Re Staples, Bryan Douglas

[1996] FCA 247

IN THE FEDERAL COURT OF AUSTRALIA     )
GENERAL DIVISION  )
   No. QN 198 of 1996
BANKRUPTCY DISTRICT OF THE           )
STATE OF QUEENSLAND                  )

RE:BRYAN DOUGLAS STAPLES AND SUSAN JANE STAPLES

EX PARTE:BRYAN DOUGLAS STAPLES AND SUSAN JANE STAPLES

Applicants

AND:PETER JAMES BAKER AND NOELA MAY BAKER

Respondents

MINUTES OF ORDER

JUDGE MAKING ORDER:     Spender J

DATE OF ORDER:         18 March 1996

WHERE MADE:            Brisbane

THE COURT ORDERS THAT:

1. The bankruptcy notice be set aside.

1. There be no order as to costs, neither in respect of the application filed on 1 March 1996 nor of the application to set aside the bankruptcy notice.

NOTE:     Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA     )
GENERAL DIVISION  )
   No. QN 198 of 1996
BANKRUPTCY DISTRICT OF THE           )
STATE OF QUEENSLAND                  )

RE:BRYAN DOUGLAS STAPLES AND SUSAN JANE STAPLES

EX PARTE:BRYAN DOUGLAS STAPLES AND SUSAN JANE STAPLES

Applicants

ANDPETER JAMES BAKER AND NOELA MAY BAKER

Respondents

CORAM:    Spender J
DATE:     18 March 1996
PLACE:    Brisbane

REASONS FOR JUDGMENT

This is an application by Bryan Douglas Staples and Susan Jane Staples seeking to satisfy the court that they have a counter-claim, set-off or cross demand of the kind referred to in s40(1)(g) of the Bankruptcy Act 1966 ('the Act'). The matter is complicated by the fact that there is a disconformity between the bankruptcy notice and the order on which the bankruptcy notice is founded.

The effect of s41(7) is to extend until today the time for compliance with the bankruptcy notice.  It is therefore possible for the applicant debtors to apply to set aside the bankruptcy notice by filing such an application with the Registrar, and if that were to be done, the Court may extend the time for compliance with the bankruptcy notice.
         Mr Martin of counsel, who appears for the judgment debtors, has undertaken to file such an application to set aside the bankruptcy notice, and the conclusion to which I have come is that that application should succeed.  That conclusion, for which I will give reasons shortly, obviates the need to consider whether in fact there is a counter-claim, set-off, or cross demand such as is referred to in the affidavits of the Staples.  It appears that while they may have a claim for some $3000 in respect of moneys that came into a partnership in which the Staples and the Bakers were involved, that claim is not for an amount which equals or exceeds the amount on which the bankruptcy notice is founded.

It would be necessary to consider in some detail a claim advanced on the Staples' behalf that there is owing to them as a result of contributions made by them in excess of their obligations with the other partners, an amount of $11,428 was overpaid by the Staples on behalf of the other partners.  

However, I am satisfied that the bankruptcy notice should be set aside.  What happened was this.  In proceedings No QX40 of 1994, Peter James and Noela May Baker applied to this Court for an order setting aside a deed of composition by the Staples which had been entered into on 24 May 1994.   On 28 September 1994, Drummond J made the following order:

"Upon David Sutcliffe Firth filing an application seeking an order setting aside a deed of composition entered into on 24 May 1994 by 4.00pm on Friday, 30 September 1994, the application of David Sutcliffe Firth and the application of P.J. & M.N. Baker, and all issues arising in those applications, shall be heard together. "

It seems to me that that order had the effect of having two applications, albeit two applications to be heard together, rather than a single application by Mr and Mrs Baker and Mr Firth.   That is confirmed, in my view, on a consideration of the application filed on 30 September 1994 in compliance with his Honour's order.   That application is an application "made to the court on behalf of David Sutcliffe Firth".   It is as a result of those matters to which I have just referred that the present difficulties arise.

On 6 October 1995, in proceedings No QX40 of 1994, Drummond J made various orders.   The order as taken out refers to Brian Douglas Staples and Susan Jane Staples as the debtors and continues "ex parte P.J. and N.M. Baker as applicants".  The order was in the following terms:

"THE COURT ORDERS that:-

1.The Respondents shall pay the Applicants costs of and incidental to this application to be taxed.

THE COURT DIRECTS that:-

2.The Respondents file and serve all material upon which they intend to rely at the hearing by 27 October, 1995;

3.All parties shall make discovery on oath by 27 October, 1995;

4.Mutual inspection be complete by 10 November, 1995;

5.By 17 November, 1995 the solicitors for Firth & Baker shall deliver a letter to the District Registrar, such letter accompanied by written confirmation from all other parties that the matter is ready for trial.  If the District Registrar receives the letter by the specified date the matter is to be set down for hearing on a date to be fixed by the District Registrar.  If the District Registrar does not receive the letter by the specified date then the matter will be re-listed at 10.15 am on 1 December 1995. "

That document on its face refers to the payment of costs by the Staples to the Bakers although the court direction numbered (5) refers to "the solicitors for Firth and Baker".   The certificate of taxation refers to the Staples as debtors but continues "ex parte P.J. and N.M. Baker and D.S. Firth" as applicants.   The certificate refers to "applicant's costs against the respondent debtors pursuant to the order of Drummond J made on the 6th day of October 1995."   The taxation refers to the tax being costs at $3033.21.

The application for a bankruptcy notice commences:

"Peter James Baker and Noela May Baker of 3/547 Oxley Road, Sherwood in the State of Queensland and David Sutcliffe Firth of Lot 1, Beenleigh/Beaudesert Road, Luscombe in the State of Queensland herein referred to as "the Judgment Creditors" request the Registrar to issue bankruptcy notices [sic] addressed to Bryan Douglas Staples and Susan Jane Staples of 1 Trundle Road, Thornlands in the State of Queensland, hereinafter referred to as 'the Judgment Debtors'. "

The bankruptcy notice No 198 of 1996 is addressed to the Staples and purports to be on behalf of both Mr and Mrs
Baker and Mr Firth.   It seems to me that there is a difficulty with the order as taken out concerning the order of Drummond J on 6 October 1995.   It is clear that the order for costs was interlocutory, and if the claims of the Staples are able to be maintained, they could not be maintained in the proceedings in which the costs order was obtained.   I think it likely that the true position should have been that costs orders were made in favour of Mr and Mrs Baker against the debtors and a further costs order in favour of Mr Firth as against the Staples.   This may have been complicated by the fact that it appears that Mr Firth and the Bakers had the same solicitor.

The order of his Honour of 28 September directed that the applications seeking the setting aside of the deed of composition be heard together, but did not have the effect of consolidating those applications into a single application.   In any event, having regard to the order dated 6 October 1995 as taken out on 14 November 1995 and the terms of the bankruptcy notice No 198 of 1996, the capacity of the bankruptcy notice to confuse the debtors is apparent and, in those circumstances, the bankruptcy notice should be set aside.

I think in all the circumstances what I should do, because the Bakers are integral players in all of this, is set aside the bankruptcy notice but make no order as to costs on either of the application that the Staples brought against the Bakers, or of the foreshadowed application that the Staples will file today in respect of the bankruptcy notice against the Bakers and Mr Firth.

Mr Firth's position creates real difficulties.  I did not know anything at all about Mr Firth until it was mentioned that he was involved in what might be called the associated proceedings, and that in fact the solicitors for the Bakers also act for him.  In the circumstances, the tenderness of my concern about natural justice in Mr Firth's case is not as strong as it would otherwise be.  I do not think that there is anything that could be said on Mr Firth's behalf which would alter the conclusion that I have reached about the nature of the bankruptcy notice in the light of the orders that were made and the documents that are in evidence before me.

In all the circumstances I think that a fair order to make is that the bankruptcy notice be set aside but that there be no order as to costs either in respect of the application filed on 1 March 1996 concerning the allegation of a cross claim, counter-claim, set-off or cross demand pursuant to s40(1)(g) of the Act, nor of the application to be filed to set aside the bankruptcy notice. The bankruptcy notice is set aside.

I certify that this and the  preceding five (5) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.

Associate
                  Date: 18 March 1996

Counsel for the applicant    :        Mr M D Martin
instructed by               :        Baker Johnson

Solicitors for the respondents:      Barwicks

Date of Hearing             :        18 March 1996