When a debtor proposes a Personal Insolvency Agreement (PIA), the controlling trustee of the debtor’s property is required, under ss. 190 and 194 of the Bankruptcy Act 1966 (Cth) (the Act), to call a meeting of  creditors within 25 working days of the s.188 authority appointing the trustee being signed, or 30 working days if the authority is signed in December.

Calculating the date for the meeting of creditors may not be as easy as it sounds, with  public holidays and human error conspiring to create potential confusion in selecting the day. A miscalculation can be a critical error which can only be rectified by a costly application to the court.

ERA Legal recently made such an application to the Federal Circuit Court of Australia when a controlling trustee realised, slightly too late, that a miscalculation had occurred and a meeting had not been called within the required time frame.

In the matter of McGinley [2016] FCCA 155, the controlling trustee applied for the time limit in s.194(1) of the Act to be extended.

In her judgment, Justice Emmett confirmed the elements required for the court to be satisfied that an extension should be ordered, including:

• The time limit in s.194 of the Act can only be extended by an Order made under s.33(1)(c);
• Statutory time limits ought not be lightly ignored and an application for an extension of time must show an acceptable explanation for the delay; and
• It must be fair and equitable in the circumstances to extend time. In considering whether it is fair and equitable, the court must consider matters including:
  • any prejudice to a party;
  • the merits of the substantial application;
  • considerations of fairness as between the applicant and other persons; and
  • any public interest.

In the present case, her Honour accepted our submissions that the above elements were satisfied and ordered that the time for holding the meeting was extended and that there would be no order as to costs.

In considering the application, Justice Emmett placed considerable emphasis on the explanation provided for the delay and that, if the time was not extended and the meeting could not take place, the debtor would have to wait 6 months before he could put forward a further PIA due to the operation of s.188(4) of the Act.  Her Honour was also mindful that the Applicant did not seek any costs, and did not intend to recoup the costs of the application from the property of the debtor.

For more information, please contact ERA Legal.