FEDERAL COURT OF AUSTRALIA
Van Gorp v Davy [2016] FCA 1385
File number: NSD 1358 of 2015 Judge: FARRELL J Date of judgment: 22 November 2016 Catchwords: BANKRUPTCY – application for review of Registrar’s decision – where Registrar dismissed application to set aside a bankruptcy notice – where bankruptcy notice attached costs assessment order made by Registrar in the Family Court of Australia – where bankruptcy notice did not attach the judgment to which the costs assessment order related – whether costs assessment order a “final judgment” or “final order” within the meaning of s 40(1)(g) of the Bankruptcy Act 1966 (Cth) – Registrar’s orders set aside – bankruptcy notice set aside
BANKTUPCY – where applicant did not apply for a stay of the Registrar’s order dismissing his application to set aside the bankruptcy notice or make an application to extend the time in which to comply with the bankruptcy notice – whether application for review otiose if act of bankruptcy committed
COSTS – unrepresented litigant
Legislation: Bankruptcy Act 1966 (Cth) ss 30, 40, 41, 306
Bankruptcy Regulations 1996 (Cth) reg 4.02, Sch 1
Family Law Act 1975 (Cth) ss 37A, 117
Family Law Rules 2004 (Cth) rr 19.30, 19.31, Ch 20
Federal Court (Bankruptcy) Rules 2016 (Cth) r 2.02, Sch 1
Federal Court of Australia Act 1976 (Cth) s 35A
Limitation Act 1969 (NSW) s 63
Cases cited: Adams v Lambert (2006) 228 CLR 409; [2006] HCA 10
Australian Super Pty Ltd v Woodward (2009) 262 ALR 402; [2009] FCAFC 168
Cachia v Hanes (1994) 179 CLR 403; [1994] HCA 14
Commonwealth Bank of Australia v Horvath (Junior) (1999) 161 ALR 441; [1999] FCA 143
Curtis v Singtel Optus Pty Ltd (2014) 225 FCR 458; [2014] FCAFC 144
Dekkan v Evans [2008] FCA 1004
Franks v Warringah Council (2003) 131 FCR 287; [2003] FCA 1047
Gibbs v Kinna [1999] 2 VR 19; [1998] VSCA 52
George v Fletcher (Trustee) (No 2) [2010] FCAFC 71
Guss v Johnstone (2000) 171 ALR 598; [2000] HCA 26
Harris v Caladine (1991) 172 CLR 84; [1991] HCA 9
Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71; [1988] HCA 34
McMillan v McMillan [2016] FamCA 387
Re Glew; Glew v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331; [2003] FCA 373
Scott v Charitopoulos (2008) 174 FCR 9; [2008] FCA 1914
Streimer v Tamas (1981) 37 ALR 211
Totev v Sfar (2008) 167 FCR 193; [2008] FCAFC 35
Winn v Blueprint Instant Printing Pty Ltd (2011) 193 FCR 41; [2011] FCA 293
Date of hearing: 14 October 2016 Date of last submissions: 4 November 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 61 Counsel for the Applicant: The applicant appeared in person Counsel for the Respondent: Mr D Parish Solicitor for the Respondent: Macphillamy’s…
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- AGLC
- Van Gorp v Davy [2016] FCA 1385
- Case
- [2016] FCA 1385
- Decision Date
CaseChat Overview and Summary
The court held that it was necessary to consider de novo Van Gorp's application to set aside the bankruptcy notice. It found that the Registrar's orders dismissing the application to set aside the bankruptcy notice and setting aside the bankruptcy notice itself were set aside. The court reasoned that, in a proper case, the court could extend time for compliance with a bankruptcy notice and set aside the declaration made by the primary judge, even if an act of bankruptcy had already occurred. Furthermore, the constitutional imperative that the exercise of delegated powers by a Registrar be subject to review by a judge of the Court could not be satisfied if no review was available because an act of bankruptcy had already occurred. The court found that Van Gorp had a counterclaim, set-off, or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final judgment or final order, and thus it was in a position to extend time for compliance with the Bankruptcy Notice under section 41(6A) and to set aside both the Registrar's decision and the Bankruptcy Notice.
The final orders of the court were that the Registrar's orders made on 6 July 2016 were set aside, the bankruptcy notice issued on 29 June 2015 was set aside, and Davy was to pay Van Gorp an amount equal to the sum of the filing fees incurred by him in relation to his application to set aside the bankruptcy notice and in relation to these proceedings. Entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.
Orders
Orders of the court
1. Registrar Tesoriero’s orders made on 6 July 2016 are set aside.
2. Bankruptcy Notice BN 182236 issued on 29 June 2015 is set aside.
3. The respondent pay the applicant an amount equal to the sum of the filing fees incurred by him in relation to his application to set aside Bankruptcy Notice BN 182236 and in relation to these proceedings.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
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
Item 1 of Schedule 1 of the Bankruptcy Rules confers power on a Registrar to exercise powers under s 30(1) of the Bankruptcy Act to set aside a bankruptcy notice and item 4 confers power to extend time for compliance with a bankruptcy notice under s 41(6A).Consideration It is difficult to accept Ms Davy’s submission that there is no utility in the Court considering Mr Van Gorp’s application for review of the Registrar’s decision made on 6 July 2016 because he has already committed an act of bankruptcy having failed to apply for or be granted a stay of the Registrar’s order or an extension of time for compliance with the Bankruptcy Notice. First, in Guss v Johnstone, the High Court found:(1)at [58]: what is said to be the ineluctable nature of an act of bankruptcy is qualified by the consideration that time for compliance with a bankruptcy notice may be extended even after the time has expired, provided the conditions of s 41(6A) are otherwise satisfied: see Streimer v Tamas (1981) 37 ALR 211; and(2)at [63]: the Court was unable to accept that whenever, in a proceeding under s 40(1)(g) and s 41(7), a judge at first instance has determined that he or she is not satisfied of the matter referred to in s 41(7), and has declined to interfere with the process initiated by a creditor, no appellate reversal of that decision, whether by the Full Court or by the High Court, can alter the consequences of the decision. In a proper case it would be within the power of the Full Court to set aside the declaration made by the primary judge. The consequences for proceedings and events that had occurred in the meantime would vary with the circumstances, but they could include the same consequences as flowed from the order in Streimer v Tamas, where the statutory power to extend time for compliance with a bankruptcy notice, given by s 41(6A), was exercised after an act of bankruptcy had been committed. Second, Ms Davy’s contention calls into question whether the “constitutional imperative” that the exercise of delegated powers by a Registrar be subject to review by a judge of the Court can be satisfied if no review is available because an act of bankruptcy has already occurred. For a delegation of power to a registrar to be valid, the powers and functions of the registrar must be subject to review by a judge on questions of both fact and law. If the review of the exercise of the power by the registrar is by way of hearing de novo, the delegation will be valid (Harris v Caladine at p 95 per Mason CJ and Deane J). Nothing less than a hearing de novo would be sufficient. That is to say, there must be a complete rehearing of the facts and the law as they exist when the judge reviews the order made by the registrar; otherwise, the registrar, and not the judges of the Court, would be exercising the original jurisdiction of the Court: see Totev v Sfar (2008) 167 FCR 193; [2008] FCAFC 35 at [10] per Emmett J and at [91]-[92] per Cowdroy J. These authorities lead me to the view that it is necessary for me to consider de novo Mr Van Gorp’s application to set aside the Bankruptcy Notice. If I were to be satisfied that he has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final judgment or final order, I would be in a position to extend time for compliance with the Bankruptcy Notice under s 41(6A) and to set aside both the Registrar’s decision made on 6 July 2016 and the Bankruptcy Notice.