Sarina v O'Shannassy

In this matter before Judge Manousaridis, Mr Sarina sought to set aside a bankruptcy notice issued by Mr O’Shannassy. The bankruptcy notice, served in March 2020, required Mr Sarina to pay $26,071.47 within 21 days, representing a judgment debt arising from a certificate of determination of costs. Mr Sarina applied to the Federal Court on 27 March 2020 to set aside the notice, relying on grounds under s.40(1)(g) of the *Bankruptcy Act 1966* (Cth) and alternatively seeking an extension of time under s.41(6A) of the Act. The proceeding was subsequently transferred to the Federal Court.

The primary legal issues before the Court were whether Mr Sarina had complied with the requirements for making an application to set aside a bankruptcy notice on the ground that he possessed a counter-claim, set-off, or cross demand exceeding the judgment debt, as contemplated by s.41(7) of the *Bankruptcy Act*. Additionally, the Court was required to determine whether to grant an extension of time for compliance with the bankruptcy notice, in aid of other grounds relied upon by Mr Sarina for setting aside the notice.

The Court found that Mr Sarina had not complied with the specific requirements for establishing a counter-claim, set-off, or cross demand under s.41(7) of the *Bankruptcy Act*. However, the Court acknowledged its jurisdiction in bankruptcy, derived from s.27(1) and s.30(1)(b) of the Act, to make necessary orders, including setting aside a bankruptcy notice. Furthermore, the Court possessed the power under s.41(6A) of the Act to extend the time for compliance with a bankruptcy notice, provided an application to set aside had been made within the prescribed period. This power to extend time was considered to carry with it the power to set aside the notice itself.