COURT
IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
GENERAL DIVISION
Hill J.(1)

CWDS
  Bankruptcy - Presentation of creditors petition against joint debtors -
whether extension of time for compliance with bankruptcy notice on application
of only one of the joint debtors operates to extend time for compliance in
respect of each of the debtors or only that debtor who applied for the
extension.
  Bankruptcy Act 1966 (Cth): ss. 41, 43-46

HRNG
SYDNEY
#DATE 17:4:1991
  Solicitor for the Applicant:        Miss K Rawsthorne of Sally
                                      Nash and Co.

ORDER
  The creditor's petition in so far as it relates to Phyllis Mary Ward be
dismissed.

Note:  Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.

JUDGE1
  Before the court is a creditor's petition of R.W. Brown and Company Pty
Limited for orders of sequestration against the estates of Lyle Alan Ward and
Phyllis Mary Ward.  Neither of the debtors appeared on the hearing of the
petition.
2.  The act of bankruptcy upon which the petition is based is, in the case of
each of the debtors, that they failed to comply on or before 17 July 1990 with
the requirements of a bankruptcy notice served on each of them, in the case of
Mr Ward on 30 March 1990, and in the case of Mrs Ward on 11 April 1990.  The
bankruptcy notice in question is a bankruptcy notice addressed to Mr and Mrs
Ward as joint debtors.  It is based upon a final judgment of $29,488.36,
together with interest thereon.
3.  The point which arises before me is a short but not unimportant one.
After the bankruptcy notice had been served, an application was made by Mr
Ward to set aside the bankruptcy notice.  In the course of those proceedings,
which were ultimately dismissed on 17 July 1990, a Registrar of the court made
orders extending the time allowed for compliance with the requirements of the
bankruptcy notice initially to 20 April 1990, then to 22 May 1990, then to 19
June 1990 and finally to 17 July 1990.  The form of order was expressed in the
usual way and, by way of example, that extending the time for compliance to 22
May 1990 read as follows:
            "... I extend the time allowed for compliance with
            the requirements of the bankruptcy notice to 22 May
            1990."
4.  That order clearly shows it was in a matter entitled Re Lyle Alan Ward; Ex
parte R.W. Brown and Co.
5.  By virtue of the provisions of s.44(1)(c) of the Bankruptcy Act 1966 (Cth)
("the Act"), the act of bankruptcy upon which the petition is founded must be
committed within six months before the presentation of the petition.  The
present petition was dated 17 November 1990 and was filed in this court on 26
November 1990.  That date is within six months of 17 July 1990, but not within
six months of the act of bankruptcy that would be committed by Mrs Ward if, in
respect of her, the time for compliance with the bankruptcy notice had not
been extended to 17 July 1990.  If that be not the relevant date in respect of
Mrs Ward, the relevant date will be 21 days after the service upon her on 11
April 1990, that is to say 2 May 1990.
6.  The question that arises, therefore, is whether the making of the order by
the Registrar in the case of a joint bankruptcy notice on the application of
only one of the joint debtors, operated to extend the time for compliance with
the bankruptcy notice in respect of each of the debtors or only that debtor
who applied to extend the time for compliance.
7.  Section 41 of the Act, which deals with bankruptcy notices, does not deal
specifically with a bankruptcy notice addressed to more than one debtor.
Provision is made for the bankruptcy notice to be issued "in relation to a
debtor": s.41(3), and the notice must be such that it requires "the debtor
named in it" within a specified time to either pay the judgment debt or sum
ordered to be paid in accordance with the judgment or order or to secure the
payment of the debt to the satisfaction of the court or the creditor or his
agent: s.41(2).  The prescribed form (form 4) is likewise expressed in the
singular.  Extension of time for compliance is dealt with in ss.41(6A) and
(6B) of the Act, the power under s.41(6A) being conferred upon the court and
the power under s.41(6B) being conferred upon the Registrar.  Section 41(6A),
by way of example, provides:
            "Where, before the expiration of the time fixed by
            the Court or the Registrar for compliance with the
            requirements of a bankruptcy notice -
            (a)           proceedings to set aside the
                          judgment or order in respect of
                          which the bankruptcy 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,
            the Court may, subject to subsection (6C), extend
            the time for compliance with the bankruptcy
            notice."
8.  Division 2 of Part IV of the Act deals with creditor's petitions.
Sections 43 and 44 are general sections setting out the court's jurisdiction
to make sequestration orders and the conditions upon which a creditor may
petition.  Those sections are expressed by reference to a debtor in the
singular.  Section 45 of the Act deals specifically with creditor's petitions
against a partnership and s.46 with creditor's petitions against two or more
joint debtors.  Section 46 provides as follows:
      "(1)  A creditor's petition may be presented
            against 2 or more joint debtors, whether partners
            or not.
       (2)  Where there are 2 or more respondents to a
            creditor's petition, the Court may make a
            sequestration order against one or more of them and
            dismiss the petition in so far as it relates to the
            other or others."
9.  Consolidation of proceedings once two or more joint debtors have become
bankrupt is dealt with in s.53 of the Act.
10.  It was submitted by the petitioning creditor, that the effect of the
orders made by the Registrar from time to time extending time for compliance
with the bankruptcy notice, was that the time for complying by all debtors was
extended.  While it was conceded that the power to extend the time for
compliance was dependent upon an application being made to the court or
Registrar as the case may be, it was submitted that ss.41(6A) and (6B)
referred only to the time (that is to say one time only) for compliance with
the bankruptcy notice.  It followed, so it was said, that once on the
application of any one of joint debtors referred to in a bankruptcy notice the
court or the Registrar regarded it as appropriate to extend the time for
compliance, the consequence of the order was that the time for compliance with
the notice was extended in relation to all joint debtors referred to in the
bankruptcy notice.  The provisions of ss.41(6A) and (6B) were contrasted with
the provisions of s.46 of the Act which deals specifically with the case where
there were two or more joint debtors.
11.  The petitioning creditor's submission would have strange consequences
indeed.  First, it may be noted that when the bankruptcy notice is originally
issued in respect of joint debtors, the time for compliance by each of those
debtors will depend upon the date of service. That is to say that except in a
case where the bankruptcy notice is served on the same day on each joint
debtor, there will, from the very outset, be different times for compliance in
respect of each debtor, dependent upon the date of service.  The present is an
example of such a case.
12.  Next, it may be noted that where there are two or more joint debtors and
the time for compliance has expired in respect of one of them, it is still
possible for the other to seek to set aside the bankruptcy notice and in
connection with that application the Registrar may extend the time for
compliance by that person.  On the submission of the petitioning creditor in
this case, if the court's order extended the time for compliance with the
notice in respect of both debtors, the strange consequence would be that one
of the debtors had committed an act of bankruptcy and presumably could commit
a second act of bankruptcy by failing to comply with the extended time.
13.  A third problem of the submissions made on behalf of the petitioning
creditor is that where only one of the debtors referred to in a bankruptcy
notice makes an application to extend the time and the other is not a party,
the acceptance of the submission requires that a person not being a party to
the proceedings be bound by the order made in his or her absence.  Often, of
course, the order would be beneficial to the debtor not a party, for example,
if the submission be accepted, in a case extending the time for compliance by
such a debtor to a later date, a date, of course, of which it would not
necessarily follow that he was advised.  If it be assumed that one debtor had
made application to set aside the bankruptcy notice and failed, it is hard to
see how that application could preclude the other debtor from making a similar
application.  Certainly, it would be a breach of natural justice to decide
such an application adversely to a person not a party.  It would become
necessary in any application made by one joint debtor to set aside a
bankruptcy notice, therefore, to join the other joint debtor in any event.
That was not the case here.
14.  Although the order made by the Registrar extending the time for
compliance with the bankruptcy notice was expressed in general terms, having
regard to the way the matter was entitled, that is to say as an application
made by Mr Ward rather than by both Mr and Mrs Ward, the order properly
construed is an order that the time for compliance by Mr Ward of the
provisions of the bankruptcy notice be extended.  It would no doubt be
preferable, where cases such as the present arise, that the order made specify
its applicability to a particular joint debtor but in my view it is not
necessary to state this, it being inherent in the combination of the
application and the order.
15.  These considerations lead me to the conclusion that where an application
is made by one joint debtor to set aside a bankruptcy notice, that application
operates only in respect of that joint debtor, and if time is extended by the
Registrar or the court, that extension of time is an extension of time in
respect of the debtor making the application and not an extension of time for
compliance with the bankruptcy notice generally. It follows, therefore, that
so far as the petition alleges an act of bankruptcy on the part of Mrs Ward,
no such act of bankruptcy was committed.  In fact, the only act of bankruptcy
committed by Mrs Ward was that which occurred 21 days after service upon her
of the bankruptcy notice, and as the petition was not presented within six
months of that date it is out of time.