Tweed Shire Council v Dove [2015] FCCA 2740 (8 October 2015)

Last Updated: 28 October 2015

FEDERAL CIRCUIT COURT OF AUSTRALIA

TWEED SHIRE COUNCIL v DOVE

[2015] FCCA 2740

Catchwords: BANKRUPTCY – Sequestration order. PRACTICE AND PROCEDURE – Application to set aside ex parte orders – whether the Registrar erred in making orders where other proceedings are on foot – whether Court’s powers to set aside orders are constrained – application allowed.

Legislation: Bankruptcy Act 1966, ss.37, 153B Federal Circuit Court Rules 2001, r.16.05(2)

CostaExchange Ltd v Shephard [2011] FMCA 545 Daskalovski v The Austral Brick Co Pty Ltd [1998] FCA 782

Applicant:

TWEED SHIRE COUNCIL

Respondent:

GREGORY MITCHELL DOVE

File Number:

SYG 833 of 2015

Judgment of:

Judge Street

Hearing date:

8 October 2015

Date of Last Submission:

8 October 2015

Delivered at:

Sydney

Delivered on:

8 October 2015

REPRESENTATION

Solicitors for the Applicant:

Ms C Graves Prime Lawyers

Solicitors for the Respondent:

Mr V Janoyan Citilawyers

ORDERS

(1) Orders 1 and 2 made 14 September 2015 are set aside under r.16.05(2)(a) of the Bankruptcy Act 1966.
(2) The proceedings be stood over to 10 February 2016 at 9:30 am.
(3) Question of costs be reserved.

FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY

SYG 833 of 2015

TWEED SHIRE COUNCIL

Applicant

And

GREGORY MITCHELL DOVE

Respondent

REASONS FOR JUDGMENT

1. This is an application to set aside orders made ex parte on 14 September 2015 by a Registrar of the Court and is within the Court’s jurisdiction under s.27 of the Bankruptcy Act 1958. The applicant’s solicitor has filed an affidavit explaining the circumstances in which the sequestration order came to be made on 14 September 2015 in the absence of the respondent. I accept the explanation given by the solicitor for the respondent as to the reasons for his absence and the respondent moves under r.16.05(2)(a) for the setting aside of the orders made by the Registrar in the absence of the party.
2. The solicitor for the judgment creditor identified the history of the matter relating to the failure of the respondent to pay counsel rates and the nature of the limited offers of compromise that the judgment creditor considered unsatisfactory in relation to the resolution of the matter in open correspondence. The rates apparently have been generated by a property of limited value and there has been dispute between the judgment creditor and the respondent in relation to the calculation of those rates for that property in circumstances where it cannot be used to build on or for residential purposes.
3. The solicitor for the respondent acknowledges that there are family law proceedings on foot between the judgment debtor and his partner but says that the outcome of those proceedings is uncertain and may not result in the respondent being in a position to satisfy the judgment debt and costs have been incurred, taking into account the existence also of other creditors. The affidavit of the respondent identifies that the Family Court of Australia proceedings are well advanced and at the time of the making of the sequestration order by the registrar there were, shortly to be held within approximately a month or so, further steps which may have resulted in a resolution of the proceedings.
4. I am satisfied that this is a case where the order ought not to have been made by the Registrar and that the matter should have been adjourned, pending the determination of the steps being taking in the Family Court of Australia proceedings.
5. Issue has been raised by the solicitor for the respondent in relation to the power conferred on this court under rr.16.05(2)(c) or (2)(a) in light of the terms of s.37 that provides as follows.
   • Section 37
   • Power of Court to rescind orders etc.
   • (1) Subject to subsection (2), the Court may rescind, vary or discharge an order made by it under this Act or may suspend the operation of such an order.
   • (2) The Court does not have power to rescind or discharge, or to suspend the operation of:
     • (a) a sequestration order; or
     • (b) an order for the administration of the estate of a deceased person under Part XI.
6. The solicitor for the respondent has also drawn attention to s.153B of the Act in relation to the power of the Court to make an order annulling the bankruptcy.
7. The solicitor for the respondent drew attention to the decision in CostaExchange Ltd v Shephard [2011] FMCA 545. That was a case where the application was not made under r.16.05(2)(a) and where there was found to be relevant delay in the making of the application to set aside the sequestration order. I do not regard anything said in that decision as supporting a narrow construction of the power conferred under r.16.05(2)(a). That is an important power for the Court to be able to set aside orders made in the absence of the parties in order to maintain the interests of the administration of justice.
8. Attention was drawn to what was said by the learned Emmett J in Daskalovski v The Austral Brick Co Pty Ltd [1998] FCA 782.
   • I should add that I would have been satisfied that the Court has jurisdiction and power pursuant to O35 r7 to make an order setting aside the sequestration order made in the absence of the Debtor in circumstances where the Debtor was not served with the petition. However, it seems to me inappropriate to make an order under that rule where the estate has already been administered in bankruptcy, as is the case here.
   • The Act, and the rules made under the Act which have now been incorporated into the Federal Court Rules, provide for the protection of creditors in the event of an order being made under s153B. There is no similar regime applicable specifically for the setting aside of an order or a judgment pursuant to O35 r7. That is not to say that, in an appropriate case, the power contained in O35 r7 ought not to be exercised.
   • However, such a power would normally be exercised in circumstances where the matter comes before the Court very soon after the order has been made and before there has been any administration in bankruptcy pursuant to a sequestration order.
9. I do not regard s.37 as constraining this Court’s power to set aside an order made in the absence of the parties where the court is satisfied that it is in the interests of the administration of justice to do so.
10. To the extent relevant, in my opinion, the decision in Daskalovski v The Austral Brick Co Pty Ltd supports the existence of the power to make such an order in an appropriate case. I am satisfied that this is an appropriate case and that the interests of the administration of justice warrant the setting aside of the order made in the absence of the respondent. I also do not regard s.153B as constraining this court’s power under r.16.05(2)(a) to set aside an order made in the absence of the parties. That is a particularly important power to maintain public confidence in the administration of justice, see Taylor v Taylor [1979] HCA 38; (1977) 143 CLR 1 at 4-5, 8-9, 16 and 22.
11. Further, I should add that, if contrary to the views I have expressed, this was a case in which the court was confined to the powers conferred by s.153B, for the reasons given, I am satisfied that a sequestration order ought not to have been made in the present case and I would have exercised the power conferred by that section in favour of the respondent. Accordingly, the orders made on 14 September 2015, numbers 1 and 2, are set aside under r.16.05(2)(a). I stand the proceedings over to 4 February 2015. I will reserve the question of costs.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Judge Street

Associate:

Date: 27 October 2015