BOENSCH v COSTIN

[2005] FMCA 1028

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BOENSCH v COSTIN [2005] FMCA 1028

BANKRUPTCY – Refusal to extend time for compliance with a bankruptcy notice where original judgment is under appeal.

Bankruptcy Act 1966, s.41
McDonald Henry and Meek Australian Bankruptcy Law and Practice

Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264

Applicant: FRANZ BOENSCH

Respondent: MICHAEL COSTIN

File Number: SYG2254 of 2003

Judgment of: Raphael FM

Hearing date: 12 July 2005

Date of Last Submission: 12 July 2005

Delivered at: Sydney

Delivered on: 12 July 2005

REPRESENTATION

For the Applicant: In person

Solicitors for the Respondent: McLean & Associates

ORDERS

1. Application dismissed.

2. Applicant to pay the respondent’s costs to be taxed, if not agreed, pursuant to the Federal Court Act and Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG2254 of 2003

FRANZ BOENSCH

Applicant

And

MICHAEL COSTIN

Respondent

REASONS FOR JUDGMENT

1. The applicant seeks review of an order of Registrar Tesoriero dismissing an application under s.41 of the Bankruptcy Act 1966 (Cth) to set aside a bankruptcy notice or extend time for compliance originally filed on 23 October 2003. The bankruptcy notice was founded on a judgment of the Local Court made on 25 July 2003.

2. Time for compliance with the original bankruptcy notice was extended pending an appeal by the applicant debtor to the Supreme Court of New South Wales.  That appeal was decided by his Honour Smart J on 17 May 2005 when judgment was handed down in favour of the creditor.  The appeal was dismissed and an order for costs was made against the debtor.

3. Time for compliance with the bankruptcy notice had been extended until 28 June 2005, when the matter was before Registrar Tesoriero.  The debtor did not appear.  He tells me that he was busy in the Supreme Court dealing with an application for an appeal against the orders of Smart J.  Registrar Tesoriero dismissed the application to set aside the bankruptcy notice and ordered costs in favour of the creditor.  On the same day, the debtor, having heard of the order of Registrar Tesoriero, filed an application for review which is the application before me. 

4. The appeal to the Court of Appeal of New South Wales is, at present, what is known as a holding appeal.  No grounds of appeal have been shown to me and so I am unable to make any judgment as to the prospects of success.  There is some dispute between the parties as to whether or not an application to stay the Local Court judgment has been dismissed.  The applicant debtor says it has not and that the matter will be going back to the Supreme Court for the consideration of that matter in a week or so time.  The respondent says that it has.  Suffice to say, there is currently no stay on the judgment.

5. This court and the Federal Court have considered the question of whether or not to continue an extension of time for compliance with the bankruptcy notice where judgments are being appealed against on several occasions.  The law is set out in some detail in McDonald Henry and Meek Australian Bankruptcy Law and Practice, at pages [2696] and [2697]. 

6. In cases which I have heard in this matter I have followed the views of Lehane J in Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264 when I have been reluctant to grant a further extension of time after a first appeal has been heard unsuccessfully. I have taken the view expressed by His Honour and others that the commission of an act of bankruptcy is not so serious a matter as a sequestration order being made against a debtor. There are good policy reasons why bankruptcy notices should be complied with and not continuously extended. The most notable of these is the fixing of a date of an act of bankruptcy. This is important in relation to back dates.

7. I have heard the debtor applicant in this case; but without some really persuasive argument that the appeal against the orders of Smart J is likely to succeed I am disinclined to grant him a further extension.  It may well be that by the time a petition is brought on to be heard the court will have before it a copy of a properly constructed notice of appeal and the result of any application for a stay.  The court may also have some indication of when the appeal is likely to be heard and taking all those matters into account will make its own independent assessment of whether or not the petition should be adjourned.

8. I dismiss this application. I order that the applicant pay the respondent's costs to be taxed, if not agreed, pursuant to the Federal Court Act and Rules.

I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date: