Drury v The Owners Strata Plan NO. 68523
[2011] FMCA 311
•19 April 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DRURY v THE OWNERS STRATA PLAN NO. 68523 | [2011] FMCA 311 |
| BANKRUPTCY – Bankruptcy Notice – counter-claim – whether applicant could have set up counter-claim in prior action or proceeding – where counter-claim in fact set up, not proceeded with and decided upon – refusal to grant adjournment – counter-claim dismissed. |
| Bankruptcy Act 1966, s.40(1)g |
| Roy Edward Brink Ex Parte: the Commercial Banking Company of Sydney Limited (1980) FCA 78 |
| Applicant: | PETER ROSS DRURY |
| Respondent: | THE OWNERS STRATA PLAN NO. 68523 |
| File Number: | SYG 672 of 2011 |
| Judgment of: | Raphael FM |
| Hearing date: | 19 April 2011 |
| Date of Last Submission: | 19 April 2011 |
| Delivered at: | Sydney |
| Delivered on: | 19 April 2011 |
REPRESENTATION
| For the Applicant: | In person by telephone |
| Solicitors for the Respondent: | Grace Lawyers |
ORDERS
Application dismissed.
Applicant to pay the Respondent’s costs assessed in the amount of $750.00.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 672 of 2011
| PETER ROSS DRURY |
Applicant
And
| THE OWNERS STRATA PLAN NO. 68523 |
Respondent
REASONS FOR JUDGMENT
This matter comes before me by way of an application by Mr Drury to set aside Bankruptcy Notice 1597/2011 filed by him in the court on 7 April 2011. Today, Mr Drury asks for an adjournment of the application on the grounds that he is unable to travel to Sydney and is unrepresented. He wishes time to seek representation. On the other hand Mr Drury did explain in some detail the nature of the cross-claim, cross-demand or set-off that he claims he has against the respondent creditors and which he argues would entitle him to have the bankruptcy notice set aside under s.40(1)(g) of the Bankruptcy Act 1966 (the “Act”). For the reasons given below I am of the view that there would be no utility in granting Mr Drury an adjournment because, to my mind, there is no prospect of success in his application.
The creditor’s claim against the debtor arises out of a judgment for strata levies obtained in the Local Court of New South Wales. In those proceedings the debtor was represented for some time although he was not represented at their conclusion. Whilst represented, the debtor cross-claimed against the owners of the strata plan and the nature of the cross-claim which he sought to have determined mirrored the nature of the cross-claim he told me today that he had against the creditor. The cross-claim is for out of pocket expenses incurred by Mr Drury in effecting certain repair works to various parts of the strata plan property after the person originally contracted to undertake that work had to withdraw through illness.
In the hearing in the Local Court Mr Drury applied for an adjournment on the grounds that he was unable to attend. That application, which also included leave to vacate the hearing date, was refused. The Magistrate gave leave to the creditors to proceed on an ex-parte basis and the cross-claim was dismissed for want of prosecution. This was not a matter dealt with summarily. The judgment of the Local Court, which is found as an exhibit D to the affidavit of Daniel Radman sworn on 14 April 2011, is some 20 pages long and deals thoroughly with the matters raised in the proceedings, including the applications by the defendant, to which I have just referred. The bankruptcy notice which is in dispute here is based upon that judgment and I am satisfied that it reflects the judgment that was given by the learned magistrate.
Section 40(1)(g) of the Act is in the following form:
“(1) A debtor commits an act of bankruptcy in each of the following cases:
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i) where the notice was served in Australia--within the time specified in the notice; or
(ii) where the notice was served elsewhere--within the time fixed for the purpose by the order giving leave to effect the service;
comply with the requirements of the notice or satisfy the Court that he or she has a counter‑claim, set‑off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter‑claim, set‑off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained.”
The important point to consider in relation to this application is whether or not the cross-claim alleged by Mr Drury is one that he could not have set up in the action or proceedings. The service makes it clear that:
“The question whether the cross-demand “could not have been set up” in the proceeding in which the judgment was obtained for the purposes of section 40(1)(g) of the Act is a question “to be answered by reference to legal considerations”, not practicalities: Re Ling; Ex parte Ling v Commonwealth (1995)
58 FCR 129.”
The service continues:
“The expression “could not have set up in the action or proceedings” is a broad one: Re Ling (Supra). Accordingly, only causes of action the debtor was not entitled, as a matter of law, to plead up to judgment in the relevant proceedings are capable of amounting to counter-claims of the kind referred to in section 40(1)(g): Re Deen; Ex parte Deen v Muller (1995) 58 FCR 441, 442-443 per Drummond J.”
It would be quite clear from these extracts from the service that the type of cross-claim that Mr Drury seeks to set up in these proceedings is not one that falls within the scope of s.40(1)(g). It was a cross-claim that he could have set up in the original proceedings; that he did, in fact, set up in the original proceedings, but that he did not proceed with for reasons which, whilst unfortunate, are of no assistance to him before this court.
I would also add, for the sake of completion, that I cannot be satisfied that the evidence provided by Mr Drury concerning the cross-claim is of the type seminally described by Lockhart J in Roy Edward Brink
Ex Parte: the Commercial Banking Company of Sydney Limited (1980) FCA 78 where his Honour set out the requirement that the debtor must at least show a prima facie case in his affidavit in support of the application. The affidavit in support of this particular application is sparse and does no more than attach some correspondence and other documentation that, if generously read, could be said to go to the former cross-claim that has already been adjudicated upon.I dismiss the application. I order that the Applicant pay the Respondent’s costs which I assess in the amount of $750.00.
I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 5 May 2011
0
2
1