iW THE FEDERAL COURT OF AUSTRALIA BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY No. B2350 of 1986 oe eres RE: TONY VYOUNAN EX PARTE: HIDABE PTY LIMITED CORAM : Evatt J DATE : 23 December 1986 PLACE: Sydney REASONS FOR JUDGMENT Before the Court 15 an application dated 26 August 1986 by the judgment debtor seeking order of the Court that the Court order made earlier that day in the proceedings be vacated and that the Bankruptcy Notice B2350/86 1ssued on 28 May 1986 be set aside. The brief history leading up to the filing of the said application by the judgment debtor is as follows. The judgment creditor, Hidabe Pty Limited, trading as Rigby's Home Furnishers, on 8 May 1986 made application that a Bankruptcy Notice be issued under the Bankruptcy Act 1966 (the Act) against Tony Younan (the judgment debtor), in respect of a final judgment pan . ' . obtained by the judgment creditor against the deb Geart "the \ XN ~ By \ District Court at Taree on 25 February 1986 inf 'the sum of tu $11,789.12. The said notice was issued by the Court on 28 May 1986, it being a "21 day notice". It would appear that the said notice was served upon the debtor on 17 June 1986 so that the last day for compliance with the Notice would have been 8 July 1986. On 7 July 1986 an application supported by affidavits of the judgment debtor anda Mr Thomas Michael Clune, a law clerk, and Patrick Joseph O'Brien, solicitor, was filed with the Court. That application sought an order that the said Bankruptcy Notice be set aside on the grounds set out and further that the time for compliance with the requirements of the Notice be extended until the determination of the application. In accordance with s.41(6B) of the Bankruptcy Act, a Deputy Registrar in Bankruptcy ordered that upon condition that the Bankruptcy Notice was served on the debtor on 17 June 1986 the time allowed for compliance with the requirements of the Bankruptcy Notice was extended to 26 August 1986. Unfortunately, a copy of this order was not with the Court's papers when the matter was listed before a Deputy Registrar on the morning of 26 August 1986 when the application was listed at 9.30am in accordance with the usual practice. Apparently when the matter was called on before the Deputy Registar there was no appearance by the judgment debtor but Mr Hughes, solicitor of Hughes & Co of Sydney, acting as agent for Baker and Borthwick, Solicitors of Forster, solicitors for the judgment creditor appeared. The judgment debtor's application was then referred to the Court as presently constituted shortly Les) after 10.00am on 26 August 1986 when the matter was again called outside the Court. Again there was no appearance by the judgment debtor. At 10.20am Mr Hughes asked that the matter be struck out. A perusal of the file by the Court showed that the application had been filed by the applicant's solicitors whose address was shown as 135 Macquarie Street, Sydney. As pointed out above there was no copy of the Deputy Registar's order of 7 July 1986 extending the tame for compliance with the requirements of the Notice in the file. Consequently at 10.20am the Court ordered that the application of the judgment debtor be dismissed with costs. Later during the forenoon, while the Court was attending to other bankruptcy matters, the clerk to the Deputy Registrar's Court approached the Hench to ascertain what had happened to the present application as a solicitor for the judgment debtor had arrived in the Deputy Registrar's Court. The Clerk, having been informed that the matter had been struck out, was handed the file with the suggestion that the Deputy Registrar inform the judgment debtor's solicitor that if he could contact Mr Hughes the matter could be rementioned before the Court that morning. The Court completed its listing at 12.45pm and as nothing further had been heard from any of the parties in the present matter, adjourned. Later that afternoon the Court was informed that the applicant's solicitor was seeking an order abridging time for service of an application seeking orders varying or vacating the Courts order dismissing the application, it being hoped that the matter could be returned for hearing on the following day, 27 August 1986. The Court at that time was still not aware of the order of a Deputy Registrar of 7 July 1986 extending the time for compliance with the Notice. Time was abridged as asked. The fresh application came on for mention on 27 August 1986 at 10.15am when Mr O'Brien, solicitor, appeared for the judgment debtor. He apologised for his absence the day before and the Court accepted his explanation for the cause of that absence. When the matter was called on the application of 26 August 1986 was further amended allowing the applicant to seek an order extending time for compliance with the Bankruptcy Notice until further order of the Court. It was at this time that the Court as presently constituted, became aware of the Deputy Registrar's order of 7 July 1986. Further, it was then clear that the judgment debtor had filed a motion in the District Court of New South Wales at Taree on 4 July 1986 requesting that the default judgment obtained on 25 February 1986 against the judgment debtor, the judgment referred to in the Bankruptcy Notice, be set aside and that that motion was set down for hearing on 15 September 1986. Accordingly on 27 August 1986 the Court adjourned the application filed on 26 August 1986 until 22 September 1986, the Court extending time for compliance with the Notice from that day up and until 22 September 1986. This was done deliberately so that in effect there was a gap between midnight on 26 August 1986 until the order of the Court on the afternoon of 27 August 1986 during which it could be said that an act of bankruptcy had occurred. On 22 September 1986 the matter was relisted before the Court when the Court became aware that the judgment debtor's motion in the District Court seeking an order setting aside the judgment had been successful. Mr Hughes for the judgment creditor then submitted that the decision in Streimer v Tamas (1981) 37 ALR 211 was distinguishable. In my view the present case falls within the principles laid down in that case. I reject Mr Hughes' submission and his further submission that the judgment debtor had not prosecuted his application to set aside the District Court judgment with due diligence (see s.41(6C)(b)(ii)). The chronology in this matter is such that in my view the judgment creditor cannot be heard to say that the debtor had not prosecuted with due diligence an application to set aside the District Court judgment. The default judgment was obtained on 25 February 1986. The Bankruptcy Notice was issued on 28 May 1986 and served on 17 June 1986, On 7 July 1986 the judgment debtor's solicitor filed an application in this Court under the Bankruptcy Act seeking orders setting aside the said Bankruptcy Notice and for an order extending the time for compliance with the requirements of that Notice. On 4 July 1986 the debtor's solicitor had forwarded a Notice of Motion to the District Court at Taree wherein orders were sought setting aside the judgment. It is clear in my view that it cannot be said that the debtor acted without due diligence in all the circumstances. Accordingly on 22 September 1986 the Court ordered that time for compliance with the Notice be extended up and until that day and further ordered that the Bankruptcy Notice issued herein and dated 28 May 1986 be set aside and then indicated that the Court would publish its reasons at a future date. As to costs, the Court in its discretion is of the view that no order as to costs should be made in all the circumstances. I certify that this and the five preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Evatt Associate Dated: 23-13. 74 Solicitors for the Judgment Debtor: Colin W Love & Co., Sydney Solicitors for the Judgment Creditor: Hughes & Co. of Sydney acting as agent for Baker and Borthwick of Forster