Re Mercovich, Frank Joseph

[1985] FCA 197

Ba&ruE?_tcl - holdlnq order extendincr beyond perlod of five years

from the date of bankruptcy the time when objections auainst

discharge would expire to enable the hearinq of a substantive

appllcation in respect of period at expiratlon of which such

objections should lapse - order made ex parte - application to set

aslde holding order - whether Order 35 of Federal Court Rules or

sub-s.29(1) of Federal Court Act applies to orders made bp a state

court - relationship between State Supreme Court and Federal Court

exerclslng concurrent bankruptcy iurlsdictlon

Bankruptcv Act 1966 ss. 5, 37, 149(1)

Federal Court	of Australia Act 1976 sub-s.29(1)
Federal Court	Rules Order 35 Rule 7(2)(a)

RE: FRANK JOSEPH MERCOVICH and TERENCE HAROLD GRIFFITHS

F B K JOSEPH MERCOVICH - Applicant

VANGUARD SERVICE	PRINT - Respondent
No. 51 of 1980
TOOHEY J.
PERTH
27 MAY 1985

IN THE FEDERAL	COURT	)
QF AUSTRALIA	i

BANKRUPTCY DISTRICT ) No. 51 of 1980

OF THE STATE OF	)
WESTERN AUSTRALIA	)
B E T W E E N :
RE: FRANK JOSEPH MERCOVICH and

F B C E HAROLD GRIFFITHS

Bankrupts

FRANK JOSEPH MERCOVICH

Applicant

and

VANGUARD SERVICE PRINT

Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER	:	Toohey J.
DATE OF ORDER	27 May 1905
WHERE MADE	Perth

THE COURT ORDERS THAT:

1.	The application made by the applicant on	19 April 1985
be dismissed.

2 . There be liberty to apply as to the costs of the

application.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

IN THE FEDERAL	COURT	)
OF AUSTRALIA	l

BANKRUPTCY DISTRICT ) No. 51 of 1980

OF THE STATE OF )

WESTERN	AUSTRALIA	)
B E T W E E N :
RE: FRANK JOSEPH MERCOVICH and TERENCE HAROLD GRIFFITHS

Bankrupts

FRANK JOSEPH MERCOVICH

Applicant

and

VANGUARD SERVICE PRINT

Respondent

m: TOOHEY J.

27 MAY 1985

REASONS FOR JU"ENT

The Court has before it two applications. The first is

made by one of the bankrupts Frank Joseph Mercovich in the

bankruptcy jurisdiction of this Court and seeks to set aside an order made on 12 February 1985 by the Supreme Court of Western

Australia in the exercise of its bankruptcy jurisdiction. It is

that appllcation with which these reasons for judgment are

concerned.

The Court heard concurrently an application by Mr.

Mercovich for an extension of time in which to file and serve a

notice of appeal from the order of the Supreme Court made on 12

2 .

February 1985. The need to deal with that appllcation only arises

If the application to set aslde the order is refused. In the

clrcumstances I thlnk it appropriate to dellver separate reasons

In respect of the second applicatlon though In the end the two sets of reasons should be read together.

The earlier history of this matter is mentioned in

reasons for judgment I delivered on 29 March 1985. For present

purposes it IS enough to say that on 1 2 February 1980 in the

Supreme Court of Western Australia a sequestration order was made against Frank Joseph Mercovich and Terence Harold Griffiths. The order was made on the petition of Vanguard Service Print. In the

ordinary course sub-s.149(1) of the Bankruptcy Act 1966 would have

effected a discharge of the bankruptcies at the end of 3 years.

However on 18 January 1983 the Official Receiver, In exercise of

his power under sub-s.149(3), entered an objection to the

discharge of each bankrupt. In the case of Mr. Mercovich the

objection was made pursuant to para. 149(4)(a); in the case of Mr.

Griffiths the objection was made pursuant to para. 149(4)(c).

Those objections had the effect of precluding a discharge from

bankruptcy pursuant to sub-s.149(1). However, by reason of

sub-s.149(7), an objection entered under para. (3)(c) lapses at

the expiration of 5 years from the date of the bankruptcy or, if

the Court makes an order under sub-s.(8) or (9). the period fixed

by the order. Sub-section ( 8 ) empowers the Court, at any time

before the expiration of 5 years from the date of bankruptcy, on

the applicatlon of any of the persons therein specified including

a creditor, to order that the period at the expiration of which an

oblection entered under para. 149(3)(c) will lapse be such period

3 .

exceedlng 5 years, commencing on the date of the bankruptcy, as is

specifled ln the order.

Vanguard Service Print, as a creditor of the bankrupts,

sought various orders from this Court. One was an extension of

time for the filing of an application pursuant to sub-s.149(8),

alternatively pursuant to sub-s.149(12). There was a further

application by Vanguard Service Prlnt seeking an order that the

time at the explration of which the objections lodged by the

Official Recelver on 18 January 1983 will lapse be 12 February

1987, alternatively that the bankrupts be not discharged from

bankruptcy by virtue of 5.149 and that it have leave to enter an

objection pursuant to para. 149(3)(c) of the Act.

The order made by the Supreme Court on 12 February 1985

was In these terms:

“1.

The time at the expiration of which the

objections dated 18 January 1983 and

filed herein will lapse will be 30 March

1985, or untll further order.

2. There be liberty to apply”.

W e n the earlier applications came before this Court one

of the bankrupts, Mr. Mercovich, made a submission which, if

accepted, would have had the consequence that when the order of

the Supreme Court was made on 12 February 1985 the bankrupts were

already discharged from their bankruptcy by the operation of

s.149. The basis of that submission and the basis for its

rejection may be found in my reasons for judgment of 29 March

1985. As a consequence of those reasons and the orders made

4.

thereon, the ob~ectlons lodged by the Officlal Receiver were not

to lapse untll 30 March 1985. As a result of orders made

subsequently, those oblectlons have been kept alive until the

determination of the proceedings now before the Court.

It should be appreciated that the Federal Court began to

exercise jurisdiction in bankruptcy in Western Australia as from 11 March 1985. Of course the Supreme Court of Western Australia

has not been dlvested of its bankruptcy jurisdictlon but, as a

result administrative of arrangements made b tween the

Commonwealth and the State of Western Australia, bankruptcy

matters wlll ordinarily be dealt with by the Federal Court and not

by the Supreme Court.

The application with which these reasons are concerned is an application by Mr. Mercovich to set aside the order of the

Supreme Court made on 12 February 1985. The basis of the

application is said to be Order 35 Rule 7(2)(a) of the Federal

Court Rules. Order 35 is concerned with judgments and orders made

by the Federal Court. Order 35 Rule 7(2)(a) empowers the Federal

Court, when not exercising its appellate or related jurisdiction under Division 2 of Part I11 of the Act, to vary or set aside a

judgment or order made in the absence of a party. It is common

ground that the order made by the Supreme Court was made in the

absence of Vanguard Service Print; indeed it is common ground that

the application was made ex parte and without prior notice to that

creditor. Nevertheless the application made to thls Court to set

aside the order of the Supreme Court cannot succeed. Although the

Supreme Court was exercising federal jurlsdiction when it made the

5.

order of 12 February 1985, it made that order as the Supreme Court

of Western Australia. Order 35 Rule 7 does not extend to orders

made by a court other than the Federal Court. The application

seeks by way of alternative relief a stay of proceedlngs under the

order of the Supreme Court pursuant to sub-s.29(1) of the Federal

Court of Australia Act 1976. But that sectlon is concerned wlth

the situatlon where an appeal to the Federal Court from another

court has been instituted. No appeal to the Federal Court from

the Supreme Court has been instituted; that is what Vanguard

Service Print seeks to d in the other appllcation to which I ave

referred. Section 29 can be of no assistance	at this stage to the
creditor.

I should add a reference to Order 1 rule 11 of the

Federal Court R - which expressly provides that those rules do

not apply to proceedings under the Bankruptcv Act. Section 37 of the Bankruptcv Act provides that “the Court may rescind, vary or discharge an order made by it under this Act . . . ‘ I . Section 5

defines “the Court“ to mean “a Court having jurisdiction in

bankruptcy under this Act”. No reliance was placed by the

bankrupt on 5.37 of the Bankruptcv Act. In my view,

notwithstanding the reference to “the Court“ as meaning a court

having jurisdiction in bankruptcy, when s.37 is read in Its

entirety it contemplates rescission, variation r discharge by the

Court that made the order in question. If Mr. Mercovich wishes to apply for a discharge of the order made on 12 February 1985, he must do so before the Supreme Court.

This appllcatlon wlll be dismlssed.

I certify that thls and the four precedmg pages

are a true copy of the Reasons for Judgmmt

herein of h l s Hor,ou Mr. -Just:ce- -hey

Dated: 27 bay 1985