Guss v Johnstone M107/1997 [1999] HCATrans 141 (14 May 1999)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M107 of 1997

B e t w e e n -

JOSEPH GUSS

Applicant

and

RAYMOND JOHNSTONE

Respondent

Application for special leave to appeal

KIRBY J

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 14 MAY 1999, AT 11.42 AM

Copyright in the High Court of Australia

MR F.G.A. BEAUMONT, QC: If your Honour pleases, I appear with my learned friend, MR L.F.M. WATTS, on behalf of the applicant. (instructed by J. Guss)

I understand there is no appearance on behalf of the respondent, your Honour.

KIRBY J: Yes, very well.

MR BEAUMONT: Your Honours, this is an appeal where, in essence - - -

KIRBY J: We can be satisfied that the respondent was served and knows of the proceedings?

MR BEAUMONT: Yes, your Honour. The respondent, in fact, your Honour, has put in - - -

KIRBY J: Yes, I have seen the written submissions. Perhaps we should call the respondent outside the Court. Call Raymond Johnstone.

MR BEAUMONT: He is a member of counsel, in fact, your Honour, and I can tell your Honour he has not been - - -

KIRBY J: He is still entitled to be heard.

COURT ATTENDANT: No appearance, your Honour.

KIRBY J: Yes. So, there is no appearance for Mr Johnstone, and there is a supplementary submission which I assume that you have, Mr Beaumont, dated 11 May 1999, which I had not seen which says that he would not be present at the Court but would rely on his written submissions.

MR BEAUMONT: I had not seen that, your Honour.

KIRBY J: Yes. Well, we are in the same boat. Press on.

MR BEAUMONT: Your Honour, this is an application for special leave to appeal against a decision of the Full Federal Court on the basis that the Full Federal Court, in effect, refused to act as a court of appeal because it thought there was no utility in doing so. That appears at page 37, line 18 of the application book. The reason for that, your Honour, is that in this matter there was a bankruptcy notice dated 14 September 1996; there was an affidavit filed in accordance with section 41(7) of the Bankruptcy Act within the required 14 days. In those days it had to be filed with the registrar. There was no application necessary. The application then came on for hearing before Mr Justice Sundberg who, on 30 May 1997, decided that he was not satisfied of the existence of a counterclaim or set-off of the requisite kind.

On that very day, your Honour, an oral application was made to his Honour by Mr Paterson, of counsel, to seek a stay of that so as to stop time from running. His Honour refused to hear the oral application and then made a statement that, without prejudice, we could make an application upon notice. That application upon notice came on for hearing on 1 July.

KIRBY J: And that was an application for a stay?

MR BEAUMONT: Yes, your Honour.

KIRBY J: No application was made then or later under section 41(6A) of the Bankruptcy Act?

MR BEAUMONT: No, your Honour, it was made under 41(7) for a stay of his Honour's order.

KIRBY J: Why was not the correct procedure, which the Act envisages and provides for, an application under section 41(6A)?

MR BEAUMONT: The difficulty is that one could not afford a section 41(6A) application at that stage, your Honour, because no application had been made before the expiration of the original time. If one goes to 41(6A), which is set out in the materials at tab 2, your Honours, about three-quarters of the way through the materials, that section says:

Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice:

(a) proceedings to set aside the judgment -

and that was not applicable in this instance -

may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.

So, in order to make an application under (6A), your Honours, it would have been necessary for that to have been commenced within 14 days of the date of service of the bankruptcy notice.

KIRBY J: Well, that could have been done on the day that the matter was returned before Justice Sundberg, could it not?

MR BEAUMONT: No, your Honour, because under (6A) the time fixed for compliance would have been, in essence, say, about 30 September 1996.

KIRBY J: When was the bankruptcy notice served?

MR BEAUMONT: It was served shortly after 14 September. I do not think, in Mr Justice Sundberg's judgment, he deals exactly with what date it was served on. In fact, he has got the wrong date but it is plain from the Full Court decision, your Honours, that it was in fact dated 14 September 1996. It must have been sworn, your Honours, in December 1996 because the affidavit, under section 41(7) was, in fact, filed on 13 September which was within the 14 days. The procedure which existed - - -

KIRBY J: May I interrupt you to say the paragraph of the notice that was filed - it must have only been filed yesterday. It did not come to my notice - indicated that the respondent would not be present in Court for the hearing of the application but it also contains the following statement:

The applicant was made bankrupt in December 1998 by an order of Justice Kenny of the Federal Court of Australia. The respondent has not been notified of any consent of the trustee pursuant either to section 116 or section 58 of the Bankruptcy Act that the applicant might bring this application.

Now, this matter having been brought to our notice, what is the position in relation to the consent of the trustee?

MR BEAUMONT: I know nothing of that. Your Honour, I know nothing of that last - we have not been given a copy of that and I am not sure - - -

KIRBY J: Well, may I hand it down to you. I had not seen it myself but the Registrar drew it to my notice and I have therefore now drawn it to your notice and I think the matter being before the Court, we would have to have some response in relation to it.

MR BEAUMONT: Yes.

CALLINAN J: But you would know whether the trustee had consented or not, would you not?

MR BEAUMONT: The answer is I do not know, your Honour, but I believe that he has not been asked. The position, if I may, your Honour, is that Justice Kenny's decision is in fact the subject of an appeal.

KIRBY J: It may be, but it is effective until the Appeal Court sets it aside.

MR BEAUMONT: Which is to be heard next Thursday in the Full Federal Court.

KIRBY J: Yes, but unless there has been a stay on its operation - has there been a stay?

MR BEAUMONT: No, your Honour.

KIRBY J: Well, if there is no stay, it is an effective order of the Federal Court of Australia and, as I understand the principles, it would require the consent of the trustee for the prosecution of this application or for the taking of any step in the application. Is that not correct?

MR BEAUMONT: I am not sure that that is correct, your Honour, as to - - -

KIRBY J: Well, I think we had better stand this matter down so that you can first seek instructions in relation to the matters contained in that paragraph of the respondent's supplementary submission and be in a position to tell the Court what the situation is. Is that a convenient course for you?

MR BEAUMONT: Yes, your Honour. I apologise for that but that - - -

KIRBY J: No. Well, neither you nor I knew, but I think that that would be the appropriate course.

CALLINAN J: And you had better pay some close attention to whether this application can even be brought.

MR BEAUMONT: May I just say to the Court that the act of bankruptcy that was relied upon in making Mr Guss bankrupt was, in fact, non-compliance with the notice of bankruptcy and the Full Court knows that that is the position at the moment, that this is being appealed against with an application for special leave.

KIRBY J: Yes, that may be so but unless the provisions of the Act are complied with and steps are taken to provide a stay or otherwise to relieve you of the operation of the Bankruptcy Act in so far as that can be done by law, then we are as bound to conform to the Act as you are.

MR BEAUMONT: I accept that, your Honour.

KIRBY J: So that I think you will have to clarify the position in relation to what is asserted in that document that I have handed you and come back later and tell us what the position is.

MR BEAUMONT: Thank you, your Honour. Sorry about that.

KIRBY J: We will not penalise you unduly as to your time; just a little bit.

AT 11.56 AM SHORT ADJOURNMENT

UPON RESUMING AT 12.39 PM:

MR BEAUMONT: Neither of those sections have any application, your Honour. They only deal with property.

KIRBY J: What is the position so far as the assertion in paragraph 6 of the supplementary submission?

MR BEAUMONT: The assertion?

KIRBY J: Is it factually correct?

MR BEAUMONT: Factually correct in that there has been an order made for bankruptcy but we say, your Honour, it does affect it. This appeal is in the same matter all the way through and it has never been the principle of this Court to have a trustee involved in an appeal by a bankrupt. May I, for example, take your Honours to Ebert's Case which you have in our materials, one part of it, but it was in two parts.

KIRBY J: Just read the relevant section.

MR BEAUMONT: That was a case which is very similar. It is at 104 CLR. The first time it went to the High Court was at page 346, where Mr Ebert was the appellant himself, and there is no suggestion about anything with the trustee, and that was an appeal based upon whether or not he had been able to satisfy the Court that he had a counterclaim, set-off or cross-demand. Very similar to the present - - -

KIRBY J: I realise. I know Ebert's Case but do we know affirmatively that the Court was informed that the trustee had been informed or had not been informed or was involved or had given consent or not given consent?

MR BEAUMONT: In the first instance, your Honour, when it first came before the High Court, the High Court sent it back and then he was subsequently made bankrupt on that same matter and in the subsequent case it is quite clear that, once again, there was no suggestion of the trustee having to be given notice or anything like that, your Honours.

Sections 58 and 116 only apply to property. When one reads those sections, there is nothing in those sections that would in any way suggest that a right, for example, of appeal against the bankruptcy order itself is in any way affected or that a trustee takes any part therein.

KIRBY J: But the whole purpose of bankruptcy, apart from status, is to deal with property. So, why is property not involved in this? I mean, the purpose is to gather in the property of the bankrupt.

MR BEAUMONT: Yes, but this is not the property of the bankrupt.

CALLINAN J: I had an idea, and I may be quite wrong about this, that there is a section which dealt specifically with proceedings by a bankrupt and the need to obtain a trustee's consent.

KIRBY J: And it is my recollection that that arose quite often in the Court of Appeal and that the law was that it had to be stopped.

CALLINAN J: There have been cases in Queensland about it, I know, and you may well be right about 58 and 116, but is there not such a section?

MR BEAUMONT: There is a section, your Honour, which is section 60(2) of the Bankruptcy Act.

CALLINAN J: Yes, I think that is the one I was thinking of.

MR BEAUMONT: I think that is probably the one that your Honour is referring to.

CALLINAN J: No, I am sorry, looking at it I do not now.

KIRBY J: Why is not (2) applicable in its terms?

MR BEAUMONT: Because this is not an action commenced by us.

CALLINAN J: It is your appeal against the making of a sequestration order.

MR BEAUMONT: Yes, your Honour.

KIRBY J: And you say this is directed at the commencement of an entirely extraneous action that may run up costs for the trustee in the administration of the estate of the bankrupt.

MR BEAUMONT: Yes, your Honour.

CALLINAN J: And if it were otherwise, you would never be able to challenge the making of a sequestration order.

MR BEAUMONT: Exactly. Your Honour, in a large number of years of experience at the Bar, I have never heard it suggested before that in any manner or form that for an appeal against a sequestration order you have to get a trustee's consent.

KIRBY J: Yes. I think you have made that point good but you should never be sure when you enter the High Court of Australia that a point may not be raised for the first time. I think we will adjourn the further hearing of this matter until 2.20. Is that convenient?

MR BEAUMONT: If your Honour pleases.

KIRBY J: Very well. We will adjourn until 2.20 pm.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.30 PM:

KIRBY J: Sorry that we are a little late but we had the pleasure of lunch with His Excellency the Governor of Victoria and Lady Gobbo and it just took a little longer than we anticipated.

Yes. Well, we will start again, I think.

MR BEAUMONT: Thank you, your Honour. Your Honours, as we said, the whole essence of this appeal basically is we say the Full Federal Court just, in effect, refused to act as a court of appeal because they said there was no utility in doing so. In reaching that conclusion, which is referred to, they relied upon the High Court decision of Ebert v Union Trustee Company of Australia Limited [1961] HCA 29; (1960) 105 CLR 327 at 333. On the last paragraph of 332 it says, dealing with a situation very similar to the present one:

it is stated as at the date of the judgment of the Bankruptcy Court dismissing the application to set aside the bankruptcy notice, whereas, so it was argued, the date should have been that of the dismissal by this Court of the appeal from that order viz 9th August 1960. The point depends upon sub-s (2) of s. 53, a sub-section inserted by s. 5 of Act No. 13 of 1958. The provision deals with the case of a debtor by affidavit setting up a counter-claim set-off or cross demand. In effect the sub-section operates to extend the time limited in the bankruptcy notice until the day when the Bankruptcy Court determines whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand. It is obvious that this refers to the decision of the Bankruptcy Court and cannot on any principle be understood as operating with respect, not to the date of that decision, but to the decision of this Court -

that is the High Court -

on appeal from the decision of the Bankruptcy Court. The objection therefore fails.

Based upon that, they used exactly that analysis in this case and said that when Mr Justice Sundberg dismissed it, that was the position, an act of bankruptcy occurred.

Now, the difficulty with that, your Honours, is this - and I have had handed to your Honours a consolidated copy of the Bankruptcy Act as at 1960 when Ebert's Case was decided.

KIRBY J: Is that in the collection in the Court?

MR BEAUMONT: No, it is separate, your Honour.

KIRBY J: Yes, I have that.

MR BEAUMONT: All of the amendments are in there but it was easier to give your Honour a consolidated copy. The position is, your Honours, that the word "Court" is not defined in the Bankruptcy Act at that time but the word "The Court" is defined as meaning, "any Court having jurisdiction in bankruptcy". That is in section 4. And "The High Court" is also separately defined as meaning "the High Court of Australia". If you then go to section 18, your Honours, it will be noted that:

The Courts having jurisdiction in bankruptcy shall be -

(a) such Federal Courts (if any) as the Parliament creates to be Courts of Bankruptcy; and

(b) the following State Courts -

which includes all of the Supreme Courts and, in subsection (1A):

The jurisdiction of the Federal Court of Bankruptcy may be exercised by any Judge or Judges thereof.

And in section 18A:

There shall be a Federal Court of Bankruptcy, which shall be a Court of Record, and shall consist of a Judge or Judges, not more than two in number, who may be appointed by the Governor-General by Commission.

If I could then take your Honours to section 20, over the page, and, in particular, subsection (3) of that section. It provides:

If in any bankruptcy proceeding in a Court any question of law arises which all the parties thereto desire, or which one of them and the Judge of the Court desire, to have determined in the first instance in the High Court, the Judge shall -

(a) state the facts in the form of a special case for the opinion of the High Court; and

(b) transmit the special case and the proceedings.....to the High Court -

and then in subsection (4):

Every order decision or award of the Court made under this Act in any cause or matter may be enforced by the Court against all persons bound thereby in the same manner as a judgment of the High Court -

In section 26, which is then over on page 15, your Honours, it provides that:

The Court may review, rescind, or vary any order made by it in its bankruptcy jurisdiction.

I might add, your Honours, that they always said they would never review a sequestration order they had already made.

CALLINAN J: But what is the point you are trying to make? Is there some difference between this Act - - -

MR BEAUMONT: Yes, your Honour.

CALLINAN J: Well, what is the difference?

MR BEAUMONT: The point is, your Honour, that now the Federal Court, of course, has its own appeal mechanism. There was no appeal mechanism at the time when Ebert's Case was decided.

KIRBY J: Is that correct, or would not the Constitution provide for - - -

MR BEAUMONT: I am sorry, your Honour, you went straight from the Bankruptcy Court to the High Court.

KIRBY J: Yes, so there was an appeal mechanism.

MR BEAUMONT: Yes, but not which involved the Federal Court or the Full Federal Court as it now stands.

KIRBY J: It did not exist at that time.

MR BEAUMONT: It did not exist then, that is correct. Now, your Honours, we have a situation where the court - all of the appeal provisions have now been transferred to the Federal Court Act. There are no appeal provisions left in the Bankruptcy Act. They have all been removed to the Federal Court Act. And, of course, as of right, under the Federal Court Act you now have a right of appeal to the Full Court of the Federal Court. So, therefore, there has been a distinct change.

CALLINAN J: That is pursuant to the Federal Court Act, is it?

MR BEAUMONT: Yes, your Honour. Can I take you to those provisions in the Federal Court Act.

KIRBY J: Well, I think we would be familiar, in general, with the right of appeal within the Federal Court. But I did not take the Full Court's decision to deny that.

MR BEAUMONT: Yes. What they said, your Honour, is that, in essence, once the judge decided that there was no set-off which could be set up, then an act of bankruptcy had been committed that day. They relied on Ebert's Case to say that that was the position. Now, what we say, your Honour, is that there has been a - - -

KIRBY J: But in Ebert they could have appealed to the High Court of Australia under the Constitution.

MR BEAUMONT: Yes, but the meaning of the word "Court" in section 53(2) at that stage, which is now section 41(7), could only mean the Bankruptcy Court, and we do not disagree with that.

CALLINAN J: You say you have to wait until all your rights of appeal have been exhausted, do you?

MR BEAUMONT: In the Federal Court; in "The Court" because "The Court" in section 41(7) now can only mean the Federal Court and "the Federal Court" means not only a judge sitting at first instance but all three judges on, for example, a court of appeal. Otherwise, you would have the situation where, if you took literally what the Full Court said, everything would be unappealable once a single judge, no matter how bad his decision was, made a decision that there was no set-off.

CALLINAN J: Can we find that in any particular place conveniently in the reasons for judgment of the Full Federal Court?

MR BEAUMONT: Yes, your Honour. Can I take your Honour to page 37, line 15 - and I might add, just above that, your Honour, was where they dealt with the 41(6A) point that your Honour had spoken to me about earlier today, Justice Kirby, when you asked me about whether that was the appropriate procedure and about condition precedents. At line 15, they say, your Honours:

In the present case, the debtor's application to set aside the bankruptcy notice was determined when the learned primary Judge pronounced that he was not satisfied of the existence of a counter-claim or set-off of the requisite kind. At the end of the same day, therefore, an act of bankruptcy occurred. As a result, there is no utility in this Court's acceding to the appellant's invitation to set aside the declaration made at first instance.

CALLINAN J: So, what you are saying is that if that is correct, you do not have an appeal?

MR BEAUMONT: Exactly.

KIRBY J: And your contention is that by the statute, you do?

MR BEAUMONT: Yes, your Honour, and quite clearly you do. "The Court" can only mean the Federal Court. They say that again at page 42, at line 4, when they were talking about the refusal to stay:

As we have already explained, at the time of that application to his Honour, there was nothing to stay - - -

CALLINAN J: And they have used the expression "because an act of bankruptcy occurred once and for all".

MR BEAUMONT: That is correct, your Honour.

KIRBY J: Of course, their interpretation upholds the high desirability that the question of whether there is an act of bankruptcy be determined clearly and without undue delay, otherwise, you could take proceedings through the Federal Court and to this Court on an application such as this and the whole matter would be set in a time warp of delay.

MR BEAUMONT: Except, your Honour, there must be a thing as justice and, for example, if the judge at first instance just went completely off the rails, no matter how bad he was, if they are correct, you could never correct it.

CALLINAN J: Is there not a section under which you could have applied that you did not apply under - - -

MR BEAUMONT: No, your Honour, because we did not satisfy, as the law then stood, the prerequisites for section 41(6A).

KIRBY J: Remind us again - it is so long since we dealt with this - as to why you do not fit into that section, because that was an important part of the Full Court's reasoning.

MR BEAUMONT: Yes, your Honour. We did not have a pre-existing application to set aside an existing judgment.

KIRBY J: But why could you have not mounted that there and then?

MR BEAUMONT: But it has to be in existence at the time when you mount the application, and the application has to be mounted - and there are numerous cases on this - within 14 days of being served with the bankruptcy notice. Now, what used to occur, your Honours, is that if you were trying to set aside a judgment and you were not relying on a general cross-claim, et cetera, which you are allowed to, then you would go under section 41(7) then and you would lodge an affidavit with the registrar. The effect of lodging the affidavit at the registrar is to deem the time to be extended until after the court considers that. It is a question of what "The Court" means. "The Court" can only mean, having regard to subsequent legislation, the Full Federal Court, we say.

That is to be contrasted, we remind your Honours, with the very position under the Corporations Law where, although the words used are "finally determines", here it just used the words "Court determines".

CALLINAN J: You will have to bear with me for a moment. I want to follow this carefully. I am looking at 41(6A):

Where, before the expiration of the time fixed for compliance.....

(a) proceedings.....have been instituted.....or

(b) an application has been made to the Court -

now, why do you say you cannot - you may have to remind me of the dates. Why do you say that you cannot comply or it is impossible to comply?

MR BEAUMONT: Because, your Honour, we did not have on foot an application on 30 May, when Mr Justice Sundberg delivered his judgment, in accordance with section 41(6A).

KIRBY J: But the point that was being made was that the time for compliance with the requirements of the bankruptcy notice was the end of that day; the end of the day on which Justice Sundberg's decision was made, is it not?

MR BEAUMONT: That is not how it has been interpreted in the past, your Honour. It has been interpreted that it is a condition precedent that you actually issue that application within the time limited.

CALLINAN J: What was the time fixed for compliance with the notice?

MR BEAUMONT: It would be 14 days after it was served in early December 1996.

KIRBY J: And when was the matter before Justice Sundberg?

MR BEAUMONT: It was 30 May when he delivered judgment, your Honour, 1997.

KIRBY J: So that on your theory, the time fixed for compliance with the requirements was 14 days from a day in December - let it be January - and therefore that time had expired.

MR BEAUMONT: Yes, your Honour.

KIRBY J: And you could not, on the day that the matter was before Justice Sundberg, invoke subsection (6A) because a pre-condition to its operation was not applicable.

MR BEAUMONT: Yes, your Honour, and it might be remembered that I informed your Honour earlier - and I do have a copy of the transcript if necessary - on the day when Mr Justice Sundberg delivered his judgment an oral application was made then and there for a stay, which was refused.

KIRBY J: Was his Honour's refusal of a stay on discretionary grounds or was it on some other basis?

MR BEAUMONT: May I read to your Honours the transcript, and I do have a copy?

KIRBY J: Yes.

MR BEAUMONT:

MR PATERSON: I have been instructed to seek a stay in relation to those orders of 14 days so that an appeal from your Honour's decision can be considered and I would seek an order in those terms.

MR COOK -

who was for Mr Johnstone -

Your Honour, I would seek that any such application would be brought on notice and the application as I perceive it to be can be made either to your Honour or to the Appeal Court and no factual basis for such an application has been put before your Honour and I would suggest that the application in the first instance, at least, be refused in the manner it is being sought -

that is orally. His Honour merely said:

Yes, the application is refused - - -

KIRBY J: Well now, that seems an appropriate or, at least, an available exercise of a discretionary procedural decision.

MR BEAUMONT: We would say it is an inappropriate exercise if one takes the view, your Honour, that it immediately means that somebody has committed an act of bankruptcy which can never thereafter be set aside, varied or anything done to it.

KIRBY J: Now, the order of Justice Kenny last December was based upon this act of bankruptcy, was it?

MR BEAUMONT: Yes, your Honour.

KIRBY J: So, your client's status is connected with the issue that you wish to agitate?

MR BEAUMONT: Yes, your Honour, very much so.

KIRBY J: Just looking at the matter from the point of view of vehicle, we do not have a respondent here today or a contradictor. That, of course, would be a great disadvantage to the Court if it had to deal with this matter without a contradictor. I am not saying a party, by not turning up on a special leave application, can make the case stronger because they do not turn up but, on the other hand, if the matter came into the Full Court, we really could not deal with it with only one party being represented. We could not deal with it effectively.

MR BEAUMONT: What we would submit, your Honour, this would be a very short matter for the Full Court to deal with.

KIRBY J: Well, that might be so, but experience teaches that there is an advantage on a contradictor.

MR BEAUMONT: We would be more than happy, your Honour, if the substituting creditor was allowed to present the case to the contrary. If Mr Johnstone saw fit not to attend, we would be more than happy for the substituted creditor, who has exactly the same interest, if not a better interest, in the circumstances - - -

KIRBY J: You answered questions before lunch relating to the application of the Act to the fact that your client is now bankrupt but there is still a question, is there not, of discretion, that you ought, in the circumstances that your client is bankrupt, to have notified the trustee so that the trustee could be heard on the issue of whether or not there were any other reasons extraneous to those which are now before us which affect the grant of special leave.

MR BEAUMONT: The only thing I can say as to that, your Honour, is that the trustee is aware these matters are being litigated and the substituted creditor's counsel was in Court earlier this morning watching what occurred this morning and that the position is, of course, that the - he is fully aware because it is in the grounds of appeal. One of the things - - -

KIRBY J: You tell the Court that the trustee is aware of the fact that these proceedings are before us today?

MR BEAUMONT: Yes, your Honour, because one of the grounds whereby we seek leave to appeal from Justice Kenny's judgment was that she refused to take any notice of this fact that this matter was proceeding today and refused to take it into account.

KIRBY J: That would have been conformably with the decision of the Full Court of the Federal Court.

MR BEAUMONT: Of course, your Honour.

KIRBY J: Very well. Well, I think you have eventually got to the point where you have explained it. It is a question of whether this is a suitable vehicle to allow the point to be dealt with.

MR BEAUMONT: Your Honour, we say it is a suitable vehicle because it must apply to every person who receives a bankruptcy notice, who goes down the section 41(7) path of setting up counterclaims, and experience shows that is nearly everybody.

KIRBY J: That might be so, Mr Beaumont, but we would normally have somebody down the other end of the table banging the table and saying why we should not do it.

MR BEAUMONT: Can I run to the other end and bang?

KIRBY J: Well, you tell the Court what is the main argument against giving you special leave?

MR BEAUMONT: Ebert's Case applies, in the way in which Mr Justice Finn and the Full Court have said so.

KIRBY J: You say that is overtaken by the change in the legislation.

MR BEAUMONT: Most certainly, your Honours.

KIRBY J: Yes, very well. Thank you.

Yes, there will be a grant of special leave in this matter.

Would you take steps, if you would not mind, to inform Mr Johnstone of the outcome of the case?

MR BEAUMONT: Yes, your Honour.

KIRBY J: And to ensure that either he or a substituted creditor appears when the matter is returned before the Full Court so that the Court will have the advantage of a contradictor?

MR BEAUMONT: I most certainly will, your Honour.

KIRBY J: You have indicated that the matter is a very short matter. It is really quite a short question of whether, notwithstanding the alteration in the Bankruptcy Act and the substitution for the Bankruptcy Court, with its relationship to this Court, and the Federal Court with its Full Court, the principle in Ebert's Case still applies?

MR BEAUMONT: Yes, your Honour.

KIRBY J: And the special leave aspect of the matter is that that is, itself, an important question and affects every bankruptcy notice at least potentially.

MR BEAUMONT: Yes, your Honour.

KIRBY J: But if you would ensure that there is a contradictor before the Court, otherwise the Court might rescind special leave. It goes without saying that you should also notify the trustee.

CALLINAN J: And that should be done formally by the instructing solicitors so that there can be no question that those whom his Honour has said should be notified, have been notified in a proper way.

MR BEAUMONT: Thank you, your Honours.

AT 2.51 PM THE MATTER WAS CONCLUDED