Foyster v ANZ Banking Group Ltd - [1999] FCA 1043

Foyster v ANZ Banking Group Ltd [1999] FCA 1043
Bankruptcy

Foyster v ANZ Banking Group Ltd [1999] FCA 1043

LLOYD FOYSTER v ANZ BANKING GROUP LTD

N7702 OF 1999

EMMETT J

27 JULY 1999

SYDNEY

BANKRUPTCY - application to set aside a bankruptcy notice - whether debtor has counter-claim, set-off or cross-demand - prior administration of debtor's estate under Pt X Bankruptcy Act 1966 - relevance of s86 Bankruptcy Act to debtor's cross-demand - separate cross-demand against creditor in conversion - whether property founding action in conversion of a value exceeding the debt owing under bankruptcy notice - whether claim in conversion made in good faith

Bankruptcy Act 1966 (Cth), s40(1)(g), s86, s243

Ebert v Union Trustees Co of Australia (1960) 104 CLR 346, cited

Gye v McIntyre (1991) 171 CLR 609, cited

Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR(NSW) 700, cited

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N7702 OF 1999
BETWEEN: LLOYD FOYSTER
Applicant
AND: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
(ACN 005 357 522)
Respondent
JUDGE: EMMETT J
DATE OF ORDER: 27 JULY 1999
WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The application be dismissed with costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N7702 OF 1999
BETWEEN: LLOYD FOYSTER
Applicant
AND: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
(ACN 005 357 522)
Respondent
JUDGE: EMMETT J
DATE: 27 JULY 1999
PLACE: SYDNEY

EX TEMPORE REASONS FOR JUDGMENT (NO. 2)

1 I have before me an application by Lloyd Foyster ("the Debtor") to set aside a bankruptcy notice, numbered NN1924 of 1998 ("the Bankruptcy Notice"), served on the Debtor at the behest of Australia and New Zealand Banking Group Limited ("the Bank"). The Bankruptcy Notice, by reason of an order made by a Registrar on 17 May 1999, was deemed to be served on the Debtor on 7 June 1999. The ground on which the Debtor seeks to have the Bankruptcy Notice set aside is that contemplated by sections 40(1)(g) and 41(7) of the Bankruptcy Act 1966 (Cth) ("the Act").

2 Under section 40(1)(g), a debtor commits an act of bankruptcy if a creditor, who has obtained against the debtor a final judgment or final order, has served on the debtor a bankruptcy notice, and the debtor does not, within the time specified in the notice, either comply with the requirements of the notice, or satisfy the Court that he 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, that he could not have set up in the action or proceeding in which the judgment or order was obtained.

3 I have earlier in the day, in ruling on the admissibility of evidence, indicated my view as to the inter-relationship between section 41(7) and section…

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.

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Details

Case: [1999] FCA 1043
Decision Date: 27 JULY 1999

CaseChat Overview and Summary

In the Federal Circuit Court, Foyster sought to set aside a bankruptcy notice issued by ANZ Banking Group Ltd. The central dispute was whether Foyster had a counter-claim, set-off, or cross-demand sufficient to prevent the bankruptcy notice from taking effect. This involved determining whether the debtor's previous estate administration under Part X of the Bankruptcy Act 1966 affected the validity of a cross-demand against the creditor and whether section 86 of the Bankruptcy Act applied to this cross-demand. Additionally, the court had to assess whether Foyster's claim in conversion against ANZ for a property founded action was in good faith and whether it exceeded the debt owed under the bankruptcy notice.

The court considered the legal issues surrounding the debtor's capacity to make a cross-demand against the creditor in the context of a prior estate administration. It examined the relevance of section 86 of the Bankruptcy Act in relation to the cross-demand and whether it could be set off against the debt specified in the bankruptcy notice. Furthermore, the court evaluated whether Foyster's conversion claim against ANZ was bona fide and whether the value of the property subject to the conversion action surpassed the debt specified in the notice. The crux of the matter was determining the interplay between the cross-demand, the conversion claim, and the bankruptcy notice.

The Federal Circuit Court concluded that Foyster's cross-demand against ANZ did not prevent the bankruptcy notice from taking effect because the cross-demand did not qualify as a counter-claim or set-off under the Bankruptcy Act. The court found that the prior administration of Foyster's estate did not bar the creditor from enforcing the bankruptcy notice. Moreover, the conversion claim against ANZ was deemed not to be in good faith and did not exceed the value of the debt specified in the bankruptcy notice. Therefore, the court upheld the enforcement of the bankruptcy notice against Foyster.

The final orders of the court were that the application to set aside the bankruptcy notice was dismissed. Foyster remained liable to be declared bankrupt unless the bankruptcy notice was set aside on other grounds not considered in this decision. The court's ruling clarified the limited circumstances under which a debtor may assert a cross-demand or conversion claim against a creditor without affecting the enforceability of a bankruptcy notice.

Orders