Re Bonney, John Owen & Anor Ex Parte Bonney, John Owen & Anor v McAuliffe, Daniel

[1996] FCA 487

IN THE FEDERAL COURT OF AUSTRALIA         )
GENERAL DIVISION  )
   No. QN 1563 of 1995
BANKRUPTCY DISTRICT OF THE          )
STATE OF QUEENSLAND  )

RE:JOHN OWEN BONNEY AND JOCELYN BONNEY

EX PARTE:JOHN OWEN BONNEY AND JOCELYN BONNEY

Applicants

AND:DANIEL MCAULIFFE AND RONALD ROWE                    Respondents

MINUTES OF ORDER

JUDGE MAKING ORDER:       Spender J

DATE OF ORDER:            13 May 1996

WHERE MADE:               Brisbane

THE COURT ORDERS THAT:

(1)the application filed 4 January 1996 be dismissed;

(2)the applicants on that application pay the costs of the respondents of the application, including reserved costs, to be taxed if not agreed.

NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA         )
GENERAL DIVISION  )
   No. QN 1563 of 1995
BANKRUPTCY DISTRICT OF THE          )
STATE OF QUEENSLAND  )

RE:JOHN OWEN BONNEY AND JOCELYN BONNEY

EX PARTE:JOHN OWEN BONNEY AND JOCELYN BONNEY

Applicants

AND:DANIEL MCAULIFFE AND RONALD ROWE                    Respondents

CORAM:     Spender J
DATE: 13 May 1996
PLACE:     Brisbane

REASONS FOR JUDGMENT

The court has before it an application filed on 4 January 1996 on behalf of John Owen Bonney and Jocelyn Bonney seeking orders that the bankruptcy notice No 1563 of 1995 be set aside and a declaration that the applicant has a counter-claim, set-off or cross demand of a kind referred to par 40(1)(g) of the Bankruptcy Act 1966.

So far as is presently relevant, it appears that on 16 September 1994 a default judgment was obtained against the present applicants in respect of a claim of $12,320.18 and costs of $921.75, making a total of $13,241.93.  A bankruptcy notice, which was a 28-day notice, issued on 6 November 1995 in respect of a total sum claimed of $14,645.93.  That sum was made up of the judgment sum for claim and interest of $13,241.93 and an amount claimed for interest being an amount
of $1,404.00 being a claim for interest at 10 per cent per annum pursuant to s 73 of the Common Law Practice Act 1872 (Qld) from the date of judgment until 6 October 1995.

It appears from the affidavit of Anissa Gaye Martoo that the bankruptcy notice was served on Mr Bonney on 14 November 1995 and on Jocelyn Bonney on 24 November 1995.  May I say that paragraph 2 of each of those affidavits is not sufficient evidence of identification of each of the persons served, and that there might have been difficulties in that aspect of the matter but for later events which confirm that the service was effected as claimed by the deponent in each of those affidavits.

On 4 January 1996 the application presently under consideration was filed as was an affidavit of J.O. Bonney which was filed on his behalf and on behalf of Jocelyn Bonney.  In respect of the application to set aside the bankruptcy notice and the assertion of a cross-claim in that material, the difficulty facing Mr and Mrs Bonney is the fact that s 41(7) provides:

"Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has filed with the Registrar an affidavit to the effect that he has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied. "

The extension of time by virtue of the operation of the Act only comes into effect if there has been a filing of an affidavit of the kind therein referred to:

"... before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice..."

The bankruptcy notice was a 28-day notice and the filing on 4 January 1996 of the affidavit of J.O. Bonney is not before the expiration of the time fixed for compliance with the requirements of the bankruptcy notice.  There is, therefore, no extension of time of the operation of the bankruptcy notice and non-compliance with it constitutes an act of bankruptcy on which a petition might be founded. 

Similarly, in relation to the application to set aside the bankruptcy notice, s 41(6A) provides:

"Where, before the expiration of the time fixed by the Court or the Registrar for compliance with the requirements of the bankruptcy notice:

(a)proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or

(b)an application to set aside the bankruptcy notice has been filed with the Registrar;

the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice. "

A similar power of extension of time by the Registrar is given by s 41(6B).

In this particular case there was on foot at an earlier time proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued.  It appears, however, that those proceedings were the subject of an order by a Magistrate on 2 November 1994.  The Magistrate indicated that he was "satisfied that there was a triable issue in relation to the type of tenancy and the proper documentation of service".  He said:

"...I am not satisfied that a defence would cover the whole claim.  The set-off may amount to approximately $5500.00.  Therefore, I am satisfied that the defendant should pay a security to defend. "

The order that he made was in the following terms:

"I order that the judgment be set aside upon the defendant paying in the sum of $8,000.00 security within fourteen (14) days. "

It appears that security, as provided by that order, was not provided in accordance with that order with the consequence that the judgment was not set aside.  For completeness it should be noted that the Magistrate ordered:

"Should the security be paid I allow the deft. a further fourteen (14) days to lodge an amended defence & counter-claim. "

No such document appears also to have been filed.  I should refer also to a letter from the Registrar of the
Magistrates Court Office at Cleveland indicating the amounts owing in respect of the judgment which was ordered on 16 September 1994.  It seems to me that under s 41(7) there has not been compliance by the debtors with the requirements of that subsection, with the consequence that the bankruptcy notice was not extended and that an act of bankruptcy occurred on the expiration of 28 days after the service of the bankruptcy notice on each of the debtors respectively.

In my opinion also, having regard to the history that I have recited, there is no power in the court to set aside the bankruptcy notice pursuant to the provisions of s 41(6A).  In those circumstances, the application to the court of 4 January 1996 is dismissed and I order that the applicants, on that application, pay the costs of the respondents of the application, including any reserved costs, to be taxed if not agreed.

I note the creditor's petition was presented on 15 February 1996.  I anticipate that a date for hearing of that petition will be notified to the parties if it has not already occurred.

I certify that this and the  preceding four (4) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.

Associate
  Date: 13 May 1996

No appearance for the applicants.

Counsel for the respondents     :         Mr J W Byrne
instructed by                  :         McAuliffe & Associates

Date of Hearing                :         13 May 1996