Williams, J.M. v Dreamworld Productions Pty Ltd Summary

CATCHWORDS

BANKRUPTCY - application to set aside bankruptcy notice - cross-claim - whether it "could not have been set up in the action" - application out of time - power of court to grant an extension

Bankruptcy Act ss 40(1)(g), 41(7)

Re Brink Ex parte The Commercial Banking Company of Sydney Ltd (1979-80) 44 FLR 135 Refd
Re Willats Ex parte Nissan Finance Corporation Ltd (1991) 104 ALR 361 Refd
Re James & Anor ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (1994) 123 ALR 342 Refd
Walton v The National Mutual Life Association of Australia Limited Full Court, unreported 25.5.94 Refd
Thurgood & Anor v National Bank of Australia Ltd) (1980) 53 FLR 51 Refd
Bryant v Commonwealth Bank of Australia (unreported decision Full Court 9.11.94) Refd
Re Bleyer Ex parte TCN Channel 9 Pty Limited (unreported decision Gummow J. 2.3.93) Refd

Re: John Maurice Williams; Ex parte: The abovenamed v Dreamworld Productions Pty Ltd (ACN 009 904 492 (Receivers and Managers Appointed)
No QP2517 of 1994

Kiefel J Brisbane 9 March 1995

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND No. QP2517 of 1994

RE:JOHN MAURICE WILLIAMS

EX PARTE: THE ABOVENAMED
Applicant

AND:DREAMWORLD PRODUCTIONS PTY LTD
(ACN 009 904 492) (RECEIVERS AND MANAGERS APPOINTED)
Respondent

JUDGE MAKING ORDER: Kiefel J.

DATE OF ORDER: 9 March 1995
WHERE MADE: Brisbane

MINUTES OF ORDERS

THE COURT ORDERS THAT:

The application be dismissed.

The costs be reserved to the hearing of the petition.

NOTE:Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND No. QP2517 of 1994

RE:JOHN MAURICE WILLIAMS

EX PARTE: THE ABOVENAMED
Applicant

AND:DREAMWORLD PRODUCTIONS PTY LTD
(ACN 009 904 492) (RECEIVERS AND MANAGERS APPOINTED)
Respondent

CORAM:  Kiefel J.
DATE:  9 March 1995
PLACE:  Brisbane

REASONS FOR JUDGMENT

On 1 May 1991 judgment was entered in the District Court at Southport against Mr Williams in the sum of $17,000 for debt and $7,358.90 for interest, there having been default under Terms of Settlement. A bankruptcy notice founded on that judgment later issued and was served. The time for compliance with that notice expired on 29 September 1994. On 22 November 1994 the creditor filed a petition and by December 1994 the matter had been reviewed and a Certificate of the Registrar filed.

Given the existence of matters of dispute raised by Mr Williams as to the creditor's entitlement to a sequestration order, the matter was recently listed for
hearing by me in May 1995. In the meantime, on 24 February 1995 Mr Williams filed an application seeking an order setting aside the bankruptcy notice.

No affidavit complying with the terms of s.41(7) Bankruptcy Act 1966 has ever been filed. Mr Williams, who appeared for himself and has, it seems, acted for himself at all times, did file a short document on 28 September 1994 which referred, in a general way, to claims to copyright and for breach of agreement which were said to be "in excess of $500,000". How these claims were said to survive the compromise was not adverted to. Assuming however that some challenge as to the fact of compromise was open to Mr Williams, and putting aside other defects as to the particularity of the claims, the document did not, as ss.41(7) and 40(1)(g) require, explain why these matters could not have been set up in the District Court proceedings. Mr Williams informed me that it was because he was unable to continue funding his Solicitors. Regrettable as that may be, it remains the case that the reference in s.40(1)(g) to a claim which could not have been set up in the proceedings refers to a claim which, by law, he could not set up: see Re Brink; ex parte The Commercial Banking Company of Sydney Ltd (1979-80) 44 FLR 135; Re Willats; ex parte Nissan Finance Corporation Ltd (1991) 104 ALR 361. That is to say it refers to a legal obstacle, and not one borne of practical considerations (see eg Walton v. The National Mutual Life Association of Australia Limited Full court, unreported 25.5.94; Re James & Anor ex parte Carter Holt Harvey Roofing (Australia) Pty. Ltd. (1994) 123 ALR 342; 348), here matters personal to the debtor.

The result is that the automatic extension provided by s.41(7) has not been brought into operation. Further, in circumstances as here, where the time for compliance with the bankruptcy notice has passed without an extension having been applied for or granted (see Thurgood & Anor v. National Bank of Australia Ltd)(1980) 53 FLR 51) the Court does not have power to grant an extension. There is no inherent power and no such power can be implied since it would conflict with the terms of s.40(1)(g) and s.41(7): Bryant v. Commonwealth Bank of Australia unreported decision, Full Court, 9.11.94 (and see also Re: Bleyer; ex parte TCN Channel 9 Pty. Limited unreported decision, Gummow J. 2.3.93).

An act of bankruptcy has therefore been committed, and there remains to be determined whether the creditor is entitled to an order of sequestration. Mr Williams has been referred to the provisions of and commentary on s.52 for the purpose of preparing to meet the creditor's petition.

The application must be dismissed. With respect to costs, the creditor asks that they be reserved to the hearing of the petition.

I certify that this and the preceding two pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel.

Associate

Date:9 March 1995

Applicant:In person

Counsel for the respondent: Mr C Wilson
Solicitors for the respondent: MacGillivrays

Date of Hearing:  9 March 1995
Place of Hearing:  Brisbane
Date of Judgment:  9 March 1995

In the case of Williams, J.M. v Dreamworld Productions Pty Ltd, the applicant, John Maurice Williams, sought an order to set aside a bankruptcy notice issued by the respondent, Dreamworld Productions Pty Ltd, on the basis of an alleged debt. The Federal Court of Australia was tasked with determining the validity of the application and the respondent's entitlement to a sequestration order. The primary legal issue was whether the applicant's application to set aside the bankruptcy notice was within the allowable time frame and whether the claims presented could legally be considered under the Bankruptcy Act.

Justice Kiefel examined the statutory provisions under sections 40(1)(g) and 41(7) of the Bankruptcy Act, which outline the conditions for setting aside a bankruptcy notice. The court noted that the applicant had not filed an affidavit in compliance with section 41(7) and that the claims raised were not sufficiently detailed to meet the legal requirements. The court found that the applicant's inability to fund his legal representation did not constitute a legal obstacle that would permit the setting aside of the bankruptcy notice. Consequently, the automatic extension of time provided by section 41(7) did not apply, and the court lacked the power to grant an extension once the compliance period had expired.

Given these findings, the court dismissed the applicant's application to set aside the bankruptcy notice. Justice Kiefel highlighted that an act of bankruptcy had occurred and directed the applicant to prepare for the hearing of the respondent's petition for a sequestration order. The court reserved the costs to be determined at the hearing of the petition. This decision underscores the strict compliance required under the Bankruptcy Act for applications to set aside bankruptcy notices and the limited circumstances in which extensions of time may be granted.

Williams, J.M. v Dreamworld Productions Pty Ltd

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established