Re Webber, J. v Ex parte Van Bladel, P

[1991] FCA 182

.JUCC;iL!ENT No. l%p / ? , !

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION	1
BANKRUPTCY DISTRICT OF THE	) No NP 2408 of 1990
STATE OF NEW SOUTH WALES	1

Re:  JEAN WEBBER
Debtor

And: PAUL VAN BLADEL

22 APR 1991	Creditor
FE-	OF

PRDlClPLL

EX TEMPORE JUDGMENT

.

Einfeld J Sydney 26 March 1991

A bankruptcy notice was issued out of the Court on 3 May 1990 claiming against the debtor a sum of slightly under $25,000 including interest, which arose out of a judgment obtained in the District Court at Coffs Harbour on 21 June 1989. In the notice the creditor required that the amount be paid within 14 days after the service of the notice which took place on 14 June 1990. In other words the money was required to be paid before the end of June last year. The money was not paid and accordingly on 7 September there issued out of the Court a creditor's petition seeking a sequestration order against the debtor.

for the setting aside of the judgment in the District Court. I am informed that the judgment has now been set aside and is

On 17 October 1990 the debtor lodged a notice of intention to oppose the petition, one of the grounds of which disputed the judgment debt and stated that an application was being made

awaiting the ordinary procedures of that court for its re-
hearing.

The debtor applies for the dismissal of the petition but the creditor seeks its adjournment and opposes dismissal. The creditor's argument is that the petition should remain on foot in an adjourned state until the outcome of the new trial in the District Court is known. It is said that in such circumstances it is not appropriate to force the creditor back to the position where proceedings have to be commenced again but to leave it possible to restore the current petition, duly amended if appropriate, following the circumstances which arise out of the re-hearing in the District Court. It was, as

I was informed, a condition of the setting aside of the

judgment that the debtor pay into the District court some $1,900 representing part of the debt alleged to be owing. Obviously when the Court comes to deal with the matter it will determine what should happen to that $1,900.

parte Sevmour [l9831 48 ALR 420, a case of somewhat simllar	I have been referred to a decision of Morling J in re Vella ex
circumstances. At 422.46, his Honour adopted what was said by Gibbs J as he then was in re Hanbv ex Darte Fleminaton Central
S~ares Pro~rietarv Limited [l9671 10 FLR 378:

At the time when the bankruptcy notice expired in the present case, namely 30 May 1966, the judgment had not been set aside and remained a final judgment. Since the debtor had not by that date complied with the requirements of the notice, the act of bankruptcy was then completed. It is not

possible to say that by reason of subsequent circumstances an act of bankruotcv once committed - ceases to have been committed or must be treated as though it had never been committed. Of course this does not mean that a sequestration order may be made if a judgment has been set aside in circumstances that show that the debtor was under no liability to the petitioning creditor, for the court must inquire whether there is a debt due by the debtor to the petitioning creditor, and if not, will refuse an order, notwithstanding the commission of an act of bankruptcy. If, however, a judgment is set aside after an act of bankruptcy has been completed, and subsequently the existence of the debt is established by a further judgment after a new trial, or by a compromise of the proceedings, the conditions which entitle the petitioning creditor to a sequestration order will have been established.

This type of problem throws up a matter that often arises in

circumstances where people's rights are at stake, namely a

balancing between competing rights or entitlements. On the one hand, a debtor should not have held over his or her future movements the possibility of bankruptcy proceedings which are not justified by law. On the other hand, a creditor is entitled to the maximum facillty which can be provided to enable him or her to recover any judgment duly ordered in his

be determined on the facts of the particular case. favour if it is unpaid. The balance in each case w ~ l l have to	It seem to me that where a courts is persuaded that a judgment
should be set aside, it is likely that it will have been persuaded that there was not only some procedural mishap, if they were the facts of the case, but that there is l~kely to be substance in the defence to the claim when the rlght to defend is given. Nothing has been placed before me that suggests that the setting aside of the judgment was obtained in this case by reason only of some technical misadventure.
I therefore make the assumption that the District Court In setting aside the judgment took into account, at least to the extent to which it is appropriate on such an application, the merits of the case. Of course setting aside a judgment is not equivalent to or tantamount to finding that the judgment was not or is not justified but at the same time I do not believe that I should make the assumption that as we are now back to square one, that there is some sort of assumption that the debt is provable.
In drawing the balance in this case between the respective rights it seems to me that the interests of the debtor ought to be preferred. I think that little will be lost by the creditor having to recommence proceedings in the event that judgment is obtained on re-hearing. I take into account, for example, that the file actually contains a relatively small number of documents filed on behalf of the creditor in the proceedings. Little disadvantage wlll come from their re- filing.
merely by the ordering by the District Court of a payment into The proceedings will have taken a different turn in any event Court albeit of only a small portion of the debt claimed. All the proceedings presently in existence would have to be amended because instead of dating back to the previous judgment of the District Court and the amount therein ruled on, a different judgment for a different amount will have to be substituted in the event that judgment is obtained.
So much amendment and so much fresh service of documents would be necessary that it seems to me that nothing serious would be occasioned to the creditor being required to commence the bankruptcy proceedings again in the event that the creditor was successful and the debtor did not pay. For those reasons
I accede to the request of the debtor to dismiss the petition.
[ DISCUSSION ]
The debtor will pay the petitioning creditor's costs.

I

I cert~fy that thls and the Cf

preced ln~ pclges are a true copy o' 'h"

Rens?ns for Juc'srnent here~n	of h S klmour	i
Just,ci! Elnfsld (c,[(	L,,& v	7

Asscciate

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