Batterham v Makeig [2010] FCA 50

Applicant

AND: PETER JOHN MAKEIG

Respondent

JUDGE: BUCHANAN J

DATE: 3 FEBRUARY 2010

PLACE: SYDNEY

REASONS FOR JUDGMENT BUCHANAN J: 1 This judgment deals with an application to set aside a bankruptcy notice which was filed in this Court on 14 December 2009. The application also sought an interim order that time for compliance with the bankruptcy notice be extended until further order. 2 The application to set aside the bankruptcy notice was supported by an affidavit sworn by Louise Selmes on 8 December 2009. In that affidavit, Ms Selmes referred to proceedings commenced in the New South Wales Court of Appeal challenging the judgment upon which the bankruptcy notice was based. Those proceedings are listed for hearing on 1 and 2 March 2010 and execution of the judgment under challenge has been conditionally stayed. I shall return to the content of the affidavit in a short while. 3 The application to set aside the bankruptcy notice was listed before the District Registrar this morning. The parties were agreed that an extension of time to comply with the bankruptcy notice should be granted. However, the District Registrar drew attention to a judgment of Edmonds J delivered on 22 December 2009 (O'Meara v Deputy Commissioner of Taxation [2009] FCA 1575 ("O'Meara")). In that judgment, Edmonds J referred (at [10]) to the necessity for strict compliance with rule 3.02 of the Federal Court (Bankruptcy) Rules 2005. That rule requires, in part, that an affidavit accompanying an application to set aside a bankruptcy notice state the date when the bankruptcy notice was served on the applicant. 4 There is a further requirement which arises under section 41 of the Bankruptcy Act 1966 (Cth), namely that an application to set aside a bankruptcy notice must be made within the time for compliance with the notice (see in particular section 41(6A) and (7)). I was informed by the parties this morning that the bankruptcy notice was served in Rabaul on 17 November 2009 and that time for compliance with it accordingly expired on 23 December 2009. The parties' acknowledgment that service was effected on 17 November 2009 was also reflected in consent orders which were handed to the District Registrar this morning. I am satisfied, on the basis of that joint position, that the application to set aside the bankruptcy notice was made within the time required by s 41. However, that does not address the requirement, identified a short while ago, in rule 3.02, that the affidavit accompanying a bankruptcy notice state the date when the bankruptcy notice was served. Further reference to Ms Selmes' affidavit is accordingly required. 5 In the body of her affidavit, no reference is made to the time at which the bankruptcy notice was served. However, my attention was drawn to an annexure to the affidavit. That annexure is a copy of a notice of motion in the New South Wales Court of Appeal. It includes an affidavit sworn on 25 November 2009, which included (at paragraph 6) the following statements: On 17 November 2009 I received a phone call from my client. He informed me that he had been served with a Bankruptcy Notice in Rabaul. 6 Ms Dulhunty, who appeared this morning for the applicant, candidly conceded that this was the closest she could come to identifying evidence of a time of service. 7 Mr Hemsworth, who appeared this morning for the respondent, quite properly pointed out that Ms Selmes' statements left open the possibility of service at a much earlier time than 17 November 2009. Having regard to the fact that the present extension of time for compliance is an interlocutory application I would be prepared to act on hearsay statements in Ms Selmes' affidavit, but I do not think it is open to treat the statement which I have set out above as a statement that service actually occurred on or about 17 November 2009. There is no other evidence in any affidavit filed before time for compliance with the bankruptcy notice about when service occurred. 8 In the circumstances, the present application to set aside the bankruptcy notice suffers from the defect identified by Edmonds J in O'Meara. As a matter of comity, I will not depart from his Honour's view of the proper construction of rule 3.02. The consequence is that an order extending time for compliance with the bankruptcy notice should not be made. The further consequence is that, as Edmonds J observed in O'Meara, the application to set aside the bankruptcy notice is not competent. In those circumstances, there seems no point allowing the proceedings to continue any further. I will dismiss the application to set aside the bankruptcy notice. 9 When I had delivered reasons for judgment to this point, Mr Hemsworth made an application for costs. It is not surprising that he should do so. He relied upon the circumstance that, notwithstanding his client's preparedness to consent to the interim orders, his client had been put to expense in responding to the application, which I have decided should be dismissed. Ms Dulhunty opposed any order for costs. She pointed out that it was originally intended that she would mention the matter for both parties today and, in those circumstances, even if the application had been dismissed little expense would have been incurred by the respondent. 10 It seems to me, in the present case, that the fate of the application has turned on a technical circumstance which was neither identified nor, except in answer to my questions, specifically relied upon by the respondent. In those circumstances I am satisfied that an exception to the general rule is justified and there should be no order as to costs. The orders which I make are: (1) The application filed on 14 December 2009 be dismissed. (2) There be no order as to costs.