Wallace v Trade Credits Ltd

[1983] FCA 315

Re: JOHN VINCENT WALLACE
And: TRADE CREDITS LIMITED (1983) 72 FLR 252
No. G92 of 1983
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.(1), McGregor(1) and Neaves(1) JJ.

CATCHWORDS

Bankruptcy - judgment for debt against guarantors - judgment for possession of land of two guarantors - bankruptcy notice issued against one other guarantor - whether judgment against the one other guarantor stayed by execution of judgment for possession against two guarantors - whether bankruptcy notice should issue against a judgment debtor where there has been execution against other judgment debtors.

Bankruptcy Act 1966 s.40(1) (g), s41(3) (b)

Bankruptcy - Judgment for debt against guarantors - Judgment for possession of land of two guarantors - Bankruptcy notice issued against a third guarantor - Whether judgment against the third other guarantor stayed by execution of judgment for possession against first two guarantors - Whether bankruptcy notice should issue against a judgment debtor where there has been execution against other judgment debtors - Bankruptcy Act 1966 (Cth), ss 40(1)(g), 41(3)(b).

HEADNOTE

The appellant was one of five guarantors to a loan granted by the respondent to World Cup Rodeo Pty Ltd.

Security for the loan was also given by two of the guarantors over three parcels of land.

The borrower defaulted in repayment of moneys due under the loan agreement and the guarantors failed to pay such money to the respondent.

On 16 July 1982 judgment was entered in the Supreme Court of New South Wales for the respondent against the five guarantors, including the appellant, for the debt. The judgment remained unsatisfied.

In August 1982 the respondent obtained possession of the three parcels of land, and caused to be issued a bankruptcy notice to the appellant.

The appellant applied to have the notice set aside. His application was rejected by a single judge and he appealed to the Full Court.

He argued that by entering into possession of the lands and selling parts of them, the respondent had taken a step equivalent to a procedure of execution and that such execution being still in progress was a bar to further execution such as the issue of the bankruptcy notice.

Held: (1) The so called act of execution was against the property of the other guarantors, whereas the bankruptcy notice was against the appellant.

(2) The issue of a bankruptcy notice is not itself a form of execution.

(3) Execution against the mortgagors had not deprived the appellant of assets thereby preventing him paying the judgment debt and accordingly there was no ground for holding that execution on the judgment precluded the issue of a bankruptcy notice.

(4) Appeal dismissed.

Re A Bankruptcy Notice (1898) 1 QB 383; and Re Bond; Ex parte Capital and Counties Bank Ltd (1911) 2 KB 988, referred to.

HEARING

Sydney, 1983, October 31; November 1. #DATE 1:11:1983

R. Cameron, for the appellant.

P. Evans, for the respondent. Cur. adv. vult.

Solicitors for the appellant: Thomas F.…