Butler v Moore; in the matter of Moore

REASONS FOR JUDGMENT 1 On 15 August 2006 a Registrar of this Court (Registrar Hedge) made the following orders: (1) The petition against the respondent debtor (Mr Moore) be dismissed. (2) Mr Moore pay the applicant creditor's (Mr Butler's) costs (including reserved costs) as agreed or taxed. (3) A copy of this order be provided to the Official Receiver in Sydney within 2 days. 2 On 14 March 2007 Mr Moore filed in the New South Wales Registry of the Court a notice of motion moving the Court for the following orders: (1) To accept an application of review of the Registrar's decision despite the time limitation of 21 days as per Order 467B(1); (2) to review the Registrar's costs order made on 15 August 2006 by rescinding those orders as per Section 37(1) of the Bankruptcy Act 1966; and (3) to replace the rescinded orders with orders that each party accept their own costs for the entirety of the matter and a mutual indemnity put into effect. 3 The notice of motion further provided that 'the predisposing matters are contained in the affidavits forming part of this motion'. 4 The motion came before me for hearing on 17 April 2007, at the conclusion of which I made the following orders: (1) The motion that further time be allowed to seek review of the Registrar's decision of 15 August 2006 concerning costs be refused. (2) The motion to review the Registrar's costs order made on 15 August 2006 by rescinding that order pursuant to subs 37(1) of the Bankruptcy Act 1966 is dismissed. 5 At the time of making the orders in [3] above I indicated that I would subsequently publish my reasons. 6 The reference in the terms of the order sought in (1) of the notice of motion to 'as per Order 467B(1)' could not be explained by either Mr Moore or counsel for Mr Butler and my researches were unable to uncover the relevance of the reference. On the hearing of the motion I therefore decided to read the terms of the order sought in (1) of the notice of motion as if those words were not there. 7 Subsection 35A(1) of the Federal Court of Australia Act 1976 (Cth) ('the Act') provides for a Registrar of the Court to exercise various powers of the Court including, in para (f), the power to make an order as to costs. That power is expressed to be subject to subs 35A(2) which provides that a Registrar shall not exercise the powers referred to in para (1)(f) except in relation to costs of or in connection with an application heard by a Registrar. That was certainly the case in respect of the costs order made by Registrar Hedge in the present case on 15 August 2006. 8 Subsection 35A(5) of the Act provides: '(5) A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power.' (Emphasis added) 9 Subsection 35A(6) of the Act provides: '(6) The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised.' 10 Rule 2.03 of the Federal Court (Bankruptcy) Rules 2005 relevantly provides: '(1) Subject to any direction by the Court or a Judge to the contrary, an application under subsection 35A(5) of the Act for review of the exercise of a power of the Court by a Registrar under subsection 35A (1) of the Act must be made by motion on notice within 21 days after the day on which the power was exercised.' (Emphasis added) This Rule, together with subs 35A(5) of the Act, explains the terms of the order sought in (1) of the notice of motion and the reference therein to '21 days'. 11 Finally, subs 37(1) of the Bankruptcy Act provides that subject to subs 37(2), the Court may rescind, vary or discharge an order made by it under the Bankruptcy Act or may suspend the operation of such an order. The exception made by subs 37(2) is that the Court does not have power to rescind or discharge or suspend the operation of a sequestration order or an order for the administration of the estate of a deceased person under Pt XI. 12 If I was to grant Mr Moore leave to make an application under subs 35A(5) of the Act for review of the exercise of the costs order made by the Registrar on 15 August 2006 notwithstanding that more than 21 days had expired after the day on which the power was exercised by her, any review under subs 35A(6) on an application under subs 35A(5) is by way of a hearing de novo: Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374. 13 On the hearing of the motion, two affidavits of Mr Moore, both sworn 9 March 2007, were read subject to a number of objections by counsel for Mr Butler. I ruled that the paragraphs in what I called the short form of affidavit (Ex. 1) to which objection was taken be allowed but that paras 4, 10, 12 and 13, the last sentence of para 8, the words '… and that the respondent has knowingly ignored those orders' in para 9 and the words '… admitting agreement to settle the amount in paragraph 4 above and providing false information of "local court costs"' in para 11 in what I called the long form of affidavit (Ex. 2) all be rejected. 14 In support of his application to review Registrar Hedge's exercise of power to make the costs order she did on 15 August 2006, despite the application being made outside the 21 day period referred to in r 2.03 of the Federal Court (Bankruptcy) Rules, Mr Moore submitted that: (1) He was not advised of the outcome of the matter, by which I assume he meant the matter before, and the orders made by, Registrar Hedge on 14 and 15 August 2006. (2) He was not advised he had to make the application to review within 21 days. (3) He was not aware of the affidavit of Mr Butler's representative, Mr Kim, sworn 11 August 2006, until he received his solicitor's file in February 2007 despite repeated requests of Mr Anderson, his solicitor, to provide the file. (4) At the end of the day, he only discharged his indebtedness to Mr Butler leading to the dismissal of the creditor's petition because he was advised to do so by his counsel who was brought in at the last moment to replace his counsel of choice, who was not available on the date of the hearing before Registrar Hedge. Prior to that time he had not been advised to settle. 15 No evidence was adduced in support of any of these submissions. Indeed, such evidence that was relied on by Mr Moore, in particular what remains of para 11 of Ex. 2 and the affidavit of Mr Kim sworn 11 August 2006 (annexure A), suggests that, the issue of costs aside, he was prepared to discharge his indebtedness to Mr Butler as early as 15 June 2006. 16 Counsel for Mr Butler submitted that I should not allow an extension of time for Mr Moore to make an application for review of Registrar Hedge's costs order for a number of reasons: (1) There is really no admissible evidence explaining the delay apart from a two-line statement in Ex. 1 in which Mr Moore claims he was misinformed as to his rights to appeal. There is no information given as to either the basis for the claim that he was misinformed or as to its effect on why that prevented him from being able to make the application in a timely fashion. (2) The taxation process has been put in train by the order made by Registrar Hedge on 15 August 2006. If I was to now countenance the prospect of an application to set aside that order, then all of the taxation process that has been conducted by Registrar Segal would be for nought. Mr Moore's claim that Mr Butler has over-charged can be pursued within the bounds of the taxation process. Indeed, Ex. 1 shows that the conduct of that proceeding is active and is set down for 20 April wherein no doubt submissions can be exchanged and an orderly determination of the review of that process can be undertaken in any event. (3) The other fundamental problem with the application is that it cannot succeed. It is apparent from Mr Moore's affidavit and oral submissions that the effect of what he wants is that the Court should enforce an agreement which Mr Moore says should have been arrived at consensually between himself and Mr Butler when the costs issue was live. What he says is that: 'The settlement of the costs aspects of the claim fell over because of the failure to agree on a mutual indemnity.' (4) The main complaint that Mr Moore seeks to advance is that too much has been charged by Mr Butler by way of costs. There is a process in train at the moment to deal with that. There has been a determination made which reduces to less than half his claim for the amount of those costs. Now there has been an appeal lodged against that but Mr Moore is entitled to be heard on that and indeed arrangements are in place for him to be so heard. 17 Having heard the parties and having regard to the material before me, I reached the conclusion that Mr Moore had no case upon which the Court should extend the time for him to make an application to have the costs order made by Registrar Hedge on 15 August 2006 reviewed. In those circumstances, I declined to make an order in those terms. 18 Having regard to the same circumstances, I also dismissed an application by Mr Moore to rescind the orders made by Registrar Hedge on 15 August 2006 pursuant to subs 37(1) of the Bankruptcy Act 1966. 19 The matter of costs of the motion was not raised by counsel for Mr Butler an I do not propose to make any order in that regard. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.