Re Batton, Robert William Ex Parte Associated Midland Corp Ltd

[1983] FCA 415

IN THE FEDEXAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) No. B. 5293 of 1983

BANKRUPTCY DISTRICT OF THE )

STATE OF NEW SOUTH WALES - 1

RE : ROBERT WILLIAM BATTON

M PARTE :

ASSOCIATED MIDLAND

CORPORATION LIMITED

ORDERS

CORAM:	Lockhart J.
WHERE MADE:	Sydney
DATE! :	16 December 1983

THE COURT ORDERS THAT :

1. The time for compliance wlth bankruptcy notice

5293 of 1983 be extended up to and including

Friday, 30 December 1983;

2. The application of the debtor filed on 2 December

1983 be dismissed;

3. The question of costs including reserved costs be stood over generally with liberty to either party

to restore to the list on seven days notice.

4 . I grant either party liberty to apply generally

in relation to the orders made today on two days

notice.

L

IN THE FEDERAL COURT OF AUSTRALIA	) )
GENERAL, DIVISION	) No. B. 5293 of 1983
)

BANKRUPTCY DISTRICT	OF THE	)
)

STATE OF NEW SOUTH W E S )

RE: ROBERT WILLIAM BATTON

Ex PARTE :

ASSOCIATED MIDLAND

CORPORATION LIMITED

CORAM : Lockhart J.

DATE : 16 December 1983

REASONS FOR JUDGMENT

LOCKHART J. On 15 November 1983 Associated Midland Corporation

Limited, "the creditor", caused to be issued against Robert William

Batton, "the debtor", a bankruptcy notice requiring payment of the sum

of $104,005.21, representing the amount of a consent judgment obtained

by the creditor against the debtor in the Supreme Court	of New South
Wales on 24 August 1982.

The amount of the judgment included the sum claimed by the

creditor against the debtor in that action, together with interest

which was awarded as damages.

In addition to the amount of the judgment, interest ran

thereon at the rate of 15 per centum per annum from 24 August 1982,

2.

and the amount claimed in the notice was for the sum of $14,871.84,

made up to 5 October 1983, and no more is claimed.

The notlce was served upon the debtor and, after an initial

extension of time to comply with its requirements, granted by the

Registrar, the debtor sought an order from this Court to set aside the

bankruptcy notice and to extend time for compllance with its

requirements.

The application came on for hearing before another Judge of

this Court on 14 December last, two days ago, and His Honour adjourned

the application to 13 February 1984, extending the time for compliance

with the notice until further order.

He directed the debtor to file and serve an affldavit of his

means by 4 pm yesterday, and noted the following undertakings to the

Court by the debtor:

1) that the debtor would prosecute with diligence an

appeal, to whlch I shall refer a llttle later, to

the New South Wales Court of Appeal, and seek an

expedited hearmg of that appeal;

2 ) that he would not, in the ordinary course of his

business. dispose of, convey, assign, transfer,

mortgage, charge or otherwise dispose of or

encumber any of his property; and

3 .

3 ) that he would not incur any liabllities otherwlse than in the ordinary course of his business.

His Honour reserved costs and granted liberty to the

creditor to apply, on 24 hours' notice to the debtor, for further

orders, including an order dismissing the application, extending

time for compliance and setting aside the bankruptcy notice.

The creditor availed himself of the liberty to apply

thus reserved to him, and in the result, the further hearing of

the debtor's application to extend tlme and the creditor's

application that the debtor's application be dismissed, have come

before me f o r hearing. The creditor has not filed a formal

application pursuant to the Rules but nothing turns on that.

I need not review all the facts in detail, it is

sufficient for me to summarise them. The debtor sold to the

creditor certain motor vehicles. Questions of title to the

vehicles arose and in the result the creditor sued the debtor and

Australian Guarantee Corporation Limlted. The result of that

case was that the consent judgment, to which I have already

referred when describing the bankruptcy notice, was signed by the

creditor against the debtor in the amounts previously mentioned.

One of the terms of the consent order was that there be

a stay of execution on the judgment until judgment be delivered

on a cross-claim filed by the debtor against the creditor. The

debtor also cross-claimed against two people known as Gary and

4.

Adrian Ashton, and against his co-defendant in the proceedings

brought by the creditor, namely, Australian Guarantee Corporation

Limited.

After the consent judgment was entered against the

debtor, the cross-claim brought by the debtor was heard by the

Supreme Court and it succeeded as against the Ashtons, in the sum

of approximately $60,000.00. Steps are bemg taken now by the

debtor to enforce that judgment in the Supreme Court	of Victorla.
That judgment still stands unsatisfied.

The debtor's cross-clalm against the creditor was heard

by the Supreme Court of New South Wales and dismissed on 30

August 1983. The debtor appealed from that judgment on 26 .

September 1983. The debtor has taken steps today to file a draft

Index of the appeal papers in that appeal.

The debtor's expenditure exceeds his income to a

considerable extent. His assets are minimal and his liabllities

considerable. They include a debt to his employer of $52.077.44,

and a debt to the Commissioner of Taxation of a little over

$6,000.00. There is also a sum of about $6,000.00 owing to his

solicitors, presumably on account of legal costs. I have ignored

for this purpose	the debt due under the consent judgment to the
creditors.

. The creditor seeks to have the application to set aside

the bankruptcy notice and to extend tlme for compliance dismissed

5.

today. The debtor opposes that. The consequences of the failure

1

to comply with the requirements of a bankruptcy notice are, of

course, serious. There can be quasi penal consequences in

certain circumstances. No doubt the debtor does not wish to

commit an act of bankruptcy. That is understandable, but it

seems to me, having reviewed all the circumstances, that the

interests of justice are best served if the application to extend

time is dismissed and the extension of time previously granted

terminated, so that if the creditor presents a petition for the

sequestration of the estate of the debtor, it will have the

benefit of the commission of an act of bankruptcy unless, of

course, in the meantime the debtor complies with the requirements

of the bankruptcy notice thereby avoiding the commission	of an
act of bankruptcy.

On the hearing of the petition no doubt the debtor can

adduce material of the kind he has adduced today, and adduced

earlier before McGregor J. and seek to rely on the principle that

if an appeal is pending over the amount in dispute between the

parties in a court of competent ~urisdiction, then, provided the

appeal is bona fide and has some prospect of success, the court

may exercise its discretion agalnst the making of a sequestration

order and adjourn the petitlon until the appeal is determined or

dismiss the petition. Whether the facts call for the application

of that principle is not for me to determine today, except to say

it would appear to fit broadly into that category. But the

question must ultimately be determined on the whole	of	the
evidence as it stands on the hearing of the petition.

6.

The commission of an act of bankruptcy has Important

consequences in law, particularly with regard to the doctrine of

relation back. I think in all the circumstances the order that I

have indicated is the proper order to make. No specific

prejudice to the debtor has been mentioned should I take that

course, save of course the prejudice the debtor necessarily

sustains upon committing an act of bankruptcy.

Accordingly, the orders of the court are as follows:

1. That he time for compliance with bankruptcy

notice 5293 of 1983 be extended up to and

including Friday, 30 December 1983;

2. That the application of the debtor filed on 2

December 1983 be dismissed;

3. That the question of costs including reserved

costs be stood over generally with llberty to

either party to restore to the list on seven days

notice. I indicate that it seems to me that if a

petition is in due course presented, the

appropriate time to deal with those costs is on

the hearing of the petition;

4 . I grant either party liberty to apply generally

in relation to the orders made today on two days

notice.

4 .,

.

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