Rose v SMITH and SMITH Cabinet Makers Pty Ltd
[2011] FMCA 227
•7 April 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ROSE v SMITH & SMITH CABINET MAKERS PTY LTD & ANOR | [2011] FMCA 227 |
| BANKRUPTCY – review of Registrar’s sequestration order – application out of time – extension of time sought – whether reasonable explanation for delay – none proffered – exercise of discretion – question of prejudice to Trustee considered – application dismissed. |
| Bankruptcy Act 1966, ss.52, 153A and 154 Federal Magistrates Act 1999, s.104 Federal Magistrates Rules 2001, Rules 16.05(2)(a), 20.01(2) and 20.03 |
| Applicant: | MICHAEL WILLIAM ROSE |
| First Respondent: | SMITH & SMITH CABINET MAKERS PTY LTD |
| Second Respondent: | PAUL ANTHONY PATTISON |
| File Number: | MLG 377 of 2009 |
| Judgment of: | O’Dwyer FM |
| Hearing date: | 8 March 2011 |
| Date of Last Submission: | 8 March 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 7 April 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Kohn |
| Solicitors for the Applicant: | Taylor Splatt & Partners |
| Counsel for the First Respondent: | Mr Gronow |
| Solicitors for the First Respondent: | Barry Kenna & Co |
| Counsel for the Second Respondent: | Mr Lilley |
| Solicitors for the Second Respondent: | Saxbys Lawyers |
ORDERS
The application filed on 21 October 2010 is dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 377 of 2009
| MICHAEL WILLIAM ROSE |
Applicant
And
| SMITH & SMITH CABINET MAKERS PTY LTD |
First Respondent
| PAUL ANTHONY PATTISON |
Second Respondent
REASONS FOR JUDGMENT
Introduction
On 21 October 2010 the Applicant applied for a review of the sequestration order made by Registrar Burns on 1 September 2009. The Applicant did not attend the Registrar’s hearing. The application is considerably out of time.
This proceeding first came before the Court on 9 November 2010 when Riethmuller FM made a number of procedural directions. It was agreed by all before me that he did not determine the extension of time question and that it was an extant issue for me. Accordingly, a threshold issue for me to determine is whether, in the exercise of my discretion, I should grant an extension of time.
The Applicant applies for that extension, in the alternative, pursuant to Rules 16.05(2)(a) and 20.01(2) of the Federal Magistrates Rules 2001 (the Rules). In respect of both, to be persuaded that my discretion should be exercised in the Applicant’s favour he needed to:
(a)provide a reasonable excuse for his non attendance at the hearing;
(b)provide a reasonable explanation for the delay in issuing proceedings; and
(c)demonstrate he has a reasonable prospect of success if an extension was granted.
Background
The First Respondent is the petitioning creditor and the Second Respondent is the Trustee in bankruptcy of the Applicant’s estate (the Trustee).
When this matter was called on before me, I was informed that agreement had been reached as between the Applicant and the First Respondent. The Applicant had agreed to pay the debt, plus interest and costs owed to the First Respondent. Consequential consent orders were made and the First Respondent withdraw from the proceeding.
There remained an extant issue, however, which the Applicant sought to prosecute. That issue, in essence, centred upon whether the Trustee would, or should, be afforded the statutory protection given by s.154(1) of the Bankruptcy Act 1966 (the Act) as to his costs of the administration of the estate.
Despite my expressed concerns about the delay in initiating the proceeding, it is not unfair to say, the Applicant launched into, and focused on, establishing the contention that I was hearing a de novo application for a sequestration order under s.104 of the Federal Magistrates Act 1999 and rule 20.03 of the Rules. Because there was no petitioning creditor to provide any necessary proofs under s.52 of the Act, the application for a sequestration order should be dismissed – thus denying the Trustee his protection under s.154 of the Act.
That argument would only be enlivened, however, once an extension of time was granted and a review entertained thereafter.
Explanation for delay
The Trustee filed an affidavit on 8 March 2011, whose jurat particulars are manifestly wrong where it was said to have been sworn on
8 June 2011. No issue was taken over this and, indeed, no issue was taken over the matters deposed to or raised in that affidavit. Although the Trustee was present in Court, he was not called to be cross-examined.From the Trustee’s affidavit, I am satisfied a representative of the Trustee made contact with the Applicant on 21 September 2009, just 20 days after the Registrar’s order, and that he was made fully aware of the sequestration order – although it appears he was already aware of this. He gave details about his new address and was advised to meet with the Trustee’s representative. Thereafter followed correspondence from the Trustee to the Applicant’s new address, contact with a work colleague and attempts to telephone him.
I am satisfied that the Applicant made telephone contact with the Trustee again on 24 February 2010 and attended the Trustee’s office on 25 February 2010, giving a new address for future correspondence. The meeting on 25 February 2010 was, on the face of it, lengthy and the Applicant’s financial circumstances, including details of his assets and liabilities, were discussed. He completed a Statement of Affairs on 8 March 2010. Another telephone contact was made with him on
31 March 2010.
By way of explanation for his non attendance and the delay, the Applicant relied on his affidavit sworn 14 October 2010 and two affidavits of his solicitor, Mr Stephen Bruce Shipp, sworn 14 October 2010 and 4 March 2011.
In his affidavit the Applicant gives an explanation of how the debt first arose, his difficult personal and family situation at the time and his movement to various places in Australia in his hunt for work. He denies receiving the bankruptcy notice and relevant documents, saying he was not living at the address to which they were sent in accordance with an order for substituted service. Incidentally, I am satisfied that service was validly effected.
Significantly, he says he first became aware of his bankruptcy in about February 2010 when told by his employer. He says he knew nothing of his bankruptcy prior to this. I do not accept this.
The Applicant denies meeting the Trustee, but does admit meeting two of his employees and that they interviewed him. He does not provide the date on which this happened. From the Trustee’s affidavit, however, it would most probably have happened on 25 February 2010.
On the material before me, I am satisfied that the Applicant was aware of his bankruptcy within 20 days of the sequestration order, had met with the Trustee’s representatives in February 2010 in the course of the administration of his estate and was fully aware of the bankruptcy approximately five months before he says he became aware.
Mr Shipp has deposed to the fact he received instructions on
13 April 2010 and has given a chronology of his contact with the Applicant, and activities conducted on his behalf, including corresponding with the Trustee. But this, in my view, does not go to providing a satisfactory explanation for the delay from the time instructions were received until the issue of proceedings, let alone for the lengthy period before the Applicant instructed solicitors in the first place after being made aware of his bankruptcy.
Conclusion
His explanation for the substantial delay in initiating his application for review, some 13 months in all, is not a reasonable explanation and has not persuaded me it would be a proper exercise of my discretion to grant him an extension of time.
Also, in the exercise of my discretion, I am conscious that the Trustee, should I grant an extension of time, might be unreasonably prejudiced as to his entitlement for the costs of the administration should the contention of the Applicant as set out in paragraph 7 be accepted.
There is no need in the circumstances to entertain argument about the prospects of success having regard to my earlier findings that militate against the exercise of my discretion.
Now that the petitioning creditor has apparently been paid, and should the Trustee be so satisfied, then, pursuant to s.153A of the Act, by force of the law, the bankruptcy will be annulled.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of O’Dwyer FM
Associate: Gail Car
Date: 7 April 2011
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