Re Perry, Emily Phyllis Gertrude Ex Parte Johnston Withers & Associates
[1996] FCA 402
•27 MAY 1996
CATCHWORDS
BANKRUPTCY - application for an extension of time to comply with the bankruptcy notice - whether the Court has jurisdiction to extend the time for compliance with the bankruptcy notice even though an application to set aside the bankruptcy notice was not made until after the time fixed for compliance - general power of the Court to extend the time conferred by s 33 of the Bankruptcy Act 1966 (Cth) does not include a power to extend the time fixed for compliance with a bankruptcy notice.
Bankruptcy Act 1966 (Cth) ss 33, 41(6A) and 41(6C)
Re Carter and Another; ex parte National Mutual Trustees Ltd (1995) 129 ALR 455
James v Abrahams (1981) 51 FLR 16
Makhoul v Barnes (unreported, Full Federal Court, 24 November 1995)
No 154 of 1996
Re: EMILY PHYLLIS GERTRUDE PERRY Debtor
Ex Parte: JOHNSTON WITHERS & ASSOCIATES Judgment Creditor
Branson J
Adelaide
27 May 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
SOUTH AUSTRALIA DISTRICT REGISTRY )
)
GENERAL DIVISION ) No 154 of 1996
)
BANKRUPTCY DISTRICT )
)
OF THE STATE OF SOUTH AUSTRALIA )
Re: EMILY PHYLLIS GERTRUDE PERRY
Debtor
Ex Parte: JOHNSTON WITHERS & ASSOCIATES
Judgment Creditor
MINUTES OF ORDER
CORAM: Branson J
PLACE: Adelaide
DATE: 27 May 1996
THE COURT ORDERS THAT:
The application of the debtor dated 24 April 1996 is dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
SOUTH AUSTRALIA DISTRICT REGISTRY )
)
GENERAL DIVISION ) No 154 of 1996
)
BANKRUPTCY DISTRICT )
)
OF THE STATE OF SOUTH AUSTRALIA )
Re: EMILY PHYLLIS GERTRUDE PERRY
Debtor
Ex Parte: JOHNSTON WITHERS & ASSOCIATES
Judgment Creditor
REASONS FOR DECISION
CORAM: Branson J
PLACE: Adelaide
DATE: 27 May 1996
Emily Phyllis Gertrude Perry ("Mrs Perry") by application dated 24 April 1996 has sought the following orders:-
"1.Under section 41 (sub-section 6C) extend the time to submit this application and supporting affidavits to today's date.
To set aside bankruptcy notice No. 156 of 1996 as no credits have been allowed."
On the application of Johnston Withers & Associates Pty Ltd ("the judgment creditor") a bankruptcy notice dated 6 March 1996 was issued against Mrs Perry ("the bankruptcy notice"). A licensed process server has sworn an affidavit in which he
deposes to having served Mrs Perry personally with a stamped copy of the bankruptcy notice on 25 March 1996. Mrs Perry has asserted that the bankruptcy notice was served on her on 26 March 1996. Nothing flows from this dispute as to the precise date upon which the bankruptcy notice was served upon Mrs Perry. I shall act on the basis of the sworn evidence of the licensed process server.
The time fixed for compliance with the bankruptcy notice was within 14 days after personal service of the bankruptcy notice. That time expired at midnight on 9 April 1996. As noted above, the present application was not taken out until 24 April 1996.
The reference in the application to s41(6C) may be assumed to be an error. Section 41(6C) is a qualification upon the power given to the Court and the Registrar respectively by subsections (6A) and (6B) of s41 to extend time for compliance with a bankruptcy notice. Its terms are set out below.
Section 41(6A) authorises the Court to extend the time for compliance with a bankruptcy notice. It provides as follows:-
"(6A)Where, before the expiration of the time fixed by the Court or the Registrar for compliance with the requirements of a bankruptcy notice -
(a)proceedings to set aside the judgment or order in respect of which the bankruptcy notice was served have been instituted by the debtor; or
(b)an application to set aside the bankruptcy notice has been filed with the Registrar,
the Court may, subject to sub-section (6C), extend the time for compliance with the bankruptcy notice."
So far as is here relevant, s41(6C) provides as follows:-
"(6C)Where -
(a)a debtor applies to the Court ... for an extension of the time for complying with a bankruptcy notice on the ground that proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; and
(b)the Court ... is of the opinion that the proceedings to set aside the judgment or order -
(i)have not been instituted bona fide; or
(ii)are not being prosecuted with due diligence,
the Court ... shall not extend the time for compliance with the bankruptcy notice."
It is not suggested that Mrs Perry has taken any proceedings to set aside the judgment in respect of which the bankruptcy notice was issued. For this reason, neither paragraph (a) of s41(6A) nor paragraph (a) of s41(6C) has any application in this case.
This application seeks an order setting aside the bankruptcy notice. However, such application was not taken out before the time fixed by the Court or the Registrar for compliance with the requirements of the bankruptcy notice as required by paragraph (b) of s41(6A). Does the Court nonetheless have
jurisdiction to extend the time for compliance with the bankruptcy notice?
This case is to be contrasted with cases in which paragraph (a) of s41(6A) may be relied upon even though the application to set aside the bankruptcy notice was not made until after the time fixed for compliance with the bankruptcy notice (see, for example, Re Carter and Another; ex parte National Mutual Trustees Ltd (1995) 129 ALR 455). In this case neither paragraph (a) nor paragraph (b) of s41(6A) can be invoked by Mrs Perry.
The general power of the Court to extend time conferred by s33 of the Act does not include a power to extend the time fixed for compliance with a bankruptcy notice (see s33(1)(c)). As was pointed out by Deane and Lockhart JJ in James v Abrahams (1981) 51 FLR 16 at 22 the terms of s33 of the Act "preclude the implication of a general inherent power in the Court to extend the time fixed by the Registrar for compliance with the requirements of a bankruptcy notice". I conclude that the Court has no jurisdiction in the circumstances of this case to extend the time within which Mrs Perry was required to comply with the bankruptcy notice.
My above conclusion leads to the result that Mrs Perry committed an act of bankruptcy upon her failing to comply with the requirements of the bankruptcy notice by midnight on 9 April 1996. The existence of that act of bankruptcy, upon which the judgment creditor may rely, means that no point would be served by the Court now considering her application to set aside the bankruptcy notice.
In this case Mrs Perry's attack on the bankruptcy notice does not go to its form. She seeks to raise the question of whether there is in truth a debt underlying the judgment referred to in the bankruptcy notice. As was made clear in the judgment of the Full Court of the Federal Court in Makhoul v Barnes (unreported, Full Federal Court, 24 November 1995) it seems now to be accepted that a court will, on the application of a debtor in an appropriate case, go behind the judgment referred to in a bankruptcy notice on a valid application to set it aside. As that case recognised, it is also well established that, at least where the matter has not been litigated on an application to set aside the bankruptcy notice, the Court will consider at the petition stage in an appropriate case whether a real debt lies behind the judgment.
Although it is not appropriate on the present application for the Court to entertain the application to set aside the bankruptcy notice, this does not of itself mean that Mrs Perry may not at the petition stage seek to place evidence before the Court in an endeavour to demonstrate that it would be appropriate for the Court at that time to consider whether a real debt lies behind the judgment referred to in the bankruptcy notice.
The order of the Court is that the application of Mrs Perry dated 24 April 1996 is dismissed.
I certify that this and the preceding pages are a true copy of the Reasons for Decision of the Honourable Justice Branson.
Associate:
Dated:
Debtor : Emily Phyllis Gertrude Perry
appeared in person
Counsel for the : Mr R P Mellows
judgment creditor
Solicitors for the : Johnston Withers
judgment creditor
Hearing Date : 13 May 1996
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