Tarzia v National Australia Bank Ltd

[1996] FCA 1155

IN THE FEDERAL COURT OF AUSTRALIA   )
NEW SOUTH WALES DISTRICT REGISTRY           )          No. NN 1622 of 1996
BANKRUPTCY DIVISION  )

Between:FRANCESCO TARZIA and

MARIA ROSA TARZIA

Debtors/Applicants

And:NATIONAL AUSTRALIA BANK LTD

Creditor/Respondents

REASONS FOR JUDGMENT

EINFELD J   SYDNEY   24 DECEMBER 1996

On 28 May 1996, the National Australia Bank Limited (the bank) issued a bankruptcy notice (the notice) against Francesco and Maria Rosa Tarzia (the debtors) requiring the payment, within 21 days of the service of the notice, of the sum of $238,646.78.  This sum was alleged to be the amount of a judgment given by the Supreme Court of the Australian Capital Territory on 25 November 1994 plus interest to 24 May 1996.  The notice was served on each of the debtors on 19 September 1996, so that the time for compliance expired on 10 October 1996.

On 27 June 1996 the applicants filed an application to have the bankruptcy notice set aside and to have the time for compliance extended pending the hearing of the application.  On 10 September 1996 a Deputy Registrar dismissed the application to set aside with some costs.  After some discussions at the Sydney registry of the Court concerning those orders of the Deputy Registrar, the solicitors for the debtors, who practised in Canberra, faxed to the Sydney registry of the Court and the bank's solicitors, on 27 September 1996 what purported to be a handwritten "application" for review of the Deputy Registrar's orders on the ground of an overstatement of interest in the bankruptcy notice.  Although this application was rejected as incorrectly formulated, the debtors' solicitors also faxed to the bank's solicitors on the same day a handwritten notice under section 41(5) of the Bankruptcy Act disputing the validity of the amount due.

An application dated 3 October 1996 in accordance with Form 45 was sent to the Sydney registry via the document exchange seeking an order of review of the Deputy Registrar's order of 10 September 1996, an order setting aside the bankruptcy notice and an extension of the time for compliance with the notice.  This application was returned by the Court because the application for an order of review was out of time, the time for filing having expired on 1 October 1996 or 21 days after the original order had been made.  On 9 October 1996, an amended application was despatched to the Court seeking in addition an extension of time for the filing of the application.  This document was filed on 11 October 1996, one day after the time for compliance with the bankruptcy notice had expired.  An affidavit of the debtors' solicitor dated 3 October 1996 was filed in support of the application but it provided no evidence at all to support any of the orders sought in the amended application.

On 26 November 1996, I extended the time for filing the application for review but that application and the application to set aside the bankruptcy notice were  dismissed with some costs.  The application for an extension of time to comply with the bankruptcy notice was adjourned part heard for written submissions.  This judgment covers that application to extend time after its expiry.

Notwithstanding the express terms of section 33(1)(c) of the Act to the contrary, a jurisdiction to extend time for compliance with a bankruptcy notice derives from subsections (6A), (6B) and (6C) of section 41 of the Act.  Subsections (6A) and (6C) relevantly provide:

(6A)       Where, before the expiration of time fixed by the Court or the Registrar for compliance with the requirements of a bankruptcy notice:

(a)proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or

(b)an application to set aside the bankruptcy notice has been filed with the Registrar, the Court may, subject to sub-section (6C), extend the time for compliance with the bankruptcy notice.

.....

(6C)    Where:

(a)a debtor applies to the Court or the Registrar for an extension of the time for complying with a bankruptcy notice on the ground that proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; and

(b)the Court or the Registrar, as the case may be, is of the opinion that the proceedings to set aside the judgment or order:

(i)have not been instituted bona filed; or

(ii)are not being prosecuted with due diligence, the Court or the Registrar, as the case may be, shall not extend the time for compliance with the bankruptcy notice.

Unlike in Re Howarth ex parte Mortgage Acceptance Nominees Limited [1993] 43 FCR 587, where the cases concerning the power of the Court to extend time for compliance were extensively considered, the debtors placed no reliance on section 30(1)(b) viz.

The Court

.....

(b)may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.

There is no need for me to repeat in this case the detailed consideration carried out in Howarth.  I concluded there, as I am bound to do here for the same reasons, that there is power in the Court to extend the time for compliance with a bankruptcy notice notwithstanding that that time has expired, provided that an application to set aside the bankruptcy notice has been made within the time for compliance fixed by the notice.

Although the time for filing the application to set aside was extended, the fact is that this condition of the power did not exist in this case.  This application to extend time for compliance is therefore beyond the jurisdiction and power of the court to grant.  The application is dismissed with costs as previously ordered.