Over-looked rule trips up a lawyer

Key Takeaways

It is relatively well known that the time for compliance with a Bankruptcy Notice passes after 21 days from the date it was served upon the debtor.

The Court (being the Federal Court of Australia or the Federal Circuit and Family Court of Australia (Division 2)) has jurisdiction to extend such time for compliance of a Bankruptcy Notice, however it may only do so if the application to extend time for compliance is filed before the expiration of the 21 days.

Brief Facts

In Ezekiel-Hart v Reis¹, Mr Ezekiel-Hart, a lawyer, (as part of an application to set aside the Bankruptcy Notice) sought an extension of time to comply with a Bankruptcy Notice served on him on 5 May 2023.

To comply with the 21 day time limit, Mr Ezekiel-Hart was required to make the application by 26 May 2023. On Friday 26 May 2023 at 7:24pm, Mr Ezekiel-Hart’s application to extend the time for compliance with the Bankruptcy Notice and to have it set aside, was filed electronically with the Court’s Registry in Canberra.

The respondent to Mr Ezekiel-Hart’s application opposed the orders sought on the basis that the application was filed outside the time within which compliance with the Bankruptcy Notice had to occur. The respondent contended that as the application was filed outside those 21 days, the Court had no jurisdiction to determine it.

Unfortunately for Mr Ezekiel-Hart’s application, the simple arithmetic he relied upon could not save it. Rules, as they tend to do, added a layer of complexity to the calculation of time, which proved terminal to Mr Ezekiel-Hart’s application.

Judgment

Rule 2.05(4)(b) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (the Rules), provides that any document received by the Registry after 4:30pm is deemed to be received on the next business day the Registry is open. The effect of this Rule on Mr Ezekiel-Hart’s application (lodged, as it was, on a Friday evening), was that it was deemed filed on Tuesday 30 May 2023 (Monday 29 May 2023 being a public holiday in the ACT that year).

Implications

The consequence of that unfortunate series of events and triggering of such Rules, is that Mr Ezekiel-Hart did not apply to the Court to set aside the bankruptcy notice by 26 May 2023 as he was required to do. That being the case, the Court had no jurisdiction to extend the time for compliance with the Bankruptcy Notice and Mr Ezekiel-Hart committed an act of bankruptcy.

The Court recognized the application of r 2.05(4) of the Rules with this consequence may appear harsh, particularly when consideration is had to the consequences the commission of an act of bankruptcy has on an individual. In an effort to explain how this potential harshness is offset by the notion of fairness, the Court reiterated Derek George Shephard v Chiquita Brands South Pacific Limited². That case explains a person who lodges a document electronically should have no advantage over someone who files it physically. As the Registry office is not open for filing (or at all) after 4:30pm on business days, Mr Ezekiel-Hart could not be advantaged by electronically filing any time up until 11:59:59pm on 26 May 2023 when someone not filing electronically had a deadline of some 7 hours earlier.

On this basis, the application made by Mr Ezekiel-Hart was refused and he was ordered to pay the respondent’s costs.

¹ [2024] FedCFamC2G 121 (2024)
² [2004] FCAFC 76, at [48] (Sackville J)