Selen & Selen & Anor

[2016] FamCA 346

FAMILY COURT OF AUSTRALIA

SELEN & SELEN AND ANOR [2016] FamCA 346

FAMILY LAW – BANKRUPTCY – Application to extend the life of a creditor’s petition pursuant to section 52(5) of the Bankruptcy Act 1966 (Cth) – Where bankruptcy proceedings were transferred from the Federal Circuit Court of Australia to the Family Court of Australia under section 35(2A) of the Bankruptcy Act 1966 (Cth) – Where the creditor is the wife in the family law proceedings – Where the debtor is the son of the wife and the deceased husband – Where the debtor is involved in the family law proceedings in his capacity as administrator of the deceased husband’s estate – Where the debt arises from outstanding costs ordered following unsuccessful appeals to the Full Court of the Family Court of Australia and the High Court of Australia – Whether it is just and equitable to extend the life of the creditor’s petition – Where the prejudice to the creditor is greater than the prejudice to the debtor in circumstances where the debtor had sought the transfer of the bankruptcy proceedings – Application granted.

Bankruptcy Act 1966 (Cth) ss 35A, 52(5)

Commonwealth Bank of Australia & Ors v Maher [2008] FMCA 552
Re Young; Ex parte Smith (1985) 59 ALR 385

APPLICANT: Ms Y Selen

RESPONDENT: Mr C Selen

PROPOSED SECOND RESPONDENT: M Pty Ltd

FILE NUMBER: NCC 2454 of 2007

DATE DELIVERED: 7 March 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: McClelland J

HEARING DATE: 7 March 2016

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ms O’Reilly of McCabe Partners Lawyers

FOR THE RESPONDENT: Mr Selen in person

SOLICITOR FOR PROPOSED SECOND RESPONDENT: Ms Griffin by telephone

Orders of 7 March 2016

THE COURT ORDERS PENDING FURTHER ORDER THAT:

1. The Application to join M Pty Ltd trading as M Lawyer adjourned to a date to be fixed.

2. M Pty Ltd are to file and serve a Response to the Application in a Case filed 17 February 2016 within 14 days of today.

1. The parties are to each file and serve any additional material upon which they intend to rely within a further 14 days.

1. The Application for final property orders is to be listed for mention on the same date as the Application to join M Pty Ltd.

1. Order 2 of the Orders made on 24 November 2015 be varied to read “I DIRECT that within 28 days from today’s date the applicant file and serve…”

1. Order 3 of the Orders made on 24 November 2015 ne varied to replace the words “on or before…” with “within 28 days…”

THE COURT FURTHER ORDERS THAT:

1. Pursuant to s 52(5) of the Bankruptcy Act 1966 (Cth), the period of the expiration of which the creditor’s petition will lapse will be a period of twenty-four (24) months commencing on the date of presentation of the creditor’s petition, being 12 March 2015.

2. The applicant’s costs in respect to her Application to extend the expiration period of the creditor’s petition be reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Selen & Selen and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: NCC 2454 of 2007

Ms Y Selen

Applicant

And

Mr C Selen

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. This matter concerns an application for the extension of time for the expiration of a creditors petition under section 52(5) of the Bankruptcy Act1966 (Cth) (“the Bankruptcy Act”). That section reads:

   The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor's petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 24 months, commencing on the date of presentation of the petition as is specified in the order.

2. It is common ground between the parties that the creditor’s petition was presented by the wife pursuant to section 44 of the Bankruptcy Act on 12 March 2015.  In dealing with this application I have had regard to the history of the matter, which I will briefly outline. 

3. The parties that have variously been a party to these proceedings are as follows:

   ·The applicant husband, Mr D Selen, who passed away on … 2010;

   ·The respondent wife is Ms C Selen, currently aged 72;

   ·The three children of the marriage: Ms A aged 51, Mr C aged 50, and Mr D aged 46; and  

   ·Mr C Selen, the respondent to this application, is the applicant in his capacity as the administrator of his late father’s estate in the substantive family law proceedings.

4. The deceased husband commenced proceedings in the Family Court in Newcastle in September 2007.  In July 2009 Mr C Selen (the respondent to this application) commenced equity proceedings in the Supreme Court of New South Wales in relation to a draft deed which provided that a substantial part of the matrimonial farming property to be transferred to him.  That property is known as “Property P”. On 20 August 2009 the equity proceedings were transferred to the Family Court. 

5. On 6 May 2011 Austin J found in favour of the Respondent and the wife appealed his Honour’s orders.  On 22 March 2013 the Full Court of the Family Court allowed the wife’s appeal and ordered that the respondent pay her costs.  On 9 October 2013 the High Court rejected the respondent’s application for special leave and ordered that he pay the wife’s costs. 

6. On 7 November 2014 the wife obtained a Costs Assessment Order in the amount of $54 902.79, inclusive of costs. On 26 November 2014 the wife obtained a Taxation of the Taxed Costs in the sum of $11 376.50. 

7. As I have indicated, on 12 March 2015, pursuant to section 44 of the Bankruptcy Act, the wife presented a creditor’s petition against the respondent in the Federal Circuit Court.  On 3 June 2015 the respondent filed a Notice of Objection.  On 4 August 2015 an application was filed by the respondent to have the creditor’s petition transferred to the Family Court.  On 7 August 2015 that matter was heard before Judge Cameron and his Honour reserved his decision. 

8. On 18 December 2015 Judge Cameron delivered judgment and made orders that the bankruptcy proceedings be transferred to the Family Court, pursuant to section 35A(2A) of the Bankruptcy Act.    

9. The issue that is now before the Court is whether it is just and equitable for the Court to make an order pursuant to section 52(5) extending the “life” of the creditor’s petition.

10. The authorities are clear that a creditor’s petition has an automatic span of twelve months from the date presented and cannot survive beyond that initial period without an order of the Court (Re Young; Ex parte Smith (1985) 59 ALR 385). It is therefore appropriate for a party to apply for an extension of the life of the petition within that first twelve months.

11. My task is to consider whether it is just and equitable to extend the life of the petition.  Some guidance in that respect is provided in the decision of then FM Hartnett in Commonwealth Bank of Australia & Ors v Maher [2008] FMCA 552. In that matter, his Honour referred to the history of the case before him. That case involved a transfer to the Federal Court and then a transfer back to the Federal Circuit Court. This process resulted in some delay. Secondly, his Honour looked at whether there was any prejudice to the respondent debtor. Those issues are relevant factors in this case.

12. In this matter, the applicant wife noted that the bankruptcy proceedings are before this Court as a result of an order made by Judge Cameron on 7 December 2015, whereby he transferred the proceedings to this Court. Reference was made to paragraph 24 of Judge Cameron’s judgment where his Honour said:

    Finally, I note the applicant’s concerns set out earlier at [10] regarding the age of the Family Court proceedings.  Respectfully, I do not believe that those proceedings cannot be finalised during any extended life of the creditor’s petition should the Family Court consider that justice requires it.

13. It was argued that that passage perhaps indicates the preliminary view of Judge Cameron that the life of the petition would be extended by this Court. 

14. In terms of the considerations of justice and equity of the case, the applicant wife noted that, during the period from when the petition was presented on 12 March 2015, the respondent has not made an application to dismiss the petition, made an endeavour to pay the debt nor has he presented evidence as to his solvency.  In those circumstances, the wife argued that it is just and equitable for the petition to be extended. 

15. In response, the respondent argued that the creditor’s petition filed by the wife is a “thorn in the side” of these Family Court proceedings and is intended to create leverage on the part of the applicant to obtain a better outcome in the family law proceedings.  He argued that the petition should not be extended because there would effectively be a situation of conflict created whereby, in respect to the creditors petition, he is the litigant in person and his role in the family law proceedings is, as I have indicated, one as an administrator of his late father’s estate.  He argued that dismissing the creditor’s petition or, rather, failing to extend it would “level the playing field” in the family law proceedings.

16. The respondent presented his argument broadly and focussed on his endeavours to achieve a resolution of the overall issues in dispute. He asserts, in particular, that he has been able to negotiate a higher figure for the sale of “Property P”. The price, he said, will be significantly greater than the outstanding costs in dispute. 

17. In response, the applicant argued that there was some inconsistency in the position of the respondent insofar as he had been the applicant in the proceedings before Judge Cameron. That is, he made the application to transfer the bankruptcy proceedings to the Family Court yet now complains that the application to extend the time of the petition is a “thorn in the side” of the family law proceedings. The applicant’s submission in that respect has merit. The respondent has not elaborated on how the bankruptcy proceedings will impede the just and timely resolution of the family law proceedings.

18. In terms of my consideration of the matter, I have had also had regard to whether there was unnecessary delay in respect to the bankruptcy proceedings. In that respect I note that the application to transfer the bankruptcy proceedings was filed on 4 August 2015. It was heard, I note reasonably quickly, before Judge Cameron on 7 August 2015 although there also appears to be hearings that occurred on 27 November and 7 December 2015. 

19. There was a delay, without any criticism whatsoever of Judge Cameron, of several months with his Honour delivering judgment and orders on 7 December 2015.  In other words, the court process rather than lack of action on the part of the wife accounts for some of the period of the twelve months that the petition has been in existence. 

20. In terms of considering the issue of prejudice to the respondent, I note that the respondent has argued that he would be prejudiced insofar as he believes the petition is being used for an ulterior purpose to assist the wife in the family law proceedings. He has also argued that he will be prejudiced as a result of being placed in a position of conflict where he is responding to the bankruptcy proceedings in his individual capacity whereas his capacity in the family law proceedings is as the administrator of his father’s estate. 

21. The respondent failed to elaborate how the family law proceedings will be prejudiced or how a position of conflict will arise. I dismiss both arguments and note that despite appearing in the family law proceedings as the administrator of his late father’s estate, the respondent will still be able to argue that the petition cannot succeed. Indeed he retains the right, if he so choses, to argue that it is being used for ulterior purposes in order to obtain leverage in the family law proceedings. 

22. On the other hand, failing to extend the life of the creditor’s petition would result in it expiring on 12 March 2016 thereby locking the wife out of the opportunity to recover the debt. In the circumstances that I have outlined, that would clearly be unfair to her.

23. For these reasons I grant the application filed by the wife. 

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 7 March 2016.

Associate: 

Date:  13 May 2016