CATCHWORDS
BANKRUPTCY - Review of sequestration order made by Deputy Registrar in Bankruptcy - hearing de novo - Magistrates' Court order that judgment debt founding bankruptcy notice be paid by instalments - order made after service of bankruptcy notice - not effective to stay judgment - whether estoppel by conduct.
Bankruptcy Act 1966 (Cth) s 14, s 31A(1)(n), s 31A(6)
Magistrates' Courts Rules 1960 (Qld) r 198, r 231
Ginnane v Diners Club Ltd (1993) 42 FCR 90 (FC)
Re Kwiatek and Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374
Ademi v Deputy Commissioner of Taxation (Cth) (unreported, Federal Court of Australia, 9 August 1995, Sundberg J)
Re Hunter; Ex parte Webb (unreported, Federal Court of Australia, 26 May 1995, Lee J)
Re Brindle; Ex parte FB & FA McMahon Pty Limited (1992) 35 FCR 506
Re Johnson; Ex parte Johnson v Tonkin (1994) 53 FCR 70
Re Frasersmith; Ex parte J Blackwood & Son Ltd (1992) 36 FCR 144
Re Schekeloff; Ex parte Schekeloff v Hopkins Group Pty Ltd (1989) 22 FCR 407
RE SALVATORE SAMUEL ARCURI; EX PARTE MASTER LEASE AND RENTAL SERVICE PTY LTD
No QB 1438 of 1996
Cooper J
Brisbane
28 June 1996
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND
No QB 1438 of 1996
RE: SALVATORE SAMUEL ARCURI
Bankrupt
EX PARTE:
MASTER LEASE AND RENTAL SERVICE PTY LTD
ACN 001 296 840
Creditor
JUDGE MAKING ORDER:Cooper J
WHERE MADE: Brisbane
DATE OF ORDER: 28 June 1996
MINUTES OF ORDER
THE COURT ORDERS THAT:
1. The application filed 30 May 1996 be dismissed.
2. Master Lease and Rental Service Pty Ltd's costs of and incidental to the application be costs in the administration of the bankrupt estate.
Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND
No QB 1438 of 1996
RE: SALVATORE SAMUEL ARCURI
Bankrupt
EX PARTE:
MASTER LEASE AND RENTAL SERVICE PTY LTD
ACN 001 296 840
Creditor
CORAM: Cooper J
PLACE: Brisbane
DATE: 28 June 1996
REASONS FOR JUDGMENT
On 8 May 1996 Deputy District Registrar McQuaid, in her capacity as a Deputy Registrar in Bankruptcy ("the Deputy Registrar"), made a sequestration order against the estate of Salvatore Samuel Arcuri ("the bankrupt") on the petition of Master Lease and Rental Service Pty Ltd ("the creditor"). The order was made in the absence of the bankrupt, who says he did not receive notice of the hearing of the petition. On 30 May 1996 the bankrupt filed an application seeking orders that the sequestration order be "rescinded" and "reviewed".
The
Deputy Registrar's power to make a sequestration order derives from s 31A(1)(n)
of the Bankruptcy Act 1966 (Cth) ("the Act") when read with
s 14(2) of the Act and a direction in writing by a Judge of the court. By s 31A(6), a party to a proceeding in which
a Registrar (including a Deputy Registrar) has exercised any of the powers of
the court under s 31A(1) may apply to the court to review that exercise of
power. An application for review under s
31A(6), of which the instant application is one, is by way of a hearing de novo on the evidence presented to the
court on the hearing of the application (Ginnane v Diners Club Ltd (1993) 42
FCR 90 at 94 (FC); Re Kwiatek and Kwiatek; Ex parte Big J Ltd v Pattison (1989)
21 FCR 374; Ademi v Deputy Commissioner of
Taxation (Cth), unreported, Federal Court of Australia, 9 August 1995,
Sundberg J at p 2). The review process
provided for by s 31A(6) is to be distinguished from that provided for in s 14
which is a review by the court of an administrative act (Re Hunter; Ex parte Webb, unreported, Federal
Court of Australia, 26 May 1995, Lee J;
cf Re Brindle; Ex parte FB & FA
McMahon Pty Limited (1992) 35 FCR 506).
The bankrupt relies upon two affidavits of his solicitor, Regan James Neate, which depose to the circumstances in which the bankrupt claims to have been unaware of the hearing of the petition on 8 May 1996. Having regard to the nature of the application before me, the correctness or otherwise of the bankrupt's claim in that regard is not relevant. Mr Neate also deposes to an order made by Mr O'Donnell SM of the Magistrates' Court at Brisbane on 21 December 1995. The order made pursuant to r 198 of the Magistrates' Courts Rules 1960 (Qld) ("the Rules") allows the bankrupt to pay the judgment debt of $23,300, upon which the bankruptcy notice leading to the petition was founded, by instalments over five years at varying monthly rates.
Counsel for the bankrupt submits that the instalment order operated as a stay of enforcement of the judgment with the consequence that the bankruptcy notice, non-compliance with which was relied upon as an act of bankruptcy, could not be so relied upon.
Rule 198 of the Rules gives the Magistrates' Court power, of its own motion or on the application of a party, to order that any judgment debt be paid by instalments. By sub-rule 198(9) an order made under r 198 of the Rules, while it remains in force, operates as a stay of enforcement of the judgment in respect of which the order was made, except enforcement by way of a garnishee order made before the instalment order. Sub-rule 198(4) gives the registrar of the Magistrates' Court power to make such an order. A refusal by the Registrar to make such an order also operates to stay enforcement of the judgment until the application is dealt with by the court under sub-rule 198(6) (r 198(8)).
For the purposes of the Act the judgment or order founding a bankruptcy notice must be one which is not stayed at the time of service of the bankruptcy notice at the latest (see Re Johnson; Ex parte Johnson v Tonkin (1994) 53 FCR 70; Re Frasersmith; Ex parte J Blackwood & Son Ltd (1992) 36 FCR 144; Re Schekeloff; Ex parte Schekeloff v Hopkins Group Pty Ltd (1989) 22 FCR 407). That is to say, a judgment or order which is stayed after service of a bankruptcy notice will be effective to found that notice.
In
the instant case, the bankruptcy notice was issued on 20 September 1995 and
served on the bankrupt on 2 October 1995.
On 16 November 1995 the bankrupt applied to the registrar of the
Magistrates' Court for an instalment order.
His application was refused.
Enforcement of the judgment was therefore stayed until the application
was dealt with by the Magistrates' Court and an instalment order was made with
the effect of continuing the stay.
However, for the purposes of bankruptcy proceedings, the stay
occurred too late - more than one month after service of the bankruptcy
notice. Non-compliance with the
bankruptcy notice is an available act of bankruptcy.
In any event, the application fails for another reason. Rule 231 of the Rules provides :-
"231.(1) Where a Court has adjudged or made an order for payment of any sum of money by instalments and default is made in payment of some instalment according to the order, a warrant of execution, without leave of the Court, may issue; and such execution shall be for the whole amount of the judgment and costs then remaining unsatisfied, or for such part thereof as the Court by its judgment or at any other time directs.
(2) If a Court adjudges or orders the payment of a sum of money by instalments, proceedings for the enforcement of the judgment shall not be taken or issued until after default in the payment of some instalment according to the judgment."
The bankrupt has made two payments to the creditor pursuant to the instalment order. The payments, by cheques dated 29 March 1996 and 31 May 1996, have not been banked by the creditor. The instalment order called for monthly payments of $150 for the first six months of 1996. The first cheque being dated 29 March 1996, the bankrupt has defaulted in the payment of the instalments. Similarly with the cheque dated 31 May 1996 for $300. Therefore, by operation of r 231 of the Rules, the judgment, at the time of the first default, was no longer stayed.
Counsel for the bankrupt further submits that, as the bankrupt is making payments in accordance with the instalment order and as the creditor chose not to be heard on the application for an instalment order, the creditor is estopped by its conduct from seeking to rely upon the whole of the judgment in the bankruptcy proceedings.
As noted, the bankrupt has not complied with the instalment order. Indeed, the cheques which have been sent by him to the creditor have not been banked and acceptance of them by the creditor has not been communicated to him. Nor has the creditor indicated that it did not intend to pursue the bankruptcy proceedings to sequestration. The non-attendance by the creditor on the hearing of the application for an instalment order does not support counsel's submission. Such application, it seems, is or at least can be, made ex parte. (See r 198(2), 198(4), 198(5)).
In any event, that the creditor continued to pursue the bankruptcy proceedings and communicated an intention to do so, negatives any suggestion of estoppel by conduct.
I am satisfied of the matters in s 52(1) of the Act and that this is an appropriate case for the making of a sequestration order. The bankrupt's application will be dismissed with costs.
THE COURT ORDERS THAT:
1. The application filed 30 May 1996 be dismissed.
2. Master Lease and Rental Service Pty Ltd's costs of and incidental to the application be costs in the administration of the bankrupt estate.
I certify that this and the preceding four (4) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper.
Date: 28 June 1996
Associate
Counsel for the Applicant: J W Lee
Solicitors for the Applicant: Goodfellow & Scott
Counsel for the Respondent: D C Rangiah
Solicitors for the Respondent: Halletts
Solicitors for the Trustees of
the Bankrupt Estate: Bowdens
Date of Hearing: 17 June 1996
Place of Hearing: Brisbane
Date of Judgment: 28 June 1996
