Sharpe v W H Bailey and Sons Pty Ltd

[2013] FCCA 2228

FEDERAL CIRCUIT COURT OF AUSTRALIA

SHARPE v W H BAILEY & SONS PTY LTD [2013] FCCA 2228

Catchwords:
BANKRUPTCY – Review of Registrar’s decision to dismiss application to set aside bankruptcy notice – where proceedings related to judgment debt subject to appeal – where leave to appeal granted – whether to set aside orders of Registrar – whether to extend time for compliance with bankruptcy notice.

Legislation:  

Farm Debt Mediation Act 1994 (NSW)

Applicant: DAVID GEORGE SHARPE

Respondent: W H BAILEY & SONS PTY LTD

File Number: SYG 690 of 2013

Judgment of: Judge Raphael

Hearing date: 18 November 2013

Date of Last Submission: 18 November 2013

Delivered at: Sydney

Delivered on: 18 November 2013

REPRESENTATION

For the Applicant: In person

Solicitors for the Respondent: Hargraves

ORDERS

1. Time for compliance with Bankruptcy Notice BN 158540 issued on 14 March 2013 be extended to 24 February 2014 or until further order.

2. Liberty to apply on 3 days’ notice.

3. Costs reserved.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYG 690 of 2013

DAVID GEORGE SHARPE

Applicant

And

W H BAILEY & SONS PTY LTD

Respondent

REASONS FOR JUDGMENT

1. There comes before the Court an application for review of a decision of Registrar Segal made on 8 October 2013 to dismiss an application to set aside a bankruptcy notice issued by W.H. Bailey & Sons Pty Ltd against the debtor, David George Sharpe.

2. The background to the proceedings is this.  Mr Sharpe is a grazier who became indebted to his creditor for farm equipment supplied by the creditor to him under a running account.  The amount of the account had reached approximately $57,000 by November 2010 and proceedings were commenced against Mr Sharpe in the Local Court at Bellingen by the supplier.  On 21 July 2010 the parties entered into a compromise of the proceedings whereby Mr Sharpe admitted a claim of $58,772.96, agreed to make payments by instalments of $10,000.00 each six months and granted to the creditor a mortgage over his property.

3. It appears that Mr Sharpe did not comply with the agreement, and the creditor sought to enforce the judgment.  Mr Sharpe argues that that action by the creditor was in breach of the provisions of the Farm Debt Mediation Act 1994 (NSW). He took his case to the Local Court, but his argument was dismissed. He sought to appeal the decision. This is a decision that required leave to appeal being granted. On 4 June 2013 Mr Sharpe issued a summons out of the Supreme Court of New South Wales seeking leave to appeal and applying for a stay of the judgment.

4. The matter came before Campbell J who gave an ex tempore decision, a copy of which is found annexed to the affidavit of Mr Sharpe dated 30 September 2013.  The effect of his Honour’s decision was that a stay was granted, his Honour coming to the conclusion that Mr Sharpe had an arguable case to take to the Court of Appeal and that it was appropriate that the stay be given to him, but only on the strictest terms.  His Honour ordered that the stay was conditional upon Mr Sharpe strictly complying with the requirements of the rules and any orders or directions made for the purpose of prosecution of his application for leave to appeal.

5. Mr Sharpe tells me that he was one day out of time for the filing of his notice of appeal or, more likely, some other document that was required and, as a result, the creditor applied for the stay to be released and it was. 

6. On 14 March 2013 the creditor had issued a bankruptcy notice.  On 4 April 2013 Registrar Ng of this Court extended time for compliance until 23 April 2013 and, as a result of the applications which I have previously referred to, the time for compliance was continued to be extended until after the stay was removed when the application to set aside the notice was originally heard.

7. In the meantime, Mr Sharpe’s application for leave to appeal proceeded in the Supreme Court and I am told that it is due to be heard on 16 December 2013, approximately three weeks from now.  Mr Sharpe asks for an adjournment until the decision of the Court is made known on the basis, presumably, that if he is successful the judgment in respect of which the notice was issued would be set aside and the creditor would be obliged to enter into a mediation and undertake all the other requirements of the Farm Debt Mediation Act 1994.

8. Mr Sharpe does not deny that he owes the creditor the money and this is one of the matters that should go into the mix.  The creditor is of the view that he has a judgment that has not been set aside and is entitled to his relief.  He would tell me that if I do not grant the extension of time there is little disadvantage to Mr Sharpe because the failure to comply with the terms of a bankruptcy notice is only the first step towards a sequestration order and the creditor would be obliged to establish a debt at the hearing of the petition.

9. That argument is one with which I am normally sympathetic, but in this case I do not believe that it will provide the appropriate answer.  This is because it is now well settled that if the act of bankruptcy is committed, the creditor is entitled to his relief and I can see an argument being raised that even if the judgment is set aside the debt still remains and it would be best that Mr Sharpe be sequestrated for the benefit of all his creditors.   On the other hand, it does appear from the decision of Campbell J, Mr Sharpe has an argument, and if his judgment is set aside he will have an opportunity to negotiate with the creditor through the Farm Debt Mediation Act 1994 provisions some satisfactory method of paying off his obligations.  I am particularly influenced by the fact that the appeal is only some three weeks away, and whilst it is probable that any decision on the matter may be reserved it is unlikely that the court will take too long to come to judgment. 

10. For those reasons I propose to set aside the orders of Registrar Segal and extend time for compliance with the bankruptcy notice until 21 February 2014 or further order.  There will be liberty to apply on three days notice so that the creditor can seek an early hearing of the application in the event that the Court of Appeal determined the matter in favour of the creditor.  If there is no decision by the Court of Appeal by 17 February 2014, I would expect the applicant to make an application to further extend the time by 17 February 2014.  I do not think there is any need for any further orders save costs reserved.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Judge Raphael

Associate: 

Date:  19 December 2013