Re Kabalan

[1993] FCA 175

Re: PETER KABALAN
No. N N206 of 1992
FED No. 175
Number of pages - 7
Practice and Procedure
(1993) 113 ALR 330
(1993) 40 FCR 560

COURT

IN THE FEDERAL COURT OF AUSTRALIA

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

CATCHWORDS

Practice and Procedure - bankruptcy - power of Registrar to certify that it is proper to waive or remit fees - meaning of "hardship".

Bankruptcy Rules, r. 183

HEARING

SYDNEY, 8 March 1993

#DATE 8:3:1993

Solicitor for the applicant: Mr D. Knaggs of Helliars.

ORDER

(1) The decision of the Deputy Registrar made 28 January 1993

and contained in annexure "B" to the affidavit of Douglas Knaggs sworn 18 February 1993, be set aside.

(2) The matter be referred back to the Deputy Registrar for

redetermination in accordance with the Reasons for Judgment of the Court.

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

JUDGE1

GUMMOW J. This is an application under sub-s. 14 (5) of the Bankruptcy Act 1966 ("the Act"). This provides:

"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."

The nature and operation of this provision has been considered in various decisions. The most recent (which postdates Harris v Caladine (1991) 172 CLR 84) is that of Hill J. in Re Brindle; Ex parte FB. and F.A. McMahon Pty Limited (1992) 35 FCR 506. I gratefully adopt his Honour's analysis at 508-512.

1. The decision of the Registrar the subject of the application was made under rule 183 of the Bankruptcy Rules ("the Rules"). Sub-rule (2) states that:
   

"The Registrar may certify that it is proper to waive or remit a fee or part of a fee paid or payable to the Registrar by a person under rule 179 on the ground that the payment imposes or would impose hardship on the person."

Sub-rule (3) states that:

"Where the Registrar so certifies, the fee or part of the fee is waived or remitted accordingly."

In this case the Registrar refused so to certify. The fee in question paid under rule 179 was paid upon the lodging of a bankruptcy notice.

1. The surrounding circumstances appear from the affidavit of Mr Douglas Knaggs, the solicitor for the applicant. In proceedings between his client and another party, a judgment had been recovered by his client in the Local Court in New South Wales. The judgment was recovered in such a fashion that if an order was not complied with as to the filing of grounds of defence, the judgment would become final. The particular date for the filing of the notice of grounds of defence was 15 January 1993. The Local Court judgment then being final, it would provide an appropriate basis for the issue of a bankruptcy notice under s. 41 of the Act.

2. On 19 January 1993, Mr Knaggs caused a search to be conducted at the Local Court, Downing Centre, Liverpool Street, Sydney. He was mistakenly informed by that court, as it later transpired, that there had been a failure by the debtor to comply with the order to file the notice of grounds of defence by 15 January 1993.

3. Acting upon the search, Mr Knaggs applied for the issue of a bankruptcy notice on 22 January 1993. The practice in this Court is that when such notices are presented, the filing fee is taken and the notice is subsequently checked and sealed and sent out to the legal representative of the applicant about 10 days later. On 27 January, at a time when this 10 day period was running, Mr Knaggs' firm received a notice that a defence indeed had been filed in the Local Court on 15 January 1993. This was the first intimation that his firm had received that the result of the earlier search had been erroneous.

4. On the same day, Mr Knaggs telephoned the Registry and was told that no steps had been taken to process the bankruptcy notice application and it might be returned to him. He then asked for the fee to be refunded. The sum of $300 had been paid when the document had been lodged some days before. After correspondence the application was refused by letter dated 28 January 1993.

5. Deputy Registrar Segal informed Mr Knaggs' firm that the application would be refused. In particular, the letter stated:
   

"It is not claimed in this matter that payment of the filing fee imposes financial hardship. While payment by 'mistake' may also be a ground for claiming hardship, I do not think the Registrar's discretion should be exercised unless the mistake relates to the legal obligation to pay the filing fee. In this case there is no doubt that the filing fee was payable and accordingly, your request must be refused."

It was in the light of that decision that the present application was filed on 22 February 1993. The filing fee in relation to this very application has attracted the operation of sub-rule 183 (1) of the Rules. This states:

"The Registrar may, in a particular case for special reasons, direct that the payment of the whole or a part of a fee payable to the Registrar be postponed until such time, and upon such conditions (if any), as the Registrar thinks fit to direct."

On 25 February 1993, Deputy Registrar Segal wrote to Mr Knaggs' firm stating that he intended, by direction pursuant to this sub-rule:

". . . to reserve for the consideration of the Court the question whether a fee should be payable for the application made on 22 February

1993. This seems appropriate in view of the relief sought in paragraph 4 of the application. Subject to any relevant direction by the Court, should the application to the Court be unsuccessful, I do not propose to certify pursuant to subrule 183(2)."

1. In his written submissions, Mr Knaggs makes the point that the concept of hardship in the present context is not confined to financial hardship or other considerations of poverty. He submits that, in the present case, it was a hardship for his client to be in the position where the $300 filing fee was paid in good faith for the proposed issue of the bankruptcy notice. As soon as it became apparent that the application for the issue of bankruptcy notice had proceeded upon a false premise the Court was informed. At the time when the Registry of the Court was alerted to what had happened, steps had not been taken to process the application filed with the payment of the fee. It is submitted that it bears hard upon the client for the $300 not to be refunded. The situation has come about through no fault or neglect on the part of the client or the client's legal representatives, but through some mishap in the operation of the administration of the New South Wales Local Court.

2. I have been referred to other rules of court which deal with related subjects. In New South Wales the Supreme Court (Fees and Percentages) Regulations, reg. 4, uses the phrase "in a particular case for special reasons".

3. Regulation 4 of the High Court of Australia (Fees) Regulations (Statutory Rules 449 of 1991) provides for the Registrar to waive payment of fees if, having regard to the income, liabilities and assets of the person liable to pay the fee, it would, in the Registrar's opinion, cause "financial hardship" to that person to pay the fee. (Emphasis supplied.) Similar provision is made in reg. 5 as to hearing fees. In contrast to the High Court provision, in bankruptcy rule 183 of the Rules speaks simply of "hardship" without any qualifying term.

4. Any condition which presses with particular asperity upon a person may be described as a hardship. The sense is conveyed by the definition in the Oxford English Dictionary, 2nd ed. which includes "hardness of fate or circumstance".

5. In Rukat v Rukat (1975) Fam D 63 at 73, Lawton L.J. said:
   

"The word 'hardship' is not a word of art. It follows that it must be construed by the courts in a common-sense way, and the meaning which is put upon the word 'hardship' should be such as would meet with the approval of ordinary sensible people. In my judgment, the ordinary sensible man would take the view that there are two aspects of 'hardship' - that which the sufferer from the hardship thinks he is suffering and that which a reasonable bystander with knowledge of all the facts would think he was suffering."

In a case dealing with a provision in s. 70 of the Landlord and Tenant (Amendment) Act 1948 (N.S.W.), F.G. O'Brien Pty Ltd v Elliott (1965) NSW R 1473 at 1475, Asprey J. said that in the context in which that term appeared in the landlord and tenant legislation, hardship would comprehend "any matter of appreciable detriment, whether financial, personal or otherwise" and (unsurprisingly) that "each case must depend upon its own particular facts".

1. In the present case, in my view the Deputy Registrar mis-directed himself as to the nature of the power given him by rule 183 (2) and, in particular, as to what was meant by the term "imposes or would impose hardship". It is true that the Deputy Registrar does not appear to have assumed that hardship can only be established by the establishment of some financial burden which is felt particularly by the applicant. However, the treatment by him of mistake as an element in a claim of hardship was, I think, defective. It is not, in my view, the case that the mistake, in order to be an element of hardship, must relate to the legal obligation to pay the very filing fee in question.

2. Here, as the submissions for the applicant point out, the money was paid with a view to the performance of certain functions by the Court which, in the event, were inappropriate. This was not because of any default on the part of the applicant, but because of what had transpired in the inquiry of the Local Court.

3. In all of those circumstances it was, in my view, open to the Registrar to certify that the payment should be remitted on the ground that the payment imposed hardship on the applicant unless remitted. Accordingly, the application should succeed.

4. The question then arises as to what is to be done with the application. The solicitor for the applicant urges that the matter not be referred back but that an order be made now that the $300 filing fee be remitted.

5. However, the power given the Registrar so far has not been exercised by the Deputy Registrar upon a proper view of the ambit of rule 183. An appropriate order would be that the decision be set aside and that the matter be referred back to the Deputy Registrar for redetermination and in accordance with the reasons of the Court, which I deliver this afternoon.

6. There is also the question of the filing fee for this application. The application having succeeded, it would, in my view, be an appropriate case for the remission of the payment of that fee, which at present stands postponed under rule 183 (1). However, I make no order in that regard, the Deputy Registrar having indicated in the letter which is exhibit A that he will reserve the matter for the consideration of the Court, and further deal with it in the light of the Court's reasons.

7. Accordingly, upon the application filed 22 February 1993, I make orders in terms of paras. 1 and 3 of the application.