Case: Maxwell-Smith v S &amp; E Hall Pty Ltd [2006] FCA 825 , 233 ALR 81
Outcome: cited
was no dissent from the proposition that the Court has an implied jurisdiction to set aside a bankruptcy notice as an abuse of process: Re Sterling; Ex parte Esanda Ltd [1980] FCA 61 ; (1980) 44 FLR 125. And an abuse of process may be made out if the purpose in issuing the bankruptcy notice is to put pressure on a debtor to pay the debt rather than to invoke the Court's jurisdiction in relation to insolvency: Brunninghausen v Glavanics [1998] FCA 230. In Killoran v Duncan [1999] FCA 1574 , Gyles J thus observed: [12] Whilst there is no debate about the jurisdiction of the Court to set aside a bankruptcy notice as an abuse of process where it can be concluded that it was simply to put pressure on the debtor rather than to genuinely invoke the Court's jurisdiction, I am not satisfied that that is the position here. There is nothing to indicate that the respondent creditor does not genuinely intend to pursue the matter if there is default in complying with the notice. In my opinion, there is nothing special about abuse of process in this field, and, if a person wishes to resort to the jurisdiction of the Court for appropriate orders, then it will be an unusual case in which that will be prevented. [13] There is no evidence here of any collateral purpose or of any undue pressure being applied. It is correct, I think, that the time to judge abuse of process is the time that the bankruptcy notice is issued and that subsequent events have relatively slight relevance. They may be relevant insofar as they throw light upon circumstances which might have been appreciated and foreseen at the time of the issue of the notice. [14] If, contrary to my view, however, there were a prima facie case of abuse of process, the remedy is discretionary and, in my view, if circumstances following that time had altered significantly so that it would not be appropriate to set aside the notice, I think that the jurisdiction of the Court is wide enough to give effect to that. I have in mind here that whilst the immediate parties to the application are those with the most interest in the matter, the body of creditors generally also have an interest and I cannot be certain one way or the other about the position of solvency. It may be most unfortunate if a bankruptcy notice were set aside in circumstances where the debtor is in fact insolvent. By way of example, in Maxwell-Smith v S &amp; E Hall Pty Ltd [2006] FCA 825 , 233 ALR 81 Jacobson J was prepared to infer that the purpose in issuing a bankruptcy notice was to put pressure on the debtor rather than to genuinely invoke the court's bankruptcy jurisdiction in circumstances where the bankruptcy notice sought payment of a debt for a small amount based on a judgment debt which was over 5 years old; where the judgment creditor was aware of the probability of solvency; and where the judgment debtor owned assets which greatly exceeded the debt. See also: Cavoli v Etl [2007] FCA 1191 at [17] per Heerey J; Slack v Bottoms English Solicitors [2002] FCA 1445 at [15] to [18] per Spender J. It is an abuse of process for a judgment creditor to pursue bankruptcy proceedings " for the purpose of stifling litigation ": Bayne v Baillieu; Bayne v Riggall [1908] HCA 39 ; (1908) 6 CLR 382 at 396 per Griffith CJ.