Williams v The People's Solicitors Pty Ltd
[2011] FMCA 482
•15 June 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WILLIAMS v THE PEOPLE'S SOLICITORS PTY LTD | [2011] FMCA 482 |
| BANKRUPTCY – Application to set aside or extend time of a bankruptcy notice – debt based upon costs assessment in the Local Court – effect of application to pay by instalments – whether cross-claim exceeding judgment debt – application for review of the costs assessment – stay on execution under s.377 of the Legal Profession Act 2004 (NSW) – bankruptcy notice valid – no grounds for setting aside – time for compliance extended until completion of costs review. |
| Bankruptcy Act 1966, ss.40(1)(g), 41(3), 41(6A), 41(7) Legal Profession Act 2004 (NSW), s.377 Uniform Civil Procedure Rules 2005 (NSW), rr.37.2, 37.3, 37.5 |
| Burns v AMP FinanceLtd [2004] FCA 1094 Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264 Coshott v Barry [2009] FCA 1521 Davidova v Murphy [2009] FCA 601 Glew v Harrowell [2003] FCA 373; (2003) 198 ALR 331 Maher v Honeysett [2009] FMCA 4; (2009) 222 FLR 407 Massih v Esber [2008] FCA 1452; (2008) 250 ALR 648 Owners of Strata Plan Number 14368 v Dickson (2008) 221 FLR 299 Re Johnson; ex parte Johnson v Tonkin (1994) 53 FCR 70 Re Schekeloff; Ex Parte Schekeloff v The Hopkins Group Pty Ltd (1989) 22 FCR 407 Williams v Spautz (1992) 174 CLR 509 |
| Applicant: | BARRY THOMAS WILLIAMS |
| Respondent: | THE PEOPLE'S SOLICITORS PTY LTD |
| File Number: | SYG 650 of 2011 |
| Judgment of: | Smith FM |
| Hearing date: | 15 June 2011 |
| Delivered at: | Sydney |
| Delivered on: | 15 June 2011 |
REPRESENTATION
| Counsel for the Applicant: | In Person |
| Counsel for the Respondent: | Mr K Liu & Mr B Ramsey |
| Solicitors for the Respondent: | The People's Solicitors |
ORDERS
Pursuant to s.41(6A)(a) of the Bankruptcy Act 1966 (Cth) the time for compliance with Bankruptcy Notice BN1608 issued 9 March 2011 is extended until the date on which a certificate is issued under s.378(1) of the Legal Profession Act 2004 (NSW) in relation to the costs assessment review in case number 2010/000143080.
The application is otherwise dismissed.
The applicant must pay the respondent’s costs, including reserved costs, as agreed or taxed under the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).
The applicant must provide a copy of this order to the Official Receiver within 2 working days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 650 of 2011
| BARRY THOMAS WILLIAMS |
Applicant
And
| THE PEOPLE'S SOLICITORS PTY LTD |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
This judgment explains why I am persuaded to extend time for Mr Williams to comply with a bankruptcy notice, but am not satisfied that I should set aside the notice.
Mr Williams employed solicitors practicing as “The People’s Solicitors” to defend proceedings in the Supreme Court, the nature of which is obscure. The proceedings ended with Mr Williams’ withdrawing his defence. He was served by The People’s Solicitors with further invoices for their legal services, which he refused to pay. The People’s Solicitors commenced proceedings to recover their outstanding fees in the Local Court in 2009, in proceedings which had the numbers either 2009/349694 or 2009/10147. The evidence is obscure in this respect, since none of the pleadings in that matter are in evidence.
Although Mr Williams had been complaining about the services he received from The People’s Solicitors, he never filed a cross-claim alleging any negligence nor claimed a set-off based on negligence or otherwise. He did, however, seek a costs assessment under the Legal Profession Act 2004 (NSW) in relation to his primary liability. Eventually, a costs assessor issued a costs assessment certificate which is dated 16 December 2010, but does not appear to have been dispatched by the manager of the costs assessment unit of the Supreme Court until 20 January 2011. The certificate determined Mr Williams’ application for costs assessment “by substituting for the disputed costs, as a fair and reasonable amount of costs to be paid to the costs respondent, the sum of fifteen thousand and thirty seven dollars ($15,037)”. I infer that this represented a substantial reduction, since the costs assessor issued a costs certificate requiring The People’s Solicitors to pay the fee for the assessment application. The reasons of the costs assessor are not before me in the present proceedings.
The contested Local Court proceedings were then re-listed, on 25 January 2011. There is confused evidence before me from both Mr Williams and a solicitor employed by The People’s Solicitors, Mr Ramsey, as to what happened at the listing. No documentary evidence of its purpose nor outcome is in evidence. I accept Mr Ramsey’s evidence that it was listed before a magistrate for the purposes of a call-over. Mr Ramsey gave oral evidence that the magistrate was informed of the recent receipt by The People’s Solicitors of the costs certificate, and that he was told that The People’s Solicitors had registered, or were about to register, the costs certificate under the Legal Profession Act, so as to gain the benefit of an automatic judgment of the Local Court in the amount of the costs certificate.
According to Mr Williams, he sought to adjourn the proceedings further while he sought legal aid and investigated his allegations of negligence, but this was refused. According to the recollections of Mr Williams and Mr Ramsey, the magistrate said words to the effect that judgment was given, or would be given, in favour of the plaintiff, that is, The People’s Solicitors. However, there is no evidence establishing to my satisfaction that, in fact, anything of the nature of a formal order was made in the proceedings which were listed on that day, being the pending contested proceedings in the Local Court.
The only certified judgment of the Local Court that is in evidence is a judgment, which on its face states that it was made and entered on 1 February 2011 in proceedings 2011/23626, in which Mr Williams is ordered to pay The People’s Solicitors a sum of $15,193 by way of “Costs assessment registered at the Local Court”. That certificate is found attached to a bankruptcy notice which was obtained by The People’s Solicitors on 9 March 2011, and was served on Mr Williams on or about 17 March 2011. It is established that such a judgment, entered ex parte upon registration of a costs assessment certificate, is not open to contest nor cross-claim by the debtor (see Massih v Esber [2008] FCA 1452; (2008) 250 ALR 648).
There is no evidence that Mr Williams was aware of the separate judgment arising from registration of the costs assessment, before he was served with the bankruptcy notice. It is possible that Mr Ramsey’s statements to him and to the magistrate on 25 January had foreshadowed obtaining such a judgment. However, this is unclear, since Mr Ramsey at times also appears to have referred confusingly to the judgment as having been ordered at the listing on 25 January. For example, in a letter he wrote to Mr Williams on 28 January 2011, he said
You will recall that His Honour entered a judgment in favour The People’s Solicitors for the amount of $15,193.00 in respect of this matter. This is the amount of the Cost Determination of the Cost Assessor and became a judgment debt upon filing the Cost Determination Certificate with the Local Court. The amount of the judgment debt is payable immediately. We are notifying you that we will be enforcing the judgment debt.
In the circumstances, I accept evidence from Mr Williams that he was in a state of confusion as to the precise proceedings number in relation to which judgment was, or was about to be, entered against him for a monetary amount. Initially he was, in my opinion reasonably, under the misapprehension that the judgment was being entered in the proceedings listed on 25 January. On the same day, he attended the registry and filed a notice of motion to ‘pay by instalments-individual’ in form 46 under the Uniform Civil Procedure Rules 2005 (NSW), r.37.2.
Mr Williams asks me to conclude that Mr Ramsey was aware that this application was filed, but there is no evidence of this, and I accept Mr Ramsey’s evidence that he was unaware of Mr Williams’ attempt to obtain an order to pay by instalments, at least, prior to the issuance and service of the bankruptcy notice.
The Local Court dealt with the document which had been filed by Mr Williams in a letter to him dated 7 February 2011 which stated:
Case Number: 2009/00349694
Case Title:The People’s Solicitors P/L v Barry Thomas Williams
------------------------------------------------------------------
APPLICATION TO PAY BY INSTALMENTS
THE APPLICATION TO PAY BY INSTALMENTS COULD NOT BE GRANTED BECAUSE:
· THERE HAS BEEN NO JUDGMENT - IAM ENCLOSING THE CORRECT FORM FOR YOUR USE.
· PERPETUAL DEBT – INSTALMENTS WOULD NOT COVER INTEREST.
There is no evidence that Mr Williams did anything in relation to that communication, until the day after he was served with the bankruptcy notice. He then, on 18 March 2011, wrote to the Registrar of the Local Court asserting that, in fact, he had made a valid application for an instalment order referable to the judgment attached to the bankruptcy notice. His letter asserted that “There must be a mistake or clerical error made in the court records as there is no doubt that there has been a judgment made”. His letter then requested “…that my application for time to pay be reconsidered now that it is clear that there is a judgment in place”.
There is no evidence that Mr Williams lodged a second formal application in form 46 in relation to proceedings number 2011/23626, in which the costs assessment certificate, in fact, was entered. However, the Local Court Registrar made, or purported to make, an order on 25 March 2011 under rule 37.3 of the Uniform Civil Procedure Rules, determining what appears to have been the original instalment application. It cited case number 2009/00349694, i.e. the pending contested matter, and refused the application to pay by instalments. It said:
REASONS FOR ORDER
PERPETUAL DEBT. DEBT WILL NEVER BE REPAID AT RATE PROPOSED. INTEREST IS ACCRUING FASTER THAN DEBT IS BEING REPAID. PLEASE NOTE, THE JUDGMENT MADE ON THE 25TH JANUARY 2011 HAS NOW BEEN NOTED TO YOUR FILE.
Mr Ramsey gave evidence that he became aware of the Registrar’s order after it was made, and that this was his first notice that Mr Williams had applied to the Local Court for an instalment order. I accept Mr Ramsey’s evidence, since it appears to me that the Local Court Registry was under no obligations to notify a judgment creditor as to an application to pay by instalments which was pending in front of a Registrar, until that application had been determined (see rule 37.3(2)).
However, under rule 37.5:
37.5 Stay of execution pending determination of application for instalment order
(1)Execution of the judgment to which an application for an instalment order relates is stayed:
(a)from the time the application is made until the time the application is determined, and
(b)if the application is refused by an order under rule 37.3 (1) (b) and an objection against the order is filed under rule 37.3 (3), from the time the objection is filed until the time the objection is determined.
(2)Subrule (1) does not apply if the applicant has previously made an application under this rule with respect to the same judgment debt.
Note: See also section 107 (2) of the Civil Procedure Act 2005 which provides for stay of execution of the judgment while an instalment order is in force.
I have in a previous judgment held that the effect of rule 37.5 is that a bankruptcy notice may not validly issue while there is an outstanding application for an instalment order, even if the judgment creditor is unaware of that application, and even if it was lost in the Local Court registry (see Owners of Strata Plan Number 14368 v Dickson (2008) 221 FLR 299).
However, in the present case, I am not satisfied that there was an instalment application made by Mr Williams in relation to the proceedings in which the judgment was entered, being the judgment certified in the attachment to the bankruptcy notice following the registration of the costs certificate. That judgment cited different proceedings, than the proceedings identified by Mr Williams in his instalment application, and had a different number to the proceedings cited in the two communications from the Registrar in response to Mr Williams’ instalment application.
In my opinion, the processing of the instalment application by the Local Court registry can be understood, in effect, as dealing with the assertion that a judgment was entered in the 2009 proceedings, the exact terms of which is obscure to me. Alternatively, the Local Court could be regarded as having treated Mr Williams’ letter of 18 March as, in effect, a second application to pay by instalment, being an application referable to the 2011 proceedings, in which the registration of the costs certificate had given rise to a judgment. On either view, there was not, in my opinion, at the time of the issuing or service of the bankruptcy notice, in existence an undetermined application to pay by instalments which would cause the invalidity of the present bankruptcy notice upon reasoning similar to that which I adopted in Dickson.
There is no evidence suggesting that any other stay on execution, whether under a discretionary power of the Local Court or under any statutory provision, was in effect at the time of the issuing and service of the bankruptcy notice. I note, in particular, that at that time Mr Williams had not sought to exercise his right of statutory review of the costs certificate under the Legal Profession Act, and did not seek to invoke that right until 2 May 2011, which was long after the issuing and service of the bankruptcy notice, and after the commencement of the present proceedings. The fact that a stay on execution under s.377 of the Legal Profession Act then came into effect, would not retrospectively invalidate the bankruptcy notice (see Re Schekeloff; Ex Parte Schekeloff v The Hopkins Group Pty Ltd (1989) 22 FCR 407 at 412, and Re Johnson; ex parte Johnson v Tonkin (1994) 53 FCR 70 at 77).
I therefore find that the bankruptcy notice was validly issued under s.41(3) of the Bankruptcy Act at that time.
Mr Williams, in some of his submissions, challenged the issue of the bankruptcy notice on grounds of abuse of process. As I understood his arguments, they required me to find that the entry of judgment was effected by Mr Ramsey with knowledge of Mr Willams’ pending instalment application and its consideration in the Local Court registry. However, on my above findings, he has not established that knowledge. Moreover, even if Mr Ramsey was motivated to try to issue a bankruptcy notice before a stay could come into effect under UCPR r.37.5, Mr Williams has not established any collateral or improper purpose which could allow the issuing of the notice by a creditor in such a circumstance to be characterised as an abuse of that process (cf. Williams v Spautz (1992) 174 CLR 509 at 527-530, and Davidova v Murphy [2009] FCA 601 at [88]-[89]).
Consequently, time for compliance with the bankruptcy notice commenced to run upon the conceded service of the bankruptcy notice on 17 March 2011.
Mr Williams commenced his present application to set aside or extend the bankruptcy notice by filing the application on 6 April 2011. This was before the expiry of the time that was specified in the bankruptcy notice. The time was extended by a Registrar on the day of filing, and has been subsequently extended up until today, under powers which were available under s.41(6A)(b).
It has been held that the power under s.41(6A)(b) should be understood to be ancillary to the Court determining on a final basis whether challenges to the validity of the bankruptcy notice are made out, or whether the ground of termination of the bankruptcy notice recognised in s.41(7) has been made out. That ground of termination arises by reason of the terms of s.40(1)(g) of the Bankruptcy Act, which requires a debtor served with a valid bankruptcy notice either to comply with its terms or:
…satisfy the Court that he or she 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 order, as the case may be, being a counter-claim, set-off, or cross demand that he or she could not have set up in the action or proceedings in which the judgment or order was obtained.
Mr Williams’ application to the Court, and his evidence and submissions presented at the hearing today, endeavoured to establish such a cross-claim. His documents are replete with complaints of professional misconduct by The People’s Solicitors in the course of their acting for him. However, he has not presented any evidence that he has ever properly formulated a claim in negligence which has either been filed in court proceedings or has been prepared in anticipation of court proceedings in which he will prove his allegations. He has presented evidence that he has made numerous complaints of professional misconduct to various bodies, including the Legal Services Commissioner and, it appears, in very recent days, to the CTTT. However, considering all the material he has presented to me, I am unable to detect in that material any claim formulated and supported in a coherent fashion, which would allow the Court to be satisfied in terms of s.40(1)(g) of the Bankruptcy Act.
The tests in this respect were explained by Lindgren J in Glew v Harrowell [2003] FCA 373; (2003) 198 ALR 331:
[8] In order to avoid committing the act of bankruptcy identified in para (g) of s 40(1) of the Act, Glew and Tresidder must satisfy the court that they have a counter-claim, set-off or cross-demand against Hunts of the kind described in that paragraph. What they must do in order to ``satisfy the Court" for the purposes of s 40(1)(g) of the Act that they have the asserted counter-claim, set-off or cross-demand has been variously described. The descriptions do not necessarily purport to be comprehensive definitions. To state that a debtor in receipt of a bankruptcy notice must show X does not necessarily imply that he or she need not also show Y, or that he or she will not be defeated if the creditor shows Z.
[9] There are authorities suggesting that Glew and Tresidder must satisfy me of the following interrelated and sometimes overlapping matters:
· that they have a ``prima facie case", even if they do not adduce evidence which would be admissible on a final hearing making out that case: Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346 (Ebert) at 350; Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433 at 438-9 ; 44 FLR 135 at 141 (Brink); Gomez v State Bank of New South Wales Ltd [2002] FCAFC 101; BC200201643 at [17], [18];
· that they have ``a fair chance of success" or are ``fairly entitled to litigate" the claim: Brink at ALR 438-9; FLR 141; Gould v Day [1999] FCA 1650; BC9907767 at [27], [28]; Re Capsanis; Capsanis v Owners -- Strata Plan 11727 [2000] FCA 1262; BC200005275 at [11]; and
· that they are advancing a ``genuine" or ``bona fide" claim: Re Capsanis; Capsanis v Owners -- Strata Plan 11727 [2000] FCA 1262; BC200005275 at [11].
It may be that the first and second formulations are intended to cover the same ground. In Brink Lockhart J treated (at ALR 438-9; FLR 141) the reference to a ``prima facie case" in Ebert as a reference to ``a fair chance of success".
[10] In Brink Lockhart J said (at ALR 438-9; FLR 141) that the court is not required to ``undertake a preliminary trial of the counter-claim, set-off or cross demand". But, clearly, the application of the criteria above requires the court to make some kind of preliminary assessment, though obviously not to determine the counter-claim, set-off or cross-demand finally. And in Guss v Johnstone (2000) 171 ALR 598, Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ stated (at 606):
[40] The state of satisfaction referred to in s 40(1)(g), and s 41(7), involves weighing up considerations as to the legal and factual merit of the claim relied upon by the debtor, and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim.
[11] Plainly, in order to ``satisfy" the court for the purposes of s 40(1)(g), the debtor is not required to prove, as on a final hearing, the asserted entitlement to recover from the creditor. Accordingly, evidence tendered on an application to set aside is to be tested for admissibility, not as if the proceeding were one in which the debtor's claim was being finally determined, but by reference to the question whether the court should be satisfied that the debtor has a claim deserving to be finally determined.
[12] Perhaps little more can usefully be said than that a debtor must satisfy the court that there is sufficient substance to the counter-claim, set-off or cross-demand asserted to make it one which the debtor should, in justice, be permitted to have heard and determined in the usual way, rather than be forced to comply with the bankruptcy notice by payment or to commit an act of bankruptcy.
I am not satisfied by any of the material presented to me by Mr Williams that he has pointed to “a fair chance of success” or a “prima facie case” of a head of negligence sounding in damages exceeding the amount of the costs which are being pursued by The People’s Solicitors, and which have been assessed by the costs assessment. This includes his complaints of professional misconduct by a reason of an alleged failure sufficiently to comply with the requirements on legal practitioners to provide estimates of their fees. I am not satisfied by the evidence before me that there is “sufficient substance” to the allegations made by Mr Williams, which should “in justice be permitted to” be “heard and determined in the usual way”, as a ground for being satisfied in terms of s.40(1)(g) and setting aside the bankruptcy notice consequent upon such satisfaction.
While I can understand Mr Williams’ state of mind, believing that he should get assistance and obtain investigations by other people before he formulates his case against The People’s Solicitors, the facts are that he has had more than enough time since 2009 to have presented a coherently formulated case of negligence with supporting evidence, and he has failed to do that in the present proceedings.
I am therefore satisfied not only that the bankruptcy notice served on Mr Williams was valid, but also that there is no ground to set it aside upon the Court’s satisfaction as to the existence of a cross-claim. Upon the reasoned opinion of Edmonds J in Coshott v Barry [2009] FCA 1521, the Court, upon that finding, no longer has power under s.41(6A)(b) to extend time to allow Mr Williams to pursue his negligence allegations, nor to pursue a belated application to appeal from the costs assessment (see Coshott at paragraph [20]).
However, Mr Williams also invokes the Court’s power to extend time under the bankruptcy notice under s.41(6A)(a). A number of authorities, including Coshott, suggests that this power is available as a head of substantive relief. By reason of the extensions of time which this Court has granted, it is possible to say, and it was not contested by The People’s Solicitors before me, that “before the expiration of the time fixed for compliance with the requirements of [the] bankruptcy notice … proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued, have been instituted by the debtor.” Those proceedings being the lodgement of an application in the Supreme Court for a review of the cost assessment certificate, that application requiring, and achieving, an extension of time before it could be progressed.
As I have noted, there is evidence that Mr Williams lodged an application for extension on 2 May 2011, during the pendency of the present proceedings. There is in evidence the submissions Mr Williams made to the Supreme Court costs assessment manager in support of an extension of time. Eventually, the manager made a decision to extend time, and this was communicated by letter from the ‘Manager, Costs Assessment’ to Mr Williams, dated 24 May 2011. This was after I had set down the present hearing. The review manager’s letter said:
1.I refer to my letter of 3 May 2011 and confirm receipt of the submissions of the Peoples Solicitor dated 4 and 12 May 2011, that are attached.
2.When considering an application to extend time, I consider the delay, the explanation for the delay, the prejudice to the parties and the merits of the application, but I may consider other factors.
3.The application for extending the time to lodge a review does explain the delay in part. It is clear that Mr Williams in lieu of preparing an application sought to resolve the payment of the outstanding fees by instalments and that process took place until March 2011.
4.The prejudice to the review respondent is not great as the certificates have been filed as a judgment, preserving any entitlement to interest should the certificates be affirmed and though other proceedings have commenced, though not relevant, parties interests will be protected by any orders for costs.
5.The merits of the application are such that there may be some prospects of success on review. The main ground of review centres on the lack of disclosure and the consequences. Mr Gibson found there was not disclosure but did not set aside the costs agreement. It may be that a review panel takes a different view as the circumstances surrounding the correspondence are open to different interpretations.
6.Accordingly, I will extend the time to lodge the review application – notices of assignment will be sent in due course.
7.A copy of this letter has been sent to both parties.
The most recent evidence is that on the first day of the present hearing, that is, yesterday, the manager of costs assessment sent a further letter to Mr Williams dated 14 June 2011, which stated:
I refer to the review application filed on 27 May 2011 in this matter.
The costs assessors who constitute the review panel are Frances A Hutley and Mark Stefan Campbell.
A notice has been sent to The Costs Assessor to produce the file and documents used for the assessment. When the file is received, the matter will be referred to the review panel.
Generally, the review is to be conducted on material that was submitted to the costs assessor. The members of the panel do not require any submissions from the parties for a review application. Should the panel require any further information or document(s), the members will contact you.
The operation of a costs assessor’s determination is suspended once The Manager, Costs Assessment has referred a application for review to the panel. This includes the liability to pay an invoice for the original assessor’s fees of those fees are also the subject of the review application. The panel may end that suspension if it affirms the original assessor’s determination or in any other appropriate circumstances.
The consequence of this referral of the matter to a panel is that s.377 of the Legal Profession Act 2004 (NSW) came into play yesterday. It provides:
377 Effect of review on costs assessor’s determination
(1)If the Manager, Costs Assessment refers a determination of a costs assessor to a panel for review under this Subdivision, the operation of that determination is suspended.
(2)The panel may end such a suspension:
(a)if it affirms the determination of the costs assessor, or
(b)in such other circumstances as it considers appropriate.
It was not contested by The People’s Solicitors before me today that s.377, in effect, gives rise to a statutory stay on enforcement of the present cost certificate. Their concession extended to accepting that it gave rise to a direct or inevitable right to obtain a stay on the Local Court judgment on the registration of the costs certificate. This concession is consistent with the broad view taken in bankruptcy law as to the existence of a stay on execution (cf. Maher v Honeysett [2009] FMCA 4; (2009) 222 FLR 407 at [31]).
The People’s Solicitors also accepted that I had a discretion today to grant final relief by way of an extension of time of the bankruptcy notice until the completion of Mr Williams’ proceedings under the review of the cost assessor’s determination. They did not contest that it might be an appropriate exercise of that discretion in the circumstances before me, provided that they receive the benefit of a costs order in the present proceedings.
The exercise of the discretion to extend time under a bankruptcy notice pending an appeal, is the subject of established authority (see Lehane J in Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264, and Branson J in Burns v AMP FinanceLtd [2004] FCA 1094). The authorities suggest that the Court would normally be reluctant to extend time for compliance with a bankruptcy notice where there are appeal proceedings outstanding in relation to the judgment debt, if there is no stay on judgment obtained by order of the Appeal Court or otherwise. The judgments point out that the situation might be different in relation to an adjournment of a bankruptcy petition, since the effect of refusing to extend time is to give rise to an act of bankruptcy but does not effect an alteration to the legal status of the debtor.
However, for the above reasons, I am satisfied in the present case that there has arisen since yesterday a statutory stay on enforcement of the judgment debt relating to the cost determination.
I am also satisfied on balance, albeit not without hesitation, that Mr Williams has sufficiently explained his delays in not bringing that appeal until 2 May 2011. This requires a somewhat generous view of his belief that he should pursue his grievances with The People’s Solicitors in other forums, before seeking to challenge the costs certificate by way of review. However, in the absence of stronger opposition, I would accept that the delay should not prevent my exercising the discretion to extend time. It appears to me that the justice of the situation points in favour of an extension of time, since, as was conceded, The People’s Solicitors would be in no position to bring a creditor’s petition based on the judgment debt they obtained in the Local Court, while there was an outstanding costs assessment review proceeding.
The circumstances therefore appear to me to fall into the situation faced by Edmonds J in Coshott, and an order extending time should be made today by way of final relief. I will define the terms of that extension in my written order.
In relation to the costs of the present proceedings, I consider that costs should not follow that event, that is, in favour of Mr Williams. I have rejected his arguments going to the validity of the bankruptcy notice and the existence of a counter claim. The relief I am giving today has only arisen by reason of his success in persuading the Supreme Court to extend time, and to refer the cost assessor’s determination to a panel. That application was made belatedly, and the statutory stay arose only during the pendency of the hearing before me.
In my opinion, The People’s Solicitors have reasonably opposed the application until the occurrence of that event yesterday, including by appearing yesterday and today at the final hearing of the matter. I therefore consider that a proper exercise of my discretions in relation to costs should order Mr Williams to pay the costs of the proceedings as agreed or taxed under the Bankruptcy Rules.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Smith FM
Date: 5 July 2011
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