By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.
It’s human to get it wrong and fortunately the law makes allowance for legal practitioners and even Judges being human.
The Slip Rule as contained in the Federal Court Rules 2011 is contained in Rule 39.05 and states:
The Court may vary or set aside a judgment or order after it has been entered if:
…
(h) there is an error or omission arising in a judgment or order from an accidental slip or omission.
A similar allowance is made in the Uniform Civil Procedure Rules 2005 (NSW) at Rule 36.17 stating:
If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error.
There were in fact two issues that required the attention of the Full Court in the matter of Ramsay Health Care Australia Pty Limited v Compton [2016] FCAFC 125 being whether an error in not extending a Creditor’s Petition should be corrected and if so, the period of time the Petition was extended.
The first need to apply the slip rule came about due to a misunderstanding by the creditor’s solicitor of whether orders made the Court included an extension of the Creditor’s Petition under section 52 of the Bankruptcy Act 1966. The primary Judge saw fit to allow an extension of the Petition out of time due to such inadvertence. The Judge allowed an extension for only 3 months on the basis that a further extension could be sought if 3 months was not sufficient.
The extension for only 3 months gave rise to the second slip in the matter as an extension of the Petition can only be made prior to the expiry of 12 months from the issue of the Petition and for a period up to 24 months from issue. An additional 12 months should have been granted by His Honour rather than only 3 months as further extension was not available.
The Full Court held that the primary Judge correctly applied the Slip Rule as it allows a correction of accidental mistakes, stating that the inadvertence by the solicitor in not applying for an extension of the Petition prior to its expiry was able to be corrected under the Rule.
The error by His Honour in only allowing an extension of only 3 months for the Petition stating that a further extension was possible when it was in fact not, was also able to be corrected under the Slip Rule. The Full Court varied His Honour’s order to state that the extension of the Petition would be for 12 months instead of only 3 months.
This decision is in direct contrast to the Full Court decision in Flint v Richard Busuttil & Co Pty Limited [2013] FCAFC 131 where their Honours (different Judges to the Ramsay appeal) held that the Slip Rules was not available to extend a Creditor’s Petition once it had expired.
The use of the Slip Rule is therefore open with respect to applying for an extension of a Petition after its expiry and requires the intervention of the High Court for determination but in general it is a convenient back stop in allowing the correction of errors and mistakes because after all … everyone’s human.
Read the judgment here
If you would like more information or advice in relation to insolvency, restructuring or debt recovery law, contact Darrin Mitchell on 02 9806 7428 or darrinm@matthewsfolbigg.com.au or a Principal of the Matthews Folbigg Insolvency, Restructuring & Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au
