Mudie J:

This is an application to set aside a Bankruptcy Notice on the ground that an order was subsequently made for payment of the judgment debt by instalments.

The Bankruptcy Notice was issued on 30 June 1932, and served on the debtor on 7 July 1932. The order for payment by instalments was made on 5 July 1932.

It is argued for the applicant that as long as the order for payment of the debt by instalments is in force, execution on the judgment will not be issued, Montgomery & Co. v. De Blumes [1898] 2 QB 420 and a Bankruptcy Notice on the judgment will not issue.

The respondent contends that when the Bankruptcy Notice was issued, it was a good notice, and is not invalidated by an order subsequently made for payment by instalments.

The ground of the judgment in Montgomery & Co. v. De Blumes is that the judgment was modified by the order for payment by instalments. Chitty LJ in the course of his judgment says 'It seems to me that so long as the country Court Judge's order stands there is a modification of the order of the High Court; and it would involve a great injustice to a defendant if it were not so. The defendant is told that he is to pay by instalments, and the instalments in such a case are generally small....... A man in such a position exerts himself in order to get the money together for the purpose of complying with the order. He does so under stress of a liability to imprisonment if he makes default, but I think he would be likely to be misled, and it would put him in a hard position if he were told that he was still liable, in spite of that, to pay the whole debt, and that what goods he had could be taken in execution.'

In my view the same principle is applicable to a Bankruptcy Notice. The judgment is modified by the order for payment by instalments, and it seems to me that the Bankruptcy Notice, which is founded on the judgment as it originally stood, is thereby invalidated.

This case is distinguishable from Re a Debtor, ex parte Rock Red Brick Company [1904] 90 LT 64; 52 WR 302, where an act of bankruptcy was committed before an order for payment by instalments is to defeat bankruptcy proceedings in respect of the judgment debt in question, if the order is made before an act of bankruptcy is committed.

The Bankruptcy Notice will be set aside. There will be no order as to costs.