Roskell v Snelgrove

Roskell v Snelgrove - [2008] FCA 427 - FCA 2008 case summary — Zoe

[8]

THE PROCEEDING IN THE FEDERAL MAGISTRATES COURT 9 Mr Snelgrove is a solicitor. He obtained a judgment against Mr Roskell in the Local Court on 22 June 2000 for costs. 10 On 20 December 2004, Mr Snelgrove procured the issue of a bankruptcy notice directed to Mr Roskell. The bankruptcy notice demanded payment of the amount of the judgment and interest. 11 As noted earlier, on 26 April 2005 Mr Snelgrove presented the creditor's petition against Mr Roskell in the Federal Magistrates Court. 12 On 28 July 2005, Mr Roskell filed a notice of intention to oppose the petition. His grounds of opposition went to the existence of the underlying debt. 13 The creditor's petition was heard by Driver FM on 12 August 2005. As has been the case throughout, Mr Roskell appeared in person, that is to say, unrepresented. His Honour raised a question as to the validity of the bankruptcy notice in view of the erroneous attribution in it of the source of the alleged liability of Mr Roskell to pay interest. Apparently it was understood that this question might be resolved by the then awaited decision of the High Court in Adams v Lambert (the case was decided on 4 April 2006 and is reported at (2006) 228 CLR 409). 14 According to an affidavit of Rachel Therese Menassa, a solicitor employed by Curwoods Lawyers (the solicitors for Mr Snelgrove), the proceeding came before his Honour on 14 March 2006. On the preceding day, 13 March 2006, Ms Menassa discussed with Mr DeBuse of counsel, the desirability of Mr Snelgrove's seeking an order extending the life of the petition which was due to expire the following month, April 2006. Mr DeBuse agreed that an extension should be sought. Unfortunately, however, Ms Menassa, who appeared for Mr Snelgrove before Driver FM on 14 March 2006, overlooked seeking the extension. As it transpired, however, the proceeding was stood over for directions to 11 April 2006, a date still within the 12 month period. 15 As mentioned previously, the High Court's judgment in Adams v Lambert was delivered on 4 April 2006. The High Court held that the erroneous attribution of the statutory liability for interest in the bankruptcy notice in that case was a formal defect or irregularity within the meaning of s 306(1) of the Act. 16 According to Ms Menassa's affidavit, she was "instructed" to apply for an extension of the life of the petition on 11 April 2006. On that date she again appeared for Mr Snelgrove before his Honour. Ms Menassa's affidavit records that she again forgot to apply for the extension. On 11 April 2006, his Honour made the following orders: 1. The applicant is to file and serve on the respondent updated affidavits of search and debt no later than 26 April 2006. 2. Parties are to file and serve any further submissions no later than 26 April 2006, concerning the validity of the bankruptcy notice relied upon, taking into account the decision of Adams v Lambert..., and the question raised at the trial of the matter on 12 August 2005, whether the bankruptcy notice was confusing having annexed to it a certificate stating that no interest was payable.

[10]

THE EARLIER APPEAL TO THIS COURT 20 Mr Snelgrove appealed to this Court against Driver FM's judgment of 6 June 2006. On 15 February 2007, Jacobson J allowed the appeal, set aside his Honour's orders and remitted the matter to the Federal Magistrates Court to be determined in accordance with Jacobson J's reasons for judgment (see Snelgrove v Roskell [2007] FCA 122). 21 Jacobson J held that upon the proper construction of the bankruptcy notice, the claim for interest was only for post-judgment interest. His Honour rejected the grounds on which Driver FM had dismissed the creditor's petition. 22 Mr Roskell sought to reargue grounds of opposition that had been raised in the Federal Magistrates Court. He had not, however, filed a notice of contention. Mr Roskell argued, for example, that he was not personally liable for the costs, or, at the very least, that that the amount was overstated. 23 Mr Roskell also submitted before Jacobson J that "a copy of the record of judgement [sic]" was not attached to the bankruptcy notice. His Honour granted leave to Mr Roskell, nunc pro tunc, to raise this submission without the need to file a notice of contention. 24 On the issues of non-liability for the debt and non-attachment of a copy of the record of the judgment debt to the bankruptcy notice, Jacobson J decided unfavourably to Mr Roskell, who did not appeal against his Honour's judgment. 25 Jacobson J raised a new point. This was that no consideration seemed to have been given by Driver FM to the question of the lapsing of the petition. After referring to certain authorities concerning the availability of the slip rule to cure the position, Jacobson J noted that the lapsing issue had not been argued before him. He considered that in these circumstances it was appropriate for him to remit the matter to the Federal Magistrates Court, for that Court to determine whether it had power to make a sequestration order and, if so, whether such an order ought to be made. 26 In the result, Jacobson J made the orders referred to at [20] above.

[13]

The passage emphasised by me shows that Driver FM's understanding was that the date 26 April 2006 was a date after the petition had lapsed. Since the only other date in contention was 25 April 2006, his Honour's understanding must have been that the petition lapsed on that date and his Honour's reference to 25 April in the passage at [17] of his reasons set out at [31] below makes it clear that this was so (see the discussion of the present question at [43] below). 30 In relation to the question whether the Federal Magistrates Court had had the requisite power to apply the slip rule, Driver FM considered that O 35 r 7(3) of the FC Rules applied in the Federal Magistrates Court as if it were a rule of that Court pursuant to Schedule 3 to the Federal Magistrates Court Rules 2001 (Cth) (FMC Rules). Driver FM gave as a "second reason" why the Federal Magistrates Court had the requisite power, the fact that that Court shared coextensive jurisdiction with this Court in bankruptcy. His Honour also referred to s 43 of the Federal Magistrates Act 1999 (Cth). 31 Having concluded that O 35 r 7(3) of the FC Rules was available to him, Driver FM noted that Mr Roskell submitted that he would have resisted an extension of the life of the petition if application for it had been made before the expiration of the 12 month period. His Honour had no doubt that Mr Roskell would have done so, but said that the petition would nonetheless have been extended and that the matter would have proceeded in accordance with his other orders or that different procedural orders would have been made. His Honour said (at [17], [18]): 17. ... Having decided that I should await the decision of the High Court and then having decided that I should receive written submissions on the significance of the High Court's judgment within the period specified in the order, I am certain that if I had adverted to the issue at the time I would have extended the life of the petition on 11 April 2006. The issue did not occur to me at the time. Although the then solicitor for the petitioning creditor had been instructed to raise it, she neglected to do so. The issue can and now should be dealt with prior to the final expiry of the creditor's petition on 25 April this year. 18. I therefore order pursuant to order 35 rule 7(3) of the Federal Court Rules and s.52(5) of the Bankruptcy Act that the petition filed on 26 April 2005 be extended until 25 April 2007. [my emphasis] 32 Driver FM then said that on the basis that the petition was revived, there was no remaining impediment to the making of a sequestration order because he had dealt with the issue of the existence of the debt in his first judgment and had now dealt with the remaining issues.

[15]

Was O 35 r 7(3) of the Rules available to Driver FM? 37 Mr Ash submits that it is unnecessary that this question be answered, because under general law principles the Federal Magistrates Court has a power of the kind referred to in O 35 r 7(3). Counsel has referred to the following authorities in support of his submission: Lawrie v Lees (1881) 7 App Cas 19 at 34-35 per Lord Penzance; Hatton v Harris [1892] AC 547 at 563 per Lord Macnaghten; Connelly v Director of Public Prosecutions [1964] AC 1254 at 1301 per Lord Morris of Borth-y-Gest. As Mr Ash has observed, it may be preferable to refer to such a power in the case of a court such as the Federal Magistrates Court which is a statutory court that does not have the "inherent" powers of a superior court, as "implied" powers: see Grassby v the Queen (1989) 168 CLR 1 at 17 per Dawson J; John Fairfax Group Pty Ltd (Receivers and Managers appointed) v Local Court of New South Wales (1991) 26 NSWLR 131 at 160-161 per Mahoney JA. 38 I agree with counsel that if O 35 r 7(3) was not available to Driver FM, there would, in any event, have been available to him an implied power to the same effect. In my view, however, O 35 r 7(3) was available to his Honour. 39 At the relevant time, the rules governing bankruptcy proceedings in the Federal Magistrates Court were contained in the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth)(the FMC Bankruptcy Rules).(Chapter 4 of the FMC Rules, which had previously governed bankruptcy proceedings in the Federal Magistrates Court, were repealed on 6 February 2006, the date on which the FMC Bankruptcy Rules commenced.) Para 1.03(2) of the FMC Bankruptcy Rules provided, relevantly, that the FMC Rules applied, so far as they were relevant and not inconsistent with the FMC Bankruptcy Rules, to a proceeding to which the Bankruptcy Act applied. The proceeding before Driver FM was, of course, such a proceeding. 40 Within Ch 1 of the FMC Rules, subr (2) of r 1.05 provided, relevantly, that if in a particular case the rules of the Federal Magistrates Court were insufficient, the Federal Magistrates Court might apply the FC Rules in whole or in part. More specifically, however, subrule (3) of r 1.05 provided, relevantly, that without limiting subrule (2), the provisions of the FC Rules set out in Part 2 of Schedule 3 to the FMC Rules applied, with necessary changes, to general federal law proceedings. The expression "general federal law proceeding" was defined in the Dictionary of the FMC Rules as meaning a proceeding other than a family law or child support proceeding. The bankruptcy proceeding that was before his Honour was a general federal law proceeding. 41 Part 2 of Schedule 3 listed various FC Rules including "Order 35". (I note that on 27 June 2007, pursuant to the Federal Magistrates Court Amendment Rules 2007 (No. 1) (Cth), the reference to "Order 35" in Part 2 of Schedule 3 was replaced with "Order 35 (except rule 7)".) Accordingly, at the relevant time, the provision in O 35 r 7(3) of the FC Rules applied to the proceeding that was before his Honour. Question 1 is answered "yes".

[17]

The Banks and Bank Holidays Act 1912 (NSW) provides in s 15 that the days in the Fourth Schedule to that Act are to be kept as close holidays in all banks in New South Wales. Those days are referred to in that Act as "bank holidays". The Fourth Schedule mentions, inter alia, "The twenty-fifth day of April (Anzac Day)". Counsel's argument is that 25 April 2006 was the last day of the period of 12 months allowed by s 52(5) "for the doing of anything" within s 36(2) of the Acts Interpretation Act, namely, for the making of an order substituting a different lapsing period for the period of 12 months referred to in s 52(4)(a) of the Bankruptcy Act. 45 Mr Ash accepts that the effect of s 52(4)(a) in isolation was that the creditor's petition in the present case lapsed at midnight between 25 and 26 April 2006, but submits that by virtue of s 52(4)(a) being expressed to be subject to s 52(4)(b), it was open to Mr Snelgrove to apply for, and for the Court to make, an order on 26 April 2006 extending the life of the petition. 46 Consistently with his submission, Mr Ash suggests that Driver FM's statement (set out at [29] above) that the steps required of the parties were to be taken up to a date beyond the 12 month period was both correct and incorrect. The period of 12 months commencing on 26 April 2005 did expire at midnight between 25 and 26 April 2006 and by reason of s 52(4)(a) of the Bankruptcy Act the petition lapsed at that moment, but the lapsing was, counsel submits, subject to para (b) of s 52(4) of the Bankruptcy Act and therefore to the possibility that the Court might make an order on 26 April 2006 extending the period at the expiration of which the petition would lapse. 47 I accept Mr Ash's submission that "the period of twelve months commencing on the date of presentation of the petition" was a "period...allowed by an Act for the doing of anything" within s 36(2) of the Acts Interpretation Act because it was a period allowed by the Bankruptcy Act for the making of an order by the Court under s 52(5) of that Act. Accordingly, even though the petition lapsed at midnight between 25 and 26 April 2006, it remained possible for the Court on 26 April 2006 to make an order under s 52(5) extending the period at the expiration of which the petition would lapse. 48 It is now necessary for me to return to consider the facts in the light of this position. 49 When the proceeding was before Driver FM on 12 August 2005, counsel for Mr Snelgrove sought an adjournment to await the outcome of the High Court's decision in Adams v Lambert. Driver FM stated: …That will no doubt take some time to decide. The creditor's petition, I think, is valid until the end of the year…You want to come back in time to extend the life of the decision [sic - petition] if you need to.

[18]

Counsel for Mr Snelgrove replied "Yes" to this last question and the hearing was adjourned to 29 November 2005 for directions only. (The reference to the end of the year is mysterious but can be put to one side.) 50 It appears that all that happened on 29 November 2005 was that the proceeding was stood over to 11 April 2006 for directions, no doubt because the High Court's decision in Adams v Lambert was still awaited. 51 I set out at [16] above the orders that were made on 11 April 2006. I set out at [29] and [31] above what Driver FM said in his reasons for judgment of 16 April 2007 concerning what he would have done on 11 April 2006 if Ms Menassa had then applied for an order under s 52(5) of the Bankruptcy Act. 52 It is true that in light of the fact that it remained open to Mr Snelgrove to apply for, and to the Federal Magistrates Court to make, an order on 26 April 2006 extending the life of the petition, it was not an exhaustive statement of the position to say, as his Honour said, that the steps his orders required of the parties were to be taken up to a date after the 12 month period elapsed. A comprehensive statement would have added that if an application were made on 26 April 2006 for an extension and if the extension were granted, it would then be seen that the steps his orders required were to be taken within, rather than outside, the lapsing period. 53 I must, however, assess the position realistically. The incontrovertible fact is that the petition was still due to lapse at midnight between 25 and 26 April 2006 and this fact was overlooked. It is perfectly clear that if Driver FM had appreciated on 11 April 2006 the true position, he would certainly have made an order extending the life of the petition under s 52(5). Absent such an order, his Honour's orders of 11 April 2006 did permit the filing and service of affidavits and submissions after the expiration of the lapsing period. It is fanciful to think that his Honour would have let matters rest on the basis that the parties had until 26 April 2006 to file and serve documents and yet that he would have to deliver judgment by midnight between 25 and 26 April 2006, unless of course Mr Snelgrove remembered to apply to his Honour on or before 26 April 2006 for an order extending the life of the petition. 54 In summary, I think that what his Honour said at [13] of his reasons remains true: It would have made no sense at all to make the orders in those terms [the terms requiring the filing and service of submissions no later than 26 April 2006] if the creditor's petition was not to be extended [on 11 April 2006]. 55 Mr Ash further submits that there was no "error arising in a judgment or order from an accidental slip or omission" within O 35 r 7(3) of the Rules. He emphasises the word "in". I set out the two orders made on 11 April 2006 at [16] above. In my opinion there was "an error arising in…[those orders] from an accidental slip or omission" [my emphasis]. The error in the orders arose from the omission of an order under s 52(5) that would enable the two orders made to have their full intended effect and his Honour to deliver judgment before the petition lapsed. 56 The approach that the Court has taken in similar circumstances is the subject of a consistent line of authority: see Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385; Re Howell; Ex parte Commissioner of Taxation (1996) 70 FCR 261; Komesaroff v Law Institute of Victoria [1997] FCA 965; Re Langridge; Ex parte Bennett, Carroll & Gibbons [1998] FCA 879; Matthews v Collett [2000] FCA 224; Bankstown Grammar School Ltd v Park [2000] FCA 1205; Griffiths v Boral Resources (Qld) Pty Ltd (2006) FCR 554. In the present case, there is clear evidence that Ms Menassa intended to apply on 11 April 2006 for an order under s 52(5) of the Bankruptcy Act but forgot to do so and a clear statement by Driver FM in his Honour's reasons for judgment that he would have made such an order if he had appreciated that the creditor's petition was to lapse on 25 April 2006. 57 In the circumstances, I think that there was an error (of omission) in his Honour's orders arising from an accidental slip or omission for the purposes of O 35 r 7(3).

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