Clyne, P.L. v. Deputy Commission of Taxation [1982] FCA 208

BETWEEN: PETER LEOPOLD CLYNE AND: DPUTY COMMISSIONER OF

Federal Court of Australia|1982-10-11|Before: Lockhart J

Bankruptcy - bankruptcy notice - setting aside ~- extension of time for compliance - whether matter arises under sub-s. 41 (7)

of the Bankruptcy Act - whether bona fide dispute as to petitioning creditor's debt - relevant considerations in exercise of discretion.

Bankruptcy Act 1966 ss. 40 (1) (g), 41 (6A), 41 (6C), 41 (7),

BETWEEN: PETER LEOPOLD CLYNE AND: DPUTY COMMISSIONER OF

It is not satisfied that the applicant has a counter-claim,

set-off or cross demand of the kind referred to in nara. 40 (1)

Tame for compliance with requirements of bankruptcy notice

No. 3645 of 1982 be extended up to and including 25 October 1982.

The applicant pay the respondent's costs of all matters

) ) ) ) BANKRUPTCY DISTRICT OF THE STATE ) NO. B. 3645 OF 1982 Datate ste? Te Se es OF NEW SOUTH WALES AND THE )

LOCKHART J. This is yet another round in the fight between Peter Leopold Clyne ("the applicant") and the Deputy Commissioner of

(1) an order setting aside a bankruptcy notice issued

(2) an adjournment of the present proceedings until

been determined before courts and Boards ot Review, and an extension of time for compliance with the requirements of the bankruptcy notice in

Act") that it 1s satisfied that the applicant has a counter-claim, set-off or cross demand cf the kind referred to in para. 40 (1) (g) cf the Act, in which case no act of bankruptcy will be

The facts may be briefly stated. The respondent issued notices of assessment to income tax against the applicant for the financial years ended 30 June 1977, 1978, 1979 and 1986. The applicant lodged objections against each assessment which the respondent disallowed. Upon the applicant's request the objection for the 1977 year was treated as an appeal and referred to the Supreme Court of New South Wales. That appeal was dismissed for want of prosecution by the Supreme Court on 1 March 1982. The applicant appealed to this Court against that jyuégment. The appeal was heard by a Full Court of this Court on

Following the disallowance by the respondent of the

applicant's objections for the 1978, 1979 and 1980 years of

income, the matters were referred to a Board of Review and the References were heard by Board of Review No. 1 from 13 to 23 September 1982 over a period of nine days. The Board reserved 1ts decision; but apparently informed the parties that it would be given before Christmas this year as one of the members of the

On lil March 1982 the respondent obtained judgment against the applicant in the Supreme Court of New South Wales, Common Law Division, in the sum of $334,826.25 ("the Supreme Court judgment") being the sum of the income tax and additional tax for late payment claimed by the respondent to be die by the applicant for the financial years 1977, 1978 and 1979 (ancluding

(a) a credit of $108,829.07 recovered by the respondent from a bank and a building society with which the applicant had deposited moneys, pursuant

The applicant appealed to the Court of Appeal of New South Wales

from the Supreme Court judgment. The appeal is still pending.

It was not disputed by the respondent that this Court has power to grant the relief sought by the applicant: Re

Sterling; ex parte Esanda Limited (1980) 30 A.L.R. 77. The

respondent says that the Court should not exercise its discretion

The applicant made a large number of submissions, some related to others and some not. Also, as his argument procceded, he merged earlier submissions to formulate other submissions with different emphasis to their predecessors. 1 propose to summarise

them 3n what, as I understood them, was their final form.

The applicant submitted that the respondent caused the bankruptcy notice to be issucd prematurely in that he should have abided the decision of the Board of Review in the references mentioned earlier and the result of any ensuing appeals to appropriate courts before applying for the assue of a notice. He conceded that it was incumbent upon him to establish that there was a bona fide dispute between the parties in the references to the Board or, put another way, that there was a dispute genuinely based on substantial grounds. He submitted that there was such a dispute and pointed in particular to the fact that this 1s not a case of references awaiting hearing by the Board, but one where

the references have been heard and the decision reserved.

Notwithstanding that the judgment on which the bankruptcy notice is based 1s the Supreme Court judgment and that the references to the Board of Review ure different proceedings under Part V of the Assessment Act, the applicant submitted that the only fair approach 1s to view them as in substance one set of proccedings or to treat the References as being analegous to counter-claims so that the existence of a bona fide dispute in the References is sufficient to justify the setting aside of the

bankruptcy notice based on the Supreme Court Judgment.

It 1s well established that courts may decline to make a

sequestration order or may restrain the presentation of a petition where there is a bona fide dispute as to the petitioning

creditor's debt. Similar considerations apply in the case of a

The respondent is no ordinary creditor. The Assessment

"201. The fact that an appeal or reference is pending shall not in the meantime interferc with or affect the assessment the subject of the appeal or reference; and income tax may be recovered on the assessment as if no appeal or reference were pending."

Notwithstanding that the references to the board are pending, the respondent's right to obtain payment of the amount

outstanding under the Supreme Court judgment remains unaffected.

The amount is due and payable. See F. J. Bloemen Pty. Limited v.

Cc. of T. (1981) 55 A.L.J.R. 450; Re Roma Industries Pty. Limited

(1976) 76 A.T.C. 4113; Fortuna Holdings Pty. Limited & Ors. v.

Deputy Federal Commissioner of Taxation [1978] V.R. 83; Re Norper

The evident policy of the Assessment Act 1s to enable

the respondent to collect or secure income tax whether appeals or

Supreme Court of New South Wales in Equity seeking an order for the winding-up of Roma. The respondent had earlier issued a demand under s. 222 of the Companies Act 1961 based on the amounts due by Roma pursuant to assessments for Division 7 tax, additional tax and penalty in respect of late payment. Bowen C.

"The next question which arises 1s whether the amount claimed by the Commissioner should be treated as a disputed claim, and an order be refused on this ground. In one sense, of course, the Commissioner's claim 1s disputed, because appeals to the Board of Review have been lodged. However, the provisions of sec. 201 of the Income Tax Assessment Act require me to treat the debt as in effect undisputed. Such a statutory provision may in some cases lead to hardship on a taxpayer, particularly where he has paid the amount of tax assessed and later wins his appeal, whereupon the money 1s repaid to him without interest. This led Higgins J. in Hickman v. F. C. of T. (31 C.L.R. 232 at p. 245) to describe it as 'unjust and even baneful', but it remains in the Act. Tt must be appreciated that from the point of view of the revenue it 1s a

Great weight must be given by the Court to the policy of the Act expressed ins. 201 and related sections when considering an exercise of discretion in cases where stays of bankruptcy

proceedings are sought. In some cases courts have granted a stay

whilst in others a stay has been refused. See the article by Mr.

A. R. Castan "Enforcement Of Payment In Contested Tax Cases"

The references to the Board of Review, as I have said, were heard over a period of nine days and the decision was reserved. The transcript of evidence and of addresses before the

Poard 1s in evidence before me and comprises 734 pages.

There 1s no general rule that the Court must set aside bankruptcy notices or extend time for their compliance where there 1s a dispute genuinely based on substantial] grounds. Indeed, although there are many "disputed" Gebt cases, they generally arise on the hearing of bankruptcy or winding-up petitions or on applications to restrain presentation of petitions. Little guidance is to be found in the reported cases when considering a case such as the present one, although orders

are not infrequently made setting aside bankruptcy notices where

the Court is satisfied that there 1s a dispute genuinely based on

substantial grounds. Ultimately it 1s a matter for the Court's

The applicant submitted that the evidence before the

Board disclosed that there was a dispute genuinely based on

substantial grounds. The respondent submitted that there is a

real likelihood that the applicant will fail in the references.

I briefly summarise some of the issues in the references

whether the applicant fully disclosed his assessable income for the relevant years and therefore whether he was able to satisfy the Board

whether the income for the relevant years was derived by the applicant or by a Licchtenstein Anstalt. on 1 July 1976 an agreement was entered into between the applicant personally and with himself cn behalf of the Anstalt under which he agreed to perform his activities as a tax consultant as agent for the Anstalt. The respondent's case was that the agreement was a sham in that the applicant carried on his activities after the Anstalt was formed exactly as he had done before: he never communicated with anyone on

Anstalt, the Anstalt went into Liquidation in 1979 in Liechtenstein and was dissolved in November 1980 in each case without the applicant's knowledge and the applicant displayed no interest in the Anstalt until March 1982 when the proceedings between himself and the respondent were in train in Australia. These facts were not contested by the applicant but he relied on provisions of the agreement of 1 July 1976 which did not require him to communicate with the Anstalt including a provision not requiring him to account to the Anstalt for moneys received so long as they were

The applicant's authority to execute the agreement on behalf of the Anstalt was a power of attorney dated 29 November 1973 being the date cn which the

Anstalt was formed in Liechtenstein. There is an issue as to whether the applicant was authorised by the power to execute the agreement with himself. This in turn may depend on whether the relevanl law 1s the law of Liechtenstein which would not

authorise the execution of the agreement or the law

Whether the agreement of 1 July 1976 was avoided by

Whether s. 251L operated to render the agreement

As to the 1979 year of income, whether the respondent was able to make an amended assessment

The applicant's credit was seriously challenged by the respondent on varicus matters including questions relating to the receipt of income by him and to the operalion of secret bank accounts in

I do not think it appropriate in this case for me to form a judgment as to the prospects of success of the applicant or the respondent in the references. If they were still awaiting hearing the position may be different. But the Board has reserved its decision after a lengthy hearing on complicated issues. For me to express a view now could embarrass the Board

This case falls to be determined cn other considerations which are relevant to the Court's discretion and which bear on other submissions of the parties, not merely those rclating to the setting aside of the bankruptcy notice. I will, for convenience, now turn to those considerations and refer to them

The applicant lives in Europe. His friends and interests are there. He works mainly in Sydney and has very little social life here. He comes to Australia "to try and pick up some more money to spend overseas". He carries on a business described as that of a tax and financial consultant. he advises his clients on a wide range of matters including ways of avoiding payment to their creditors, moving moneys overseas, avoiding the application of the provisions of the Act in the event of bankruptcy (for example, avoiding making preferences and avoiding the transfer of property especially within the period of

relation back). He also advises clients as to stalling creditors for as long as possible, abusing the processes of the courts - for example, obtaining adjourments by feigning sickness, by obtaining false medical certificates from friendly doctors to deceive the courts, instructing lawyers at the last minute so

that they must seek an adjournment to obtain proper instructions,

There is no dispute that he does a lot of the things

He sends money overseas whenever the opportunity arises. Ile banks moneys he receives here in bank accounts of companies

controlled by him and not in any bank account in his own name. Clients pay him fees in various forms including cash and gold bullion. He has frequently opened and closed secret bank accounts in Vienna. He told the Eoard of Review during the recent hearing that he did not have any secret Viennese bank accounts during a relevant period in 1979. After counsel for the respondent showed him a copy of a piece of paper in his own handwriting which listed three accounts, he admitted that his earlier evidence was incorrect and that he did have three secret

He hes written a number of books relating to his business activities. In one of them called "Outlaw Among Lawyers" there is printed an article which had been published in the Wall Street Journal on 27 August 1975 and written by a Mr. Kessler, a staff reporter of the Journal. Mr. Kessler interviewed the applicant in Vienna and reported that interview in the article. Mr. Kessler quoted the applicant as having said to ham:

that anything goes as long as it enables you to retain your property."

respondent before the Board, the appellant gave this evidence

"Q. Do you agree that you said that to Mr. Kessler? A. I do not know in those words, but that

would be the gist of - he was compressing into one article the result of three or four days' discussions and J am sure that is the - it 1s an accurate summary of the attitude of mine that I have conveyed to him.

Q. So that whether or not those were the exact words, you agree that you conveyed to him the substance of what I have just read out to you?

The applicant's attitude to the current litigation between himself and the respondent is clearly expressed in statements made by him to some of his clients at a "seminar" held

about the first week of August this year. lHe said:-

"And on present indications the situation looks like this, so far as collecting tax from Peter Clyne is concerned, that there is a 10 @ay fixture in the Board of Review from which there'll only be an appeal to the Supreme Court and then to the Federal Court and then the High Court and then there'll be a second hearing of the Board of Review from which there will be an appeal to the Supreme Court and then the Federal Court, and then the High Court and then I've challenged the validity of the whole Income Tax Act which I maintain is a figment of the imagination, and that's got to go to the Suprome Court and to the High Court and then we'll see in about 1989 cr 1990 what else might occur to me.

Illustrating again the basic advantage we have in this faght"

Some further insight into the applicant's views and

standerds may be gleaned from the following passages in one of

"HOW TO SURVLVE A FINANCIAL CRISIS...and then make more

"If you decide to go bankrupt, there are many ways of salvaging some or all of your assets in such a way that your creditors cannot get at them, and without breaking the law...

But I can and do tell you how you can salvage your assets, effectively and without going to prison. Let us recognize at the outset that these are two legal problems, not one, though at times they overlap...

The first problem concerns legajity. The law forbids certain things, and you risk prison if you do something that's forbidden...usually for no longer than twelve

months, which means eight months after remissions for good behaviour, so the risk may not seem all that hard if you are buying

safety from the much more frightening spectre of poverty...

(A collateral risk, of far less importance, is that although what you do may be legal, the court might disapprove of it, and this could lessen your chances of a guick discharge.)...

Thus the basic rules for the salvaging of assets are:

If possible, do not transfer assets at all.
ff there must be any kind of Lransfer,

make sure that the transfer occurs twelve months or more before you go bankrupt.

If there is any doubt as to whether or not your creditors can get at your assets, place them beyond reach in a Swiss or Viennese account.

If there 1s any doubt as to whether or not you have broken the law, place yourself beyond reach for a

while...though in the end it is better to come back and face the music, as 1 did, and you will probably find that you didn't break the law after all. Even the Bartons found they hadn't broken the law.

Go easy! It's less likely to occasion unpleasantness and confrontation if, using the above rules, you salvage some of your assets, but leave a little for - your creditors. That way you may finish up with your discharge, with your creditors taking you to lunch, with a good bit in reserve, and writing such books as "Jlow to Survive a Financial Crisis". ~ ~~

Dealing with these rules in more detail, Rule l as to avoid transferring anything. If you have plenty of time, and time is the name of the game in this area, there are many assets you can simply place in someone else's name without the need of a transfer. You can sell property A and buy property B in the name of your new Swiss compny (sic), or in the name of a new Australian company whose shares are held by your Swiss company or by your Liechtenstein Trust. Or you can say to someone who owes you money: Don't pay me! Buy a strata title unit and lease it to me for life at a rental of $1 per week. Nothing has been transferred, and 1f the lease is properly drawn so as to give only you a personal right of occupancy there 1s no asset for your creditors to seize!

There are numerous other possibilities. Each aindividual case calls for aindiviual solutions. Suffice to mention my case as an example of how close you can sail to the wind without actually sinking...

Careful readers will recall how, whilc dispensing justice to the fortunate people of Zambia, I persuaded my friendly bank manager to transfer all my cash to a Swiss account two days before I went bankrupt, not forgetting to send him a cable of thanks which was later duly read out to the entranced assemblage at the public examination...

to dock as a result of this exercise, except for one thing...The Bankruptcy Act forbids you from transferring your assets to a place of

safety shortly before you go bankrupt. But this money belonged to a company, and it wasn't ain any financial trouble. In times of

possible trouble, 1t always pays to have your assets placed in someone else's name, if you can do this without transferring anything, even if that someone else is a company wholly owned and controlled by yourself.

In Chapter 7 titled "Cpen a Secret Account in Vienna!" the applicant said this (at p. 31):- "Swiss accounts are becoming difficult to

obtain, but two Viennese banks have very kindly authorized me to open secret accounts

for my clients. For a reasonable fee, usueélly $1250 per passbook, 1'1ll give you a passbook and a code number. To pay in money, simply

mail the cash (in Australian dollars) to the bank, with a piece of paper containing the code number. As Big Brother may use X-Rays, and money contains a metal thread, some careful clients wrap their cash in plain paper, then in carbon paper, then again ina layer of plain paper, with the code number written on the outside. Should Bag Brother nevertheless open the envelope...to our knowledge this has never happened...you would lose the contents, since this is a breach of regulations, but no one can prove who sent the money.

The Viennese bank then converts the money anto Austrian schillings, which are the most stable currency today after the Swiss franc. Your funds are held in complete secrecy, since even the bank doesn't know who owns' the account. (If you give a false name, or send your girl friend for the passbook, I won't know either!) Thus no one can steal or trace your money. To draw out the money, your agent or you must present the book in Vienna, and also write a second code word or code number...the whole arrangement 1s thief-proof, fiscal-fiend-proof, and...most important of all...creditor-proof."

In Chapter 19 titled "Your Day in Court" the applicant

"Every man is entitled to his day in court, and even you are entitled to yours. You have filed your defence (what there was of it) and asked for hundreds of uscless '''particulars' (and got hundreds of useless answers), and now you must prepare for the hearing. With most litigants this means that they must prepare to win their case. But we know you aren't going to win yours, don't we? So your preparations are simpler. They consist of trying to put off the hearing for as long as possible; and when you can't put it off any longer, you must prepare to confuse things so much that you will have foundations for an appeal. or perhaps the judge will make a mistake, especially if you irritate him sufficiently...

hearing. There is nothing in the facts to help you. Facts are to be avoided. Conjure up some legal defence, or play with your counter-claim. Say you are only a

layman...and you have done your best, but you apologize 1£f you don't put things in the right way.-.-but it says here...wWith luck the judge will think that it's your inexperience that makes what you say scem so totally lacking in relevance.

The following are a few random suggestions for complicating the case, irritating everyone and dragging out the proceedings as long as possible - remember, it is costing your creditor a lot of money, while all this entertainment 1s free so far as you are concerned (one Judge in Sydney had to be taken away to a clinic after seventeen days of a particularly skilful litigant-in-person, and of course the proceedings had to start all

over again). Anyway, here are some ideas:

Admit nothing. Insist that every part of the enemy's case be proved strictly. Lf

1t's a mammoth, insist on proof that they are properly incorporated in accordance with the laws of Panama or what - -have-you, that the person who authorized the proceedings was himself authorised to authorize them, and that those who

Object to every question, to every answer and to every tender of a document.

Cross-examine every witness at length, and fiercely. But stay within limits - judges con't Jike you accusing someone of having served a long prison sentence for fraud, if he hasn't, because that can be

disproved; they don't mind so much if you accuse every witness of being a. mental defective or a paranoid, or perhaps both, because that can't be disproved. i

Address the court at great length from the bar table, and tender written

submissions which should be lengthy and complex, even if they are as senseless as the last speeches of Der Fuhrer, or as inscrutable as the pronouncements of the

Sphinx. 'T've had a friend to help me with these,' you say to the hapless judge as you hand him 216 pages of illegible gibberish. 'l'm not a lawyer

but 1 do hope Your Honour will look through these and help me as best you can...' He wall. He has to."

I forebear from setting out any further extracts from

the applicant's books or his evidence before the Board.

It is plain that the applicant intends to do everything in his power to delay proceedings betwecn himself and the respondent for as long as possible in whichever Court or Tribunal

they are in conflict. He has no intention of paying any moneys

to the respondent notwithstanding the existence of the Supreme Court judgment. His avowed purpose is to Frustrate and delay the respondent in every way possible in his attempt to recover the tax which is due to the respondent. Although he receives remuneration for his services in Australia, he takes steps to ensure that the respondent will never be able to obtain payment of the tax. He is an expert at placing assets beyona the respondent's reach and has no scruples about doing so. 1f the day comes when the applicant is made bankrupt he intends to ensure that there will be no property which can be seized for the benefit of his creditors. The applicent seeks to use the courts

Mindful of the problems in his path, the applicant proferred an undertaking to this Court during the hearing of the application which was set out in writing and was said by the applicant to be unconditional and to operate irrespective of the

outcome of the application. The undertaking is in the following

1.I hereby undertake that during the pendency of the proceedings between myself and the Deputy Commissioner of Taxation in the Supreme Court of NSW and in the Federal] Court of Australia and in the Board of Review and during the pendency of any appellate proceedings arising From either of the said proceedings 1 will not without the leave of the Supreme Court of NSW or the Federal Court of Australia or the written consent of the Deputy Commissioner of Taxation dispose of any

assets or transfer or attempt to transfer any assets or money from the Commonwealth of

Australia to any country outside the Commonwealth of Australia.

This undertaking 1s given on my own behalf, on behalf of Metropolitan Mortgage Investment Corporation Pty.Ltd., Oeax 3 Pty.Ltd.,Nadove Pty.Ltd. and Peter Clyne International Pty.Ltd. and any other company which I may now own and control or which I may own or control in the future throughout the period referred to 1n par. 1 hereof. . -

(a)To pay debts in the ordinary course of business, or private debts.

(b) When travelling outside Australia, to acquire foreign

currency required for travel expenses not exceeding ten thousend dollars ($10,000) per journey, take that currency with me and spend it on travel expenses as aforesaid.

Dated this 30th day of September sgd. (Peter Clyne) "

Within moments of proferring the undertaking the applicant said to me that, although he would observe it by not sending moneys abroad, he may spend it all in Australia. I decline to accept the undertaking. 1t would be too easy for the

I turn to another aspect of the matter. By setting aside the bankruptcy notice or extending time for compliance or adjourning the application I would be, in effect, granting the

applicant a stay of execution of the Supreme Court judgment. the

applicant sought, unsuccessfully, a stay from the Supreme Court on 11 March 1982. It is still open for him to renew that application. Indeed, the bankruptcy notice itself provides that he may secure payment of the amount claimed by the respondent to the satisfaction of this Court or the respondent. If he complies with the notice and provides the security he will not commit an act of bankruptcy. lt is probable that he controls property whether in this country or elsewhere with which he could provide some security. As to its sufficiency or the acceptability of its

form, I say nothing. Indeed, counsel instructed by him before

the Supreme Court on 11 March 1982 offered $50.0U0.00 cash as security. Also he is paid fees here in one form or another. So it seems that funds or property of some kind may be martialled by the applicant. I should add that there 1s no clear statement of

the applicant's financial position before me. He gave no

evidence as to assets, liabilities, income or expenditure.

The applicant must comply with the requirements of the notice or commit an act of bankruptcy. To defer the operation of the notice would merely place another weapon in his hands to delay and defeat the respondent (according to the applicant, until about 1989 or 1990), who is a creditor in a substantial sum and entitled to obtain payment of the tax which is due and

The proper time for the Court to consider whether its

discretion should be exercised in favour of the respondent 1s

upon the hearing of any petition to séquestrate his estate which the respondent, or any other creditor, may present. The Court will then have a more recent knowledge of the stage reached in the litigation between the parties in the Court of Appeal and Board of keview or any other court or tribunal then involved in the battle. The applicant's financial position and the views of

In the meantime an act of bankruptcy may be committed and a petition for sequestration presented, so that if a

sequestration order 1s made the raghts of creditors will be

The commission of an act of bankruptcy and the presentation of a petition for sequestration are critical events in bankruptcy. After a debtor becomes bankrupt the date of the commission of an act of bankruptcy and the Gate of presentation of the petition on which he was made bankrupt are vital for varlous purposes including the determination of the period of relation-kack (s. 115), the ascertainment of his property divisible amongst his creditors (s. 116), the avoidance of preferences (ss. 122 and 123), the avoidance of voluntary settlements (s. 120) and the repayment by creditors to the trustee of his estate of moneys received as a result of execution

If the applicant were to become a bankrupt it 1s obvious

that delay in the meantime could only cause detriment to the

respondent and other creditors, 1f any, of the applicant.

Of course, the applicant may not become bankrupt. He may satisfy or secure his indebtedness to the respondent. He may succeed in the litigation before the Court of Appeal or the Eoard of Review and not be made bankrupt in the meantime. In balancing the conflicting interests of the applicant and the respondent it is preferable that no indulgence 1s granted to the applicant at this stage. 'ihe proper time to consider any adjournment of any relevant bankruptcy process or proceeding is upon the hearing of

I do not say for one moment that in the appropriate case, relief such as is sought by the epplicant here should not be granted. There may be cases where, notwithstanding the existence of a common law Judgment in favour of the respondent against a taxpayer, time for compliance with a bankruptcy notice,

issued at the respondent's request, should be extended or the

I will not set aside the bankruptcy notice in this case.

The applicant submitted that the Court should extend

time for compliance with the requirements of the bankruptcy notice until the final determination of all his disputes with the

respondent in proceedings before courts or tribunals.

The court may extend time for compliance with the requirements of the bankruptcy notice

notice was issued have been instituted by the debtor; or

(b) an application to set aside the bankruptcy notice has been filed with the Registrar..."

It is not disputed by the respondent that the appeal from the Supreme Court judgment to the Court of Appeal of New South Wales falls within para. 41 (6A) (a); but the respondent submitted that sub-s. 41 (6C) operated to prevent the Court from

extending time on the ground mentioned in para. (a).

(a) a debtor applies to the Court...for an extension of the time for complying with a bankruptcy notice on the ground that proceedings to set aside the judgment or

order in respect of which the bankruptcy notice was issued have been institued by the debtor; and

(b) the Court...1s of the opinion that the proceedings to set aside the judgment or

The respondent submitted that the appeal to the Court of Appeal was not instituted bona fide and was not being prosecuted with due diligence. I do not propose to deal with this argument as the Court of Appeal may hear the appeal soon and, even if I

were against the argument so that my discretion could be

exercised 1n favour of extending time for compliance, I would not

in fact extend time for the reasons given by me earlier under the

The second leg of the applicant's submission was that time for compliance should be extended until this Court has

determined whether the bankruptcy notice should be set aside

(para. 41 (6A) (b) ). This submission also fails for the same

should be set aside on any one of s1x other grounds. He

described these submissions as his "safety net" submissions.

(c) The bankruptcy notice was said to be invalid because it comprised two pages and was not signed on the second page by a Registrar or a Deputy Registrar in Bankruptcy. Alternatively, service of the notice was said to be invalid on the same ground. The applicant relied on bankruptcy. Rules 7

application has been duly made to him for the assue of a bankruptcy notice and that the copies of the form of bankruptcy notice

furnished to him in accordance with paragraph (2) (b) are in order for signature, the Registrar shall sign and stamp each of those copies and return them to the applicant.

Unless otherwise ordered by the Court under sub-section 309 (2) of the Act -

(a) service of a bankruptcy notice shall be effected on the debtor by delivering to

the debtor personally a copy of the bankruptcy notice signed and stamped by

The bankruptcy notice in this case comprised two pages. A Deputy Registrer in Bankruptcy signed and stamped the notice at the foot of the first page. The note to the notice telling the applicant what he could do if he had a counter-claim, set-off or

cross demand of the kind mentioned in para. 40 (1) (g) of the Act

appeared on the second page. The Deputy Registrar did not sign

In my opinion the notice was signed by the Deputy Registrar notwithstanding that the note thereto appeared on the second page. The prescribed form (form 3) provides for the signature of the Registrar (or a Deputy Regisirar) once only. That 1s precisely what was done here. The fact that the note appears on the second page of the notice does not invalidate the

notice or otherwise render it, or the service thereof, defective.

At a glance

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Judgment (244 paragraphs)