Re Geard; Ex parte Reid

Frederick John Geard has applied to the court to have a bankruptcy notice set aside or, in the alternative, to extend the time for compliance with the notice until the hearing of an appeal pending in the Supreme Court of New South Wales. The bankruptcy notice, issued on 8 October 1993 and served on 22 October 1993, requires the debtor to pay a judgment debt of $942,722 plus interest within 21 days. The debtor filed the application on 27 October 1993, prior to the expiry of the compliance period. The bankruptcy notice was based on a judgment recovered by the creditors in the Supreme Court of New South Wales, where the debtor was one of three defendants. The creditors, as executors of the estate of the late A.T. Reid, sued the debtor and others for an indemnity related to a failed business venture. The debtor's application includes a request to extend the time for compliance with the bankruptcy notice until the appeal against the judgment is disposed of by the Court of Appeal.

The court considered whether it should exercise its discretion to grant an extension of time for compliance with the bankruptcy notice. The court noted that the application is governed by subsection 41(6A) of the Bankruptcy Act 1966, which allows for the extension of time for compliance with a bankruptcy notice under specific circumstances. The court concluded that the appeal against the judgment does not constitute an application to set aside the judgment within the meaning of subsection 41(6A). However, the court found that the debtor's application, which includes a request to set aside the bankruptcy notice, falls within the provision as it was filed before the expiration of the time fixed for compliance.

The court then considered how to exercise its discretion. The debtor did not apply for a stay of proceedings pending the outcome of the appeal, and the judgment is a final judgment with execution not stayed. The court held that it would require special circumstances to extend the time for compliance with the bankruptcy notice when no stay of execution has been sought. The court also noted that the refusal of the application would not affect the debtor's status but would likely result in the debtor committing an act of bankruptcy, which could be significant for creditors and the administration of the bankrupt estate if the appeal is dismissed.

The court ultimately decided to refuse the application for an extension of time and dismissed the application to set aside the bankruptcy notice. However, to provide the debtor with an opportunity to comply with the bankruptcy notice, the court extended the time for compliance by one further week from the date of the judgment. The debtor was ordered to pay the costs of the application.