it is made shall, within 14 days from the day on which he or she is notified of the bankruptcy:
(a)make out and file in the office of the Registrar for the District in which the sequestration order was made a statement of his affairs; and
(b) furnish a copy of the statement to the trustee.”
His Honour held (and we respectfully agree with him) that although the respondent’s statement of affairs, filed in support of his own petition, was filed within 14 days of the sequestration order made on 16 September 1991 on the creditor’s petition, that was not sufficient compliance with s 54(1) of the Act. That subsection takes effect prospectively and imposes an obligation upon a bankrupt to act within 14 days of the obligation arising.
However, his Honour said that:
“...there remains a significance in the preparation of the statement of affairs that accompanied the petition presented to the Registrar by Mr Macchia, particularly when put in context with an earlier statement of affairs prepared by Mr Macchia and filed as part of the Pt X proceeding some weeks earlier”.
His Honour referred to the fact that the appellant was the trustee authorised by the respondent and his brother in the Pt X proceeding, that the appellant was nominated by Mr Macchia’s brother as the trustee in his bankruptcy and by the petitioning creditor in the respondent’s bankruptcy. His Honour also noted that when the respondent presented his own petition, the petitioning creditor had not sought a sequestration order on its petition and was content to consent to an order that the Registrar be directed to accept the respondent’s petition. If that direction had been made, as his Honour observed, no question could have arisen under s 54 of the Act of the bankrupt filing another statement of affairs. His Honour explained that in directing the Registrar to reject the respondent’s petition, he had had regard to the public interest and the interest of creditors in the relation-back period not being abridged, as would have occurred if the respondent had become bankrupt on his own petition. His Honour noted that it did not appear that any prejudice would have been suffered by the creditors if the Registrar had been directed to accept the respondent’s petition. His Honour made the following further observations, namely, that:
. no suggestion had been raised that any change took place in the affairs of the respondent between 9 July 1991, 4 September 1991 and 16 September 1991;
. the knowledge which the appellant had gained from the joint and several statements prepared by the respondent and his brother in the Pt X proceeding was sufficient to allow him to commence due administration of the respondent’s estate and to direct enquiries to the respondent if any further information was required;
. the appellant was prepared to accept the joint statements of the respondent and his brother prepared for the Pt X proceeding as sufficient for dealing with their joint debts in the consolidated estates of the respondent and his brother;
. so far as the administration of the respondent’s estate had been concerned, it had not been suggested that the default in filing a further statement of affairs within 14 days of 16 September 1991 had impeded the appellant in any way;
. the circumstances suggested that there was no material of which the appellant was unaware that would have been revealed in that period or was revealed almost 2½ years later.
Nevertheless his Honour stated that consideration had to be given to the fact that the respondent did not comply with the terms of the Act for a considerable period, albeit for reasons of mistaken belief as to his compliance with the Act.
His Honour then said that:
“In the end it is a matter of discretion where the period of bankruptcy should end. If not abridged it will run for at least 6 years and if the Trustee’s objection to discharge is allowed to take effect the period of bankruptcy will be 11 years.”
The learned trial judge then expressed his satisfaction that, in all the circumstances of the case, it was appropriate that the period of bankruptcy be abridged. From his reasons for judgment it is apparent that his Honour had regard to the following facts:
.that the respondent would have been discharged from bankruptcy in September 1994 but for the order directing the Registrar to reject his petition;
.a reasonable abridgement would not deny the appellant the opportunity duly to administer the estate.
His Honour then decided that the possibility of the respondent’s estate benefiting from the after-acquired property vesting in the trustee upon the death of the respondent’s mother in March 1995, was not a proper matter to be considered in abridging the period of bankruptcy. The starting point, so his Honour reasoned, was to:
“... look at the circumstances relevant to the failure to file a statement of affairs as required by the Act and, after having regard to those matters, and the consequences thereof, to determine whether any order of abridgement is appropriate”.
His Honour expressed the opinion that the interests of creditors with whom debts were incurred by a bankrupt some years beforehand had to give way to the interests of others at some point in time, and noted that the Act had declared that in usual circumstances the appropriate period would be three years. The question was not whether the bankruptcy should be prolonged to improve the prospects of recovery for creditors but what was a reasonable period of bankruptcy in the circumstances. His Honour said that the assessment made by the appellant of income contributions and the respondent’s liability to pay the sum assessed raised “a different question”. His Honour declined to express any opinion on the two matters of whether the assessment of which notice was given in February 1995 had been made and notified as required by the Act, or the consequence of the subsequent assessment made in June 1996. However, his Honour noted that if the original assessment had any effect under the Act, it related to events within the period of bankruptcy even if that period were abridged. On the other hand, so his Honour also noted, if the time at which the assessment was made was not within the abridged period, such an abridgement might work an injustice on the creditors. Against that his Honour balanced the fact that there was no evidence that the respondent had any ability to pay from present income the sum demanded in the original assessment. His Honour concluded:
“Having regard to all of these matters I conclude that an appropriate order in this case is that the period of bankruptcy limited by s149 of the Act be abridged from 3 years to 1 year and 1 month from the date of filing of the statement of affairs. As a result Mr Macchia will be discharged from bankruptcy as at 22 February 1995, a period of bankruptcy of 3 years and 5 months.”
The Appeal
The appellant relied upon seven grounds of appeal. Six of those grounds related to matters of discretion i.e. whether the learned trial judge should have exercised his discretion to abridge the bankruptcy period and the manner in which he exercised that discretion. Ground 3 arguably falls into a different category; it was in the following terms:
“The Learned Judge erred in law in finding that the time-period expressed in section 149(3) of the Act could be abridged in circumstances where the relevant time-period had been extended by the effect and operation of section 149A of the said Act ... The Learned Judge should have held that the said power of abridgement could not be exercised in the circumstances of the case.”
Mr A J N Aristei, counsel for the appellant, initially confined his submissions in respect of Ground 3 to matters of discretion. During the course of submissions on behalf of the respondent, it was put to counsel for the respondent (Mr D J A Hockton) from the bench that s 33 of the Act might not confer power upon the Court to abridge the time limited by s 149, whether in combination with s 149A or otherwise. Consequently the appellant sought and was granted leave to add the following ground of appeal:
“The Learned Judge erred in law in finding that the power pursuant to section 33(1)(c) of the Act enabled him to abridge the time limited by s 149 and/or s 149A of the Act. The Learned Judge should have held that section 33(1)(c) only applied to the doing of an act or thing.”
In finding that s 33(1)(c) conferred power to abridge the time limited by s 149(3), the learned trial judge accepted decisions of several judges of this Court that the Court may make an order under s 33(1)(c) of the Act abridging the time so limited. The first such decision (as we have mentioned) was that of Burchett J in Re Rohde. In that case, the bankrupt had furnished his statement of affairs to his trustee and the normal practice had been for a trustee, in such circumstances, to file the statement of affairs with the Registrar. Mr Rohde’s trustee had not done so for a reason which was not made clear, but was assumed to have been a complete oversight. Mr Rohde filed his statement of affairs on 1 December 1992. Had his trustee filed the statement of affairs on his behalf, Mr Rohde would have been discharged automatically from bankruptcy (by the operation of s 149) in February 1993. Burchett J gave an ex tempore judgment. The relevant passages in his Honour’s reasons for judgment (at p 150) were as follows:
“It appears that there is no reserve power for an application to be made, in such circumstances, to the court for an order of discharge, rather than to have discharge occur automatically pursuant to s 149. I find this surprising, and on the basis of what has been put to me in this case it would seem that the situation ought to be looked at by those responsible for recommending amendments to the Act. Traditionally, the court has always had an ultimate control in matters of bankruptcy, in the interests alike of the commercial community, the creditors, and the bankrupt. However, I have come to the conclusion that it is open to me, though by a somewhat curious route, to cure the quite Draconian effect which the amendments to the Act, recently made, seem to have brought about. That route is by way of ss 30 and 33 of the Act.
Under s 33(1)(c), it is provided that the court may extend, “before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act ... for doing an act or thing or abridge any such time.” It seems to me that I have power, and that in these very special circumstances, where the evidence shows that the case is one in which, but for a technical lapse, discharge would already have occurred, I ought to abridge the time provided by s 149(3) of three years from the date of the filing of the statement of affairs. I do accordingly abridge that time to a period of two months.”
As the learned trial judge in the present matter noted, Rohde was followed by Lindgren J in three matters namely, Re Ghee Siang Khoo, unreported Judgment No 618 of 1994, 16 August 1994; Re Morgan, unreported Judgment No. 185 of 1995, 21 March 1995 and Re Jacobs, unreported Judgment No. 36 of 1997, 7 February 1997. In Jacobs (at p 3) Lindgren J, after referring to Rohde said:
“Not thinking that his Honour was clearly wrong in his view that those powers were available and apt to afford a remedy, I followed him in Re Khoo ...”.
Lindgren J also referred in Jacobs (again at p 3) to other judges of this Court having made similar orders in the cases of Re Neil, unreported Hill J, 2 May 1995; Re Calvino, unreported Tamberlin J, 30 July 1996 and Re Menere, unreported Burchett J, 3 September 1996.
In our respectful judgment, and while recognising the interests of justice which were served by those decisions, this Court does not have the power to abridge the time limited by s 149(3). This conclusion is one reached regretfully, because the wide variety of factual circumstances covered by those decisions cries out for a capacity in the Court to ameliorate injustice.
Our reasons can be shortly stated. We do not think that the time referred to in s 149(3) of the Act is, in terms of s 33(1)(c), a “... time limited by [the] Act ... for doing an act or thing.” That subparagraph confers power to extend or abridge any such time. It does not in our view confer power to abridge the time which Parliament has provided for the automatic discharge of a bankrupt under s 149(3). In our view, it is clear that the Court has power, for example, to extend the time in which the bankrupt is obliged to file his or her statement of affairs by s 54(1). That is a time limited for the doing of an act or thing. The same cannot be said of the time referred to in s 149(3). Section 149(3) limits the time at which a bankrupt is discharged by operation of that section. If one reads s 33(1)(c) by viewing the phrase “... any time limited by this Act, ...” in isolation, or even separately from the last eleven words of the sub-paragraph, then it might have to be conceded that the time limited by s 149(3) fell within that phrase. However, in our opinion the words between the comma at the end of that phrase and the comma after the word “notice” and the closure of the brackets containing the further qualification in the second last line of the sub-paragraph, make it clear that the time limited and the time fixed which may be extended or abridged have both to be read as times “for doing an act or thing”.
We also agree, respectfully, with Burchett J that this situation ought to be looked at by those responsible for amending the Act. It is unlikely that Parliament, in introducing the new regime now found in Pt VII of the Act, intended a statutory framework so rigid as to be unfair in particular circumstances. In our view, it would work an injustice in factual situations (such as those in Rohde and the significant number of cases which followed that decision) where there is a reasonable excuse for a bankrupt not filing his or her statement of affairs within time. It is not a complete response to point to Sub-division B of Division 3 of Pt VII as providing a means of application for early discharge. Eligibility under that subdivision is very restricted.
The result is that, in our opinion, the present matter has proceeded on an assumption which did not have a secure legal foundation. We will order that the matter be remitted to the learned trial judge for further consideration. It may be that some other basis can be advanced [apart from s 33(1)(c)] for treating one or other of the statement of affairs filed by the respondent as having been duly filed in accordance with the Act.
In those circumstances, it is not strictly necessary to consider the other grounds of appeal.
However, in case we are wrong in our above conclusion, we propose to add the following observations.
The power which his Honour was exercising was a discretionary one. We do not think that the appellant has made good his contention that his Honour failed to take into account, or any sufficient account, the factors listed in the grounds of appeal. Then there was a complaint that the learned trial judge placed excessive or undue reliance on what were said to be a number of irrelevant factors. A close examination of those factors confirms that none of those factors could be said to be irrelevant to the exercise of the discretion to abridge time. As a further alternative, the appellant submitted that there was not sufficient evidence upon which his Honour could have abridged the time limited in s 149(3) of the Act. In our opinion, it was clearly open on the evidence before his Honour to exercise his discretion in the manner in which he chose to do so. Finally, the appellant contended that the power could only be exercised in “special or extraordinary circumstances”. It is true that Burchett J in Re Rohde referred to the circumstances as being “very special circumstances” (see p 150). However, no such qualification was expressed by Lindgren J in Khoo, Morgan or Jacobs. As the learned judge in the present matter observed, there is no express condition that the circumstances be “special or extraordinary” before the power conferred by s 33(1)(c) is exercised. We do not consider that his Honour erred in the manner suggested. In any event, his Honour (at p 9) observed that it was likely that the circumstances would have some “special characteristic”.
In our view the appeal should be allowed, the orders below set aside and the matter remitted to the learned trial judge for consideration of any alternative basis upon which to determine the actual period of the respondent’s bankruptcy. In our opinion, the possibility of the respondent having obtained an interest consequent upon the death of his mother intestate is a relevant circumstance to the exercise of that discretion. Although his Honour held squarely to the contrary, it would seem that he chose to limit the period of bankruptcy to three years and five months as being a period which would include the appellant’s original assessment of income contribution, but would exclude any entitlement from that estate forming part of the respondent’s estate in bankruptcy. Such an entitlement (if shown to exist) would have arisen if the period had been fixed at, say, three years and six months. If evidence were adduced that upon the due administration of the intestate estate of the respondent’s mother (if indeed she died intestate) some property devolved upon him and thus immediately became vested in the appellant, we think that would be a relevant consideration when deciding at what point the bankruptcy should cease. The weight to be attached to that matter would vary according to the circumstances of the case. However, as a matter of principle it seems undesirable for the legal history of an item of real property to be re-written without that factor being given due consideration. It may be noted that the orders made by Tamberlin J in Calvino and Burchett J in Menere contained express reservation of rights and objection to discharge which might arise.
| I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment of the Court |
A/g Associate:
Dated: 15 September 1997
| Counsel for the Appellant: | A J N Aristei |
| Solicitors for the Appellant: | Carles Solicitors |
| Counsel for the Respondent: | D J A Hockton |
| Solicitors for the Respondent: | Wojtowicz Kelly |
| Date of Hearing: | 14 July 1997 |
| Date of Judgment: | 15 September 1997 |
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