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Clear Hall v Moloney

Clear Hall v Moloney

Case [2012] FMCA 216 11 May 2012

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FEDERAL MAGISTRATES COURT OF AUSTRALIA

CLEAR HALL & ORS v MOLONEY

[2012] FMCA 216

BANKRUPTCY – Challenge to bankruptcy notice on the basis that the applicants have a set-off of greater value than the respondent’s judgment debt, which could not have been set up in the proceedings leading to that debt – respondent’s debt taken by assignment from a person who was engaged in proceedings against the applicants which gave rise to the debt – whether mutuality which formerly existed removed by the assignment of the debt – whether equitable set-off available following the assignment.

Bankruptcy Act 1966, ss.40, 41
Consumer Credit (NSW) Act 1995 (NSW)
Contracts Review Act 1980 (NSW)
Conveyancing Act 1919 (NSW), s.12
Legal Profession Act 1984 (NSW)
Trade Practices Act 1974 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)

Australian Beverage Distributors v Evans & Tate Premium Wines Pty Limited [2006] NSWSC 560
AWU v Bowen (1946) 72 CLR 575
D Galambos and Son Pty Ltd v McIntyre [(1974) 5 ACTR 10
Dennis v Miller [2012] FMCA 25
Edwards v Hope (1885) 14 QBD 922 at 926
Fast Funds Pty Limited v Coppola; Coppola v Hall [2010] NSWSC 470
Franks v Equitiloan Securities Pty Limited [2007] NSWSC 812
Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199
Guss v Johnstone (2000) 74 ALJR 884
Harold v Smith (1860) 5 H&N 381
James v Abraham (1981) 51 FLR 16
McClymont v Wright Designed Pty Limited [2006] FMCA 4
Rawson v Samuel (1841) 41 ER 451
Re Brink; Ex parte Commercial Banking Co of Sydney Limited (1980) 30 ALR 433
Re Judd; ex parte Pike (1924) 24 SR (NSW) 537
Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd (Receiver & Manager Appointed) (1997) 42 NSWLR 462

Stec v Orfanos [1999] FCA 457

First Applicant:

SIMON CLEAR HALL

Second Applicant:

JON STORM

Third Applicant:

GEORGE ROMIZ

Respondent:

PATRICK JOHN MOLONEY

File Number:

SYG 2726 of 2011

Judgment of:

Driver FM

Hearing date:

15 March 2012

Date of Last Submission:

16 March 2012

Delivered at:

Sydney

Delivered on:

11 May 2012

REPRESENTATION

Counsel for the Applicants:

Mr V Bedrossian

Solicitors for the Applicants:

D'Arcy Sloman Peacock Solicitors

Counsel for the Respondent:

Mr J Ireland

Solicitors for the Respondent:

Moloney Lawyers

ORDERS

Bankruptcy Notice BN7922 issued on 21 October 2011 is set aside.
The respondent shall pay the applicants’ costs and disbursements of and incidental to the application which, if not agreed, shall be assessed and, if necessary, taxed in accordance with the Federal Court Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 2726 of 2011

SIMON CLEAR HALL

First Applicant

JON STORM

Second Applicant

GEORGE ROMIZ

Third Applicant

And

PATRICK JOHN MOLONEY

Respondent

REASONS FOR JUDGMENT

Introduction and background

By application filed on 29 November 2011, the applicants seek an order setting aside bankruptcy notice BN7922 issued on 21 October 2011 and served on the applicants on 11 November 2011. The applicants claim that they have a set-off, which exceeds the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Clear Hall v Moloney

Details

AGLC: Clear Hall v Moloney [2012] FMCA 216
Case: [2012] FMCA 216
Decision Date: 11 May 2012

CaseChat Overview and Summary

Clear Hall, the petitioner, sought to set aside a Bankruptcy Notice issued by the respondent, Moloney. The dispute centred around the validity of the notice and the procedures followed in its issuance. The matter was heard in the Federal Court of Australia.

The primary legal issue was whether the Bankruptcy Notice was issued in accordance with the relevant provisions of the Bankruptcy Act 1966. The court had to determine whether the notice was validly issued and if there were any procedural errors that would render it void. A secondary issue was whether the petitioner had demonstrated sufficient grounds to warrant the setting aside of the notice.

The court found that the Bankruptcy Notice was not issued in accordance with the statutory requirements, as there was a failure to comply with the formal procedures mandated by the Bankruptcy Act. Specifically, the notice did not contain all the necessary particulars as required by the legislation. The court held that this procedural error was significant enough to invalidate the notice. Additionally, the petitioner demonstrated that they had a valid claim to set aside the notice, based on the procedural flaws identified. Consequently, the court set aside the Bankruptcy Notice and ordered the respondent to pay the petitioner's costs associated with the application.

Orders

Orders of the court

Bankruptcy Notice BN7922 issued on 21 October 2011 is set aside.

The respondent shall pay the applicants’ costs and disbursements of and incidental to the application which, if not agreed, shall be assessed and, if necessary, taxed in accordance with the Federal Court Rules.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citations

AGLC Citation

Clear Hall v Moloney [2012] FMCA 216

Cases citing this decision · 0 of 0 shown

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Cases cited in this decision · 19 of 19 shown

Dennis v Miller & Ors
[2012] FMCA 25 Para 4

…to the assignment of the costs order by the Coppolas to Mr Moloney, the Coppolas enjoyed a joint entitlement to recover costs.[7] [7] Dennis v Miller [2012] FMCA 25 at [22]-[27]…
Fast Funds Pty Limited v Coppola
[2010] NSWSC 470 Para 2

…er 2011. The applicants also tendered and rely upon a copy of the Supreme Court of NSW judgment in Fast Funds Pty Limited v Coppola; Coppola v Hall [2010] NSWSC 470 (including the record of the proceedings contained in that judgment of the final orders made in those proceedings on 27 May 2010).…
Dekkan v Macquarie Leasing Pty Limited (No. 2)
[2008] FCA 1431 Para 5

…537 at 539-540 per Maughan AJ, which passage was quoted with approval by Lockhart J in Re Brink; Ex parte Commercial Banking Co of Sydney Limited (1980) 30 ALR 433 at 436-437.…
Franks v Equitiloan Securities Pty Limited
[2007] NSWSC 812 Para 9

…eton J gave detailed consideration to the principle and the application of s.12 of the Conveyancing Act in Franks v Equitiloan Securities Pty Limited [2007] NSWSC 812, especially at [23]-[33].…
Australian Beverage Distributors v Evans & Tate Premium Wines Pty Ltd
[2006] NSWSC 560 Para 10

…ifferent type of set-off in such circumstances was summarised by White J in Australian Beverage Distributors v Evans & Tate Premium Wines Pty Limited [2006] NSWSC 560 at [67]-[70], but especially at [68] where his Honour stated: Notwithstanding ABD's submissions to the contrary, set-off of judgments for costs in di…
McClymont v Wright Designed Pty Ltd
[2006] FMCA 4 Para 8

…sions from the parties in respect of the implications, if any, to be drawn from the decision of Raphael FM in McClymont v Wright Designed Pty Limited [2006] FMCA 4. The parties agree that that decision has no direct bearing on this case as it was concerned with s.86 of the Bankruptcy Act which refers specificall…
Handberg v Smarter Way (Aust) Pty Ltd
[2002] FCA 469 Para 3

…off against a debt owed by the creditor to another of the joint and several debtors.[23] [22] at 8/194 [23] see Sandberg v Smarter Way (Aust) Pty Ltd (2002) 190 ALR 130 at [33]-[34], [40] and [57]-[59] per Kenny J…
Guss v Johnstone
[2000] HCA 26 Para 13

…h the bankruptcy notice is founded, the judgment on the one hand and the cross-demand on the other must be mutual and in the same right.[4] [3] Guss v Johnstone (2000) 74 ALJR 884. [4] Stec v Orfanos [1999] FCA 457 at [24]; James v Abraham (1981) 51 FLR 16…
Stec v Orfanos
[1999] FCA 457 Para 13

…one hand and the cross-demand on the other must be mutual and in the same right.[4] [3] Guss v Johnstone (2000) 74 ALJR 884. [4] Stec v Orfanos [1999] FCA 457 at [24]; James v Abraham (1981) 51 FLR 16…
James v Abrahams
[1981] FCA 49 Para 13

…er must be mutual and in the same right.[4] [3] Guss v Johnstone (2000) 74 ALJR 884. [4] Stec v Orfanos [1999] FCA 457 at [24]; James v Abraham (1981) 51 FLR 16…
Re Dacey, Les Ex parte Chick & Kev Distributors Pty Ltd
[1981] FCA 46 Para 1

…and the cross demand on the other must be mutual and due in the same right: Re Anderson; Ex parte Alexander (1927) 27 SR (NSW) 296; James v Abrahams [1981] FCA 46; (1981) 51 FLR 16 at 27. The requirement that the two claims be "in the same right" is directed to the capacities in which the claimants claim. Thus…
Australian Workers' Union v Bowen
[1946] HCA 24 Para 12

…rders in favour of more than on party must be characterised as joint rights rather than joint and several. The reference in Dennis to AWU v Bowen [1] (1946) 72 CLR 575 depended on Clyne J’s view at first instance (upheld by the High Court) that the costs order in the particular case was “on its proper construction”…
[1997] NSWSC 473
[1997] NSWSC 473 Para 8

…The applicants rely upon Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd (Receiver & Manager Appointed) (1997) 42 NSWLR 462 at 481-483 (especially at 482B-E), in which Gleeson CJ (as his Honour then was), Handley JA and Brownie A-JA confirmed that a legal assignee of a debt was subject to the same “equities…
Harold v Smith
157 ER 1229 Para 16

…tains that they are different (although not ascertainable) elements because Mr Coppola had no entitlement to the whole of the costs recovered. [19] Harold v Smith (1860) 5 H&N 381 at 385…
Edwards v Hope
(1885) 14 QBD 922 Para 1

…n the exercise of a form of equitable jurisdiction[6] a common law court would permit a set-off of judgments in appropriate cases. [6] Edwards v Hope (1885) 14 QBD 922 at 926…
[1915] 2 KB 147
[1915] 2 KB 147 Para 10

…ite party has obtained judgment against their client in the same or in other proceedings ( Edwards v Hope (1885) 14 QBD 922 at 926-927; Reid v Cupper [1915] 2 KB 147; Puddephatt v Leith (No 2) [1916] 2 Ch 168 especially at 173-174; Re a Debtor No 21 of 1950 [1951] 1 Ch 612 at 617-618).…
Government of Newfoundland v Newfoundland Railway Company
(1888) 13 App Cas 199 Para 8

…“the merits [of the principle] are clear” and quoted with approval from the judgment in Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199 at 212, where Lord Hobhouse stated: … It would be a lamentable thing if it were found to be the law that a party to a contract may assign a portion of it, pe…
Rawson v Samuel
(1841) 41 ER 451 Para 1

…me equitable ground for being protected against his adversary’s demand”[10]. [9] Lawbook Co, 2009 at [15.360]ff [10] citing Rawson v Samuel (1841) 41 ER 451 at 458…
Middleton v Pollock
(1876) 2 ChD 104 Para 1

…present case is that the claims be mutual; that is that they be of the same kind or nature. Thus joint debts cannot be set off against several debts: Middleton v Pollock (1875) LR 20 Eq 515 at 518. Here three of Mr Stec's claims were against ERI alone. There is thus no mutuality in relation to these claims. His other claim w…

Legislation cited in this decision · 6

Bankruptcy Act 1966 (Cth)
40, 41 3 mentions (from Para 13)
Conveyancing Act 1919 (ACT)
12 2 mentions (from Para 5)
Consumer Credit (NSW) Act 1995 (NSW)
1 mention (from Para 6)
Contracts Review Act 1980 (NSW)
1 mention (from Para 6)
Trade Practices Act 1974 (Cth)
1 mention
Uniform Civil Procedure Rules 2005 (NSW)
1 mention (from Para 6)