Re St Leon, P.F. & Re St Leon, I.K.M.G

[1994] FCA 562

S 6 2 9%

JUDGMENT NO. .....wenrn.wa

RE: - P FRANCIS ST LEON

RE:  ST LEON

2 August 1994

There are two applications before the court today, one is in matter 1476 of 1994, the other in 1491 of 1994. Certain of the evidence in each of the matters is common to both and I have so treated it. I shall deal first, for reasons of convenience only, with the application in matter 1491 of 1994, Reginald Phillip Francis St Leon. The application is made by the judgment creditor National Australia Bank Limited, to which I shall for convenience refer as "the creditor".

It seeks orders by way of review of certain orders of Deputy Registrars of the Court extending time for compliance with the requirements of the bankruptcy notice issued at the request of the creditor and directed to Mr St Leon, the debtor. It seeks also orders or declarations that the orders of the Registrars are beyond power and have no effect or alternatively they be set aside ab initio. It also seeks a declaration that there is and has been no deemed extension of

which is made on the basis that a particular affidavit, to	time to comply with the requirements of the bankruptcy notice,
which I shall refer to in a moment, is not one of the kind to
which S. 41(7) of the Bankruptcy Act 1966 is directed. It

.

also seeks a declaration that time for compliance with ehe
bankruptcy notice against the debtor expired on 11 June 1994.

The creditor has been represented by counsel, the debtor has not appeared and I am satisfied that he has been served with appropriate notice of the proceeding and does not intend to play a part in it.

The facts are in a short compass; the bankruptcy notice against the debtor was issued by a Registrar at the creditor's request on 9 May 1994. It was a notice which in the usual terms required compliance within 14 days after service upon the debtor, excluding the date on which the notice is served.

The notice was served on Saturday morning, 28 May 1994.
The last day for compliance is not determined merely by

calculating the 14 day period after service of the bankruptcy

Acts Interpretation Act 1901 which makes the last day for	notice (Saturday, 11 June 1994) because of S. 3 6 ( 2 ) of the
compliance with the requirements of that notice Tuesday 14 June 1994. It was on that last mentioned day that the debtor applied ex parte to a Registrar to extend the time for compliance with the requirements of the bankruptcy notice and on that same day a Deputy Registrar made an order that:

"Upon condition that the bankruptcy notice in the matter was served on the debtor on 28 May 1994 then pursuant to section

41(6)B of the Act the Deputy Registrar

extended time for compliance with the requirements of the notice to 27 June

1994. "

A further extension was granted by another Deputy Registrar on 27 June 1994 extending time for compliance to 12 July 1994. As the last day for complying with the requirements of -the notice was, for the reasons I have already given, Tuesday 14 June the first application for extension of time made to a Deputy Registrar was in time' and therefore the condition upon which the first order was made was satisfied, that is the application was made in time.

The basis of the attack upon the Registrar's decision made by the creditor is that the power of the Registrar to extend time, which arises from section 41(6B) can only arise where within the relevant time, either proceedings to set aside the judgment or order in respect of which the bankruptcy

notice was issued had been instituted by the debtor or an	application to set aside the bankruptcy notice has been filed
by the Registrar. There is no question that the first of those conditions has not been satisfied. The question is whether the application made by the debtor to the Registrar was one that answers the description of an application to set aside the bankruptcy notice. The application to the Registrar sought the following order:

" 1 . That action under bankruptcy notices

numbers 1491 and 1476 of 1994 be suspended pending hearing of the cross-demand set out in the affidavit of Reginald Phillip Francis St Leon appended to this

application. "

A perusal of the affidavit in support of the application shows that judgment was signed by the creditor against the debtor on 3 March 1994 in a sum in excess of $500,000. The affidavit which accompanied the debtor's application to the Registrar sets out a number of reasons why the debtor did not apply to defend the proceedings, based primarily upon misfortunes of a close member of the debtor's family which he says prevented him from giving attention to the matter.

The basis of the alleged counter-claim or cross-demand is essentially that he says he seeks to propound a claim against the creditor in a sum in excess of $1,000,000 based upon alleged failures by the creditor to perform duties to it as banker and duties owed by it to a company, Universitas College

times.	Pty Limited, of which the debtor was a director at relevant
Plainly the alleged cross-action or counter-claim or cross-demand is one which could have been established or set up by the debtor in the Supreme Court proceedings that were brought against him, but I shall return to that point a little later. One must, I think, adopt a liberal approach to an application made by a debtor to set aside a bankruptcy notice in determining its true character. It is true that the form of application does not ask for an order that the bankruptcy notice be set aside. It asks that action under it be suspended pending the hearing of the cross-demand against the creditor.
In one sense an application for suspension of an action under a bankruptcy notice is inconsistent with the notion of setting it aside, but when one examines the form of application, in the light of the facts disclosed in the affidavit that accompanied it (which is a permissible course), what the debtor was seeking was to have time extended to propound his cross-claim or cross-demand against the bank in the Supreme Court of New South Wales; and if he succeeded in setting that judgment aside then he would have removed the very foundation of the bankruptcy notice which the creditor has caused to be issued against the debtor, and the logical consequence of that would be to set the notlce aside.
I therefore am of the view that the condition pre- requisite to the exercise of the Registrar's power under section 41(6B)(b) has been satisfied.
There arises a further point which I have in part already dealt with; namely, whether the affidavit of the debtor which accompanied the application to extend time to comply with the requirements of the notice (the affidavit being that of the debtor sworn on 14 June 1994) is an affidavit of the kind to which section 41(7) is directed.
That provision states so far as relevant that where before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice the debtor has filed with the registrar an affidavit to the effect that he has such a counter-claim, set-off or cross-demand as is referred to in paragraph 40(l) (g) of the Act and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross-demand, that time should be deemed to have been extended immediately before its expiration until and including the day on which the Court determines it is so satisfied.
Section 40(l) (g) provides that a debtor commits an act of bankruptcy if a creditor who has obtained against the debtor a final judgment or final order, being one the execution of
which has not been stayed, is served on the debtor in Australia or by leave of the court elsewhere, a bankruptcy
notice under the Act and the debtor does not, where the notice was served in Australia within the time fixed by the Registrar by whom the notice was issued; 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 final order as the case may be, being a counter-claim, set-off or cross-demand that he could not have set up in the action or proceeding in which the judgment or order was obtained.
As- I have indicated earlier, plainly the alleged claim of the debtor against the creditor is one that he could have set up in the action or proceeding in which the judgment or order was obtained. In the result, the Court is of the opinion that there has been no deemed extension of time to comply with the requirements of the bankruptcy notice by reason of the provisions of S. 41(7), and the Court is also of the opinion that the time for compliance with the bankruptcy notice in this matter expired on 12 July 1994.
I do not think it appropriate to express my reasons in the form of a declaration, but the relevance, particularly of the finding that there is no room for the application of 41(7) is really a matter to be determined by a registrar or a judge upon the hearing of the petition if presented by the creditor
against the debtor. However, no doubt the view I have
expressed will be brought to the attention of the registrar or
judge, as the case may be.

I order the debtor to pay the creditor's costs of this

application.

I then turn to the other matter, No 1476 of 1994.

In the matter number 1476 of 1994, which is matter
involving Mrs St Leon, the bankruptcy notice was issued on 17

May 1994. Again it was a 14 day notice and it was served on Tuesday, 31 May 1994 in the morning. The last day for compliance with the requirements of the notice was Tuesday, 14 June 1994. The application to the Registrar to extend time was made by the debtor on 15 June 1994. The Registrar's order of that date reads as follows:

"Upon condition that the bankruptcy notice in thls matter was served on the debtor on

3 . 6 . 9 4 , pursuant to sections 41 (6B) of the

Bankruptcy Act 1 9 6 6 , I extend time for compliance with the requirements of the

bankruptcy notice to 2 7 . 6 . 9 4 . "

I notice from the file that there is attached to the order a handwritten document which says:

"I certlfy the bankruptcy notice 1476 of

1994 was served on Isabell Karin Marion

Gertrude St Leon on Friday, June 3, 1 9 9 4 . "

The document is dated 15 June 1994 and purports to be signed by Mr St Leon. It was no doubt that document, which was before the Registrar, that led the Registrar to make the order for extension, conditioned on the premise that the notice was served on 3 June.

In fact, the evidence before the Court indicates that it
was served on 31 May; that evidence is the sworn evidence of

the person who served the notice personally upon the debtor. The order of the Registrar extending time which was made on 15 June, and a further order made by another Registrar further extending time on 27 June 1994 to 12 July 1994 are valid

orders; - the first order was based on the condition that the

service was effected on 3 June, and the second is premised on
the condition that the first order was validly made.

Although the orders were validly made, it is clear that the conditions were not satisfied, the express condition when the first order was made on 15 June that service was effected on 3 June, and the obviously implied condition when the second order was made on 27 June. If the condition attached to the first order was not, in fact, made out then plainly the second order could not make good that which was not good before. As the condition as to service being effected on 3 June is not the fact, having been served on 31 May and the last day for compliance having been 14 June, not 15 June, it must follow that the orders for extension of time for compliance are

inoperative.

It therefore follows that the last date for compliance with the requirements with the notice was 14 June. The same point arises with respect to section 41(6B)(b) as arose in the other matter, and I make the same findings. The same position applies also with respect to the point as to S. 41(7), and in so far as it is incorporated by reference, S. 40(l) (g) of the Act. In this case, however, I think it is appropriate that the Court make a declaration as to the date for compliance with the bankruptcy notice's requirements because of the intervention of the two orders of the Registrars.

Accordingly, the Court declares that the last day for compliance with the requirements of bankruptcy notice number 1476 of 1994 was Tuesday, 14 June 1994.

I make the same observations with respect to drawing to the attention of the judge or registrar who hears the petition my comments about S. 41(7) and S. 40(l)(g) in the other matter. I order the debtor to pay the creditors' costs of the application.

I certify that this and the

preceding nine (9) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate -&&
:	2 August 1994

Counsel for the Applicant	Mr S M P Reeves
Solicitors for the Applicant :	Mallesons Stephen Jaques
Date of Hearing	2 August 1994
Date of Judgment	2 August 1994