Official Receiver v Moloney, in the matter of Moloney

[2024] FedCFamC2G 1457

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Official Receiver v Moloney, in the matter of Moloney [2024] FedCFamC2G 1457

File number(s):

MLG 3785 of 2024

Judgment of:

JUDGE RILEY

Date of judgment:

20 December 2024

Catchwords:

BANKRUPTCY – application under s.55(3B) of the Bankruptcy Act 1966 for direction to Official Receiver to accept or reject a debtor’s petition in circumstances where a creditor’s petition against a group of debtors was filed – debtor subsequently giving an authority to a trustee under s.188 of the Act – whether the application under s.55(3B) of the Act is stayed by force of s.188AAA of the Act because that application is related to a creditor’s petition.

Legislation:

Bankruptcy Act 1966 ss.55(3B), 188, 189AAA

Cases cited:

Fountain v Alexander (1982) 150 CLR 615; (1982) 56 ALJR 321; (1982) 40 ALR 441; [1982] HCA 16

Inland Revenue Commissioners v Maple & Co (Paris) Ltd [1908] AC 22

Kennon v Spry (2008) 238 CLR 366; (2008) 83 ALJR 145; (2008) 251 ALR 257; (2008) 1 ASTLR 271; (2008) 40 Fam LR; (2008) FLC 93-388; [2008] HCA 56

O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356; (1990) 19 ALD 743; (1990) 64 ALJR 283; (1990) 92 ALR 213; [1990] HCA 16

Secretary v Boswell (1992) 36 FCR 367; (1992) 28 ALD 151; (1992) 108 ALR 77; [1992] FCA 467

Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602; (1962) 35 ALJR 109; [1962] ALR 195

Division:

Division 2 General Federal Law

Number of paragraphs:

16

Date of hearing:

20 December 2024

Place:

Melbourne

Advocate for the applicant:

Daniel Welsh

Solicitor for the applicant: 

Australian Government Solicitor

Advocate for the respondent:

In person

Solicitor for the respondent:

None

ORDERS

MLG 3785 of 2024

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF DAMIAN JOHN MOLONEY

BETWEEN:

OFFICIAL RECEIVER
Applicant

AND:

DAMIAN JOHN MOLONEY
Respondent

ORDER MADE BY:	JUDGE RILEY
DATE OF ORDER:	20 DECEMBER 2024

THE COURT ORDERS THAT:

1.The matter be adjourned to 5 February 2025 at 10am for final hearing of the application under s.55(3B) of the Bankruptcy Act 1966 filed on 5 November 2024.

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).

EX TEMPORE REASONS FOR JUDGMENT
(Revised from transcript)

JUDGE RILEY:

1. There is an application before the court under s.55(3B) of the Bankruptcy Act 1966 (“the Act”).

2. That subsection provides that:

   The Official Receiver must refer a debtor’s petition to the Court for a direction to accept or reject it if there is a creditor's petition pending against a group of debtors (whether they are joint debtors or members of a partnership) that includes the debtor against whom the debtor’s petition is presented.

3. Such applications were brought by the Official Receiver following the debtor, Mr Damian Moloney, and his brother, Mr Francis Maloney, each filing a debtor’s petition, and a petitioning creditor, Carl Finance Corporation Pty Ltd (“Carl Finance”), filing a creditor’s petition against Mr Damian Moloney jointly with Mr Francis Maloney.

4. The court determined the application in respect of Mr Francis Maloney the day before yesterday, 18 December 2024, by directing the Official Receiver to accept Mr Francis Moloney’s debtor’s petition.

5. Following that, also on 18 December 2024, Mr Damian Moloney gave an authority under s.188 of the Act, whereby a trustee became his controlling trustee, essentially with a view to coming to some arrangement with his creditors.

6. The statement of affairs that Mr Damian Moloney lodged with his debtor’s petition had a number of creditors. The statement of affairs that he lodged with his s.188 authority had considerably more creditors, including relatives. This is a cause of some concern.

7. The application under s.55(3B) of the Act in relation to Mr Damian Maloney came before me today. The Official Receiver was legally represented. Mr Damian Maloney appeared in person. Carl Finance appeared as an interested person and was legally represented. The trustee appointed by Mr Damian Maloney under the s.188 authority, Mr Nick Mellos, appeared without legal representation.

8. The critical question before the court today arises under s.189AAA(1) of the Act. That subsection provides that:

   If:

   (a)an authority signed by a debtor under section 188 has become effective; and

   (b)either:

   (i)a creditor’s petition was presented against the debtor before the authority became effective; or

   …

   proceedings relating to that petition are, by force of this subsection, stayed until:

   (c)       the conclusion of the meeting; or

   (d)       the adjournment of the meeting;

   whichever is the earlier.

9. The key question before the court today is whether the proceedings under s.55(3B) of the Act, which concern whether the Official Receiver should accept or reject the debtor’s petition filed by Mr Damian Maloney, are proceedings that relate to the creditor’s petition.

10. This is a matter that appears to be devoid of authority. That is, it appears that there are no cases that deal with what ought to happen to an application under s.55(3B) of the Act where there has been a creditor’s petition lodged and a s.188 authority given to a trustee.

11. There is authority on the meaning of the words “relating to”. Those words are generally regarded as being very broad[1].

    [1] Fountain v Alexander (1982) 150 CLR 615; (1982) 56 ALJR 321; (1982) 40 ALR 441; [1982] HCA 16 at 629; Inland Revenue Commissioners v Maple & Co (Paris) Ltd [1908] AC 22 at 26; Secretary v Boswell (1992) 36 FCR 367; (1992) 28 ALD 151; (1992) 108 ALR 77; [1992] FCA 467; O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356; (1990) 19 ALD 743; (1990) 64 ALJR 283; (1990) 92 ALR 213; [1990] HCA 16 at [27]; Kennon v Spry (2008) 238 CLR 366; (2008) 83 ALJR 145; (2008) 251 ALR 257; (2008) 1 ASTLR 271; (2008) 40 Fam LR; (2008) FLC 93-388; [2008] HCA 56 at [217]; Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602; (1962) 35 ALJR 109; [1962] ALR 195

12. In the present case, it seems to me that it is certainly arguable that the application under s.55(3B) of the Act relates to the creditor’s petition, because it was only because the creditor’s petition was lodged that there was any need for the Official Receiver to bring the proceeding under s. 55(3B) of the Act.

13. The petitioning creditor submits that that is not a sufficient connection. There are, obviously, many other sorts of proceedings that clearly relate to creditor’s petitions, such as proceedings seeking an extension of the creditor’s petition, or proceedings seeking that a person be substituted as a creditor. The application under s.55(3B) of the Act is not that closely related to the creditor’s petition.

14. However, it seems to me that the application under s.55(3B) of the Act is a proceeding relating to the creditor’s petition, because the s.55(3B) proceeding only needed to be brought because there was a creditor’s petition lodged.

15. For that reason, it seems to me that the proceeding that is before me under s.55(3B) of the Act is stayed by force of s.189AAA of the Act until the conclusion of the meeting of creditors, or the adjournment of that meeting.

16. The meeting of creditors under the s.188 authority is scheduled for 4 February 2025. The application in respect of Mr Damian Maloney will be adjourned until 5 February 2025.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley.

Associate:

Dated:       22 January 2025