Re Sabbagh, G. Ex parte N. Waige & Co. P/L

[1993] FCA 894

399 93

JUDGMENT No. ........ , ....... J .,,.,,..,,.

IN THE FEDERAL COURT OF AUSTRALIA	)
1
) No. NN3410493 )
BANKRUPTCY DISTRICT OF THE	1 1
STATE OF NEW SOUTH WALES	1

RE: GEORGE SABBAGH

EX PARTE: N. WAIGE & CO. PTY. LTD.

CORAM :	Beaumont J.
DATE :	23 November 1993

CORRIGENDUM

Page 4, line 13 should be amended to read:

"cross-demand of the kind contemplated by section

40(l.)(g), and"

Page 4, line 20 should be amended to read:

"the kind specified in section 40(l)(g), the Court

may merely"

REGISTRY

eaumont J.

10 DEC 1993

FEDERAL COURT OF

PRINCIPAL

8 q Y I 93

JUDGMENT No. ...... , ........ ... . .oo ..... ,

IN THE FEDERAL COURT OF AUSTRALIA ) )

NEW SOUTH WALES DISTRICT REGISTRY ) No. NN3410/93

)

BANKRUPTCY DISTRICT OF THE	) )
STATE OF NEW SOUTH WALES	1

RE: GEORGE SABBAGH

CORAM:

m:

EX TEMPORE REASONS FOR JUDGMENT

By a Bankruptcy Notice dated 15 September 1993

addressed to the judgment debtor, notice was given that within

21 days after service of the notice the debtor is required to

pay the sum claimed by the judgment debtor in the jud&ent

' .

obtained in the Local Court there specified, or to secure the payment of the sum to the satisfaction of the court or the judgment creditor or compound the sum so specified.

Further notice was given that if, within the period set out above, the debtor fails to comply with either of the abovementioned requirements or to satisfy the Court that the debtor has a counter claim, set off or cross-demand equal to

or exceeding the sum specified in paragraph (A) of the notice, being a counter clalm, set off or cross-demand that the debtor could not have set up in the actlon in which the judgment was obtained, the debtor will have committed an act of bankruptcy.

By an affidavit sworn on 3i October 1993, the judgment debtor says that he had no ;loi;ce of the judgment prior to 4 October 1993 when he was ae-?red with the Bankruptcy Notice. He goes on to say that ne understood that the statement of liquidated claim was allegedly served on an occupant of his home, but from inquiries made, he says that no member of his household has any knowledge of receipt of the statement of liquidated claim. In his affidavit, the debtor also states, that he has a proper defence and cross-claim agalnst the judgment debt and has lodged a notice of motion to set aside the judgment. He alleges that the goods, the subject of the claim, were not of merchantable quality or of a quality that he had been shown by way of sample. He says that the goods had no or little value and that his set off and cross-claim agalnst the judgment creditor exceeds the amount claimed. I have been informed by the counsel for the judgment creditor that the notice of motion in the Local Court had the judgment set aside and was d~smlssed.

There is on the file a letter dated 19 November 1993

from the solicitor for the judgment debtor stating that the

debtor wishes to:

"wl thdraw h l s proceedings w i t h r e s p e c t t o Bankruptcy

N o t i c e N o . 3410 o f 1993."

The matter has been referred to me by the Registrar. It appears that the Registrar was asked to make an order thac the debtors application for a stay of proceedings should be dismissed. The Registrar has questioned whether this is the appropriate procedure and I think that she was right to do so.

By s.40(l)(g) of the Bankru~tcv Act 1966 ("the Act"), it is provided that if a creditor who has obtained against a debtor a final judgment or final order and served on the debtor a bankruptcy notice and the debtor does not within the time prescribed comply with the requirements of the notice or satisfy the Court that he has a counter claim, set off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the f lnal order, as the case may >be, belng a counter claim, set off, or cross demand, that he could not have set up any action or proceeding in which the judgment or order was obtained, the debtor will commit an act of

bankruptcy.

By s.41(7) of the Act it is provided that

" w h e r e , b e f o r e the e x p l r a t i o n o f the t i m e f i x e d for

c o m p l i a n c e w i t h the r e q u i r e m e n t s o f a b a n k r u p t c y

n o t i c e ,	the	d e b t o r	h a s	f i l e d	w i t h	the	R e g ~ s t r a r	an
a f f i d a v i t	t o	the	e f f e c t t h a t	h e	h a s	s u c h	a	c o u n t e r

c l a i m , set o f f o r cross-demand a s i s r e f e r r e d t o i n

s e c t i o n	4 0 ( l ) ( g ) and	the	C o u r t	h a s	no t ,	b e f o r e	the
e x p l r a t i o n	o f	t h a t	t i m e ,	d e t e r m i n e d	w h e t h e r	i t	i s
s a t i s f i e d	t h a t	the	d e b t o r	h a s	s u c h	c o u n t e r	c l a i m ,

set	o f f or cross demand,	t h a t t l m e s h a l l be deemed
t o h a v e been	e x t e n d e d ,	immediately b e f o r e i t s

e x p i r a t i o n , u n t i l and inc lud ing the d a y on which t h e

Court determines whether i t i s so s a t i s f i e d . "

It will be seen that the legislation assumes, that in a case such as the present, the matter will proceed to a hearing in which the Court will or will not be satisfied that the debtor has a counter claim, set off or cross-demand of the prescribed kind. However, as the present matter illustrates, there may be cases where there is no such hearing and where the parties each accept that the debtor wishes to withdraw the proceedings. In those circumstances I do not think that I have any alternative except to make a declaration that I am not satisfied that the debtor has a counter-claim, set-off or cross-demand of the kind contemplated by section 40(l)(g), and I make that declaration.

I do, however, propose that this question be drawn

to the attention of the appropriate authorities with a view to

claim, that he has a counter-claim, set-off or cross-demand of	a possible amendment to the legislation so as to provide that in any case where the debtor indicates a wish to withdraw a
the kind specified in section 40 (l) (g), the Court may merely note the wish of the debtor and the matter proceed to a conclusion accordingly.
The order of the Court will be that I make a declaration that I am not satisfied of the matters I have

mentLsi1e.i i n t h e reasons f o r judgment. I n o t e t h e r e is no

o r d e r f o r c o s t s .

I c e r t i f y t h a t t h i s and t h e preced ing

f o u r ( 4 ) pages-rue copy of t h e

Reasons f o r Jud e n t h e r a ~ of h ~ s Honour

a. J u s t l c e	B e
Assoc i a t e  Dated: