Re Abignano, G. Ex parte Abignano, G. v Abigroup Limited

[1992] FCA 763

NOT FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
j
GENERAL DIVISION	) No B 3767 of 1992
)
BANKRUPTCY DISTRICT OF THE	1
)
STATE OF NEW SOUTH WALES	)

RE :

- GENNARO ABIGNANO

Judgment Debtor

EX PARTE:  GENNARO ABIGNANO

Applicant

ABIGROUP LIMITED

Respondent

Coram:  Davies J .

Date:  13 October 1992

Place: Sydney

15 OCT 1992

AUSTRALIA

PRINCIPAL

REASONS FOR JUDGMENT REGISTRY

EX TEMPORE

Abigroup Limited. In those proceedings Abigroup Limited made

claims againstother parties and therewere several cross-claims.

The original claim was brought by Sandtara Pty Limited against Abigroup Limited in respect of moneys due under a lease between Sandtara Pty Limited as lessor and Cenrin Pty Limited as lessee. Apparently, Abigroup Limited had been guarantor of Cenrin Pty Limited's obligations. The judgment discloses that an amount of $668,493.91 was due to San tara Pty Limited. Judgment in respect of that sum was given i the first place in

order appears in para. 1 of the judgment.	favour of Sandtara Pty Limited against Abig oup Limited. That 9
A like judgment was given in favour of Sandtara Pty Limited against Genalco Pty Limited, Gennaro Abignano and Cenrin Pty Limited in paragraph 7 of the judgment, which provided that Mr Abignano and the two companies pay directly to Sandtara Pty Limited that amount of $668,493.91. A like order was made in para. 15, that Mr Alan Pitman, Sesete Pty Limited and Cenrin Pty Limited pay directly to Sandtara Pty Limited that sum of $668,493.91.	i
It is clear that the judgment was speaking of the one sum, that judgment was given in favour of Sandtara Pty Limited and that Sandtara Pty Limited was placed in the position of being able to enforce the judgment against the persons named in paras. 1, 7 and 15 of the judgment.

The persons other than Abigroup Llmited were imposed with the liability because of their arrangements with Abigroup Limited

and with each other. Thus the judgment in para. 6 provided that

Genalco Pty Limited, Gennaro Abignano and Cenrin Pty Limited were

jointly and severally liable to indemnify Abigroup Limited in

respect of any liability which it may have to Sandtara Pty

Limited under the subject lease. Paragraphs 9, 10, 11 and 12

provided that Cenrin Pty Limited and others were liable to

indemnify or exonerate certain of the par ies in respect of matters which might arise in relation to The lease. In the 1

result, Abigroup Limited was entitled to be i demnified and other

persons, including M r Abignano, were entitl d to be exonerated I in respect of the amounts which they might bejcalled upon to pay. e

The judgment reserved liberty to all parties to apply on 24 hours notice.

Immediately the judgment had been taken out, the bankruptcy notice was issued against Mr Abignano on the application of Abigroup Limited.

This is an application to set aside a bankruptcy notice issued by Abigroup Limited directed to Gennaro Abignano and calling upon him to pay a sum of $668,493.91 to Sandtara Pty Limited. The bankruptcy notice was issued on 15 September 1992, the same day as a judgment in the Equity Division of the Supreme Court of New South Wales was taken out. That judgment was delivered in proceedings brought by Sandtara Pty Limited against

Relevant provisions appear in s.40(l)(g) of the Bankruptcy

m 1966 (Cth) which provides:-

"A debtor comm~ts	an act of bankruptcy in each of the following
cases:
(g) ~f -a creditor who has obtained aga~nst	the debtor a

final judgment or final order being a judgment or order the execution of w h ~ c h has not been stayed, has served on the debtor in Austral~a or, by leave of the Court, elsewhere, a bankruptcy notlce under this Act and the debtor does not:

(i)  where the notice was served Ln Australia - with~n the t ~ m e fixed by the Registrar by whom the notice was issued; or

(li) where the notice was served elsewhere - within the time fixed for the purpose by the order givrng leave to effect the service;

comply with the requirements of the notlce or satlsfy the Court that he has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be. being a counter-claim, set-off or cross demand that he could not have set up in the actxon or

obtained"

and also in s.40(3)(d) which provides:-

order"

The issue in this present application turns upon the effect of para. 40(3)(d), a provision the substance of which came into

the Bankru~tcv Act of the United Kingdom in 1890 and subsequently into the Bankru~tcv Act of the Commonwealth. Before that provision was enacted, the understanding of the effect of s.40(1) (g) and its English counterpart was clear enough and that was described in Ex Darte Woodall (1984) 13 QB 480. In that case at p.483, Lindley LJ said:-

clearly what sort of a credltor is intended. It must be a	"The words 'execution thereon not having been stayed' shew
creditor who is in a position to issue execution on the judgment; it is assumed that executLon mrght have been stayed. Then the provision that the bankruptcy not~ce is to require the debtor to pay the ]udgment debt 'in accordance with the terms of the judgment', tends in the same direction; the debtor cannot be required to pay, 'In accordance with the terms of the judgment'
unless the credrtor is in a pos~tion to issue execution."

Ex Darte Woodall has been referred to on many occasions and

applied, for example, in Australian Workers Union v. Bowen (1946)
72 CLR 575 where at 583 Latham CJ referred to Woodall and said:-

"A judgment creditor can ~ a s u e a bankruptcy notice only if he is

In a position to issue execution".

The submission of Mr J. Sexton, counsel for Abigroup Limited, is that para. 40(3)(d) and the United Kingdom equivalent which first appeared in 1890, radically changed the operation of the statute as enunciated in In my opinion

that is not so, and Mr	to quote
authority to support his proposition.

One authority which which Mr

Sexton contends is Re Pannowitz: Ex uarte Wilson (1975) 6 ALR at

287. In that case, Riley J. at pp.296-7, confirmed the traditional view that execution for the purpose of these provisions means execution in the narrower sense, that is, execution by a public officer under the writ of fieri facias.

His Honour also referred to Ex uarte Woodall and to the coming into the Act of the new provision now appearing in section 40(3)(d) and went on to say, at p.290:-

"But the 'person ent~tled	to enforce a final judgment' was one
who, though he had not hlmself obtained the judgment, had taken

all steps which entitled him to reap the fru~ts of that judgment: so, a trustee in bankruptcy of a judgment credltor who had become a party to the action but had not obta~ned the necessary leave to

Lssue execut~on	was not such a person: Re Clements [l9011 1 KB
260."

Accordingly, Riley J. was of the view that, in substance, the type of judgment in respect of which a bankruptcy notice might be issued had not been altered by the inclusion of the new provision.

That has been, as I understand it, the traditional and accepted view; there must be a money judgment upon which execution can be levied and the judgment creditor, for the purposes of the provisions, is the person who is entitled to the fruits of that judgment.

Under the judgment of the Supreme Court bf New South Wales,
the person who is the judgment creditor in respect of the

$668,493.91 is Sandtara Pty Limited. Sand ara Pty Limited is

Abigroup Limited. Under that judgment, Abigroup Limited is as	entitled to that judgment against a number o parties, including 3
much a judgment debtor as is Mr Abignano.
In my opinion, Abigroup Limited was not a judgment creditor for the purposes of s.40 of the Bankru~tcv Act.
I also agree with the submissions put by Mr H.K. Insall, counsel for M r Abignano, that Abigroup Limited did not have a final order for a monetary sum which it was entitled to enforce
against M r Abignano. I agree with his submission that the rights
as between Abigroup Limited and Mr Abignano have still to be worked out pursuant to the leave granted by the court and that there is no final judgment in respect of a sum of money as between them.

Mr Insall referred to Woolminaton v. Bronze Lamp Restaurant

Limited (1984) 2 NSWLR 242, a decision of Needham J. in the Equity Division of the Supreme Court of New South Wales wherein his Honour discussed an order in the nature of quid timet and the purpose and effect of reserving liberty to apply, such as was reserved in the present judgment of the Supreme Court. Needham J. at p.244 cited the remark of Wilberforce J. where his Lordship, after referring to a similar order, said:-

"I desire to guard myself against any suggestion that the order	l
to pay can be enforced in any specific manner.
'I

In my opinion, the rights as between Abi roup Limited and Mr Abignano have still to be worked out and wi 1 depend upon what	l
9

occurs and which person or company pays money to Sandtara Pty i

Limited. There is therefore no final judgment fixing a sum of money which Abigroup Limited can, in any sense, enforce.

For these reasons, I am of the view that the bankruptcy notice was wrongly issued and I shall order that it be struck out and that the Abigroup Limited pay the costs of M r Abignano of this motion.

I certlfy that this and the preceding 6 pages are a true copy of the Reasons for Judgment

Associate:
Date:	15 -October 1992
Counsel for the applicant:	Mr H.K. Insall
Solicztors for the applicant:	Norton Smlth C Co.
Counsel for the respondent:	Mr J. Sexton
Solicitors for the respondent:	Minter Ellison Morris Fletcher
Date of hearing:	13 October 1992
Date of judgment:	13 October 1992