DESANGES v JOHNSON
[2005] FMCA 6
•12 January 2005
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 Court. It also failed to provide grounds of appeal as required by the rules. This breach has not been rectified.
[4] Initially, the proceedings were given a special fixture before Master Harrison on 17 June 2004. She adjourned the proceedings on the application of the plaintiff because his counsel was unable to appear on that day.
…
[6] The summons was further fixed for hearing on Friday 26 August 2004. After certain diversions, the appeal finally came to hearing and it was concluded on that day.
[7] The summons has been brought out of time. Presently the appeal stands as being incompetent and liable to be dismissed. There is no application for extension of time.”
The Master did not dismiss the application peremptorily but proceeded to then hear the appeal and consider whether or not he was prepared to allow the debtor to ventilate an argument that the account was unenforceable under the provisions of the Legal Profession Act 1987 (NSW). He concluded that he would not allow this, saying at [44] – [45]:
“If the plaintiff had been allowed to ventilate that ground in this appeal, it would have necessitated yet further adjournment of these proceedings. … I gained the impression that the appeal was being used as a vehicle to frustrate the defendant from enforcing her judgment.
The appeal is dismissed. The plaintiff is to pay the costs of the summons.”
On 1 October 2004 the debtor filed a notice of appeal from the whole of the decision of Master Malpass. That appeal has not yet been heard. On 5 November 2004 the debtor was served with the bankruptcy notice.
Discussion
The debtor argues that there is a statutory stay on the judgment of the Local Court pursuant to the provisions of s.69(5) Local Court (Civil Claims) Act which is in the following form:
[s.69] Appeal
…
(5) Subject to any order of the Supreme Court to the contrary, the judgment or order against which the appeal is made is stayed pending the determination of the appeal.
I interpose here that on 19 June 2003 the debtor obtained an actual order for stay of the judgment for 28 days to enable him to take proceedings in the Supreme Court. Those proceedings were not commenced within the 28 days allowed but were commenced on
21 July 2003 a few days out of time. In considering the validity of the Notice the Court must look at the document at the date which it bears, that is the date of its issue. The notice speaks as at the date of its issue and the requirements of the notice, for the purposes of s.40(1)(g) of the Bankruptcy Act must be ascertained in that context. Walsh v DCT (1984) 53 ALR 606 at 608 per Gibbs CJ; Beson v Dean (unreported FCA, Branson J, 1 December 1997); Wenkart v Abignano & Anor [1998] 162 FCA.
On 15 June 2004 the proceedings which Master Malpass considered to be an appeal against the Local Court (Civil Claims) Act had been filed. Notwithstanding the comments of Master Malpass in his judgment about the validity of those proceedings he treated them as if they were valid and gave judgment, dismissing the appeal. This appeal was due to be heard first on 17 June 2004 only two days after the bankruptcy notice was issued but it was not heard at that time for reasons explained by Master Malpass in his judgment. It seems to me that as at the date of issue of the bankruptcy notice there was an appeal from the local court decision and there had been no order of the Supreme Court of the type found in Chioatto v Sandona [2004] NSWSC 629 which would affect the stay thereby granted.
It was forcefully argued before me by the creditor that there was no stay under s.69(5) because the debtor had been given a special stay for a limited period in order to commence the very appeal proceedings that would have occasioned the stay under s.69(5). When the debtor failed to comply with the provisions of the stay order he lost his right to such a stay. I do not think that this could be the case. The only court which has the right to interfere with the stay upon filing of an appeal is the Supreme Court. The special orders providing a stay were made by the Local Court. It was open to the creditor upon the filing of the appeal to apply to the Supreme Court for an order under s.69(5) which would remove the stay. That was not done. I am of the view that that was the only approach available to the creditor as at the time the bankruptcy notice was issued. Therefore the bankruptcy notice is invalid because of the provisions of s.41(3)(b) Bankruptcy Act.
The Bankruptcy Notice is to be set aside. The creditor must pay the debtor’s costs to be taxed if not agreed in accordance with the Federal Court Act and Rules.
I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 12 January 2005
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