IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY No. B4272 of 1983 le BRUCE SCOTT McWILLIAM EX PARTE: PALIDO PTY. LIMITED ORDER Judge making order: Beaumont, J. When order made: 3 November, 1983. Where made: Sydney. THE COURT ORDERS THAT: 1. The time for compliance by the debtor with the require- ments of Bankruptcy Notice No. B4272 of 1983 issued by Palido Pty. Limited be extended up to and including 5 December, 1983. 2. The application is adjourned until 5 December, 1983. 3. Costs reserved. IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION OF NEW SOUTH WALES AND THE ) ) BANKRUPTCY DISTRICT OF THE STATE ) ) ) ) ) AUSTRALIAN CAPITAL TERRITORY No. B4272 of 1983 RE: BRUCE SCOTT McWILLIAM EX PARTE: PALIDO PTY. LIMITED CORAM: Beaumont, J. DATED: 3 November, 1983. REASONS FOR JUDGMENT In this matter, the debtor seeks an extension of time for compliance with the requirements of a Bankruptcy Notice issued against him. The extension of time sought is for the purpose of seeking Legal Aid in the first instance. If Legal Aid is granted, the debtor proposes to apply to the District Court to set aside the default judgment obtained against him upon which the subject Bankruptcy Notice 1s based. The judgment which was obtained by default by the creditor was itself based on a statement of liquidated claim against three defendants. The first defendant, Australian Direct Mail Advertising and Addressing Co. Pty. Ltd. 1s a company now in receivership but of which the debtor and his brother, Peter Bruce McWilliam, are directors. The other defendants to the statement of liquidated claim are the debtor and his brother. The claim made in the District Court was for moneys owing by the corporate defendant for rent of premises pursuant to a Memorandum of Lease to which reference will be made later. The claim made against the personal defendant, being the debtor and his brother, was alleged to be upon a guarantee of due performance by the corporate defendant of the covenants contained in the Memorandum of Lease. Paragraph 2 of the statement of liquidated claim alleged that by Memorandum of Lease registered number R597684 dated 31 July, 1979, the corporate defendant leased from the plaintiff certain premises at a certain rent. Paragraph 3 of the statement of liquidated claim alleged that the personal defendants guaranteed the due performance and observance by the corporate defendant as lessee of covenants contained in the said lease. In evidence tendered in this application, it emerged that the Memorandum of Lease referred to in the statement of liquidated claim was, in fact, a lease made between Stocks & Realty' (Allerton) Pty. Limited as lessor and the corporate defendant as lessee. Clause 11 of the Memorandum of Lease contained a covenant by the debtor and his brother in which they . "severally covenant and agree with the lessor that they guarantee and each of them guarantees the due performance and observance . by the lessee of the covenants herein contained ...". There is no express provision in the Memorandum of Lease which provides in terms that the reference in Clause 11 to the lessor should be construed as a covenant or agreement made with the lessor and its assigns. It would appear that, after entering into the lease, Stocks & Realty (Allerton) Pty. Limited transferred to the creditor the freehold being the reversion expectant upon the lease to Australian Direct Mail Advertising and Addressing Co. Pty. Ltd. There is no explicit evidence to this effect but it is submitted on behalf of the creditor that an inference to this effect should be drawn from, for example, correspondence from the corporate defendant written by the debtor as its managing director, in which reference is made to a claim for outstanding rent by the creditor. This inference may well be drawn but I do not think that it is open also to infer that at the time of the transfer of the freehold, there was also assigned to the creditor the benefit of the guarantee contained in Clause 1l of the Memorandum of Lease. In those circumstances, it is submitted that in the absence of an express assignment, the creditor is not entitled to the benefit of the guarantee. Reference is made to International Leasing Corporation (Vic.) Ltd. v. Aiken (1966) 85 WN (Pt. 1) (NSW) 766 at pp.796-7; and Sacher Investments Pty. Ltd. v. Forma Stereo Consultants Pty. Ltd. (1976) 1 N.S.W.L.R. 5. There is force in the submission although it would not be appropriate for me to express a view on it in this application. However, there is also in evidence correspondence from the cor- porate defendant,written on its behalf by the debtor, which would appear to constitute an admission, at least on behalf of the corporate defendant, that some rent is owing. It may be that at least one of those letters (the letter of 25 November, 1982) was written on a "without prejudice" basis. Further, it 1s not at all clear whether the letter constituted an admission, 1f at all, so far as the debtor was concerned. Again, it is not appro- priate that I express a view on this question in this application. As has been said, the debtor seeks only an extension of time for compliance with the Bankruptcy Notice at this stage. In my opinion, the debtor has demonstrated to my satisfaction that a real or arguable question has arisen as to whether the judgment obtained by default should stand. I am therefore of the view that the application should, in principle, be acceded to but that the matter should remain in the control of the Court so as to ensure that any application to the District Court is prosecuted with due diligence. In the circumstances, I am of the view that the appropriate order to be made at this stage is to extend the time for compliance with the Bankruptcy Notice for a period of one month. I propose so to order. | certify that this andthe 5 preceding pages are'a true copy of the reasons for judgment herein of The Honourable Mr Justice Beaumont. Dera hay Associate | Dated 2 Nevemrer (9%3