Burckhardt v I & L Securities Pty Ltd [1999] FCA 96 (10 February 1999)

Last Updated: 24 February 1999

CATEGORY: NO QUESTION OF PRINCIPLE

FEDERAL COURT OF AUSTRALIA

Burckhardt v I & L Securities Pty Ltd [1999] FCA 96

BARRY RAYMOND BURCKHARDT -v- I & L SECURITIES PTY LTD

VG 376 OF 1998

SPENDER, FINN AND MERKEL JJ

10 FEBRUARY 1999

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 376 OF 1998

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	BARRY RAYMOND BURCKHARDT APPELLANT
AND:	I & L SECURITIES PTY LTD RESPONDENT
JUDGE(S):	SPENDER, FINN AND MERKEL JJ
DATE OF ORDER:	10 FEBRUARY 1999
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

The appeal be dismissed with costs.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 376 OF 1998

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	BARRY RAYMOND BURCKHARDT APPELLANT
AND:	I & L SECURITIES PTY LTD RESPONDENT

JUDGE(S):	SPENDER, FINN AND MERKEL JJ
DATE:	10 FEBRUARY 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

SPENDER J:

1 This is an appeal, or at least an appeal so-called, from a judgment of a single judge of this court, Heerey J, who refused to extend the time for compliance with a bankruptcy notice which had been issued to Barry Raymond Burckhardt in respect of a debt connected with the mortgagee sale of property in Queensland. On 13 March 1998, Mr Burckhardt had filed an application in the Victoria District Registry of the Federal Court; those proceedings being VG 7172/1998.

2 Mr Burckhardt, who acted for himself, said in that application:

"This application is relative to the selling of a residential property in Shute Harbour, Nth QLD as (sic) a grossly reduced price. Relief is sought to have Bankruptcy notice set aside (No 1084 of 1997) pending submission of further evidence to the court. Service of Bankruptcy deemed to be on 27.2.98 but was not received until 7.3.98 as I had left address noted for service. I hereby wish to have time for compliance extended."

Then under the printed part of the application which says "on the grounds stated in the accompanying affidavit or statement of claim", the applicant claims:

"1. Set aside Bankruptcy Notice No 1084 of 1997 pending further court action."

3 Mr Burckhardt was a guarantor in respect of a mortgage of a property in Shute Harbour. The mortgagee, I & L Securities Pty Ltd, sold the property in April 1997 and it has been Mr Burckhardt's claim that, particularly having regard to the time of the sale and to the marketing program that was adopted in the marketing of the property prior to the auction, the property was sold at a gross under value.

4 There are a number of valuations in the material: one prior to the entering into of the security for $530,000, one shortly after the auction for $300,000, the price that the property achieved at the mortgagee auction, and then a valuation of $400,000 subsequently obtained by valuers through a firm of solicitors engaged by Mr Burckhardt.

5 The position has been that Mr Burckhardt has sought to challenge his liability as guarantor for the shortfall. On 4 August 1997 on a contested application for summary judgment, Williams J in the Supreme Court of Queensland entered judgment against Mr Burckhardt in the sum of $160,750.85 together with costs and interest. On that judgment, the bankruptcy notice in question here was issued on 22 August 1997. The application to set aside that bankruptcy notice "pending further court action" - as Mr Burckhardt sought, was filed on 13 March 1998. After some extensions, the matter came before District Registrar Seccombe on 18 May 1998. On that day he ordered that the application be dismissed and that the applicant pay the costs of an earlier appearance, 21 April 1998, and of 18 May.

6 In the meantime, on 14 May 1998, a notice of motion was filed at the Court of Appeal, Queensland, seeking leave to appeal from the judgment of Williams J. On 2 June 1998 Mr Burckhardt filed a notice of motion seeking review of the decision of the Registrar on 18 May dismissing his application to extend the time for compliance with the bankruptcy notice. On 13 July 1998 after a contested hearing where again Mr Burckhardt was legally represented, the Court of Appeal dismissed his application for leave to set aside the judgment of Williams J. On 27 July 1998 Heerey J reviewed the decision of Registrar Seccombe and dismissed the application.

7 Shortly put, Mr Burckhardt continues to maintain his claim which was raised in his defence before Williams J that the property was sold at an under value and that a small amount, if any, is in truth owing by him under his guarantee. The present position is that there is no litigation involving that question on foot, although it is hoped by Mr Burckhardt that the mortgagee company (which is presently in liquidation) will have assigned to it the right of action it has in respect of the mortgagee sale, and that, should that assignment occur, an entity (other than Mr Burckhardt) might be able to prosecute further the issue of the cause of the shortfall on the mortgagee sale, which point has now been decided against Mr Burckhardt personally on two occasions.

8 The question then in those circumstances is whether any legal error has been shown in the exercise of the discretionary judgment by Heerey J not further to extend time so as to permit this possibility of further litigation to occur. In my opinion, it is clear beyond argument that no error has been displayed in relation to the exercise of the judgment of Heerey J. Heerey J drew attention to the provisions of s 52(2) of the Bankruptcy Act 1966 which provides that at the petition stage of bankruptcy proceedings the court has certain options open to it. Section 52(2) provides:

"If the Court is not satisfied with the proof of any of those matters [that is, the matters which are specified in s 52(1)] or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition."

9 What occurs at the petition stage, of course, is a matter for another day. For present purposes, it seems to me, that this appeal, if it be properly constituted as an appeal, ought be dismissed.

10 I have addressed the substance of Mr Burckhardt's complaint. There are other matters. It seems likely that the judgment of Heerey J was interlocutory and an application for leave to appeal ought to have been the mechanism by which the matter came before a Full Court of the Federal Court. There is also the question of whether there was jurisdiction in Heerey J to extend the time for compliance with the bankruptcy notice, given the chronology of events, and in this regard the solicitor for the respondent referred to a judgment of Lindgren J in Re Udowenko; Ex parte Mitchell [1996] FCA 879; (1996) 69 FCR 299.

11 Because I think it better to approach the substance of Mr Burckhardt's complaint and also because the facts in the present case are quite different from the facts in Udowenko, I do not decide the present matter on any basis other than on the substantive point that Mr Burckhardt wishes to agitate.

12 For the above reasons it seems to me that the appeal should be dismissed.

FINN J:

13 I agree and have nothing further to add.

MERKEL J:

14 I also agree.

SPENDER J:

15 It seems to me that the ordinary rule should apply in this case, and I will propose that the appeal be dismissed and that the appellant, Mr Burckhardt, pay the respondent's costs of and incidental to the appeal, to be taxed if not agreed.

FINN J:

16 I agree with the orders proposed by the presiding judge.

MERKEL J:

17 I also agree with those orders.

SPENDER J:

18 The orders of the court are that the appeal be dismissed with costs.

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Spender, Finn & Merkel JJ.

Associate:

Dated: 10 February 1999

The appellant appeared in person.
Solicitor for the Respondent:	Fetter Gdanski
Date of Hearing:	10 February 1999
Date of Judgment:	10 February 1999