Fraser v Lenards Pty Ltd
[2005] FMCA 1848
•6 December 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FRASER v LENARDS PTY LTD | [2005] FMCA 1848 |
| BANKRUPTCY – Application to set aside bankruptcy notice – where applicant alleges a stay of execution – where there is no stay – where applicant alleges a set off, cross-demand or cross-claim which is not particularised or more than an assertion. |
| Bankruptcy Act 1966, s.40(1)(g) Australian Bankruptcy Law and Practice ed Darvall & Fernon |
| Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 Guss v Johnstone (2000) 74 ALR 598 |
| Applicant: | ANTHONY JOHN FRASER |
| Respondent: | LENARDS PTY LIMITED ACN 010 711 145 |
| File Number: | SYG3436 of 2005 |
| Judgment of: | Raphael FM |
| Hearing date: | 6 December 2005 |
| Date of Last Submission: | 6 December 2005 |
| Delivered at: | Sydney |
| Delivered on: | 6 December 2005 |
REPRESENTATION
| For the Applicant: | Applicant in person |
| Counsel for the Respondent: | Ms K Morgan |
| Solicitors for the Respondent: | Phillips Fox |
ORDERS
Application dismissed.
Applicant pay the respondent's costs to be taxed if not agreed in accordance with the Federal Court Act and Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG3436 of 2005
| ANTHONY JOHN FRASER |
Applicant
And
| LENARDS PTY LIMITED ACN 010 711 145 |
Respondent
REASONS FOR JUDGMENT
I have before me an application by the judgment debtor to set aside a bankruptcy notice which was issued by the official receiver for the bankruptcy district of Queensland on 19 August 2005 and which, by virtue of orders for substituted service, was deemed served on 4 November 2005. The application to set aside the bankruptcy notice was filed by the applicant on 23 November 2005.
The judgment debt that formed the basis of the bankruptcy notice was an assessment of costs made in certain Supreme Court proceedings in Queensland that had been commenced by the creditor against the debtor on 9 November 2004. A costs order was obtained on 1 April 2005 and was assessed in the sum of $9,427.09 with the order in relation thereto being entered in the Supreme Court on 13 July 2005.
On 30 September 2005 the applicant filed an application in the Supreme Court of Queensland to, inter alia, stay the costs order. That application was heard by White J on 24 October 2005 but no stay was granted. It is noteworthy that the application to stay the costs order was made after the issue of the bankruptcy notice although prior to its service.
The grounds of the application as filed by the debtor state at [3] of the final orders sought by the applicant as follows:
“Due to the fact that the respondent knew of my application to the Supreme Court of Queensland seeking the stay on the costs order, yet vexatiously chose to issue the bankruptcy notice that the respondent pay all costs associated with this matter.”
Before me today the applicant debtor articulated his application as one to set aside the bankruptcy notice on the grounds that he was making an application for a stay of the costs order judgment and that the Supreme Court of Queensland had the power to stay it. He made an additional claim, which was found in an affidavit filed by him on 6 December 2005, that he had a counter-claim which would greatly exceed the amount sought by the respondent. The affidavit at paragraph 2 is in the following form:
The amount of my counter-claim will greatly exceed the amount sought by the respondent. I need at least three more months to complete and file the counter-claim due to the large number of supporting affidavits I need from witnesses.
Section 40(1)(g) of the Bankruptcy Act 1966 (Cth) is relevantly in the following terms:
40(1)(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 ... 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 applicant in this case is required to satisfy me of one of two things. Firstly, he must satisfy me that the execution of the judgment has been stayed or secondly he must satisfy me that he has a counter-claim, set-off or cross-demand that he could not have set up in the original proceedings and that exceeds the amount of the judgment debt. There is a substantial discussion of the requirements of sub-s.40(1)(g) in the Australian Bankruptcy Law and Practice at pg 2581 where the learned authors provide authorities for the proposition that the words "whereof execution has not been stayed" require that the person issuing the notice should be in a position to issue immediate execution on the judgment or order at the time of the application for the issue of the notice. The applicant in this case does not dispute that as at the time the bankruptcy notice was issued there was no stay of the order.
It seems to me that it is equally certain that as at today there is no stay upon the order, although the debtor would wish there to be and would wish to make an application for such a stay. It is therefore clear that there was no stay as at the time the bankruptcy notice was served, to the extent that that might be relevant. Whilst I accept that a stay upon the order may be made by the Supreme Court of Queensland acting under its general jurisdiction that has not occurred. If it does occur it may be relevant to any decision to make a sequestration order, but that is not a matter with which I am required to deal today.
The applicant told me from the bar table that his cross-claim was genuine, that the respondents had engaged in mistruths about him and that he believed that the cross claim had good prospects of success. Quite rightly, Ms Morgan, who appears for the respondent, objected to this evidence from the bar table but even if I accepted it as evidence it does not seem to me to comply with the requirements of cases such as Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 or the other authority cited by the learned authors of the service at pg 2621 include Guss v Johnstone (2000) 74 ALR 598. It is trite law that the assertion of the existence of a cross claim without any particulars of how it arose, or what it might consist of, or how much it might be valued at is not sufficient to allow a court to set aside a bankruptcy notice.
I am not satisfied that the applicant has any grounds upon which this bankruptcy notice can be set aside and I dismiss his application.
I offered the applicant an opportunity to request an extension of time for compliance of the bankruptcy notice so that he might effect a payment of the not particularly large sum demanded. He informed me that he was unable to do that and in those circumstances I will order simply that the application be dismissed and that the applicant pay the respondent's costs to be taxed if not agreed in accordance with the Federal Court Act and Rules.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Raphael FM
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