Wan v MIMA

Case [2001] FCA 188

FEDERAL COURT OF AUSTRALIA

Reasonable Endeavours Pty Ltd v Dennehy [2001] FCA 188

BANKRUPTCY – notice of opposition to applicant creditor’s petition – whether bankruptcy notice was invalid on account of execution on the judgment upon which it relied being stayed at the time the bankruptcy notice was applied for and deemed to be served – whether execution on the judgment can be said to have stayed on account of the fact that leave of the Supreme Court of Victoria is required before a warrant of seizure and sale may be issued

Bankruptcy Act 1966 (Cth) ss40(1)(g), 41(3)(b)

Re Exell; ex parte Martin (1995) 62 FCR 337 not followed

In Re Overseas Aviation Engineering (GB) Ltd [1963] Ch 24 referred to

Re Pannowitz; ex parte Wilson (1975) 38 FLR 184 followed

Re Seers (1955) 17 ABC 11 referred to

Penning v Steel Tube Supplies Pty Ltd (1988) 18 FCR 568 applied

Ex parte Ide; Re Ide (1886) 17 QBD 755 referred to

Cawood v Cawood [2000] FCA 1786 followed

Abigroup Ltd v Abignano (1992) 39 FCR 74 applied

REASONABLE ENDEAVOURS PTY LTD (FORMERLY ASIACITI (AUSTRALIA) PTY LTD) v GERARD PETER DENNEHY

V 7093 OF 2000

MARSHALL J
MELBOURNE
9 MARCH 2001

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 7093 OF 2000

BETWEEN:

REASONABLE ENDEAVOURS PTY LTD (FORMERLY ASIACITI (AUSTRALIA) PTY LTD)
APPLICANT

AND:

GERARD PETER DENNEHY
RESPONDENT

JUDGE:

MARSHALL J

DATE OF ORDER:

9 MARCH 2001

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

The creditor’s petition be dismissed with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 7093 OF 2000

BETWEEN:

REASONABLE ENDEAVOURS PTY LTD (FORMERLY ASIACITI (AUSTRALIA) PTY LTD)
APPLICANT

AND:

GERARD PETER DENNEHY
RESPONDENT

JUDGE:

MARSHALL J

DATE:

9 MARCH 2001

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

  1. On 24 February 2000, the applicant creditor caused a creditor’s petition to be issued. The petition sought the sequestration of the respondent debtor’s estate. The applicant alleged that the respondent owed it the sum of $564,303.76 pursuant to a final judgment obtained by the applicant in the Supreme Court of Victoria on 28 November 1991. It was not until early 1999 that the applicant applied for the issue of a bankruptcy notice. The relevant bankruptcy notice was issued on 14 October 1999.

  2. On 25 August 2000, the respondent filed a notice of intention to oppose the applicant’s petition. Paragraph 5 of the notice provided as follows:

    “The said Bankruptcy Notice is invalid pursuant to section 41(3)(b) as being applied for and deemed served at a time when execution on the judgment on which it relies was stayed – the debtor will submit that Re Exell; ex parte Martin (1995) 62 FCR 337 was wrongly decided … .”

  3. On 25 October 2000, Registrar Wood ordered that paragraph 5 of the notice of intention to oppose be tried as a preliminary issue.

    The statutory context

  4. Section 41(3)(b) of the Bankruptcy Act

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AGLC
Wan v MIMA [2001] FCA 188
Case
[2001] FCA 188
Decision Date

CaseChat Overview and Summary

The case of Wan v MIMA involves the applicant creditor, who seeks to have a bankruptcy notice issued against a debtor. The legal dispute hinges on whether the creditor had taken all necessary steps to reap the fruits of its judgment before issuing the bankruptcy notice. The case was heard by Olney J in the Federal Court of Australia. The central issue before the court was whether the creditor had satisfied all prerequisites to issue a valid bankruptcy notice, specifically whether it had taken all necessary steps to immediately execute upon its judgment against the debtor.

The court was required to decide whether the creditor, having not yet obtained leave from the Supreme Court of Victoria to apply for a warrant of seizure and sale, could be considered to have taken all necessary steps to reap the fruits of its judgment. This interpretation of "execution" was pivotal, as it determined the creditor's eligibility to issue a bankruptcy notice. The court examined previous cases such as Cawood, Abigroup, and Exell to understand the requisite steps for a creditor to be able to issue a valid bankruptcy notice. Mr Nolan argued that Cawood and Abigroup could be distinguished from the present case based on the creditors' failure to take all necessary steps, but the court found this distinction unconvincing, asserting that the principles applied in Cawood and Abigroup were applicable to the present case.

The court concluded that the applicant creditor had not taken all necessary steps to entitle it to issue a bankruptcy notice, as it still required leave from the Supreme Court of Victoria to execute upon its judgment. This conclusion aligns with the reasoning in Cawood and the Full Court's judgment in Abigroup. Consequently, the court dismissed the creditor's petition and awarded costs.

Orders

Orders of the court

The creditor’s petition be dismissed with costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

MARSHALL J
In his written submissions provided on 5 February 2001, Mr Bigmore observed that Abigroup contains a statement of principle consistent with the oral submissions he advanced before the Court. He also stated that Cawood provided further support for those submissions in that it confirmed Seers and was inconsistent with Exell. Mr Nolan provided his written submissions on 26 February 2001. He contended that the essence of Sackville J’s reasoning in Cawood was that a creditor applying for the issue of a bankruptcy notice must be a person who had taken all the steps that entitled her or him to reap the judgment’s fruits. Sackville J equated Mrs Cawood with a creditor who had to obtain leave of the Court to issue execution. She had not obtained such leave; therefore, she was not in a position to reap the judgment’s fruits, that is, to obtain a valid bankruptcy notice. Mr Nolan asserted that Sackville J did not construe the meaning of “execution” and would have reached the same conclusion whether he had given it a broad or narrow meaning. Mr Nolan interpreted Abigroup similarly. Mr Nolan stated that the Full Court found the bankruptcy notice invalid because the creditor was not in a position to execute immediately upon the judgment given against the debtor named in the bankruptcy notice; the Court having decided this without interpreting the meaning of “execution”. Mr Nolan argued that Cawood and Abigroup could be distinguished on their facts from the present matter because the creditors in these cases had not taken all necessary steps to reap their judgment’s fruits. I do not accept Mr Nolan’s differentiation of Cawood and Abigroup from the present matter. The applicant creditor was not in a position to issue immediate execution upon a final judgment, just as Mrs Cawood and the creditor in Abigroup were not in such a position. The applicant creditor still had to obtain leave of the Supreme Court of Victoria to obtain a warrant of seizure and sale. Consequently, Cawood and Abigroup are not relevantly distinguishable, and the fact that they did not discuss the meaning of “execution” does not weaken their authority.Conclusion In the present matter, the applicant creditor, at the time of the issuing of the bankruptcy notice, had not taken all steps necessary to entitle it to reap the fruits of its judgment. One of those steps was the application for leave to apply for a warrant of seizure and sale. I agree with the approach taken by Sackville J in Cawood and am content to follow it, especially as it derives support from the Full Court’s judgment in Abigroup. That approach is also consistent with the view taken by Riley J in Pannowitz and by the Full Court in Penning, albeit by way of dicta. The judgment of Olney J in Exell stands on its own as pointing to an opposite conclusion. I do not consider that Exell should be followed especially having regard to the historical analysis undertaken in Abigroup, referred to at [24] above, which supports Riley J’s analysis in Pannowitz.Order

Ratio Decidendi

Legal Principle Established

Established by: MARSHALL J

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