Re Smith, G.P.

[1994] FCA 481

JUDGMENT No. , / . . 4-81 __ 99

CATCH WORDS

BANKRUPTCY - extension of time for compliance with requirements of bankruptcy notice pending appeal - adjournment of application to set aside bankruptcy notice - application refused.

e Reid (unreported, Sheppard J, 11 February 1994)

Re (1991) 29 FCR 363

anda Ltd (1980) 44 FLR 125

Re GRAHAM PHILIP SMITH

No. NN 805 of 1994

R E Q I W V

Coram:	Whitlam J
Place:	Sydney
Date:	4 May 1994

RECEIVED
2 7 JUL 1994
FEDERAL COURT OF

AUgTRAUA

P R l N U P U

Limited D i s t r i b u t i o n

IN THE FEDERAL COURT OF AUSTRALIA	1
1
GENERAL DIVISON
&WKRUPTCY DISTRICT OF THE	1
STATE OF NEW SOUTH WALES
Re GRAHAM PHILIP SMITH
Coram:	Whltlam J
Place:	Sydney
Date:	4 May 1994

REASONS FOR JUDGMENT

Yesterday I dlsmlssed the debtor's application filed on 18 April 1994 and ordered

him to pay the respondent cred~tor's	costs These are my reasons for making those
orders.

The appllcatlon sought orders that the tlme for cornpllance w~th a bankruptcy

notice be extended and that the bankrupt~y notlce ~tself be set aslde. The bankruptcy

notice was Issued on 21 March 1994 at the request of Fairfax Community Newspapers Pty Limited, which had obtained judgment against the debtor in Parramatta Local Court on 2 March 1994. The time for compliance specifled In the notlce was 21 days after service, which was effected on 30 March 1994.

As I have sad, the debtor's application to thls Court was filed on 18 Aprll 1994,

that is, before the explratlon of the tlme spec~fied rn the bankruptcy notlce. Accordingly,

pursuant to s 41(6B) of the Bankruptcy Act 1966 ("the Act") Deputy Registrar Qullter

extended the time for compliance with the notlce to 3 May 1994.

The affidavit filed in support of the appl~cation was that of the debtor's sollcitor.

This affidavit did not comply with Rule 103 of the Bankruptcy Rules in that it did not state the grounds relied on in support of the orders sought in the appl~cation.

The following facts emerge from that affidav~t. The debtor has appealed from the

judgment of the Local Court to the Supreme Court. HIS sollcitor deposes that he

received instructions to appeal "on or about" 6 April 1994. However, it appears from an annexed copy of a letter from the "Parrarnatta C o u ~ t Complex" that the request to state a case may have been filed on 5 April 1994. A copy of that request, whlch was served on the judgment cred~tor on 6 Aprll 1994, is annexed to the affidavit. The debtor entered a recognizance to prosecute hls appeal on 11 April 1994 before a justice of the peace at Sutherland Local Court. He notified his sollcitor of that fact on 14 April 1994.

At the hearing counsel for the debtor tendered, without objection, a facs~mile copy

of a further affidavit sworn by the debtor's solicitor yesterday. This affidav~t annexed a copy of a letter dated 2 May 1994 to the debtor's solicltor from the clerk of the

Parramatta Local Court in the tollow~ng terms:

'%z the above matter tire Mngutrate Mr M[lovntzovich hns gratzted you art extetuiotz of time to lodge the draft stnted case utttil ,he 30th May, 1994

It should also be tzoted tlrnr your request for a stay of proceeditzgs rtr
regard to the etajorcemetzt of tire ongitzal order iras also been gratzted."

Mr M~lovanovich was the magistrate who heard the action in which the judgment against the debtor was obtained The debtor's sol~citor deposes that he has briefed counsel to settle the draft case, but that he has not yet received a transcript of the Local Court proceeding. The affidavit of the debtor's solicitor does not annex any material

relating to the maklng of either an application for an extension of time for service of a

draft stated case or a "request" for a stay of proceedings.

The debtor does not seek an extens~on of time in reliance on what Rule 9A of the

Bankruptcy Rules describes as the "ground" specd~ed in s 41 (6A)(a) of the Act. Counsel

for the debtor accepts that the appeal on foot to the Supreme Court does not constitute

proceedings of the kind there contemplated. See Re Lentlnl (1991) 29 FCR 363 at 367.

The power to extend the tlme for compl~ance w~th the requirements of a

bankruptcy notice is a power conferred in aid of the power to set aside the notice itself:

Re Sterling: Ex parte Esanda Ltd (1980) 44 FLR 125 at 129-130, 131-132. As I have said, in the present case the affidavit in support of the application does not indlcate any

1 grounds at all upon which the court is asked to set aside the bankruptcy notice. The

I

facts stated relate solely to the institution of the appeal.

Counsel for the debtor Indicated that he did not w~sh to press yesterday for an

order setting aside the bankruptcy notice. The sol~citor for the judgment creditor sought

to have the whole of the application heard yesterday and opposed any adjournment.

Counsel for the debtor dld not point to any ground upon which the bankruptcy
notice could be set aslde other than the pendlng appeal and the existence of the "stay".
It was not suggested that there was any defect in the form or contents of the notice or

its issue or service. I appreciate that the clrcumstances in which notlces may be set as~de

are not governed by rigid rules and do not fall Into fmed categories. The exerclse of the power to set aside a bankruptcy not~ce will depend on the particular facts of each case.

In the present case there IS scanty materlal relating to the appeal. The request

to state a case sets out the grounds s a ~ d to make the Local Court's determlnatlon

"erroneous in polnt of law." The solicitor for the cred~tor subm~ts that such grounds do

not disclose questions of law. I could not accede to thls subm~ssion	at thrs stage. More
importantly, there is no draft stated case	There is no evidence of any material

supporting the appl~cation for an extension of tlme to lodge the draft case. There is no indication whether transcript 1s necessary to prepare the draft case and, if so, when it

might be available. There is no evidence of when the case might expect to be settled by the magistrate and when it might be heard in the Supreme Court. Quite apart from being in a pos~tion to form any view about the bona fides or prospects of the appeal, I

can have no Idea when it may be heard.

Then there 1s the questlon of the stay. The terms of the stay do not appear from the letter from the clerk of the Local Court. Counsel for the debtor submits that it may be assumed to be a stay untll 30 May 1994. He has come Into the matter overnight and

very properly is reluctant to speculate about what m~ght have been put to the magistrate. It does appear that any applicat~on was made ex parte and, in the absence of the

material that was before the magistrate, I can hardly in all the clrcumstances accord much weight to the existence of a "stay' In the bald terms notified by the clerk of the Local Court on 2 May 1994. I am even left to guess at the purpose and duratlon of the

stay.

I thlnk that it is important to bear in mlnd that thls 1s not the hearlng of a

bankruptcy petition. The refusal of the appllcatlon w~ll not affect the status of the

debtor, but it may be Important that there should be an act of bankruptcy. Sheppard J

referred to these considerations in R e Geard: Ex oarte R e ~ d (unreported, 11 February

1994) at p. 7.

Of course, if the appeal to the Supreme Court were to succeed, it would be appropriate to set aside the bankruptcy notlce. However, as there was no material before me to Indicate when there was a prospect of such an appeal belng heard, I could

see no polnt in adjourning the hearlng of the application tor the order setting aside the bankruptcy notice and, in the meantrme, extendtng tlme for compliance \nth its

requirements untll the appeal was heard.

Appearances
Applicant	P F Joseph oC counsel lnstrucled by M~chael Murphy
Respondent	MISS Sally Nash of Sally Nash & CO, agents for Bannermans
Date of hearlng	3 May 1994

I cert~ly that t111s and [he preceding lour pages are a true copy of the Reawns for Judgment hereln of the

Honourable Mr Just~ce A P.	Whitbm
Assoc~ate, Date 4 May 1994