Re Frasersmith; Ex parte J Blackwood & Son Ltd

Re: MARK IAN FRASERSMITH and ROBYN ELIZABETH FRASERSMITH trading as DRIVELINE
PUMPS (Petitioning Creditor)
Ex Parte: J. BLACKWOOD and SON LIMITED trading as A.E. BAKER and CO. (Debtor)
No. P 142 of 1992
FED No. 428
Bankruptcy
(1992) 36 FCR 144

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
Beaumont J.(1)

CATCHWORDS

Bankruptcy - creditor's petition for sequestration orders - s.40(1)(g) of Bankruptcy Act 1966 - Local Court ordered judgment debt be paid by instalments - whether judgment was one "the execution of which had not been stayed".

HEARING

SYDNEY

#DATE 29:5:1992

Counsel and Solicitors Mr P. Parker instructed by
for Petitioning Creditor: J.F. Lamich and Co.

Counsel and Solicitors Mr J. Johnson instructed by
for Debtor: Rowlandson and Co.

ORDER

Petition dismissed, with costs.

Note: Settlement and entry of order is dealt with in Bankruptcy Rule 124.

JUDGE1

On the hearing of a creditor's petition for sequestration orders, the debtors oppose the petition on the ground that they had not committed any act of bankruptcy. The point arises in the following circumstances.

1. On 1 May, 1991, the judgment creditor recovered judgment against the debtors in the local court for $4897.13. On 4 September, 1991, pursuant to part 27 of the Local Courts (Civil Claim) Rules, N.S.W. ("the Rules"), the Local Court ordered that the judgment debt be paid by instalments at $200 per month commencing on 23 September. The creditor now claims that the first instalment was not paid on the due date.
   On 8 October, 1991, the debtors were served with a 14 day bankruptcy notice which had been issued on 11 September, 1991, pursuant to a request filed with the court by the petitioning creditor on 13 August 1991.

2. On behalf of the debtors reliance is placed upon the words "the execution of which has not been stayed" in section 40(1)(g) of the Bankruptcy Act 1966, ("the Act"). The debtors also rely in this connection on the provisions of rule 2(13) of the rules, that an order for the payment of a judgment debt by instalments "shall while it remains in force, operate as a stay of the enforcement of the judgment."

3. For the sake of completeness reference should also be made to rule 3(2) to the effect that an order made under, inter alia, rule 2 "shall cease to be in force if the debtor fails to make any payment in accordance with the order, and thereafter the judgment may be enforced for the balance."

4. By rule 3(3) where an order under inter alia rule 2 has ceased to be enforced through the operation of 3(2), process for the enforcement of the judgment shall not be issued except on affidavit evidence as to how the order came to cease to be in force. There is no evidence that such an affidavit was filed in the present case.
   In Re Moss Ex parte Tour Finance Limited (1968) 13 FLR 101, Gibbs J explained the meaning of…