Porter v Oamps Ltd

[2004] FMCA 272

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PORTER v OAMPS LTD [2004] FMCA 272

BANKRUPTCY – Application to set aside bankruptcy notice – where applicant debtor claims notice did not have copies of the judgment or order attached – whether applicant established on balance of probabilities that the notice served was incomplete – where a subsequent complete bankruptcy notice was served upon the applicant – whether this is capable of constituting service, irrespective of first notice – whether service of second notice an abuse of process given applicant debtor had already begun proceedings in relation to initial bankruptcy notice – whether rule in Browne v Dunn applied to evidence given at hearing – whether applicant debtor had counter claim/set off/ cross demand where proceedings which were basis of this claim now on appeal to Court of Appeal – whether Court should set aside notice on grounds that the applicant’s cross-claim was subject to appeal – whether time for compliance should be extended until after decision on appeal.

Bankruptcy Act 1966

(Cth), ss.30, 41(6A), (7)

Supreme Court Act 1970

(NSW) s.46(4)

Ellis v Wallsend District Hospital

(1989) 17 NSWLR 553

Seymour v Australian Broadcasting Commission  

(1990) 17 NSWLR 219

Ebert v The Union Trustee Co of Australia Ltd

(1960) 104 CLR 346

Re Brink; Ex parte Commercial Banking Company of Sydney Ltd

(1980) 44 FLR 135

Guss v Johnstone

(2000) 171 ALR 598

Glew v Harrowell

[2003] FCA 373

Re Capsanis; Capsanis v The Owners – Strata Plan

11727 [2000] FCA 1262 Re Gould; Gould v Day [1999] FCA 1650

Re Errol Hugh Pollnow And: Queensboro Pty Limited and Garden Mews-St. Leonards Pty Limited

(unreported Burchett J, 19 October 1988)
Ahern v DCT (1987) 76 ALR 137

Re Baker; Ex parte Baker v Staples

[1995] FCA 703 (unreported Kiefel J, 4 September 1995)

Byron v Southern Star Group Pty Ltd

(1997) 73 FCR 264

Shephard v Chiquita Brands (South Pacific) Ltd

[2001] FCA 1394

Re Geard; Ex parte Reid

(unreported Sheppard J, 11 February 1994)

Liew v JNS Technologies

[1999] FCA 1428

Jenkins v National Australia Bank

[1999] FCA 1758

Warner v Frost

[1999] FCA 830

Re Nguyen; Ex parte Commissioner of Taxation

(1995) 54 FCR 403

Applicant: ROBERT ARTHUR PORTER

Respondent: OAMPS LTD

File No: SZ 276 of 2004

Delivered on: 8 June 2004

Delivered at: Sydney

Hearing date: 27 April 2004

Judgment of: Raphael FM

REPRESENTATION

Counsel for the Applicant: Mr P Hayes QC

Counsel for the Respondent: Mr T Barrett

Solicitors for the Respondent: Bamford Associates

ORDERS

1. Application dismissed.

2. Applicant pay the respondent’s costs to be taxed if not agreed according to the Federal Court Act and Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 276 of 2004

ROBERT ARTHUR PORTER

Applicant

And

OAMPS LTD

Respondent

REASONS FOR JUDGMENT

1. On 5 February 2004 Robert Arthur Porter made an application to set aside a bankruptcy notice numbered VN 1854/03 issued by the Official Receiver for the Bankruptcy District of Victoria on 26 November 2003 and amended pursuant to the authorisation of the Official Receiver on 5 January 2004. The application was made under ss 30, 41(6A) and 41(7) of the Bankruptcy Act 1966 (Cth) in the standard form. The grounds stated in the accompanying affidavit as required in respect of the s.41(6A) application are in the following form:

   “1.On 16 January 2004 I received service of a bankruptcy notice filed by OAMPS Ltd exhibited marked (1) hereto as a true and complete copy of the notice served on me.

   2.I am unable to understand the basis of the claim as there is no attachment identifying the proceeding or any documents in support of the notice as prescribed in Note 1 of the schedule of the notice.

   3.There are two current proceedings on foot which affords a good prospect that an offset may be made to include the amount claimed.  Exhibited hereto marked “2” is a true copy of a notice of appeal with appointment filed in the New South Wales Court of Appeal.”

2. The affidavit is somewhat opaque, but before me it was quite clearly accepted by all that Mr Porter was saying that the bankruptcy notice which he received did not contain as an attachment a copy of the Judgment or Order relied upon by the creditor. The application under s.41(7) was identified:

   i)As a cause of action which had been heard in the Equity Division of the Supreme Court of New South Wales under Plaint No ED50072/01 by Justice McClellan and was the subject of an appeal to the New South Wales Court of Appeal.

   ii)A cause of action in the Federal Court.

3. The reason that these proceedings constituted a counter claim, set off or cross demand that could not be set up in the original action was that “the original action” was a judgment for costs of certain proceedings to set aside a notice of demand in which the creditor had been successful. There was no argument before me that s.41(7) could not apply, the argument was whether the applicant could satisfy the court for the purposes of s.40(1)(g) of the genuineness of the asserted counter claim, set off or cross demands in accordance with the authorities.

4. It is as well to note here that on 3 March 2004 the debtor was served with a further copy of the bankruptcy notice with which the debtor had not complied by 24 March 2004.

Service of the bankruptcy notice

1. Mr Porter does not deny that Mr Coombs served him with a bankruptcy notice on 16 January 2004 at 11.50a.m. at the office of Bamford Associates, 27 Macquarie Place Sydney.  Mr Porter had gone to that office to view certain documents in relation to the proceedings between the parties.  Some days previously a letter dated 5 January 2004 serving the bankruptcy notice had also been sent to him.  In his affidavit of 4 February 2004 Mr Porter exhibits the document that he says came with that letter which also does not have attached to it the judgment relied on.  The document which was served upon Mr Porter personally by Mr Coombs contained a number of staple holes.  The affidavit of service sworn by Mr Coombs on 16 January 2004 annexes an original bankruptcy notice (amended in red) which also has a number of staple holes in it.  It is suggested by Mr Porter that these staple holes indicate that the original bankruptcy notices had been stapled and unstapled several times.  He argues that that would corroborate his assertion that the document he received from Mr Coombs did not have attached to it the judgments (there were two “Judgments”, one is an order of Senior Master Mahony of 11 September 2002 ordering that costs of an application to set aside a notice of demand be paid by the debtor and the second is a general form of order noting that the costs had been taxed and allowed in the sum of $19,853.61).  The applicant bears the onus of satisfying the court on the balance of probabilities that the bankruptcy notice with which he was served was incomplete.  As against his statement of that fact first made in the application and affidavit in support, Mr Coombs the process server, swore an affidavit of service on the day of service.  The copy bankruptcy notice exhibited to his affidavit of service contains both orders. 

2. Mr Coombs gave oral evidence.  He told the court that when he had originally received the documentation from the solicitors he had checked through it in the normal manner.  He noticed that in the draft affidavit provided to him (Exhibit “7”) the date of the bankruptcy notice was said to be 26 February 2004.  This was obviously an error because the date of the bankruptcy notice was actually 26 November 2003.  He sent the affidavit back to the solicitors and they provided him with a new draft affidavit showing the correct date.  Mr Coombs went on to say that when he attended at the office of the solicitors in order to effect service he had already checked the service copy against the copy which was to be annexed to the affidavit to confirm that they were identical.  Mr Coombs was satisfied that the document which he gave to Mr Porter contained the two orders that were attached to the copy of the bankruptcy notice that was the document marked “1” annexed to the affidavit of service.  

3. Mr Bryett, a solicitor at Messrs Bamford Associates, also gave evidence of what occurred that morning.  He said that he had checked the bankruptcy notice that was served upon Mr Porter and that it had contained the two orders.  Although this evidence appears to be highly corroborative of Mr Coombs it should be stated that it was given late, was not the subject of an affidavit or referred to in any prior affidavits and was given after Mr Bryett heard the evidence of Mr Coombs in which Mr Coombs had said that he had showed the bankruptcy notice to Mr Bryett. 

4. There was some cross examination and considerable comment about the fact that the bankruptcy notice which was served upon Mr Porter was not identical to the bankruptcy notice which was annexed to the affidavit.  There were no matters of substance which were different, only the form of the signature on behalf of the Official Receiver and the placing of the seal.  I do not think that there is anything untoward in this.   A number of copies of bankruptcy notices are taken into the Official Receiver’s office for the purposes of sealing before issue.  It would be strange indeed if the person who signed and sealed those documents did so in absolutely identical form and place in each copy.

5. I heard the evidence of both Mr Porter and Mr Coombs.  I saw both men in the witness box.  I was impressed by the demeanour and manner of giving evidence of Mr Coombs.  I think that the fact that he sent back the original affidavit because it was in error indicates quite clearly that he is a man of caution.  I think that it supports his assertion that he checked through the service copy and the affidavit copy of the bankruptcy notice to ensure that they were the same.  Mr Coombs is an experienced process server.  He knows the importance of the two documents being the same.

6. Mr Bryett corroborated Mr Coombs.  I accept that the evidence was not satisfactory insofar as it came after Mr Coombs had told the court that Mr Bryett had checked the document.  I accept that it was not the subject of any prior affidavit or reference in any prior affidavit. But Mr Bryett is an officer of the court.  He gave his evidence voluntarily.  If he did not recall what had occurred he could have told Counsel of that and he would not have been called to give evidence.  I am prepared to accept that he did have this late recollection of checking the document.  I am satisfied that the document which was given to Mr Porter by Mr Coombs did contain the two orders.  What had happened to those two orders by the time Mr Porter came to check them I do not know.  They may well not have been there.  I have no reason to  believe that Mr Porter was deliberately lying when he gave his evidence but it must be possible that the documents came detached from the bankruptcy notice at some time before 5 February 2004.

7. The finding which I have made above means that Mr Porter’s application under s.41(6A) must fail. The creditor argued that even if I had found that the bankruptcy notice which was served on 16 January 2004 was defective I should find that the later service of a full copy of the document on 3 March 2004 constituted good service and that the applicant has failed to comply with the notice then served. Mr Porter argues that this second attempted service was an abuse of process because he had already commenced the proceedings which are presently before me. I do not think there is any merit in this argument. These proceedings are only an application to set aside a bankruptcy notice. They are not the hearing of the petition. The actual date of the service of the bankruptcy notice is important to determine the date upon which the act of bankruptcy on which a petition is founded occurs. That would be a matter for the creditor to choose when it issued the petition. I cannot see what can be wrong with a creditor effecting a further service when it is on notice that the original service is being impugned. This is not a case where the bankruptcy notice itself is said to be defective in form. All that is being argued is that the service copy did not contain attachments. If I had come to that view I would be entitled to make a declaration that the bankruptcy notice had not been served in January. That would not invalidate the bankruptcy notice, it would be available for further service subject only to the provisions of reg 4.02A Bankruptcy Regulations 1996 which states:

   Service of bankruptcy notices

   (1)This regulation applies to the following kinds of bankruptcy notice:

   (a)a bankruptcy notice issued on or after the commencement date;

   (b)a bankruptcy notice issued before the commencement date if, immediately before the commencement date, service of the bankruptcy notice would have been effective under rule 9 of the Bankruptcy Rules.

   (2)Subject to subregualtion (3), a bankruptcy notice must be served within:

   (a)the period of 6 months commencing on the date of issue of the bankruptcy notice; or

   (b)any further period that the Official Receiver allows (whether within or outside that period of 6 months).

   …

8. It was submitted on behalf of Mr Porter that because Counsel for the respondent had not put to him in terms that he did receive a bankruptcy notice containing the two orders the rule in Browne v Dunn would apply and his evidence would have to be accepted.  This rule is discussed by the New South Wales Court of Appeal in Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at [586] – [588] per Samuels J. There was also relevant discussion in Seymour v Australian Broadcasting Commission (1990) 17 NSWLR 219 at [224] – [225]. Browne v Dunn is a rule which has been put in place in order to ensure a fair trial.  It does not provide a rigid bar to the provision of contrary evidence.  By the time this case came to be heard before me it was quite clear what the issues were.  The main issue was whether or not the document which was served upon Mr Porter contained two orders or did not.  Mr Porter said it didn’t.  Mr Coombs and Mr Bryett said it did.  What could possibly have been gained by Counsel putting to Mr Porter a submission that the document which he had received did contain the attachments?  Mr Porter had already said that it didn’t.

The counter claim, set off or cross demand

1. The requirements of s.41(7) have been considered in several cases, particularly Ebert v The Union Trustee Co of Australia Ltd(1960) 104 CLR 346; Re Brink; Ex parte Commercial Banking Company of Sydney Ltd (1980) 44 FLR 135 and Guss v Johnstone (2000) 171 ALR 598.

2. All of these cases were considered by Lindgren J in Glew v Harrowell [2003] FCA 373 where between [9] and [12] his Honour elucidated by reference to them and also certain other cases such as Re Capsanis; Capsanis v The Owners – Strata Plan11727 [2000] FCA 1262 and Re Gould; Gould v Day [1999] FCA 1650 the current interpretation of the requirement:

   “[9]  There are authorities suggesting that Glew and Tresidder must satisfy me of the following interrelated and sometimes overlapping matters:

   * that they have a "prima facie case", even if they do not adduce evidence which would be admissible on a final hearing making out that case (Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 ("Ebert") at 350; Re Brink; Ex parte Commercial Banking Company of Sydney Ltd (1980) 44 FLR 135 ("Brink") at 141; Gomez v State Bank of NSW Ltd [2002] FCAFC 101 at [17], [18]);

   * that they have "a fair chance of success" or are "fairly entitled to litigate" the claim: Brink at 141; Re Gould; Gould v Day [1999] FCA 1650 at [27], [28]; Re Capsanis; Capsanis v The Owners - Strata Plan 11727 [2000] FCA 1262 at [11]); and

   * that they are advancing a "genuine" or "bona fide" claim (Re Capsanis; Capsanis v The Owners - Strata Plan 11727 [2000] FCA 1262 at [11]).

   It may be that the first and second formulations are intended to cover the same ground. In Brink Lockhart J treated (at 141) the reference to a "prima facie case" in Ebert as a reference to "a fair chance of success".

   [10]  In Brink Lockhart J said (at 141) that the Court is not required to "undertake a preliminary trial of the counter-claim, set-off or cross demand". But, clearly, the application of the criteria above requires the Court to make some kind of preliminary assessment, though obviously not to determine the counter-claim, set-off or cross demand finally. And in Guss v Johnstone (2000) 171 ALR 598, Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ stated (at 606):

   "[40] The state of satisfaction referred to in s.40(1)(g), and s.41(7), involves weighing up considerations as to the legal and factual merit of the claim relied upon by the debtor, and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim.”

   [11]  Plainly, in order to "satisfy" the Court for the purposes of par 40(1)(g), the debtor is not required to prove, as on a final hearing, the asserted entitlement to recover from the creditor. Accordingly, evidence tendered on an application to set aside is to be tested for admissibility, not as if the proceeding were one in which the debtor's claim was being finally determined, but by reference to the question whether the Court should be satisfied that the debtor has a claim deserving to be finally determined.

   [12]  Perhaps little more can usefully be said than that a debtor must satisfy the Court that there is sufficient substance to the counter-claim, set-off or cross demand asserted to make it one which the debtor should, in justice, be permitted to have heard and determined in the usual way, rather than be forced to comply with the bankruptcy notice by payment or to commit an act of bankruptcy.”

   Thereafter Lindgren J considered in some detail the case being brought by the debtors and concluded at [65]:

   “With some doubt, I think that Glew and Tresidder have surmounted the relatively low threshold referred to at [9] above.  In particular, although their claim may well fail, I think it is one which they “are fairly entitled to litigate.”

3. I have looked at the Judgment of McClellan J and I have also considered in detail the Judgment of Hodgson J in the New South Wales Court of Appeal on an application for security for costs about which I shall make further comment later.  I have no hesitation in saying that Mr Porter’s claims against OAMPS was one he was “fairly entitle to litigate.”  I am satisfied the claim was genuine and bona fide.  The difficulty is that the claim has been heard and has been lost.  Mr Porter argues that he should be entitled to pursue his appeal as of right and not be hamstrung by the committal of an act of bankruptcy leading to a sequestration order at the behest of the respondent to the appeal.

4. In Re Errol Hugh Pollnow And: Queensboro Pty Limited and Garden Mews-St. Leonards Pty Limited (unreported Burchett J 19 October 1988) his Honour dealt with a case where two related proceedings were at an appellate stage. The first proceedings were the subject of an application for special leave to the High Court which had been adjourned pending the hearing of the second proceedings.  The second proceedings were due to be heard by the Court of Appeal for New South Wales two months hence.  His Honour said at [13]:

   “[13]  It seems to me that a case where the debtor's claim is the subject of current litigation, which is incomplete in the sense that appeals remain to be determined, raises somewhat different questions from those which are raised in the normal case of a claim yet to come before a court. In the normal case, it is appropriate to ask whether the debtor has shown "that he has a prima facie case, even if then and there he does not adduce the admissible evidence which would make out a prima facie case before a court trying the issues that are involved in his counter-claim, set-off or cross demand". (See Re Brink) … But in a case such as the present, a court has already pronounced upon the prima facie case the debtor would seek to propound. The pronouncement, however, has not been finally affirmed, and has been put in question by appellate proceedings. I have not been referred to any authority which discusses this problem. It would clearly be invidious for this Court to attempt to assess the prospect that the Court of Appeal may overrule the decision of Hodgson J., or that the High Court may ultimately grant special leave and allow an appeal on the question on which a majority of the Court of Appeal, with Priestley J. dissenting, has overruled the decision of Kearney J.  The issue should rather be whether there is a real possibility that the debtor's claim will ultimately be established. The stage of considering whether there is a prima facie case has already been passed. It is necessary to bear in mind that s.40(1)(g) does not require the debtor to satisfy the Court that he will succeed in his claim; the ordinary test of whether he has merely shown a prima facie case makes that plain.”

   His Honour went on to find without more explanation and from his reading of the dissenting judgment of Priestley J that the debtor did have a cross demand within the meaning of s.40(1)(g).

1. Before I give my views on this vexed topic I would note the following.  Firstly, the debtor claims, and this has not been denied, that he has collected about him a legal team of some considerable strength which has agreed to pursue his appeal on a pro bono basis.  Secondly, the respondents to the appeal sought security for costs against the appellant.  This application was heard by Hodgson J.  It was successful to the extent that an order was made for the provision of security in the sum of $150,000.00 in respect of each of the two respondents.  This sum is apparently considerably less than the amount asked for.  Before making the orders his Honour considered the nature of the original proceedings.  The Notice of Appeal itself contained 197 grounds over 28 pages.  He also considered the suggestion by the appellant’s leading counsel that the costs of the appeal could be kept to a minimum by separating out issues to be heard and determined before other grounds.  One of the most important issues was the standard of proof:

   “[33] He [counsel for the appellant] submitted that the appeal had substantial merit.  He submitted that the Judge had not applied the Brigginshaw standard in relation to making adverse findings against the appellant; that he ignored compelling evidence in favour of the appellant; and he had failed to approach the question as to the drawing of adverse inferences on the Brigginshaw standard on the basis that inferences should not be drawn where the absence of evidence was due to the respondent’s failure to call important witnesses: see Whitlam v Australian Securities and Investment Commission [2003] NSWCA 183 at [119].”

2. His Honour did not think that the costs of the appeal could be reduced by ordering the determination of certain issues in advance of the rest of the case but he said at [38]:

   “I accept that the appellant has some chance of success on certain questions of law which, on the way the primary Judge found them, were complete answers to the appellant’s case against one or other of the defendants.”

   But he went on to say at [40]:

   “However, success on matters such as this would not result in a successful appeal unless the appellant was also substantially successful in his challenge to the factual findings, essentially to the effect that he acted dishonestly.  So long as those findings stand, it seems clear to me that the appellant’s claim against both respondents would fail.  In my opinion, there is no way which is fair to both parties that the appellant’s challenges to these findings can be split up for separate determination.  It follows, in my opinion, that the appeal will inevitably be an extremely long one and also that it will be a difficult one for the appellant to win, when what is required is that he overturn factual findings from a primary Judge which were to a substantial extent dependent upon the primary Judge’s assessment of the credibility of witnesses who gave evidence before him.”

3. The decision of Hodgson J is to be reviewed by the Court of Appeal pursuant to the provisions of s.46(4) of the Supreme Court Act 1970 (NSW). Mr Porter has frankly admitted that if the review application is unsuccessful he will not be able to provide the security sought and the appeal will be stayed and subject to an application that it be struck out for want of prosecution.

4. It seems to me that in Pollnow Burchett J took the view that the debtor had an arguable case on appeal based upon his Honour’s reading of the dissenting Judgment of Priestley J. But is it strictly necessary where the stage of establishing a “prima facie case” has passed, to make such an assessment where the debtor is seeking to exercise a right which is given to him by statute, in this case s.101 Supreme Court Act (NSW) (1970). Might the test not be more appropriately allied to that with which the court is faced when considering an application to adjourn the hearing of a sequestration order pending an appeal?

5. It cannot be said that Courts are insensitive to the impact that bankruptcy proceedings will have upon a debtor. A creditors petition, if successful, results in serious and long term consequences. As the full bench of the Federal Court said in Ahern v DCT (1987) 76 ALR 137 at 148:

   “It is also well-established that in general a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of a debtor where an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings provided that the appeal is based on genuine and arguable grounds: Re Rhodes; Ex parte Heyworth (1884) 14 QBD 49; Bayne v (1907) 5 CLR 64 and Re Verma; Ex parte DCT (1985) 4 FCR 181.

   These cases rest on the broad principle that before a person can be made bankrupt the court must be satisfied that the debt on which the petitioning creditor relies is due by the debtor and that if any genuine dispute exists as to the liability of the debtor to the petitioning creditor it ought to be investigated before he is made bankrupt. Bankruptcy is not mere inter partes litigation. It involves change of status and has quasi-penal consequences.”

   Indeed it was the acknowledgment of the potential gravity of an act of bankruptcy which led the Court in Re Baker; Ex parte Baker v Staples [1995] FCA 703 (unreported Kiefel J, 4 September 1995) to apply the Ahern principle to applications for an extension of time to comply with a bankruptcy notice. Her Honour was of the opinion that such applications should generally be granted providing that the appeal proceedings are genuine and arguable. 

6. With respect, this approach appears to overlook the fact that the service of a bankruptcy notice simply marks the start of a process and that the commission of an act of bankruptcy, while undoubtedly of significance to the debtor, does not affect the actual status of the debtor: Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264; Shephard v Chiquita Brands (South Pacific) Ltd [2001] FCA 1394; Re Geard; Ex parte Reid (unreported Sheppard J, 11 February 1994); Liew v JNS Technologies [1999] FCA 1428; Jenkins v National Australia Bank [1999] FCA 1758; Warner v Frost [1999] FCA 830. The Court in these cases when considering whether to grant an extension of time for compliance with a bankruptcy notice has been mindful of balancing the interests of creditors, noting the potential impact of a later act of bankruptcy in the event that the appeal is unsuccessful and proceedings continue. In Liew v JNS Technologies (supra) Kenny J referred to the comments of Heerey J in Re Nguyen; Ex parte Commissioner of Taxation (1995) 54 FCR 403 at 407:

   “Extension of time for compliance with the bankruptcy notice may have important adverse consequences for the judgment creditor. For example, if a sequestration order is subsequently made the commencement of the bankruptcy may be later than would otherwise have been the case, which in turn may affect rights of recovery by the trustee in relation to property.”

   An appropriate safeguard for debtors was seen to exist as the Court is always able to exercise its discretion and adjourn any petition for sequestration until after the appeal has been heard.

7. The factors which weigh against setting aside the bankruptcy notice or extending time for compliance until after the hearing of the appellate proceedings are:

   ·    The possible disadvantage to creditors if the relation back period was extended for a significant period of time, as it would most likely be.

   ·    The fact that the claim upon which the bankruptcy notice has been issued is a separate claim to the proceedings in respect of which the debtor seeks to appeal. The amount of money required under the bankruptcy notice is not large in the scheme of things.

   ·    The fact that the committal of an act of bankruptcy does not prevent the debtor from continuing his appellate proceedings.

   ·    The fact that the Court will have control over the timing of the hearing of the creditor’s petition at which time the situation regarding the appeal will be clearer as will its likely prospects of going ahead.

   ·    The fact that the debtor has not sought a stay in relation to the judgment nor made any offer to pay by instalments which would have the effect of such a stay and which would have prevented the issue of the bankruptcy notice in the first place.

8. Having taking these matters into account I am of the view that the bankruptcy notice should not be set aside. I am also of the view that it would not be appropriate to extend time for compliance until after the hearing of the appeal. The one thing we do know about the appeal is that it is likely to be hard fought, complex and probably long. It may not come on for hearing for some time. On the other hand, the debtor may well be able to put forward cogent arguments as to why a sequestration order should not be made against his estate whilst the appeal is being run. I would therefore propose to make an order similar to that made by Ryan J in Jenkins v National Australia Bank [1999] FCA 1758 that any application for a sequestration order should be made returnable before me.

9. The applicant debtor has been wholly unsuccessful in these proceedings. I will hear the parties as to costs.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date:  8 June 2004