Davison v Pachos
[2010] FMCA 683
•31 August 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DAVISON v PACHOS | [2010] FMCA 683 |
| BANKRUPTCY – Hearing of Petition – where notice of objection filed – extension of time for compliance with bankruptcy notice sought after notice had expired – cross claim alleged against person other than the creditor. |
| Bankruptcy Act 1966 (Cth), s.40(1)(g) |
| Re Duckworth; Ex parte Lockett [1987] FCA 34 GEB (1903) 2KB 340 Re Bankruptcy Notice (1934) Ch 431 Guss v Johnstone (2000) 74 ALJR 884 |
| Applicant: | CHARLES DAVISON |
| Respondent: | JOHN PACHOS |
| File Number: | SYG 1309 of 2010 |
| Judgment of: | Raphael FM |
| Hearing date: | 31 August 2010 |
| Date of Last Submission: | 31 August 2010 |
| Delivered at: | Sydney |
| Delivered on: | 31 August 2010 |
REPRESENTATION
| Solicitors for the Applicant: | Houston Dearn O’Connor |
| Counsel for the Respondent: | Ms J Keys |
ORDERS
Matter adjourned to Registrar’s list on 7 September 2010.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1309 of 2010
| CHARLES DAVISON |
Applicant
And
| JOHN PACHOS |
Respondent
REASONS FOR JUDGMENT
There comes before me today an application for a sequestration order against the estate of John Pachos. Mr Pachos is represented by Ms Keys.
On 27 August 2010 there was filed a notice stating grounds of opposition to the petition. There were two grounds of opposition. The first stated :
“1.The respondent seeks leave to extend time within which to comply with the Bankruptcy Notice until 17 May 2010 on the grounds that the Applicant had notice of the Respondent’s “counter-claim”; and nevertheless effected service of the Notice at the same time as serving documentation concerning a proposed application for costs assessment in a fashion that was unreasonably confusing; and
2.The Respondent applies to set aside the Bankruptcy Notice on the ground that the Respondent counter claims that Candice Weeden, who was a party in the material proceedings, is liable for the costs order made against the Respondents in favour of the Applicant by virtue of an arrangement set up in the appeal proceedings in which the costs order was made.”
The first ground of application cannot succeed. The bankruptcy notice was served by hand on 21 April 2010 and expired on 12 May 2010. As no application was made to extend time prior to that date an act of bankruptcy has been committed and it is impossible for this court to now extend the time for compliance; Re Duckworth; Ex parte Lockett [1987] FCA 34.
In regard to the second ground the matter has a history which was explained to me by Ms Keys. It appears that Mr Davison drove a vehicle belonging to Mr Pachos, the respondent, in a Darwin V8 race. He did this as a result of negotiations between Ms Weeden and Mr Pachos. Mr Davison was not party to those arrangements. Ms Weeden paid a fee to Mr Pachos by cheque but the cheque was dishonoured. Mr Pachos commenced proceedings in the Local Court of New South Wales against Mr Davison and Ms Weeden. He was unsuccessful against Mr Davison because it was held that Ms Weeden was not his agent. That decision was appealed to the Supreme Court of New South Wales where on 30 March 2009 Matthews AJ handed down judgment confirming the decision of the Local Court Magistrate. The appeal was dismissed and her Honour ordered, by consent, that Mr Pachos pay Mr Davison’s costs assessed and agreed in the sum of $11,000.00. Ms Weeden was not a party to the appeal which related solely to the claim against Mr Davison. It is the $11,000.00 that her Honour ordered be paid, and which Mr Pachos consented to pay, that form the basis of the judgment on which the bankruptcy notice, and now the petition, was founded. After the decision of Matthews J Mr Pachos mounted a further appeal to the Court of Appeal but that was withdrawn with costs ordered against him.
During this period there was correspondence between Ms Keys and the solicitors for Mr Davison. Ms Keys told Mr Davison’s solicitors that arrangements had been made with Ms Weeden whereby she would pay Mr Pachos’ costs plus the award of damages that had been made against her in the local court. In an affidavit filed in this matter on 27 August 2010 a number of these letters are attached but as Mr Schneider, who appears on behalf of Mr Davison points out, there is no letter indicating any consent by Ms Weeden to this arrangement.
Mr Pachos now argues that he has a cross-claim of the type referred to in s.40(1)(g) of Bankruptcy Act 1996 (Cth) (the “Act”) which would allow the setting aside of the bankruptcy notice and hence the petition. But I am unable to find that this is the case. It is clear that any cross claim, cross demand or set off that may be raised in these matters has to be against the creditor. ReGEB (1903) 2KB 340; Re Bankruptcy Notice (1934) Ch 431 at [440-441]; Guss v Johnstone (2000) 74 ALJR 884. This cross claim, if it exists, or, as Ms Keys later described it, set off, is not a set off against the creditor, it is a claim or set off against Ms Weeden.
In these circumstances the notice of grounds opposition must be dismissed and I proposed to proceed to hear the application for a sequestration order against Mr Pachos. However, Mr Davison’s solicitor was not ready with the required updated affidavits of final debt and final search and I therefore, by agreement with the parties, determined that the matter should be adjourned for seven days into the next registrars list on 7 September 2010.
I certify that the preceding seven (7) paragraphs are a true copy of the reasons for judgment of Raphael FM
Date: 2 September 2010
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