Sommer v C Pty Ltd (No.2)

Case [2020] FCCA 1898


FEDERAL CIRCUIT COURT OF AUSTRALIA

SOMMER v C PTY LTD (No.2) [2020] FCCA 1898
Catchwords:
BANKRUPTCY – Determination of separate question – whether it is open to a creditor who has procured the issue and service of a bankruptcy notice to “withdraw” the bankruptcy notice or to waive compliance with its requirements after an application has been made for an order that it be set aside – question answered in the negative.

Legislation:

Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41, 43

Bankruptcy Regulations 1996 (Cth), reg.4.02

Cases cited:

Abignano v Wenkart [1998] FCA 1468

Australian Securities and Investments Commission v Forge [2003] FCAFC 274

Colin Richard Hubner v ANZ Banking Group Ltd [1998] FCA 1779

Maine v Esplins Solicitors [2010] FMCA 885

Maples v Siteberg Pty Ltd [2013] FMCA 123

Murphie v Vita Domus Pty Ltd [2019] FCCA 2063

O’Connor v SP Bray Ltd [1936] NSWStRp 14; (1936) 36 SR (NSW) 248

Rasile v Ground & Foundation Supports Pty Ltd [2003] FMCA 568

Re Conomo: A Debtor (1960) 18 ABC 174

Re Hastings; Ex parte Dearle (1884) 14 QBD 184

Re Hood; Ex parte English Scottish & Australian  Bank Ltd [1971] ALR 151

Sommer v C Pty Ltd [2020] FCCA 1412

The Commonwealth of Australia v Verwayen (1990) 170 CLR 394

Thorne as trustee for Thorne Family Trust v Ozibar Pty Ltd as trustee for Ozibar Unit Trust [2017] FCCA 3273

Valamios v Demarco [2007] FMCA 298

Yong v Velik trading as SV Law [2017] FCCA 2842

Young v Cooke [2017] FCA 26

Applicant: MS SOMMER
Respondent: C PTY LTD
File Number: SYG 697 of 2020
Judgment of: Judge Manousaridis
Hearing date: 10 July 2020
Date of Last Submission: 10 July 2020
Delivered at: Sydney
Delivered on: 14 July 2020

REPRESENTATION

Applicant in person, by video
Counsel for the Respondent: Mr D Edney, by video
Solicitors for the Respondent: ICL Lawyers

ORDERS

  1. The question whether the respondent, on whose application a bankruptcy notice has been issued, and who arranged to serve it on the applicant, can unilaterally “withdraw” it, or “waive” compliance with its requirements, after the applicant applied for an order that the bankruptcy notice be set aside, is answered in the negative.

  2. The costs of the separate determination of the question referred to in order 1 are reserved.

IT IS NOTED that publication of this judgment under the pseudonym Sommer & C Pty Ltd (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 697 of 2020

MS SOMMER

Applicant

And

C PTY LTD

Respondent

REASONS FOR JUDGMENT

Introduction

  1. In these reasons for judgment I consider as a separate question whether the respondent, on whose application a bankruptcy notice has been issued, and who arranged to serve it on the applicant, can unilaterally “withdraw” it, or “waive” compliance with its requirements, after the applicant applied for an order that the bankruptcy notice be set aside.

How question arises

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Details
AGLC
Sommer v C Pty Ltd (No.2) [2020] FCCA 1898
Case
[2020] FCCA 1898
Decision Date

CaseChat Overview and Summary

In *Sommer v C Pty Ltd (No.2)*, heard by Judge Manousaridis, the applicant sought to set aside a bankruptcy notice that had been issued and served by the respondent creditor. The core of the dispute revolved around the respondent's ability to unilaterally withdraw or waive compliance with the bankruptcy notice after the applicant had initiated proceedings to have it set aside.

The central legal issue before the court was whether a creditor, having issued and arranged for the service of a bankruptcy notice, could subsequently elect to "withdraw" that notice or "waive" the requirement for compliance with its terms once an application to set it aside had been filed by the debtor.

Judge Manousaridis determined that it was not open to a creditor to unilaterally withdraw a bankruptcy notice or waive compliance with its requirements after the debtor had applied to have the notice set aside. The court reasoned that once such an application is made, the bankruptcy notice and the creditor's rights under it become the subject of judicial scrutiny, and the creditor cannot unilaterally alter the situation to circumvent the legal process.

Accordingly, the court answered the separate question in the negative. The costs associated with this separate determination were reserved.

Orders

Orders of the court

1.

The question whether the respondent, on whose application a bankruptcy notice has been issued, and who arranged to serve it on the applicant, can unilaterally “withdraw” it, or “waive” compliance with its requirements, after the applicant applied for an order that the bankruptcy notice be set aside, is answered in the negative.

2.

The costs of the separate determination of the question referred to in order 1 are reserved.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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