Lawrence v Sammut

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.