Re Carter; Sweeney v Millyard - [2000] FCA 1549

FEDERAL COURT OF AUSTRALIA
Re Carter; Sweeney v Millyard [2000] FCA 1549
BANKRUPTCY - Application by the trustee in bankruptcy to extend the time, if necessary, to make an election to prosecute proceedings commenced by the bankrupts - whether a valid notice for the purposes of s 60(3) Bankruptcy Act 1966 (Cth) had been served on the trustee.
Bankruptcy Act 1966 (Cth) ss 33, 60(2), 60(3)
Aware Industries Ltd v Robinson (1997) 75 FCR 600 (FC) Foll
Re Faulkner; Ex parte Official Receiver (1981) 52 FLR 109 Cited
Re Collins; Ex parte Official Trustee in Bankruptcy v Bracher (1986) 10 FCR 209 Cited
Abeyratne v Trkulja (1998) 90 FCR 253 Cited
Brien v P & E Phontos Pty Ltd [1999] FCA 1072 Cited
Re Paterson; Ex parte Official Trustee [2000] FCA 116 Cited
Theissbacher v MacGregor Garrick & Co (a firm) [1993] 2 QdR 223 Cited
PETER BRUCE CARTER AND ANTHEA IRENE CARTER (BANKRUPT); PAUL SWEENEY v IAN C MILLYARD
Q7194 OF 2000
COOPER J
BRISBANE
1 NOVEMBER 2000

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q7194 OF 2000

IN THE MATTER OF:

PETER BRUCE CARTER AND ANTHEA IRENE CARTER (BANKRUPT)

AND:

PAUL SWEENEY
APPLICANT

IAN C MILLYARD
RESPONDENT

JUDGE:

COOPER J

DATE OF ORDER:

1 NOVEMBER 2000

WHERE MADE:

BRISBANE

THE COURT DECLARES THAT:
1.Ian Millyard did not, by his solicitor’s letter of 4 November 1999, or at all, give notice of the action sufficient for the purposes of s 60(3) of the Bankruptcy Act 1966 (Cth) to Paul Sweeney as trustee of the estates of Peter Bruce Carter and Anthea Irene Carter (“the bankrupts”).
2.Paul Sweeney, by letter dated 24 February 2000 to the solicitors for Ian Millyard, made a sufficient election in writing for the purposes of s 60(2) of the Bankruptcy Act 1966 (Cth) to prosecute District Court proceedings No 236 of 1998 commenced by the bankrupts against Ian Millyard.

THE COURT ORDERS THAT:
1.Ian Millyard pay the trustee’s costs of and incidental to his application, including reserved costs, if any, to be taxed if not agreed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q7194 OF 2000

IN THE MATTER OF:

PETER BRUCE CARTER AND ANTHEA IRENE CARTER (BANKRUPT)

AND:

PAUL SWEENEY
APPLICANT

IAN C MILLYARD
RESPONDENT

JUDGE:

COOPER J

DATE:

1 NOVEMBER 2000

PLACE:

BRISBANE

REASONS FOR JUDGMENT
BACKGROUND

On 9 November 1998, Peter Bruce Carter and Anthea Irene Carter commenced proceedings in the District Court in Cairns, Queensland, against Ian Millyard. Mr and Mrs Carter were made bankrupt on 13 October 1999 and a sequestration order was made in respect of their estates.
On 4 November 1999 the solicitors for Mr Millyard wrote to Mr Paul Sweeney, the trustee of the bankrupts’ estates. The letter said :
“We act for the professional indemnity insurers of Ian Millyard in an action commenced against him by Mr and Mrs Carter in the District Court at…

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.

Continue reading Re Carter; Sweeney v Millyard

Details

AGLC: Re Carter; Sweeney v Millyard [2000] FCA 1549
Case: [2000] FCA 1549
Decision Date: 1 NOVEMBER 2000

CaseChat Overview and Summary

The parties involved in this case were Sweeney and Millyard, with Sweeney acting as the trustee. The dispute revolved around the bankruptcy proceedings and the subsequent legal actions initiated by Sweeney before becoming a bankrupt. The case was heard in the Federal Court of Australia. The central issue before the court was whether the statutory requirements under section 60(3) of the Bankruptcy Act 1966 (Cth) had been satisfied regarding the service of notice on the trustee. Specifically, the court had to determine if the service of the notice of the action on the trustee was adequate and whether this triggered the 28-day period within which the trustee must make an election to prosecute or discontinue the action.

The court examined the statutory provisions and previous case law to address the nature and sufficiency of the notice. It was established that the service of such notice is a prerequisite for the commencement of the 28-day period stipulated in section 60(3). The Full Court in Aware Industries Ltd v Robinson had previously held that the notice must contain sufficient information to alert the trustee to the impending time constraints and the potential consequences of inaction. While there is no prescribed form for the notice, it must be sufficient to draw the trustee's attention to the running of time from the date of service. The notice should ideally include details of the action and the consequences of failing to make an election within the specified period. The court concluded that the notice served in this case met the necessary requirements, as it sufficiently informed the trustee of the action and the impending deadline for making an election.

Following its analysis, the court found that the notice served on the trustee was adequate and complied with the statutory requirements. Consequently, the 28-day period under section 60(3) of the Act commenced to run from the date of the service of the notice. As the trustee had not made an election within the stipulated period, the action was deemed abandoned. This ruling underscores the importance of ensuring that the notice is clear and comprehensive to effectively communicate the urgency and consequences to the trustee.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

COOPER J

The trustee, by his counsel, submitted to the contrary in respect of each issue.CONCLUSION ON APPLICATION Section 60 of the Act relevantly provides :“60(2) An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.(3) If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action.” The question is not whether the trustee was made aware of the proceedings. The issue is whether notice of the action has been served on him. The twenty-eight day period provided for in s 60(3) does not commence to run until the trustee has been served with the requisite notice. The service of a notice of the action is a condition precedent to the running of time under s 60(3): Aware Industries Ltd v Robinson (1997) 75 FCR 600 (FC) at 602. There is no prescribed form for the notice of the action for the purposes of s 60(3) of the Act. The requirements of the section were considered by a Full Court of this Court (Northrop, Davies and Sundberg JJ) in Aware Industries. In a joint judgment, their Honours said (at 602 - 603) :“It might be thought that the requirements of s 60(3) would be satisfied by service of a document which said no more than that an action in an identified court had been commenced by the bankrupt to which the person serving the notice was a defendant. But we do not regard the notice contemplated by s 60(3) as a mere provision of the details of the action. The consequences of the effluxion of time without an election to prosecute are serious. An action which may have value will be lost. The purpose of the notice is to alert the trustee to the need to consider whether to prosecute or discontinue the action. In those circumstances it is appropriate to read s 60(3) as requiring that the notice contain sufficient information to draw the trustee’s attention to the fact that time will run against the trustee upon service of the notice. Ideally a notice will be in the form of that served in Welinski v Temple (unreported, Federal Court, 8 April 1997). The document served in that case was described as a notice pursuant to s 60. It recited the existence of the action and that the persons on whose behalf it was given were the defendants in the action, required the trustee within 28 days of service to provide in writing an election advising the defendants of the trustee’s intention to prosecute or discontinue the action, and stated that in default of such advice the trustee would be deemed to have abandoned the action. That notice expressly drew attention to the fact that time ran from the date of service, and that the action would be deemed to have been abandoned at the expiration of the 28-day period in default of an election to prosecute it. But given that a notice will be directed to a registered trustee, it need not have all the attributes of that served in Welinski so long as, on a fair reading, it draws the trustee’s attention to the fact that time runs against him from the date of service.”

Ratio Decidendi

Legal Principle Established

Established by: COOPER J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q7194 OF 2000

IN THE MATTER OF:	PETER BRUCE CARTER AND ANTHEA IRENE CARTER (BANKRUPT)
AND:	PAUL SWEENEY APPLICANT IAN C MILLYARD RESPONDENT
JUDGE:	COOPER J
DATE OF ORDER:	1 NOVEMBER 2000
WHERE MADE:	BRISBANE

JUDGE:	COOPER J
DATE:	1 NOVEMBER 2000
PLACE:	BRISBANE