In a recent case involving a default judgment to recover the sum of an outstanding loan, the Federal Court of Australia considered whether it had jurisdiction to set aside a bankruptcy notice issued against the guarantor of the loan and whether it had jurisdiction to extend the time for compliance with the bankruptcy notice.

Background

On 19 June 2019, Lumi Financial Pty Ltd (Lumi) entered into a loan agreement with Efektiv Pty Ltd (Efektiv). Ms Maria Di Gregorio was a guarantor of this loan. On 25 September 2019, Efektiv defaulted on the loan and on 14 November 2019, Lumi instituted proceedings, in which Ms Di Gregorio was a named defendant, to recover the sum of the outstanding loan amount plus interest and costs. Ms Di Gregorio did not file a defence and subsequently, on 5 February 2021, a default judgment was awarded in favour of Lumi and against Ms Di Gregorio for the sum of $67,588.60.

Following numerous attempts to personally serve an AFSA issued bankruptcy notice on Ms Di Gregorio, on 2 September 2021, a second bankruptcy notice was issued with orders for substituted service. This second bankruptcy notice was served on Ms Di Gregorio in accordance with the orders for substituted servers and Ms Di Gregorio subsequently applied to the Court seeking to set the bankruptcy notice aside on various grounds or alternatively, an extension of time for compliance with the bankruptcy notice.

Extension of time under s 41(6A) of the Bankruptcy Act

After considering that it did not have jurisdiction to set aside the second bankruptcy notice as there was evidence that the orders for substituted service had been complied with (even though Ms Di Gregorio didn’t receive the notice in her mailbox until 12 days after the date of service as deemed by the Registrar), the Court turned its attention to whether it could entertain Ms Di Gregorio’s application seeking an extension of time in which to comply with the second bankruptcy notice under s 41(6A)(a) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act).

Section 41(6A)(a) of the Bankruptcy Act enables the Court to extend the time for compliance with a bankruptcy notice where, before the expiration of time fixed for compliance with that bankruptcy notice, proceedings to set aside a judgment in respect of which the bankruptcy notice was issued have been instituted by the debtor. The relevant time for compliance in this case was 21 days. As the Court had determined service of the second bankruptcy notice was effected on 30 September 2021, Ms Di Gregorio had until 21 October 2021 to issue proceedings in respect of the notice if she wished to enliven the Court’s power to extend the time for compliance with the notice under s 41(6A)(a) of the Bankruptcy Act.

Ms Di Gregorio lodged an application to set aside the default judgment on 21 October 2021 at 11.59pm; one minute before the expiry of the time fixed for compliance with the bankruptcy notice. Soon after, Ms Di Gregorio received an automatic reply confirmation email advising her that ‘[t]he form(s) filed on 21 October 11.59pm have been processed by the court’, with the filing date stated on the email as 22 October 2021 12.00am. Thus, the question before the Court was to determine what time Ms Di Gregorio’s application to set aside the default judgment was filed, as 11.59pm on 21 October would enliven the Court’s power under s 41(6A)(a) of the Bankruptcy Act, but 12.00am on 22 October would not.

In consideration of this issue, the Court was required to interpret and apply Rule 3.4(3)-(5) of the Uniform Civil Procedure Rules 2005 (NSW), which relates to the electronic filing of documents. Rofe J noted that under Rule 3.4(3) of the UCPR a document is taken to be filed when the Online Registry gives notice of acceptance of the document. Similarly, Rofe J noted that Rule 3.4(4) stipulates that the date and time of the acceptance of the document must be given to the user who filed the document, rather than the time of receipt or uploading. Finally, Rule 3.4(5) refers to a document being submitted to be filed, which, as Rofe J determined, suggests the document is not actually filed until some further action (i.e. acceptance by the Registry) has taken place.

Conclusion

It was on this basis that the Court considered Ms Di Gregorio’s application to set aside the default judgment was not properly filed until the Online Registry gave notice of its acceptance of the application, at 12.00am on 22 October. Therefore the Court’s power under s 41(6A)(a) of the Bankruptcy Act could not be enlivened and Ms Di Gregorio’s application for an extension of time in which to comply with the second bankruptcy notice was dismissed.

Key takeaway

This case illustrates that on proper construction of the UCPR, documents are deemed to be filed with the Court at the time the Online Registry gives notice of acceptance of those documents, rather than at the time the documents are submitted to the Registry. Although it is a rare situation in which this distinction will be of any practical significance (as the time between submission and acceptance by the Online Registry is usually very short), this case serves as a timely reminder of the importance of strict compliance with the timeframes that are prescribed for in the Bankruptcy Act and subject to interpretation under the UCPR.