Re Coveos, Sia Ex Parte Sevastos, Steve & Anor [1995] FCA 1056

CATCHWORDS BANKRUPTCY - Application to review decision of registrar to refuse to set aside bankruptcy notice - whether judgment debt stayed under Pt 27 r2(13) of the Local Courts (Civil Claims) Rules - whether default in payment accelerates payment under consent orders pursuant to Pt 27 r1(2) and r3(2) - whether consent orders "otherwise provide" - whether silence as to acceleration means there shall be no acceleration - whether court order is an "agreement" - construction - whether entitled to interest on balance outstanding from time to time - whether timely payment was condition precedent to the foregoing of interest. Local Court (Civil Claims) Rules 1988 Pt 12 r3, Pt 27 r2(13), r3(2), r1(2) Bankruptcy Act 1966 (Cth) s 40(1)(g), s 41(3)(b) In Re HB (1904) 1 KB 94 Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 Deputy Commissioner of Taxation v Hadidi (1994) 51 FCR 453 RE: SIA COVEOS EX PARTE: STEVE SEVASTOS AND MARIA SEVASTOS No NN2416 OF 1995 Tamberlin J Sydney 15 December 1995

IN THE FEDERAL COURT OF AUSTRALIA) GENERAL DIVISION )No. NN2416 of 1995 BANKRUPTCY DISTRICT ) OF THE STATE OF NEW SOUTH WALES RE: SIA COVEOS EX PARTE: STEVE SEVASTOS and MARIA SEVASTOS CORAM: TAMBERLIN J PLACE: SYDNEY DATED: 15 DECEMBER 1995 MINUTE OF ORDERS THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant to pay the respondent's cost of the application. NOTE: Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA) GENERAL DIVISION ) No. NN2416 of 1995 BANKRUPTCY DISTRICT ) OF THE STATE OF NEW SOUTH WALES RE: SIA COVEOS EX PARTE: STEVE SEVASTOS and MARIA SEVASTOS CORAM: TAMBERLIN J PLACE: SYDNEY DATED: 15 DECEMBER 1995 REASONS FOR JUDGMENT This is an application to review a decision of Registrar Quinn, made on 21 November 1995, refusing an application to set aside a bankruptcy notice issued on 3 August 1995. The application is made on two bases. The first is that as at the time the bankruptcy notice was issued on 30 August 1995 the judgment debt on which it was based was not due and payable because there was a stay in force arising from the Local Courts (Civil Claims) Rules 1988 ("Local Court Rules"). The second submission is that an excessive amount of interest has been claimed. The facts, are not in dispute. They are in short compass and can be set out as follows. On 1 September 1993, judgment was entered by consent in the Local Court in the following terms: " Consent Orders 1. Verdict & Judgment for the Plaintiff in the sum of ($22,000) Twenty Two Thousand Dollars. 2. Each party pay their own costs of these proceedings. 3. The defendants to pay the judgment by two instalments of ($11,000) Eleven Thousand Dollars. The first instalment to be paid to the plaintiffs on or before the 1st day of March 1995 and the second instalment to be paid on or before the 1st September 1996. And the Court notes the agreement between the parties that no interest shall accrue on the judgment debt provided that the defendants pay the instalments on or before the due dates for payment. Dated 1st September 1993 Signed ............... Signed ............... Counsel for Plaintiffs Counsel for the Defendants " Section 40(1)(g) of the Bankruptcy Act 1966 ("the Act") requires that the judgment or order in relation to which a bankruptcy notice is issued must be "one the execution of which has not been stayed". Section 41(3)(b) prohibits the issue of a bankruptcy notice if, at the time of the application for its issue, the judgment or order to which it relates has been stayed. Accordingly, if the applicants' first submission is correct and the judgment of the Local Court was stayed the Notice must be set aside. The first instalment due under the judgment was required to be paid on 1 March 1995. It was not paid on that date. It was paid on 10 April 1995. The creditor's case is that as a result of this failure to pay on the due date, as required by Order 3 quoted above, the whole debt of $22,000 became immediately due and payable, together with interest on monies outstanding until payment as from 1 September 1993. The stay imposed under the Local Court Rules was lifted as a result of the failure. The debtor says that the late payment did not accelerate the $11,000 payment agreed to be made on 1 September 1996, and that the amount claimed in the Bankruptcy Notice was not then due and payable. The first question calls for a consideration of the relevant Local Court Rules. These are set out below. Part 12 rule 3 provides that: