Re Brindle; Ex parte F B & F A McMahon Pty Ltd

[1992] FCA 285

Re: BRIAN BRINDLE and DAPHNE BRINDLE
And: Ex Parte F.B. and F.A. MCMAHON PTY LTD
No. B700 of 1992
FED No. 285
Bankruptcy
(1992) 108 ALR 470

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
Hill J.(1)

CATCHWORDS

Bankruptcy - Bankruptcy Act s.14(5) - whether review a hearing de novo - meaning of "review".

Bankruptcy Act 1966 (Cth): ss.14(5), 41.

Re Greenhill; Ex parte Pook (1988) 83 ALR 295

Federal Commissioner of Taxation v Jackson (1990) 90 ATC 4990

Harris v Caladine (1991) 172 CLR 84

R v Davison (1954) 90 CLR 353

Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374

HEARING

SYDNEY

#DATE 13:5:1992

Counsel and Solicitors C.R.C. Newlinds instructed by
for Creditor/Respondent : Kell Heard McEwan and Lough

Counsel and Solicitors J. Johnson instructed by
for Debtor/Applicant : Brown and Partners

ORDER

The Court orders that:

1. The application for review be dismissed.

2. No order as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The applicant, F.B. and F.A. McMahon Pty Ltd, a creditor of Mr and Mrs Brindle, the "debtors", applies to the court to review a decision of a registrar of this court to extend the time for compliance by the debtors with a bankruptcy notice dated 27 February 1992. That notice, which required compliance with its terms within 14 days of service, was served on each of the debtors on 28 February 1992. In the result, unless the time for compliance were extended, that time would have expired on 13 March 1992. On an application made by the debtors, the Deputy Registrar, on 6 March 1992, extended the time for compliance until 30 March 1992.

1. The present application is made pursuant to s.14(5) of the Bankruptcy Act 1966 ("the Act"), which provides as follows:
   

"An order or direction made or given, or an act done, by a Registrar or a Deputy Registrar under this Act is subject to review on summary application to the Court."

1. The applicant submits that the Registrar should not have extended the time for compliance at all, or that if he was justified in so doing, the period of the extension was too long and that I should set a shorter time.

2. Had these been the only relevant questions, I would have delivered an ex tempore judgment. However, it became clear that the issues which were raised in the application went beyond those which on the surface appeared to arise. The additional issues which were raised were whether, in conducting a review of a Registrar's decision, the court should receive evidence of matters that occurred after the time the Registrar gave the decision complained of, or whether the court was limited to the evidence that was before the Registrar, or perhaps ought to have been before the Registrar, at the time of the decision. Put in another way, was a review under s.14(5) of the Act a hearing de novo?

3. The application to the Registrar to extend time was based upon there being then, before the New South Wales Court of Appeal, an application for leave to appeal against a judgment of Sully J. dated 18 February 1992. To understand the situation as it was presented to the Registrar, it is necessary to go back earlier in time.

4. The creditor commenced proceedings in the Supreme Court of New South Wales by Statement of Claim on 9 September 1991, claiming that the debtors owed it in excess of $1,700,000. The debtors filed a notice of appearance. On 3 October 1991, the creditor filed a notice of motion for summary judgment. On 25 October 1991, that motion was heard and, the debtors not appearing, judgment was entered by a Master of the Supreme Court in the sum of $1,776,485.49.

5. On 15 January 1992, the debtors filed a notice of motion in the Supreme Court that the judgment be set aside and that they be let in to defend the substantive proceedings. That motion came before Sully J. who gave judgment upon it on 18 February 1992, dismissing the motion with costs. The explanation given by the debtors appears to have been that they instructed a solicitor (giving him what were said to be inadequate instructions) and were advised that they had no defence to the claim. Later, however, they approached another solicitor about realising assets, told him the whole story and were advised that they did have a defence. His Honour was of the view that the explanation put forward by them for their procedural default was unsatisfactory. However, his Honour considered their defence on the merits and found it to be:
   

"... inherently contradictory and so imprecise that it would not be just to the respondents to set aside the summary judgment."

1. In the result, his Honour dismissed the debtors' motion with costs.

2. On 24 February 1992, the debtors filed a summons for leave to appeal in the Court of Appeal. The application to the Registrar to extend the time for compliance was made on the basis that the summons for leave to appeal was pending and was listed to be heard on 9 March 1992.

3. On 6 March 1992, the day on which the Registrar extended the time for compliance, Brown and Partners, the then solicitors for the debtors, sent an urgent facsimile advising that they had formed the view that, notwithstanding the refusal by Sully J. to set aside the judgment entered, the debtors were not prevented from making a further application to set aside the judgment of Sully J. Presumably the facsimile was intended to refer to the making of a further application to set aside the default judgment entered by the Master. They sought the concurrence of the solicitors for the creditor not to resist the further notice of motion on the grounds that the debtors were barred by failure of their application before Sully J. The letter indicated that, subject to the response of the creditor, the debtors would arrange to have the appeal before the Court of Appeal dismissed with costs. The parties agree that that facsimile was received after the Registrar had extended the time for compliance.

4. On 9 March 1992, the debtors sought to discontinue their appeal to the Court of Appeal. It was dismissed with costs. The application to review the decision of the Registrar was made on the basis that it was clear, in the period between the date of the Registrar's decision and the hearing of the review, that there was no intention on the part of the debtors to continue with the appeal in the Court of Appeal, and that that appeal had, in fact, been discontinued. So far as it may be relevant, a new application to set aside the judgment obtained by the creditor and to be let in to defend had been prepared, although at the date of hearing of the application for review that application had not yet been filed.
   The nature of a review under s.14(5) of the Act

5. In Re Greenhill; Ex parte Pook (1988) 83 ALR 295, Gummow J. considered the question whether, on an application for review under s.14(5), the court was restricted to considering the evidence that was before the Registrar, or whether it could receive evidence not before the Registrar but which bore upon the situation at the time of the Registrar's decision. His Honour was not required to consider whether evidence could be considered of events after the time the Registrar made his decision. His Honour held that the court was not limited to considering only the material that was before the Registrar and expressly left open the question presently for decision.

6. As Gummow J. indicates in Re Greenhill, s.14(5) was no doubt drafted with an eye to the "complex history" relative to the question of the exercise of the judicial power of the Commonwealth: cf Commonwealth v Hospital Contribution Fund of Australia (1982) 150 CLR 49 at 63-4, 66. It may well be, as his Honour observes, that the word "review" was for that reason used by the legislature, instead of the word "appeal".

7. The Shorter Oxford English Dictionary defines "review" as:
   

"The act of looking over something (again), with a view to correction or improvement" ...

Law. Revision of a sentence, etc., by some other court or authority".

1. The latter, as Burchett J. observed in Colpitts v Australian Telecommunication Commission (1986) 9 FCR 52, correctly conveys the legal meaning. The Macquarie Dictionary gives the legal meaning as:
   

"judicial re-examination, as by a higher court, of the decision or proceeding in a case,".

1. The expression "review" is commonly used in the context of judicial control of administrative action: Council of Civil Service Unions v Minister for the Civil Service 91985) AC 374 at 408 per Lord Diplock. It is also used in the context of full administrative review of administrative decision-making by an administrative tribunal.

2. Thus, s.187 of the Income Tax Assessment Act 1936, prior to its amendment conferring jurisdiction upon the Administrative Appeals Tribunal, gave a taxpayer, dissatisfied with the decision of the Commissioner of Taxation upon his objection, a choice whether to refer that decision to a Taxation Board of Review for review, or to treat his objection as an appeal and to forward it to a State Supreme Court. If the former course were taken, the Board looked at the matter afresh, and, as a result of particular provisions of the then legislation (s.193), had all the powers and functions of the Commissioner. Its review was not limited to evidence before the Commissioner, but the Board stood in the shoes of the Commissioner to do again that which he had done within the limits of the taxpayer's objection: Mobil Oil Australia Pty Limited v Federal Commissioner of Taxation (1963) 113 CLR 475 at 502 per Kitto J. It thus took into account evidence between the date of the Commissioner's decision under review and the date of hearing.

3. The Administrative Appeals Tribunal Act 1975 provides for the Administrative Appeals Tribunal to "review" decisions where legislation confers that right of review. In the context of that statute, the review conducted by the Tribunal of administrative decision-making operates as a rehearing, and the Tribunal is not restricted to the evidence that was before the decision-maker. Like the Taxation Boards of Review, the Administrative Appeals Tribunal stands in the shoes of the decision-maker in reviewing the decision under attack: Federal Commissioner of Taxation v Jackson (1990) 90 ATC 4990 at 5000.

4. By contrast, the Administrative Decisions (Judicial Review) Act 1977 provides for an application by a person aggrieved by a decision to which that Act applies, to apply to this court for an "order of review" of such a decision: s.5(1). Such a review is limited to considering the evidence that was before the decision-maker, or ought to have been before him. Events after the making of a decision would have no relevance, except perhaps on discretionary matters: Surinakova v. Minister for Immigration, Local Government and Ethnic Affairs (4 December 1991, unreported).

5. I do not think that in the context of the Bankruptcy Act the power conferred upon the court to review a decision of a Registrar is properly to be equated to judicial review of administrative decision-making. Many, if not all, of the functions specifically conferred by the Act on the Registrar are, without question, administrative. Thus, the issue of a bankruptcy notice and the fixing of the time limited for compliance are clearly administrative acts: Clyne v Deputy Commissioner of Taxation (NSW) (1982) 45 ALR 323 at 330 per Bowen C.J., McGregor and Fisher JJ. In so doing, the Registrar decides no matter of controversy between the parties, determines no issue of fact or law and ascertains no existing rights or liabilities. But in exercising other powers or functions the Registrar may perhaps arguably be said to be exercising judicial power (that is not an issue arising in the present case). If the Registrar in a particular case does so, the question whether the power was validly conferred upon the Registrar would probably depend upon whether the Registrar's decision were subject to review or appeal; cf Harris v Caladine (1991) 172 CLR 84, but see per Brennan J. at 111. In that context, the nature of the "review" might have relevance.

6. Harris v Caladine was concerned with the validity of delegation by the Family Court of Australia to Judicial Registrars, rather than the direct conferral of jurisdiction by statute upon a person not a judge. The review provided for in that case was specifically an appeal de novo, rather than an appeal stricto sensu or an appeal by way of rehearing. The difference between the three lies in the fact that an appeal stricto sensu is limited to determing whether, upon the material below, the conclusion was properly reached. Where the appeal is by way of rehearing, the appeal court does not, without leave, hear evidence but decides the matter as at the date of the appeal upon the evidence adduced below. A hearing de novo involves the complete rehearing of the matter, taking into account the evidence as at the hearing of the appeal.

7. The legislative purpose of conferring powers or functions upon the Registrars of the court in bankruptcy matters was to relieve the judges from having to determine a variety of matters, administrative or perhaps judicial, in respect of many of which there would be little or no dispute. It was held in R v Davison (1954) 90 CLR 353, that it was unconstitutional to confer upon a Registrar of a court the power to make a sequestration order, even upon the petition of a debtor. The Registrar of the then Bankruptcy Court stood outside the organisational structure of that court and the decision in that case turned upon the absence of the necessary relationship between the Registrar and the court. In that respect the situation differed from that considered in Harris v Caladine.

8. The consequences of the decision in Davison were overcome in three significant ways. Firstly, the direct result of the decision was overcome in a practical way by providing that the presentation by a debtor of his own petition resulted by force of statute in his bankruptcy: s.55. Secondly, there was conferred by statute power in the Registrar to exercise such of the powers and functions of an administrative nature exercisable by the court as the court directs or authorises the Registrar to exercise: s.14(3). Thirdly, in 1986 there was introduced s.31A of the Act providing for certain powers of the court, enumerated in that section and including the power to make a sequestration order, to be exercised by a Registrar. The same section provides for a review by the court of the exercise of such a delegated power, but again the legislation is silent as to the nature of such a review.

9. In the context of a review under s.31A, Northrop J. held in Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 that the review was by way of rehearing, based upon the evidence before the Registrar supplemented by any evidence which the parties may desire to produce. That view is consistent with the view taken by Dawson J. in Harris v Calladine, that if there had been no specific provision requiring the review from a Judicial Registrar to be a hearing de novo he would have reached the result that it would be the case in any event. His Honour said (at 125):
   

"For where the function of exercising a discretion is delegated by a court, as it may be delegated to a Registrar, the exercise of the delegated discretion cannot confine the exercise of the same discretion by the person in which it is primarily reposed... Upon a hearing by way of review of the decision of a Registrar the court is exercising its own discretion. There are not the same restrictions which exist when there is an appeal from a judge to whom a discretion is confided, rather than delegated, at first instance. In that event the appeal court must, before interfering, be persuaded that the judge was in error in the exercise of the discretion, either by acting upon wrong principles, mistaking the facts, or by taking into account irrelevant considerations or failing to take into account relevant considerations: House v The King (1936) 55 CLR 499 at pp 504-5...".

1. Northrop J. in Re Kwiatek contrasted the position arising under s.31A with that arising under s.14. His Honour noted the decision of Gummow J. in Re Greenhill and regarded it as deciding, inter alia, that the court in a review under s.14 of the Act was not permitted to take into account evidence after the date of the Registrar's decision. With respect to his Honour, Gummow J. did not so decide. As I have said, that was the matter which his Honour expressly left open. Be that as it may, Northrop J. emphasised that a distinction should be clearly drawn between a case where the Registrar was exercising a power as Registrar and where the Registrar was exercising a power conferred by delegation as an officer of the court.

2. The question for decision in the present case, in my opinion, may be posed to be whether the legislature in entrusting certain powers thought to be administrative upon the Registrar did so intending that in any review of the exercise of those powers the court would itself be able to exercise the discretions, or rather intended that the role of the court should be limited to a process of judicial review. In answering this question it is to be noted that the review under s.14(5) involves an application in the original jurisdiction of this court. In that respect it is not an appeal stricto sensu. For this reason it is unlikely that it involves no more than considering, in accordance with the principles in House v The King (1936) 55 CLR 499, whether the Registrar's exercise of discretion has miscarried. Indeed, the decision of Gummow J. to admit evidence not before the Registrar makes clear that his Honour did not regard the review as involving such a limited question. As a judge at first instance I would follow that decision unless convinced that it was clearly wrong. I am not so convinced.

3. But once it has been acknowledged that the appeal is not so limited, there seems no reason to deny that in the review the court could itself exercise discretions otherwise conferred upon the Registrar. If the court has such power, and I believe that it does, then the court is entitled to be informed by evidence of matters, not only not before the Registrar at the time the initial decision was given (Re Greenhill), but evidence which came into existence thereafter and before the time of hearing, so long as that evidence bears upon the subject matter in question.

4. There is, however, in the present context, an even more compelling reason why the review undertaken by the court is not a limited judicial review of administrative decision-making. Most of the decisions of the Registrar which are susceptible to review will be made ex parte, that is to say, that a party affected by the decision of the Registrar will have had no opportunity to be heard or present evidence. The present is a good example. The practice of the Registrar is to consider, ex parte, applications by a debtor for extension of time for compliance with a bankruptcy notice, without hearing from the creditor on whose application the bankruptcy notice was issued. That is to say, the creditor has had no opportunity to present to the Registrar any evidence at all which might bear upon the issue. For evidence thus to be restricted to the material before the Registrar on a review by this court would, in practical terms, be to confine the review to the material submitted by one party and deny to a party affected the right to put any facts at all. Such a result would clearly offend natural justice and raise a question whether the Registrar was bound, in all cases where some person other than the applicant might be affected, to give that person notice and permit evidence to be adduced before him. The difficulty is avoided if, on a review, the court can consider the matter for itself and in the light of the evidence which is adduced before it. But once it is accepted that the court can exercise its own discretion and on the evidence before it, being evidence which by the very nature of the Registrar's proceeding might not have been before the Registrar, it follows that the court must be able to hear evidence that is not limited to the point of time at which the Registrar heard the matter. It follows, therefore, that the court ought to take into account matters which might have taken place after the Registrar's decision is made. I am, therefore, of the opinion that the evidence of the discontinuance of the leave proceedings was admissible.

1. Taking that evidence into account, the situation as at the time of the hearing before me was that there was no appeal of the debtor before a court, merely evidence that it was intended that a second attempt would be made to persuade a judge of the Supreme Court to take a different view of the matter to that taken by Sully J. and set aside a judgment. Once the Court of Appeal proceedings had been disposed of, there was clearly no ground to extend the time for compliance. It could no longer be said that proceedings to set aside the judgment had been instituted within s.41 of the Act, that section clearly enough referring to proceedings that had been instituted and were still on foot. It may perhaps also be remarked that it must be doubted whether s.41 contemplates a case where proceedings to set aside a judgment have been decided adversely to a debtor and all that remains outstanding is leave to appeal against the dismissal, but that is a matter that I do not have to decide in these proceedings.

2. Accordingly, I am of the view that the Registrar's decision should be set aside. The question which next arises is whether I should refuse to extend the time for compliance with the bankruptcy notice beyond the initial date of compliance or allow some time for compliance less than that allowed by the Registrar, or whether, in all circumstances, no order is appropriate. In considering this matter it is necessary to remark that, in the meantime, the extended period set by the Registrar has long since expired. Before it did, a further application for extension of the period was sought before a Registrar who referred the matter to a judge of the court. In the result, Lockhart J. refused further to extend the time for compliance. Accordingly, I have been told, an act of bankruptcy will have been committed in any event. The consequence of my decision will be to determine the date upon which the act of bankruptcy will have been committed.

3. It can not be said that the question is necessarily academic. It may well be the case (there is no evidence one way or the other) that there will be property which would be included in "the property of the bankrupt" if a shorter time for compliance were now set in place of that adopted by the Registrar, or if time were not extended at all, than would be the case if the time for compliance were left at the time set by the Registrar.

4. Ordinarily, where there is a review of the time for compliance the issue will be whether the court on the evidence before it would extend the time for compliance, having regard to the statutory criteria. On that basis I would refuse to grant to the debtor an extension of time at all. The complication here, and it is a complication which will often arise, is that to refuse the extension at all has the consequence to the debtor that he will probably have committed an act of bankruptcy, secure at the time that the time for compliance had not yet arisen, and indeed perhaps unaware that a creditor proposed to seek a review of the Registrar's decision in this court. As to the effect of an order of the court setting aside a previous order, see Broken Hill Pty Co Ltd v Trade Practices Tribunal (1980) ATPR 40-173 and cases there referred to, the articles of D.M. Gordon: "Effect of reversal of judgment on acts done between pronouncement and reversal" (1958) 74 LQR 517 and (1959) 75 LQR 85 and Oates v Federal Commissioner of Taxation (1991) 91 ATC 4060 at 4069.

5. It may perhaps be argued that because a question of status is involved, the setting aside of the Registrar's decision excluding the time for compliance with a bankruptcy notice does not operate ab initio. The parties were in agreement that this was a matter which it was inappropriate for me to decide in these proceedings. However, it seems to me that it is appropriate nevertheless for the court in deciding whether to set aside a decision of the Registrar to extend the time for compliance, or indeed to set a different time for compliance than that set by the Registrar, to take into account at least this potential consequence to the debtor as a matter of discretion. In my view, it would ordinarily be inappropriate to shorten the time for compliance if the consequence were that an act of bankruptcy had been committed retrospectively.

6. In all the circumstances of this case, notwithstanding that I would, if sitting on the date the Registrar determined the matter, have not extended the time for compliance had all the evidence been then available, I would not set aside the extension of time for compliance, because having regard to the time which has elapsed and the subsequent order of Lockhart J. I do not think that it would now be just so to do.

7. Although the debtors have been successful, I do not think that a cost order should be made in their favour. This is because it is clear that at the time the application for extension of time was heard by the Registrar, the debtors were in the course of discontinuing the Court of Appeal proceedings and were obviously less than frank in relying on those proceedings as a ground for extending the time. Accordingly, although I would dismiss the application for review, I would make no order as to costs.