Re Monk, S.R. Ex parte Australia & New Zealand Banking Group Ltd

[1993] FCA 932

JUDGMENT No. ........ ....,..... ........ .,.. 93.2 ,93

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY )	NO. NN 203 of 1993

1

GENERAL DIVISION 1

RE :  SCOTT RONALD MONK

Debtor

EX PARTE:  AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED

Creditor

30 NOVEMBER 1993

REASONS FOR JUDGMENT

RECFI\lFn

LOCKHART J.

16 D E C 1993

This is an application by Scott Ronald Monk, the applicant, for various orders relating to a bankruptcy notice that was issued at the request of Australian and New Zealand Banking Group, the creditor, on 1 February 1993. The period within which the matter could be served was extended by order of a registrar on 19 July ! ?93 to 1 February 1994. Personal service of the bankruptcy notice could not be effected, so the creditor sought and obtained on 14 July 1993 an order for substituted service of the notice. The notice required the applicant to comply with it "within fourteen days after 4 August 1993, excluding that day".

be extended (presumably pursuant to S. 41(6A) of the Bankru~tcv

It is common ground that the last day for compliance with the requirements of the notice was 18 August 1993.

The applicant filed an application on 17 September 1993 in
this Court seeking an order that the bankruptcy notice be set
aside and that time for compliance by him with its requirements

1966 (the Act). That application was heard by a registrar

on 25 October 1993, the application was dismissed and the
applicant ordered to pay the cost of the creditor.

It is well established that time for compliance with the requirements of a bankruptcy notice may be extended after the expiration of the time limited by the notice for compliance, provided an application to set aside the notice is made within the time so limited: Re Lentini (1991) 29 FCR 363 per Neaves J at 372; Streimer v Tamas (1981) 54 FLR 253; Thuraood v National Bank of Australia Limited (1981) 53 FLR 51; Re Conte (1990) 27 FCR 120; Van Reesema v Australian Growth Resources Cor~oration

Ptv Limited (1987) 75 ALR 311 at 320 and 321; Re Blever: Ex parte TCN Channel 9 Ptv Limited, unreported, Gummow J, 2 March 1993.

The application to the Court to set aside the notice which

came before the registrar on the 25 October was not filed until

17 September 1993. Plainly then, the application to set aside

by the registrar for compliance with the requirements of the	the notice was not filed before the expiration of the time fixed
notice under S. 41(6A). Therefore, the registrar correctly declined to extend time for compliance with the requirements of the notice and dismissed the application. The first order which is sought is an order that the Court exercise its power under S. 14(5) to review the order of the registrar made on 25 October
1993. In my opinion, the registrar was correct, so I decline to set aside the registrar's order.
Counsel for the applicant argued that the Court is empowered to exercise its powers under section 33(l)(c) of the Act to extend the time for the applicant to file with the registrar an affidavit of the kind contemplated by S. 41(7). Counsel's argument was not strongly persisted in because of the requirement of sub-S. (7) that the debtor's aff idavit must be filed with the registrar "before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice". This was not done, and for the same reasons as led to the conclusion that there could be no exercise of the power to extend the time in the circumstances of this case under sub-S. (6A), there can be no exercise of the power under sub-S. 7.
That leaves the principal argument of counsel for the applicant, namely, that the Court should exercise its powers under S. 33(l)(c) to extend time to the applicant to give notice
notice on the ground that there was a misstatement in the notice, to the creditor that he disputes the validity of the bankruptcy
namely that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due: see S. 41(5).
As the applicant did not comply with the requirements of the notice within the time fixed by the registrar, it follows that, assuming the notice is valid, the applicant committed an act of bankruptcy on 19 August 1993. Notwithstanding that, it is, in my oplnion, competent for the Court to exercise its powers under section 33(l)(c) to extend the time in which a debtor may give notice to the creditor that he disputes the validity of the notice on the ground of a misstatement in the notice, namely, that the amount stated as being due to the creditor exceeds the amount in fact due.
I agree with the judgment of Pincus J in Re Wilhelmsen: Ex parte Gould (1986) 11 FCR 107 where his Honour extended time to the debtor in that case to give notice under S. 41(5) of the Bankru~tcy Act and then set the notice aside. That was a case (as is the present case) where the debtor did not give notice to the creditor that he disputed the validity of the notice on the ground of misstatement within the time allowed for payment. I am asked by counsel for the applicant to exercise the Court's discretion in his favour under ss. 41(5) and 33(l) (c) because both the applicant and the creditor will be taken to have known that there was, in fact, an overstatement in the bankruptcy
based upon a judgment obtained in the Supreme Court of New South notice of the amount actually due by the debtor to the creditor. The amount claimed in the bankruptcy notice as being due is
Wales on 10 February 1992 in the sum of $100,000, together with interest, making a total claim in the notice of $111,669.73. It is common ground that the applicant made payments to the creditor in reduction of the judgment debt on four occasions between March and September 1992 in a total sum of $500.
There is, therefore, an overstatement of the amount in the notice of the amount in fact due by the applicant to the creditor. The consequence under the general law - I put aside for the moment S. 41(5) - of overstatement in a bankruptcy notice of amounts due by a debtor to a creditor is serious and it is sufficient for present purposes if I refer to the principle expounded by Clyne J in Re Prossimo: Ex Darte De Marco (1952) 16 ABC 86 at 88. The authorities are collected by Morling J in his judgment in Re Donald David Greenhill: Ex Darte Mver NSW Limited
(1984) 5 FCR 84.
There are subsequent decisions of the courts to the same effect. However, section 41(5) provides:

" A bankruptcy	n o t i c e	i s not	i n v a l i d a t e d	by
reason	o n l y t h a t	t h e	sum	spc : i f i e d i n t h e

n o t i c e a s the amount due to t h e c r e d i t o r

exceeds t h e amount i n f a c t due, un le s s t h e

d e b t o r , w i th in t h e t i m e a l lowed f o r payment,

g i v e s	n o t i c e	t o	t h e	c r e d i t o r	t h a t	he
d i s p u t e s	t h e	v a l i d i t y o f	t h e	n o t i c e	on	t h e

ground o f the mis-s tatement . "

given out of time, the bankruptcy notice cannot be invalidated	Therefore, unless the Court allows the notlce of dispute to be	by reason of the $500 misstatement by way of overstatement.
There is no evidence before the Court as to why it is that the applicant did not raise the question of invalidity of the bankruptcy notice or overstatement of the amount claimed in it until 25 October 1993 before the registrar. That seems to be the first date on which that point was raised.
The time that elapsed between the failure to comply with the notice and the hearing before the registrar was a little over two months. If the application to extend time is granted it will mean that the date of the commission of the relevant act of bankruptcy and failure to comply with the requirements of the notice in this case would be postponed for a period of in excess of three months.
I take into account the fact that there has been a long standing dispute between the parties in this case which has resulted in extensive litigation between them. Overall I am not persuaded that this is a proper case for the Court to exercise its discretion in favour of the applicant under S. 33(l)(c) by extending the time within which the applicant may dispute the validity of the bankruptcy notice under S. 4 1 ( 5 ) . Accordingly, the notice stands as a good notice and the application of 3 November is dismissed.

The applicant shall pay the costs of the respondent of the

application including reserve costs, if any.

I certify that this and the preceding five (5) pages are a true'copy of the reasons for judgment herein of the Honourable Mr Justice Lockhart.

Associate %L&,! .-l 7 q L . q

W:  30 November 1993

Counsel for the Debtor	C H O W
Solicitors for the Debtor	Comino & Dunn
Counsel for the Creditor	C E Adamson

S o ~ ~ ~ i t o r s for the Creditor : Norton Smith & CO

Date of Hearing	30 November 1993
Date of Judgment	30 November 1993