Re Carter; Ex parte National Mutual Trustees Ltd - [1995] FCA 230

CATCHWORDS

BANKRUPTCY - bankruptcy notice based on default judgment - application for extension of time for compliance with notice - application made after expiration of time initially limited for compliance - proceeding by debtor to set aside judgment pending during period of the notice - whether application for extension of time competent.

Bankruptcy Act 1966, sub-ss. 41 (6A), (6C)

Streimer v Tamas (1981) 37 ALR 211
Re Halstead; Ex parte Westpac Banking Corporation (No. 2) (1991) 32 FCR 394
Re Lentini; Ex parte Lentini v CSR Limited (1991) 29 FCR 363

RE: COLIN CARTER and NELL CHRISTINE CARTER
EX PARTE: NATIONAL MUTUAL TRUSTEES LIMITED

No. BNN 1125 of 1994

BEFORE:      GUMMOW J.
PLACE:       SYDNEY.
DATE:        11 APRIL 1995.

IN THE FEDERAL COURT OF AUSTRALIA     )
GENERAL DIVISION  )    No. BNN 1125
BANKRUPTCY DIVISION OF NEW SOUTH WALES )    of 1994

RE: COLIN CARTER and
NELL CHRISTINE CARTER

EX PARTE: NATIONAL MUTUAL
TRUSTEES LIMITED

BEFORE:      GUMMOW J.
PLACE:       SYDNEY.
DATE:        11 APRIL 1995.

MINUTE OF ORDERS
THE COURT ORDERS THAT:

(1)The question for separate decision, namely
"Upon the agreed facts and in reliance upon para. (a) thereof does the Court have power to make an order under s. 41 (6A) of the Bankruptcy Act 1966?"

be answered "Yes".
(2)The costs of the separate question should be the costs of the application filed 17 January 1995 and amended 28 March 1995.
(3)The application filed 17 January 1995 amended 28 March 1995 stand over to a date to be fixed for hearing of the remaining issues.

Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA     )
GENERAL DIVISION  )    No. BNN 1125
BANKRUPTCY DIVISION OF NEW SOUTH WALES )    of 1994

RE: COLIN CARTER and
NELL CHRISTINE CARTER

EX PARTE: NATIONAL MUTUAL
TRUSTEES LIMITED

BEFORE:      GUMMOW J.
PLACE:       SYDNEY.
DATE:        11 APRIL 1995.

REASONS FOR JUDGMENT
This is an application by the debtors, Mr and Mrs Carter, made 17 January 1995 for an order extending the time for compliance with the requirements of a bankruptcy notice issued 16 May 1994. The application was amended on 28 March 1995. In addition to seeking the extension, the applicants seek an order setting aside the bankruptcy notice.

On 28 March 1995, the Court ordered that until further order the creditor, and respondent to the present application, National Mutual Trustees Limited, be restrained from presenting a creditor's petition against either or both of the debtors.

The debtors rely upon sub-s. 41 (6A) of the Bankruptcy Act 1966 ("the Act"). This states:

"41(6A) Where, before the expiration of the time fixed by the Court or the Registrar for compliance with the requirement of a bankruptcy notice -

(a)proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or

(b)an application to set aside the bankruptcy notice has been filed with the Registrar,

the Court may, subject to subsection (6C), extend the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1995] FCA 230
Decision Date: 11 APRIL 1995

CaseChat Overview and Summary

In the case of Re Carter; Ex parte National Mutual Trustees Limited, the applicants, Mr. and Mrs. Carter, sought an extension of time for compliance with a bankruptcy notice and an order setting aside the bankruptcy notice. The bankruptcy notice was issued on 16 May 1994, and the time for compliance expired on 30 May 1994. The applicants filed their application for an extension of time on 17 January 1995, well after the expiration of the time for compliance. The applicants relied on subsection 41(6A) of the Bankruptcy Act 1966, which states that the Court may extend the time for compliance with a bankruptcy notice if proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor or an application to set aside the bankruptcy notice has been filed with the Registrar. The applicants argued that the Court has power to extend the time for compliance with the bankruptcy notice, even if the application for an extension was made after the expiration of the notice.

The legal issue before the Court was whether the Court had the power to extend the time for compliance with the bankruptcy notice, given that the application for an extension was made after the expiration of the notice. The Court held that the jurisdiction of the Court was attracted during the currency of the bankruptcy notice because condition (a) in sub-s. 41 (6A) was satisfied throughout that period. The Court followed the reasoning of Deane and Ellicott JJ in Streimer v Tamas (1981) 37 ALR 211, which held that the power conferred by the sub-section is a power to "extend" the previous period of time, rather than a power to establish a new, distinct, and independent period of time for compliance. The Court held that the existence of the power of the Court in the matter was not affected by the fact that the application for extension was made after the expiration of the bankruptcy notice.

The Court ordered that the question for separate decision, namely "Upon the agreed facts and in reliance upon para. (a) thereof does the Court have power to make an order under s. 41 (6A) of the Bankruptcy Act 1966?" be answered "Yes". The costs of the separate question should be the costs of the application filed 17 January 1995 and amended 28 March 1995. The application should stand over for a date to be fixed for the determination of the remaining issues. The restraint upon presentation of a creditor's petition continues until further order and without the need now for any extension of it.

Orders