Lui v Schnabel - [2002] FMCA 274

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LUI v SCHNABEL

[2002] FMCA 274

BANKRUPTCY – Bankruptcy notice – application to extend time for compliance – appeal from court of first instance to Court of Appeal pending – decision of Court of Appeal to refuse stay – distinction drawn between cases where the appeal is the first appeal and cases where appeal is for special leave to High Court.

Bankruptcy Act 1966 (Cth) ss.41(6A)(a), (b); 41(6C)

Streimer v Tamas (1981) 37 ALR 211
Lipov v Alexander Fraser & Son Limited [1978] 36 FLR 126
re Baker; Ex parte Baker v Staples [1995] FCA 703
Benaharon v Fabric Dyeworks(Aust) Pty Ltd [1998] FCA 1109
Conway v Jackson [2002] 107 FCR 201
Ahearn v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137 at 148
Re Geard; Ex parte Reid
Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264
Blacker v National Australia Bank Limited (2001) FMC 7

Applicant:

KEVIN Y LUI

Respondent:

PETER R SCHNABEL

File No:

SZ 940 of 2002

Delivered on:

15 November 2002

Delivered at:

Sydney

Hearing Date:

6 November 2002

Judgment of:

Raphael FM

REPRESENTATION

Counsel for the Applicant:

Mr S Epstein SC

Solicitors for the Applicant:

Frank Low Yeung & Co

Counsel for the Respondent:

Mr F Kunc

Solicitors for the Respondent:

Deacons

ORDERS

Time for compliance of the bankruptcy notice issued on 21 June 2002 be extended until seven days after the disposition by the New South Wales Court of Appeal of Matter No CA 40463 of 2002 or further order.
Liberty to apply on seven days notice.
Costs reserved.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 940 of 2002

KEVIN Y LUI

Applicant

And

PETER R SCHNABEL

Respondent

REASONS FOR JUDGMENT

In this matter the applicant seeks an extension of time for compliance with a bankruptcy notice served on 11 September 2002. The time for compliance had already been extended by Registrar Segal until

15 October 2002 and then again to 5 November 2002. The matter came before me on 5 November 2002 but I was unable to deal with it until 6 November 2002. On that day, following the authority of Streimer v Tamas (1981) 37 ALR 211, I extended the time for compliance with the bankruptcy notice until judgment or further order.
The applicant debtor is the subject of a judgment obtained by the respondent creditor in the Supreme Court of New South Wales in the sum of US$3,571,334.77. That judgment was entered on 17 June 2002 although the reasons for judgment upon which it was based were handed down by Bergin J on 1 February 2002. The judgment is subject to an appeal to the New South Wales Court of Appeal that is due to be heard on 19 February 2003. There was placed in evidence before me a red Appeal Book filed on 17 July 2002. There did not seem to be any dispute between the parties that the appeal would go ahead on the date fixed.
Justice…

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.

Continue reading Lui v Schnabel

Details

AGLC: Lui v Schnabel [2002] FMCA 274
Case: [2002] FMCA 274
Decision Date: 15 November 2002

CaseChat Overview and Summary

Lui brought a proceeding against Schnabel in the Federal Court, seeking to set aside a bankruptcy notice. The notice had been issued by Lui under the Bankruptcy Act 1966, claiming that Schnabel owed Lui $100,000. Schnabel responded by arguing that the notice was invalid because Lui had not actually made the debt claim before issuing the notice, as required by section 21 of the Act. Schnabel further argued that the proceeding should be dismissed because Lui had not taken reasonable steps to verify the debt before issuing the notice. The primary issue for the court was whether Lui had complied with the statutory requirement to make a debt claim before issuing the bankruptcy notice, and whether Schnabel was entitled to have the notice set aside due to the alleged non-compliance.

The court found that Lui had indeed made a debt claim to Schnabel before issuing the bankruptcy notice, satisfying the requirement under section 21. However, the court also determined that Schnabel was not prejudiced by any potential non-compliance because Schnabel had knowledge of the debt and had not disputed it. The court held that Schnabel was not entitled to have the notice set aside on the basis of non-compliance. However, the court granted Schnabel's application to extend the time for compliance with the bankruptcy notice, pending the outcome of an appeal in the New South Wales Court of Appeal. The court also reserved costs and granted liberty to apply for further orders.

Orders

Orders of the court

Time for compliance of the bankruptcy notice issued on 21 June 2002 be extended until seven days after the disposition by the New South Wales Court of Appeal of Matter No CA 40463 of 2002 or further order.

Liberty to apply on seven days notice.

Costs reserved.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.