Edelsten, Geoffrey Walter v QBE Insurance (International) Ltd

[1982] FCA 258

I N THE	FEDERAL	COURT OF	AUSTRALIA	)
1.

GENERAL D I V I S I O N j )

BANKRUPTCY D I S T R I C T OF THE STATE	)	XO.	B.	1159 of 1982
)
OF NEW SOUTII WALES AND THE	) )

AUSTRALIAN CAPITAL TERRITORY )

GEOFFREY WALTER EDELSTEN

Applicant

Q. B. E. INSURANCE (INTERNATIONAL) LINITCD

Respondent

ORDERS

JUDGE MAKING ORDERS:	ST. JOHN, J.
DATE OF ORDERS:	TUESDAY 19 OCTOI3ER 1982
WHERE MADE :	AT SYDNEY

THE COURT ORDERS THAT:

1.    The appllcation to set aslde the bankruptcy notice

1 s dlsmissed.

respondent from presenting a petltion 1 s dlsmissed.

2.          The appllcation for an order restraznlng the

IN THE FEDERAL COURT OF AUSTRALIA ) )

GENEIWL DIVISION ) 1

BPNKRUPTCY DISTRICT OF THE STATE	)	NC.	B . 1159 Of 1 9 8 2
1
OF NEW SOUTH WALES AND THE	1
)
AUSTRALIAN CAPITAL TERRITORY	)

GEOPFREY WALTCR EDELSTEN

Appl lcant

Q. B. E. INSURANCE (1NTERNATIONP.L) LIMITED

Respondent

REASONS FOR JUDGMENT

ST.	J O H N ,	J.
TUESDAY	1 9 OCTOBER	1 9 8 2
AT SYDNEY

By a n a p p l i c a t i o n d a t e d 4 t h May, 1 9 8 2 , Geoffrey

K a l t e r Z d e l s t e n ( " t h e a p p l i c a n t " ) s o u g h t , I n t e r a l i a ,

a n o r d e r r e s t r a l n l n g Q.B.E. Insurance (International)

Limited ( " Q . B . E . " ) f rom present lng a c r e d i t o r s

p e t i t i o n b a s e d upon t h e a p p l i c a n t ' s f a l l u r e t o comply

wi th a bankruptcy not lce served upon him on 1 3 t h A p r i l ,

1 9 8 2 , and a l s o a n o r d e r s e t t i n g a s i d e t h e b a n k r u p t c y

not lce based upon a n a l l e g e d f a i l u r e t o a d h e r e to t h e

r e q u i r e m e n t s r e l a t i n g t o the con ten t o f such no t i ce .

. . . / 2

c

On the 6th day of May, 1 9 8 2 , by c o n s e n t , t h e f i r s t

o r d e r r e f e r r e d t o was adjourned, Q.B.C. u n d e r t a k i n g t o

t h e c o u r t n o t t o p r e s e n t a pe t i t l on pend ing t he hea r ing

of t h e a p p l i c a t i o n , and t h e c o u r t was informed tha t

n e g o t i a t i o n s b e t w e e n t h e p a r t i e s	would	proceed	t o a t t e m p t
t o r e s o l v e t h e m a t t e r .

The a p p l i c a t i o n t o se t a s ide t he bankrup tcy no t i ce

came on f o r h e a r i n g b e f o r e me on 13th October, 1 9 8 2 , b u t

be fo re p roceed ing t o dea l w l th t he subn l s s lons nade , l t

i s n e c e s s a r y t o s e t o u t a h i s t o r y of t h e f i n a n c i a l

dea l lngs be tween the appl lcant , Q.B.E. and Medlservices

I n t e r n a t i o n a l P t y . L i m l t e d ("Mediservices") .

T h i s h l s t o r y was no t In d i spu te . Med i se rv ices , t he

fo rmer	s e rv l ce company "owned" by the app l i can t , and
whose	occupa t lons i nc luded t ha t o f med ica l p rac t i t i one r ,

purchased land In S t . I v e s w l t h f i n a n c i a l a s s l s t a n c e

from Q.B.E., which company took a r e g l s t e r e d f i r s t

mor tgage over tha t p roper ty and , upon d e f a u l t , s i g n e d

judgment I n t h e Supreme Court of New South Uales aga ins t

t h e a p p l i c a n t , who had guaranteed Medlservices ' obl igat lons

under the mortgage in the amount of one mll l ion twenty-

f lve t housand and seventy-s ix do l la rs n ine ty-n ine cen ts

($1,025,076.99) and costs of two hundred dol lars ( $ 2 0 0 ) .

. . . / 3

l	a : -
/'

By a document described a s a deed of covenant

da t ed 31s t December, 1 9 8 0 , Med i se rv ices , t he app l i can t

and Q.B.E. reclted the mortgage and indebtedness to

Q.B.E. , the deed guarantee ing th i s mor tgage entered i n t o

by	t h e a p p l l c a n t ,	and	the	judgment,	whlch	was	desc r ibed
a s	b e i n g " f o r	$ 1 , 0 2 5 , 0 7 6 . 9 9	p l u s	$200	c o s t s "	and	wholly

u n s a t i s f i e d . The deed fu r the r recited an agreement t o

d l scha rge t he mor tgage t o enab le Med i se rv ices t o s e l l

t h e p r o p e r t y , w h i c h s a l e r e s u l t e d I n a c r e d i t b e l n g g l v e n

f o r t h e payment t o Q.B.E. of e ight hundred and seventy-

f ive	thousand	do l la rs	($875,000) .	Mediserv	lces
acknowledged	and	declared	that ,	as	a t 3 1 s t December,
1 9 8 0 ,	a f t e r	g i v i n g s u c h c r e d i t ,	t 5 e d i s e r v i c e s	was	indebted

t o Q.B.E. In t h e sum of two hundred and thir ty-f lve

thousand two hundrcd and n ine t een do l l a r s , f l f t een cents

( $235,219.15) .

Paus ing he re , I was l n f o r m e d t h a t f i g u r e r e p r e s e n t e d

the d i f fe rence be tween e lght hundred and seventy- f ive

thousand do l l a r s ( $ 8 7 5 , 0 0 0 ) and the amount of p r i n c l p a l

and	i n t e r e s t owed	by	Mediservices a t t h e d a t e	of	t h e
deed.

Thereaf te r , In the deed , Mediserv ices and the

a p p l i c a n t l o i n t l y and s e v e r a l l y c o v e n a n t e d t o r e p a y t o

Q.B.E.	over a	t e n y e a r	term,	t h e f l g u r e	of	two hundred
and	th i r ty - f ive	t housand ,	two	hundred	and	nineteen

. - . / 4

do l l a r s	f i f t een	cen t s	($235 ,219 .15 ) ,	wh lch	was	referred
t o as	" t h e	new	p r i n c i p a l	sum",	p l u s l n t e r e s t a s	set o u t

t h e r e i n , by month ly lns ta l lments , commencing f o r t h e f l r s t

f l v e y e a r	term,	a t t h e r a t e	of	four	thousand f	lve	hundred
and	n ine ty- f lve	do l la rs	for ty- four	cen	ts	($4 ,595 ,44)	per

month .

Pursuant to the deed , Mediserv ices made monthly

payments in accorddnce therewl th , commencing on 23rd

February, 1 9 8 1 , and endlng on 30th October, 1 9 8 1 , a t o t a l

of for ty-s ix thousand two hundred and sixty-one dollars

f i f t y - t w o c e n t s ( $ 4 6 , 2 6 1 . 5 2 ) . The deed p r o v l d e d t h a t a l l

nonles rece lved by Q.B.E. would be appl led f l r s t ly towards

c o s t s and expenses, secondly towards i n t e re s t , a n d t h l r d l y

towards reduct ion of the new p r i n c i p a l sum. The deed

fu r the r p rov ided for l i m i t a t i o n of l l a b l l i t y o f t h e

a p p l i c a n t a s f o l l o w s : -

"QBE hereby acknowledges and declares that

t h e amount of I ts ~udgmen t zga lns t Ede l s t en

r e f e r r e d	to I n R e c l t a l	C	is reduced	to
$ 1 5 0 , 2 7 6 . 9 9	by	t h e s a l d	payment	of
$ 8 7 5 , 0 0 0 . 0 0	and	t h a t E d e l s t e n ' s	liability

f o r i n t e r e s t upon the Judgment debt (bu t

n o t t h e s a i d b a l a n c e of $ 1 5 0 , 2 7 6 . 9 9 ) i s

merged i n t h i s Deed."

The deed a l s o p r o v l d e d t h a t d e f a u l t i n t h e payment of

any	of	t h e l n s t a l l m e n t s p r o v i d e d ,	would	r e s u l t	i n t h e
whole of	t h e new	p r i n c i p a l sum becoming	immedrately	due	and

payable , toge ther wi th Interest on the remainder o f the t en

year term.

. . ./5

Medlse rv lces en t e red i n to a schene or arranqement

a s from 4th August, 1 9 0 2 , and pursuant to such scheme,

a trustee was appointed.	The l a s t three	payments	made
t o Q.B.E.	were appa ren t ly made by	such	trustee.

There was e v i d e n c e f r o m t h e a p p l i c a n t t h a t n e l t h e r

Q.B.E. n o r t h e t r u s t e e n o t l f l e d t h e a p p l l c a n t o f t h e

a c t u a l o r p e n d l n g d e f a u l t i n the payment of Instalments

0 and t h i s e v i d e n c e was not cha l lenged .

The a p p l i c a n t , I n c o u n s e l ' s s u b n a s s l o n s , f i r s t l y

r e l i e d	upon	an	a l l e g e d f a l l u r e t o	comply	wi th the p ro-
vlslons	of	t h e A c t ,	p r e s c r l b l n g p e r s o n a l	s e r v l c e o f	a

bankruptcy notlce on a ludgment debtor. The a p p l i c a n t

a l l e g e d t h a t h e was n o t s e r v e d p e r s o n a l l y , b u t was

telephoned by t h e p r o c e s s s e r v e r , who l e f t the bankruptcy

n o t i c e a t h l s s u r g e r y and i t came i n t o h i s h a n d s t h e n e x t

day , 13 th Apr i l , 1 9 8 2 . Counse l for Q.E.E. submi t t ed t ha t ,

I n these c l rcumstances , S.306 of the Bankruptcy A c t could

b e s u c c e s s f u l l y c a l l e d i n h l s c l i e n t ' s a l d , and I ag ree

w l t h t h a t s u b n l s s l o n . I n f a i r n e s s t o counse l for t h e

a p p l l c a n t , I s h o u l d p o l n t o u t t h a t h e p u t t h i s s u b m s s i o n

t h a t t h e n o t i c e s h o u l d b e s e t a s i d e on th l s g round , w i th

some t i m i d l t y . T h a t t l n i d l t y was j u s t i f i a b l e and I s e e

the c i rcumstances as a c l e a r case where S.306 of t h e

Bankruptcy A c t 1 9 6 6 can	be	a p p l i e d t o	remedy	t h i s
l r r e g u l a r l t y .

. . ./6

- I 1 6

The a p p l i c a n t ' s a t t a c k o n t h e b a n k r u p t c y n o t l c e was

to t h e e f f e c t t h a t t h e i a i l u r e t o fo l low the p re sc r ibed

form l a i d down by t h e Act and Rules was s u c h t h a t i t

cou ld no t amoun t t o an i r r egu la r l ty or a e f e c t , b u t

rendered that document a n u l l l t y . The argument centred

around the s ta tement of t h e d e b t o r ' s o b l l g a t l o n s I n t h e

bankruptcy not ice . The r e l e v a n t p a r t is a s fol lows:-

"Whereas Q.B.C.	. .	. . . . . .	has c l a imed t ha t
the ba l ance	sum of	$ 1 5 0 , 4 7 6 , 9 9	1s due by

you t o it under a f l n a l judyment obtained

by it a q a i n s t you l n t h e Supreme Court of

New South Wales a t Sydney on the 17th day

of June, 1 9 8 0 , b e m g a judgment, the

execution of whlch has not been stayed:"

Through h l s c o u n s e l , t h e applicant s u b m l t s t h a t t h e

f u l l amount Of the ludgment and deductions made from t h a t

f i gu re shou ld have been spec l f i ed and t ha t t he f a i lu re t o

so spec i fy t hen was s u c h t h a t t h e r e c l p l e n t of t h e

bankruptcy not ice would be perplexed, misled or embarrassed.

I n s u p p o r t o f t h l s c o n t e n t i o n , I was r e f e r r e d t o a number

of cases dec lded m t h l s cour t , such as Re McDonald; E x

par te E l d e r S m t h Goldsborough Mort L t d ( 1 8 A.L.R. S O S ) ,

R e Manion;	EX p a r t e Deputy	Commlssioner	of	Taxation
( 2 3 A.L.R.	2 7 0 ) ,	and R e Wimborne;	Ex p a r t e The	Debtor

( 2 4 A.L.R. 4 9 4 ) . Those dec ls lons , a l though apply lng

g e n e r a l p r l n c l p l e s f o r w h l c h t h e r e 1s weal th o f au thor l ty ,

d e a l w i t h t h e a p p l i c a t i o n o f t h o s e p r i n c l p l e s t o

particular f a c t s . I n J a m s v. Federal Cormissioner of

Taxat ion (93 C.L.R. 6 3 1 ) , a Hlyh C o u r t c o n s i s t i n g of

. . . / 7

Will iams,	Klt	to	and	Taylor ,	JJ.	made	some gene ra l
o b s e r v a t i o n s	a b o u t	t h l s	q u e s t i o n .	A t page	6 4 4 ,	It	was

s t a t e d t h a t t h e c o u r t c a n n o t e n q u l r e w h e t h e r t h e d e b t o r

has In f ac t been mi s l ed o r no t , and It is s u f f i c i e n t

t h a t he could have been nusled. I t ake it t h a t t h a t

does no t mean tha t t he bus iness h i s to ry and c i r cums tances

of the par t icu lar debtor and the a r rangements he has

e n t e r e d i n t o a r e n o t i g n o r e d i n t h e a s s e s s m e n t of whether

o r n o t the debtor could be misled a s t o h i s o b l i g a t i o n s

under the bankruptcy notlce. This view was taken by

Lockhart , J. ir. Klmborne 's case supra.

I n t h l s c a s e , t h e a p p l i c a n t entcred l n t o a deed of

covenant , the e f fec t o f whlch was t o r e d u c e h l s l i a b l l i t y

t o pay the judgment debt to a f l g u r e which was s p e c i f i e d

a t one hundred and f i f t y thousand two hundred and seventy-

s i x d o l l a r s n m e t y - n i n e c e n t s ($150,276.94) In t he deed .

Counse l fo r t he app l i can t f irst contended that the a ixounts

pa ld by Mediservices t o Q.B.E. by way of in s t a lmen t s

should be taken as r educ t ions of t h e d e b t o r ' s l i a b l l l t y ,

thereby reducing h i s indebtedness to a f i g u r e somewhere

I n t h e v i c i n l t y o f	one	hundred	thousand	dollars	( $ 1 0 0 , 0 0 0 ) .
I t	is	necessa ry t o cons t rue t he deed	of	covenant	to

d e t e r m i n e t h e a p p l i c a n t ' s l i a b l l i t y t h e r e u n d e r . I n my

n e w ,	t h e	c l a u s e	l i m i t i n g	t h e	a p p l i c a n t ' s	l i a b i l i t y	u n d e r
the	~udgmcnt	reproduced	above,	i s	not	ln tended	to have

the r e su l t con tended fo r . The re l s , E i r s t l y , a ~ o l n t

. l '

. t" and s eve ra l l l ab l l i t q r w i th Q.B.E. expressed l n t h e f i g u r e

a t two hundred and thirty-five thousand two hundred and

n i n e t e e n d o l l a r s f i f t e e n cents ($235,219.15). Payment by

Medlserv lces pursuant to i t s j o i n t a n d s e v e r a l l l a b i l l t y

f o r t h a t	amount	does	not	,	ln	my	v iew,	reduce	the ob l iga t ion
of	the	a p p l l c a n t t o	pay	the	reduced	amount	of	the	judgment

a g a l n s t him, namely, one hundred and f i f t y t h o u s a n d , two

hundred and seventy-s lx dol lars nlnety-nine cents

I ($150,276.99) . Counsel for the appl icant lnformed the

cour t t ha t he had adv i sed t he app l i can t on ly t ha t morn ing

t h a t , i n h l s o p i n i o n , t h e a p p l i c a n t ' s o b l l g a t l o n u n d e r

the covenant t o pay the last-mentioned amount was reduced

by the payments made by Med i se rv ices , bu t t ha t i s n o t a

circumstance which I can take i n t o a c c o u n t i n determining

w h e t h e r o r n o t t h e a p p l i c a n t would be mlsled.

Looking a t t h e terms i n w h i c h t h e d e b t o r ' s o b l i g a t i o n

under	the	bankruptcy	not ice	i s	expres sed ,	t he	fo l lowmg
1 s p l a l n	and	not	misleading.	F i r s t l y ,	t h e	f l n a l	l u d g m e n t ,

t h e c o u r t i n which i t was en te red and t he da t e upon whlch

i t was en te red i s s p e c i f i e d . I t could not be suggested

t h a t t h a t is n o t a s u f f i c i e n t identification of t he

~udgment , even though the sum i n which it was en te red i s

no t spec i f i ed . Second ly , t he amount of one hundred and

f i f t y t h o u s a n d , f o u r h n d r e d a n d s e v e n t y - s i x d o l l a r s

ninety-nine cents ( $ 1 5 0 , 4 7 6 . 9 9 ) i s expres sed t o be " the

balance sum" and, a l though that expression mlght no t

. . . / 9

cowmend l t s e l f a s a precedent t o be fo l lowed , i n my view,

i t s rneanlng i s c l e a r , and t h a t is, t h a t t h e judgment has

been	reduced	t o	t h e	amount	s t a t e d .	I t 1 s t h e	f l g u r e
whlch	i s	s p e c i f i e d i n t h e c l a u s e	I	have	quoted,	p	lus

t h e two hundred do l la rs ( $ 2 0 0 ) f o r agreed c o s t s . Here, i t 1 s

necessa ry t o r e f e r t o what counsel was t h e

reduced sum of the judgment due a t t h e d a t e of t h e d e f a u l t

under the deed of covenant . That f lgure was g iven me a s

I one hundred and f i f t y t h o u s a n d two hundred and seventy-slx

dol la rs n lne ty-n lne cen ts ($150,276.99) and I was a l s o t o l d

from the bar t a b l e t h a t t h a t f i g u r e was inc reased by two

hundred do l la rs ( $ 2 0 0 ) i n e r r o r . No n o t l c e P u r s u a n t to

S . 4 1 ( 5 ) oE the Bankruptcy Act was g l v e n n o t i f y i n g t h e

respondent o f th l s excess and t h e no t lce i s n o t , t h e r e f o r e ,

p u r s u a n t t o t h a t s u b - s e c t i o n , l n v a l l d a t e d .

The cen t r a l a rgumen t t ha t t he bankrup tcy no t i ce d i d

n o t comply a s t o c o n t e n t was t o t h e e f f e c t t h a t t h e

a p p l i c a n t , knowinq t h a t some payments had been made

p u r s u a n t t o t h e d e e d , b u t n o t knowlng t h e t o t a l amount,

c o u l d b e i n d o u b t a s t o h l s i n d e b t e d n e s s t o t h e r e s p o n d e n t .

If the total payments had exceeded the difference between

the reduced ~udgment debt of one hundred and f i f t y t h o u s a n d

two hundred and seventh-s ix do l la rs n lne ty-n ine cen ts

($150,276.99) and the amount covenantcd t o be p a l d , namely

two hundred and thirty-five thousand two hundred and

n l n e t e e n d o l l a r s f i f t e e n cents ($235,219.15) , the Indebtedness

. . . /l0

of t h e a p p l i c a n t would be reduced, b u t t h l s was n o t t h e

case. So thls argument must be looked a t as an argument

t h a t monies pald whlch do not reduce the ~udgmen t debt

should be spec l f ied so t h a t t h e a p p l l c a n t c a n b e s u r e h e

i s n o t b e l n g c a l l e d upon t o comply wl th a not ice which

may be I n e r r o r . I see no war ran t I n t he dec ided cases

f o r t h i s a p p r o a c h t o b e g i v e n t h e s l i g h t e s t s u p p o r t . The

e r r o r o f two hundred do l l a r s ( $ 2 0 0 ) a p a r t , t h e n o t l c e

E s t a t e d t h e correct amount. I n James c a s e r e f e r r e d t o

above, the High Cour t ru l ed t ha t whe the r t he app l i can t

was	i n f a c t misled	i s n o t	a	s u b j e c t m a t t e r	of	enqui	ry	for
t h e	c o u r t .	I t	1 s	d o u b t f u l ,	I n	my	n e w , whe the r	t ha t
ruling 1s to	be	fo	l	lowed where	the	appl	lcant	p resents

evidence of h l s own a l l e g e d d o u b t s a s t o h l s I n d e b t e d n e s s .

I t h e r e f o r e p r o p o s e t o d e a l w l t h t h e m a t t e r on two

b a s e s , f i r s t l y by n o t p a y i n g r e g a r d t o t h e a l l e g e d

confus ion	In	t h i s	app l l can t	and	,	s econd ly ,	w l th	such
regard .

D i s rega rd lng t he app l i can t ' s ev idence , and approaching

t h e problem on t h e b a s i s t h a t I am a s s e s s i n g t h e e f f e c t

of t h l s b a n k r u p t c y n o t l c e on a man who obviously has had

business deal ings of great magni tude and complexsty,

i nvo lv ing l a rge sums of money, I am s a t i s f l e d t h a t t h e

f a i l u r e t o s p e c l f y	tine	amount	i n whlch	t h e judgment	was
o r i g i n a l l y e n t e r e d	i n	t he bankrup tcy no t l ce	1s	not	such

an omlss lon tha t i t would poss ib ly ml s l ead t he app l i can t .

I n so hold lng , I t a k e t h e v i e w t h a t , i f h i s p r e s e n t

o b l i g a t i o n s t o s a t i s f y t h e j u d g m e n t h a v e b e e n a l t e r e d

by a document of h i s making, t h a t f a c t would come t o t h e

mlnd of a person i n such a p o s i t i o n . F u r t h e r , i f t h e

p r e c i s e r e d u c t i o n	of	the ~udgrnent	debt	depends	on	the
cons t ruc t ion o f	a	document ,	whether	that	construct lon	i s

d l f f l c u l t o r n o t , i f t h e e n s t e n c e of t h e document i s

b r o u g h t t o mlnd by t h e n o t x e , h e cannot r e l y upon those

f a c t o r s t o a s s e r t h e c o u l d b e m i s l e d .

If I em e n t l t l e d t o look a t t h e e v l d e n c e p r e s e n t e d

t o me I n r e l a t l o n t o h i s a l l e g e d d o u b t s , It is f l r s t

p e r t i n e n t	t o	r e w a r k	t h a t ,	i f	h e r e c e i v e d p r o f e s s i o n a l
lega l	advlce which	was	i n c o r r e c t a t	a	t l m e l o n g a f t e r

the bankruptcy no t ice was se rved , i t should be d i s -

regarded. Knowlng h i s o b l l g a t l o n s u n d e r t h e deed of

covenant, and that must I n c l u d e a knowledge of t h e

p rope r cons t ruc t lon of t h a t d e e d , I am n o t s a t l s f i e d

t h a t t h e a p p l l c a n t was I n any way mlsled, and any of h l s

ev	idence	which	tended	to	suppor t	tha t	conc lus lon ,	I	d l s -
r e g a r d , a s	I	have formed	the	op	in	lon	tha t	his	c r e d l b l l i t y

was s e r i o u s l y damaged. I n n e y o t i a t l o n s t o r e s o l v e t h i s

mat ter , he wrote a let ter t o h i s l n s t r u c t l n g s o l i c l t o r ,

whlch was tendered i n ev idence w i thou t ob~ec t lon on any

b a s l s , l n which l e t te r he i n s t r u c t e d h i s s o l i c l t o r t o

. . . / l 2

t h r e a t e n Q.B.E. t h a t , if he were made personal ly bankrupt ,

he would admit a s debts two p o s s i b l e c l a i m s a g a l n s t hlm,

one	fo r	o n e m i l l i o n d o l l a r s	( $ 1 , 0 0 0 , 0 0 0 )	and	one	f o r
approximately	one	thousand	do l l a r s	( $ 1 , 0 0 0	approx.)	w l t h

the purpose of inducing Q.B.E. t o b e l i e v e t h a t any proceeds

l i k e l y t o be obtained from h i s bankruptcy would be minimal.

As t o t h e error i n o v e r s t a t i n g the balance of t h e

~udgment debt by two hundred do l la rs ( $ 2 0 0 ) I aga in t h lnk

t ha t 5 .306 i s a p p r o p r l a t e t o c u r e t h a t I r r e g u l a r i t y . The

sum i s a la rge one , the judgment d e b t as reduced was e a s l l y

a sce r t a inab le , and t h e Joint covenantor was a company he

“ o w n e d ” , a l b e i t t h a t company was i n t h e h a n d s of a trustee.

I n r e l a t i o n t o a l l t h e o b j e c t l o n s a s t o t h e form of

t h e bankruptcy no t lce , I am s a t i s f l e d t h a t t h e a p p l i c a n t

could no t	be	misled	as	t o what	was	be ing c la imed aga ins t
him,	nor am	I	s a t l s f i e d t h a t	he was	i n f a c t	misled.

Counse l for the applicant submi t ted t h a t I had a

d i s c r e t i o n which should be exercised I n the a p p l i c a n t ‘ s

favour because he rece ived no no t ice o f the de fau l t unde r

t h e deed before the bankruptcy no t ice was Issued and

served .	If I have	such	a	d i s c r e t i o n ,	i n	t h e e x e r c i s e of
whlch	I	can t ake In to accoun t	t h e	conduct	of	the p a r t i e s ,

there a r e many o t h e r f a c t o r s o p e r a t l n g t o the de t r lmen t

o f t he app l i can t . The deed specifically p r o v i d e d t h a t no

’,

. . ./l3

n o t i c e o f d e f a u l t was necessary. The appl icant shoved

no l n t e r e s t i n w h e t h e r h i s obligations and those of hls

l o l n t debtor , Mediserv ices , were being met. He had

r eason t o suspec t t ha t Med i se rv ices \ -ou ld de fau l t , as

he admitted under cross-exaninatlon.

C o u n s e l € o r t h e 2 p p l l c a n t a l s o s u b m i t t e d t h a t t h e

a p p l l c a n t t7as s o l v e n t a n d t h a t I s h o u l d t a k e t h a t i n t o

P account . I d o n o t a g r e e t h a t , upon such appl ica t ions as

are be ing dea l t wi th here , so lvency is r e l e v a n t . I f it

were,	on	the ev idence be fo re	me,	I	would	n o t f i n d	It
proved.	T h e	a p p l l c a n t ' s	l a c k	of	knowledge	of	h i s f i n a n c i a l
a f f a i r s ,	whe the r	p re t ended o r	no t ,	was	s u f f i c l e n t f o r	me	t o

r e a c h t h i s c o n c l u s i o n .

I n these c i rcumstances , I apply 5 . 3 0 6 and I dlsrniss

t h e a p p l l c a t i o n t o set a s ide t he bankrup tcy no t l ce . I a l s o

# dismiss t h e a p p l i c a t i o n for a n o r d e r r e s t r a i n i n g t h e

respondent f rom presentmg a p e t i t i o n .

I