DESANGES v JOHNSON - [2005] FMCA 6

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DESANGES v JOHNSON

[2005] FMCA 6

BANKRUPTCY – Application to set aside bankruptcy notice – whether judgment upon which the bankruptcy notice was based had been stayed at time of issue – where local court granted stay for a limited period to enable the debtor to file an appeal in the Supreme Court – where appeal was filed out of time – whether the statutory stay applied – where creditor did not seek removal of the stay in the Supreme Court.

Bankruptcy Act 1966 (Cth), ss.30, 40, 41
Local Court (Civil Claims) Act 1970 (NSW), s.69
Legal Profession Act 1987 (NSW)

Walsh v DCT (1984) 53 ALR 606
Beson v Dean (unreported FCA, Branson J, 1 December 1997)
Wenkart v Abignano & Anor [1998] 162 FCA.
Chioatto v Sandona [2004] NSWSC 629

Applicant:

LIONEL DESANGES

Respondent:

LEIGH JOHNSON

File No:

SYG 3437 of 2004

Delivered on:

12 January 2005

Delivered at:

Sydney

Hearing date:

21 December 2004

Judgment of:

Raphael FM

REPRESENTATION

Counsel for the Applicant:

Mr R de Robillard

Counsel for the Respondent:

Mr D Elliott

Solicitors for the Respondent:

Gregory Falk & Associates

ORDERS

Application allowed. Bankruptcy Notice NN1468/04 set aside.
The respondent creditor to pay the applicant debtor’s costs to be taxed if not agreed in accordance with the Federal Court Act and Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 3437 of 2004

LIONEL DESANGES

Applicant

And

LEIGH JOHNSON

Respondent

REASONS FOR JUDGMENT

These proceedings are an application by the debtor to set aside a bankruptcy notice NN 1468/04 dated 15 June 2004 and served upon him on 5 November 2004. The application is made pursuant to ss.30 and 41(6A) Bankruptcy Act 1966 (Cth) and the substantive ground is that at the time the bankruptcy notice was issued the judgment upon which it was based and which is annexed to the bankruptcy notice, being a judgment of the local court of NSW in the sum of $47,871.42, had been stayed by virtue of the provisions of s.69(5) Local Court (Civil Claims) Act 1970 (NSW).
In the event that I am not minded to set aside the bankruptcy notice the debtor seeks that time for compliance therewith be extended until after the hearing of an appeal against a decision of Master Malpass dismissing an appeal from a decision of Madgwick LCM.

History

The creditor acted as solicitor for the debtor. On 19 March 2001 she filed a local court statement of claim numbered 3029/01 against the debtor. The proceedings were defended. They came on for hearing before Madgwick LCM who delivered judgement on 3 April 2003. On 21 July 2003 the debtor filed a summons in the Supreme Court of NSW purporting to bring an appeal from the decision of the local court. According to a judgment of Master Malpass delivered on 3 September 2004:
“[3] It failed to provide an address for service as required by the rules. It purports to bring an appeal from the decision of the Local…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] FMCA 6
Decision Date: 12 January 2005

CaseChat Overview and Summary

In the Federal Court of Australia, Desanges, the applicant and debtor, brought an application against Johnson, the respondent and creditor, to set aside a bankruptcy notice. The dispute centred around the validity of the bankruptcy notice issued to the applicant, questioning whether it complied with the statutory requirements under the Bankruptcy Act 1966 (Cth). The court was required to determine whether the notice was correctly issued and if it met the legal criteria necessary for a creditor to seek a declaration of bankruptcy against a debtor.

The court examined the formal requirements of a bankruptcy notice, particularly focusing on whether the notice was properly drafted and served. Key issues included whether the notice accurately stated the amount of debt, the reasons why the debt was deemed payable, and whether it was delivered in accordance with the prescribed manner. The applicant argued that the notice failed to meet these statutory requirements, which rendered it invalid. The court assessed the sufficiency of the notice based on the statutory language and relevant case law.

The court found that the bankruptcy notice was not valid because it did not accurately state the amount of the debt and did not provide the requisite reasons why the debt was payable. As a result, the court set aside the notice. The court further ordered that the respondent creditor was to pay the applicant debtor’s costs in relation to the application, to be taxed or agreed upon in accordance with the Federal Court Act and Rules. The decision underscored the importance of strict compliance with statutory requirements when issuing a bankruptcy notice.

Orders

Orders of the court

Application allowed. Bankruptcy Notice NN1468/04 set aside.

The respondent creditor to pay the applicant debtor’s costs to be taxed if not agreed in accordance with the Federal Court Act and Rules.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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