Re Dingle; Westpac Banking Corporation v Worrell
[1993] FCA 619
•30 AUGUST 1993
PETER CAMERON PAUL HALLIDAY
Ex parte: PETER CAMERON PAUL HALLIDAY and A.C.N. 003 075 394 PTY LTD
(formerly NINE NETWORK PTY LTD)
No. VN273 of 1993
FED No. 619
Number of pages - 12
Bankruptcy
(1993) 44 FCR 349
COURT
IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
GENERAL DIVISION
OLNEY J
CATCHWORDS
Bankruptcy - bankruptcy notice - claim by debtor to have counter claim, set-off or cross demand - whether counter-claim could be set up in proceedings in which judgment obtained.
Bankruptcy - bankruptcy notice - debtor subject to injunction in family Court proceedings - application to transfer proceedings to Family Court.
Bankruptcy Act, ss 35A, 40, 41
Judgment Debts Recovery Act 1984 (Vic), ss 5(8), 6(5), 6(7)
County Court Act 1958 (Vic), s 74
Judiciary Act 1903, s 77U
County Court Rules, Rule 63A.17(B), Order 21 (r 21.07)
Re Lentini (1991) 29 FCR 363
Gould : Ex parte Skinner and Smith (1983) 72 ALR 393
Schekeloff : Ex parte Schekeloff v The Hopkins Group Pty Ltd 22 FCR 407
Trade Practices Commission v Manfal Pty Ltd and others (1990) 27 FCR 284
HEARING
MELBOURNE, 4 and 5 August 1993
#DATE 30:8:1993
The applicant (debtor) appeared in person.
Counsel for the respondent: H W Fraser
Solicitors for the respondent: Hall and Wilcox
ORDER
THE COURT DETERMINES:
That it is not satisfied that debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(l)(g) of the Bankruptcy Act.
AND ORDERS THAT:
1. The debtor's application dated 23 March 1993 and his amended application dated 2 August 1993 be dismissed.
2. The debtor pay the creditor's costs of the application and amended application and any reserved costs and in the event that the debtor becomes bankrupt upon the petition of the respondent as a result of an act of bankruptcy constituted by failure to comply with the bankruptcy notice such costs be deemed to form part of the petitioner's costs of the petition.
3. Time to comply with bankruptcy notice be extended to 30 August 1993.
Note: Settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules.
JUDGE1
OLNEY J The applicant debtor seeks orders that a bankruptcy notice issued by the respondent creditor be declared void or be set aside or alternatively that the time for compliance with the notice be extended. The debtor also seeks to have further proceedings in relation to the bankruptcy notice transferred to the Family Court of Australia.
THE ATTACK ON THE BANKRUPTCY NOTICE
(a) The statutory regime
2. A debtor commits an act of bankruptcy if a creditor who has obtained a final judgment or order, execution of which has not been stayed, serves a bankruptcy notice on the debtor and the debtor fails, within the time specified in the notice, to comply with the requirements of the notice or satisfies the Court that he has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or order, being a counter-claim, set-off or cross demand which the debtor could not have set up in the action or proceeding in which the judgment or order was obtained. (Bankruptcy Act, s 41(1)(g)).
A bankruptcy notice is required to be in the prescribed form and must require the debtor, within a specified time to pay the judgment debt or sum ordered to be paid or secure the payment of same to the satisfaction of the Court or the creditor or his agent or compound the debt or sum to the satisfaction of the creditor or his agent. (Bankruptcy Act s 41(1),(2)).
A bankruptcy notice shall not be issued in relation to a debtor if, at the time of the application for its issue, execution of the judgment or order to which it relates has been stayed. (Bankruptcy Act s 41(3)(b)).
For the purposes of section 40(1)(g) a judgment or order that is enforceable as, or in the same manner as, a final judgment obtained in an action is deemed to be a final judgment so obtained and the proceedings in which, or in consequence of which, the judgment or order was obtained are deemed to be the action in which it was obtained. (Bankruptcy Act s 40(3)(b)). It follows that an order for costs which is enforceable in the same manner as a final judgment is deemed to be a final judgment obtained in an action. (Re Gould : Ex parte Skinner and Smith (1983) 72 ALR 393).
The Court or the Registrar may extend the time for compliance with a bankruptcy notice where before the expiration of the time fixed for compliance proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor or an application to set aside the bankruptcy notice has been filed with the Registrar (Bankruptcy Act s 41 (6A), (6B)), but where a debtor applies for an extension of time on the ground that proceedings to set aside the judgment or order have been instituted and the Court or Registrar is of the opinion that those proceedings have not been instituted bona fide or are not being prosecuted with due diligence the Court or Registrar shall not extend the time for compliance with the bankruptcy notice. (Bankruptcy Act s 41 (6c)).
Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice the debtor files with the Registrar an affidavit to the effect that he has a counter-claim, set-off or cross demand equal to or exceeding the judgment or order that he could not have set up in the action or proceedings in which the judgment or order was obtained, the time for compliance with the notice is extended until and including the day on which the Court determines whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand. (Bankruptcy Act s 41(7)).
(b) The Facts
8. On 15 May 1992 in proceedings in the County Court of Victoria between the creditor as plaintiff and the debtor as second defendant, the creditor obtained an order for costs against the debtor. The costs were subsequently taxed and allowed in the sum of $4,939.48. The creditor applied for the issue of a bankruptcy notice based on the costs order and the notice was issued on 8 February 1993. It required the debtor to comply within 14 days. The notice was served on 10 March 1993. The time for complying with the notice has since been extended from time to time pending resolution of the matters now before the Court.
The County Court proceedings remain current but have not come to trial. In the County Court the creditor has sued Spectra Systems Pty Ltd (Spectra) a company now in liquidation, and the debtor for $44,800 said to be owing in respect of advertising services provided by the creditor to Spectra, payment for which services it is said the debtor guaranteed. A trial commenced on 14 May 1992 but was aborted on 15 May 1992 when it became necessary for the debtor to substantially amend his defence.
The trial judge adjourned the proceedings and made a number of orders including an order that the costs of the adjournment including the creditor's costs of 14 and 15 May 1992 and the costs thrown away by virtue of the adjournment be taxed on the appropriate scale and paid by the debtor. The costs so ordered were taxed on 29 July 1992 but not before the debtor had instituted an appeal to the Full Court of the Supreme Court of Victoria against the orders made on 15 May 1992, including the order for costs.
Execution on the costs was stayed for a period of 28 days after taxation. On 31 August 1992 the debtor filed and served an application for an instalment order pursuant to section 6 of the Judgment Debts Recovery Act 1984 (Vic) (JDRA). The application was heard by a proper officer of the County Court on 11 September 1992 and refused. The debtor filed notice of objection and on 9 October 1992 a judge of the County Court heard the matter and refused the debtor's application. Notice of appeal against the judge's decision was filed on 29 October 1992.
Both appeals were heard by the Full Court of the Supreme Court on 23 June 1993. Both were dismissed. On 14 July 1993 the debtor filed an application in the High Court of Australia for special leave to appeal from the decisions of the Full Court. In the meantime however, namely on 25 June 1993, the debtor served a further application for an instalment order. This application was heard on 30 July 1993 and was struck out.
(c) The question of stay
13. The debtor says that both at the time the bankruptcy notice was issued (8 February 1993), and at the present time, execution of the order for costs has been stayed. If the debtor's assertion that execution of the costs order had been stayed at the time the bankruptcy notice was issued is correct, then the bankruptcy notice should be set aside. The staying of execution subsequent to the issuing of the bankruptcy notice would have no effect on its validity. (Re Schekeloff : Ex parte Schekeloff v The Hopkins Group Pty Ltd 22 FCR 407).
The JDRA provides that where an application for an instalment order has been made, and a copy of the application has been served on the judgment creditor, from the time of service the application operates as a stay of enforcement or execution of the judgment in respect of which the application is made until the proper officer of the court or the court (as the case requires) deals with the matter. (JDRA s 5(8)).
A judgment creditor or judgment debtor may within the prescribed period after receiving notice of the refusal to make an instalment order file notice of objection which notice shall be set down for hearing by the court (JDRA s 6(5)) and the court may either make an instalment order or refuse to make such an order. (JDRA s 6 (7)).
Assuming (but without deciding) that in a case where notice of objection has been filed the stay effected by the service of the application for instalment order continues until the order for costs upon which the bankruptcy notice was based would have been stayed from the date of service of the first application for instalment order (31 August 1992) until the decision of the judge upon the debtor's objection (9 October 1992). The debtor claims that upon filing notice of appeal against the last mentioned decision on 29 October 1992, the stay again came into force and that it will remain so until after his application to the High Court is disposed of.
I reject this argument for three reasons. First, section 6(8)of the JDRA applies the stay from the date of service of the application until the proper officer or the court has dealt with the matter. The term 'court' is relevantly defined as the County Court. No provision is made for extending the stay beyond the time that a debtor's application has been dealt with by the County Court which in this case was at the latest, 9 October 1992. The second reason for rejecting the argument is that section 74 of the County Court Act 1958 (Vic) which deals with appeals from the County Court to the Supreme Court provides that an appeal shall not operate as a stay of proceedings unless the County Court so orders or unless within 14 days after the judgment or order appealed from a deposit is made of, or security given for, a sum fixed by the Supreme Court not exceeding the amount of the judgment. As neither of such alternatives applied in this case the appeal did not operate as a stay. Third, the filing of an application for special leave to appeal to the High Court does not operate as a stay of execution. Indeed, an application for special leave is not an appeal. Section 77U of the Judiciary Act 1903 provides that when an appeal has been instituted the High Court or the court or judge appealed from may order a stay of all or any proceedings under the judgment appealed from but this section has no application in the case of a mere application for special leave to appeal. (Trade Practices Commission v Manfal Pty Ltd and others (1990) 27 FCR 284 per French J at p 287).
The debtor also argues that execution was stayed upon the service of his second application for instalment order on 25 June 1993 and that the stay remains in force by reason of the failure of the Registrar of the County Court (in his capacity as the proper officer under section 6 of the JDRA) to "deal with the matter". This argument is based upon the provisions of section 6(3) to the effect that the proper officer may either order that the judgment debt be paid by instalments or refuse to make such an order. In the case of the instant application the proper officer ordered that the application be struck out. It is said by the debtor that this did not amount to a dealing with the application and accordingly, it is said, the stay remains in force. The evidence before the Court is that the application was struck out, after hearing detailed submissions from both parties, on the basis that it was an abuse of the process of the court in that it amounted to a collateral attack on the decision of the Full Court given on 23 June 1993. Notice of objection to this decision has not been filed. With respect, the only conclusion open is that on 30 July 1993 the proper officer of the County Court dealt with the debtor's application and that no stay has operated since that date. In any event, as has already been said, a stay which has come into effect after the date of the issue of the bankruptcy notice does not affect the validity of the notice.
By reason of the foregoing, there is no basis upon which to set aside this bankruptcy notice on the ground that execution of the costs order was at any relevant time stayed.
(d) The question of set-off
20. The debtor was served with the bankruptcy notice on 10 March 1992. He was required to comply within 14 days. Before the expiration of the time fixed for compliance, namely on 23 March 1993, the debtor filed with the Registrar the application (since amended on 2 August 1993) the subject of the present proceedings and a supporting affidavit sworn 23 March 1993.
Relevant to the question of counter-claim, set-off or cross demand the debtor disposed at paragraphs 11 - 13 (inclusive) of the affidavit as follows:
11. I say further that in the County Court proceedings I have a right to costs which costs I am certain will exceed the taxed costs order made by the Registrar on 29 July but these costs are not able to be determined until the conclusion of the County Court proceeding.
12. In the same County Court proceedings I have filed a defence in such terms as will enable the trial judge to give me leave to amend my pleadings to counter claim the sum as set out in my defence of $50,000 from (the creditor).
13. As the County Court pleadings stand and in view of the appeal to the Full Court seeking a judgment that the claim of (the creditor) ought to have been dismissed on 14 May 1992 and seeking judgment that all County Court orders adverse to my interests and made, or arising from, the County Court orders made on 14 May and 15 May 1992 be set aside it would be prejudicial to my rights to enter a counter claim in the County Court proceedings at this time and accordingly such counter claim has not been able to be filed in those proceedings.
The matters raised in these paragraphs have been expanded upon in subsequent affidavits filed in support of the application.
So far as paragraph 11 is concerned, the claim is that on 14 May 1992, at the commencement of the trial in the County Court, the creditor having successfully applied to amend its statement of claim, it became liable to pay the debtor the costs occasioned by the amendment. On that day the creditor amended the name of the plaintiff in the proceedings to read as shown in the heading of these reasons and further substituted amended particulars of the contract alleged to have been made between the creditor and Spectra. No order for costs was made nor was an adjournment sought by reason of the amendments. The debtor relies upon rule 63A.17(B) of the County Court Rules which provides that a party who amends a pleading or other document by leave shall, unless the court otherwise orders, pay the costs of and occasioned by the amendment. The debtor appeared in person in the County Court proceedings. Sometime in 1992 he made an application to have his costs in the proceedings taxed. The amount claimed was in excess of $10,000. On 17 November 1992 his application came before a registrar in the County Court and was struck out with costs. The debtor then sought a review of the registrar's order and this was heard by a judge of the court on 21 January 1992. On that day the judge dismissed the summons for review with costs. No further proceedings have been taken.
It is common cause that in respect of the "proceedings" giving rise to the order for costs made against the debtor on 15 May 1992, it was not open to the debtor to set up his claimed set-off for costs nor could that have been done upon the taxation of costs on 29 July 1992. But be that as it may, the debtor has failed to satisfy me that he has any set-off or cross demand in relation to costs in the County Court proceedings, and certainly not one which equals or exceeds the amount of the order upon which the bankruptcy notice is based.
The debtor was required to give security for the costs of each of the appeals to the Full Court of the Supreme Court referred to above. In one case the sum of $6,000 was ordered and in the other $5,000. In addition, the debtor has a third appeal pending in the same proceedings in respect of which he has been required to give security in the sum of $6,000. The latter appeal has not been heard and can be disregarded for present purposes.
In the two appeals heard and determined by the Full Court of the Supreme Court on 23 June 1993 the debtor was ordered to pay the creditor's costs on the basis of solicitor and client. The debtor says that from previous experience in another appeal (which apparently had a similar result) the costs which he had to pay were taxed at $3,100 and thus he anticipates that in due course he will receive a refund of the security paid into court and that this sum will exceed the amount of the order upon which the bankruptcy notice is based. On this premise, the debtor says he has a set-off which exceeds the amount referred to in the bankruptcy notice.
Apart from the fact that until the creditor's costs in the two appeals have been taxed it is not possible to reach any conclusion as to whether the amount of security provided by the debtor will execute his liability, the fallacy in the argument is that if there is any excess of the security provided over the amount of the costs ordered to be paid, it will be refundable to the debtor, not to the creditor. The creditor has no claim to any surplus and there can therefore be no question of set-off.
(e) The question of counter-claim
27. The debtor has not raised a counter-claim in the County Court proceedings but he asserts that he is entitled to raise one as and when he thinks fit. It is conceded that he could not have raised a counter-claim in the "proceedings" which gave rise to his liability for costs. It is therefore appropriate that there be an examination of the basis of his alleged counter-claim.
In paragraph 12 of the affidavit of 23 March 1992 the debtor refers to his defence in the County Court proceedings as indicating the basis of his as yet unformulated counter-claim in those proceedings. Although mere assertion is insufficient to satisfy the Court for the purpose of having a bankruptcy notice set aside, it is helpful to look to the defence in an attempt to identify precisely what it is that the debtor says is, or more precisely will be, his counter-claim. But before doing that it is necessary to turn to the creditor's statement of claim in the County Court proceedings.
In the amended statement of claim the creditor pleads that Spectra is indebted to it in the sum of $44,800 for advertising services provided by the creditor in or about August and September 1990 pursuant to an agreement. The particulars of the agreement as pleaded in the amended defence are:
The Agreement is partly oral, partly in writing, and partly to be implied. Insofar as it is oral it was constituted by conversations between Gabrielle Jackman, and Craig Martin on behalf of the Plaintiff and Peter Halliday and Gabrielle Halliday on behalf of the Defendants, which conversations occurred between 8th August, 1990 and 22nd August, 1990, at the offices of the Firstnamed Defendant, and at the offices of the Plaintiff, the material substance of which was that the Firstnamed Defendant requested the Plaintiff to provide advertising services on behalf of the Firstnamed Defendant, and that the Plaintiff agreed to provide advertising services on behalf of the Firstnamed Defendant, and that the Firstnamed Defendant would pay the Plaintiff for the advertising services in advance.
Insofar as it was written, it was constituted by an advertising proposal from the Plaintiff dated 8th August, 1990,and a credit application received from the Firstnamed Defendant on or about 17th August, 1990. Insofar as it was to be implied, it was to be implied in order to give business efficacy to the Agreement.
The creditor pleads that on 17 August 1990 the debtor (the second defendant in the proceedings) entered into an agreement of guarantee whereby, in consideration of the creditor supplying credit to Spectra, he agreed in writing to guarantee to the creditor the payment of moneys owing by Spectra to the creditor. It is further said that on 17 December 1990 the creditor served a demand for payment of the claimed debt on each of the defendants.
The debtor filed an amended defence in the County Court proceedings on 7 September 1992 and this presumably is the defence referred to in paragraph 12 of the debtor's affidavit on 23 March 1993. The defence comprises some 44 paragraphs running into 18 typed pages. The pleading is prolix in the extreme, repetitious and in some respects incomprehensible. It is not easy to summarise. The general thrust of the defence is that the debtor denies that Spectra is liable to the creditor as alleged and says that Spectra had no dealings with the creditor, but rather did have dealings with a related corporation General Television Corporation Pty Ltd (GTV) which did not involve the creditor in any way known to Spectra. A substantial part of the defence is devoted to pleading facts relevant to claims Spectra may have against the creditor or GTV for damages for breach of contract and for alleged contraventions of the Trade Practices Act 1974 or the Fair Trading Act 1985 (Vic). The debtor then pleads that he admits entering into an agreement not with the creditor but with GTV and says that the creditor has not supplied credit to Spectra. He says that the agreement entered into with GTV, or in the alternative, with the creditor, was a guarantee limited by the terms and conditions of the guarantee namely that:
a) the creditor or GTV would prove to the satisfaction of Spectra, the debtor and IBM (Spectra's client) that television advertising would produce the required results. b) the television advertising proposal by GTV would achieve the level of buyer inquiries specified by Spectra without any need for additional or complimentary media advertising. c) GTV would use the skill and professional input of To Market To Market Pty Ltd through the specific services provided by that company of Alister Gordon.
d) the advertising proposal was subject to meeting the approval of Spectra for an initial stage one of advertising before approval would be given to proceed further. e) the expenditure on the advertising proposal was limited to $10,000.
It is said that the guarantee was subject to the performance requirements of the agreement between Spectra and GTV, that GTV failed to meet the same and that the debtor is not required to meet the guarantee.
The debtor further pleads that the guarantee does not comply with section 126 of the Instruments Act 1958 (Vic) in that it does not set out in writing all the terms of the agreement.
The debtor admits receiving a letter of demand dated 17 December 1990 sent on behalf of a corporation called Nine Network Australia Limited.
Even assuming for present purposes that every allegation of fact pleaded in the amended defence can be established, I am far from satisfied that there is any basis upon which the debtor can counter-claim against the creditor in the Country Court proceedings or could mount any other claim against the creditor.
At the hearing of the application the debtor advanced an argument which, when reduced to its essentials, was to the effect that by reason of the creditor's breach of its contract with Spectra, that company failed, and as a result of its failure, the debtor as a director and the prime mover behind Spectra is entitled to claim damages from the creditor for the loss of income he has thereby sustained. With respect, even on the most generous interpretation of the facts asserted, I am unable to detect any contractual or fiduciary basis existing between the debtor and the creditor upon which he should fairly be permitted to litigate such a claim before the bankruptcy proceedings against him are allowed to continue.
(b) The question of securing payment.
37. The debtor says he is in a position to secure the payment of the sum in question in a manner which should satisfy the Court but he has put forward no substantial proposal as to how this could be done. None of the debtor's proposals amount to anything more than a request for more time to enable him to so order his affairs as to permit payment to be made at some uncertain future date. This does not constitute the giving of security for the debt.
THE APPLICATION TO EXTEND TIME
38. I turn now to deal with the question of whether the time for complying with the requirements of the bankruptcy notice should be extended, and if so, for what period.
Primarily, the debtor wants time to be extended until the County Court proceedings are resolved. So far as the County Court proceedings are concerned it would seem as things stand at the moment, that the best outcome that the debtor can achieve is for the claim against him to be dismissed. He is confident that this will occur and that he will recover costs against the creditor that will exceed the amount of the creditor's order against him. I express no opinion as to the likely outcome of the County Court proceedings nor as to whether as a litigant in person the debtor would recover costs against the creditor. The creditor has a final order against the debtor for the payment of money. He is entitled to be paid or to take other appropriate action such as instituting bankruptcy proceedings. It is unreasonable that the creditor's rights should be suspended until an uncertain future date in anticipation of a successful outcome to litigation which already has been on foot since February 1991 and is presently further from resolution than it was in May 1992.
As an alternative the debtor seeks time to be extended until his applications to the High Court (and any subsequent appeals) have been resolved. I hesitate to express an opinion as to the likely outcome of the debtor's two pending applications for special leave to appeal to the High Court but for present purposes it is appropriate to make some comment. The orders from which the debtor unsuccessfully appealed to the Supreme Court were first, an order awarding costs against the debtor upon the adjournment of a trial and second, the refusal of a judge to make an instalment order under the JDRA. The Full Court dismissed both appeals without calling upon counsel for the creditor and ordered the debtor to pay the costs on a solicitor and client basis. No stay has been sought and none ordered. In effect, the debtor by seeking further time for compliance with the bankruptcy notice, is seeking a stay of execution in circumstances where he is not otherwise entitled to one. Having regard to the criteria set out in Section 35A of the Judiciary Act it seems highly likely that the debtor will not obtain the leave he seeks. The action of the debtor in seeking special leave to appeal from the decisions of the Full Court provides no justification for extending the time for compliance with the bankruptcy notice.
Although the debtor's ultimate aim is to achieve the position that the order for costs made on 15 May 1992 will be set aside, I am of the view that neither his appeal to the Full Court of the Supreme Court nor his application for special leave to appeal to the High Court can be properly regarded as proceedings to set aside the judgment in respect of which the bankruptcy notice was issued. In this regard I prefer the views adopted by Neaves J in Re Lentini (1991) 29 FCR 363 at p 367 where His Honour referred to an earlier unreported decision of his own in which he said:
The language of s 41 (6A)(a) is clearly apt to refer to proceedings by a judgment debtor in the court where judgment was entered against him to have the judgment set aside. What the provision contemplates is an application to have the court by which the judgment was pronounced revoke the expression of its coercive power where there has been a failure to follow the rules of procedure or where there is shown to be some defect or irregularity or some other circumstance which renders it desirable that the debtor should be given an opportunity to have the issue further litigated. It may be that, in some circumstances, such proceedings may be taken in a court superior to that in which the judgment was entered but, be that as it may, the language of the provision is not, in my opinion, apt to refer to proceedings which are properly characterised as an appeal from the judgment in respect of which the bankruptcy notice was issued.
The County Court Rules provide that the court may set aside or vary any default judgment entered or given in accordance with Order 21 (r21.07). The rules also provide for the setting aside or varying of a judgment or order other than by appeal in the case of:
(a) judgment against a party who does not attend the hearing of an application under O 22 for summary judgment: r22.15;
(b) order that a proceeding be dismissed for want of prosecution: r24.06(a);
(c) judgment entered or given upon the failure of a party to do any act or take any step which under the rules he is required to do or take or to comply with an order that he do any such act or take any such step: r24.06(b);
(d) an order against a person on an interlocutory or other application where the application was made on notice to that person, but the person did not attend the hearing of the application, or where the application was not make on notice to that person: r46.08;
(e) a judgment, order or verdict obtained where a party is absent from the trial of proceeding: r49.02(2).
In my opinion it is this type of application to set aside judgment that is contemplated by section 41 (6A), (6B) and (6C) of the Bankruptcy Act. That is not to say that in the exercise of its wide discretion the Court should not grant an extension of time to comply with a bankruptcy notice where an appeal raising an arguable case has been instituted bona fide and is being pursued with due expedition.
The debtor further says that certain answers to interrogatories given by the creditor in the County Court proceedings indicate that the creditor's claim should be for an amount considerably less than that originally claimed and that had the lesser amount been claimed from the outset the costs ordered against him would have been taxed on a different scale and would have been allowed at a considerably reduced sum, which sum he is now willing and able to pay. The answer to this argument is that the creditor has a final order for the payment of the costs. The order has been unsuccessfully tested on appeal. The question of the scale on which the costs were taxed has never been an issue. At the best the debtor's argument is speculative and ignores the reality of the situation, namely that the order has been held by the Full Court to have been correct when it was made and there is no procedure available to the debtor to have some alternative order substituted for it. There is certainly no justification to extend time on the bankruptcy notice on this ground.
THE APPLICATION TO TRANSFER PROCEEDINGS TO THE FAMILY COURT
45. The debtor is a party to certain proceedings in the Family Court of Australia in which there is, and has been since 14 April 1992, an interlocutory injunction in force restraining the debtor from in effect altering the structure of any company in which he holds shares, and from disposing of or dealing with any of his assets except in the normal course of business. He says that upon the transfer of these proceedings to the Family Court he would seek a variation of the terms of the injunction to enable him to utilize sufficient of his assets as would permit him to pay the total amount of the costs order the subject of the bankruptcy notice. According to the debtor's submissions, (and there is no evidence to support the same) the proceedings in the Family Court are likely to be finally resolved by the end of 1993.
The Court has power under section 35A of the Bankruptcy Act to transfer a pending proceeding to the Family Court. The Act does not prescribe any criteria for the exercise of the power.
There is no doubt that there may be occasions when the proper exercise of jurisdiction under the Bankruptcy Act may be facilitated by the transfer of a pending proceeding to the Family Court but this is not such a case. The debtor has had the capacity to seek a variation of the Family Court injunction ever since it was first imposed on 14 April 1992. He seeks the transfer of the present proceeding merely to obtain further time to comply with the bankruptcy notice since the injunction came into force he has been able to raise a total of $17,000 for use as security for the costs of three appeals to the Full Court from decisions made in the Country Court proceedings. He has not explained the source of these funds and does not assert that he does not have the means to comply with the bankruptcy notice without breaching the injunction. In any event, no useful purpose would be served by a transfer to the Family Court.
In the circumstances I decline to make an order pursuant to section 35A(1) of the Bankruptcy Act. I also decline to extend time for compliance with the bankruptcy notice until after the conclusion of the Family Court proceedings or until the debtor has made application to vary the injunction for the reason that it has not been demonstrated that the debtor is unable to comply with the bankruptcy notice by reason of the injunction imposed by the Family Court or that any such application for variation is likely to be productive if the result sought is to be achieved.
CONCLUSION
49. The debtor has failed to establish any basis upon which to set aside the bankruptcy notice. Nor has he established any justification for the further extension of time for complying with the bankruptcy notice. I not satisfied that the debtor has a counter-claim, set-off or cross demand of the type referred to in paragraph 40(1)(g) of the Bankruptcy Act.
The debtor's application of 23 March 1993 and his amended application of 2 August 1993 will be dismissed.
2
0