Commonwealth Bank of Australia Trading as Bankwest v Mastronardo

Commonwealth Bank of Australia trading as Bankwest (the creditor) presented two creditor's petitions against Mr. Mastronardo (the debtor). The debtor sought an adjournment of these petitions to allow him to obtain advice from senior counsel regarding a potential cross-claim against Bankwest. The debtor argued that this cross-claim, if properly formulated, would exceed the amount of the debt owed to Bankwest, thereby providing a defence to the petitions.

The central legal issue before the Court was whether the debtor had presented sufficient evidence to demonstrate that he had a reasonably arguable cross-claim against Bankwest that exceeded the debt. This required the Court to assess whether the proposed cross-claim, as it stood or was intended to be presented, disclosed a genuine and arguable case. The Court also had to consider the appropriate course of action, specifically whether to grant an adjournment or proceed to make a sequestration order.

Judge Manousaridis dismissed the application for adjournment, finding that there was no evidence before the Court that a draft cross-claim, which disclosed a reasonably arguable case, was to be provided to senior counsel. Without such evidence, the Court was not satisfied that the debtor had a reasonably arguable case that his cross-claim would exceed the debt. Consequently, a sequestration order was made in relation to one of the creditor's petitions.