Teese v Clinch
[2002] FMCA 205
•11 September 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TEESE v CLINCH & ORS | [2002] FMCA 205 |
| BANKRUPTCY – Application for a stay on bankruptcy proceedings – stay of 21 days previously granted – no further stay possible. |
Bankruptcy Act 1966 (Cth), ss.37, 52
Bankruptcy Regulations
Bankruptcy Rules
Federal Court Rules
Coleman v Lazy Days Investments Pty Ltd (1995) 55FCR 297
Day v Gould [2000] FCA 1377
Gould v Day [2002] FCA 66
Trustees of the Franciscan Missionaries of Mary v Weir [2002] FCA 574
| Applicant: | ANN CAROLYN TEESE |
| First Respondent: Second Respondent: | PETER ALLAN ROWLANDS CLINCH ROSS STANLEY NEVILLE |
| File No: | SZ450 of 2001 |
Delivered on: | 11 September 2002 |
| Delivered at: | Sydney |
| Hearing Date: | 11 September 2002 |
| Judgment of: | Driver FM |
REPRESENTATION
| Agent for the Applicant: | Mr P Gargan |
| Counsel for the Respondent: | Mr J Chippindall |
| Solicitors for the Respondent: | Clinch Neville Long Lawyers |
ORDERS
Motion dismissed.
Applicant on the motion to pay petitioning creditor’s costs, including any reserved costs, to be taxed and paid from the estate of the bankrupt in accordance with the Bankruptcy Act 1966 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ450 of 2001
| ANN CAROLYN TEESE |
Applicant
And
| PETER ALLAN ROWLANDS CLINCH |
First Respondent
ROSS STANLEY NEVILLE
Second Respondent
CLAYTON ANDREW LONG
Third Respondent
REASONS FOR JUDGMENT
(CORRECTED JUDGMENT)
I have before me an application by Ms Ann Carolyn Teese for relief stemming from circumstances alleged to have occurred following a sequestration order I made on 20 August 2002. On that date I ordered that the sequestration order be made against the estate of Ms Teese.
I also made orders for costs. I ordered that a copy of the orders be provided to the official trustee within 2 days of entry and order 4 stated that: pursuant to s.52(3) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) all proceedings under the sequestration order be stayed for 21 days after that date, being 20 August.
The complaint made by Ms Teese in these proceedings is that she expected, during the period of the stay, to seek to borrow funds in order to satisfy the debt, at least the debt leading to the creditor’s petition, and possibly other debts as well, and that she was frustrated in that purpose by the fact that the national insolvency index was amended to include reference to the sequestration order I made on 20 August, but without mentioning the stay that I had ordered. The material relied on by Ms Teese in support of the application satisfies me that the petitioning creditor provided a copy of my order to the official receiver, and that in consequence of the creditor doing so the national insolvency index was amended, apparently by ITSA, to include reference to the sequestration order without any reference to the stay.
The material before me asserts that because of that Ms Teese was unsuccessful in obtaining finance to discharge the debt or debts that she was seeking to deal with and that she has thereby been prejudiced. The application seeks orders extending the operation of the stay of proceedings that I put in place on 20 August and also seeks other unspecified relief against the petitioning creditor, asserting, in effect, that the petitioning creditor is in contempt of the orders I made on 20 August, and that criminal offences have been committed.
It is clear to me that the petitioning creditor was not in contempt of the orders I made in entering those orders and in providing a copy of the orders to the official receiver. The petitioning creditor was obliged by the Bankruptcy Regulations (“the Bankruptcy Regulations”) and rule 31.08 of the Federal Magistrates Court Rules 2001 (Cth) (“the Federal Magistrates Court Rules”) to enter the orders and to provide them to the official receiver within 2 days of entry.
I did not relieve the petitioning creditor of that obligation in my orders. In addition, order 3 required a person who could logically be taken to be the petitioning creditor to provide a copy of the orders to the official trustee within 2 days of entry. That order was made under the misapprehension that the official trustee would be the trustee of the bankrupt estate of Ms Teese. As that is not in fact the case, order 3 was unnecessary but was nevertheless an order made.
The import of order 4 is, as submitted to me, that it was put in place to permit Ms Teese to borrow money to satisfy debts. The sequence of events was that I made orders to sequestrate the estate of Ms Teese and in relation to costs and that before the proceedings closed Mr Gargan, who appeared as agent for Ms Teese, sought the additional order for a stay. I understood that application to be made to permit Ms Teese to consider her position and to seek to put her affairs in order.
I was persuaded in those circumstances that I should make order 4.
It may be in the light of hindsight that a stay ought not to have been granted for the purpose of permitting Ms Teese to borrow money, based on observations by his Honour Emmett J in Gould v Day [2002] FCA 66, as to the proper purpose of the granting of a stay. Nevertheless, the stay was granted. In addition, however, the sequestration order was made and the fact of the making of that sequestration order would in itself have inhibited Ms Teese's ability to borrow funds, notwithstanding the stay.
There was nothing that the petitioning creditor did following those orders that inhibited Ms Teese's ability. The petitioning creditors simply fulfilled their obligation under the Bankruptcy Regulations and the Bankruptcy Rules. It is unfortunate that the insolvency register did not make reference to the stay having been granted and it is possible that a lender simply referring to the register may have gained a misleading impression.
If that occurred, that misleading impression would have been dispelled simply by showing the lender a copy of the orders that I made on 20 August, which clearly make reference to the stay. In any event, if Ms Teese has a genuine complaint about the state of the register up to today's date, that complaint is one that she should properly make to the Insolvency and Trustee Service. It is not properly a complaint against the petitioning creditor.
The other relief sought, and the specific relief sought by Ms Teese, is an extension of the stay granted on 20 August. I have come to the view that I have no power to grant an extension of the stay beyond the period of 21 days already granted. Section 37(2) of the Bankruptcy Act makes clear that I have no general power to suspend the operation of the sequestration order. However, s.52(3) also makes clear that I have the power to stay the operation of a sequestration order for a maximum period of 21 days.
In Coleman v Lazy Days Investments Pty Ltd (1995) 55 FCR 297, his Honour Carr J found that, in addition, the Federal Court Rules permit a stay of longer than 21 days to be granted where there is an appeal to the Federal Court against the making of a sequestration order. Further, in the case of the Trustees of theFranciscan Missionaries of Mary v Weir [2000] FCA 574 the Federal Court also held that there was a power to extend a stay beyond 21 days where an application was made in the Federal Court to review a sequestration order made by a registrar under delegated power.
That seems to be the limit of the power to extend the stay beyond 21 days. In Gould v Day, and in Day v Gould [2000] FCA 1377, his Honour Emmett J expressed the view that, leaving aside the question of an appeal or a review application, there is no power to grant a stay of longer than 21 days. With respect, I agree with and adopt that view and I find that I am unable to extend the stay beyond the period of 21 days already granted.
In the circumstances, there is no relief that I can grant to the applicant in these proceedings, Ms Teese, in the nature of a stay and I am not satisfied that I should grant any of the other relief sought. I will therefore dismiss the application.
On the question of costs, Mr Chippindall has requested a costs order.
I am satisfied that an order should be made, given that his clients have been entirely successful and Ms Teese has been unsuccessful, and taking account also of my view that the respondents in these proceedings, who were incorrectly described as applicants, have done nothing to disentitle themselves to an order for costs. The proceedings were, in my view, misconceived and a costs order should flow. I see no reason to link these proceedings to any other proceedings being pursued by Ms Teese, notwithstanding the submission to the contrary being made by Mr Gargan.
I will therefore order that the petitioning creditors costs, including reserved costs if any, be taxed and paid from the estate of bankrupt in accordance with the Bankruptcy Act.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 23 September 2002
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