Horvath, Gabor & Anor Ex Parte Commonwealth Bank of Australia [1997] FCA 187

IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA No VP 990 of 1996 BETWEEN: GABOR (SNR) HORVATH and AGOTA HORVATH ex parte: COMMONWEALTH BANK OF AUSTRALIA COURT: Merkel J DATE: 12 February 1997 PLACE: Melbourne EX TEMPORE REASONS FOR JUDGMENT HIS HONOUR: In this matter the Commonwealth Bank of Australia is petitioning for the bankruptcy of two judgment debtors, Mr Gabor Horvath and Mrs Agota Horvath. The debt arises out of a loan made by the bank to the two judgment debtors and their son who, it appears, was under age or a minor at the time the debt was incurred. The bank brought proceedings in the Supreme Court of Victoria to recover the debt. The result of the proceedings was that judgment was entered against the judgment debtors and a stay of proceedings on that judgment, which was granted by the Master, was set aside after a contested hearing before Beach J in the Supreme Court.

Beach J, in his reasons, indicated that: • he was satisfied that there were grounds for an arguable defence by the son, because he was a minor; • there were no such grounds nor was there an arguable defence for the parents being the judgment debtors; • There were no circumstances that would justify a stay of the judgment against the judgment debtors. As a consequence of the judgment a bankruptcy notice was duly served and an application was made by the debtors to set it aside. The matter came on for hearing before Northrop J in this Court. His Honour declined to set aside the bankruptcy notice and in the course of giving reasons referred to the fact that the judgment debtors were seeking to challenge the underlying judgment debt. His Honour had been told that there was an appeal pending in relation to the judgment given at trial against the son and that the judgment debtors contended that the judgment debt against them was not a proper one on the basis that the transaction, being void against the son, was also void against themselves. His Honour said in his reasons for judgment that the judgment against the judgment debtors is still in existence and must be acted upon as such until it is set aside. His Honour concluded that as the bank's petition was based upon the judgment debt the application to set aside the bankruptcy notice must fail. His Honour added that the: