Re: Smith, Peter, D

[1987] FCA 214

C A T C H W O R D S

BANKRUPTCY - bankruptcy notice - extension of time for compliance -

exercise of court's discretion - appeal from order creating

judgment debt - appeal on technical points only.

Bankruptcv Act 1966 s.41(6A), (6C)

Re: Peter Donald Smith and Anor.

PINCUS J.

BRISBANE

24 APRIL 1987

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IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION 1 BN377 QLD of 1987

BANKRUPTCY DISTRICT OF THE SOUTHERN )

DISTRICT OF THE STATE OF OUEENSLAND 1

RE: PET'F3Z DONALD SMITH and PAUL DESMOND FORSYTH

Judgment Debtors

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	28 APRIL 1987
-E MADE:	BRISBANE
THE COURT ORDERS THAT:

1. The application for an extension of time for

compliance filed on 27 March 1987 is dismissed;
2.	The applicant pay the respondent's costs of and

incidental to the application to be taxed.

NOTE: Settlement and entry of orders is dealt with in

Rule 124 of the Bankruptcy Rules.

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IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL	DIVISION	1 EN377 QLD of 1987
BANKRUPTCY DISTRICT OF THE SOUTHERN 1 DISTRICT OF THE STATE OF QUEENSLAND )

RE:	PmER DONAGD SMITH and
PAUL DESMOND FORSYTH

Judgment Debtors

PINCUS J. 28 APRIL 1987

M TEMPORE REASONS FOR JUDGMENT

In this matter, on 3 March 1987 an applicaton was made

for issue of a bankruptcy notice based upon a judgment obtained in

the District Court on 13 February in the sum of $27,232.84,

toqether with a certain amount of interest.

The judgment was obtained on an application to his

Honour Judge Quirk asserting that there was no defence to an

action brought in that court, and it related to the sale of the

Commonwealth Hotel, Roma, effected by	a contract made in July last
year.

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The evidence before me discloses that the contract was

completed in October, but the stock was not paid for. The

contract contemplated that the stock would either be valued or an agreement reached with respect to it. and the proceedings in the

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District Court were brought on the basis that an agreement had

been reached. The judgment creditor was, of course, successful

before his Honour Judge Quirk but	an appeal has been launched in
the Supreme Court.

The bankruptcy notice was served on 13 March 1987 and

the last day for compliance was 27 March 1987, on which day

application was made to this Court for an extension of time to

comply with the notice; it now comes before me.

That application is based upon S. 41(6A) of the

Bankruptcy Act 1966 which reads as follows:

"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

issued 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. I'

The provisions of subs. (6C) restrict the power of the

Court to extend the time in a way which is relevant here. It is unnecessary to set out the terms of the subsection in full, but its effect is the Court is not entitled to extend the time if it

is of the opinion that the proceedings to set aside the judgment

have not been instituted bona fide or are not being prosecuted

with due diligence. I do not hold either opinion set out under

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subs.(6C) - that is, the proceedings relied on seem to me not to

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fall within that provision. Those procccdings wcrc instituted by

a notice of appeal in the ordinary way and. although more perhaps

I	might have been done to expedite the hearing of the appeal in the
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I	Supreme Court, there is nothing before me to suggest that the
appeal was instituted mala fide or that it is not being prosecuted
with due diligence.

The question then arises whether under subs.(6A) I am

required to extend the time for compliance. The provision uses

the word "may", which prima facie imports a discretion. The

principal argument advanced by M r s . Wolfe on behalf of the

creditor. in opposition to the application for an extension, is

that the appeal has no real substance. Having held, as I have,

, that the appeal has been instituted bona fide, it may be a

possible view that that is the end of my consideration of the

appeal. That is not, however, my view:	I think I have a residual
discretion.

The matter, which has been ably argued by Mr. Lee on

behalf of the applicants, seems to depend upon two points,

principally. Firstly, Mr. Lee says that his Honour Judge Quirk

was wrong insofar as he held that the plaintiff before him could

succeed on the basis of an agreement made on 15 January 1987, such

agreement being unpleaded.

The second point which is made by Mr. Lee is that it

would be argued that Judge Quirk was wrong insofar as he ignored

the possibility that under the agreement, in the events which

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happened, the moneys did not become due unLil	90 days after	15
January 1987.

Without going into detail, it seems to me that the

second point is very thin. The first point, however, is one which

has concerned me. Although the particulars which were delivered

somewhat extended the pleading, as I read it, it is a simple

allegation that matters happened in accordance with the contract;

it does not appear to me that that was the pleader's real case. I

am not prepared to hold that there is no substance in the appeal.

It is a delicate task to say anything about the merits of the

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appeal, in view of the fact that it is pending in another court,

and I need go no further than that.

The reason whv I hold, as I do, however, that the

application should fail, is principally that the questions to be

argued on appeal appear to me essentially of a technical

character. there being, as Mrs. Wolfe said, no real dispute that

some such sum as is claimed is owing.

The correspondence is not entirely clear, but the

impression I have gained on the whole of the material is that the

dispute about the value of the stock was of a peripheral kind and

that the real purpose of the debtors was to gain some time. I

think I am entitled to act upon that impression and to exercise my

discretion against the applicants.

If they succeed in the Supreme Court, as they may do,

and the judgment is set aside, then certain consequences

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favourable to them may follow in this Court. But they have not

obtained any stay. As far as the law of this State is concerned,

they are obliged to pay the money and it does not seem likely that

they would get a stay.

If the appeal succeeds, they will be entitled to their

money back, no doubt - having paid it, which they will have to do

if they want to avoid bankruptcy.

Generalizing my reasons, it seems to me that, in a case

where in substance the sum mentioned in the judgment is due, or

some very similar sum, and the real questions raised in the appeal

are merely technical, this Court should not, prima facie, extend

time for compliance, although it may do so in particular

circumstances. When I speak of "technical points", I have in

mind, in the instant case, questions of	a	purely procedural
character.

The application which was filed on 27 March 1987 for an

extension of time for compliance is dismissed, with costs. That

is, it will be ordered that the costs of and incidental to that

application be taxed and paid by the applicants.