Re Nath, Vijendra Ex Parte Nath, Vijendra

[1996] FCA 868

CATCHWORDS

BANKRUPTCY - bankruptcy notice - personal service - whether counterclaim, set-off or cross-demand within s 40(1)(g) of the Bankruptcy Act 1966 (Cth) - whether sufficient evidence - whether claim made bona fide - whether could not have been set up - stay of execution of judgment after service of bankruptcy notice.

Bankruptcy Act 1966 (Cth) s 31A(1), 31A(6), 31A(7), 40(1)(g), 309(2)
Bankruptcy Rules r 15

Ginnane v Diners Club Ltd (1993) 42 FCR 90
Re Kwiatek;  Ex parte Big J Ltd v Pattison (1989) 21 FCR 374
Re Ditfort;  Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347
Re Hudson;  Ex parte G E Crane & Sons Ltd (1990) 25 FCR 318
Re Rosenberg;  Ex parte Westpac Banking Corporation, (unreported, 21 July 1993, Sweeney J )
Baldry v Jackson [1976] 1 NSWLR 19
Re O’Sullivan;  Ex parte O’Sullivan (1995) 57 FCR 145
Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346
Re Stokvis [1934] 7 ABC 53
Re Jocumsen (1929) 1 ABC 82
Re Johnson;  Ex parte Johnson v Tonkin (1994) 53 FCR 70
Re Frasersmith;  Ex parte J Blackwood & Son Ltd (1992) 36 FCR 144
Re Schekeloff;  Ex parte Schekeloff v Hopkins Group Pty Ltd (1989) 22 FCR 407

RE VIJENDRA NATH;  EX PARTE VIJENDRA NATH and METWAY BANK LIMITED
No QN 472 of 1996

Cooper J
Brisbane
2 October 1996

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND

No QN 472 of 1996

RE:  VIJENDRA NATH

EX PARTE:              VIJENDRA NATH

Judgment Debtor

AND:  METWAY BANK LIMITED
  ACN 010 831 722

Judgment Creditor

JUDGE MAKING ORDER:          Cooper J
WHERE MADE:  Brisbane
DATE OF ORDER:  2 October 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The application filed 24 June 1996 be dismissed.

2. The judgment debtor pay the judgment creditor’s costs of and incidental to the application, including reserved costs, to be taxed if not agreed.

Note:Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

No QN 472 of 1996

RE:  VIJENDRA NATH

EX PARTE:              VIJENDRA NATH

Judgment Debtor

AND:  METWAY BANK LIMITED
  ACN 010 831 722

Judgment Creditor

CORAM:  Cooper J
PLACE:  Brisbane
DATE:  2 October 1996

REASONS FOR JUDGMENT

Introduction
  By application filed on 24 June 1996, Vijendra Nath seeks review of an order made by the Registrar in Bankruptcy for the Bankruptcy District of the State of Queensland (“the Registrar”) dismissing Mr Nath’s application to have bankruptcy notice number 472 of 1996 set aside.  The ground relied upon by Mr Nath was that the bankruptcy notice was not personally served upon him in accordance with the provisions of the Bankruptcy Act 1966 (Cth) (“the Act”) and the Bankruptcy Rules in force under the Act (“the Rules”). Mr Nath’s application, insofar as it relates to service of the bankruptcy notice, is an application under s 31A(6) of the Act for review of the exercise by the Registrar of a power delegated to him pursuant to s 31A(1) of the Act. As such, the application has proceeded as a hearing de novo on the evidence presented to the court on the hearing of the application (Ginnane v Diners Club Ltd (1993) 42 FCR 90 at 94 (FC)).

Mr Nath also seeks a declaration that he has a counterclaim, set-off or cross-demand of a kind referred to in s 40(1)(g) of the Act and, obliquely, raises the issue of a stay of execution of the judgment upon which the bankruptcy notice in question is founded. These issues were not argued before the Registrar. However, there does not appear to be anything in s 31A(6) or s 31A(7) of the Act which would limit the court, on an application pursuant to s 31A(6), to a consideration of only those issues argued before the Registrar. Indeed, that the court is exercising original and not appellate jurisdiction in hearing such an application suggests that no such limitation should be imposed - the court is in reality exercising a power conferred initially upon it (see Re Kwiatek;  Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 381).

I turn now to deal with each of the issues raised by Mr Nath in support of his application.

Service
  The judgment upon which the bankruptcy notice in question is founded was summarily obtained by the judgment creditor in the Magistrates’ Court at Brisbane on 25 January 1996.  Judgment was entered against Mr Nath on that day in the sum of $15,622.60.  On 18 March 1996 the judgment creditor successfully applied for the issue of a bankruptcy notice directed to Mr Nath claiming payment of the judgment debt within fourteen days of service of the notice upon him.

On 21 March 1996 Mr Nath attended at the Magistrates’ Court at Brisbane for the hearing of an application by him to have the summary judgment set aside.  Also present at
the Magistrates’ Court for that hearing was Nina Bognuda, a solicitor in the employ of Gadens Ridgeway, the solicitors for the judgment creditor.  Before the hearing by the Magistrate, Ms Bognuda attempted to serve upon Mr Nath an affidavit which exhibited a letter previously sent to him by Gadens Ridgeway.  Mr Nath looked at the letter, indicated that he had already received it and said that he did not want the affidavit.

In the event, Mr Nath’s application was dismissed with costs.

The alleged service of the bankruptcy notice occurred outside the Magistrates’ Court after the hearing and determination of Mr Nath’s application.  Ms Bognuda has sworn an affidavit of service of the notice which, excluding the formal parts, is as follows :-

“1.On 21 March 1996 I served VIJENDRA NATH with the Bankruptcy Notice herein by delivering a true copy thereof signed and stamped by the Deputy Registrar in Bankruptcy to VIJENDRA NATH personally outside the Magistrates Court at Brisbane at 179 North Quay, Brisbane in the State of Queensland.

2.Mr Nath was present at the Magistrates Court as a result of an unsuccessful application filed by him against the Judgment Creditor on which application I had appeared on behalf of the Judgment Creditor.

3.VIJENDRA NATH subsequently let the said Bankruptcy Notice drop to the ground and walked away from the notice.

4.I identified the person I served as the said VIJENDRA NATH as I had previously met this gentleman and knew of his identity.  I called out ‘Mr Nath’ to which VIJENDRA NATH replied ‘Yes’.  I then stated ‘I am sorry Mr Nath but I hereby serve this bankruptcy notice on you.’ And I then placed the Bankruptcy Notice in VIJENDRA NATH’s hand.  VIJENDRA NATH said ‘No’ and dropped the Bankruptcy Notice and walked away from it.”

On 4 April 1996, Ms Bognuda sent a copy of the bankruptcy notice to Mr
Nath by ordinary post under cover of a letter which said :-

“We refer to the service of the bankruptcy notice on behalf of our client on you on 21 March 1996.

We confirm that although the bankruptcy notice was left by you outside the Brisbane Magistrates Court building at North Quay, that the Magistrates Court advised us that they would be forwarding that document to you by way of mail.

We enclose a further copy of the notice for your attention.”

Before me, Ms Bognuda was cross-examined by Mr Nath.  Her oral evidence did not differ in any significant respect from that set out above.

According to Mr Nath, Ms Bognuda did not at any time use the words “bankruptcy notice” or otherwise indicate that the document she was purporting to serve on him was a bankruptcy notice.  Mr Nath’s evidence was that he thought Ms Bognuda was attempting to re-serve him with the affidavit mentioned above which annexed a letter already received by him and which he had already indicated he did not want.  Mr Nath submits that if the notice had been served upon him as alleged, there would have been no need to post a copy of it to him at a later date.  In part Mr Nath said in evidence :-

“And Ms Bognuda was there?---I - Ms Bognuda tried to serve me the affidavit that she had served me at Magistrate’s Court earlier, outside the chambers.

Well I put it to you that Ms Bognuda said to you in the terms of her affidavit that she had a bankruptcy notice and she was serving that bankruptcy notice?---That is not correct, Mr Davies.  The words I heard was the same words she said to me outside the chambers, ‘I’ve got to serve this on you’, and I had a quick glance at it and I thought it was the same affidavit she was trying to serve because I’ve already received, I said to her earlier, because I returned it to her.  She was trying to reserve [sic] this on me and I made it clear that I have already received a letter.  That I know about it.

Well, I put it to you as the bankruptcy notice and you let it fall to the ground and, in Ms Bognuda’s words, ran away?---Well, there was no knowledge of -
there was no words ‘bankruptcy notice’ used.  If it was used I would have stopped and taken it because I consider a bankruptcy notice to be a serious document.”

I accept Ms Bognuda’s evidence and reject that of Mr Nath where it is in conflict.  Ms Bognuda swore an affidavit on 24 April 1996 setting out the circumstances in which she had served the bankruptcy notice.  That affidavit was sworn before Mr Nath filed any material touching on the events of 21 March 1996, and was prepared from a note made by Ms Bognuda on 21 March 1996.  Her near contemporaneous note contains the following :-

“I went down and went outside the court building and waited for Nath to come out.  I waited about ten minutes.  He came out and I ran after him calling, ‘Mr Nath, Mr Nath’.  He stopped and said, ‘Yes’.  I said, ‘I have instructions to serve this bankruptcy notice on you’.  He said, ‘No’.  I touched his hands with the notice and he said, ‘I’m not taking it’, and it dropped to the ground.  I said, ‘You have to’.  I said, ‘It will be left there’.  Nath almost ran off.”

I accept Ms Bognuda’s evidence that a copy of the bankruptcy notice was later posted to Mr Nath because she knew Mr Nath had left the notice on the ground outside the Magistrates’ Court and she wanted to make sure that he was aware of the dates within which he had to comply with the notice in order to avoid the commission of an act of bankruptcy.

I do not accept Mr Nath’s evidence that he did not know what document Ms Bognuda purported to serve on him on 21 March 1996 nor his evidence that if he had known the document was a bankruptcy notice he would have accepted service of it because, in his words, “I know it is a serious document.”  On his own evidence he knew Ms Bognuda was attempting to serve the document on him and he, at a minimum, glanced at the document she handed to him.  There is no objective reason why, if Mr Nath did not know what the
document was, he would not have asked Ms Bognuda, or as he had done before the hearing before the Magistrate, looked at the document to decide if he needed or wanted it.  The only rational explanation for Mr Nath’s conduct in refusing to accept the document from Ms Bognuda and allowing it to fall to the ground is that he knew that the document was a bankruptcy notice.

The question remains whether the mode of service of the bankruptcy notice deposed and sworn to by Ms Bognuda is sufficient personal service within the meaning of the Act and the Rules.

Rule 15 of the Rules provides that, unless otherwise ordered by the court under s 309(2) of the Act, service of a bankruptcy notice shall be effected by delivering to the debtor personally a copy of the bankruptcy notice signed and stamped by the Registrar.

In Re Ditfort;  Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347, Gummow J considered what was meant by delivering a bankruptcy notice personally to the debtor within the meaning of r 15 of the Rules. Gummow J said (at 360) :-

“I accept the submission by the respondent to the present application that there may be delivery personally to the debtor of process within the meaning of r 15 of the Bankruptcy Rules, even though the process has not been left in what Patteson J described as the ‘actual corporal possession of the defendant’.  If the debtor were refusing to take such actual corporal possession of the process, but the process server informed the debtor of the nature of the process and left it before or near the debtor so that the debtor had unimpeded and immediate access to the documents, that, in my view, should, in general, be sufficient to comply with r 15.”

That passage has been cited with approval in this court on a number of
occasions (see eg Re Hudson;  Ex parte G E Crane & Sons Ltd (1990) 25 FCR 318 at 319 -320 per Pincus J; Re Rosenberg;  Ex parte Westpac Banking Corporation, unreported, 21 July 1993, Sweeney J at p 18).

The facts of the instant case fall squarely within the circumstances contemplated in those cases as amounting to delivery of the notice personally to the debtor within the meaning of r 15 of the Rules. Ms Bognuda informed Mr Nath that the document she was serving upon him was a bankruptcy notice and placed the notice in his hand or touched his hand with it. Whilst Mr Nath refused to take “actual corporeal possession” of the bankruptcy notice, when it fell to the ground at his feet, Mr Nath had “unimpeded and immediate access” to it.

I am satisfied that Mr Nath was duly served with the bankruptcy notice on 21 March 1996 by Ms Bognuda delivering it to him personally in the circumstances set out in her evidence.  It was suggested by Mr Nath that service on him of the document at the Magistrates’ Court constituted a contempt of court.  The notice was served outside the Magistrates’ Court.  Even if it be contempt of that court to do so, which it is unnecessary to determine, that alone does not invalidate the otherwise effective service in the circumstances of this case (see Baldry v Jackson [1976] 1 NSWLR 19; Re O’Sullivan;  Ex parte O’Sullivan (1995) 57 FCR 145).

Counterclaim, Set-off or Cross-demand
  For reasons which will become apparent, it is necessary to have regard to the manner in which Mr Nath has conducted his application and in particular to the opportunities
afforded to Mr Nath to bring forward evidence in support of his asserted counterclaim and his responses to those opportunities.

Mr Nath filed his original application to have the bankruptcy notice set aside on 4 April 1996 together with an affidavit in support of the application.  In the affidavit Mr Nath asserted that a cross-claim was “being prepared” and would be “filed with Registrar in due course.”  The affidavit stated that “a full and comprehensive affidavit setting out dates, details and reasons to oppose this notice if it was properly served will be filed within the next 7 days.”

On 10 April 1996 Mr Nath filed a further affidavit in support of his application which, in paragraphs 4, 5 and 6, set out Mr Nath’s “cross claim against the Metway Bank Pty Ltd, its officers and directors.”  Paragraphs 4, 5 and 6 of the affidavit contained the following :-

“4.Misrepresentations by the bank! to approve a loan of $20,000.00 then only allow $10,000.00 by Mr Brian Phelps is indeed misleading.

5.An amount of $5000.00 was deposited with Metway Chambers branch.  Bank has a lean [sic] on these funds.  Interest and cumulative compounded interest is also under lean [sic].  Bank and its officers further failed to deduct these amounts from the monies being claimed.

6.Credit charges and dishonour charges of approximately $2800.00 is claimed against the Bank.”

On 24 June 1996 the Registrar ordered that Mr Nath’s application be dismissed with costs.  Later that day Mr Nath filed the application now before me.  The application was listed to be heard on 15 July 1996.  On 15 July Mr Nath’s solicitor requested
an adjournment for a period of four weeks to “obtain copies of the relevant documents and to prepare this matter.”  Spender J adjourned the application to 5 August 1996, a period of three weeks.

No material was filed by or on behalf of Mr Nath between 15 July and 5 August 1996.  On 5 August 1996 Mr Nath’s solicitor sought and was granted the court’s leave to withdraw.  Mr Nath then sought a further adjournment to enable him to attempt to negotiate a settlement with the judgment creditor directly rather than via its legal representatives.  He indicated that if the application was to be heard he would wish to file further material in support of it.  Somewhat curiously, given what had earlier transpired, Mr Nath stated that he required time to organise legal representation for the hearing of the application, indicating that he did not consider himself able to conduct the application.  I adjourned the application to 9.00 am on 8 August 1996 and directed that Mr Nath file and serve any material upon which he intended to rely by 12.00 noon on 7 August 1996.

On 8 August 1996 Mr Nath again appeared in person and filed in court a further affidavit.  The affidavit went primarily to the issue of service but stated that Mr Nath relied upon his affidavit of 10 April 1996 in support of his asserted cross-claim.  When, on 8 August, after cross-examining Ms Bognuda, giving oral evidence and making submissions on the issue of service, Mr Nath was called upon to make submissions in support of the other issues raised in the application, he expressed his understanding to be that the issue of the effectiveness of the service of the notice was to be resolved before any consideration of the other issues.  I indicated to Mr Nath that there was no basis for such an understanding and that such understanding was wrong.  Mr Nath requested that he be given a further day in
which to prepare and file “all the necessary affidavits required.”  I acceded to Mr Nath’s request and adjourned the application to 9.00 am the following day (9 August 1996) directing that Mr Nath file and serve any further affidavit material upon which he intended to rely by 5.00 pm.

On 9 August 1996 Mr Nath appeared and filed an affidavit relevantly containing the following :-

“2.I refer to my previous Affidavit which shows I have a cross demand on the creditor.  My previous Affidavit did not detail my cross demand as I do not believe it was appropriate to do so.

3.I have been requested by this Honourable Court to detail my cross demand, which I now do for the first time.

4.It was my intention to file an application to contest the Bankruptcy Notice when matters were properly attended to by the creditor.  I continue to contest the proper service of the Bankruptcy Notice on me.

5.My cross demand against the creditor could not be raised in any other action as the facts and issues in my opinion are distinct from the creditors action.  In my opinion my action must be a separate action.

6.My cross demand exceeds the amount being claimed by the creditor in its Bankruptcy Notice.

7.On or about March 1995, I approached the creditor for an overdraft and business laon [sic].  I entered the creditor’s Post Office Square (Queen Street, Brisbane) Branch and spoke to a Michael Dunne.  Mr Dunne was the Manager of the Branch.  At this meeting, Mr Dunne informed me of the Banks requirements in general form and requested I produce to him my previous banking records from other banks and details of my busness [sic] Gypsy’s Oyster Bar and Grill.

8.From thereafter I produced the requested documents and information to a Brian Philps [sic] of the creditor.

9.In the same month of March, the landlord of Gypsy’s Oyster Bar and Grill, Mr Hans Van Derdrift demanded arrears in rental from me of $20,000.00.  I had recently taken ownership of the business with various capital outlays I had gone into rent arrears.

10.I informed Mr Van Derdrift, I had secured a $20,000.00 overdraft facility from the creditor and would be able to pay all arrears of rent the following week.  He was not satisfied and demanded something done more positive [sic].

11.Consequently, I requested Mr Van Derdrift to accompany me to the creditors Post Office Square Branch.

12.In the office we met with Brian Phelps.  I explained to Mr Phelps the reason soley [sic] we were there.  In the presence of Mr Van Derdrift Mr Phelps informed us the $20,000.00 overdraft was approved and the funds will be transferred into my account.  Soon, Mr Van Derdrift was satisfied and we left.

13.I have been unable to obtain an affidavit from Mr Van Derdrift because of the shortness of time provided to me.  It will be produced.

14.The $20,000.00 was not transferred to my account.

14(a)Only $10,000.00 was transferred into the account.

15.In this situation, I advised Mr Van Derdrift of the problem.  Mr Van Derdrift took the necessary steps to have me removed from the premises and made arrangements to terminate the lease, I surrendered my possession.

16.The representation I relied upon of the creditor has caused me loss and damage.

17.From information available to me now my loss and damage are as below:

(a)Loss of profit from business - $312,000.00.  This is based on profit of $1,300.00 per week over a 5 yeqar [sic] lease.

(b)Improvements to premises which I had to relinguish [sic] - $65,000.00.

18.I will need to employ an accountant and auditor to substantiate my extent of loss and damage.  An affidavit from my accountant can be filed if requested.  I will need probably a week to obtain his affidavit.

19.The judgment obtained by the creditor in the Magistrates Court is presently on appeal to the District Court of Brisbane.

20.I strongly believe and rely on my Affidavit of 8 August 1996 and the subsequent sections of the Act which deals [sic] with service of bankruptcy notice. I further reinterate [sic] that I have not been
served with a bankruptcy notice accordingly [sic] to the rules of the bankruptcy act.”

In Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346, the High Court (Dixon CJ, McTiernan and Windeyer JJ), in a joint judgment, said (at 350) :-

“... The debtor clearly must satisfy the Court that there exists in him a counterclaim, set-off or cross demand.  ‘Cross demand’ is the word relied upon here.  The appellant cannot satisfy the Court that a cross demand exists by showing no more than that she propounds one and states how she suggests that she can make it out.  In Re Duncan;  Ex parte Modlin (1917) 17 SR (NSW) 152;  34 WN 49, Street J said that the debtor need not satisfy the Court that there are reasonable grounds for believing that he will establish his cross action, but only that he has a bona fide claim which he is fairly entitled to litigate.  This perhaps is expressed too favourably to the debtor.  In Re A Debtor (1958) 1 Ch 81 Roxburgh J said:  ‘But not every demand will suffice.  A demand made in bad faith would not be good enough.  The debtor must satisfy the Court that he has a genuine demand. ... but in my opinion a demand must be more than bona fide:  the Court must be satisfied that it has a reasonable probability of success’ (1958) 1 Ch, at p 99.  Perhaps the standard may be expressed by saying that the debtor must show that he has a prima facie case, even if then and there he does not adduce the admissible evidence which would make out a prima facie case before a court trying the issues that are involved in his counter-claim, set-off or cross demand.”

Despite being afforded, with the indulgence of the court, ample opportunity to put forward evidence in support of his asserted counterclaim, Mr Nath has been unable to adduce any relevant evidence to show that he has a genuine counterclaim that has a reasonable probability of success.  The only evidence consists of assertions by the debtor that such claim exists and exceeds the amount claimed in the bankruptcy notice.  In the absence of any other evidence against which to judge the strength or otherwise of the claim, that is not sufficient.

Furthermore, I have reached the conclusion that the claim propounded by Mr
Nath is not made bona fide. I have formed the view that Mr Nath, by engaging and disengaging solicitors and by repeated requests to be allowed more time to put in material and/or to obtain legal advice, has sought to delay the inevitable institution of bankruptcy proceedings against him. His assertion that he has a counterclaim of a kind referred to in s 40(1)(g) of the Act is, in my view, simply an attempt to delay the matter in the hope that the petitioning creditor will relent. In those circumstances Mr Nath cannot be said to have any claim falling within s 40(1)(g) as interpreted by the High Court in Ebert.

Even if Mr Nath’s counterclaim was genuine and was supported by evidence to suggest a prima facie case or reasonable prospect of success, he has failed to show that the claim was one which could not have been set up in the action in which the judgment founding the notice was obtained.  The test be applied is that stated by Lukin J in Re Stokvis [1934] 7 ABC 53, where his Honour said (at 57) :-

“I take a counter claim, set off, or cross demand which could not be set up as one which, from point of time, or from its nature, or from absence of empowering provisions, or from positive inhibition to do so, could not be set up in the particular case in which judgment was obtained. ... Mere failure to take advantage of the opportunity can hardly be said to be inability.”

Or, as was stated by Henchman J in Re Jocumsen (1929) 1 ABC 82 at 85, the claim was one “which he could not by law set up in the action.”

In the instant case, Mr Nath has put forward various explanations for his failure to set up the asserted claim in the Magistrates’ Court action, none of which satisfy the tests set out above.  In an annexure to the application filed by Mr Nath, he stated that “lack of legal knowledge” and a failure to “provide all facts relating to cross demand due to lack of know-how in preparing documents” were the reasons his claim could not have been set up in
the Magistrates’ Court.  On 8 August 1996 Mr Nath orally gave to the court two reasons for his failure to pursue his counterclaim in the Magistrates’ Court action.  The first was that it was “a separate counterclaim;  two different things.”  Later Mr Nath said :-

“The reason I could not bring, you know, your Honour, in the Magistrates Court because it was not an issue I was going to chase up;  I simply wanted to make peace with the bank and pay up the $10,000 that I had borrowed ...”

(Emphasis added)

Finally, in his affidavit filed on 9 August 1996, Mr Nath said :-

“5.My cross demand against the creditor could not be raised in any other action as the facts and issues in my opinion are distinct from the creditors action.  In my opinion my action must be a separate action.”

There is no doubt that the counterclaim or cross-claim asserted by Mr Nath could, in law, have been raised in the Magistrates’ Court action.  Indeed, an affidavit of Mr Nath filed in the Magistrates’ Court in opposition to the petitioning creditor’s application for summary judgment raises all the matters which Mr Nath now says constitute his counterclaim.  It seems to me that far from being one which could not have been set up in the Magistrates’ Court proceedings, Mr Nath’s asserted counterclaim was in fact set up and rejected in that court.

Mr Nath has failed to establish that he has a counterclaim, set-off or cross-demand of a kind referred to in s 40(1)(g) of the Act. The declaration he seeks will be refused.

Stay
  In the material filed by and on behalf of Mr Nath, reference is made to a notice
of appeal from the Magistrates’ Court judgment which notice has been filed in the District Court and to a possible application for a stay of execution of that judgment.  Any stay of execution obtained now would not affect the validity of the bankruptcy notice nor prevent the petitioning creditor from relying upon non-compliance with it as an act of bankruptcy upon which to base a petition for the sequestration of Mr Nath’s estate.  A judgment which is stayed after service of a bankruptcy notice remains effective to found that notice (see Re Johnson;  Ex parte Johnson v Tonkin (1994) 53 FCR 70; Re Frasersmith;  Ex parte J Blackwood & Son Ltd (1992) 36 FCR 144; Re Schekeloff;  Ex parte Schekeloff v Hopkins Group Pty Ltd (1989) 22 FCR 407).

Conclusion
  Mr Nath has failed on each of the grounds raised by his application.  The application will be dismissed with costs.

THE COURT ORDERS THAT:

1. The application filed 24 June 1996 be dismissed.

2. The judgment debtor pay the judgment creditor’s costs of and incidental to the application, including reserved costs, to be taxed if not agreed.

I certify that this and the preceding fourteen (14) pages are a true copy of the reasons for judgment of his Honour Justice Cooper.

Date:2 October 1996

Associate

Judgment Debtor in Person

Solicitor for the Judgment Creditor:             Gadens Ridgeway

Date of Hearing:  5, 8 and 9 August 1996

Place of Hearing:  Brisbane

Date of Judgment:  2 October 1996