Case: Re Geard; Ex parte Reid (unreported, Federal Court, Sheppard J, 11 February 1994)
Outcome: referred to
Honour made the following observations: (1) It is not only on the hearing of a petition that the Court may 'go behind' the judgment giving rise to the judgment debt on which the petitioning creditor relies; the judgment debt can be impeached on a notice to set aside a bankruptcy notice (at 268D). (2) His Honour noted the different approaches of Kiefel J in Re Baker; Ex parte Baker v Staples (unreported, Federal Court, Kiefel J, 4 September 1995) and Sheppard J in Re Geard; Ex parte Reid (unreported, Federal Court, Sheppard J, 11 February 1994) and to later decisions in which Geard was followed. (3) In the course of his judgment in Geard , Sheppard J had taken on board the following considerations: (a) The debtor had not made any application for a stay of proceedings pending the outcome of the appeal; (b) an application to extend time for compliance with the bankruptcy notice is not the hearing of a bankruptcy petition. The refusal of the application will not affect the status of the debtor but it will mean that he, in all probability, will commit an act of bankruptcy; (c) if the appeal is ultimately dismissed and the judgment stands with the consequence that the bankruptcy proceedings go on, it may be quite important to the petitioning creditor, whoever he or she may be, to the general body of creditors and to the trustee in bankruptcy, that there be, for the purposes of the administration of the bankrupt estate, an act of bankruptcy committed at an earlier time than would be the case if the application were acceded to. (4) The approach adopted by Sheppard J was followed by Whitlam J in Re Smith (unreported, Federal Court, 4 May 1994) and by Sackville J in Agrillo v Codisposto (unreported, Federal Court, Sackville J, 16 December 1994). His Honour went on to observe that considerable weight should be given to the circumstance that in the case before him, as in Geard , no stay has been granted (or, apparently, sought) of the judgment supporting the bankruptcy notice. It did not follow that other matters were not to be taken into account: the discretion is 'at large' ( Re Taylor; Ex parte Deputy Commissioner of Taxation (Cth) [1983] FCA 316 ; (1983) 74 FLR 377 at 379). Counsel for Mrs Coshott submitted that a further extension of time for compliance with the Bankruptcy Notice should be allowed in terms of the amended order sought in the amended application by reference to the following considerations: (1) The discretion to grant an extension of time for compliance is 'at large': Re Taylor at 379; Byron at 270. (2) While there is no stay in place, the application for a stay of proceeding No. 4000/09 having been dismissed on 27 November 2009, it was dismissed on jurisdictional, rather than discretionary, grounds. Considerable weight should only be given to the absence of a stay of the underlying judgment ( Byron at 270G; Geard (in the passage quoted in Byron at 269G)), if the court that granted the judgment had jurisdiction and power to grant a stay. In circumstances such as the present, where the court that issued the judgment has determined that it has no jurisdiction to grant a stay, the absence of a stay should, in relation to the discretion under s 41(6A) , be viewed as carrying no weight, rather than 'considerable weight'. (3) Only a short amount of time is likely to be involved in any extension of time, as the proceeding in the District Court is of limited scope. (4) If Mrs Coshott succeeds in the District Court to any extent, she will be entitled to an order setting aside the Bankruptcy Notice: Halstead v Westpac Banking Corporation [1991] FCA 424 ; (1991) 31 FCR 337 at 355. (5) Reference was made to the merits of the appeal while acknowledging the reluctance of courts to enter upon that area, save in the particular circumstances referred to by Lehane J in Byron at [36] above. The thrust of the submission was that the appeal had merit because: (a) There was no basis for the costs assessor to proceed to determine an amount payable by Mrs Coshott but refuse to determine an amount payable by Mr Coshott; (b) the Legal Profession Act does not give a costs assessor any power to, in effect, alter the terms of an assessment that are referred to him or her; (c) the costs assessor acted ultra vires ; (d) the broad brush approach taken by the costs assessor to assessment was not permissible: Cassegrain v CRK Engineering [2008] NSWSC 457 including the passages extracted therein from Kennedy Miller Television Pty Ltd v Lancken (unreported, Supreme Court of New South Wales, August 1999, Sperling J); (e) inadequate reasons are an error of law: Cassegrain at [86]. (6) The Bankruptcy Notice was served after the District Court proceeding No. 2872/09 to appeal the Certificate of Determination had been commenced. Whilst Mr Barry was entitled to do this (there being no stay in place), it is relevant to the discretion that Mr Barry chose to issue his Bankruptcy Notice in circumstances where he knew that the Certificate of Determination, and hence the judgment, was under challenge. This is not a situation of the appeal being launched in response to a bankruptcy notice. Indeed, it is arguably the reverse. It is true that there is no stay of the judgment upon which the Bankruptcy Notice is based and no suspension of the costs assessor's determination or decision. But both were sought and refused on jurisdictional grounds: see [4] and [7] above. The contrast with Geard and Byron is clear.