Bankruptcy Act 1966(Cth) ss.33(1)(c), 41(6A), 52(4),(5)

Trade Practices Act 1974 (Cth) S.82(2)

John van Coblyn v Mercantile Credits Limited (unreported, 21 September 1992)

re Young; ex parte Smith (1985) 5 FCR 204

Streimer v Tamas [1981] FCA 123; (1981) 54 FLR 253

Wardley (Australia) Limited v Western Australia [1992] HCA 55; (1992) 175 CLR 514

Counsel for the applicant: P R Hayes QC with R S Randall

1. The creditor's application dated 25 August 1994 be dismissed

with costs.

2. The creditors' petition be dismissed with costs, including

reserved costs.

3. Insofar as is necessary, leave to appeal is granted.

4. The hearing of the appeal be expedited.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

HEEREY J I have come to the conclusion that I have no power to extend the petition.

2. The history of this matter commences with a default judgment obtained in the Supreme Court of Victoria by the judgment creditors against the debtor on 13 June 1991 for $7,937,790.05. On 15 December 1992 the judgment creditors issued a bankruptcy notice, which was served on 22 March 1993. On 25 March the debtor gave a notice under s.41(5) of the Bankruptcy Act 1966 (Cth) (the Act). An act of bankruptcy constituted by non compliance with the notice, was committed on 5 April 1993. The creditors' petition was filed on 30 June. Thus by virtue of s.52(4) the petition would, unless extended under s.52(5) before the time of expiration of the period of 12 months, expire on 1 July 1994. There were a number of procedural directions which followed the service of the petition; directions were given on 25 October 1993, 29 November, and 9 February 1994. On 23 February, directions were given which included a direction that the petition be placed in the list of cases fixed for hearing, with an estimate of one day.

3. On 31 March the Registry advised the parties of today's hearing date, namely, 2 September 1994. The evidence of the solicitor for the petitioning creditors is that she did not consider the date of expiry of the petition and that, had she turned her mind to this matter, or had this possibility been raised on 23 February, she would have attended to the making of an application to extend the petition.

4. I was referred to a number of authorities, commencing with Streimer v Tamas [1981] FCA 123; (1981) 54 FLR 253. That case involved the extension for time for compliance with a bankruptcy notice. The hearing of the applications commenced on 6 April 1981. The court was unable to deal with the applications and adjourned them to the following afternoon, but by an oversight no application of extension was made. The time expired on the following day.

5. The majority, Deane and Ellicott JJ, held that on the construction of s.41 (6A) there was nevertheless jurisdiction to make an order extending the time for compliance with the bankruptcy notice. Sheppard J concurred in the result, but did so on the basis of the inherent power of the Court to rectify slips. His Honour said (at 267):

"In my opinion the respondent is entitled to succeed on its

submission because the case falls within the Court's

inherent power to vary its own orders as to carry out its

own meaning or to make its meaning plain."

6. His Honour referred to English authorities which show that in addition to having an express power to correct errors, a superior court also has an inherent power to do so. His Honour concluded (at 268):

"In my opinion the court has power to act where, as in the

present case, the slip or oversight is solely attributable

to a failure on the part of counsel or solicitor or of the

party himself, if he not be represented, to draw the court's

attention to the particular matter. It would have been

pointless to stand this matter over unless time were

extended. If the matter had been mentioned, there can be no

doubt but that his Honour would have extended the time. The

appellant would plainly not have raised any opposition to

his doing so. Time was not extended because the matter was

not mentioned and was not adverted to by the judge."

7. In re Young; ex parte Smith (1985) 5 FCR 204 a Full Court had to consider a case like the present one of a petition which had lapsed with no extension being granted within the 12 month period. It was argued that s.33(1)(c) of the Act gave power to extend time. That section provides:

"33(1) The Court may

(a) ...

(b) ...

(c) extend before its expiration or, if this Act does not

expressly provide to the contrary, after its

expiration, any time limited by this Act, or at any

time fixed by the Court or the Registrar under this

Act (other than the time fixed for compliance with the

requirements of a bankruptcy notice) for doing an act

or thing or abridge any such time." (Emphasis added)

8. The Court held that s.33(1)(c) did not confer power. Their Honours said (at 209):

"We make no comment on the applicability of the slip rule in

the context of orders made under s.52(4) and (5) as plainly

there could be no question of the application of that rule

in this case."

9. Then in John van Coblyn v Mercantile Credits Limited (unreported, 21 September 1992) Einfeld J applied the reasoning of Sheppard J in Streimer in extending a petition after the 12 month period.

10. I do not doubt that in the present case there was an honest and understandable inadvertence. If there were power to extend, I would not hesitate to exercise it. But it does seem to me that the Act specifically provides for petitions to be heard and determined within 12 months, and by s.52(5) expressly provides that extension can only be granted within that period.

11. That is consistent with the more general provision of s.33(1)(c) which contemplates that extension of a period after time has expired is only to be done when the Act does not expressly provide for the contrary, as s.52(5) does.

12. I do not think s.306, being of general application, can prevail against the specific provision of s.52(5). Nor do I think any inherent or implied power can exist which is inconsistent with an express statutory provision. I would respectfully adopt the words of Toohey J in Wardley (Australia) Limited v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 561, where his Honour, speaking of s.82(2) of the Trade Practices Act 1974 (Cth), said:

"But, what is 'incidental and necessary' cannot override a

clear statutory prohibition such as appears in section 82(2)

of the Act."

13. There are obvious policy reasons, going beyond the general need for timely resolution of litigation, why bankruptcy petitions are to be disposed of with reasonable promptness. The Act has made specific provision for the inevitable delays that may occur, and given power to the Court to extend the 12 month period. But Parliament has expressly provided that such application must be made within the period. In doing so, I think the Parliament must be taken to have contemplated that there would be human oversight and inadvertence of the kind that has happened here. Neverthe-less, the Act is clear and in my opinion excludes any power in the Court to extend time once the 12 month period has elapsed.

14. I will order that the application of the creditors dated 25 August 1994 be dismissed with costs. The petition is dismissed with costs, including reserved costs. Insofar as is necessary, I grant leave to appeal.

15. I will order that the hearing of the appeal be expedited with an estimate of half a day.