A. IN THE FEDERAL COURT OF AUSTRALIA } GENERAL DIVISION ) BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF OUEENSLAND ) OLB PET 1098 of RE: ERNEST BRIAN GRIEVE and SHIPRLEFE ANN GRIEVE EX PARTE: DAINFORD LIMITED ORDER JUDGE MAKING ORDER: SPENDER J. DATE OF ORDER: 11 March 1985 WHERE MADE: BRISBANE THE COURT ORDERS THAT: l. The bankruptcy notice of 4 July 1984 dicected to Ernest Brian Grieve and Shirlee Ann Grieve did not validly issue on the order of Sheahan J. 1983. 2. The creditor's petition of 28 October seeking the making of sequestration orders against Ernest Brian Grieve and Shirlee Ann Grieve 15 dismissed. 42 8s" IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISTON ) OLD PET 1028 of 1954 BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND } RE: ERNEST BRIAN GRIEVE and SHIPLEE ANN GRIEVE EX PARTE: DAINFORD LIMITED SEENDER J. 1) MARCH 1985 EXTEMPOKE REASONS FOR JUDGMENT This is a creditor's petition for sequestration against Ernest Brian Grieve and Shirlee Ann Grieve. It raises questions which are, unrortunately, of no present ainfrequency as to the circumstances inc'mhich a valid bankruptcy notice can he founded on an order for specific performance. This case has features a little different from others of a similar kind in that the persons whose estatey are sought to be sequestrated are quarantors under a contract for the purchase of a home unit on the Gold Coast. on NN N Queensland ordered that an agreement dated 24 October 8 October 1983, Sheahan J. in the Supreme Court of between Dainford Limited, the petitioning creditor, and Fosaqrove Investments Pty Limited, the first defendant, ought to specifically performed and carried into execution. His order was:- -. that the First Defendant within fourteen (14: days of today do pay into Court to the credit of this action the balance purchase price due under the said agreement namely $179,10u.00 together with interest upon the said balance purchase price in the sum of $88.32 per day for each and every day from and including the 6th day of December, 1982 until and ancluding the date when such payment unto Court shall be made AND IT IS FURTHER ORDERED that an account be taken if any party by its solicitors shall so require by written notice to the other party s ¢olivuators given within three (3) calendar months of to-day $ date as to the adjustment of rates, taxes and outgoings provided for in the said aqreement AND IT IS FURTHER GRDERED that the party by whom any sum shall be found payable to the other on the taking of such account shall pay such sum within seven .7) days of the taking of such account by such party to the other party s solicitors AND IT [S FURTHER ORDERED that within Fourteen 'l4) days after production or the receipt tor payment into Court as aforesaid to the Plaintiff 3 solicitors the Plaintiff execute and deliver to the solicitors for the first Defendant a Memorandum of Transfer in favour of the First Defendant in reqisterable form of an estate in fee simple ain Lot 121 in Reqistered Building UYnits Plan No. 5531, capable of making a transfer free of all encumbrances. AND that the Plaintiff do at the same time ueliver to the Solicitor for the First Defendant the Certificate or Title to the said Lot 121 free of all encumbrances save for mortgage 6578121 anda release of that mortgage together with any other documents necessary to enable the transferees to become registered as proprietor of an #25htate in fee simple in 4et 12] in Registered Building Units be Plan No. 5331 free of all encumbrances, and that the Plaintiff do at the same time deliver vacant possession of the said Lot 12! ta the First Defendant AND IT IS FURTHER ORDERED that the Plaintiff be at liberty to apply at any time and from time to time on notice to the Defendants for an order for payment out of Court to the Solicitors for the Plaintiff of such sum or sums as mav be necessary to discharge any encumbrance upon the said Lot 121 or to gain possession of the relevant Certificate of Title in order to perrorm its obligations under the said agreement or this order AND IT IS FURTHER ORDERED that the Plaintiff do recover against the First Defendant .ts costs of this action aincluding reserved costs to be taxed His Honour's judgment continued:- "And it is declared that, upon the construction of the written agreement between the plaintiff and the second and third defendants, (Ernest Brian Grieve and Shirlee Ann Grieve), being that agreement entitied Form of Guarantee' and contained in the agreement the subject of this action dated 24th day of October, 1981, that should the first defendant fail to satisfy the terms of this Judgment within the times thereby limited that the Second and/or Third defendants are liable to pay to the Plaintirr the balance purchase price due under the said agreement, namely $179,100, together with interest upon the said balance purchase price in the sum of s8A.32 per day for each and every day from and includina the 6th day of December 1982, until and including the date when such payments shall be made. and that the Second and/or Third defendants are liable to pay to the Plaintiff its costs of and ancidental to this action to be taxed." His Honour further ordered that any party be at liberty to apply. The bankruptcy notice directed to the second and third defendants in that action was issued out of the regictry of the southern district of the State of Queensland on 4 July 1984, and the creditor's petition is founded on the act of bankruptcy which 1s said to be constituted by the failure to pay the amount claimed in the notice or adopt any of the alternatives open toa debtor in those circumstances. The Registrar has indicated in his certificate to this court that a real question exists as to the validity of the bankruptcy notice. Two questions seem to arise as to its validity. Both must be resolved in favour of the petitioning creditoc befare 4 sequestration order can be made. The first is whether the judgment to which I have referred, and on 'vhich the petition is founded, is a final judgment or order within the meaning of s.49:1l)(q) or the Bankruptcy Act <«"the Act"). The second aspect relates to the requirement in that sub-section, namely whether it is a final judgment or order the execution of which has not been stayed. Iam prepared to accept that this judqment is a final judgment or order in the sense referred to in that section and, in particular, the description that it 18 a judgment which 13 a final adjudication of the rights of the parties. It 1s arguable whether this is the most appropriate form of order for specific performance of contract. Reference can profitably be made to Palmer v. Lark (1945) Ch. 182 as to the form in which this order is made. However, that question is irrelevant as far ag the issues with which 1 am concerned, Accepting 1t then to be a Final judqment or order, it seems to me to be accepted that, at the time of the bankruptcy notice, execution was not able to be immediately effected because of Order 47 Rule 16 of the Rules of the Supreme Court of Queensland. This provides:- "When a Judgment or order is to the effect that any party ils entitled to any relief subject to or upon the fulfilment of any condition or contingency, the party so entitled may, upon the fulfilment of the condition or contingency, and upon demand made upon the party against whom he is entitled to relief, apply to the court or a judge for leave to issue execution aqainst such party. And the court or judge may, if satisfied that the right to relief has arisen according to the terms of the judgment or order, order that execution issue accordingly, or may direct that any issue or question necessary for the determination of the rights of the parties be tried in any manner in which any question or issue of fact in an action may be tried." Alse, that same Order in Rule 25 provides:- "Every order of the court or a judge in any cause or matter may be enforced against all persons bound thereby in the same manner as a fudgment t9 the same effect." The authorities clearly establish in my view that, before a bankruptcy notice can validly issue, the Judaqment or order said to ground that bankruptcy notice has to have the character that execution can issue on it immediately. In re Ide 17 G.B. 755 at p.759, Bowen L.J. gaid:- "In order to entitle a creditor to 21ssue a bankruptcy notice, he must be ina position to issue eyecution on his judqment at the time when he issues the bankruptcy notice." That was referred to by the Court of Appeal in re a Debtor (1912) 3 K.B. 242, and in particular at p.247, where Farwell J., having refecred to Bowen L.J s. observations, said:- "In the case of ex_parte Ide, the creditor was not in that position; in the present case he was in that position, and therefore he was entitled to issue the notice." The cases consistently reflect the view that the requirement of immediate execution is crucial to the validity of a bankruptcy notice founded on a judgment or order: re John Perkins Seerg i7 A.B.C. 11; re Pannowitz, ex parte Wilson £1975] 38 F.L.R. 184. The words "the execution of which has not been stayed" are not restricted to cases where there is an express order ot the court: re a Debtor (1908) 1 K.B. 344; Ex parte Woodall, in re Woodall (1884) 13 G.B. 479; in re Ide (1886) 17 0.B. 755; lo Richards; ex parte Sowmers (1947) 14 A.B.C. 112. In my view, the fact that the right to immediate execution is a necessary part of a valid bankruptcy notice is strongly reflected in the provisions of s.40(3) of the Act which deals with the interpretation of s.40(1)(g). In each of the five circumstances there postulated, the capacity of the judgment or order to be immediately enforced is highlighted. In the first case, where leave has been given by a court to enforce an arbitration award, the award ig deemed to bea final order. In the second case, a judgment or order that 15 enforceable as a final judgment obtained in an action is deemed to be a final judgment. Essentially, therefore, 1f 1t has the enforceability characteristics of a final judgment in an action, then it is a judgment which comes within paragraph (1)(q) of 5.40, The third category deals with a judqment or order against a married woman. It provides a specific exemption from the requirements of immediate enforceability, as does the fifth category referred to in s.40:(3)(e@). The fourth category in 3.49(3)(d) equates the position of a person who 1s immediately entitled to issue execution with that of a creditor who has obtained a final judgment or order. That sub-section emphasises that the characteristics of immediate enforceability are the characteristics of a final judgment or order. aq In my view, the bankruptcy notice did not validly issue on the order of Sheahan J. of 28 October 1983. It follows that the creditor's petition must be dismissed. The creditor's petition in this matter seeking the making of sequestration orders against Ernest Brian Grieve and Shirlee Ann Grieve is, therefore, dismissed. I make no order as to costs. | certify that this and the 7 nr-seding pages areatiue csi, (fF Gor ton. fer t judgment here nat Fb > rota j Sper Mr Justice Sper our PS fmm Associate Dated //,3 ¥o oe