Re Brdar, Mijor Ex Parte C & F Homes Pty Ltd
[1996] FCA 584
•26 JUNE 1996
CATCHWORDS
BANKRUPTCY - whether execution of judgment stayed - order by local court for payment of judgment debt by instalments - meaning of "complied with" in s 9 of Judgment Debt Recovery Act 1984 (Vic) - minor and trivial non-compliance - exercise of discretion to dismiss petition
Bankruptcy Act 1966 (Cth): ss 40(1)(g) and 52(2)
Judgment Debt Recovery Act 1984 (Vic): ss 9, 17 and 18
Re Gualtieri (1995) 130 ALR 523
Re Moss; ex parte Tour Finance Limited (1968) 13 FLR 101
Re: Mijor Brdar; ex parte C & F Homes Pty Ltd
(No. VP 165 of 1996)
Judge: Heerey J
Date: 26 June 1996
Place: Melbourne
IN THE FEDERAL COURT OF AUSTRALIA )
)
GENERAL DIVISION ) No. VP 165 of 1996
)
BANKRUPTCY DIVISION OF VICTORIA )
RE:
MIJOR BRDAR
(Also known as Mijo Brdar) Judgment Debtor
EX PARTE:
C & F HOMES PTY LTD
ACN 010 714 664
Judgment Creditor
JUDGE: Heerey J
DATE: 26 June 1996
PLACE: Melbourne
MINUTES OF ORDER
The Court orders that:
The petition is dismissed.
The petitioning creditor pay the debtor's costs, including reserved costs.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA )
)
GENERAL DIVISION ) No. VP 165 of 1996
)
BANKRUPTCY DIVISION OF VICTORIA )
RE:
MIJOR BRDAR
(Also known as Mijo Brdar) Judgment Debtor
EX PARTE:
C & F HOMES PTY LTD
ACN 010 714 664
Judgment Creditor
JUDGE: Heerey J
DATE: 26 June 1996
PLACE: Melbourne
REASONS FOR JUDGMENT
The petitioning creditor seeks a sequestration order based on non-compliance with a bankruptcy notice which was issued on 27 November 1995 and served on the debtor on 13 December. The bankruptcy notice was based on a judgment obtained against the judgment debtor in the Magistrates' Court at Geelong on 5 July 1994 for $18,496.19, including costs of $7128. The judgment arose after a contested hearing which I was informed originated in a building dispute.
The issue that principally arises here is whether the judgment was one "the execution of which has not been stayed" within the meaning of s 40(1)(g) of the Bankruptcy Act 1966 (Cth). That question is to be decided at the time either of issue or service of the notice. The criterion is whether it can be said that "at the time the creditor is not entitled immediately to issue execution on the judgment" : Re Moss; ex parte Tour Finance
Limited (1968) 13 FLR 101 at 103.
On 13 December 1994 the Registrar of the Magistrates' Court at Geelong made an order under the Judgment Debt Recovery Act 1984 (Vic) permitting payment of the judgment debts by instalments of $290 per month. The debtor complied with that order by sending cheques in December 1995, January 1995 and February 1995 to the solicitors for the petitioning creditor.
The petitioning creditor applied to the Magistrates' Court on 1 March 1995 to have the instalment order discharged. After a contested hearing the Magistrate confirmed the instalment order and directed that instalments of $290 be paid each month, the first instalment to be due on 15 December 1994, and that instalments be paid to the petitioning creditor's solicitors, B.J. Fennelly and Associates, at their offices in Belmont.
The evidence as to compliance with that order between the time it was made and the issue and service of the bankruptcy notice was as follows. The instalment for March was posted on 2 March and received, even on the creditor's version, by 15 March and was thus within time. The instalment for April was posted on Friday 13 April, which was Good Friday, and was received on the following Wednesday 19 April, and thus was one business day late. The May instalment was posted on Friday 12 May and received on Tuesday 16 May, which was again one business day late.
The June, July, August and September payments were all received on or before the respective due dates.
Three of the cheques sent by the debtor had been returned by the petitioning creditor. On 22 September the debtor received a letter from the petitioning creditor's solicitors confirming the receipt of the cheques but saying that they had now been accepted and banked "in reduction of the judgment debt only and not pursuant to any instalment order".
On Saturday 15 October the debtor personally delivered a cheque for the instalment for that month to the offices of the petitioning creditor's solicitors. The cheque was said not to have been received until 16 October, which was a Sunday. I infer that it was in some way put under the door or through a mail box on the Saturday.
On Tuesday 14 November the debtor posted a further cheque. He was absent from his home for about a week and when he returned he received a letter from P.J. Fennelly and Associates returning the November cheque and advising that they no longer acted for the petitioning creditor. On Friday 24 November the debtor posted a cheque to the creditor's new solicitors Hill Perkins & Co. After the issue and service of the bankruptcy notice the debtor continued to pay instalments in December 1995 and January, February, March, April, May and June, 1996.
Counsel for the debtor referred to s 9 of the Judgment Debt Recovery Act which provides:
While an instalment order is in force and is being complied with the instalment order shall operate as a stay of enforcement or execution of the judgment in respect of which the instalment order was made.
He argued that s 9 must be read as referring to "substantial compliance". Put another way, he said, s 9 could only be relied on when there was "gross" non-compliance. He pointed out that ss 17 and 18 of the Act give a remedy to a judgment creditor where the judgment debtor defaults "in the payment of any instalment under an instalment order." The judgment debtor may apply to the proper officer of the court who may summons the debtor. The court can then, under s 18, examine the judgment debtor, consider the circumstances of the default, and, by virtue of s 18(2), "the court may confirm, vary or cancel the instalment order and shall cause the judgment creditor and judgment debtor to be notified accordingly".
It may be that the sections of the Act referred to do not work totally harmoniously. There is a clear distinction between the Victorian legislation and that in force in New South Wales which was considered in Re Gualtieri (1995) 130 ALR 523. The New South Wales legislation requires an affidavit from the creditor showing how the instalment order came "to cease to be in force". In that case Tamberlin J held that in the absence of such an affidavit the stay still operated for the purposes of s 40(1)(g).
However it seems to me that it is not possible as a matter of ordinary language to read into s 9 the qualification for which
counsel contends. The notion of a "gross" non-compliance is very much a matter of value judgment. It would lead to extreme uncertainty if a creditor's right to proceed to execution under s 9 depended on whether or not the non-compliance could be characterised as "gross".
Section 17 may serve a useful purpose in that it enables a judgment creditor to obtain certainty in a situation where there has been non-compliance. Conversely, if a judgment creditor were to seek to enforce rights under s 9 where the non-compliance had been minor, in all probability the judgment debtor could apply to the court and obtain a further instalment order. Hence, the judgment creditor would gain no practical benefit.
The other ground that counsel relied on was the general discretion conferred on this court by s 52(2) of the Bankruptcy Act which provides:
If the Court is not satisfied with the proof of any of those matters or is satisfied by the debtor
(a)that he is unable to pay his debts or,
(b)that for other sufficient cause a sequestration order ought not to be made,
it may dismiss the petition.
I am quite satisfied that this is an appropriate case for the exercise of that discretion. Such non-compliance as there has been with the instalment order can be fairly characterised as minor and trivial. While the purpose of the bankruptcy legislation no doubt is to enable sequestration orders to be made against persons who cannot pay their debts, the Act itself clearly contemplates that there may be debtors who cannot pay their debts but who nevertheless obtain stays of judgments against them and who are thus protected from bankruptcy by the terms of s 40(1)(g).
The debtor in the present case has displayed to date a high degree of regularity in the meeting of his obligations under the instalment order, to an extent that would delight most creditors. The spirit of the Victorian legislation should be respected and the debtor protected from further execution, including sequestration. The petition will be dismissed. There will be order that the petitioning creditor pay the debtor's costs, including reserved costs.
I certify that this and the preceding five (5) pages are a true copy of the reasons for judgment of his Honour Justice Heerey.
Dated:
Associate
Appearances
Counsel for the petitioning
creditor:Ms A Wardell
Solicitor for the petitioning
creditor Hill Perkins & Co
Counsel for the debtor: Mr R C Wells
Solicitor for the debtor: Brendan J Meredith & Co.
Date of hearing: 26 June 1996
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