Perkes, R.D. v McIntyre, N

Re: RAYMOND DAVID PERKES
And: NEVILLE McINTYRE and ITALA BELINDA McINTYRE
Nos. G536 and 537 of 1990
FED No. 432
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND
THE AUSTRALIAN CAPITAL TERRITORY
GENERAL DIVISION
Davies,(1) Beaumont(2) and Burchett(3) JJ.

CATCHWORDS

Bankruptcy - Whether debtors committed acts of bankruptcy - whether bankruptcy notices valid - debtors claiming set-off - whether substantial defect in bankruptcy notices - bankruptcy notices not refer to set-off - bankruptcy notices issued when court would have prevented execution on judgment by reason of set-off - existence of debt not established - discretion to refuse to exercise sequestration order.

Bankruptcy Act 1966: ss. 41(3), 44(1)(a), 52(1)(c), 52(2)(b), 86.

HEARING

SYDNEY

#DATE 31:7:1991

Counsel for the appellant: Mr B. Coles

Solicitors for the appellant: Gye and Perkes

Counsel for the respondents: Mr P.R. Garling

Solicitors for the respondents: Price Brent

ORDER

The appeal be dismissed with costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The facts have been described in the reasons of my brother Beaumont J. and I need not repeat them.

1. Mr McIntyre's state of indebtedness, if any, was determined by that of his wife, Mrs I.B. McIntyre. The situation as between Mrs McIntyre and the appellant, Mr R.D. Perkes and Mr C.A. Gye, at least the situation in principle, was fully explained in the proceedings between Mrs McIntyre and Messrs Gye and Perkes before Hill J. (1989) 89 ALR 460, the Full Court (1990) 22 FCR 260 and the High Court of Australia (1991) 98 ALR 393. The judgment of the High Court, which dismissed an appeal from the orders made by the Full Court, established that, as between Mrs McIntyre and Messrs Gye and Perkes, s.86 of the Bankruptcy Act 1966 (Cth) applied, for the dealings between them were mutual dealings within the meaning of that section, with the result that the section operated to produce a balance. As the High Court said at 401, "Only that balance can be claimed in the bankruptcy or recovered by the trustee. If its operation is to produce a nil balance, its effect will be that there is nothing at all which can be claimed in the bankruptcy or recovered in proceedings by the trustee."

2. However, Mr Perkes and his counsel appear to have proceeded upon the assumption that, as s.86 is self-executing in the sense that its operation is automatic and not dependent upon the option of either party, as to which see the High Court at 401, it was not necessary that an account be taken of the mutual dealings or that the result of the mutual dealings and of the set-off be ascertained and declared. This view was adopted notwithstanding that the result of the taking of the account as between Mrs McIntyre and Mr Perkes was neither self-evident nor agreed.

3. Section 86(1) of the Bankruptcy Act provides:-
   

"86(1) Subject to this…