Acheson v National Australia Bank Ltd - [2010] FMCA 771

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ACHESON v NATIONAL AUSTRALIA BANK LTD

[2010] FMCA 771

BANKRUPTCY – Application to vacate the hearing of an application to set aside a bankruptcy notice.

Bankruptcy Act 1966 (Cth), s.40

Re Glew; Glew v Harrowell of Hunt & Hunt Lawyers; Re Tresidder; Tresidder v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331; [2003] FCA 373

Ultimate Property Group Pty Ltd v Lord (2004) 60 NSWLR 646; [2004] NSWSC 114

Applicant:

ADRIAN GLYNN ACHESON

Respondent:

NATIONAL AUSTRALIA BANK LIMITED

ABN 12 004 044 937

File Number:

SYG1004 of 2010

Judgment of:

Barnes FM

Hearing date:

14 September 2010

Delivered at:

Sydney

Delivered on:

14 September 2010

REPRESENTATION

Counsel for the Applicant:

Mr R Brender

Solicitors for the Applicant:

Campbell Paton & Taylor

Counsel for the Respondent:

Mr D Sulan

Solicitors for the Respondent:

Dibbs Barker

ORDERS

The interim application filed on 10 September 2010 be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG1004 of 2010

ADRIAN GLYNN ACHESON

Applicant

And

NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937)

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

This is an application to vacate the hearing of an application to set aside a Bankruptcy Notice filed on 7 May 2010. The matter has been before a Registrar of this court on a number of occasions. It came to me as duty Federal Magistrate on 3 August 2010, on which date it was set down for hearing on 24 September 2010 as was sought by the parties. Orders were made for the applicant to file further affidavit evidence in reply and for both parties to file and serve written submissions.
However on 10 September 2010 the applicant filed an application in a case in the nature of an interim application seeking orders that the hearing date on 24 September 2010 be vacated. It is necessary to say something about precisely what orders are sought.
Importantly, there is no proposal that the hearing be adjourned until a specified date. Rather, it is sought that there be an adjournment to a date to be fixed. The applicant claims that certain matters have come to his attention since the matter was listed for hearing which, he contends, may provide the basis for further cross-claims within s.40(1)(g) of the Bankruptcy Act 1966 (Cth) that could not have been raised in the proceedings that gave rise to the judgment that forms the basis for the Bankruptcy Notice.
In his original application to set aside the Bankruptcy Notice the applicant relied on a claim that he had a counter-claim, set-off or cross demand of the nature referred to in s.40(1)(g) of the Bankruptcy Act. He gave details of the asserted cross-claim in his accompanying affidavit. In effect, it consists of a cross-claim he has raised in a defence to proceedings brought by the respondent to these proceedings, the National Australia Bank Limited (the Bank), in the Supreme Court of New South Wales. These were initially proceedings for possession, but were subsequently extended to seek a sum of money from Mr Acheson. A cross-claim has been raised by Mr Acheson in relation to what is said to be a shortfall in the price received on the sale of two properties that were owned by him and sold by the Bank as mortgagee.
However the proceedings in relation to those properties and the asserted cross-claims do not form the basis for the application to vacate the hearing date. Rather, it is suggested that the applicant has become aware that certain other properties that were owned by a corporation, Baiame Investments Proprietary Limited, now in receivership, were sold in December 2009 and in June 2010 by the receivers of the company in question, Grant Thornton Australia.
The applicant contends that he has a potential counter-claim, set-off or cross demand against the Bank on the basis that these properties have been sold at an undervalue. He intends to obtain further information in that respect. Notwithstanding that the properties were sold by the receiver, Mr Acheson, a director of Baiame, contended that he had a claim that would constitute a s.40(1)(g) counter-claim against the Bank for its involvement in events that occurred in relation to sale of those properties. However it was submitted that he was not yet in a position to identify these matters in any more detail as it was necessary to conduct further inquiries and obtain material from the Bank, expert assistance and reports. It was claimed that Mr Acheson would file an amended cross-claim in the Supreme Court proceedings which might then be evidence of the existence of a further counter-claim, set-off or cross demand that could be relied upon as a basis to set aside the Bankruptcy Notice.
It was contended for Mr Acheson that the circumstances in which these possible claims came to his knowledge had to be seen in light of the fact that there had been ongoing communication between his solicitors and the Bank in relation to amounts owed to the Bank. He took issue with the fact that the Bank did not inform him of the sales of the Baiame properties at the time they occurred.
It appears from the documents before the court that there is a claimed indebtedness to the Bank by Mr Acheson personally and also pursuant to his guarantees of the obligations of Baiame and also of another company (Bentech Australia Pty Limited), as well as corporate indebtedness. Mr Acheson’s claims about the disclosure by the Bank of the sales of his properties has to be seen in light of this and of the fact that the two properties now in question were owned by Baiame and sold by the receivers, not by the Bank.
The proceedings that gave rise to the Bankruptcy Notice were not concerned with sales of properties or the value of such properties, but rather were separate proceedings commenced in the District Court in February 2008 that resulted in orders being made by consent that were subsequently varied. The Bank obtained a judgment by consent for the payment of $150,000 by Mr Acheson. According to the respondent, Mr Acheson did not pay that debt. That led to the issue of the Bankruptcy Notice.
In addition, on 30 October 2008 the Bank commenced the Supreme Court proceedings against Mr Acheson for possession of two properties. It appears that a number of properties that were owned by Mr Acheson or by associated companies have been sold at different times since those proceedings commenced.
The pleadings in the Supreme Court are of some complexity and have been amended. I am told that all of those amendments have been by consent. While those proceedings have been on foot there has been correspondence between the parties in which Mr Achseon asked, in effect, for a net payout figure to resolve indebtedness. It appears that the indebtedness he referred to was the indebtedness of the Bentech Group, not just of Mr Acheson personally. Issue was taken by the applicant with the adequacy of the Bank’s response and, in particular, with what is said to be the Bank’s failure to have disclosed the sales of the two Baiame properties sold by the receivers in December 2009 and June 2010 until August 2010 (after this matter had been listed for hearing). Mr Acheson now wishes to contend that issues in relation to these properties could be added to his cross-claim in the Supreme Court and are relevant to these proceedings.
For present purposes, he claims that there ought to be an open-ended adjournment of the hearing that has been set down in order to enable him and his advisers to carry out inquiries to possibly formulate further cross-claims in relation to those properties. He foreshadowed a possible claim of breach of a mortgagee’s duty to act conscionably (see Ultimate Property Group Pty Ltd v Lord (2004) 60 NSWLR 646; [2004] NSWSC 114).
There are a number of obstacles that may face such potential claims, the most obvious of which is that the properties were owned by Baiame and sold by the receivers, not by the Bank. It appears to be foreshadowed that there will be an attempt to attribute the acts of the receiver to the Bank on principles that have not been addressed at this stage but which are said to reflect reality, notwithstanding what is said to be the technical position of a receiver.
There are also issues about the nature of any duty owed in these circumstances and whether it is open to the applicant to raise such claims as a cross-claim as distinct from there being an accounting in relation to amounts owing under the guarantee given by Mr Acheson which is the basis on which the Bank seeks to impose liability on him in relation to Baiame’s indebtedness.
What is in issue for present purposes is whether it is appropriate to vacate the hearing of the application to set aside the Bankruptcy Notice. In effect this is an adjournment application. It is necessary on an adjournment application to have regard to the interests of the parties and the interests of justice. It is also necessary to bear in mind the nature of these proceedings. This is an application to set aside a bankruptcy notice. It is not the hearing of a creditor’s petition. An unsuccessful application to set aside a bankruptcy notice would give rise to the commission of an act of bankruptcy, but would not change the status of a person in Mr Acheson’s position, whereas a sequestration order would clearly have a significant impact on his status.
I also consider that it is relevant to have regard to the limited extent to which the proposed further cross-claims have been formulated. Putting on one side the issue of whether it is indeed open to a person who applies to set aside a bankruptcy notice to raise further claims after filing the application (a matter neither of the parties was in a position to address), the manner in which the claim has been formulated at this stage is extremely general and unspecific and, to some extent, speculative. It depends on a number of inquiries being carried out and on the applicant determining whether in fact there has been any conduct of the Bank that could properly be raised in a cross-claim.
There is limited material before the court in support of Mr Acheson’s contention that the properties must have been sold at an undervalue and that there may be a claim against the Bank in this respect.
All of these matters pose significant obstacles. However the matter that is of most concern is that this is not an application for an adjournment for a fixed period, but an application that the hearing be vacated and the matter be adjourned to a date to be fixed.
I do not consider that it is appropriate in all the circumstances to adjourn the hearing of the application to set aside a bankruptcy notice to a date to be fixed which is not specified but is to be some date in the future.
It was suggested for the applicant that it may well be that the hearing could happen this year. Had this been a proposal to adjourn the matter to a date to be fixed within the not too distant future, I might well be disposed to determine on balance that it would be in the interests of the administration of justice and of the parties to allow such a limited adjournment to enable the applicant to more fully enunciate the case that he wished to make by way of counter-claim, set-off or cross demand. However I am not satisfied, having regard to the nature of the proceedings and the importance of the time of an act of bankruptcy, that an open-ended adjournment is in the interests of justice given the very general nature of the potential claims that are sought to be investigated.
This is not a case in which there is a claim that is able to be clearly identified at this stage. There is no suggestion that the court could be provided with draft pleadings that might refer to any such proposed claim such that a short adjournment would be appropriate to allow appropriate supporting evidence to be filed as material on which the court may be satisfied that the debtor had a prima facie cross-claim in the sense considered in Re Glew; Glew v Harrowell of Hunt & Hunt Lawyers; Re Tresidder; Tresidder v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331; [2003] FCA 373.
We are simply not at that stage and I am not persuaded that it is appropriate on the evidence that is before the court to make the orders sought that the hearing of this matter on 24 September 2010 be vacated and the matter adjourned to a date to be fixed.
Accordingly the interim application filed on 10 September 2010 should be dismissed.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate:

Date: 13 October 2010