Smits v Shirlaw

Case [2011] FMCA 510

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SMITS v SHIRLAW [2011] FMCA 510

BANKRUPTCY – Bankruptcy notice – application to set aside – alternatively extension of time for compliance with Bankruptcy notice.

BANKRUPTCY – PRACTICE & PROCEDURE – Application for extension of time pending application for special leave to appeal to High Court – factors to be considered – whether applicant must show that arguable that special leave application will be granted.

BANKRUPTCY – Bankruptcy notice – judgment debt – validity – power of court to go behind judgment.

BANKRUPTCY – Bankruptcy notice – whether discretion to set aside Bankruptcy notice on debtor’s solvency – whether use of Bankruptcy notice can be characterised as an abuse of process.
Bankruptcy Act 1966 (Cth), s.30, s.41(6A), s.41(6C), s.41(7), s.41G,
Civil Procedure Act2005 (NSW), s.22
District Court Act1973 (NSW) s.4, s.44(1), s.51, s.134(1)(h), s.140
Uniform Civil Procedure Rules2005 (NSW), r.9.1, r.9.8
Amos v Brisbane TV Ltd [2000] FCA 825; (2000) 100 FCR 82
Re Bryant; Ex parte Bryant v Commonwealth Bank of Australia (Hill J) (unreported 9 May 1994) (BC9405749)
Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264
Ciccarelli v Cavasinni Developments [2004] NSWSC 788
Conway v Jackson [2001] FCA 230; (2001) 107 FCR 201
Corney v Brien  (1951) 84 CLR 343
Re Baker; Ex parte Baker v Staples [1995] FCA 703
O’Loughlin v Glenmont Investments Pty Ltd [2001] FCA 925
Re Brink; Ex parte the Commercial Banking Company of Sydney Ltd (1980) 44 FLR 135
Re Franks; Ex parte GIO Holdings Ltd (1990) 24  FCR 398
Re Ling; Ex parte Ling v Commonwealth of Australia (1995) 58 FCR 129
Re Taylor; Ex parte Deputy Commissioner of Taxation (1983) 74 FLR 377
Wren v Mahony (1972) 126 CLR 212
SDN Children’s Services Inc v Hughes (unreported 14 May 2002 Transcript number S35 of 2002)
State Rail Authority of New South Wales v Barnes [2001] NSWCA 133
Tzovaras v Nufeno Pty Limited [2003] FCA 1152
Westpac Banking Corporation v Carver (2003) 126 FCR 113; [2003] FCA 221
McDonald, Henry and Meek on Bankruptcy Law in Australia
Applicant: LEONARDUS GERARDUS SMITS
Respondent: ANDREW CHARLES SHIRLAW
File Number: BRG 314 of 2011
Judgment of: Burnett FM
Hearing date: 30 June 2011
Date of Last Submission: 30 June 2011
Delivered at: Brisbane
Delivered on: 30 June 2011

REPRESENTATION

Counsel for the Applicant: Ms D. Skennar
Solicitors for the Applicant: Morgan Conley Solicitors
Counsel for the Respondent: Mr J. Davies
Solicitors for the Respondent: Rodgers Barnes & Green

ORDERS

  1. That the Bankruptcy Notice be set aside pursuant to s.30 of the Bankruptcy Act 1966 (Cth).

  2. That costs be reserved.

  3. That the matter be adjourned for mention to 26 August 2011 commencing at 10.00am.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRG 314 of 2011

LEONARDUS GERARDUS SMITS

Applicant

and

ANDREW CHARLES SHIRLAW

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

  1. The applicant, Leonardus Gerardus Smits seeks to set aside bankruptcy notice 2194 issued 14 April 2011.  Alternatively, he seeks an…

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Details
AGLC
Smits v Shirlaw [2011] FMCA 510
Case
[2011] FMCA 510
Decision Date

CaseChat Overview and Summary

Smits v Shirlaw involved a dispute between Smits, the bankrupt, and Shirlaw, who issued a bankruptcy notice against Smits. The case was heard in the Federal Circuit Court of Australia. The central issue was whether the bankruptcy notice issued by Shirlaw should be set aside or if an extension of time should be granted for Smits to comply with the notice. Additional issues included the validity of the judgment debt, the court's power to review the judgment, and the discretion to set aside the notice based on the debtor's solvency.

The court examined whether there was an arguable basis for the special leave application to the High Court, which was necessary to consider an extension of time. The court also assessed the power of the court to go behind the judgment to determine the validity of the judgment debt. Furthermore, the court deliberated on whether the use of the bankruptcy notice could be considered an abuse of process and if there was discretion to set aside the notice based on the debtor’s solvency.

In ruling, the court found that the bankruptcy notice should be set aside under section 30 of the Bankruptcy Act 1966 (Cth). The court determined that the judgment debt was invalid and that the power to go behind the judgment was applicable. Additionally, the use of the bankruptcy notice was deemed an abuse of process, and there was sufficient discretion to set aside the notice considering the debtor's solvency. The court reserved costs and adjourned the matter for a mention on 26 August 2011 at 10.00 am.

Orders

Orders of the court

1.

That the Bankruptcy Notice be set aside pursuant to s.30 of the Bankruptcy Act 1966 (Cth).

2.

That costs be reserved.

3.

That the matter be adjourned for mention to 26 August 2011 commencing at 10.00am.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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