Smith v Gotsch

[1995] FCA 652

JUDGMENT No. . k L - d -* 52 ss'

IN THE FEDERAL COURT OF AUSTRALIA	)
1

NEW SOUTH WALES DISTRICT REGISTRY ) No. NN 1062 of 1995

1

BANKRUPTCY DIVISION )

RE : STEPHEN FREDERICK SMITH, JANIS PATRICIA SMITH AND MICHAEL SKORSKI

EX PARTE: STEPHEN FREDERICK SMITH,

JANIS PATRICIA SMITH AND

MICHAEL SKORSKI

AND : LEO GOTSCH AND LORNA WILSON

Respondents/Creditors

JUDGE MAKING ORDERS: FOSTER J

DATE :	25 JULY 1995
PLACE :	SYDNEY

2 5 RUG 1995

MINUTE OF ORDERS FEDERAL COURT OF

AUSTRALIA	pRIMClPAL
plEGISTRb

THE COURT ORDERS THAT:

1.  The application to set aside the Bankruptcy Notice dated 11 April 1995 be dismissed with costs.

Note:

Settlement and entry of orders is dealt with in

Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) )

NEW SOUTH WALES DISTRICT REGISTRY ) No. NN 1062 of 1995

1

BANKRUPTCY DIVISION 1

RE: STEPHEN FREDERICK SMITH,

JANIS PATRICIA SMITH AND

MICHAEL SKORSKI

EX PARTE: STEPHEN FREDERICK SMITH,

JANIS PATRICIA SMITH AND

MICHAEL SKORSKI

AND : LEO GOTSCH AND LORNA WILSON

C O M :	FOSTER J
DATE :	25 JULY 1995
PLACE :	SYDNEY

REASONS FOR JUDGMENT

(Extempore)

HIS HONOUR: This is an application to set aside a Bankruptcy Notice dated 11 April 1995. It comes before me today in the following circumstances. A previous application to set aside the Bankruptcy Notice was heard by a Registrar of this Court on 26 May 1995. On that occasion the Bankruptcy Notice was set aside after the creditors conceded that the amount claimed in the Bankruptcy Notice was overstated by reason of a wrong calculation of interest which accrued on the judgment debt. The Registrar's order was subsequently set aside by his

-2-

Honour, Hill J on 13 June in the circumstances that the creditor withdrew its earlier concession having discovered that there was, in fact, no overstatement of the amount claimed in the Bankruptcy Notice. Justice Hill also extended the time for compliance with the Bankruptcy Notice until today.

The application made today is based on two grounds. First, that the Bankruptcy Notice should be set aside because the amount of the judgment debt has been secured to the satisfaction of this Court or the judgment creditor. In respect of this ground reliance is placed upon a deed of mortgage of shares. However, the deed was, in fact, made in favour of the judgment creditors prior to the coming into existence of the judgment debt. In my view, it cannot, therefore, support the assertion that the judgment debt is currently secured.

The second ground of the application is that the time for compliance with the Bankruptcy Notice should, in effect, be extended indefinitely to enable proceedings to be brought in the Equity Division of the Supreme Court of New South Wales against persons other than the judgment creditors. The subject of these proposed proceedings is to obtain relief in relation to the dilution of the value of the shares which was the subject of the deed of mortgage relied on to support the first ground of the application. It is claimed that the value of those shares has been diluted by an issue of further

shares in the company, which transaction was oppressive, unfairly prejudicial and/or unfairly discriminatory against the judgment debtors. Reference is also made to outstanding claims on the part of two of the judgment debtors for wages. None of these proceedings has reached fruition and, indeed, no statement of claim has yet been filed in the Supreme Court in relation to the proposed proceedings in the Equity Division. In these circumstances I cannot see that there is any basis upon which I can set aside the Bankruptcy Notice or further extend its time for compliance.

I have, of course, sympathy with the judgment debtors in their predicament. It is possible that later, when the Supreme Court proceedings have been instituted, they may be able to produce more material in relation to a defence aginast their being declared bankrupt pursuant to the petition, but that is not a matter upon which I can venture any opinion at this stage. In the circumstances I must dismiss the application with costs.

I certify that this and the preceding two (2) pages are a true copy of the reasons for ent herein of the

Honourable JuflI. L . m t e r .

Associate: //W- Date: 25 JULY 1995

A P E A R A N C E S

THE APPLICANTS APPEARED IN PERSON

COUNSEL FOR THE RESPONDENTS:	G. W. McGRATH
INSTRUCTED BY:	FORSHAWS NEILL

DATE OF HEARING:	25 JULY 1995
DATE OF JUDGMENT:	25 JULY 1995