Re Horvath, Gabor (Senior)

[1996] FCA 456

IN THE FEDERAL COURT  No. VN 478 of 1996
OF AUSTRALIA
EXERCISING FEDERAL
JURISDICTION IN BANKRUPTCY  

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA

RE :  GABOR HORVATH (SENIOR) and AGOTA HORVATH
  Judgment Debtors
EX PARTE:  GABOR HORVATH (SENIOR) and AGOTA HORVATH
  Applicants
  and
  COMMONWEALTH BANK OF AUSTRALIA
  Respondent
COURT:         NORTHROP J
DATE: 29 MAY 1996
PLACE:         MELBOURNE

REASONS FOR JUDGMENT

In this matter, Gabor Horvath (Senior) and Agota Horvath ("the Applicants") appeared in person. They are seeking an order that a bankruptcy notice served upon them be set aside. The background facts can be stated shortly. On 24 February 1995 a default judgment for recovery of land and debt was entered against the Applicants in the Supreme Court of Victoria in matter No.9168 of 1994. The judgment creditor, the Commonwealth Bank of Australia ("the Bank") was the plaintiff in that action. There were three defendants to the Supreme Court action namely the Applicants and their son Gabor
Horvath (Junior). The judgment of the Supreme Court was:-

"The Plaintiff recover possession of the land described in the Statement of Claim on the Writ as the land being Lot 5 on Plan of Subdivision 209632N and more particularly described in Certificate of Title Volume 9801 Folio 263 and being the land situate and known as factory 1 and factory 2, 9 Superior Drive, Dandenong South, Victoria ("the land") and that the First and Second Defendants pay the Plaintiff $295,287.01, $43,119.92 interest and $410.00 costs."

The Applicants were the first and second defendants named in that judgment. No judgment was entered against the third defendant, Gabor Horvath (Junior).

On 12 March 1996, a bankruptcy notice based on the judgment debt was issued in which the Applicants were named as the judgment debtors and the Bank was named as the judgment creditor. The bankruptcy notice which is in apparent conformity with paragraph 40(1)(g) of the Bankruptcy Act 1966 required compliance by the Applicants within 14 days. Affidavits which have been filed show that the bankruptcy notice was served on Gabor Horvath (Senior) on 29 March 1996 and on Agota Horvath on 24 March 1996.

By application filed on 11 April 1996, the Applicants sought orders that the bankruptcy notice be set aside and that the time for compliance with the notice be extended. It shall be noted that by 11 April 1996 the time for compliance with the notice served on Agota Horvath had expired. The application for the extension of time must have been made under subsection 41(6A) of the Bankruptcy Act but this provision should not have applied to Agota Horvath. The return date of the application was stated to be 29 April 1995, an impossibility. No order for extension of time for compliance with the
bankruptcy notice had been made.

On 29 April 1996 the application came on for hearing before a Deputy District Registrar of the Court exercising powers under paragraph 31A(1)(h) of the Bankruptcy Act. The Registrar adjourned the hearing to 8 May 1996 and extended the time for compliance with the bankruptcy notice to 1600 hours on 8 May 1996. There is a notation on the report of listing that the extension of time was made under paragraph 41(6B)(b) although questions arise whether this could be done.

On 8 May 1996, another Deputy District Registrar dismissed the application. By application filed on 15 May 1996, the Applicants sought a review of the decision of the Deputy District Registrar made on 8 May 1996 and for an order that the bankruptcy notice be set aside.

In all probability, the Applicants have no standing to seek this review since the time for compliance with the bankruptcy notice has long expired. Nevertheless the Court considered the merits of the review by way of a hearing based on the evidence before the Court.

The two substantive grounds relied upon by the Applicants are that the bankruptcy notice was not served on Mrs Horvath and that for some reason the judgment is bad because the Bank is trying to double up on the amount owing to it.

There is a very clear affidavit sworn by Eva Preac concerning the service of the bankruptcy notice. Although Mrs Horvath speaks English, apparently she also speaks Hungarian, and Ms Preac, who served the bankruptcy notice, spoke to her in Hungarian. On the face of that affidavit, there was a valid service. Mrs Horvath expresses a view that she thought the person serving, who was a woman, was seeking her husband and did not understand what was taking place. The bankruptcy notice was, in fact, left at her feet at the time of service and I am satisfied on the evidence before me that service occurred at the time specified in the affidavit of Ms Preac.

It is also argued that because of the nature of the judgment debt upon which the bankruptcy notice is founded, the bankruptcy notice is bad. The action brought by the Bank in the Supreme Court was against Mr and Mrs Horvath and their son. There was a default judgment against Mr and Mrs Horvath. Thereafter the Bank continued its action against the son Gabor Horvath (Junior) and eventually orders were made in the Supreme Court on 2 April 1996. Those orders included an order for the sale of the land over which the Bank held a mortgage. The sale was to enable payment to be made from the proceeds of the sale of the amount owed by the son. There is an appeal pending, I am told, from that judgment. The land has not been sold. It was argued that the continuation of the proceedings in the Supreme Court against the son are of such a nature as to vitiate or have some effect on the judgment which had been obtained against the two Applicants. That judgment in the Supreme Court is still in existence. It must be acted upon until it is set aside. There has been no attempt to have it set aside. What has happened as far as the son is concerned, does not affect that judgment.

Accordingly, as as the present application is based upon the judgment debt and its validity, the application must fail. The fact that this application to have the bankruptcy notice set aside and time for its compliance extended is not the end of the story. If the Bank determines to proceed with the petition, the matters can be raised at the hearing of the petition.

It is always difficult in cases of this kind, where a debtor appears in person, in an area where legal advice is of great importance. If opposition is to be taken to any petition, particularly in regard to the bankruptcy notice, it is important that the opposition be supported by affidavits setting out in a clear manner what are the facts which the debtors say are relevant for the purposes of determining the matter. At the present time, the only order I make is that the application to have the bankruptcy notice set aside be dismissed.

I order that the judgment creditor's costs be reserved.

I certify that this and the preceding four (4)  pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Northrop.

Associate:

Date:

Counsel for the applicants  The applicants appeared in person

Solicitors for the applicants  -

Counsel for the respondent  Mr A Sharpe

Solicitors for the respondent  Lander & Rogers