Sacca, J. v Drevikovsky, M.

[1993] FCA 1044

IN THE FEDERAL COURT OF AUSTRALIA )

BANKRUPTCY DISTRICT	1	No. NB 2229 of 1992
OF THE STATE OF NEW SOUTH WALES	)

Re: JOSEPH SACCA

Debtor

Ex parte: MARTIN DREVIKOVSKY. RICHARD PEGG arid STEPHEN TOOMEY tradina as TOOMEY PEGG & DREVIKOVSKY

Creditor

REASONS FOR JUDGMENT

EINFELD J SYDNEY 22 DECEMBER i993

This matter concerns an application to extend time for compliance with a bankruptcy notice after the time has expired. I am satisfied that the failure of the debtor to apply for an extension of time when the matter was before Justice Hill on 22 June 1993 was an accidental oversight. Up to then, time for compliance had been extended on several occasions but the case had always been before a registrar where there is a standard form available to parties for this purpose which specifically draws extension of time to attention. The form is not normally used when the matters come before Judges. In the proceedings before Justice Hill on 22 June and me on 21 September, the matter slipped the mind of the debtor's solicitor and it did not particularly occur fully to either his Honour or to me probably

because we were not familiar with the very complex and lengthy	history of the litigation in this matter and because of its
exceptional nature. The matter was then dealt with in the bankruptcy list in the ordinary way.
In a judgment given on 6 August this year in Howarth v Mortaaae Acceptance Nominees [l9931 43 FCR 139, I examined the authorities concerning the question of whether an extension may be granted after the time has expired. Quite a number of cases have considered this matter, not all of which are entirely clear and some of which have caused not a little controversy. Nevertheless, I concluded, following Justice Heerey in
Halstead & Anor ex warte Westwac Bankina Corworation No. 2 [l9911 32 FCR 394, that there is power in the Court in certain circumstances to extend the time for compliance with a bankruptcy notice after the time has expired. It remains open what actually happens to the act of bankruptcy that has occurred in the intervening time but that matter seems unlikely to figure largely in the future litigation of the matters in dispute here.
Howarth involved an application for an extension of time by a
creditor but most of the other cases have involved the more normal applications by debtors as in this case. The relevant
circumstances of this matter include an enormously long history of the litigation and repeated applications by the debtor for an extension of time for compliance. In addition a most unusual controversy arises as a result of the judgment of the District Court on 30 November 1992 which purported to set aside the judgment on which the bankruptcy notice is based, on conditions about which there is a dispute on compliance. All these matters impel me to believe that the reason for the failure to apply for the extension on 22 June and 21 September was oversight and not intent, and that at all times it had been the intention of the debtor to keep the bankruptcy notice alive until the substance of the dispute between him and the creditors had been resolved.
It is appropriate to make reference to one or two other aspects of this litigation. The present very unsatisfactory situation is that there have been at least 20 occasions on which the dispute between these parties has been before a Court -- and that would appear on the face of the record to be a conservative estimate. The dispute is over some $11,000 worth of unpaid legal costs, the creditors being a firm of solicitors and the debtor one of their former clients. The matter is now back in the District Court where it first started in June 1990, three and a half years ago. There is an argument in the District Court as to whether the judgment has in fact been set aside and if so, whether on the defence sought to be raised by the debtor the moneys are payable.
pay into court the amount of the judgment plus interest and By orders of the District Court the debtor has been required to
costs, the costs of the motion to set aside the judgment originally, and some other costs which on the evidence he has already paid. As the amount paid into court is in excess of $20,000 and the matter is far from finished, it is perfectly clear that the costs involved in all of this will far exceed the amount in dispute. This type of disputation brings the legal profession and system into disrepute and there is nothing much to commend the conduct of either of these parties in this litigious nightmare.
At the present time the matter is bouncing backwards and forwards between the District Court and this Court and there is no simple way of resolving that situation. There is no legal basis to transfer the bankruptcy proceeding to the District Court and no easy way of having the proceedings in the District Court transferred to this Court. Moreover, as the same District Court Judge has been hearing the matter from the beginning and made the orders which have been the subject of dispute, it is appropriate that he continue with the resolution of the issues between these parties. Because of the pending litigation, it seems to me quite unlikely that a petition will issue on the basis of non- compliance with this bankruptcy notice. When eventually time for compliance is not further extended and the terms of the notice have to be confronted, it is not particularly likely on the present facts that a sequestration order will be obtainable
by reason of any failure to comply with this bankruptcy notice. There is a motion before the Court to set aside the bankruptcy
notice. The grounds upon which this relief is sought do not relate to the bankruptcy notice itself, not even to the fact that there is a doubt about the debt because there is no way of resolving the issue of the debt contained in the bankruptcy notice without conducting a parallel hearing to that which is

about to take place in the District Court. Certainly the public
interest and many other things forestall any such hearing.

The ground advanced from the bar table for the setting aside of the bankruptcy notice is that it is unjust and oppressive to the debtor for him to be subjected to a bankruptcy notice while the proceedings in the District Court are in such a state of flux. The debtor argues that he is a person of substance, that he is quite solvent, that he has paid the appropriate moneys relating to the debt into the District Court, and that he should not have to be facing bankruptcy proceedings and finding his name in newspaper law lists as a person before the courts in relation to indebtedness.

All bankruptcy notices are oppressive to debtors. By the same token creditors could claim oppression by the unpaid debts; in this case $11,000 has been unpaid since 1990 or earlier. Thus the matter could not be resolved on the basis of oppression and hardship even if that were a ground for striking out bankruptcy

notices. No authority has been advanced to suggest that it is
and I know of none which permits the Court to set aside a

bankruptcy notice on the grounds that it is unfair, unjust or oppressive, or for similar reasons under the general heading of the interests of justice. For those reasons I am quite unable to grant the motion to set aside the bankruptcy notice on the evidence that has presently been presented to the Court.

On the other hand, I cannot refuse the debtor the opportunity to move to set it aside in the event that it turns out that there is in fact no payable debt. Much as I would like to rid this Court of these proceedings if only for the purpose of saving the litigants further expense, and to have the matter centred in the District Court which is where it should be for resolution of the debt issue, it seems to me that my hands are tied. The consequence is that the parties will have to come back to this Court at some time in the future. However, rather than allow the matter to be dealt with in the way it has been up till now, popping back every month or so for another stoush which takes the matter nowhere, what I propose to do is to stand the matter over for three months and extend the time for compliance with the bankruptcy notice to a date about that time.

In the event that the District Court proceedings are not then finally resolved so that the parties are not aware of what the present position of this debt is, the time for compliance may be further extended and these proceedings further adjourned by a

consent order between the parties which is either filed in the	registry or transmitted to my associate by hand or by facsimile
to 221 3238. If the parties are not notified to the contrary, it may be assumed that the orders have been made. If a consent order cannot be filed, the matter can be listed on the day nominated or on another day agreed between the parties to be convenient to them and the Court, but it should be assumed that the party held to be at fault for not consenting or otherwise contributingto a sensible approach to the bankruptcy proceedings may have to face an order for costs on an indemnity basis regardless of the result of the hearing then conducted.
As I see it, the bankruptcy notice could be set aside by consent
-- as far as I can see, nothing much would be lost by such a
happening. If the debt is eventually found to be owing in the District Court, the security that has been ordered should result in the verdict being paid. If for some reason that does not occur and the debtor does not pay as ordered by the District Court, then a further bankruptcy notice could be issued. It is, as I have said, at least questionable as to whether the present bankruptcynoticewould adequately found successful sequestration proceedings. But without consent I cannot set it aside myself at present.
Should the parties agree that the bankruptcy notice can be set aside before the next date on which the matter is set down, they may file a consent order in the registry or again submit it to my associate by delivery or by fax. Again, the orders may be
contrary. assumed to have been made unless the parties are notified to the
As for a date, the parties are unable to advise the Court when the District Court is going to be able to deal with this matter, so I will fix it for 9.30am on Friday, 8 April. The parties will be excused from attendance in the event that all that has to be done on that day is to stand the matter over again, in which case

a faxed consent order or a telephone adjournment will be

satisfactory.

I certify that t l ~ s and the s*~J I

preceding paGos ar8 a true copy of thc

Reasons for Judsment herein c i h ~ s Hor.aur

Jus:~co Elnield

Associa

Dated: y L t a t ~ h . 1 4 q 4

L .. --.

Solicitor for the debtor	M. Foley of Foleys
Counsel and solicitor for	J.K. Chippindall instructed
the creditor	by Toomey Pegg & Drevikovsky
Date of hearing	22 December 1993

Date of judgment 22 December 1993