Re Williams, William Leslie Ex Parte General Credits Ltd

Re: WILLIAM LESLIE WILLIAMS
And: GENERAL CREDITS LIMITED (1983) 68 FLR 202
No. 1039 of 1982
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA
Fisher J.(1)

CATCHWORDS

Bankruptcy - bankruptcy notice - validity - stay of execution on judgment - understatement of amount of judgment - description of amount due - cure of defect

Bankruptcy Act 1966 s.41(3((5)(6). s.306(1)

Bankruptcy - Bankruptcy notice - Whether bankruptcy notice was invalid - Compromise between judgment creditor and debtor - Bankruptcy notice understated amount of judgment debt - Compromise between judgment creditor and judgment debtor - Effect of compromise - Whether debtor likely to have been misled by bankruptcy notice - Bankruptcy Act 1966 (Cth), ss 40(1)(g), 41(3), 41(5), 41(6), 306.

HEADNOTE

Section 40(1) of the Bankruptcy Act 1966 (Cth), so far as relevant, provides that:

"(1) A debtor commits an act of bankruptcy in each of the

following cases:

. . .(g) if a creditor who has obtained against the debtor a final

judgment or final order, being a judgment or order the execution

of which has not been stayed, has served on the debtor in

Australia . . . a bankruptcy notice under this Act. . .".

Section 41(3) of that Act, so far as relevant, provides:

"(3) A bankruptcy notice shall not be issued in relation to a debtor -

. . .(b) if, at the time of the application for its issue,

execution of the judgment or order to which it relates

has been stayed."

On 21 October 1982, the creditor served the debtor with a bankruptcy notice and on 8 November 1982, the debtor made application to the Federal Court of Australia to set aside the bankruptcy notice on the ground of its invalidity.

The bankruptcy notice claimed, to the extent relevant, that:

"the sum of $10,000 is due by you to the Judgment

Creditor under a final judgment obtained by the Judgment

Creditor against you in the Local Court of Adelaide on

24 January 1980 being a judgment the execution of which

has not been stayed."

However, evidence showed that the certificate of judgment issued by the Local Court on 19 August 1982 stated that the sum of $10,727.96 was due on that date under the judgment.

By his affidavit filed in support of his application to set aside the bankruptcy notice, the debtor deposed that he believed that the amount stated to be owing to the judgment creditor in the bankruptcy notice was an amount less than that for which judgment was signed in the Local Court and that the amount claimed in the Local Court action was the sum of $10,700.96 plus costs.

On 10 February 1983, an affidavit was filed in the court deposing that on 14 May 1982 the creditor was present in the Supreme Court of South Australia when a judgment was entered in a certain action (in which the judgment creditor was plaintiff and the judgment debtor…