FEDERAL MAGISTRATES COURT OF AUSTRALIA
STEINBERG v DRYDON	[2010] FMCA 41	

BANKRUPTCY – Application for review of Registrar’s decision not to set aside a bankruptcy notice – application dismissed.	

Watson v Anderson (1976) 13 SASR 329	

Applicant:	Joel Alexander Steinberg	

Respondent:	Alexander Barclay Drydon	

File Number:	ADG 151 of 2009	

Judgment of:	Simpson FM	

Hearing date:	10 November 2009	

Date of Last Submission:	10 November 2009	

Date of Order:	10 November 2009	

Delivered at:	Adelaide	

Delivered on:	28 January 2010	

REPRESENTATION
Counsel for the Applicant:	Self-represented	

Counsel for the Respondent:	Mr Riggall	

Solicitors for the Respondent:	Ouwens Lawyers	

ORDERS
(1)	The Application for Review is dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
Adelaide	
ADG 151 of 2009
Joel Alexander Steinberg	
Applicant

And

Alexander Barclay Drydon	
Respondent

REASONS FOR JUDGMENT
On 10 November 2009 I made an order dismissing the applicant’s Application for Review and said that my reasons would be published at a later date.  These are those reasons.
1.	I have before me an Application for Review of a decision of Registrar Christie in which she dismissed the applicant’s application to have bankruptcy notice SA196 of 2009, which was served on the applicant on 5 June 2009, set aside.  The bankruptcy notice relied upon a judgment debt in the Magistrates Court for the sum of $37,229.93.  The judgment debt arose as a result of a claim by the respondent in these proceedings for money due on a deed of settlement dated 16 November 2008 in which the applicant agreed to pay the respondent the sum of $35,000.
2.	When the matter came before me on 15 October 2009 I heard certain submissions and adjourned the matter to 30 October 2009.  On 15 October 2009 the applicant advised the Court that he had an application before the Magistrates Court for the setting aside of the judgment debt which was to be heard by Deputy Chief Magistrate Cannon on 28 October 2009.
3.	When the matter came before me on 30 October 2009 I set a timetable for the filing of any further affidavit material and outline of argument and adjourned the matter to 4 November 2009 for interim argument.
4.	The applicant relies upon three affidavits: 
a)	firstly, his affidavit sworn and filed on 18 June 2009 (“the First Affidavit”), which was considered by Registrar Christie when she decided to refuse the applicant’s application to have the bankruptcy notice set aside;
b)	second, his affidavit sworn and filed on 30 October 2009 (“the Second Affidavit”); and
c)	finally, his affidavit sworn on 3 November 2009 and filed on 5 November 2009 (“the Third Affidavit”).
5.	The respondent relied on his affidavit of 30 June 2009.
6.	The applicant was unsuccessful in his application in the Magistrates Court to have the judgment debt set aside.  The failure to have the judgment debt set aside is a significant matter for me to take into account in deciding whether the bankruptcy notice should be set aside or an extension time for compliance with the bankruptcy notice given.  The respondent submits that neither should occur and that the bankruptcy notice should stand.
7.	The respondent submits that the test applied in the Magistrates Court for setting aside a default judgment is “for all practical purposes whether or not the defendant has a genuine intention to defend the proceedings”.  The case of Watson v Anderson (1976) 13 SASR 329 was referred to.  To this suggested test for deciding whether a default judgment should be set aside I would add that there must be some possibility of the applicant being able to defend the proceedings with success.  An important consideration in such applications is always whether there is merit in the applicant’s alleged defence.
8.	In all three of the applicant’s affidavits he mentions a cross-claim that he says that he has against the respondent for $1.7 million (in the First Affidavit $1.6 million is referred to) which he says arises from the respondent’s fraudulent conduct in completing documentation to enable the applicant to obtain finance.  Not only has no proceeding been instituted by the applicant to seek to recover this sum but no draft Statement of Claim has been provided.
9.	More importantly, the applicant has not provided any significant information in support of his claim that there has been fraudulent conduct by the respondent or how his damages might be assessed at $1.7 million.  I place little weight on the applicant’s evidence of such a claim.
10.	In doing so I also take into account the fact that the judgment debt is in relation to a deed of settlement signed by the parties on 16 December 2008 and that the effect of that deed of settlement was that the applicant (and his company, Plancor Pty Ltd) agreed to pay the respondent the sum of $35,000 on or before 19 December 2008.  That deed of settlement had the effect of the applicant releasing the respondent “… from any and all liability from the date of this Deed in relation to Plancor and agree to release and discharge Drydon in relation to any future claim, demand, expenses, costs, liabilities whether at law or in equity that Plancor or Steinberg may have against Drydon existing or arising from any document in existence or any act or omission occurring prior to the date of this Deed”.  The alleged conduct by the respondent occurred, if it occurred at all (in relation to which I make no finding) prior to 16 December 2008.  The deed of release would be a defence to any proceedings brought by the applicant in this regard.
11.	The applicant says in the Second Affidavit and Third Affidavit that he intends to appeal to the Supreme Court in relation to the refusal of his application to have the judgment debt set aside.  There is no other evidence before me that he intends to do so.  I place little weight on his evidence that he intends to appeal.
12.	In his affidavits and oral submissions the applicant suggested a number of further bases upon which he says the bankruptcy notice should be set aside.  He mentioned undue influence, frustrated contract, a term to be implied into the deed of settlement and duress.  There is no evidence before me that is sufficient to raise any of these possible bases for the setting aside of the bankruptcy notice.
13.	The Application for Review is dismissed.
14.	I will hear the parties in relation to the question of costs.
I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Simpson FM

Associate:  Ms N. Julius

Date:  28 January 2010