Snelgrove v Roskell
[2007] FMCA 567
•16 April 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SNELGROVE v ROSKELL | [2007] FMCA 567 |
| BANKRUPTCY – Contested creditor’s petition – petition expiring before any court order extending the life of the petition – whether the court can make an order after the petition has expired considered – order made under the slip rule. |
| Bankruptcy Act 1966, s.52, 306 Federal Magistrates Court Rules 2001 (Cth) |
| Adams v Lambert [2006] HCA 10 Griffiths v Boral Resources (Queensland) Pty Limited [2006] FCAFC 149 Snelgrove v Roskell [2006] FMCA 503 Snelgrove v Roskell [2007] FCA 122 |
| Applicant: | JOHN ANTHONY SNELGROVE |
| Respondent: | DAVID ROSKELL |
| File Number: | SYG1043 of 2005 |
| Judgment of: | Driver FM |
| Hearing date: | 16 April 2007 |
| Delivered at: | Sydney |
| Delivered on: | 16 April 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr B DeBuse |
| Solicitors for the Applicant: | Curwoods Lawyers |
The Respondent appeared in person
CORRECTED ORDERS
Pursuant to s.52(5) of the Bankruptcy Act 1966 (Cth) and Order 35, rule 7(3) of the Federal Court Rules, that the petition filed on 26 April 2005 be extended until 25 April 2007.
The estate of David Roskell be sequestrated.
The petitioning creditor’s costs, including any reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that the date of the act of bankruptcy is 10 February 2005.
The Court notes that a copy of this order is to be provided to the Official Receiver in Sydney within two days after the order is entered.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG1043 of 2005
| JOHN ANTHONY SNELGROVE |
Applicant
And
| DAVID ROSKELL |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
I have before me a creditor’s petition filed on 26 April 2005 seeking a sequestration order against the estate of David Roskell. This matter has a long and somewhat unfortunate history. After numerous interlocutory court events I identified what appeared to me to be a defect in the bankruptcy notice supporting the creditor’s petition and raised with the parties the question of whether the creditor’s petition should be dismissed and the bankruptcy notice set aside. Upon hearing argument I was persuaded to await the then pending decision of Adams v Lambert [2006] HCA 10. Following that judgment I invited submissions and reserved judgment. I gave judgment on 6 June 2006. I found that the bankruptcy notice supporting the creditor’s petition was confusing and that it could not be corrected pursuant to s.306 of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”). I therefore dismissed the petition and declared the bankruptcy notice supporting it to be invalid.
The petitioning creditor appealed to the Federal Court against those orders. On 15 February 2007 the Federal Court gave judgment on the appeal, finding that I had incorrectly applied the principles established by the High Court in Adams v Lambert[1].
[1] Snelgrove v Roskell [2007] FCA 122
In dealing with the appeal his Honour Jacobson J identified a further issue. That issue is whether the creditor’s petition is stale and whether it can now be revived. His Honour considered that issue at paragraphs 56 to 63 of his judgment. Because the issue had not been argued before him his Honour decided that it would be appropriate for him to remit the matter to this Court to determine whether the Court has power to make a sequestration order and if so whether an order ought to be made. His Honour remitted the matter to this Court to be determined in accordance with his reasons for judgment.
It is plain that the principal issue to be decided is whether it is now open to this Court to make an order extending the life of the creditor’s petition given that almost two years have elapsed since the petition has been presented and no order has been made before today extending the life of the petition. I listed the matter for hearing today in the expectation that that would be the only issue to be resolved. In my first judgment[2], I rejected arguments by the debtor, Mr Roskell, that there was no debt owing by him to Mr Snelgrove. I declined to go behind the judgment debt relating to unpaid solicitor’s costs. That aspect of the matter was affirmed on appeal[3]. I am bound by that decision of the Federal Court.
[2] Snelgrove v Roskell [2006] FMCA 503
[3] Snelgrove v Roskell [2007] FCA 122 at [47]
Nevertheless, at the hearing today Mr Roskell sought to reagitate a limited aspect of the earlier dispute as to the existence of the debt. That limited aspect is set out in Mr Roskell’s submissions filed in court by leave today. Mr Roskell argues that the creditor is guilty of fraud in not acknowledging some payments made by R & G Deli to Snelgrove Partners on 10 October 1994, 14 July 1995 and 26 September 1995 amounting in total to approximately $5,000. I agreed to consider that issue as an assertion that it was some other sufficient cause why a sequestration order ought not to be made for the purposes of s.52(2)(b) of the Bankruptcy Act.
The issue was addressed by the petitioning creditor in the affidavit of John Anthony Snelgrove filed in court by leave today. Essentially, Mr Snelgrove deposes that he acknowledges the payments asserted by Mr Roskell but explains that a credit was given for them in respect of disbursements which were dealt with in an earlier period than the costs bills leading to the costs assessment which in turn led to the bankruptcy notice and the creditor’s petition. Mr Roskell insists that leaving aside any question of how the money has been applied, payment of the money has never been properly acknowledged. He asserts that Mr Snelgrove has only ever acknowledged receipt of approximately $41,000 from him or the company whereas his own records disclose that approximately $46,000 has been paid. Mr Roskell told me that he had sought to advance this argument before the costs assessor prior to the making of the costs assessment leading to the judgment debt.
I have previously declined to go behind the judgment supporting the bankruptcy notice and creditor’s petition and I do not consider it is open to me to do so now. Even if it were open to me the most that could be said is that Mr Roskell has a claim against Mr Snelgrove for approximately $5,000 being moneys paid by R & G Deli to Mr Snelgrove and not properly acquitted. That is a wholly insufficient reason to refrain from making a sequestration order and I reject it to the extent that it was advanced pursuant to s.52(2)(b) of the Bankruptcy Act.
The real issue remains whether a sequestration order can now be made following the lapsing of that petition by effluxion of time on 25 April 2006 pursuant to s.52(4)(a) of the Bankruptcy Act. I received updating affidavits of search and debt from the petition creditor and I also received the affidavit of Rachel Therese Menassa filed on 4 April 2007 going to the issue of the exercise of the Court’s power, if it has it, to extend the life of the petition retrospectively.
Ms Menassa was required for cross-examination. Her evidence is that at the time she was responsible for the petitioning creditor’s file in this matter she had been instructed to apply for a 12 month extension of the petition but neglected to do so. Her file notes verify those instructions and the accuracy of those notes which appear to be contemporaneous was not seriously questioned. I accept her evidence.
The question remains whether the Court has power to do what is requested of it. Section 52(5) is plain on its face in that the power granted to the Court to extend the life of a petition appears to be limited to a time prior to the expiry of 12 months from the date of presentation of the petition. On the face of the subsection an order extending the life of the petition could only have been made up to 25 April 2006. Nevertheless, there has been some history of extensions being granted retrospectively, particularly in the Federal Court.
The Full Federal Court considered the issue in detail in Griffiths v Boral Resources (Queensland) Pty Limited [2006] FCAFC 149. Although expressing some concern in the light of what appear to be the plain words of s.52(5), the Court was unwilling to disturb earlier decisions which proceeded on the basis of the Federal Court having the capacity to correct an order under the slip rule extending the life of a petition retrospectively. The Full Federal Court in Griffiths raised the question of whether that power vested in the Federal Court extends to this Court. The Federal Court in Griffiths found it unnecessary to answer that question because in that case there was no order to which the slip rule could be applied.
The position here is different. Numerous interlocutory orders were made in this matter. For present purposes the relevant orders are those made by me on 11 April 2006. Following delivery of the High Court’s judgment in Adams v Lambert, and prior to the reservation of my judgment, I made two orders. The first was that the applicant file and serve on the respondent updated affidavits of search and debt no later than 26 April 2006. The second was that the parties were to file and serve any further submissions no later than 26 April 2006 concerning the validity of the bankruptcy notice relied upon taking into account the decision of Adams v Lambert and the question raised at the trial of the matter on 12 August 2005 whether the bankruptcy notice was confusing, having annexed to it a certificate stating that no interest was payable.
The steps required of the parties were to be taken up to a date after the 12 month period elapsed. It would have made no sense at all to make the orders in those terms if the creditor’s petition was not to be extended. Prima facie, the petitioning creditor has a good case for applying the slip rule on the basis that if the issue had been adverted to at the time either the petition would have been extended or different procedural orders would have been made.
I am bound by the decision in Griffiths v Boral Resources which preserves the power of the Federal Court to retrospectively extend the life of a petition pursuant to Order 35 rule 7 subrule (3) of the Federal Court Rules (“the Federal Court Rules”). That rule is applied in this Court as if it were a rule of this Court pursuant to schedule 3 to the Federal Magistrates Court Rules 2001 (Cth). That is the first reason why this Court should have available to it the facility of applying the slip rule in appropriate cases.
The second reason is that this Court shares co-extensive jurisdiction with the Federal Court in bankruptcy. Something in excess of 90 per cent of bankruptcy proceedings are now heard in this Court. It would be inconsistent with Parliament’s intention that this Court and the Federal Court should have a concurrent jurisdiction in bankruptcy if a procedure available to the Federal Court under its rules was unavailable to this Court pursuant to the same rule applied in this Court pursuant to its own rules. Thirdly, Parliament intended that to the extent that the rules of this Court were insufficient, this Court should be able to have resort to the rules of the superior courts, in the present case, relevantly, the rules of the Federal Court[4].
[4] Section 43 of the Federal Magistrates Act 1999 (Cth)
I find that this Court may, pursuant to Order 35 rule 7.3, apply the slip rule in appropriate cases in order to retrospectively extend the life of a creditor’s petition. There is no real doubt in my mind that having answered those questions, the power ought to be exercised. Mr Roskell stresses that the issue is controversial because he would have resisted an extension to the life of the petition if the same had been sought before the expiry of 12 months. All matters in this matter have been hotly contested between the parties and I have no doubt that that would have been so.
However, if the argument had been had at the appropriate time either the petition would have been extended and the matter would have proceeded in accordance with my other orders or different procedural orders would have been made. Having decided that I should await the decision of the High Court and then having decided that I should receive written submissions on the significance of the High Court’s judgment within the period specified in the order, I am certain that if I had adverted to the issue at the time I would have extended the life of the petition on 11 April 2006. The issue did not occur to me at the time. Although the then solicitor for the petitioning creditor had been instructed to raise it, she neglected to do so. The issue can and now should be dealt with prior to the final expiry of the creditor’s petition on 25 April this year.
I therefore order pursuant to order 35 rule 7(3) of the Federal Court Rules and s.52(5) of the Bankruptcy Act that the petition filed on 26 April 2005 be extended until 25 April 2007.
The petition having now been revived, there is no remaining impediment to a sequestration order being granted. I dealt with the issue of the existence of a debt in my first judgment. In its appeal judgment the Federal Court dealt with the question of the validity of the bankruptcy notice preceding the petition. I have now dealt with the remaining issues. I therefore make the following findings and orders.
I am satisfied that Mr Roskell committed the act of bankruptcy alleged in the petition and I am satisfied with the proof of the other matters of which s.52(1) of the Bankruptcy Act requires proof. I make a sequestration order against the estate of David Roskell. I order that the petitioning creditor’s costs including reserved costs if any be taxed and paid in accordance with the Bankruptcy Act. I note that under the Bankruptcy Regulations a copy of these orders is to be given to the Official Receiver in Sydney within two days after the orders are entered. I note that the date of the act of bankruptcy is 10 February 2005.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 1 May 2007
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