ther | 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), s-41(3) (b) JOHN VINCENT WALLACE v. TRADE CREDITS LIMITED Coram: Bowen C.J., McGregor and Neaves JJ. 1 November 1983 Sydney IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES: DISTRICT REGISTRY) No. G92 of 1983 ) GENERAL DIVISION ) BETWEEN: JOHN VINCENT WALLACE Appellant AND: TRADE CREDITS LIMITED Respondent ~ CORAM: Bowen C.J., McGregor, Neaves JJ. DATE : 1 November 1983 ORDERS 1. The appeal is dismissed. 2. The appellant is to pay the respondent's costs. ~~, IN THE FEDERAL COURT OF AUSTRALIA baa a a w Ww ie) my ft! ip to tad NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION BETWEEN : JOHN VINCENT WALLACE Appellant AND: TRADE CREDITS LIMITED REASONS FOR JUDGMENT Coram: Bowen C.d., McGregor, Neaves JJ. Date: 1 November 1982 This 15 an appeal by JOHN VINCENT WALLACE 'appellant) against an order made on 8 April 1983 by a judge of this court wherein he refused to set aside or stav the operation of a Bankruptcy Notice dated 24 August 198% assued by the Deputv Reqistrar on the application of TRADE CREDITS LIMITED, judament ereditor (respondent) following entering of judqment ain the Supreme Court of New South Wales against the appellant and others on 16 Julv 1982. The Bankruptcy Notice was 1ssued in reliance on 5.41 of the Bankruptcy Act 1966 'the Act) and asserted that execution on the tudament had not been staved. In appears from the evidence that voursuant to a lcan agreement dared 31 December 1981, the respondent lent 4550,000.00 ri to WORLD CUP RODEO PTY. EIMITED (borrower). In respect of this transaction there were five quarantors including the appellant. Security also was given for the loan bv two of the guarantors, viz., Nickolas Mariosulas and Sophia Marioulas (mortaagors) over three parcels of Iland at, respectively, Abbotsford, Linley Point and Ryde. The mortgage over the Abbotsford land was subject to an earlier mortgage to Mercantile Mutual Life Insurance Company Limited. The monev was advanced to finance a business venture by the borrower, viz., the staging of th World Cun Podeo in Li] Melbourne and Svdnev. The business venture was not successful. In fact, on 15 February 1982 the borrower defaulted in renayment of monies due under the loan agreement; and the guarantors, including the mortqagcrs, farled to pav such money to the respondent. On 25 June 1982, the respondent was qiven leave by the Supreme Court of New South Wales to issue on or after 9 Julv 1982 a Writ of Pessession in respect of the three oroperties at Abbotsford, Linley Point and Ryde. On 14 July 1982. the Writ was Ltssued. On 16 July 1982 judgment was in the Supreme Court antered for the respondent against the five quarantors including the appellant for the debt, 1.2. then the sum of $603,755,72 being principal and interest outstanding under the loan agreement at the date of tudament. This judament remained unsatisfied. Before 24 August 1982 the respondent was already in possession af the properties at Abbotsford, Linley Point and Ryde. Gn that day the Bankruptcy Notice already referred to was issued. It was ll served on 28 August 1982. We were told that a Sequestration Order has been made against Nickolas and Sophia Mariculas. On 20 Sentember 1982, the appellant applied to have the Bankruptcy Notice set aside. The application was adjourned on several occasions and time for compliance with the Bankruptcy Notice extended pending the determination of his application. On 12 October 1982, the respondent sold the Ryde oroperty at public tha t auction and realized a net amount of 565,851.30. I+ avone u % nH wt ray nm s fa s steps mav have been taken to srepare the other ovroner sale but there was no evidence before the Judge at first instance as to whether a date had been set for any such sale or that anv income had been received in respect of those other properties. The Bankruptcy Notice, as will have been seen, was issued hefore the sum was received at the auction and made no allswance for uk. Tt 15 conceded that the interest calculation referred to in the )! } Bankruptcy Notice has been correctly made. The arguments advanced bv the arpellant to the Judge at first aianstance and to this Court ainciuded that the respondent, bv entering into possession of the lands at Abbotsford, Linley Point and Ryde and by selling the land at Ryda had taken a step equivalent to a procedure of execution; that such execution still being in progress was a4 bar to further execution euch as e.g. the 1ssue of the bankruptcy notice. We do not find it necessary to examine in detail the arguments so carefully presented on behalf of the appellant. We observe that the so called act of execution nere was against the property of the mortaaqors whereas the Eankruptcy Notice, ioe c mortqagors £ cr) whatever status it has, was against not th against the appellant. If it is necessary to sav 50, we donot reqard the In re A Bankruptev Notice (18598) 1 0.8. 38? at op.386,387. The basis upon which executi mon ai sudgment debtor s goods by a qudqment creditor, pursuant to a judgment obtained, precludes the issue of a Bankruptcy Notice by the iudgment creditor relving on non payment of the judgment debt i. that the taking of the qoods thereby deprives or may well deprive the jiudament debtor of assets which he could otherwise use to pav the ludoment creditor and thus comply with the Bankruptcy Notice. See a.a. In re Bond; ' Ex parte Capital and Counties Bank Limited (1911) K.B. 988 at p.99l1. In our view, no ground has bean mada out that because execution has been issued against two of the quarantors, being the mortaagors, the judgment against the apoelilant is thereby staved. That execution has not deprived the appellant of assets thereby preventing him paving the iudament debt. The jiudament 15 not one the execution of which has been staved within the meaning of s.40(1)(a) or 5.41°3)(b). Hence it could not be successfully UT arqued that proceedings on the Bankruptcy Notice should be staved or that it should be set aside. In our opinion, no errer has been shown in the reasons advanced bv the learned Judge at fairst instance against whose decision the appeal is brought. The appeal is dismissed. _ The appellant is to pay the respondent's costs. | certify that this and the 4. preceding pages are a true copy of the reasons for judgment herein of the Court Dated fri /F3 _