Williams, J.M. v Dreamworld Productions Pty Ltd [1995] FCA 129

CATCHWORDS BANKRUPTCY - application to set aside bankruptcy notice - cross-claim - whether it "could not have been set up in the action" - application out of time - power of court to grant an extension Bankruptcy Act ss 40(1)(g), 41(7) Re Brink Ex parte The Commercial Banking Company of Sydney Ltd (1979-80) 44 FLR 135 Refd Re Willats Ex parte Nissan Finance Corporation Ltd (1991) 104 ALR 361 Refd Re James & Anor ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (1994) 123 ALR 342 Refd Walton v The National Mutual Life Association of Australia Limited Full Court, unreported 25.5.94 Refd Thurgood & Anor v National Bank of Australia Ltd) (1980) 53 FLR 51 Refd Bryant v Commonwealth Bank of Australia (unreported decision Full Court 9.11.94) Refd Re Bleyer Ex parte TCN Channel 9 Pty Limited (unreported decision Gummow J. 2.3.93) Refd Re: John Maurice Williams; Ex parte: The abovenamed v Dreamworld Productions Pty Ltd (ACN 009 904 492 (Receivers and Managers Appointed) No QP2517 of 1994 Kiefel J Brisbane 9 March 1995

IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND No. QP2517 of 1994 RE: JOHN MAURICE WILLIAMS EX PARTE: THE ABOVENAMED Applicant AND: DREAMWORLD PRODUCTIONS PTY LTD (ACN 009 904 492) (RECEIVERS AND MANAGERS APPOINTED) Respondent JUDGE MAKING ORDER: Kiefel J. DATE OF ORDER: 9 March 1995 WHERE MADE: Brisbane MINUTES OF ORDERS THE COURT ORDERS THAT: 1. The application be dismissed. 2. The costs be reserved to the hearing of the petition. NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND No. QP2517 of 1994 RE: JOHN MAURICE WILLIAMS EX PARTE: THE ABOVENAMED Applicant AND: DREAMWORLD PRODUCTIONS PTY LTD (ACN 009 904 492) (RECEIVERS AND MANAGERS APPOINTED) Respondent CORAM: Kiefel J. DATE: 9 March 1995 PLACE: Brisbane REASONS FOR JUDGMENT On 1 May 1991 judgment was entered in the District Court at Southport against Mr Williams in the sum of $17,000 for debt and $7,358.90 for interest, there having been default under Terms of Settlement. A bankruptcy notice founded on that judgment later issued and was served. The time for compliance with that notice expired on 29 September 1994. On 22 November 1994 the creditor filed a petition and by December 1994 the matter had been reviewed and a Certificate of the Registrar filed. Given the existence of matters of dispute raised by Mr Williams as to the creditor's entitlement to a sequestration order, the matter was recently listed for hearing by me in May 1995. In the meantime, on 24 February 1995 Mr Williams filed an application seeking an order setting aside the bankruptcy notice. No affidavit complying with the terms of s.41(7) Bankruptcy Act 1966 has ever been filed. Mr Williams, who appeared for himself and has, it seems, acted for himself at all times, did file a short document on 28 September 1994 which referred, in a general way, to claims to copyright and for breach of agreement which were said to be "in excess of $500,000". How these claims were said to survive the compromise was not adverted to. Assuming however that some challenge as to the fact of compromise was open to Mr Williams, and putting aside other defects as to the particularity of the claims, the document did not, as ss.41(7) and 40(1)(g) require, explain why these matters could not have been set up in the District Court proceedings. Mr Williams informed me that it was because he was unable to continue funding his Solicitors. Regrettable as that may be, it remains the case that the reference in s.40(1)(g) to a claim which could not have been set up in the proceedings refers to a claim which, by law, he could not set up: see Re Brink; ex parte The Commercial Banking Company of Sydney Ltd (1979-80) 44 FLR 135; Re Willats; ex parte Nissan Finance Corporation Ltd (1991) 104 ALR 361. That is to say it refers to a legal obstacle, and not one borne of practical considerations (see eg Walton v. The National Mutual Life Association of Australia Limited Full court, unreported 25.5.94; Re James & Anor ex parte Carter Holt Harvey Roofing (Australia) Pty. Ltd. (1994) 123 ALR 342; 348), here matters personal to the debtor. The result is that the automatic extension provided by s.41(7) has not been brought into operation. Further, in circumstances as here, where the time for compliance with the bankruptcy notice has passed without an extension having been applied for or granted (see Thurgood & Anor v. National Bank of Australia Ltd) (1980) 53 FLR 51) the Court does not have power to grant an extension. There is no inherent power and no such power can be implied since it would conflict with the terms of s.40(1)(g) and s.41(7): Bryant v. Commonwealth Bank of Australia unreported decision, Full Court, 9.11.94 (and see also Re: Bleyer; ex parte TCN Channel 9 Pty. Limited unreported decision, Gummow J. 2.3.93). An act of bankruptcy has therefore been committed, and there remains to be determined whether the creditor is entitled to an order of sequestration. Mr Williams has been referred to the provisions of and commentary on s.52 for the purpose of preparing to meet the creditor's petition. The application must be dismissed. With respect to costs, the creditor asks that they be reserved to the hearing of the petition. I certify that this and the preceding two pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel. Associate Date: 9 March 1995 Applicant: In person Counsel for the respondent: Mr C Wilson Solicitors for the respondent: MacGillivrays Date of Hearing: 9 March 1995 Place of Hearing: Brisbane Date of Judgment: 9 March 1995