Re Wilhelmsen; Ex parte Gould

[1986] FCA 192

-. C A T C H W O R D S

BANKRUPTCY - bankruptcy notlce claiming excessive	sum - notice
disputlng validity - whether can extend time.
Re: Kai Borqe Wilhelmsen

Ex Parte: Sydney Georqe Gould

& Ors.

QLD BN61 of 1986

PINCUS J.

BRISBANE

16 May 1986

IN THE FEDEXAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) QLD BN61 of 1986
BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF OUEENSLAND )

- RE: KAI BORGE WILHELMSEN

EX PARTE:

MINUTES OF ORDER

JUDGE W I N G ORDER:	PINCUS J.
DATE OF ORDER:	16 May 1986
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1. The tune for qlving notice under s.41(5) of the

Bankruptcy Act be extended until 2 2 April 1986.

2. The bankruptcy notice be set aside.

NOTE:

Settlement and entry of orders 1 s dealt with in Order 36

of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) QLD BN61 of 1986
BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF OUEENSLAND )

RE: KAI BORGE WILHELMSEN

M PARTE:

PINCUS J. 14 May 1986

REASONS FOR JUDGMENT

This case concerns a bankruptcy notlce issued on 16

December 1985, which is challenged by the debtor on the ground,

inter alia, that it claims too great a sum.

On 22 May 1985, the judgment on which the notice is

based was entered agalnst the debtor in the sum of $340,603.24,

being money due under securities. The credltors admit that

before the notice issued the amount due was substantlally

reduced, because property the subject of the securities was sold

and the proceeds received. There 1 s evidence that a bankruptcy

2 .

notice was issued in June 1 9 8 5 in respect of the same debt and

that is further mentioned below, but the first notice was thought

to be deficient in some way not dlsclosed to me. So the issue of

this second notice was procured. Allegedly by a mistake, it

requlred payment of the whole amount due on the judgment, rather

than the sum of $181,666 whlch, so counsel for the credltors

informed me, should have been clalmed.

An order for substltuted servlce was made and complied

wlth. Under the terms of the order, servlce became effectlve on

26 February 1 9 8 6 . The last day for compliance wlth the notlce

was fourteen days later, 12 March 1986 .

The debtor, who 1 s unrepresented, has placed oral and

written evldence before me, prlnclpally to the effect that the

creditors sold mortuaqed property at an undervalue; he also made

complalnts about the allegedly excessive charges made by the

sollcltor for the credltors, who had prevlously acted f o r the debtor - a matter of which he also complamed. The flrst qtuestlon for determlnatlon. however, is whether such a notice was

glven by the debtor as 1 s mentioned in s . 4 1 ( 5 ) of the Bankruptcy

m, which reads as follows:

"A bankruptcy notice 1 s not Invalidated by reason

only that the sum speclfled in the notlce as the

amount due to the credltor exceeds the amount in

fact due, unless the debtor, withln the time

allowed for payment, gives notlce to the creditor

that he disputes the valldity	of the notlce on the
ground of the mis-statement."

If such a notice was given, then the bankruptcy notice in

question must be taken to be invalid: Walsh v. Deputy

Comissioner of Taxation (1984) 53 A.L.R. 606 at 6 0 7 (High Court).

3 .

On 25 February 1986, the registrar a notice beginning: debtor delivered to the

"I wish to advise that the amount of $340,603.24 is

c-gmpletely untrue. "

He went on to make complaints of the same sort as made before me,

but did not include an express statement that the sum in question

had been reduced since the entry of judgment by the mortgagees'

sales. However, reading the notlce as a whole, It conveyed the

information that the sum of $340,603.24, described as "completely

untrue", was so because It was too high, for the reasons set out

in it. Section 41(5) does not require that any reasons be set

out or that, If reasons are given, they be correct. In my vlew,

although by no means clear, the document dellvered to the

registrar would, If delivered to the creditors, have complied

wlth s.41(5).

There was a conversation between a member of the

registry staff and the debtor at the time the notlce was

delivered, but I am unable to be satisfied as to what that

conversatlon was, nor does it seem necessary to make a flndlng on

that subject. On 26 February 1986, the reglstrar prepared a

notice, referring to the document of 25 February 1986 which has

just been discussed, and setting "the matter" down for hearing by

the Court at a specified time. There was some rather confused

evidence as to the subsequent history of these two documents -

i.e. that filed by the debtor n 25 February and that prepared by

the reglstrar on 26 February. I am satlsfied that both came to

the knowledge of the Brisbane agents of the solicitors for the

creditors on or before 12 March 1986, but there is no evidence

4.

from which it could be safely inferred that the Brisbane agents actually had the debtor's notice on or before 12 March; the

solicitors for the creditors did not get that document until 14

March - two days too late.

-

In these circumstances, it has become necessary to

consider the question whether It is possible to extend tlme for

giving of a s.41(5) notice. Counsel for the creditors argued

that I have no power to extend that time because it is the same as the tlme "allowed for payment" - 1.e. the time for compliance

with the bankruptcy notice; by reason of the provisions of

s.41(6A), the latter time cannot now be extended.

In my oplnion, the time for glvlng of a s.41(5) notice

may be extended under s.33(l)(c):

"The Court may -

.	..
(c) extend before its expiration or, If this Act

does not expressly provide to the contrary,

after its expiration, any time llmited by this

Act, or any time fixed by the Court or the

Registrar under thls Act (other than the time

flxed for compliance with the requlrements of

a bankruptcy notice), for doing an act or

thlng or abridge any such tune."

Counsel for the creditors relied upon the express

exclusion of the time fixed for compliance wlth the requlrements

of a bankruptcy notice. That exclusion, however, does not avail

the creditors, because the giving of a s.41(5) notlce is not a

requirement of a bankruptcy notlce. What is requlred by a

bankruptcy notice is, of course, primarily payment.

5 .

To my mind, the question is whether it is implicit in

s . 4 1 ( 5 ) , read with s.33(l)(c), that one cannot extend the tlme

for giving a s.41(5) notice other than by extending the time for

compliance with the requirements of the bankruptcy notice, under

-

s . 4 1 ( 6 A ) . My conclusion on that point is in favour of the

debtor, because, although a s.41(5) notice must prima facie be

given within the time allowed for compliance with the

requirements of a bankruptcy notice (which time is briefly

described there as the "time allowed for payment"), that is to be

read subject to s.33(l)(c). I think the time for giving a

s . 4 1 ( 5 ) notice may be extended without affectlng the time for

compliance with the requirements of the bankruptcy notice.

Although counsel argued that, even if there were power

to extend the time, that should not be done, it seems clear, for

a number of reasons, that thls	IS an appropriate case to exercise
the power:

The bankruptcy notice grossly overstates the amount due; the discrepancy is about $160,000.

The overstatement was deliberate. at least ln the sense

that it was clear to the creditors that no such sum as

claimed was then due.

A previous bankruptcy notice, which was apparently

defective in some respect, was given, and the debtor

responded by giving a notice similar to that with which

he responded to the bankruptcy notice in question. That

. 6.

is, even before the latter was issued, the creditors

knew that the amount claimed was challenged.

(iv) The debtor acted very promptly, but dld not appreciate,

-

it appears, that it was necessary for him to give notice

to the creditors as opposed to the registrar. Even so,

but for mischance, the creditors would have received the

debtor's notlce in time rather than two days late.

I therefore hold that I both can, and should, extend the

time for giving the s.41(5) notice. It is not qulte clear

whether I should extend that time to 14 March, when the debtor's

notlce was actually recelved by the creditors, or to 22 April

when the matter came on for hearing before me. The dlfficulty

about the former date 1s that an extenslon to it raises the

questlon whether a notlce given to the registrar, and thence to

the credltors, complies with s.41(5). Although a two day

extenslon might, depending on that point, be sufficient, I have

decided to extend time to	22 April 1986, on which date notice was
undoubtedly given.

The result is that the notice is invalid as exceeding

the amount in fact due.

In Summarv:

(i) A notice sufficient, as to content, to comply with

s.41(5) was given to the registrar by the debtor in

tlme .

7.

(ii) That notice did not reach the creditor until two days

after the time for compliance with the bankruptcy

notice.

-

(iii)	There is power	to extend the time	for giving a s . 4 1 ( 5 )
notice.

(1v) In the special circumstances of this case, it is

appropriate to exercise that power in favour	of the
debtor.

The orders will be that the time for giving notice under

s.41(5) of the Act be extended until 22 Aprll	1986 and that the
bankruptcy notice be set aside.