Lau v Accord Pacific Properties Pty Ltd, in the matter of Lau

Lau brought an application in the Federal Circuit Court against Accord Pacific Properties Pty Ltd, seeking to have a bankruptcy notice set aside based on having a cross-claim or set-off. The basis of the application was that the cross-claim he had, which he argued was equal to or greater than the amount of the bankruptcy notice, could not have been set up in the original proceeding in the District Court of New South Wales. The court had to determine whether the applicant satisfied the two requirements under section 41(7) of the Bankruptcy Act 1966 (Cth). These requirements were that the applicant has a cross-claim, set-off or cross demand that is equal to or exceeds the amount of the judgement or order, and that he could not have set up the cross-claim in the original proceeding. The court found that the applicant did not satisfy the second requirement, as it was now accepted that the value of his cross-claim was below the jurisdictional limit of the District Court. The court also noted that the question of whether the applicant 'has' a cross-claim is to be determined by reference to legal considerations, and not the applicant's belief. Therefore, the application was dismissed, and the time for the applicant to comply with the bankruptcy notice was extended to 5 pm on 28 July 2003. The applicant was also ordered to pay the respondent's costs of the application.