Shaddock, Edward Arthur v Commonwealth Bank of Australia [1997] FCA 947

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VG 7247 of 1997

BETWEEN: EDWARD ARTHUR SHADDOCK

Applicant

AND: COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124)

Respondent

JUDGE: RYAN J

DATE: 16 SEPTEMBER 1997

PLACE: MELBOURNE

REASONS FOR JUDGMENT The applicant in these proceedings seeks a review of an order made by Registrar Agnew on 18 June 1997 dismissing an application to set aside a bankruptcy notice served on 27 March 1997 ("the bankruptcy notice"). The bankruptcy notice claimed a judgment debt of $237,091.62 plus accrued interest making a total amount claimed of $282,278.03. After the issue of the bankruptcy notice but before it was served, the respondent, the Commonwealth Bank of Australia ("the Bank"), sold the property which it held as security for moneys owing by the debtor, possession of which it had obtained in the same proceeding which gave rise to the judgment debt. On 16 April 1997, the debtor applied to set aside the bankruptcy notice and on the same day an order was made extending the time for compliance with the bankruptcy notice to 4.00pm on 19 May 1997 or further order. On 17 May 1997 Registrar Agnew further extended the time for compliance to 4.00pm on 17 June 1997. It appears that on 17 June 1997 Registrar Agnew stood the debtor's application over to 18 June 1997 after recording a decision that "the affidavit of E.A. Shaddock sworn 16 April 1997 does not satisfy the requirements of s 40(1)(g) in that it does not identify on its face a counter-claim, set-off or cross-demand equal to or exceeding the sum due under the judgment". It does not appear that the learned Registrar made any order on 17 June 1997 further extending the time for compliance with the bankruptcy notice. She contented herself on 18 June 1997 with formally dismissing the application and making orders in respect of the costs of the application. By motion on notice dated 4 August 1997 the debtor seeks: 1. That the application to the Court dated the 2nd day of July, 1997 be amended in relation to the first order sought by deleting a reference to Section 14(5) of the Bankruptcy Act 1966 and substituting therefor a reference to Section 35A(5) of the Federal Court of Australia Act 1976. 2. That the application to the Court dated the 16th day of April, 1997 be amended to include a further order sought in the following terms: "5. A declaration that the Applicant has a counterclaim set-off or cross demand of the type referred to in Section 40(1)(g) of the Bankruptcy Act 1966." 3. That the time for compliance with Bankruptcy Notice VN 371/97 be extended to the 11th day of August, 1997 or such further order. 4. Such further or other orders as this Honourable Court deems appropriate. Mr Nolan of Counsel for the Bank submitted that there can be no deemed extension of time for compliance with a bankruptcy notice pursuant to s 41(7) when an application to challenge such a notice by way of counter-claim has been dismissed by the Court. Section 41(7) is in the following terms: Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied. Mr Nolan submits that notwithstanding that a review of a decision on an application to set aside a bankruptcy notice is by way of a hearing de novo, "the Court" for the purposes of s 41(7) of the Act comprises the Registrar exercising the delegated judicial power of the Court. It follows, therefore, in Mr Nolan's submission, that, pursuant to s 41(7), the determination by the Registrar on 18 June 1997 to dismiss the application to set aside the bankruptcy notice meant that the time for compliance with the bankruptcy notice was deemed to have been extended only to the date of the Registrar's determination. Consequently an act of bankruptcy was committed by the debtor on the last moment of that day. Mr Nolan further submitted that the power to extend time for compliance with a bankruptcy notice is in aid of an application to set aside a bankruptcy notice and relied on McLean v Australia and New Zealand Banking Group Ltd and Anor (1993) 42 FCR 300, particularly at 306 where I observed: I have already concluded that the power to extend time is to facilitate a challenge to the bankruptcy notice. That entails that, in the absence of a continuing challenge to the bankruptcy notice, there is no power in the court to grant an extension of time for compliance. Ms Horivitz of Counsel for the debtor submitted that, pursuant to s 41(7), time for compliance with a bankruptcy notice is deemed to be extended until the Court makes a determination upon the debtor's application asserting the existence of a cross-claim. It was further contended, however, that as this Court, upon review, deals with the original application by way of a rehearing de novo then "the Court" for the purposes of s 41(7) comprises the Court conducting the review and not the Registrar who makes the initial, reviewable, determination. Thus, it was argued, that until and including the day when this Court, as presently constituted, decides whether the debtor has a counter-claim of the requisite kind, the time for compliance with the bankruptcy notice is deemed to be still running and allows the debtor to comply with the notice by payment or have it set aside by satisfying a Judge on review of the existence of the requisite kind of counter-claim, set-off or cross-demand. Ms Horivitz also sought to rely upon s 41(6A) of the Act by contending that notwithstanding that the application to set aside the bankruptcy notice by asserting a cross-claim had been dismissed by the Registrar, the Court could, in its discretion, extend time for compliance with the bankruptcy notice pursuant to that sub-section. Section 41(6A) of the Act is in the following terms: Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice: