Case: Guss v Johnstone (2000) 171 ALR 598
Outcome: distinguished
summary, the appellant submits that the application to set aside the bankruptcy notice is not spent and will only be spent when leave to appeal is refused by the High Court, and orders are settled. Accordingly, the respondents could not produce an affidavit verifying par 4 of the creditors' petition as required by r 31.04 of the Federal Magistrates Court Rules 2001 (as they were prior to amendment) until an order is settled. As authority for this proposition, the appellant relies on Guss v Johnstone (2000) 171 ALR 598. In Guss a bankruptcy notice was issued in respect of a judgment of the Magistrates Court which was eventually appealed (unsuccessfully) to the Full Court of the Supreme Court of Victoria. The debtor filed an affidavit pursuant to s 41(7) of the Bankruptcy Act , with the result that time for compliance with the notice was extended until the Federal Court determined whether it was satisfied that the appellant had a counter-claim, set-off or cross demand such as referred to in s 40(1)(g) of the Act. Sundberg J held that he was not satisfied that the appellant had such a counter-claim, set-off or cross demand; the debtor did not comply with the requirements of the bankruptcy notice, and as a result the debtor committed an act of bankruptcy. The debtor appealed unsuccessfully to the Full Court of the Federal Court, and then to the High Court. Rimmer FM considered this issue in the course of her decision. Her Honour noted that the appellant applied to have the bankruptcy notice set aside; the application was heard on 13 May 2005 by Deputy District Registrar Baldwin and dismissed; the appellant was then served with the creditor's petition; as of the date of the hearing of the matter by Rimmer FM the appellant had not paid the debt owing to the respondents, and clearly he had committed an act of bankruptcy. Turning to the submissions of the appellant, it is difficult to see how the appellant is assisted by his reliance on Guss . The only relevance of Guss is that the debtor in that case, like the debtor in the case before me, also sought to raise issues as to the validity of the debt upon which the bankruptcy notice was founded. In that case, as has also been the case here as evidenced by the history of litigation involving the appellant and the respondents, the debtor was unsuccessful. In my view it is incorrect for the appellant to assert that the issue is not 'finally decided' until all avenues of appeal in the matter are exhausted. This is for at least two reasons. First, the plain reading of r 31.04 is that, once a bankruptcy notice is issued by the Official Receiver, it is open to the debtor to make an application to have the bankruptcy notice set aside by a court. In this case, the courts having jurisdiction under the Bankruptcy Act are the Federal Court of Australia and the Federal Magistrates Court (s 27 Bankruptcy Act ). The application by the appellant to have the bankruptcy notice set aside was heard in the Federal Court before Deputy District Registrar Baldwin. In relation to matters before the Federal Court, it is open to either a Judge or a Registrar of the Federal Court of Australia to deal with an application to set aside a bankruptcy notice (this is clear from s 35A(1)(h) Federal Court of Australia Act 1976 (Cth) and O 77 r 7 and Sch 3 Federal Court Rules ). 'Decided' in this context bears the plain meaning of the court having entertained an application, and making an order on the basis of that application. In this case, the appellant's application to have the bankruptcy notice set aside was decided by Deputy District Registrar Baldwin on 13 May 2005 when the application was dismissed.