Benjamin v Lopilato [2010] FMCA 96 (19 February 2010)

Last Updated: 26 February 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BENJAMIN v LOPILATO

[2010] FMCA 96

BANKRUPTCY – Application to set aside a bankruptcy notice – s.41(6A) of the Bankruptcy Act 1966 – proceedings instituted and not yet finalized in respect of orders on which the bankruptcy notice was issued.

Bankruptcy Act 1966

Applicant:

JOHN ROBERT BENJAMIN

Respondent:

FRANK LOPILATO in his capacity as liquidator of GB Franchising Pty Ltd (in liquidation) (ACN 105 196 389)

File Number:

MLG 342 of 2008

Judgment of:

Hartnett FM

Hearing date:

10 February 2010

Delivered at:

Melbourne

Delivered on:

19 February 2010

REPRESENTATION

Counsel for the Applicant:

Mr Cook

Solicitors for the Applicant:

Fong & Co. Barristers Solicitors

Counsel for the Respondent:

Mr Larkings

Solicitors for the Respondent:

Williams Love & Nicol Lawyers

ORDERS

(1) The time for compliance with Bankruptcy Notice 11/08 be extended until the determination of the Supreme Court of the Australian Capital Territory Court of Appeal proceedings.
(2) Costs are reserved.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE

MLG 342 of 2008

JOHN ROBERT BENJAMIN

Applicant

And

FRANK LOPILATO in his capacity as liquidator of GB Franchising Pty Ltd (in liquidation) (ACN 105 196 389)

Respondent

REASONS FOR JUDGMENT

1. Mr Benjamin filed an application for review on 9 February 2010. He seeks review of the decision of Registrar Luxton made 22 January 2010. Registrar Luxton ordered the applicant’s application, now before me, be dismissed. Registrar Luxton extended the time for compliance with a Bankruptcy Notice 11/08 to 4:30pm on 12 February 2010. On 10 February 2010 when the application for review first came before the Court I extended the time for compliance and pursuant to s.33 of the Bankruptcy Act 1966 (“the Act”) to 4:30pm on 19 February 2010.
2. On 20 March 2008 the applicant made application pursuant to s.41(6A) of the Act to set aside Bankruptcy Notice 11/08 issued on 27 February 2008 and which was served on 28 February 2008. The first of many orders extending the time for compliance was made. These included an order made 16 June 2008 by Registrar Moore that time for compliance be extended until the determination of the substantive application. There have been many adjournments of the substantive proceedings in the interim.
3. On 1 August 2007 Crispin J in the Supreme Court of the Australian Capital Territory made orders in proceedings in the matter of GB Franchising Pty Limited (in liquidation) (CAN 103 196 389) (“the Company”) and Frank Lo Pilato in his capacity as Liquidator of the Company (Applicant) v John Benjamin (Respondent), including an order that Mr Benjamin pay the sum of $82,507.97 so as to render the Company solvent. It is these orders in respect of which the bankruptcy notice has issued. By notice of appeal filed on 29 August 2007 Mr Benjamin appealed against the orders of Crispin J. On 28 February 2008 he was granted a stay of execution of the order of Crispin J by Refshauge J pending Refshauge J’s delivery of reasons. Those reasons were delivered on 1 July 2008 granting a further stay of the orders of Crispin J. On 12 March 2009 the respondent filed an application to strike out the appellant’s application.
4. On 9 July 2009 Gray J of the Supreme Court of the Australian Capital Territory Court of Appeal dismissed the Appeal for want of prosecution. He further ordered that the order of Refshauge J dated 1 July 2008 granting a stay of the orders of Crispin J be set aside and that the appellant pay the costs of the respondent in respect of the application.
5. The respondent sought the relisting of these proceedings now before me on 24 August 2009. This was because Mr Benjamin had obtained a stay of the bankruptcy notice proceedings until the determination of the applicant’s appeal in the Supreme Court of the Australian Capital Territory Court of Appeal. The appeal being dismissed, the applicant then failed to take further action to pursue his application to set aside Bankruptcy Notice 11/08.
6. In a directions hearing before Registrar Luxton on 12 October 2009 the applicant was ordered to file and serve any further affidavit by 26 October 2009. He failed to do so. On 16 November 2009 an order was made giving a further time period to the applicant in which to file and serve any further affidavit (he only having before the Court his initiating affidavit sworn 20 March 2008). The applicant complied with this order in the filing of his affidavit on 16 November 2009. The matter had been fixed for hearing on 22 January 2010 by order of Registrar Luxton on 12 October 2009. When the matter proceeded before me on review the applicant relied upon affidavits of Mr Benjamin sworn 16 November 2009 and 5 February 2010 together with an affidavit of Anthony Pigounis sworn 21 January 2010. The respondent relied upon an affidavit of Carolyn Francis Drury sworn 30 November 2009 and submissions dated 16 November 2009 and 7 December 2009.
7. The grounds for the application made by the applicant pursuant to s.41(6A) of the Act are as follows:
   • (a) that since July 2008 the applicant has spent the majority of his time in the United States providing care and support for his wife who has been receiving ongoing treatment for cancer. Since 2005 she has had colon and ovarian cancer and in 2008 first had lung cancer. Mr Benjamin’s wife’s illness has been very stressful for his family and has severely hampered him in his ability to prepare for these legal proceedings. Thus he stated he was unable to file affidavit material by 26 October 2009. I note the applicant was given an extension of time for the filing of affidavit material;
   • (b) his lawyers were unaware of the strike out application for his appeal listed in the Supreme Court of the Australian Capital Territory Court of Appeal until minutes before its scheduled time because all correspondence was sent to his appointed Canberra agent to that law firm’s street rather than postal address. This forms the basis of the appeal referred to in (c) below.
   • (c) proceedings to set aside the order in respect of which the bankruptcy notice was issued have been instituted by the applicant and have not yet been finalized. This argument is made on the basis that on 21 January 2010 the applicant filed an Application in Proceeding in appeal No. ACTA 30 of 2007. That application was scheduled to be heard by the Supreme Court of the Australian Capital Territory Court of Appeal on 17 February 2010. The appellant Mr Benjamin sought the following orders:
     • (i) The orders of President Gray J dated 9 July 2009 be set aside;
     • (ii) The order of Refshauge J dated 1 July 2008 granting a stay of the orders of Crispin J, be reinstated;
     • (iii) The respondent properly serve on the appellant the Application in Proceeding filed by the respondent on 12 March 2009;
     • (iv) The Application in Proceeding filed by the respondent on 12 March 2009 be re-heard, on a date to be determined by the Court;
     • (v) Any other orders that the Court considers appropriate.
8. On 9 July 2009 the applicant’s appeal in the Supreme Court of the Australian Capital Territory Court of Appeal was dismissed. The bankruptcy proceedings were reactivated and the applicant was given extensions of time to comply with procedural orders. On 21 January 2010 being the day before the final hearing of this application and some six months after the decision of 9 July 2009 the applicant filed a further proceeding in the Supreme Court of the Australian Capital Territory Court of Appeal seeking a setting aside of the orders of Gray J dated 9 July 2009. The applicant claims to have not received the strike-out application by way of service. His counsel on that day submitted to the Court that neither he nor his instructor had instructions and accordingly they sought to withdraw from the proceedings. Counsel for the respondent to the appeal sought and was granted leave to file affidavits of service including in relation to the notification of the strike-out proceeding and being to the Australian Capital Territory address for service of the appellant (Mr Benjamin).
9. The only real argument before the Court is whether these proceedings should be stayed because the applicant has now filed a further application in the Supreme Court of the Australian Capital Territory Court of Appeal being six months after the decision of which he complains and one day before the hearing of his application pursuant to s.41(6A) of the Act. Whether that application just filed has any merit is still to be determined. However I have been handed a copy of the orders made by Higgins CJ on 17 February 2010 acceding to Mr Benjamin’s application in the setting aside of the orders of Gray J of 9 July 2009 and reinstating of the orders of Refshauge J of 1 July 2008 granting a stay of the orders of Crispin J on which the bankruptcy notice is founded. In these circumstances I propose to make orders for an extension of the time for compliance with the bankruptcy notice until the determination of those proceedings.

I certify that the preceding 9Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !ninenine (9) paragraphs are a true copy of the reasons for judgment of Hartnett FM

Deputy Associate: Kate Gray

Date: 19 February 2010