Re Shields, I.J.M. & Anor Ex parte Australia & New Zealand Banking Group Ltd

[1993] FCA 926

JUDGMENT No. ........ ........ ..l .......,.... 426 43

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF THE	) No. NN3118 of 1993
STATE OF NEW SOUTH WALES	)

ISAAC JOHN MACKAY SHIELDS AND

JENNIFER MARGARET SHIELDS

Judgment Debtor

EX PARTE:  AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED

Judgment Creditor

HILL J SYDNEY 9 NOVEMBER 1993

EX TEMPORE REASONS FOR JUDGMENT

Mr Isaac John Mackay Shields is one of two debtors to whom a bankruptcy notice issued by the Australian and New Zealand Banking Group Limited, ("the Bank") is addressed. The notice has presently only been served upon Mr Shields and has not been served as yet on the other addressee of it, Jennifer Margaret Shields, Mr Shields' wife. Mr Shlelds seeks to set aside the bankruptcy notice on one of three grounds, as I understand his wrltten submissions. He seeks also an extension of time for compliance with the bankruptcy notice.

The three grounds sought to be raised may be summarised as follows. First, it is said that the bankruptcy notice is defective because it does not detail how the amount shown in it of $139,829.37 is made up. Secondly, Mr Shields	of a value at least equal to or greater than the amount	alleges that he has a counter-claim, set-off or cross demand
demanded, and that he has, in an affidavit duly lodged, asserted that claim. Finally, Mr Shields claims that although the bank has a ludgment against him upon whlch the bankruptcy notice is based, there is no real debt owed by his wife and himself underlying that judgment.
Mr Shields and the Bank have engaged in litigation for some time now. Some of the steps in that litigation are set out in a judgment of Wilcox J of 20 July 1993. It suffices here only to say that in December 1992 Morling J gave leave to the Bank to enter judgment, but that was apparently after his Honour had ordered the then statement of claim be struck out. The case was later repleaded, it would seem, and proceedings came before Morling J in February 1993 when Mr Enright, purporting to act for Mr Shields, signed a consent to judgment being entered and for orders for possession of the land to be given.
It would seem, although the details are not before me, that Morling J on that day also dismissed a cross-claim that was brought for either $5,000,000 or $8,000,000, being the cross-claim upon which Mr Shields now relies. That settlement gave rise to further litigation when application was made to set aside the orders made by Morling J on 8 February, on the grounds that Mr Shields had not consented to the orders whlch were made on that day. Put another way, Mr Shields repudiated the authority of his legal adviser to
consent to the entering of judgment, claiming not to have understood the effect of what was to happen.
Wilcox J dismissed Mr Shields' motion to set aside Morling J's orders, inter alia, on grounds of credit and Mr Shields has appealed to the Full Court of this Court against the judgment of Wilcox J. That appeal is likely to be heard in the February 1994 Full Court sittings. In the meantime, an application was made before Whitlam J for a stay of the judgment and that application was refused by his Honour.
The submission that the bankruptcy notice is defective because it does not detail the manner in which the amount demanded is made up can be quickly dismissed. There is no requirement that the bankruptcy notice detail the manner in which an amount is calculated and the notice is not, in form, defective.
The second matter relating to the alleged counter- claim, set-off or cross demand can also be dealt with fairly shortly. The cross demand or cross-claim has been dismissed. There has been no stay of the order dismissing it and the consequence would seem to me to be at the moment that it cannot be said that Mr Shields has any cross-claim which he can assert as a defence against the amount claimed.
In any event, having regard to the material contained in an affidavit of 13 October 1993, which has been read in these proceedings and supplemented by written submissions, in a document which I will initial and date and which can be placed with the papers for identification, I am not satisfied that Mr Shields, if he has any cross-claim at all, has a claim which is in value equal to or exceeding the amount of the judgment debt, being a counter-claim, set off or cross demand he could not have set up in the action or proceeding in which the judgment was obtained. Indeed, it seems to me that it was set up in the proceedings in which the judgment was obtained, albelt that it failed.
The material in the affidavit to which I have referred does not enable me to reach a conclusion one way or the other as to whether there was underlying the judgment debt a real debt. Mr Shields asserts that the amount was not owing, claiming there was no agreement between the Bank and
was not advanced to him. There is no evidence of these himself and says from the bar table at least that the money
matters and I would decline at this stage to go behind the judgment debt and certainly could not find on the material before me that there was, in the language of the cases, no consideration for that debt.

A final matter argued is, however, more difficult.

Mr Shields, in essence, adopting a suggestion I made to hlm,

indicated that he might wish to seek an extension of the time for compliance with the bankruptcy notice, on the basis that proceedings to set aside the judgment upon which it was based have been instituted by him. Those proceedings are still on foot in the sense that an appeal is still pending.

The Bank does not say that the proceedings were instituted other than bond fide or that they are not being prosecuted with due diligence, so the provisions of s.41(6C) of the Bankru~tcv Act 1966 have no application to require me not to extend the time for compliance. I would, however, additionally require, as a condition for extending the time, an undertaking by Mr Shields that he would proceed with the settling of the appeal index with due expedition, and also proceed with the prosecution of the appeal wlth expedition, co-operating with the Bank in that course being adopted.

It is a serious matter to permit an act of bankruptcy to occur where there is an appeal against the very	judgment upon which the bankruptcy notice is based, and that
is conceded, as it must be, by counsel for the Bank. Counsel for the Bank does say that there is no real material before me to enable me to decide one way or the other whether the judgment would ultimately be set aside. That is certainly true. There is no more at the moment before me than an assertion by Mr Shields that the money is not owing.
However, given that only a short amount of time is likely to elapse between now and the time when the appeal would be heard in the February sittings, and that there is no
suggestion that there are assets which will cease to be
available to creditors by virtue of the extension of time, and having regard to the seriousness of the committal of an act of bankruptcy by Mr Shields, it seems to me that weighing up the possible detriment to the Bank, justice in this case requires that the period for compliance with the bankruptcy notice be extended.
On the undertakings to which I earlier referred being given, I would extend the time for compliance with the bankruptcy notice presently before me until further order, with liberty to apply on 24 hours notice.

Costs will be costs in the proceedings.

I certify that this and the

preceding five (5) pages
are a true copy of the Reasons
for Judgment herein of his Honour

Mr Justice Hill.

ssocite: T-C[&,q'2R1J,+ Date :

i+ D E ~ B F I :

The Debtor appeared for himself.

Counsel and Solicitors	Mr G Blake instructed by
for Petitioning Creditor:	Norton Smith & CO
Date of Hearing:	9 November 1993