FEDERAL COURT OF AUSTRALIA Valassis v Bernard [2002] FCA 796 VALASSIS v BERNARD N 254 of 2002 SACKVILLE J SYDNEY 21 JUNE 2002 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 254 OF 2002 BETWEEN: DENNIS VALASSIS APPLICANT AND: ERIC BERNARD RESPONDENT JUDGE: SACKVILLE J DATE OF ORDER: 21 JUNE 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for extension of time in which to file and serve a notice of appeal be dismissed. 2. The applicant pay the respondent's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 254 OF 2002 BETWEEN: DENNIS VALASSIS APPLICANT AND: ERIC BERNARD RESPONDENT JUDGE: SACKVILLE J DATE: 21 JUNE 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application for an extension of time in which to file and serve a notice of appeal from a judgment given by Beaumont J on 12 June 2001. On that date, his Honour made orders dismissing an application by the present applicant (the "Debtor") to set aside a bankruptcy notice that had been issued on the application of the respondent (the "Creditor"). Beaumont J also ordered the Debtor to pay the Creditor's costs of the application to set aside the bankruptcy notice. 2 At the conclusion of argument I indicated that I proposed to make an order dismissing the application. These are my reasons for making the order. 3 The application for an extension of time was filed on 3 April 2002, some ten months after Beaumont J delivered judgment. The Court has power to extend time "for special reasons": Federal Court Rules ("FCR") O 52 r 15(2). In Jess v Scott (1986) 12 FCR 187, a Full Court said this about FCR O 52 r 15(2) (at 195): "What is needed to justify an extension of time is indicated in r 15(2) by the words 'for special reasons'. It is that there be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of twenty-one days. In that context, the expression 'special reasons' is intended to distinguish the case from the usual course according to which the time is twenty-one days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the Court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression 'for special reasons' implies something narrower than this. … It should not be overlooked that r 15(2) enables leave to be given 'at any time'; the 'special reasons' relevant to such a power cannot but describe an elastic test, suitable for application across a range of situations, from an oversight of a day to a neglect persisted in during a prolonged period. It would require something very persuasive indeed to justify a grant of leave after, for example, a year; equally, it may be said, something much less significant might justify leave where a party is a few days late. 'Special reasons' must be understood in a sense capable of accommodating both types of situation. It is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule prescribing a period within which an appeal must be filed and served." 4 FCR O 52 r 15(6) requires an application or an extension of time to be accompanied by an affidavit showing: "(a) the nature of the case; (b) the questions involved; and (c) the reason why leave should be granted". The Debtor, who appeared unrepresented, filed three affidavits, but none complied with O 52 r 15(6). Nor did he file a draft notice of appeal specifying the grounds upon which he intended to rely. 5 A brief chronology of events is as follows: * On 15 December 2000 a bankruptcy notice was issued on the application of the Creditor. The notice was founded on a judgment for costs obtained by the Creditor against the Debtor arising out of proceedings in the Residential Tenancy Tribunal of New South Wales. The judgment was for $7,519.95. * On 25 January 2001, the Debtor applied to this Court to set aside the bankruptcy notice, on the basis that he had applied for leave to appeal to the Supreme Court of New South Wales against the costs determination. * On 10 April 2001, Beaumont J extended the time for compliance with the bankruptcy notice until 12 June 2001, conditional upon the debtor paying the sum of $7,519.95 to the Creditor's solicitors on or before 19 April 2001. The sum was to be held by the solicitors in a trust account to abide the further order of the Court. * On 19 April 2001, Beaumont J extended the time for compliance with the condition until 26 April 2001. His Honour noted that, on the evidence, the Debtor was "not only solvent, but clearly solvent". * On 12 June 2001, the matter was again before Beaumont J. The Debtor did not appear. In the absence of any appearance by the Debtor, Beaumont J dismissed the application to set aside the bankruptcy notice, with costs. The present application for an extension of time relates to these orders. * On 18 June 2001, the Creditor filed a creditor's petition founded on the Debtor's act of bankruptcy in failing to comply with the bankruptcy notice. * On 16 July 2001, the first return date for the petition, the Debtor signed an authorisation for the Creditor's solicitors to withdraw from their trust account the moneys that the Debtor had paid in pursuant to the orders made by Beaumont J. The petition was adjourned to 20 August 2001 and, on that date, was again adjourned to 3 September 2001. * On 3 September 2001, the matter was called, but the Debtor did not appear. On the application of the Creditor, the petition was dismissed, but an order was made that the Debtor pay the Creditor's costs. * On 21 September 2001, the Debtor applied by notice of motion for the costs order to be vacated. On 23 October 2001, Branson J ordered that the costs order be set aside pursuant to FCR O 35 r 7(2)(a) on the basis that the Debtor had not been present when the order was made. The matter was returned to the Registrar to deal with the costs of the petition. * After a series of adjournments, Emmett J heard argument on 12 March 2002 concerning the costs of the petition. His Honour held that it was not unreasonable for the Creditor to have filed the petition on 18 June 2001, bearing in mind that it was not until the first return date that the amount of the debt was paid pursuant to the authority given by the Debtor. Accordingly, Emmett J ordered the Debtor to pay the costs of the Creditor of the petition up to and including the day of its dismissal. * On 3 April 2002, the present application for an extension of time was filed. 6 This chronology shows that during the ten month period between the date of the orders made by Beaumont J and the filing of the present application, the Debtor appeared in the Court on several occasions and filed at least one notice of motion. It also shows that the orders made by Beaumont J dismissing the application to set aside the bankruptcy notice have largely been overtaken by events, in particular by Emmett J's order dismissing the Creditor's petition. While another creditor might in theory be able to take advantage of the Debtor's act of bankruptcy in failing to comply with the bankruptcy notice, in practice the act of bankruptcy could not found a fresh petition. This is because s 44(1)(c) of the Bankruptcy Act 1966 (Cth) provides that a creditor's petition is not to be presented against a debtor unless the act of bankruptcy on which the petition was founded was committed within six months before presentation of the petition. 7 The Debtor sought to explain the delay of some ten months in the filing of his application for an extension of time on the basis that he had been ill throughout the relevant period. It is true that there was medical evidence suggesting that the Debtor had a serious illness during the relevant period. But, as I have noted and as the Debtor acknowledged, during that period he appeared in this Court on several occasions and filed at least one motion. In any event, the medical evidence fell well short of establishing that the Debtor, particularly in the early part of the ten month period, was so ill that he could not have attended to the filing of an appeal, or an application for an extension of time in which to file an appeal in this matter. I am therefore not satisfied that the Debtor provided an adequate explanation for the extensive delay in filing the current application. 8 A second difficulty facing the applicant is that the substantive orders made by Beaumont J no longer have any practical effect. In substance, as the Debtor acknowledged, the only issue at stake in any appeal would be the question of costs in the proceedings determined by Beaumont J. 9 The costs order against the Debtor, so far as I am aware, has not been taxed. Nonetheless, it is clear enough that any costs order would be for a relatively modest amount. Moreover, the Debtor, on the findings made by Beaumont J on 19 April 2001, had net assets of at least $2.5 million. This is not a case where, if the appeal were not to proceed, the debtor would be at risk of a serious injustice. 10 It was for these reasons that I formed the view that the Debtor had not established that there were "special reasons" why the appeal should be permitted to proceed out of time. Accordingly, I dismissed the application for an extension of time in which to file and serve a notice of appeal. 11 The Debtor advanced no cogent reasons why he should not pay the costs of the current application. I therefore order that he pay the Creditor's costs of the application. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. Associate: Dated: 21 June 2002 The Applicant was unrepresented. Counsel for the Respondent: Ms M Sneddon Solicitor for the Respondent: Gray & Perkins Date of Hearing: 20 June 2002 Date of Judgment: 21 June 2002