Bad timing? or will Euclid save the day?

Calculation of time limits in law should be straightforward but judges have taken us to the mathematics of Euclid and beyond in deciding whether a bankruptcy can take place at a point in time of a day before the first instant of that day.

Time limits are important in law because a person with claims is expected to pursue them promptly, the alternative being that a defendant might suffer the anticipation of suit for ever.

Time limits are particularly important in insolvency, including to protect the assets from pre-emptive claims.

The law tries to make the calculation of time clear and accurate but invariably fine points are taken.

The basic rule is that time must be “reckoned exclusive of” the day of the act or event from or to which the time is measured: see s 105 of the Corporations Act and s 36(1) of the Acts Interpretation Act 1901.

PPSR registration out of time

Voluntary administrators were appointed to a company on 10 May 2016; they then became the liquidators. A creditor’s security interest was registered on the PPSR on 10 November 2015.  Applying s 588FL of the Corporations Act, the court found that the registration time occurred one day late and the security interest vested in and became the property of the company in liquidation.

The six month count was back to and inclusive of all of 10 November 2015. The result was the same when months and days were used: Overflow FNQ Pty Ltd (in liquidation); Kelly v Austwide Consumer Products Pty Ltd [2017] QSC 76.

The Court in that case pondered whether the time of day was important, the company having gone into administration at 8am and the registration occurring at 4.18pm, but that would not have changed the result.

In fact the time of day is not relevant in how the law determines time limits, unless in some particular cases the law makes it so. For example, Rule 85 of the English Bankruptcy Rules 1952 provided that service of a documents “after six o’clock in the afternoon” was deemed to have been served the following day, and if served after 2 o’clock in the afternoon on a Saturday, was deemed to have been served on the Monday. That law no longer applies.

Further time

A closer analysis of time was given by Justice Barrett in Autumn Solar v Solar Magic [2010] NSWSC 463 who had to decide whether an application to set aside a s 459G demand was made “within 21 days after” the day of service, being 16 March 2010.

As the Judge reasoned, and leaving out 16 March 2010 itself,

“no period “after” 16 March 2010 started until 16 March 2010 had itself ended. The first day of every period “after” 16 March 2010 was 17 March 2010, and then the second, the third and continuing to twenty-one days “after” 16 March 2010 elapsing at the conclusion of 6 April 2010 (as paraphrased).

Justice Barrett considered but then rejected a point taken that the relevant period began

“an instant after the midnight that divided 16 March from 17 March, and the 21 days did not end until an instant after the midnight dividing 6 April from 7 April”

that is

“an infinitesimally small part of 7 April” was included in the 21 days.

Barrett J found two reasons why this was wrong:

  • as a general rule, the law takes no account of fractions of a day. “The idea that a day is defined by or made up of a multitude of fragments of time is one that cannot be accepted unless required by some particular words in a section”; see Forster v Jododex Australia [1972] HCA 61; and
  • “the beginning of a day is nothing but the end of the day before, and the end of the day is nothing but the beginning of the next …”: Prowse v McIntyre [1961] HCA 789.

Or, as Justice Barrett concluded,

“all beginnings of days and all ends of days fall precisely at the point of midnight, not an instant before or an instant after”,

explaining out that

“as Euclid recognised in mathematics, a point has no magnitude”.

Further instances

That may be so but, with too much time having been spent on this question, it remains to briefly point out that even though section 57A of the Bankruptcy Act deems a person to have become a bankrupt “on the first instant of the day of the bankruptcy”, the Court in Clyne v Deputy Commissioner of Taxation [1984] FCA 9 said that this did not prevent a sequestration order taking effect on the same day but prior to that first instant. By way of explanation, the Court said that:

“Time like matter is said to be infinitely divisible (Wing v Angrave [1860] EngR 525 … Re Grosvenor, Peacey v Grosvenor (1944) 1 All ER 81)”. 

Published 2017; republished February 2019.

 

 

 

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