FEDERAL COURT OF AUSTRALIA Valassis v Bernard [2001] FCA 477 BANKRUPTCY – extension of time for compliance with Bankruptcy Notice – extension granted on condition – judgment debtor to pay sum into trust account of judgment creditor's solicitor. DENNIS VALASSIS v ERIC BERNARD NO N 7054 OF 2001 JUDGE: BEAUMONT J DATE: 19 APRIL 2001 PLACE: SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7054 OF 2001 BETWEEN: DENNIS VALASSIS APPLICANT AND: ERIC BERNARD RESPONDENT JUDGE: BEAUMONT J DATE OF ORDER: 19 APRIL 2001 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Order 1 made on 10 April 2001 be varied by substituting for 19 April 2001, the date of 26 April 2001. 2. The reservation of liberty to apply in Order 4, made on 10 April 2001, be omitted. 3. The judgment debtor pay the costs of today's hearing. 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 7054 OF 2001 BETWEEN: DENNIS VALASSIS APPLICANT AND: ERIC BERNARD RESPONDENT JUDGE: BEAUMONT J DATE: 19 APRIL 2001 PLACE: SYDNEY REASONS FOR JUDGMENT BEAUMONT J: 1 This matter came before me on 10 April and for the reasons then given, I made the following orders: "(1) Upon the judgment debtor on or before 19 April paying to the solicitors for the judgment creditor the sum of $7,519.95 (to be held by those solicitors in a trust account to abide the further order of the court), the time for compliance with the Bankruptcy Notice is extended up to and including 12 June 2001." 2 I stood the matter over before myself on 12 June 2001. I reserved costs but I also, on the application of the judgment debtor, reserved liberty to apply. I made the order of extension upon the condition mentioned, so as to permit the judgment debtor, if he wished, to pursue an appeal by leave against the decision of Bell J given on 12 March 2001. 3 The matter dealt with by Bell J was an application by the judgment debtor disputing a bill of costs which had its ultimate origin in proceedings in the Residential Tenancy Tribunal of New South Wales. I now have evidence of her Honour's reasons for judgment, to the effect that even if the judgment debtor had not received the particular bill of costs, her Honour declined to grant leave to appeal because there was no substantial injustice. However, in the course of her reasons, her Honour expressed her satisfaction that the judgment debtor had, in fact, received the revised or new bill of costs. In essence, the reason why her Honour was satisfied that, in any event, there would be no substantial injustice, was that her Honour was of the opinion that it was possible to transpose any objections that might have been open to the new bill to the amounts claimed in the old bill of costs. 4 Approaching this matter, as I must, as a court of bankruptcy or insolvency, I see no reason to go behind her Honour's judgment at this stage. It is true that the judgment debtor, who was a man of considerable means, elected to appear before her Honour unrepresented. However, given the relatively small amount involved and the nature of the issue sought to be tendered before Bell J, I cannot perceive any disadvantage in the judgment debtor electing to appear without the benefit of legal advice. 5 As I have mentioned, on the previous occasion, I did reserve liberty to apply. The reason for that, which I expressed at the time, was a plea made by the judgment debtor that he wished to bring evidence as to his financial position before me. Given this, I indicated that I would allow him to bring the matter back before me today for reconsideration. On the question of the imposition of the condition which I ordered, in particular as to the time for compliance for that condition, it will be recalled that it was a stipulation of the condition for the extension of time that the amount in question be paid into the solicitor's trust account, on or before today. 6 The judgment debtor now relies upon an affidavit sworn by him on 12 April 2001. In that affidavit the judgment debtor has attempted to re-agitate the merits of the dispute already dealt with by Bell J. As I have previously indicated, I do not propose to re-enter that territory as it is, from the perspective of a court of bankruptcy, simply not appropriate. The applicant has also mentioned in his affidavit that he has been unable to work for the last seven years and is 71 years of age with health problems, including arthritis. I take that matter into account, however, in my view, the weight to be given to this consideration is to be assessed in the light of a more fundamental consideration, as follows. 7 In his affidavit the judgment debtor states that he owns a number of properties as follows: "(e) I own the property 48 Regent Street, Redfern, which is five shops on the ground floor and No. 2 Lawson Square, Redfern on top of the five shops. All the property is vacant possession and is worth $1,550,000.00. I have a mortgage on this property for $350,000, and pay interest of $3,500.00 per month. (f) I own the property 304A, 304, 306 and 308 Chalmers Street, Redfern. The value of this property is over $1,100,000.00. I have a mortgage for $250,000.00 on this property and pay monthly $1,673.92. (g) I own the house 31 Veterans Parade, Collaroy Plateau. The property is worth over $650,000.00. I have a mortgage for $150,000.00 and I pay interest of $1,000.00 per month. (h) From my nine shops and eight bedroom accommodation in No. 2 Lawson Square, Redfern, only one shop is let (for $500.00 per week) and I do not have any other income. I have run completely out of cash and I have put on the market to sell the properties 48 Regent Street, Redfern and the shops 304A, 304, 306 and 308 Chalmers Street, Redfern, expecting to sell at least one of the above properties in four to six weeks, and then I will be able to pay my debts, including the Respondent. (i) The Court on 10th April, 2001, ordered that the Applicant pay $7,915.95 to the Respondent's solicitor. I have no cash. I would appreciate the honourable court giving me time to sell one of the above properties, then I will be able to pay this bill." 8 The judgment debtor also relies upon the details contained in the epitomes of the mortgages mentioned in his affidavit. They show that in respect of the mortgage of $350,000, interest in the sum of $3,500 is due on the 15th of each month, that in respect of the mortgage of $150,000, interest in sum of $1,000 per month is due on the 4th of every month, and that in respect of the mortgage of $250,000, interest of $1,660.67 is due on the 2nd of every month. The epitomes also show that the mortgage of $350,000 was repayable on 15 March 2001, that the mortgage of $150,000 was due on 4 February 2001 and that the mortgage of $250,000 was repayable on 2 December 2000. 9 The judgment debtor has also tendered the last page of his current bank statement. That statement shows that at the end of last month he had a credit balance of $9,591.08, having deposited the sum of $5,000 on that day. The statement also shows that at the date the matter was last before me, namely, 10 April 2001, he had a credit balance of $5,504.71. The bank statement further shows that on 15 April 2001 he withdrew the sum of $3,500, which he informs me and I accept, was used to pay the interest due on the mortgage of $350,000. The statement shows that the balance as of 15 April 2001, according to his handwritten notation, was $1,659.71. 10 In round terms, the evidence before me shows that in real estate alone the judgment debtor has assets of around $3.3 million on which are secured mortgages in the sum of $750,000, thereby indicating a surplus in the order of $2.5 million. He also informs me that he owns a motor car which he estimates to be of the value of $4,000. It appears that there is little, if any, rent of any substance being earned by properties of such considerable value. It will be remembered that only one shop is apparently let at the moment for a rent of $500 per week. However, the explanation for this extraordinary state of affairs is, I think, the intention of the judgment debtor to sell all properties on a vacant possession basis. This is understandable, but I do not see it as a matter that weighs in favour of the judgment debtor at all in the ordinary course. Property or other assets of the value exceeding $3 million would naturally be expected to earn a substantial income, certainly more per annum than was necessary to pay the present judgment debt of some $7,000. 11 The position then is that the judgment debtor is, on the evidence before me, not only solvent, but clearly solvent. The reason why he has not paid the judgment debt lies in his wish, whatever the legal costs, and whatever strain it may impose upon his health, to contest each and every item of that dispute. I know nothing of its origins, but clearly none of this should be the concern of a court of bankruptcy. However, I take into account the fact that there has been an Easter break and some time has inevitably been consumed in that regard. The plain fact, however, is that the judgment debtor has made no attempt to raise the small amount of finance that would be required on a bridging basis to discharge the condition which I imposed upon him. 12 In those circumstances, I am prepared to grant a further extension of time. The time will be of the essence in this regard and I do not propose to entertain any further extension. I will achieve this outcome by substituting for today's date, the date of 26 April 2001 for the time for compliance with the condition. I will omit the reservation of liberty to apply. I further propose to order that the judgment debtor pay the costs of today's application. The formal orders I make, therefore, are as follows. ORDERS 1. I vary order 1 made on 10 April 2001 by substituting for 19 April 2001, the date of 26 April 2001. 2. I omit the reservation of liberty to apply in Order 4 made on 10 April 2001. 3. I order the judgment debtor to pay the costs of today's hearing. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont. Associate: Dated: 19 April 2001 Solicitor for the Applicant: The applicant appeared in person Solicitor for the Respondent: Gray & Perkins Date of Hearing: 19 April 2001 Date of Judgment: 19 April 2001