Macquarie Leasing Pty Ltd v Dekkan & Anor [2009] FMCA 349 (14 April 2009)

Last Updated: 6 May 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MACQUARIE LEASING PTY LTD v DEKKAN & ANOR

[2009] FMCA 349

BANKRUPTCY – Petition against joint debtors – one debtor already made bankrupt and appeal outstanding – identification of date of act of bankruptcy – effectiveness of extensions of time for compliance with bankruptcy notice – oral application for amendment of petition as to date of non-compliance – application refused – petition adjourned against both debtors.

Bankruptcy Act 1966 (Cth), ss.41(6A), 41(7) Federal Court (Bankruptcy) Rules 2005 (Cth), r.3.03 Federal Magistrates Court Rules 2001 (Cth)

Dekkan v Macquarie Leasing Pty Ltd [2008] FCA 1235 Dekkan v Macquarie Leasing Pty Limited (No. 2) [2008] FCA 1431 Evans v Dekkan [2009] FCA 281 Hubner v Australia & New Zealand Banking Group Ltd [1999] FCA 385; (1999) 88 FCR 445 Skalkos v Tzovaras Legal Pty Ltd [2008] FMCA 543 Streimer v Tamas [1931] VicLawRp 32; (1981) 54 FLR 253

Applicant:

MACQUARIE LEASING PTY LTD ACN 002 674 982

First Respondent:

BASSAM DEKKAN

Second Respondent:

JEANETTE DEKKAN

File Number:

SYG 1871 of 2008

Judgment of:

Smith FM

Hearing date:

14 April 2009

Delivered at:

Sydney

Delivered on:

14 April 2009

REPRESENTATION

Counsel for the Applicant:

Ms E Glover

Solicitors for the Applicant:

Douros Lawyers

Counsel for the Respondents:

First Respondent in person

ORDERS

(1) The petition is adjourned to 19 May 2009 at 9.30 am for directions only.
(2) The applicant must file and serve any interim application to amend the petition and any supporting affidavits no later than 8 May 2009. Such application is to be returnable for directions on 19 May 2009 at 9.30 am.
(3) Costs reserved.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 1871 of 2008

MACQUARIE LEASING PTY LTD ACN 002 674 982

Applicant

And

BASSAM DEKKAN

First Respondent

JEANETTE DEKKAN

Second Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. This is a creditor’s petition which was filed 21 July 2008 by Macquarie Leasing Pty Ltd (“Macquarie Leasing”). It sought sequestration orders against two debtors, Mr and Mrs Dekkan. Mr Dekkan appeared today and spoke on behalf of himself and his wife. Macquarie Leasing accepts that the petition against Mr Dekkan should be adjourned, but not the petition against Mrs Dekkan. However, for the reasons which follow, I have decided that it should be adjourned in relation to both debtors.
2. Paragraph 1 of the petition asserted that the debtors both owe Macquarie Leasing the amount of $23,661.98 pursuant to a default judgment in the Local Court of New South Wales and some interest. Paragraph 4 of the petition is in the following terms:
   • The following act of bankruptcy was committed by the First and Second Respondent Debtors within 6 months before the presentation of this petition:
   • The First and Second Respondent Debtors failed to comply on or before 9 July 2008 with the requirements of a bankruptcy notice served on them on 8 May 2008 or to satisfy the Court that they had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross demand that he could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.
3. The petition was returnable before a Registrar on 25 August 2008, at which time it was adjourned by consent due to an application by Mr and Mrs Dekkan pending in the Federal Court, in which they sought review of a Registrar’s dismissal of an application to set aside the bankruptcy notice served on them. In circumstances which I shall describe below, Perram J had made orders on 19 August 2008 which set aside the Registrar’s order, and gave directions for the preparation of the application (see Dekkan v Macquarie Leasing Pty Ltd [2008] FCA 1235). The application was later dismissed by Buchanan J on 17 September 2008, and his Honour published his reasons on 18 September 2008 (see Dekkan v Macquarie Leasing Pty Limited (No. 2) [2008] FCA 1431).
4. Later during the morning of 18 September 2008, the petition against Mr and Mrs Dekkan was listed before Registrar Segal. Unfortunately, there is no clear record of what happened on that occasion. The file shows that the Registrar considered the documents, and has noted on his listing report: “in my opinion, in the events that have happened, the Creditor’s Petition is invalid”. There is no record on the file of the Registrar’s reasons for that opinion. The listing report records an order: “on the application of the Applicant, the Petition is adjourned to 9.45 am on 23.9.08 to allow the Applicant to consider its position”. This also is unexplained in the material before me.
5. In effect, it seems that Registrar Segal identified a concern about the petition, and invited Macquarie Leasing to consider its position, including as to whether it wished to salvage a problem by way of amendment to the petition. In particular, I think it likely that the Registrar was concerned about the accuracy of the statement in paragraph 4 of the petition, which asserted acts of bankruptcy by Mr and Mrs Dekkan on 9 July 2008. Such a concern might have appeared to arise from the background chronology which is suggested in the documents before me. In particular, the Registrar may have thought that the petition was invalid, because one of Perram J’s orders made on 19 August 2008 appeared, in its terms, to be an unqualified extension of time for compliance with the bankruptcy notice until a date after the date when the petition was filed.
6. The original application to set aside the bankruptcy notice had been lodged with the Federal Court on 5 June 2008. It included an ex parte interim application for an extension of time to comply with the bankruptcy notice “up to and including the date of the first direction’s hearing” under s.41(6A) of the Bankruptcy Act 1966 (Cth). There was power to give such an extension in the present case, but only if the application was made “before the expiration of the time fixed for compliance”. The application did not assert that an automatic extension of time arose under s.41(7) of the Act.
7. The affidavit in support of the application is not in the documents before me, but I infer that, as is required by r.3.03 of the Federal Court (Bankruptcy) Rules 2005 (Cth), the affidavit identified “the date when the bankruptcy notice was served on the applicant” as being 15 May 2008. On that basis, there was still time for the Registrar to extend time. Such an ex parte order was made by Registrar Ng on 5 June 2008 in the following terms:
   • 1. Pursuant to subsection 41(6A) of the Bankruptcy Act 1966 and rule 3.03 of the Federal Court (Bankruptcy) Rules 2005, on condition that Bankruptcy Notice No. 1431 of 2008 was served on the Applicants on 15 May 2008, the time for compliance by the Applicants with the requirements of the Bankruptcy Notice is extended up to and including 18 June 2008.
   • 2. There be liberty to any party to apply to vary or discharge Order 1, on 24 hours notice.
8. The application to set aside the bankruptcy notice was listed before Registrar Hedge on 18 June 2008. Although I do not have that file, I infer that both sides were represented, Mrs Dekkan probably by Mr Dekkan. The Registrar made the following orders:
   • 1. By consent the application to set aside Bankruptcy Notice No. NN 1431 of 2008 be adjourned until 9am on 9 July 2008.
   • 2. Time for compliance with requirements of Bankruptcy Notice No. NN 1431 of 2008 be extended up to and including 9 July 2008.
   • 3. The applicant to file and serve an amended application and affidavits to be relied upon by 4 July 2008.
9. It will be noted that the order made in paragraph 2 is not qualified by any express condition as to the date of service of the notice. Moreover, it seems likely that Macquarie Leasing did not advert to the fact that its evidence from the process server showed that service of the bankruptcy notice was effected on both Mr and Mrs Dekkan on 8 May 2008 and not 15 May 2008. If this is correct, then it was, and remains, arguable on behalf of Macquarie Leasing that the Registrar’s order on 5 June 2008 was ineffective to prevent the occurrence of an act of bankruptcy on 29 May 2008, and that there was no subsequent power in the Federal Court to extend the time for compliance. However, it seems likely that this point was not taken in front of Registrar Hedge on 18 June 2008, before she made her second order.
10. On the next listing on 9 July 2008, Registrar Hedge dismissed the application to set aside. The petition was then lodged on 21 July 2008, before Mr and Mrs Dekkan lodged their application for review of her order on 30 July 2008. As I have indicated, the petition was then adjourned on 25 August 2008, before being listed before Registrar Segal on 18 September 2008.
11. The application for review of the Registrar’s refusal to set aside the bankruptcy notice was filed on 30 July 2008. It was referred to Perram J on 13 August 2008, and his Honour refused the application on the same day. His Honour later, it seems, came to the view that his reasons for dismissing the application for review were flawed by a misapprehension that he was exercising a discretionary jurisdiction. He re-listed the matter on 19 August 2008, and made a new set of orders. These vacated his earlier order, set aside the orders of Registrar Hedge on 9 July 2008, and restored the application to set aside the bankruptcy notice to the Federal Court’s list. His Honour published a judgment explaining his reasons (see Dekkan v Macquarie Leasing Pty Ltd [2008] FCA 1235). There is nothing in his Honour’s judgment to indicate what submissions he received from the parties before making his new orders.
12. They also included:
    • 4. Pursuant to s 41(6A) of the Bankruptcy Act 1966 (Cth) and rule 3.03 of the Federal Court (Bankruptcy) Rules 2005, the time for compliance by the applicants with the requirements of the bankruptcy notice be extended up to and including 17 September 2008.
13. His Honour gave no reasons for making this order. As with the extension made by Registrar Hedge on 18 June 2008, it seems likely that Perram J’s attention was not drawn to the present contention by Macquarie Leasing that the time for compliance with the bankruptcy notice had expired before the application to set it aside, and that there was therefore no power to extend time under s.41(6A). His Honour may have thought he had power to extend time for compliance retrospectively over the period since the expiry of Registrar Hedge’s order dismissing the application on 9 July 2008, under principles of nunc pro tunc which were addressed in Streimer v Tamas [1931] VicLawRp 32; (1981) 54 FLR 253. However, these may be unavailable or ineffective if an act of bankruptcy had occurred before the application to set aside the bankruptcy notice was originally filed (cf. Hubner v Australia & New Zealand Banking Group Ltd [1999] FCA 385; (1999) 88 FCR 445 at 449, Rixon v Bryett [2001] FCA 433, and Skalkos v Tzovaras Legal Pty Ltd [2008] FMCA 543 at [21]).
14. The effect of the order of Perram J on the validity of the petition and the identification of the date of an act of bankruptcy was not flagged in any written submission of Macquarie Leasing filed and served before or at today’s hearing. It involves technical issues, requiring research into legal authorities which Mr and Mrs Dekkan would find difficult to present without legal assistance. They only surfaced in the course of my endeavours to identify the issue which had concerned Registrar Segal, which prompted an oral application by Macquarie Leasing to amend paragraph 4 of the petition so as to assert an act of bankruptcy on 29 May 2008.
15. I have decided that it is inappropriate for me to decide these issues on the petition today, due to its imperfect exploration before me, and the lack of notice by Macquarie Leasing of its application for amendment. In effect, Macquarie Leasing now concedes that the petition still suffers from a defect in paragraph 4, which has not been rectified by way of formal application to amend the petition, as it appears was invited by Registrar Segal back in September 2008. It acknowledges that the alleged date of an act of bankruptcy is incorrect, even assuming the correctness of its submission that all of the three purported extensions of time for compliance with the bankruptcy notice under s.41(6A) were legally ineffective to prevent the occurrence of an act of bankruptcy on 29 May 2008, being 21 days after the proven service of the notice.
16. I was today invited to rectify paragraph 4 by oral application to amend the reference from 9 July 2008 to 29 May 2008 and to dispense with re-verification and re-service on Mr and Mrs Dekkan. However, in all the circumstances which I have sketched above, I do not consider it appropriate to entertain such an application nor to grant it. In my opinion, in the confused circumstances as to the actual date of the act of bankruptcy, and in the possibility that Mr and Mrs Dekkan may have legal arguments concerning the effect of the three orders purporting to extend time for compliance with the bankruptcy notice, I consider that it is appropriate to insist upon the rules requiring formal amendment of the bankruptcy petition, verification of its amended assertions, and re-service on both of the debtors.
17. As to service of an application for amendment, I note that Mrs Dekkan is not present today, that she has never appeared in person in answer to the petition, and that she has been only informally, and not very competently, represented by her husband.
18. I therefore decline to accept an oral application to amend the petition. I decline to proceed today on the petition against Mrs Dekkan. I am prepared, however, to allow Macquarie Leasing an opportunity, such as was offered to it by Registrar Segal, to apply by way of interim application to amend the petition. I will, however, require proof of service of that application and any supporting affidavits by hand on Mrs Dekkan.
19. It is possible that she and Mr Dekkan may not be able to obtain legal assistance to address the issues identified above. However, I am not persuaded that the interests of the administration of justice require a referral for legal assistance under Pt.12 of the Federal Magistrates Court Rules 2001 (Cth) as was requested by Mr Dekkan. It they are unable to get legal assistance, the Court will endeavour itself to consider the arguments that might be available to them, if any.
20. The petition in so far as it seeks a sequestration order against Mr Dekkan was not pressed today by Macquarie Leasing. This is because Mr Dekkan has already been made bankrupt by order of Jacobson J on 24 March 2009 (see Evans v Dekkan [2009] FCA 281). There is an appeal outstanding against that order.
21. Jacobson J noted an act of bankruptcy in relation to that matter, being 3 July 2008. Depending upon the issues which I have flagged above, there might be a nice issue whether the present petition against Mr Dekkan relies upon an earlier act of bankruptcy and can survive his later bankruptcy. This is not a matter I propose to decide today. However, I am prepared to adjourn the petition against both Mr and Mrs Dekkan to a date in May, as is invited by Macquarie Leasing.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate: Lilian Khaw

Date: 29 April 2009