Sommer v C Pty Ltd (No.3)

The Federal Circuit Court of Australia considered an application by the respondent to terminate proceedings by setting aside a bankruptcy notice. The applicant had sought to set aside the bankruptcy notice, which was based on a costs determination. The respondent initially purported to concede that the costs determination was affected by jurisdictional error, thereby rendering the bankruptcy notice liable to be set aside.

The central legal issue before the Court was whether, assuming the respondent conceded the costs determination was affected by jurisdictional error, the Court was bound to terminate the proceeding by setting aside the bankruptcy notice without determining other outstanding issues. The Court also considered the respondent's subsequent application for an extension of time to seek a review of the costs determination.

Judge Manousaridis reasoned that the respondent's purported concession regarding jurisdictional error did not automatically compel the Court to set aside the bankruptcy notice. The Court retained discretion to consider the broader context and the respondent's subsequent actions, including the application for a review of the costs determination. The Court noted that the respondent had not withdrawn its application to set aside the bankruptcy notice, but rather had filed a separate application to extend time for a costs review. The Court found that the respondent's actions indicated an intention to pursue the costs review rather than simply concede the bankruptcy notice was invalid.

The Court dismissed the respondent's application to terminate the proceeding by setting aside the bankruptcy notice. The Court granted the applicant liberty to apply for an order restraining the respondent from taking further steps in the costs review application, other than those necessary to withdraw or stay it, provided the respondent failed to provide a written undertaking not to proceed further within seven days of a request.