FEDERAL CIRCUIT COURT OF AUSTRALIA
Lawrence v Sammut [2021] FCCA 1929
File number(s): SYG 346 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 20 August 2021 Catchwords: BANKRUPTCY – application to set aside bankruptcy notice on ground that applicant has counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt – bankruptcy notice based on a judgment entered on the registration of a costs certificate recording the assessment of costs debtor was ordered to pay to the creditors in proceedings in the Supreme Court of New South Wales in which debtor unsuccessfully claimed he had an interest in land – debtor claims he has counter-claim, set-off or cross demand based on money he spent and work performed in relation to the property – whether in determining whether debtor has counter-claim, set-off or cross demand the Court is restricted to considering the affidavit filed when the debtor filed application to set aside bankruptcy notice – Court not so restricted – whether the proceeding in relation to which the debtor could not have set up counter-claim, set-off or cross demand is the proceeding in which the order for costs was made or instead in the proceeding in which the certificate for costs was registered – the latter is the relevant proceeding which means that the counter-claim, set-off or cross demand the debtor claims he has could not have been set up in that proceeding – whether there is sufficient substance to the counter-claim, set-off or cross demand asserted to make it one which the debtor should, in justice, be permitted to have heard and determined in the usual way, rather than be forced to comply with the bankruptcy notice by payment or to commit an act of bankruptcy – there is sufficient substance in relation to some amounts but the amounts do not in total exceed the amount of the judgment debt – application adjourned to a date for the purpose of making an order dismissing the application and an order as to costs. Legislation: Bankruptcy Act 1966 (Cth) ss 40(1)(g), 41(7)
Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) r 3.02
Federal Circuit Court Rules 2001 (Cth) r 1.06
Home Building Act 1989 (NSW) ss 4, 5, 6, 7(2)(g), 7BA, 7BB(2), 10(1)
Real Property Act 1900 (NSW) s 74K
Cases cited: Crimmins v Glenview Home Units [1999] FCA 515
Glew v Harrowell, in the matter of Glew [2003] FCA 373
Lawrence v Ciantar [2019] NSWSC 464
Lawrence v Ciantar [2020] NSWCA 89
Massih v Esber [2008] FCA 1452
Port of Melbourne Authority v Anshun Pty Ltd (1981) [1981] HCA 45; (1981) 147 CLR 589
Re Brink; Ex parte The Commercial Banking Company of Sydney Ltd [1980] FCA 78; (1980) 44 FLR 135
Re James; Ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (1993) 46 FCR 183
Number of paragraphs: 85 Date of last submission/s: 20 August 2021 Date of hearing:
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- AGLC
- Lawrence v Sammut [2021] FCCA 1929
- Case
- [2021] FCCA 1929
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CaseChat Overview and Summary
This matter concerned an application by Mr Lawrence to set aside a bankruptcy notice issued by Mr Sammut and others. The bankruptcy notice was based on a judgment debt arising from the registration of a costs certificate in the Supreme Court of New South Wales. Mr Lawrence contended that he possessed a counter-claim, set-off, or cross demand that was equal to or exceeded the amount of the judgment debt, thereby entitling him to have the bankruptcy notice set aside.
The primary legal issues before the court were whether Mr Lawrence had a counter-claim, set-off, or cross demand of sufficient substance to warrant setting aside the bankruptcy notice, and if so, whether the court was restricted to considering only the affidavit filed at the time of the application to set aside. The court also considered which proceeding was the relevant one for determining if Mr Lawrence could have set up his alleged counter-claim, set-off, or cross demand.
Judge Manousaridis determined that the court was not restricted to the initial affidavit when assessing the counter-claim, set-off, or cross demand. The relevant proceeding for the purpose of the counter-claim was the one in which the costs certificate was registered, not the original proceedings in which the costs were ordered. While the court found that Mr Lawrence had asserted some amounts with sufficient substance, these did not collectively equal or exceed the judgment debt. Consequently, the court was not satisfied that Mr Lawrence met the threshold under s 40(1)(g) of the *Bankruptcy Act 1966* (Cth).
The court proposed to dismiss Mr Lawrence's application and order him to pay the respondents' costs. However, to provide Mr Lawrence with an opportunity to pay the debt, the court adjourned the final determination of the application and the making of orders until 4:00 pm on 27 August 2021, extending the time for compliance with the bankruptcy notice until that date. Parties were granted liberty to apply for a different costs order before that date.
The primary legal issues before the court were whether Mr Lawrence had a counter-claim, set-off, or cross demand of sufficient substance to warrant setting aside the bankruptcy notice, and if so, whether the court was restricted to considering only the affidavit filed at the time of the application to set aside. The court also considered which proceeding was the relevant one for determining if Mr Lawrence could have set up his alleged counter-claim, set-off, or cross demand.
Judge Manousaridis determined that the court was not restricted to the initial affidavit when assessing the counter-claim, set-off, or cross demand. The relevant proceeding for the purpose of the counter-claim was the one in which the costs certificate was registered, not the original proceedings in which the costs were ordered. While the court found that Mr Lawrence had asserted some amounts with sufficient substance, these did not collectively equal or exceed the judgment debt. Consequently, the court was not satisfied that Mr Lawrence met the threshold under s 40(1)(g) of the *Bankruptcy Act 1966* (Cth).
The court proposed to dismiss Mr Lawrence's application and order him to pay the respondents' costs. However, to provide Mr Lawrence with an opportunity to pay the debt, the court adjourned the final determination of the application and the making of orders until 4:00 pm on 27 August 2021, extending the time for compliance with the bankruptcy notice until that date. Parties were granted liberty to apply for a different costs order before that date.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
I should also note that before 9:30 am on 20 August 2021, being the time at which the matter was listed for judgment, Mr Lawrence sent to my associate’s inbox an email containing further submissions. At the time the matter was called for judgment I asked Mr Lawrence what he expected me to do with the submissions he had sent that morning. Mr Lawrence said “nothing”, and that he had sent the submissions as a matter of record. I have read the submissions, but they do not appear to add anything new to the matters Mr Lawrence had already relied on in the proceeding. In light of the discussion I had with Mr Lawrence about his submissions, and Mr Lawrence’s informing me that, should I decide the matter against him, he required seven days to pay the amount demanded in the bankruptcy notice, I decided to adjourn delivery of judgment to 1:00 pm on 20 August 2021.CONCLUSION AND DISPOSITION I am not satisfied that Mr Lawrence has “a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt” within the meaning of s 40(1)(g) of the Act. It follows that Mr Lawrence’s application will be dismissed. I do not propose, however, to dismiss the application on the publication of these reasons and, by so doing, determine I am not satisfied Mr Lawrence has a counter-claim, set-off, or cross demand. Mr Lawrence informed me at the hearing on 7 July 2021, and I have no reason not to believe him, that he is in a position to pay the amount demanded by the bankruptcy notice. Mr Lawrence also informed me at the time I had initially listed the matter for judgment that he should be able to pay the amount within seven days. I therefore propose not to make any orders to dismiss the application until 4:00 pm on 27 August 2021 to give Mr Lawrence an opportunity to pay the amount demanded in the bankruptcy notice before I finally determine this application. Accordingly, I propose to make an order that the matter be listed before me at 4:00 pm on 27 August 2021 for the purpose of my then making the following orders:(a)The application be dismissed.(b)The applicant pay the respondents’ costs. I will grant the parties liberty to apply before 27 August 2021 if any party wishes to apply for a different costs order to the one I propose to make on 27 August 2021. I will also make an order extending the time for compliance with the bankruptcy notice up to and including 27 August 2021.
Ratio Decidendi
Legal Principle Established
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