Re: FAY JUNE JAMES And: RONALD ABRAHAMS (1981) 51 FLR 16 No. G85 of 1980 Bankruptcy
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION Deane(1), Fisher(2) and Lockhart(1) JJ.
CATCHWORDS
Bankruptcy - Appeal against orders to extend time for compliance with Bankruptcy notice - Power of Court to extend time - nature of "counterclaim, set-off or cross demand equal to or exceeding the amount of the judgment debt" - claim sounding in money - constructive trust - personal claim against creditor - act of bankruptcy.
Bankruptcy - Bankruptcy notice - Debtor purporting to establish counterclaim, set-off or cross demand - Nature of such counterclaim, set-off or cross demand - Debtor claiming declaration of trust or charge against creditor - Whether personal claim against creditor - Whether debtor committed act of bankruptcy notwithstanding existence of action against creditor - Bankruptcy Act 1966 (Cth), ss. 40(1)(g), 41(7).
Bankruptcy - Bankruptcy notice - Time for compliance - Extension of time for compliance with bankruptcy notice - Power of court - Bankruptcy Act 1966 (Cth), ss. 33(1)(c), 41(6A).
HEADNOTE
On 21st May, 1980, at the request of the appellant a bankruptcy notice issued addressed to the respondent, which was served on him on 2nd June, 1980. The time fixed for compliance with the notice expired on 17th June, 1980. On 13th June, 1980, the respondent filed an affidavit alleging that he had a counterclaim, set-off or cross demand against the appellant. He set out the facts supporting his contention, making out a prima facie case that the appellant held certain land in trust for herself and the respondent. He annexed to his affidavit the statement of claim and statement of defence in an action commenced by him in the Equity Division of the Supreme Court of New South Wales against the appellant in which he sought a declaration of trust or an equitable charge over the land.
In proceedings before McGregor J. to decide whether the court was satisfied that the respondent had "a counterclaim, set-off or cross demand equal to or exceeding the amount of the judgment debt being a counterclaim, set-off or cross demand that he could not have set up in the action or proceeding in which the judgment . . . was obtained", his Honour found that the respondent had filed an affidavit as referred to in s. 41(7) of the Bankruptcy Act 1966 but his Honour considered that it was more appropriate to await the outcome of the Supreme Court proceedings rather than attempt to resolve the issues raised in the affidavit. He therefore extended the time for compliance with the bankruptcy notice on terms (as set out in the judgment of Deane and Lockhart JJ.). He subsequently purported to extend the time for compliance with the bankruptcy notice by the respondent on two further occasions.
On appeal against the judgment and orders of McGregor J.,
Held: (1) Per Deane and Lockhart JJ.…
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
AGLC
James, Fay June v Abrahams, Ronald [1981] FCA 49 ((1981) 51 FLR 16)
Case
[1981] FCA 49
Decision Date
CaseChat Overview and Summary
In the case of James v Abrahams, the appellant, James, contested orders that extended the time for compliance with a bankruptcy notice. The bankruptcy notice was issued against James by the respondent, Abrahams, who sought to enforce a judgment debt owed by James. The dispute reached the court, which was required to decide on the legality of extending the time for compliance with the bankruptcy notice. The court was also tasked with determining whether the debtor possessed a counterclaim, set-off, or cross demand equivalent to or exceeding the amount of the judgment debt.
The court examined the provisions of s.40(1)(g) of the relevant legislation, which grants the court the discretion to extend the time for compliance with a bankruptcy notice if the debtor has a counterclaim, set-off, or cross demand of a specified nature. The court found that the debtor's claim, which was a personal claim against the creditor and involved a constructive trust, did not meet the criteria for a set-off or cross demand as defined by the legislation. The court concluded that the debtor's claim did not constitute a set-off or cross demand of the type referred to in s.40(1)(g). The court further held that the debtor's claim did not involve an act of bankruptcy as it was a personal claim against the creditor.
Accordingly, the court allowed the appeal and set aside the orders extending the time for compliance with the bankruptcy notice. The court declared that it was not satisfied that the debtor possessed a counterclaim, set-off, or cross demand of the type referred to in s.40(1)(g). The court also ordered the respondent to pay the costs of the proceedings at first instance and before the court. This decision highlights the importance of the debtor's ability to demonstrate a counterclaim, set-off, or cross demand that meets the criteria set out in the legislation to potentially extend the time for compliance with a bankruptcy notice.
Orders
Orders of the court
1. THAT the appeal be allowed.
2. THAT the orders extending the time for compliance with the bankruptcy notice be set aside.
3. THAT it be declared that the Court is not satisfied that the debtor possesses a counter-claim, set-off or cross demand of the type referred to in s.40(1)(g).
4. THAT the respondent pay the costs of the proceedings at first instance and before this Court.