ad —_ oy JUDGMENT. No. 523. Blam CATCHWORDS Bankruptcy - bankruptcy notices - validity - notices based on order for costs in favour of a company - notices required payment of debt to receivers and managers thereof. Bankruptcy - bankruptcy notices - time for compliance expired - power in Court to extend time for compliance. Companies - receivers and managers - court appointment thereof - not agents of the company. Bankruptcy Act (1966) ss.40(1) and 41 Companies (South Australia) Code (1981) s.573(1),(1A) Burt Boulton and Hayward v Bull [1895] 19B276 followed. Viola v Anglo~American Cold Storage Company [1912] 2 Ch 305 referred to. In re Savoy Estate Ltd [1949] Ch 622 referred to. Moss Steamship Co. v. Whinney [1912] AC 254 referred to. Parsons v Sovereign Bank of Canada [1913] AC 160 referred to. Wilmot v Buckley (1984) 56 ALR 589 referred to, Re Cartwright; Ex parte Cartwright v Barker [1975] 1 WLR 573 referred to. Re Arkell, Ex parte Arkell (1889) 6 Mor. 182 followed. RECFIVED - {OCT 1987 FEDERAL COURT OF A AUSTRALIA PRINCIPAL WL. (REGISTRY XO SNe Py wee mere er - we -- 2. In re a Debtor [1929] 2 Ch 146 referred to. In re Winterbottom; Ex parte Winterbottom (1886) 18QBD 446 followed. Streimer v Tamas (1981) 37 A.L.R. 211 followed. ERNST ABRAHAM SIEWERTSZ VAN REESEMA V AUSTRALIAN GROWTH RESOURCES CORPORATION PTY. LTD. No. G29 of 1987 Coram: Morling, Spender and Gummow JJ. 1 October 1987. SYDNEY. wae eg ee er IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA Re: Ex Parte: No. G29 of 1987 ERNST ABRAHAM SIEWERTSZ VAN REESEMA Appellant AUSTRALIAN GROWTH RESOURCES CORPORATION PTY LTD. (Receivers and Managers Appointed) Respondent MINUTE OF ORDER CORAM: WHERE MADE: DATE OF ORDER: THE COURT ORDERS THAT: MORLING, SPENDER AND GUMMOW JJ. SYDNEY 1 October 1987. (1) The time for compliance with the bankruptcy notices Nos. 1167/86, 1168/86, 1170/86, 1171/86 be extended until the date of the making of these orders. (2) The bankruptcy notices extended by order (1) hereof, be set aside. (3) The appeal otherwise be dismissed. " ee 2. (4) The order for costs made by Fisher J. on 27 March 1987 be varied so as to provide that the Appellant pay two-thirds of the costs of the proceedings at first instance. Note: Settlement and entry of orders 1s dealt with in Rule 124 of the Bankruptcy Rules. qm ts wo pe ween ees errr at arte ee 7 iS t Ds oo - = pee IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA Re: Ex Parte: CORAM H WHERE MADE DATE OF ORDER No. G29 of 1987 ee eee ERNST ABRAHAM SIEWERTSZ VAN REESEMA Appellant AUSTRALIAN GROWTH RESOURCES CORPORATION PTY. LTD. (Receivers and Managers Appointed) Respondent MORLING, SPENDER AND GUMMOW JJ. SYDNEY 1 October 1987. REASONS FOR JUDGMENT The Court: This is an appeal against a decision of a Judge of the Court (Fisher J.) dismissing five applications to set aside bankruptcy notices served on the Appellant ("the debtor") by the Respondent ("the Company"). Each of the notices was based on a separate Certificate of Judgment of the Supreme Court of South me ee eee ee bate aay cee 2. Australia for costs which the debtor was ordered to pay to the company. The orders were made in Action No. 1504 of 1985. The amounts claimed under the several bankruptcy notices totalled $22,663.40. This amount was made up as follows: Bankruptcy notice No. 1167/86 $6,604.23 pursuant to the order of White J. of 5/7/85. Bankruptcy notice No. 1168/86 $12,182.69 pursuant to the order of White J. of 5/7/85. Bankruptcy notice No. 1169/86 $1,247.09 pursuant to the order of O'Loughlin dg. of 5/9/85. Bankruptcy notice No. 1170/86 $1,730.63 pursuant to the order of the Full Court of 1/4/86. Bankruptcy notice No. 1171/86 $898.76 pursuant to the order of O'Loughlin J. of 26/9/85. The proceedings in the Supreme Court of South Australia were initiated by the Corporate Affairs Commission ("the Commission"). On 3 May 1985 the Commission made an application to the Supreme Court of South Australia pursuant to s.573 of the Companies (South Australia) Code ("the Code"). That section, to the extent relevant, provides as follows: "573(1) Where —- (a) an investigation is being carried out under this Code in relation to any act or omission by a a " 4 cee ks hoon ta oN we ON Yer age oe aN i te wee epee ee 3. person, being an act or omission that constitutes Or may constitute an offence against this Code; .(b) a prosecution has been instituted against a person for an offence against this Code; or (c) a civil proceeding has been instituted against a person under this Code, and the Court considers it necessary or desirable to do so for the purpose of protecting the interests of any persons to whom the person referred to in paragraph (a), (b) or (c), as the case may be (in this section referred to as the 'relevant person'), is liable or may be or become liable to pay any moneys, whether in respect of a debt, by way of damages or compensation or otherwise, or to account for any securities or other property, the Court may, on application by the Commission, make one or more of the following orders: (d) ... {e) an order prohibiting, either absolutely or subject to conditions, a person holding money, or securities or other property, on behalf of the relevant person or on behalf of any person associated with the relevant person from paying all or any of the money, or transferring, or otherwise parting with possession of, the securities or other property, to, or to another person at the direction or request of, the person on whose behalf the money, or the securities or other property, is or are held; {£) 4... (g) ... (h) an order appointing - (i)... (ii) where the relevant person is a body corporate - a receiver or receiver and manager, having such powers as the Court orders, of the property or of part of the property of that person." Section 573(1A) of the Code provides as follows: "573(1A). Where an application is made to the Court for an order under sub-section (1), the Court may, if in the ope ~ oe wee ¢ 4. opinion of the Court it is desirable to do so, before considering the application, grant an interim order, being an order of the kind applied for that is expressed to have effect pending the determination of the application." The Supreme Court exercised jurisdiction under s.573(1) upon being advised of an investigation by the Commission of a possible breach of Part IV Division 6 of-the Code by the Company. That Part relates to the issue by a company to the public of "prescribed interests". At all relevant times the debtor, his son and daughter were directors of the company. The application by the Commission named the company, the debtor, his son and daughter as respondents. On 7 May 1985 White J. made the following interim orders: "1. That upon service of this order upon Ernst Abraham Sewertsz [sic] Van Reesema, Martine Ludowici Sewertsz {sic] Van Reesema and Nicholas Anthony Sewertsz2 [sic] Van Reesema, the said Ernst Abraham Sewertsz [sic] Van Reesema, Martine Ludowici Sewertsz [sic] Van Reesema and Nicholas Anthony Sewertsz [sic] Van Reesema cease holding money, or securities or any other property on behalf of Australian Growth Resources Corporation Pty. Limited. 2. That Michael Jaunay Mount and Fredrick Charles Perkins be appointed jointly and severally as receivers and managers over all of the property of Australian Growth Resources Corporation Pty. Limited with power to:- (a) Enter upon or take possession of or receive the said property of Australian Growth Resources Corporation Pty. Limited. (b) Carry on the business of Australian Growth Resources Corporation Pty. Limited or any part thereof with all the powers of an absolute owner. (c) Do any such acts, assurances and things as, in the opinion of the said receivers and managers, are weer mee or ope te FO een wma ee 5. necessary or incidental to the proper performance of their duties pursuant to this order." Subsequent to the making of the interim orders there was much litigation in the Supreme Court both in Action No. 1504 of 1985 and in other proceedings. In the course of this litigation the debtor was ordered to pay the costs referred to in the five bankruptcy notices. At the hearing at first instance the debtor initially relied upon a number of grounds in support of his application that the bankruptcy notices be set aside. Some of these grounds appear to have been abandoned during the course of the hearing. However two substantial grounds were argued before Fisher J. and on the hearing of the appeal. First, it was submitted that each notice should be set aside because the orders for costs had been made, not in favour of the Company, but in favour of the receivers and managers. Secondly, it was contended that, in accordance with s.40(1)(q) of the Bankruptcy Act, 1966, the debtor had a counter-claim exceeding the amounts claimed by the Company, which counter-claim he could not have set up in the proceedings in which the orders for costs were obtained against him. Section 40(1)(g) of the Bankruptcy Act provides, in part, as follows: "40(1) A debtor commits an act of bankruptcy in each of the Woo Se nn ee following cases:- (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not - (i} where the notice was served in Australia - within the time fixed by the Registrar by whom the notice was issued; or (ii) ... comply with the requirements of the notice or satisfy the Court that he has a counter-clain, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he could not have set up in the action or proceeding in which the judgment or order was obtained;" In order to understand the debtor's first submission it is necessary to refer at some length to the forms of the various orders made in the Supreme Court, and to the Certificates of Judgment which were issued pursuant to those orders. Bankruptcy notices No. 1167/86 and No. 1168/86 were based on order made by White J. on 5 July 1985. That order was made in proceedings in which the Company applied for leave to issue a Writ of Attachment relating to certain contempts of court alleged against the debtor. The receivers and managers were not named as applicants in those proceedings. The formal order of the Court commences with the following words: "UPON THE APPLICATION of Australian Growth Resources Corporation Pty. Limited (Receivers and Managers appointed) (the said Company in receivership being hereinafter referred to as "the Company" and the i i en eagte- sec 7. Receivers and Managers appointed as "the Receiver".)....66." The relevant order for costs was expressed in the following terms: "AND IT IS HEREBY ORDERED: 4 That the Respondent do pay to Kelly and Co. of 55 Waymouth Street Adelaide within 3 calendar months of service of the relevant allocatur the taxed costs of the Receiver as between solicitor and client in relation to the contempt proceedings, including in such costs as a disbursement to be taxed the costs and expenses of the Receiver and the Receiver''s staff. In October 1986 the Deputy Registrar of the Supreme Court issued two Certificates of Judgment in respect of the order made by White J. on 5 July 1986. In each of these certificates it was stated that the Company was the party to whom payment of the costs was to be made. Upon the hearing of the appeal, we allowed the debtor to tender evidence that, after Fisher J. gave his decision, the Deputy Registrar issued fresh Certificates of Judgment in which "the Receiver" was named as the party to whom payment of the costs was to be made. Bankruptcy notice No. 1169/86 was based upon an order made by O'Loughlin J. on 5 September 1985. The order was made in an application brought by the debtor. It appears that the Commission and the Company (not the receivers and managers) were respondents to the application. The formal order of the Court was in the following terms: co pepe we weet een ree wwacct yr meee + pou 8. "IT IS ORDERED that the said application do stand dismissed and that the costs of and incidental to the application of the abovenamed Corporate Affairs Commission and Australian Growth Resources Corporation Pty. Ltd (Receivers and Managers Appointed) to be agreed or in default of agreement to be taxed, be paid by the said Ernst Abraham Siewertsz Van Reesema." After Pisher J. gave his decision a Certificate of Judgment was issued by the Deputy Registrar in which the company was named as the party to whom the costs payable under the order were to be paid. Bankruptcy notice No. 1170/86 was based upon an order of the Full Court of South Australia made on 1 April 1986. The order was made on appeal from the orders made by White J. on 5 July 1985. The formal order of the Full Court relevantly provided as follows: ",... AND UPON HEARING the said Ernst Abraham Siewertsz Van Reesema in person Mr Lane of counsel for the Corporate Affairs Commission and Mr M dg Barrett of counsel for Australian Growth Resources Corporation Pty. Ltd (receivers and managers appointed) the Court did reserve judgment AND the same standing for judgment this day THIS COURT DOTH ORDER: (2) That the said Ernst Abraham Siewertsz Van Reesema do pay to the Receivers and Managers of Australian Growth Resources Corporation Pty Ltd and the Corporate Affairs Commission their costs of the appeal to be taxed." eee The Deputy Registrar issued a Certificate of Judgment naming the Company as the party to whom the costs payable pursuant to the Full Court's order were to be paid. However, wer te a eee mee y- g. ve 9. after the hearing before Fisher J., a fresh Certificate was issued in which the name of the party to whom the costs were to be paid was stated to be "the Receivers and Managers of Australian Growth Resources Corporation Pty. Limited". Bankruptcy notice No. 1171/86 was based upon an order made by O'Loughlin J. on 26 September 1985. That order was made in an application (brought by the debtor) to which the Commission and the receivers and managers were respondents. The Company was not joined as a respondent. The relevant order for costs was in the following terms: "IT IS ORDERED AND DIRECTED: 5. That two-thirds of their costs of and incidental to this application including the attendance in Chambers on the 6th day of September 1985 be paid by the said Ernst Abraham Siewertsz Van Reesema to the Receivers and Managers of Australian Growth Resources Corporation Pty. Ltd." The Certificate of Judgment originally issued by the Deputy Registrar in respect of the last mentioned order named the Company as the party to whom the costs were to be paid. However, subsequent to the hearing before Fisher J, the Deputy Registrar issued a fresh Certificate in which he named the party to whom payment of the costs was to be made as "the Receivers and Managers of Australian Growth Resources Corporation Pty. Limited." It is convenient first to consider the application to set Vee ns saa Mat oe ees ee 10. aside bankruptcy notice No. 1169/86. In our opinion the learned primary judge was plainly correct in dismissing this application. The order for costs made by O'Loughlin J. on 5 September 1985 was indubitably made in favour of the Company. The receivers and managers were not parties to the proceedings in which that order was made. Bankruptcy notice No. 1169/86 was properly based on the order for costs made by O'Loughlin J. There is therefore no substance in the first ground of attack on this notice. We now turn to consider the second ground of attack on bankruptcy notice No. 1169/86. It was submitted that the debtor had a counter-claim equal to or exceeding the amount of the sum payable under O'Loughlin J's. order and that the counter-~claim could not have been set up in the proceedings before O'Loughlin 3. The alleged counter-claim was formulated in a Statement of Claim filed in Action No. 149 of 1987, in the following terms: "4, After the 7 May 1985 the said receivers and managers purported to take possession of the property of the said company and proceeded to conduct the said company in breach of its agreements and obligations to the plaintiff in that (a) The Receivers and Managers of the said company unlawfully and improperly took possession of the Plaintiff's property to the value of $30,000 and failed and refused to return the said property to the Plaintiff; eee 5. And the Plaintiff claims from the Defendant as follows:- Pursuant to paragraph 4(a) $30,000..." 11. Fisher J. held that any counter-claim that the debtor may have had was against the receivers and managers, and not against the Company. In our opinion this decision was plainly correct. Indeed, on the hearing of the appeal this was all but conceded. It was not disputed in argument before us that the receivers and managers acted in exercise of their powers, not as representatives or agents of the Company, but as persons appointed by the Court in response to the necessity or desirability perceived by the Court for protection of the persons described in sub-s.573(1) of the Code. In Burt, Boulton and Hayward v Bull [1895] 1 QB 276 at p.279 Lord Esher M.R. described the position of a receiver and manager appointed by the Court in these terms: "What is the position of such a receiver and manager? He is not the agent of the company. They do not appoint him; he is not bound to obey their directions; and they cannot dismiss him, however much they may disapprove of the mode in which he is carrying on the business. Only the Court can dismiss him, or give him directions as to the mode of carrying on the business, or interfere with him, if he is not carrying on the business properly. The incidents of his relation to the Court are such as would, if they existed as between him and an ordinary person, constitute him an agent for such person; but it is of course impossible to suppose that the relation of agent and principal exists between him and the Court. What is the inference that necessarily arises? It must be that the intention is that he shall act in pursuance of his appointment on his own responsibility and not as an agent, because otherwise nobody will be responsible for his acts. The company cannot be liable, for he is not their agent, and the Court clearly cannot be liable. Therefore any orders which he may give under such circumstances as manager must prima facie be taken to be orders given on his own responsibility and credit." LUN Me teneetor ee 8 Dont sane fa 8 ar ory 12. The source of the Court's power is to be found in the Code, but the statute adapts for its purposes the long established general jurisdiction of courts of equity to appoint receivers of property in jeopardy or in contention. Such receivers have been described as virtually representatives of the Court and of all the parties with an interest in the litigation wherein they are appointed, so that the possession of the receivers is to be treated as that of the Court which appointed them: Viola v Anglo-American Cold Storage Company [1912] 2 Ch 305 at p.311, In re Savoy Estate Ltd [1949] Ch 622 at p.635, Davis v Gray (1872) 83 US 203 at pp.217-218, O'Donovan "Company Receivers 'and Managers" pp.294-296, Clark "A Treatise on the Law and Practice of Receivers" 3rd Ed, vol-, Chs. 12, 13. Further, upon appointment of a receiver by the Court, the powers of the directors to deal with the property included in the appointment are suspended and the directors are largely excluded from the conduct and supervision of the business and affairs of the --company in--relation to that property: Moss Steamship Co: Ltd. v Whinney [1912] AC 254 at pp.260, 263, 271; Parsons v Sovereign Bank of Canada [1913] AC 160 at p.167. The claim propounded in paragraph 4 of the debtor's Statement of Claim is plainly a claim in conversion against the receivers and managers. It is not a counter-claim against the Company. We now turn to consider the remaining bankruptcy notices. As will appear from what we have already written, wre ee hay ke Yt . -4 au —-- oe ts wet . 13, bankruptcy notices No. 1167/86 and No. 1168/86 are based upon an order that the appellant "Pay to Kelly and Co...... the taxed costs of the Receiver --- including in such costs as a disbursement ... the costs and expenses of the Receivers and the Receiver's staff". Kelly and Co. had entered an appearance in the proceedings for the Company, not the receivers and managers. It was the Company alone which was the applicant in the proceedings. The order of the Full Court upon which bankruptcy notice No. 1170/86 is based was that the debtor pay the costs of "the Receivers and Managers", although only the Company, and the Commission were respondents to the appeal. The order for costs made by O'Loughlin J. and upon which bankruptcy notice No. 1171/86 was based was that the debtor pay costs to the receivers and managers, the Company not being a party to the proceedings. As we have already observed, at the time the matter was argued before Fisher J. the Certificates of Judgment described the Company as the party in whose favour the orders for costs had been made. However, it was the orders of the Court and not the Certificates of Judgment, which were central to the question of the validity of the bankruptcy notices: see Wilmot v_ Buckley (1984) 56 A.L.R. 589 and Re Cartwright; Ex parte Cartwright v Barker [1975] 1 W.L.R. 573; [1975] 2 All E.R. 970. The actual orders of the Court were in evidence before Fisher J. but they did not lead him to conclude that the various orders for costs had not been made in favour of the Company. He said, at p.19: mt ee Lor) wegt cae re eer 14. "It is my opinion, notwithstanding the variations in terminology, that each of the orders for costs was made for the benefit of the company. The receivers were before the Court only as the persons appointed by the Court to take charge, as against the directors, of the assets of the company. They were not before the Court in their personal capacity, the capacity in which they are allegedly liable to the debtor in conversion. In each instance the receivers were not named as parties to the proceedings and were not represented on the application separately from the company". His Honour's statement that the receivers were not named as parties to the proceedings is readily understandable, as their names do not appear as applicants or respondents in any of the headings of the formal court orders. We are bound to say that, as drawn up, the wording of some of the Supreme Court orders is somewhat arcane and gives rise to serious questions whether the orders carry into effect the real intentions of the judges who made then. It seems probable that insufficient consideration was given to the distinction between the Company and its receivers and managers. It is true, as Fisher J. said, that the receivers were before the Supreme Court only as the persons appointed by that Court to take charge of the assets of the Company. For instance, they were not joined as applicants in the proceedings which led to the making of the order of 5 July 1985 by White J., although the order recites the appearance of "counsel for the Receiver" and does not mention the appearance of any counsel for the Company. Nevertheless, it is inescapable that, as made, none of the orders (save the order upon which bankruptcy notice No. 1169/86 is based) ordered payment of costs to the Company. a ae oe Vee ep 15. Section 41 of the Bankruptcy Act provides, in part, as follows: "41(1) a bankruptcy notice - (a) shall be in accordance with the prescribed form; and (b) shall be issued by the Registrar. (2) The prescribed form of bankruptcy notice shall be such that the notice - (a) requires the debtor named in it, within a specified time (being the time referred to in sub-paragraph 40 (1) (g) (i) or (11), whichever 1s appropriate) to - (1) pay the judgment debt or sum ordered to be paid in accordance with the judgment or order; or (ii) secure the payment of the debt or sum to the satisfaction of the Court or the creditor or his agent, if any, specified in the notice or compound the debt or sum to the satisfaction of the creditor or his agent, if any, specified in the notice; and (b) states the consequences of non-compliance with the requirements of the notice. We readily understand that it can be said, in a loose sense, that all the orders for costs were made for the benefit of the Company. But we do not think that this is a sufficient basis for holding that the orders made in the Supreme Court are a sufficient basis for the issue of the bankruptcy notices, save the order upon which notice No. 1169/86 is based. The orders, in terms, require the payment of costs to the receivers and managers. If the debtor, in conformity with s.41(2), had paid the costs to the receivers and managers, he would have complied with the requirements of the bankruptcy notices. The wording of , ") . 2 eee weer op 1 ae aw yee ~ areas 16. s.41(2)(a)(i) of the Bankruptcy Act is unambiguous. A bankruptcy notice must require the debtor to pay the judgment debt or sum ordered to be paid "in accordance with the judgment or order". Even if it be accepted that the orders for costs were made for the benefit of the Company we do not think it can properly be said that the bankruptcy notices (save No. 1169/86) required the debtor to pay the costs in accordance with the judgments or orders upon which the notices were based. They were therefore invalid. This conclusion is supported by long' standing authority. In Re Arkell, Ex parte Arkell (1889) 6 Mor. 182, an order made in the Probate Division of the High Court required the defendant to pay an amount of costs to the solicitor for the plaintiff and a bankruptcy notice was subsequently issued by the plaintiff against the debtor. It was held that the plaintiff was not entitled to issue the notice, since the order required payment of the costs to the solicitor. Field dg. said, at p. 186, "the plaintiff could no doubt have got the order for payment of costs made payable to him, but the question is whether the petitioning creditor is entitled to serve the debtor with this notice as the matter stands". The bankruptcy notice in Arkell's case was issued pursuant to s.4(1)(g) of the Bankruptcy Act 1883 (U.K.) which was in terms not dissimilar to s.40(1)(g) of the Bankruptcy Act 1966. Arkell's case was referred to with apparent approval in the English Court of Appeal in In re a Debtor [1929] 2 Ch. 146 at pp.152-153. ay ene ee on mos nr 17. In In re Winterbottom; Ex parte Winterbottom (1886) 18 Q.B.D 446, a bank recovered a judgment against a debtor. The liquidator of the bank, one Nicholson, subsequently issued a Bankruptcy Notice in respect of the judgment debt. The debtor did not comply with the bankruptcy notice and a receiving order was made against him. The notice required the debtor to pay Nicholson, "the liquidator of the Manchester and Oldham Bank Limited" the sum of 800 pounds "claimed by him as being the amount due on a final judgment obtained by the bank against you in the Queen's Bench Division ...". It was held by Cave J. that the notice was bad because it was not in the name of the bank. These authorities support our conclusion that the bankruptcy notices (save no. 1169/86) were not properly issued. In these circumstances the question arises as to orders that should be made disposing of the appeal. In this regard it is necessary to refer to what happened after the hearing before Fisher J. His Honour's decision dismissing the applications to set aside the bankruptcy notices was given on 27 March 1987. An application was then made to extend the time within which compliance might be made with the requirements of the notices, pending the hearing of the appeal. This application was rendered necessary because, in the absence of an extension of time, non-compliance with the requirements of the notices would have resulted in acts of bankruptcy being committed by the debtor: see s.40(1)(g) of the Bankruptcy Act, 1966. wom, 18. On 27 March Forster J. made an order extending to 2 April the time for compliance with all the notices. No order was made on 2 April further extending the time for compliance. On 3 April the matter again came before Forster J. He then made an order extending the time for compliance to 16 April. The matter came back into the list again before Forster J. on 15 April when he made an order extending the time for compliance until the determination of the appeal. It was a condition of the order made by Forster J. that the appellant should pay $20,000 into Court within 21 days. On 4 May Forster J. varied his order of 15 April as follows: "IT vary my order of 15 April by altering the condition of the order then made which now is that on or before the 31 May 1987 the debtor cause to be paid into Court the sum of $20,000.00 to await the outcome of his appeal against the order of Mr Justice Fisher. The other conditions of my order of 15 April stand except that, the order concludes, if the sum of $20,000.00 be not paid into Court on or before 31 May as aforesaid, then the extension of time for compliance with the Bankruptcy Notices previously mentioned terminate on that day". As 31 May was a Sunday, in accordance with sub-rule 202(2) of the Bankruptcy Rules the last day for compliance with ares se wee Mer ame > ' e . an 19. the order, as varied, was 1 June 1987. No appeal was brought from Forster J's. order. The debtor did not pay $20,000 into Court. However, on 2 June he paid $1,197.16 into the Supreme Court of South Australia with a denial of liability. Apparently he attempted to pay this last mentioned sum into Court on 1 June after the Court office was closed, but was unsuccessful in doing so. Thus, in the result, the debtor did not comply with the condition referred to in the order of 4 May and time for compliance with the requirements of the bankruptcy notices has long since expired. After the hearing of the appeal we gave leave to the parties to make further submissions in writing dealing with, inter alia, the effect of the order made by Forster J. and the consequences of non-compliance with it. In the further submissions made on behalf of the appellant an application was made for an extension of time for compliance with the requirements of the bankruptcy notices. This application was opposed by counsel for the company. We have carefully considered whether we should accede to the application to extend time for compliance with the requirements of the notices. It is competent for the Court to grant the application - see Streimer v Tamas (1981) 37 A.L.R. 211. We have come to the conclusion that we should extend time for compliance with the notices, except No. 1169/86. It is true that a considerable time has elapsed since time for compliance «mer whee eee 20. with the notices expired. However, as appears from what we have written, the notices should not have been issued in the form they took. The Company will not be prejudiced if time for compliance with them is extended, since non-compliance with the requirements of bankruptcy notice No. 1169/86 has resulted in an available act of bankruptcy having been committed by the debtor. However, we do not think we should extend time for compliance with the requirements of bankruptcy notice No. 1169/86. That notice is valid, and time for compliance with its requirements expired on 1 June. Counsel for the debtor argued that since his client could only have complied with Forster J's. conditional orders of 15 April and 4 May by paying $20,000 into Court and since the amount referred to in notice No. 1169/86 was but a small part of that sum, it would be unreasonable to refuse a further extension of time to comply with the requirements of that notice. However, this argument overlooks the fact that at any time between 27 March and 15 May the debtor could have complied with the requirements of that notice by paying the appropriate amount to the Company. He neither did this nor appealed from Forster J's. order. Indeed, so far as we can deduce from the Court record and the material placed before us, Forster J. was not asked by the debtor to grant an extension of time for compliance with the requirements of that notice conditional only on the amount referred to in the notice being paid into Court. + sR aoe ae eer bee. a ai. In the result, we think orders should be made extending the time for compliance with the requirements of the notices (except no. 1169/86) until today's date and setting aside those notices. The appeal should otherwise be dismissed. The hearing before Fisher J. occupied several days, almost all that of time being taken up in the debtor's unsuccessful attempt to establish his alleged cross-—ciain. In these circumstances we think we should vary the order for costs made by Fisher J. by ordering the appellant to pay two thirds of the respondent's cost of the hearing at first instance. There should be no order as to the costs of the appeal. Whilst the debtor has been successful in setting aside four of the five notices, the Company will have available to it an act of bankruptcy upon which it canis present a petition for sequestration of the debtor's estate. The debtor has therefore not achieved any practical advantage from the appeal. I certify this and the twenty (20) preceding pages to be a true copy of the Reasons for Judgment of the court. Associate: C Mormeson Date: 1 October 1987. Fo orp exe or rn rerey aoe er ~ . 22. Counsel and Solicitors for the Appellant: Counsel and Solicitors for the Respondent: Dates of hearing: Place of hearing: R. Evans with E. Fardone instructed by Fardone and Co. M.L. Robertson, Q.C. with D.L. Jenkin instructed by Kelly and Co. 25 and 26 August 1987. Adelaide. ewes pee, ot ee oe