Re Italiano, Michael Ex Parte Italiano, Michael

[1996] FCA 829

NOT SUITABLE FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION                 )
BANKRUPTCY DISTRICT OF THE STATE  )    NN 2018 of 1996
OF NEW SOUTH WALES               )

RE:MICHAEL ITALIANO

Debtor

EX PARTE:MICHAEL ITALIANO

Debtor/Applicant

AND:     OMAR YANIERI and EDITH YANIERI

Creditors/Respondents

CORAM:    Burchett J.
PLACE:    Sydney
DATE:     3 September 1996

REASONS FOR JUDGMENT

BURCHETT J.:

In this matter, an application is made by a debtor for an extension of time to answer a bankruptcy notice on the ground that the judgment founding the bankruptcy notice is subject to appeal to the Court of Appeal of New South Wales.  It is a judgment in the District Court which was given on 1 April 1996 in the sum of $100,000 plus interest and costs, and as the debt had been long outstanding the total amount of principal and interest is $203,845.47.

The appeal has undoubtedly been prosecuted with reasonable dispatch.  No criticism has been advanced in that regard.  What is pointed out, however, by counsel for the

judgment creditor is that the judgment was stayed for a mere 14 days, after which no further application has been made either to the District Court or to the Court of Appeal for any stay.  The bona fides of the appeal is attacked, and certainly the District Court Judge expressed himself in strong terms as not accepting the account given by the judgment debtor.  Also, he referred to certain objective matters which on the face of the judgment appear to lend it considerable support.  However, I am not prepared to condemn the bona fides of the debtor merely on a reading of the judgment. 

The law on the subject has been authoritatively expressed, so far as this court is concerned, in Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137 and in Adamopoulos v Olympic Airways SA (1990) 95 ALR 525. In general, a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of a debtor, where an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings, provided that the appeal is based on genuine and arguable grounds. But it will be observed that that principle is expressed specifically in relation to the court proceeding to sequestrate the estate.

A somewhat different question arises at the stage of a bankruptcy notice.  I accept that I have a discretion to uphold the application, but in my opinion that discretion, in a case such as the present, will generally be better exercised by permitting the bankruptcy notice to have its normal effect, and leaving it to the debtor to obtain an appropriate adjournment of any petition.  I say generally in cases such as the present.  I do not mean by that to imply that in all cases, or even perhaps the majority of cases, that is the appropriate course; but where, as in this case, there has been no attempt to obtain a stay of the judgment below, it seems to me that, on the imprecise understanding of the facts which is all I can, in the nature of things, have, it would be inappropriate for me to prevent the commission of an act of bankruptcy.  An act of bankruptcy may very well occur, if I withhold my hand, and may very well rightly occur, and lead to appropriate enforcement in due course.

Accordingly, I refuse the application as made at this stage, and I order that the debtor pay the creditors' costs including reserved costs.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:

Date: 18 September 1996

Solicitors for the Debtor/

Applicant:Brown & Partners

Counsel for the Creditors/

Respondents:  Mr B. Skinner

Solicitors for the Creditors/

Respondents:  Thurlow Fisher

Date of hearing:                 3 September 1996