Amirbeaggi as trustee of the bankrupt estate of Hanna v Hanna [2021] FCA 988


This past week the Federal Court handed down an interesting bankruptcy decision concerning the late lodgement of cross-claims. The respondent in this matter on two separate occasions failed to serve a cross-claim within the allotted time. This was despite being granted an extension. The question for the court was whether should be granted to permit the applicant to serve the cross-claim notwithstanding these delays. 

Resisting the cross-claim:

In opposing leave, it was argued that the respondent’s delays remained unexplained, unduly lengthened court proceedings and were contrary to the overarching purposes of ss 37N and 37M of the Federal Court of Australia Act 1976 (Cth) (to dispense with proceedings quickly, inexpensively and efficiently). 

The court’s reasoning:

In determining whether to grant leave, the court acknowledged that the respondent’s unexplained delays were a relevant discretionary consideration. [1] However, the court was unconvinced that this reason, on its own, was sufficient to refuse leave. Instead, as the proposed cross-claim sought to raise issues central to the case, the court ultimately decided to grant leave. 

Despite granting leave, the court was nonetheless displeased with the respondent’s ‘unsatisfactory conduct’ and ordered that he pay the other parties costs associated with the application for leave.

Concluding Thoughts:

This matter serves as a timely reminder to both applicants and practitioners that court deadlines are not simply procedural but are essential in conserving judicial time and minimising legal costs. Indeed, this matter emphasised that the courts do not look favourably upon those who unnecessarily prolong proceedings and will make cost orders against such parties. 

***Assisted by: Kayla Cook***

  [1] [30].