Di Giaacomo, Vittoria v Boral Steel Ltd

[1983] FCA 43

CATCHWORDS

Bankruptcy - Credltor's Petltion - Bankruptcy Notice - enforcement of ludgment debt stayed before servlce (but not before Issue) of

Bankruptcy Notlce - whether sald Notlce could found Act of Bankruptcy -

resclssion of order staylnq enforcement of judgment debt after service

of sald Notlce - whether Notlce thereby "revives".

Bankruptcy Act 1966, ss.40(1) (q) and 41(3) (a) and (b)

--	District Court Act 1973 (N.S.W.) s.88
Re: Vlttoria D1 Glacomo
Ex parte: Boral Steel Llmlted
No. P 892 of 1982
Evatt J.
18 $!arch 1963
Sydney

I .

' No. P.892 of 1982

BANKRUPTCY DISTRICT OF TfLF S T m	)
CREDTIOR' S PETITION
VITTORIA D1 GIACKBO
Ex Par te FOR?& STE% LIMITED

O R D E R

DATE OF OFDER:	18 MARCH 1983
"E COURC ORDEIS m :

1. B a n k r u p t c y Notice herem KO. B1734 of 1982 be set aside.

2. Petition No. P892 of 1982 be dismissed.

3. The P e t i t i o n i n g Creditor p q the debtor's mts of

and incidental to the lssuing of the banknptcy notice

herein No. B1734 of 1982 and of the P e t i t i o n No. P. 892 of 1982.

DISTRICT REGISTRAR

'IHE F'EDERAZ, COURC OF AUSTRALIA	1
)
GENERAL DIVISION	)
) No. P.892 of 1982
BXXFUPTCY DISTRICT OF "E STATE	)
1
OF NJW S O W WALES AND THE AUS"K&IAN )
)
CAPITAL TERRITORY	)
CREDITOR'S PETITION
VITIOFXA D1 G I X O K J
Ex Par te BORAL STEEL LIMITED

18 mrch 1983 EVmT J.

?he petltlon herem dated 2 A q u s t 1982 having been presented

t o the Court on 9 August 1982 w a s listed for hearhg on 27 September 1982.

On 24 September 1982 the debtor Vittoria D1 G i a m (mmrrectly referred

t o m the bankruptcy notlm and the petition as Victor D1 G l a m ) f l led

a nokce of intention t o oppose the petition together with m application

seekmg orders that the bankruptcy n o t x e dated 16 April 1982 on whlcfi

the said petition was based be set aside or alternatively that service

of the said bankruptcy nokce be set aside. when the petition c m on

for he-g on 27 September 1982 the matter w a s stood over unt i l 25 October 1982

on which date evidenm was led and suhnissims made by legal representatives

for both the debtor and the petltioning e t o r m regard to the application

opposing the petltion herein.

The debt alleged to be mmg by the debtor to the ~Udc~wnt .-

crebtor 1s a D l s t n c t mmt ~udqwnt debt of $4242.90 entered on ll March 1982.

The bmkruptcy notice is dated 16 April 1982. The petition 1s founded upon

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an alleged act of baolkruptcy conslsting of the failure on o r before 27 M a y 1982

t o a n p l y w i t h the requrentmts of the bankruptcy notice senred cm 13 May 1982

or to sa t i s fy the Court of a counterclam, set-off or Cross-dsrand equal

to or exo3eding the sum specified i n the no'uce.

The following facts are not disputed :-

(1) the debtor, on 16 April 1982, filed in the D i s t r i c t court

Sydney a s t a t m t of confession to the ammt of the ~udrprwt

c d t o r ' s s t a t e m n t of liquidated clam together with m

application under s.88 of the D i s t r i c t Court Act 1973to pay

the j u d m t debt by mstalrrwts.

(ii) the R?gistrar of the Distrlct Court on 10 M a y 1982 made

an ex parte order that the	amunt of the judgrnent be paid by
instzllmnts.

(iii) the bankruptcy notice herem (a 14 cby notice) w a s

served on 13 May 1982.

(1v) On 14 May 1982 the julrprwt crehtor f i led a notice

of objectmn to the p-t of the debt by instahwnts

and consequently the D l s t n c t Court Registrar set dam the

debtor's application for leave t o pay the debt by instalments

for hearmg on l5 July 1982.

(v) On l5 July 1982 the sol ic l tor for the j u d q m t a d t o r

appeared befole the D i s t r i c t Court. As there w a s no response

by the debtor hen the matter was called on the order of the

D l s t r l c t Court Reqstrar of 10 May 1982 w a s rescmded.

(VI.) Later on the l5 July 1982, after the judgmnt creditor's

solicitor had left-the -Dis tz icW3nr t ,Yhe debtor -inquired

- of the Eeqlstrar %.to hen his appllcatxon was to be dealt

W i t h . The debtor has smrn that he was present at the District

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C o a t all relevant tynes that day and had ~ not heard h s

naT[E called. As the order of the 10 May 1982 had then been

rescinded and as the creditor's sollcltor had l e f t the Court,

the debtor who was appearmg in person w a s adnsed to make a

fresh applimtmn that day to pay the judgment debt by instal-

mts. Thls he &d.

(vii) The semnd application under s.88 of the District Court

Act dated 15 July 1982 w a s dealt w i t h ex parte by the D i s t r i c t

Court F?qlstrar on 28 July 1982 on which date an order that the

debt be paid by certain ncnninated instalments w a s m&.

(vili) On 6 August 1982 the ju-t creditor f i led an

abjection to the order of the D i s t r i c t Court Registrar that

the debt be p a d by mstillnmts. The semnd application cans

on for hearing on 2 September 1982 when both partles appeared

and the order of 15 July 1982 was vaned so that instalments were

lncreased to the rate of $200.00 per nkmth, the f i r s t payment being

dus on o r befom 10 September 1982.

Sechon 88 of the D i s t r i c t Court A c t (N.S.W.) 1973 reads:

" (8) !here the Court o r the registrar makes an order

under this sechon, the order shall, while it remains

in force, operate as a stay of enfor-t of the

jufkjiwnt i n respect of which the order was made, except enfor-t by way of a gmlshee order

to which section 98 applies mde before the order

under this secbon was m&. "

It w i l l be seen that on 13 May 1982 when the bankruptcy

notice herem w a s served there was in force an order of the District Court €&glstrar made on 10 1982 pursuant to s.88 of the D i s t r l c t U x r t Act .

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The debtor has sulnutted that in view of the facts set out

in para. (1) to (iii) above the bankruptcy notice herem was bad as a t the

date of its service on the debtor. %at 1s t o say that the said notlce

could not on 13 May 1982 have founded the alleged act of banknptcy as set

out 111 the petition. In thls regard he relied upon the &&a of Glhbs J.

(as he then was) in Re Ikss;Fk parte Tour Finance Limited, 13 F.L.R. 101

@ 103-4 and of Riley J. m R? Padagas Ex parte Carrier Air Qndi t iomg

Pty. Linuted, 30 F. L.R. 170 @ 172.

Gihbs J. @ 103-4 of 13 F.L.R. said:

"Secondly, the words "the execution of whl& has not been

stayed", wh1d-1 appear not only in the prescr ikd form of bank-

ruptcy notice but also in the words of s.40 (1) (g) of the

Bmkniptcy Act 1966, cb not mean that execution has never

been stayed. If that were their meaning they would have

the mconvenlent result that i f execution on a ju-t

had once been stayed a bankruptcy notice could never

afterwards be Isswd on such jUaVt, nobmthstanding that the period of the stay had long since elapsed and

the -Judgx?nt &bt had never been paid. Haever, the

words of the notice and of the sechon spak as at

the tm when the notice is served and refer tc a stay

of execution which has continued i n f o r e up t o the

m of the servlce of the notice. Smilarly, s.41(31 (b) ,

which pmvldes tha t a bankruptcy notice shall not be

issued i f a t the t h of the application for its issue

executlon of the 1ud-t or order to which it relates

has been stayed, refers to a stay in f o r e a t the tm

of the application. The effect of these provisions is

that i f a t the t h of the issue or the service of the

notxe the execution o€ the jufkgrent on which the notice

is founded has been stayed, and the stay is still in

force, so that at that the crerhtor is not entltleil

h d i a t e l y to issue executlon on the jud-t, the

notice w i l l be bad. Hawever, the fact that there has

previously been a stay of execution, vhrdch has ceased

t o operate before the tim of the application for the

i s sue of the notice, w i l l not prevent the notice fran

bemg a goOa one. "

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Riley J. (3 172 of 30 F.L.R. said:

" It was subnutted by counsel for the debtor that the o d e r f o r p-t by instahmnts had two effects, each of which w a s fatal to the petition: it stayed execution

of the 3u&.ym1t, and it removed the debt frcm the class

of debts "payable either k d l a t e l y o r a t a certam

future tune" referred t o in s.44(1) (b) of the Bankruptcy

A c t 1966.

By reason of S. 88(8) of the D ~ s t n c t Cburt A c t an

mnstalmnt order, tile It remaim i n force, operates

"as a stay of en fo rawnt of the ~udqmnt" m respct

of which it was made. (There is an exception which is

not mterial to this case.) Had this order so operated

before the the of the lssue o r the service of the

bankruDtw notice the notice would have been bad: ss.40 (1)

(g), 47($ (b) o f the Bankruptcy A c t ; Re Moss; Ex parte Tour

Finance Ltd. (1968) 13 F.L.R 101 (3 103-104. "

The ~ u d g r ~ n t creditor has sukmitted that the chservations

of bth Gihbs J. and Riley J. that a bankruptcy notice is bad i f at the

time of its service upon the debtor there is m force an order made under

s.88 of the D l s t r i c t Cburt A c t w e r e obiter and should not be followed. He

subnutted that the proper maning of s.40 (1) (g) when read mth s.41(3Xa)

and (b) w a s that the proviso provlded for i n s.40(1) (g) w a s speaking only

as at the date of the Issuing of the bankruptcy notice and not the date

of service thereof.

It 1s clear that the observations of both G l b l s J. and

Riley J. m respect of s.40(1) (g) of the Bankruptcy Act set out h v e

are obiter and as such are not b m d g . But with respct I agree w i t h

those observations. The instalment order made under s.88 o f the

District Cburt Act on 10 May 1982 operated "as a stay of e n f o r s m t

of the jdcpmt" i n respsct of which it w a s made and such order so

operated on 13 Mzy 1982, the date of the service of the bankruptcy

notice. Acmrdmgly I an of the vlew that the bankruptcy notlce

. muld not .then have fomded.the&sf-bbankrtllptq a l leged-m the

petition.

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B u t the judgnent creditor further suhruts that as the order

of the D l s t r i c t court dated 10 M q 1982 t o pay by m s t a h t s w a s resunded

on 15 July 1982 (see fact (v) above) and as there was no further order

un&r s.88 of the D l s t n c t Burt A c t until 28 July 1982 (see fact (vil)

above), therefore on and af te r 15 July 1982 the efficacy of the bankruptcy

notice, which had been suspended whilst the first m s t d m n t order w a s

i n krce, w a s revived without further service thereof. Thereafter on

the explratlon of the 14 days pmvided for in sucfi notlcs (that is af te r

29 July 1982) i f the jud-t debt had not then been p a d o r otherwise

satisfied, the a to r would have then amrnitted an act of bankruptcy w i t h i n

the manmg of s.40 of the Bankruptcy Act. Acmrdingly, It was submitted

that the petition herem, having been dated and presented after 29 July 1982

was valid subject to the court granting leave t o mend the munt c la i red

therein to ref lec t any mstalment payments that may have been made by the

debtor. Thls subrmssion was of murse made on the basis that the further

order of the Distrlct (burt under s.88 made on 28 July 1982 ( fact (vi i ) above)

had no effect upon the bankruptcy notice herem as & facto service of

that notice had been made prior to that date, n m l y on 13 Mzy 1982

and such semi= had be- "effechve" after L5 July 1982 and before

2 8 July 1982. !this sulmission is rejected.

I f as I have found the bankruptcy notice herein w a s bad a t

the date of servlce then that is the end of that nobce. ?he pcsibon,

m my view, 1s not slmply that the service of a banknqtcy nokce

concerning a judgment debt in respect of whicfi an or&r under S. 88

had been made is bad. Clearly the words of para. (g) of s&s.40(1)

..nf ..the B d q t Act speak as .at the tire when the notice is served ~

and refer t o a stay of execution which has wntinued i n force up t o

the tim of the serviae of the notice.

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Acrndingly, the bankruptcy notlce hereem dated 16 April 1982

should be set aslde. Consequently the petltion herem dated 2 August 1982

and presented on 9 August 1982 is hsmssed. The pe'utloning mebtor

1s to pay the debtor's costs as agreed or i n default of agreexent in

accordanoe w ~ t h the Act . 'Ihe Dlstnd Court f l l e No.525 of 1982 is

tn be returned to the Registrar of that Court in S k y .

$ 1 v