FEDERAL COURT OF AUSTRALIA Bankruptcy - creditors petition - whether no act of bankruptcy - whether, at time of issue or of service of bankruptcy notice, there was a final judgment or order the execution of which has not been stayed - whether debtor entitled to a stay where application for rehearing of claim before Consumer Claims Tribunal was out of time. Bankruptcy Act 1966 - s 40 Consumer Claims Tribunals Act 1987 - ss 12, 25 GERARD CONWAY V JAN MOGENSEN NG 7334 of 1998 JUDGE: BEAUMONT J. PLACE: SYDNEY DATE: 26 MAY 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 7334 of 1998 BETWEEN: GERARD CONWAY CREDITOR AND: JAN MOGENSEN DEBTOR JUDGE: BEAUMONT J. DATE OF ORDER: 26 MAY 1998 WHERE MADE: SYDNEY ORDERS: 1. Costs reserved. 2. Stand the matter over until 5 June 1998. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 7334 of 1998 BETWEEN: GERARD CONWAY CREDITOR AND: JAN MOGENSEN DEBTOR JUDGE: BEAUMONT J. DATE: 26 MAY 1998 PLACE: SYDNEY REASONS FOR JUDGMENT BEAUMONT J: Before the Court is a creditor's petition based upon an act of bankruptcy, which itself was based upon a judgment issued by the Sutherland Local Court in the following circumstances. In December 1997 a claim was made by the creditor against the debtor in the Consumer Claims Tribunal ("the Tribunal") pursuant to the provisions of the Consumer Claims Tribunals Act 1987 (NSW) ("the Act"). The matter was listed for hearing on 5 December 1997 before the Tribunal. It appears that the debtor sent a message by facsimile transmission to the Tribunal that he was unable to appear on that date. However, an order was then made by the Tribunal that the debtor pay the creditor the sum of $15,321. On 16 December 1997 the debtor received notice of this order. On 15 January 1998 the creditor registered the order of the Tribunal as a judgment of the Local Court at Sutherland pursuant to the provisions of Division 4 of Part 4 of the Act. On 19 January 1998 a certificate of judgment was issued by the Local Court. On 28 January 1998 the debtor applied for a rehearing of the matter before the Tribunal. This application was made pursuant to s 25(1) of the Act which states: "If a tribunal has decided an issue in dispute in the absence of a party to a consumer claim or a consumer claim has been dismissed under section 24(2), a referee may, on application in the approved form lodged at the registry within 14 days after receiving notice of the decision or the order dismissing the claim, order the claim to be reheard if satisfied that there was sufficient reason for the party's absence." On 29 January 1998 a referee purported to order that the claim be reheard. On the same date, namely 29 January 1998, the subject bankruptcy notice was issued. It was served on the debtor on 4 February 1998. The notice required compliance within 21 days, that is, by 25 February 1998. On 6 March 1998 the rehearing took place before the Tribunal. It was then again ordered that the debtor pay the creditor the sum of $15,321. On 26 March 1998 the present petition was presented. It was served on 9 April 1998. The petition is opposed on a number of grounds but, in my view, there is only one that need be dealt with as follows. The debtor submits that there was no act of bankruptcy as there was no final judgment or order at either the time of issue or of service of the bankruptcy notice. In support of this submission, the debtor contends that at the time of issue and of service of the notice, the requirements of s 40(1)(g) of the Bankruptcy Act 1966 had not been complied with. By that provision, it is stipulated that an act of bankruptcy will be committed 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 a bankruptcy notice in the circumstances there specified. At the time of issue and of service of this bankruptcy notice, there was no formal stay of execution; that is to say, there was no order made by the Tribunal or by the Court that execution be stayed. As has been noted, the certificate of judgment was issued by the Local Court on 19 January 1998. There was no stay then in force in any formal sense. However, as has been mentioned, on 28 January 1998, being the day before the issue of the bankruptcy notice, the debtor applied for a rehearing and that rehearing was granted on 29 January 1998. It is well established that the exception in s 40(1)(g), that execution not be stayed, should not receive a narrow interpretation, so that those words also speak of a situation where, under the general law, the person issuing the notice was not in a position to issue execution on the judgment or order (see the cases cited in "McDonald Henry and Meek, Australian Bankruptcy Law and Practice", C Darvall QC and N T F Fernon eds, 5th ed., vol.1, 2592). It would follow, in my view, that if under the general law the debtor, as at either 29 January 1998 or 4 February 1998 (being the date of issue and of service of the bankruptcy notice respectively) had been able to show an entitlement to the grant of a stay of execution, I would have held that there was no act of bankruptcy established in the present case. However, as has been said, the power granted to a referee by s 25(1) of the Act is conditional only, that is, the power to order the rehearing of a claim is conditional on the referee exercising the power "on application... lodged... within 14 days after [the debtors] receiving notice of the decision". In the present case, it appears that the application for a rehearing was made out of time. It will be recalled that the debtor received notice of the decision of the Tribunal on 16 December 1997. The application for rehearing was not made until approximately 6 weeks later, on 28 January 1998. It was thus out of time, and in my opinion, as a matter of construction of s 25(1) of the Act, the existence of an application lodged within time is a jurisdictional fact and thus a condition precedent to the existence of the power of the referee to order a rehearing. It is true, as has been pointed out on behalf of the debtor, that by s 12 of the Act, the Tribunal is declared to be immune from judicial review and no prerogative writ, for instance, can be granted in this connection. However, I do not think that any question arises here of immunity or otherwise from judicial review of any ruling, order or other proceeding relating to a claim made before a Tribunal. Rather, as it seems to me, the present question is whether the debtor can establish an entitlement to a stay. There was no formal stay in existence and, therefore, the relevant inquiry is whether at the material date, that is, either 28 January 1998 or 4 February 1998, the debtor would, if he had applied for a stay before the Local Court, have been granted such a stay. In my opinion, any such application then made would have been unsuccessful for the reason, as has been said, that the referee's power to order a rehearing was conditioned upon the existence of a claim made within time. This was a jurisdictional fact in that sense (cf. David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265). I am, therefore, of the view that notwithstanding the circumstance that the Tribunal purported to order on 29 January 1998 that there be a rehearing, once the hypothetical exercise that I have mentioned is embarked upon, it appears that on jurisdictional grounds, any application for a stay of proceedings would have been refused. It follows, in my view, that the exception referred to in s 40(1)(g) of the Bankruptcy Act is not here applicable and, although other grounds were advanced and other arguments were presented on behalf of the debtor, and indeed on behalf of the creditor in support of the petition, I am of the view that they do not now require any further elaboration in these reasons. ORDERS I will reserve costs. I will stand the matter over until 5 June 1998. I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont Associate: Dated: 26 May 1998 Solicitor for the Creditor: Watkins Tapsell Counsel for the Debtor: I Mescher Solicitor for the Debtor: Lyon Lawfirm Date of Hearing: 26 May 1998 Date of Judgment: 26 May 1998