Present: Federal Magistrate Simpson, Federal Magistrates Court
Patricia Christie, Registrar, Federal Court
Pat Tragauer, ITSA
Erica Verrusio, ITSA
James Neate, Lynch Meyer
Rosemarie Bastiampillai, ATO
Nick Economos, Economos Lawyers
Amy Nolan, Kelly & Co
Ivars Martirovs, Martirovs & Co
Fidelis McGarrigan, Fisher Jeffries
Karen Guazzelli, Fisher Jeffries
Anita Caruso, Fisher Jeffries
Melanie Bird, Donaldson Walsh Lawyers
Natalie Abela, Cowell Clarke
Justin Stewart-Rattray, Stewart-Rattray Lawyers
Apologies: FM Lindsay, Federal Magistrates Court
FM Brown, Federal Magistrates Court
Karen Olsson, Mellor Olsson
Steven Hailstone, Donaldson Walsh Lawyers
Nic Parkyn, AGS
Dusan Uglesic, AGS
Linda White, ATO
Alex Marshall, Marshalls Solicitors
1. Welcome
Patricia welcomed everybody to the meeting and thanked them for taking the time to attend. She introduced Federal Magistrate Simpson to those who had not previously met his Honour.
2. Practice issues
2.1 Rule changes since last meeting – when effective
Patricia noted that a number of relatively uncontroversial rule changes came into effect on 1 April 2008 and asked if everyone had been made aware of these. The participants at the meeting indicated that they were aware of the rule changes.
2.2 Affidavits of service of Creditor’s Petitions – r 4.06(2)(b)
Patricia noted that r 4.06(2)(b) of the harmonised rules requires that, when the affidavit proving service of the documents required to be served prior to the hearing is filed, that affidavit must have annexed to it the documents which have been served. Patricia noted that although most practitioners ensure this occurs there have been one or two occurrences in recent times where affidavits of service had been filed which did not include the annexures required.
2.3 Affidavits of debt
Patricia noted that she had raised this issue on a number of occasions previously however it continued to remain the case that some practitioners file affidavits of debt which have been sworn on information and belief only. She noted that the making of a sequestration order is a final order and as a result there is a risk associated with relying on affidavits sworn on information and belief in seeking such an order. She noted again that there should be no need for this to occur given the ability to file affidavits of debt by facsimile.
2.4 Consents to act as Trustee
Patricia noted that although the consent to act as trustee must be served on the debtor, and is therefore one of the documents required to be annexed to the affidavit of service, pursuant to r 4.06(2)(b), she had noted in recent times that a number of the consents to act as trustee appear to have been filed with the Court separately. She noted that she was concerned that this might mean that there is some confusion amongst practitioners as to where the consent to act as trustee needs to be lodged. She noted that the consent needs to be lodged with ITSA.
2.5 Costs
2.5.1 Lump sums for substituted service applications
Patricia noted that this issue had been raised some time ago and that the Rules Committee at its meeting on 30 April 2008 had agreed in principle to recommend that the rules should be amended to provide a short form bill amount for applications for substituted service of a bankruptcy notice. Practitioners can then use that short form amount in seeking to have a costs amount fixed.
To assist if, the committee has requested input from practitioners on a reasonable amount that might be specified in a short form bill. Patricia asked practitioners if they had any views in relation to what a reasonable amount would be. After some discussion it was agreed that an amount of $400 plus the costs of attendance plus disbursements would, in the normal course, be an appropriate amount. Patricia indicated that she would pass this information back to the Rules Committee.
2.5.2 Fixed costs / Certificates of Taxation
Patricia noted that some years ago, when the procedure of fixing costs in Court routinely first commenced, practitioners were asked if they had any concerns in relation to s 109 of the Bankruptcy Act being interpreted in a way that might give any difficulties in priority being given to costs so fixed. She noted that at that time practitioners were of the view that as a matter of practice trustees would not take such a view, however, it has come to her attention recently that at least one trustee has raised the issue. Practitioners agreed that in order to ensure that future issues do not arise, it would be useful if consideration is given at the time of the next amendments to the Act to changing s 109 in such a way as to make it clear that the word “taxed costs” in that section is wide enough to include costs which have been fixed by the Court rather than by quantified by way of a process of taxation. Pat Tragauer advised she would take this issue on board and raise it for consideration at the appropriate time.
2.6 Reliance of 1992 District Court Rules in claiming interest
Patricia noted that a number of bankruptcy notices are still coming through which specify the 1992 District Court Rules when claiming interest. Those rules are no longer in force. She noted that although this issue has not to date been raised as an issue by any debtors, and although there is an argument that this would not result in a fundamental flaw to the bankruptcy notice, it is a risk that it may be preferable to avoid.
2.7 Orders for substituted service of Bankruptcy Notices
Patricia noted that on the last occasion she had indicated that she would consider whether orders for substituted service of bankruptcy notices could be made in chambers, if it came to the stage that this was something that practitioners wanted because of lengths of lists. After some discussions about the eCourt pilot in Victoria, and the pros and cons of various approaches, practitioners indicated that they were happy given the present size of lists for these matters to continue to be dealt with in the lists.
3. Recent cases of interest
Patricia noted, in the event they were of interest to practitioners, the following cases which have been handed down since the last meeting.
Benjamin v G B Franchising (In Liquidation) [2008] FMCA 170 (February 2008, FM Riley). This case involved the setting aside of a bankruptcy notice because of confusion in relation to the identity of the creditor, in circumstances where the bankruptcy notice required the debt to be paid to the company in liquidation, the order attached to the bankruptcy notice required that the debt be paid to the liquidator, the bankruptcy notice did not expressly state who applied for the bankruptcy notice, and the notice stated that the debt could be paid to a firm of solicitors. She noted that where liquidators are involved, care should be taken to avoid such confusion in the issuing of a bankruptcy notice.
Palasty v Tomko [ 2008] FMCA 10
Patricia noted that this case was not one which she hoped would arise in South Australia but involved the attachment to the bankruptcy notice of 27 pages of a 52 page judgment of the District Court. The missing pages were the odd numbered pages of the judgment and the question for consideration was whether or not the document was a judgment for the purposes of the Act. She noted that it was held that it was a judgment because it identified the relevant Court, identified the parties and judge, referred to the proceedings relied on by the creditor, the amount of the judgment was sealed by the court and signed by the judge, and the document stated the order of the court.
Deputy Commissioner of Taxation v Barner [2008] FMCA 7
Patricia noted that this case involved a consideration of when an act of bankruptcy might arise because a debtor remained out of Australia with intent to delay or defeat creditors. It held that where there is no direct evidence of that intent then it must be established by inference according to the circumstances of the case. Patricia noted that although this is not a common act of bankruptcy relied upon, the case may be useful should that situation arise.
Deputy Commissioner of Taxation v Cumins [No.5] [2008] FCA 794
Patricia noted that this was one of a number of cases that had in recent times dealt with s 41(5) of the Bankruptcy Act. It confirmed that even where the bankruptcy notice overstated the amount payable, that would not result in the bankruptcy notice being set aside unless notification had been given pursuant to s 41(5). She noted further that it confirmed that notification could be by way of an affidavit filed in support of an application to set aside the bankruptcy notice provided that affidavit was served on the debtor within the required time frame.
Deputy Commissioner of Taxation v Video & Audio (Australia) Pty Ltd [2008] FCA 213
Patricia noted that this case was a corporate insolvency case and although it was only short thought it interesting in that the court in that case refused to adjourn a matter even though there was pending an outstanding audit outcome being undertaken by the creditor in relation to a claim for a GST refund. The adjournment was refused because the court was convinced that the debtor was insolvent and the initial outcome of the audit by the creditor was that no reduction in debt would occur as a result of the claim.
4. Practitioner issues/suggestions
4.1 Manner in which matters are called on in the Bankruptcy List
Patricia noted that this issue had been raised by Karen Olsson who was not present today. She indicated that attempts are generally made to call matters on such that short matters, dismissals and uncontroversial adjournments are dealt with first and longer matters later, however, she noted that whether or not this outcome is achieved in all cases is dependant upon whether practitioners advise court staff of what is likely to occur in order for their files to be so ordered. Practitioners noted that they were quite happy with the way matters were running at this time.
4.2 ITSA
Pat Tragauer advised that ITSA is now sending an officer to the Court most weeks. She noted that in some cases they had noticed that matters can be stood over or adjourned to allow a further NPII search to occur. She advised that in this case instead of the usual 24 hour requirement, if the relevant practitioners spoke to the representative from ITSA in Court, he or she would authorise an immediate search, which may allow the matter to be dealt with in the course of the afternoon.
5. Other Business (including any corporate insolvency issues)
Ivars Martirovs noted some trustees had recently expressed concern in relation to the time it might be taking for reviews of decisions of Registrars to make a sequestration order to be dealt with, from the perspective of the tension between them performing their statutory obligations and not incurring costs unnecessarily which they may not be able to recoup. He indicated they were concerned as a result of the decision in Begetis v Temperzone Australia Pty Ltd [2007] FMCA 498 although in that case the decision may have resulted from a perceived unnecessary excessive amount of expenditure by the trustee. Patricia noted that the rules had been changed in the April tranche to try to ensure those matters are not delayed and it was agreed that there may not be anything further than can be done by way of rule change. Pat Tragauer noted that she will raise whether there is anything that can be done when the next Bankruptcy Act amendments are being considered.
Next Meeting
The next meeting will be held in approximately 6 months.
