Vamvoukakis, George v Papadimitriou, John

[1997] FCA 1443

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 8006 of 1997

IN THE MATTER OF:      GEORGE VAMVOUKAKIS, EFFIE VAMVOUKAKIS, MARIA VARIKOS AND JIM VARIKOS

BETWEEN:	GEORGE VAMVOUKAKIS, EFFIE VAMVOUKAKIS, MARIA VARIKOS AND JIM VARIKOS APPLICANT
AND:	JOHN PAPADIMITRIOU AND CLEOPATRA PAPADIMITRIOU RESPONDENT

JUDGE(S):	HILL J
DATE:	2 DECEMBER 1997
PLACE:	SYDNEY

REASONS FOR JUDGMENT

On 26 August 1997 Mrs George Vamvoukakis, Effie Vamvoukakis, Maria Varakos and Jim Varakos (“the debtors”) applied to the Court for orders that bankruptcy notices numbers NN 981/97, NN 980/97, NN 983/97 and NN 982/97 be set aside and that the time for compliance with them be extended until further order.

The circumstances in which the application was made are not in dispute.  They are as follows.

On 23 April 1997 the creditors, John Papadimitriou and Cleopatra Papadimitriou, obtained judgment against the debtors in the District Court of New South Wales in the sum of $158,100.81.  On 23 May 1997 the four bankruptcy notices to which reference has already been made were issued out of this Court relying upon the judgment.  Those notices were served on 26 May 1997 and 31 May 1997 respectively.  Each of the bankruptcy notices was a 21 day notice, that is to say that the time for compliance stipulated in it was a period of 21 days from the date of service.

On 10 June 1997 the debtors filed a notice of motion in the District Court seeking to set aside the default judgment upon which the bankruptcy notice was based.  It should be noted that the notice of motion was filed prior to the date set for compliance under the bankruptcy notices.  After the time for compliance had expired in each case the motion to set aside the default judgment was dismissed by consent.

Subsequently, approximately two months later, the debtors filed yet another motion in the District Court seeking to set aside the judgment. The situation was thus as at 26 August 1997 that the application filed in this Court to extend time for compliance and to set aside the bankruptcy notice was filed at a time when the original notice of motion upon which reliance could be placed for the purposes of s 41(6)A of the Bankruptcy Act 1966 (Cth) (“the Act”) had been dismissed although that motion has been extant at the time when an act of bankruptcy would have been committed under the bankruptcy notice if nothing further had happened.

When the application was filed a Registrar of the Court made an order, ex parte, extending time for compliance.  Subsequent orders extending the time for compliance have been made by Registrar Quinn on 16 September 1997 and 28 October 1997 so that the situation at present is that the time for compliance with the bankruptcy notice has been extended until 2 December 1997, that being today.

In the meantime proceedings continued in the District Court with a Registrar initially ordering the judgment to be set aside and a judge of that Court subsequently setting aside the orders of the Registrar and ordering judgment to be entered.  The end result of those proceedings is that judgment was entered against the debtors in the sum of $82,056.18, being a sum considerably less than the amount shown in the bankruptcy notice.

When the matter came before me this morning it was suggested that there were three matters that required to be argued.  The first was the question of the power to extend time for compliance, the second was whether the bankruptcy notice should be set aside because it referred to a judgment that had gone and in place of which a new judgment of a lesser amount had been substituted and, thirdly, that a compromise had been reached between the parties prior to the time for compliance having expired.

In respect of the second of those arguments the solicitor for the debtor gave notice orally in accordance with s 41(5) of the Act that he disputed the validity of the notice on the grounds of the mis-statement. He undertook to file a notice. That undertaking has now been complied with.

In the course of argument it became clear that to deal with the application that was before me it was unnecessary to consider either the first or third of the matters in question. Orders of the Court have been made by Registrars from time to time extending the time for compliance so that the situation is that, while those orders stand, the time for compliance has not yet occurred. That time will expire at midnight tonight. I should say that there is a good argument that the orders extending time for compliance should not have been made having regard to the provisions of s 41(6)C of the Act.

It seems to me the situation is this.  It was held by Gummow J in Re Carter, Ex parte National Mutual Trustees Limited (1995) 129 ALR 435 that so long as a notice to set aside a judgment was extant as at the time the time for compliance with a bankruptcy notice would expire application might thereafter be made to set aside the bankruptcy notice and it did not matter that the application was brought after the time for expiration of the time for compliance had elapsed. The crux of his Honour's judgment is to be found in the passage at 441 where his Honour said:

“... the jurisdiction of the court was attracted during the currency of the bankruptcy notice because throughout that period condition (a) in sec 41(6)A was satisfied.  There had been instituted by a debtor a proceeding to set aside the judgment or order in respect to which the bankruptcy notice had been issued.  That being so it is no objection to the existence of the power of the court in the matter that that application for extension itself was made after the expiration of the bankruptcy notice.”

The present facts differ in one respect however, from that in Re Carter and that is that at the time the application to set aside the bankruptcy notice came on for hearing the motion to set aside the judgment in support of which the application to extend time was initially made, had been dismissed, notwithstanding that another motion had subsequently been filed. It may be, and it is unnecessary for me to decide, that the very language of s 41(6)A and, in particular, the use of the perfect tense brings about the result, as Lindgren J appears to have thought in Re Udowenko; Ex parte Mitchell (1996) 69 FCR 299 at 304 pars (C) to (D), that there was no jurisdiction to make the orders which the Registrars of this Court have made from time to time extending the time for compliance. His Honour's view in my opinion is somewhat strengthened by the provisions of s 41(6)C which is applicable to a case to which s 41(6)A applies that the Registrars should not have made the orders they made because it could not be said in respect of the motions to set aside the judgment that that motion was being prosecuted with due diligence for the very reason that the motion had by then been dismissed so that it could not be prosecuted.

The problem is, however, that the orders of the Registrar are orders of the Court and unless and until they are set aside the situation remains that there is a bankruptcy notice, the time for compliance with which has been extended.

After I had raised all this with the solicitor for the creditors she sought to make an application to presumably to review or set aside or both the various orders of the Registrar, at least one of which was made by consent.  It is tempting to give leave to file applications out of time and to deal with them without any written material or evidence other than that which is presently before me, but it seems to me that if this course was to be taken it should have been taken before this.  It can at any event presumably still be taken irrespective of what course I may adopt now.

This leaves me with, extant, a bankruptcy notice requiring payment of a sum considerably in excess of that which is due and in circumstances where a notice has been given in accordance with s 41(5) of the Act before the time for expiry of the bankruptcy notice that the validity of the notice is disputed on the grounds of mis-statement. It is properly conceded by the solicitor for the creditors that if the extension of time is valid, and indeed it is because it is an order of the Court, it must follow that the bankruptcy notice is bad and must be set aside.

I would, accordingly, set aside each of the four bankruptcy notices referred to in the application.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill

Associate:

Dated:            12 December 1997

Counsel for the Applicant:	M Scheib
Solicitor for the Applicant:	Nicholas G Pappas & Company
Counsel for the Respondent:	D Fitzsimon
Solicitor for the Respondent:	Colquhoun & Colquhoun
Date of Hearing:	2 December 1997
Date of Judgment:	2 December 1997