FEDERAL COURT OF AUSTRALIA Rose v Howell [1999] FCA 1515 IN THE MATTER OF PAUL ROCH HOWELL; JOHN EMMANUEL ROSE v PAUL ROCH HOWELL N 7880 OF 1999 KATZ J SYDNEY 26 OCTOBER 1999 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7880 of 1999 IN THE MATTER OF PAUL ROCH HOWELL; BETWEEN: JOHN EMMANUEL ROSE Applicant AND: PAUL ROCH HOWELL Respondent JUDGE: KATZ J DATE OF ORDER: 26 OCTOBER 1999 WHERE MADE: SYDNEY MINUTES OF ORDER THE COURT ORDERS THAT: 1. The application to set aside the bankruptcy notice be dismissed. 2. The respondent pay the applicant's costs of the application. 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 N 7880 of 1999 IN THE MATTER OF PAUL ROCH HOWELL; BETWEEN: JOHN EMMANUEL ROSE Applicant AND: PAUL ROCH HOWELL Respondent JUDGE: KATZ J DATE: 26 OCTOBER 1999 PLACE: SYDNEY EX TEMPORE REASONS FOR JUDGMENT 1 On 6 May 1999, a bankruptcy notice was issued in relation to Paul Roch Howell ("the debtor"). The judgment creditor concerned was John Emmanuel Rose ("the creditor"). 2 That notice arose out of a judgment obtained by the creditor against the debtor in the District Court of New South Wales on 29 March 1999. That judgment had been in the sum of $352,844.48. 3 The bankruptcy notice was served on the debtor by way of substituted service on 23 July 1999, in accordance with an order which had been made by this Court on 14 July 1999. 4 On 5 August 1999, the debtor filed in this Court an application to set aside the bankruptcy notice. (For some reason not easy to explain, the debtor described himself as the respondent to his own application and described the creditor as the applicant. I have done nothing to alter the style of cause.) The application stated that the debtor relied on the grounds stated in an affidavit sworn by him on 26 July 1999. (That was a typographical error and, in truth, what was being referred to was an affidavit sworn by the debtor on 23 July 1999.) 5 In the course of his affidavit, the debtor set out what was, in substance, the ground for the application to set aside the bankruptcy notice. It was that he had applied to the District Court to set aside its judgment of 29 March 1999. 6 The debtor stated in his affidavit that his application to the District Court was due to be heard by it on 30 July 1999. Strangely, as the application to this Court to set aside the bankruptcy notice was not filed until 5 August 1999, the debtor did not put on any further evidence at that time establishing what had happened in the District Court on 30 July 1999, although it would obviously have been possible for him to do so. 7 In fact, what had happened in the District Court on 30 July 1999 was that it had set aside its judgment of 23 March 1999. However, it had done so on certain terms, which essentially were that: "1. … the defendant pay to the plaintiff or his solicitors the sum of $10,000.00 within 14 days and pay a further sum of $165,000.00 within 2 months from today. 2. [I]n the event of either payments not complied with [sic] the plaintiff is to have leave to apply for re-entering of judgment forthwith on proof only of the balance due to him." 8 On 5 August 1999, this Court extended the time for compliance with the bankruptcy notice until 31 August 1999 and, then, on 31 August 1999, extended the time until today. 9 I have before me a letter from the creditor's solicitors to the debtor's solicitors dated 1 October 1999, which date was after the expiration of the two months referred to in order 1 of the District Court dated 30 July 1999. In that letter the creditor's solicitors said: "We note that your client has breached the Orders made by the Honourable Judge Patten on the 30 July, 1999 in that payment of the amount of $165,000.00 remains outstanding. We hereby give you three (3) days notice that we intend to re-enter judgment on Tuesday, 5 October, 1999 including interest to date. For your information, the amount due, including interest, is now $369,717.80." 10 The figure to which I have just referred was afterwards altered by a facsimile from the creditor's solicitors to the debtor's solicitors dated 8 October 1999. The amount which was then said to be properly owing was $360,897.34. 11 On the same day as the facsimile was sent, the creditor, by default, re-entered judgment against the debtor. The judgment was in the sum shown in the correcting letter of 8 October 1999, together with a further sum for costs of $1,093. 12 The position after 8 October 1999 was, therefore, that the application to set aside the judgment of 29 March 1999, which application had formed the basis for the application to set aside the bankruptcy notice, had succeeded on 30 July 1999 and the judgment had been set aside, but, by 8 October 1999, as a result of default by the debtor in the conditions attached to the setting aside of the earlier judgment, the judgment had been restored. 13 In those circumstances, I consider that, as I look at the matter on 26 October 1999, the application to set aside the judgment, which was the foundation of the application to set aside the bankruptcy notice, has failed. 14 In those circumstances, I see no good reason to set aside the notice. 15 I should perhaps mention that, at the outset of the hearing of this matter today, Mr Dennis, who appeared for the debtor, applied for a further extension of time for compliance with the bankruptcy notice, by reference to a foreshadowed application to the District Court on 12 November 1999 to set aside its judgment of 8 October 1999. However, he put no evidence before me whatever to prove that such an application had been made, what its grounds were and that it would be heard on that day. 16 I took the view that I would not grant a further extension of time in the absence of any evidence in support of the application for such extension and I therefore compelled Mr Dennis either to proceed today with his application to set aside the bankruptcy notice or have his client take the consequences of not making such an application today. 17 I mentioned in the course of argument to Mr Dennis, and I adhere to this view, that whilst his client will, if he does not pay the outstanding amount to the creditor by the end of the day today, have committed an act of bankruptcy, nonetheless, he will, at the time any creditor's petition comes to be heard, be able to rely on the provisions of subs 52(2) of the Bankruptcy Act 1966 (Cth). That subsection confers on this Court a power to refuse to make a sequestration order, nonetheless though the conditions precedent to its making are satisfied. In my judgment, in the light of the whole history of this matter, the debtor ought to be left to make such capital as he can of this Court's discretion under subs 52(2). 18 Therefore, for the reasons which I have already given, I refuse to set aside the bankruptcy notice. I will also order the debtor to pay the creditor's costs of the application. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz. Associate: Dated: 2 November 1999 Counsel for the Applicant: Mr J A Jobson Solicitor for the Applicant: White & Downey Solicitor for the Respondent: Dennis & Company Date of Hearing: 26 October 1999 Date of Judgment: 26 October 1999