Re Langridge, Carol Ann Ex Parte Bennett, Carroll & Gibbons [1998] FCA 879

REASONS FOR JUDGMENT EX TEMPORE In this matter the petitioning creditor applied to the Court for an order extending the time for the hearing of the petition under O 35 r 7 Federal Court Rules, the "slip-rule". The matter comes about in this way. The bankruptcy notice was founded on a judgment entered in the Magistrates' Court at Brisbane, Queensland, in favour of the petitioning creditor, a firm of solicitors, for professional fees and costs on 30 April 1996. Following non-compliance with that notice a petition was presented to this Court on 23 May 1997. Difficulties were first encountered with service and then with gaining an appearance from the debtor who, in late 1997, was undertaking various medical procedures. On 5 February 1998 the hearing of the petition was adjourned to 9 April 1998 and on that date it was again adjourned to 27 May 1998 and then again to 3 June 1998 when Mrs Langridge appeared with legal representation and directions were made. By this time, however, the petition had lapsed pursuant to s 52(4) Bankruptcy Act 1966. No order for sequestration had been made and no order for extension of time had been made prior to its lapsing 12 months from presentation. On 9 April 1998 in the absence, again, of Mrs Langridge I indicated that I would be prepared to make an order for sequestration on the hearing date which was to say that the material filed by the petitioning creditor to that point appeared in order if Mrs Langridge did not file material showing some ground why such an order should not be made. Directions to that end were made on that date and on subsequent dates and have not yet been complied with, although counsel now appearing for Mrs Langridge today has foreshadowed an argument that there is no debt. I informed the parties on the hearing of the petitioning creditor's application today that had application been made to me on 9 April 1998 I would have ordered an extension to permit the hearing of the petition; this is so, despite my misgivings as to the true worth of these proceedings to the petitioning creditor. That firm has pursued a claim which was originally just under $10,000 but which has now doubled, and in circumstances where it says that Mrs Langridge appears to have no money. I would however, have made such an order on the basis that the petitioning creditor's rights to a hearing of the petition had been postponed through no apparent fault of that firm. The petitioning creditor places reliance upon the decision of the Full Court of this Court in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385. Their Honours were concerned with the provisions of the Corporations Law, s 459R, which differs somewhat from the terms of s 52(4) and other provisions relevant in the Bankruptcy Act. Nevertheless in the course of reasoning their Honours disapproved the view taken by each of Pincus and Heerey JJ in, respectively, Re Hibbard; ex parte Playroom Proprietary Limited (Pincus J, 5 December 1988, unreported) and Re Agushi; ex parte Farrow Mortgage Services Proprietary Limited (In Liq) (1994) 126 ALR 704. Their Honours took the view that the power to correct errors was a wide one and one which could be exercised with respect to prior orders made, during the currency of a petition, and that there was no inconsistency with the provisions of s 52(4). In this case the order to be corrected would, on that reasoning, be 9 April 1998, when I ordered an adjournment. For my part I must, however, express my preference for the reasoning of their Honours in Re Hibbard and Re Agushi. The object of provisions such as s 52(4) is finality in commercial dealings. Moreover, I have considerable difficulty with the notion that the slip-rule is, in reality, to be extended to correct a party's error and not the Court's own unintended error. In this case not only does the petitioning creditor then apply to the Court on the basis that the Court would have made an order extending if the petitioning creditor had thought to ask for one, but the effect of what the debtor now submits is that there may have been an argument she could have presented prevailing against such an extension, based upon futility. The view taken in Elyard is potentially of very wide application and it may well be that the application of the slip-rule, and what is to be taken as the approach of the High Court in L Shaddock and Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 upon which the Court in Elyard placed considerable reliance, will be considered again by a Full Court. However, in this case at least I do not consider that I ought to depart from the considered and unanimous decision expressed by the Court in Elyard even if it be viewed strictly as obiter. That was the approach taken by Burchett J in Re Howell; ex parte Commissioner of Taxation (1996) 70 FCR 261 and by Heerey J in Komesaroff v Law Institute of Victoria (Heerey J, 11 August 1997, unreported) and I respectfully agree. I would not wish to encourage any further applications or appeals in this matter. I will, therefore, order that the order made on 9 April 1998 be corrected by adding to it an order in these terms; "that the period at the expiration of which the petition will lapse will be twenty four months from the date of presentation of the petition." It remains to set a date for the hearing of the petition if that is the course the petitioning creditor wishes to pursue. In this respect the debtor has given notice of the basis of opposition to it as I have referred to above. I will hear from counsel as to necessary directions.