M v The Queen

[2014] FCCA 1044

FEDERAL CIRCUIT COURT OF AUSTRALIA

M v R [2014] FCCA 1044

Catchwords:
BANKRUPTCY – Application to set aside bankruptcy notice – whether debtor has counter-claim, set-off or cross demand – whether counter-claim, set-off or cross demand must exist at time of hearing of application to set aside bankruptcy notice – whether the Child Support (Assessment) Act 1989 (Cth) (Assessment Act) is capable of giving rise to a counter-claim, set-off or cross demand – whether the Assessment Act conferred on debtor such right on the day of hearing of application to set aside bankruptcy notice – no such right conferred on debtor as at date of hearing – application to set aside bankruptcy notice dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.30, 40(1), 40(1)(g), 41(6A), 43(1)(a), 52(1).

Child Support (Assessment) Act 1989 (Cth), ss.5, 23, 24, 25, 26, 27, 30, 31, 69, 76, 77, 78, 79, 106A.
Child Support (Assessment) Act 1989 (Cth), Schedule 1.
Child Support (Registration and Collection) Act 1988 (Cth), ss.25(2), 26, 30(1), 30(3), 113A.

Ebert v The Union Trustee Company of Australia Limited (1960) 104 CLR 346
Guss v Johnstone [2000] HCA 26
Luton v Lessels (2002) 210 CLR 333
Maxwell-Smith v S & E Hall Pty Limited, in the matter of Maxwell-Smith [2006] FCA 825
Patane v Asteron Life Ltd (formerly Royal & Sun Alliance Financial Services Ltd) (ACN 001 698 228) [2004] FCA 232
Re Brink; Ex parte The Commercial Banking Company of Sydney Ltd (1980) 44 FLR 135
Re John Richard Riordan Ex Parte: John Richard Riordan v Direct Acceptance Corporation Limited (Receiver and Manager Appointed) (In Liquidation) [1995] FCA 1395
Re Judd; Ex parte Pike (1924) 24 S.R. (N.S.W.) 537

Applicant: MS M

Respondent: MR R

File Number: SYG 1000 of 2014

Judgment of: Judge Manousaridis

Hearing date: 15 May 2014

Date of Last Submission: 20 May 2014

Delivered at: Sydney

Delivered on: 23 May 2014

REPRESENTATION

Solicitors for the Applicant: Mr Ramrakha

Solicitors for the Respondent: Mr Kent

ORDERS

1. Interim application to extend time for compliance with bankruptcy notice BN 169877 issued on 24 March 2014 is dismissed.

2. Application to set aside bankruptcy notice BN 169877 issued on 24 March 2014 is dismissed.

3. The applicant pay the respondent’s costs.

NOTATION

Please note that in light of reference to child support proceedings this decision has been edited to exclude identifying information. Therefore this judgment will be published under the pseudonym of M v R [2014] FCCA 1044.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1000 of 2014

MS M

Applicant

And

MR R

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 28 March 2014 the respondent, Mr R, served on the applicant, Ms M, a bankruptcy notice demanding payment of $5,204.19. That amount represents a judgment for $5,143.11 Mr R obtained against Ms M in the Local Court of New South Wales on 29 January 2014, together with interest. The judgment relates to costs Ms M was ordered to pay to Mr R.

2. On 11 April 2014 Ms M filed an application with this Court for an order that the bankruptcy notice be set aside, and an order that the time for compliance with the bankruptcy notice be extended. The ground on which Ms M seeks to set aside the bankruptcy notice is that she has “a counter-claim . . . or cross demand equal to or exceeding the amount of the judgment debt” referred to in the bankruptcy notice.[1] The counter-claim or cross demand Ms M claims she has against Mr R is one arising out of the Child Support (Registration and Collection) Act 1988 (Cth) (Registration and Collection Act). Ms M alleges that Mr R is the father of her child, and he has a liability under the Registration and Collection Act to pay her an amount that exceeds the amount demanded in the bankruptcy notice.

   [1] Bankruptcy Act 1966 (Cth), s.40(1)(g)

3. Mr R has raised a number of grounds against the Court making the orders Ms M claims. First, he says he is under no liability to pay any amount under the Registration and Collection Act. Second, if he has any liability, the liability is a liability to pay the Commonwealth, not Ms M. And third, if Mr R has any liability, and the liability is owed to Ms M, Ms M has not put before the Court any evidence or any sufficient evidence from which the Court can rationally conclude Mr R’s liability is equal to or exceeds the amount demanded in the bankruptcy notice.

4. To assess the contentions made by the parties, it will be necessary to first set out the facts, the provisions of the Bankruptcy Act 1966 (Cth) (Act) that Ms M’s application engages, the nature of the liabilities that may arise under the Registration and Collection Act and the Child Support (Assessment) Act 1989 (Cth) (Assessment Act), the steps by which such liabilities may be brought into existence under those Acts, and whether such liabilities can properly be characterised as “a counter-claim . . . or cross demand” within the meaning of s.40(1)(g) of the Act.

Facts

1. In about March 2011 Mr R and Ms M commenced a relationship. On 11 December 2012 Ms M had a child (child). Ms M claims, but Mr R does not accept, Mr R is the father of the child.

2. The relationship of Ms M and Mr R ended in about March 2013. In proceedings commenced in the Local Court of New South Wales, Ms M applied for an apprehended violence order against Mr R. Ms M was ordered to pay Mr R’s costs in the amount of $5,000.

3. On 5 December 2013 Ms M applied to the Child Support Agency (Agency) for an assessment of child support in relation to the child. By letter dated 19 December 2013 the Agency informed Ms M that it was unable to accept Ms M’s application for assessment because Ms M did not supply acceptable information that Mr R is a parent of the child, and the Agency had not received evidence from Ms M to confirm her claim that she is a parent of the child.

4. On 14 February 2014 Ms M filed an application with this Court for a declaration under s.106A of the Assessment Act that Mr R should be assessed for the support of the child because he is a parent of the child. In that proceeding, the Court ordered that the parties submit to DNA-typing parentage testing. That matter is next before the Court on 26 June 2014, and it is expected that by that date the results of that testing will be before the Court.

5. In one of her affidavits, Ms M asserted Mr R earned an annual income of at least $50,000.[2] At the hearing, I indicated that I would not accept Ms M’s assertion as evidence of Mr R’s income. I also indicated that if Ms M’s application turned solely on the income that Mr R earned, I would grant Ms M liberty to adduce admissible evidence of Mr R’s income.

   [2] Affidavit of Ms M, sworn 11 April 2014, [4]

Principles for setting aside bankruptcy notice based on asserted cross demand

1. A person is made bankrupt in Australia when this Court or the Federal Court makes a sequestration order under s.52(1) of the Act. Neither Court, however, has jurisdiction to make a sequestration order unless, among other things, the person whom it is sought to make bankrupt has committed one of the “act[s] of bankruptcy” defined in s.40(1) of the Act.[3]

   [3] Section 43(1)(a) of the Act.

2. The act of bankruptcy on which most applications for sequestration orders are based is that defined by s.40(1)(g) of the Act:

   A debtor commits an act of bankruptcy . . .

   . . .

   (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:

   (i)where the notice was served in Australia – within the time specified in the notice; or

   (ii)where the notice was served elsewhere – within the time fixed for the purpose by the order giving leave to effect the service;

   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.

3. A person on whom a bankruptcy notice has been served may avoid the consequences of not complying with the bankruptcy notice, and hence committing an act of bankruptcy, if the person applies to the Court for an order to set aside the bankruptcy notice, and the Court does set aside the bankruptcy notice. Such applications, however, must be made before the time for complying with the bankruptcy notice expires.[4]

   [4] Re John Richard Riordan Ex Parte: John Richard Riordan v Direct Acceptance Corporation Limited (Receiver and Manager Appointed) (In Liquidation) [1995] FCA 1395 (Foster J)

4. The Court’s power to set aside a bankruptcy notice is derived from s.30 of the Act;[5] and the grounds on which a bankruptcy notice may be set aside are limited. These include the bankruptcy notice having been issued without “a final judgment or final order, being a judgment or order the execution of which has not been stayed”, or the bankruptcy notice not complying with the Act or regulations made under the Act, and such non-compliance cannot be cured by order of the Court, or where the person on whom the bankruptcy notice has been served satisfies 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”. It is on this third-mentioned ground that Ms M relies to set aside the bankruptcy notice that was served on her.

   [5] Maxwell-Smith v S & E Hall Pty Limited, in the matter of Maxwell-Smith [2006] FCA 825 at [41]-[44] (Jacobson J)

5. There are three issues that must be considered when determining the scope of this third-mentioned ground for setting aside a bankruptcy notice. The first is the meaning of the expressions “counter-claim”, “set-off” and “cross demand”. The second is of precisely what must the Court be satisfied before it may be satisfied that the debtor has a “counter-claim”, “set-off” or “cross demand”. And the third issue is the circumstances in which an applicant will be considered to have been unable to set up in the proceedings in which the judgment on which the bankruptcy notice is based the cross-claim, set-off, or cross demand? I will briefly consider the first two issues.

Meaning of “counter-claim”, “set-off” and “cross demand”

1. The meaning of these expressions was considered by Lockhart J in Re Brink; Ex parte The Commercial Banking Company of Sydney Ltd.[6] His Honour said that the counter-claim, set-off or cross demand mentioned in s.41(7) and s.40(1)(g) of the Act “must be something sounding in money”; it “must be in respect of a money demand, whether liquidated or unliquidated”.[7]

   [6] (1980) 44 FLR 135

   [7] (1980) 44 FLR 135 at 138 citing Re Jocumsen(1929) 1 A.B.C 82 per Henchman J. at p. 85 and Vogwell v. Vogwell(1939) 11 A.B.C. 83 per Latham C.J. at p. 85.

2. His Honour also set out with approval the following passage from the judgment of Maughan A.J. in Re Judd; Ex parte Pike:[8]

   There is no authority of which I am aware deciding what limits (if any) ought to be placed on the words 'counter-claim, set-off or cross-demand’. I think that the Legislature by the word 'counter-claim' probably referred to those claims which might be the subject of a counter-claim in equity and by the word 'set-off' to those claims which might be the subject of a set-off at common law. The other term 'cross-demand,' however, is not a technical term and must in my opinion refer to claims other than those which would be comprised in the two expressions 'counter-claim' and 'set-off.'

   Taking the ordinary meaning of the word itself, I can see no reasons why 'cross-demand' should not be held to include a claim for unliquidated damages for a tort. The case of Re Griffin; Ex parte Soutar ((1890) 1 B.C. (N.S.W.) 29) shows that 'cross-demand' includes a claim for unliquidated damages for breach of contract. In the case of Re Smyth; Ex parte North ((1892) 3 B.C. (N.S.W.) 17) a common law action of Smyth v. North is referred to as constituting a cross-demand. I have sent for and perused the papers in this case and here again it appears that the cause of action was a claim for unliquidated damages for breach of contract. Two recent cases in England - Re G.E.B ([1903] 2 K.B. 340) and Re A Debtor ([1914] 3 K.B. 726) - show that the cross-demand need not have any connection with the cause of action out of which the judgment debt arose - so much so, that a judgment debtor may even buy up a claim against the judgment creditor in order to have a 'cross-demand’. These cases are all in favour of an unrestricted meaning being given to the word.

   [8] (1980) 44 FLR 135 at 138-139 citing Re Judd; Ex parte Pike (1924) 24 S.R. (N.S.W.) 537 at pp. 539-540

Must be satisfied of what?

1. A passage that is often referred to as identifying the matters of which a Court must be satisfied before it can be satisfied a debtor has a “counter-claim”, “set-off” or “cross demand” is the following passage from Ebert v The Union Trustee Company of Australia Limited:[9]

   Section 52 (j) makes it necessary that a debtor served with a bankruptcy notice, if he does not comply with its requirements, should satisfy the Court of Bankruptcy that he has a counter-claim, set-off or cross demand which equals or exceeds the amount of the judgment debt. The debtor clearly must satisfy the Court that there exists in him a counter-claim, set-off or cross demand. “Cross demand” is the word relied upon here. The appellant cannot satisfy the Court that a cross demand exists by showing no more than that she propounds one and states how she suggests that she can make it out. In Re Duncan; Ex parte Modlin . . . Street J. said that the debtor need not satisfy the Court that there are reasonable grounds for believing that he will establish his cross action, but only that he has a bona fide claim which he is fairly entitled to litigate. This perhaps is expressed too favourably to the debtor. In Re A Debtor . . . Roxburgh J. said: “But not every demand will suffice. A demand made in bad faith would not be good enough. The debtor must satisfy the Court that he has a genuine demand…. But in my opinion a demand must be more than bona fide: the Court must be satisfied that it has a reasonable probability of success” . . . . Perhaps the standard may be expressed by saying that the debtor must show that he has a prima facie case, even if then and there he does not adduce the admissible evidence which would make out a prima facie case before a court trying the issues that are involved in his counter-claim, set-off or cross demand.

   [9] (1960) 104 CLR 346 at 350 (Dixon C.J., McTiernan and Windeyer JJ)

2. The “satisfaction” required by s.40(1)(g) is not restricted to assessing the merits of the asserted counter-claim, set-off, or cross demand. Also relevant is whether in the interests of justice it is preferable for bankruptcy proceedings to go ahead or to require the creditor to await the outcome of the proceedings in which the “counter-claim, set-off or cross demand” is to be litigated:[10]

   The state of satisfaction referred to in s 40(1)(g), and s 41(7), involves weighing up considerations as to the legal and factual merit of the claim relied upon by the debtor, and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim.

   [10] Guss v Johnstone [2000] HCA 26 at [40] (emphasis added)

3. Another requirement is that the counter-claim, set-off or cross demand on which an applicant relies must exist at the time when the application to set aside the bankruptcy notice is heard.[11]

   [11] Patane v Asteron Life Ltd (formerly Royal & Sun Alliance Financial Services Ltd) (ACN 001 698 228) [2004] FCA 232 at [74] (Lander J) referring to In re G.E.B. a debtor [1903] 2 KB 340; In re A Bankruptcy Notice (1934) Ch 431 at 440 – 441; Guss v Johnstone [2000] HCA 26; (2000) 171 ALR 598 at 607

4. The next matter to consider is whether the Registration and Collection Act is capable of creating rights to demand money which can properly be characterised as a “counter claim, set-off or cross demand”.

The Assessment Act and the Registration and Collection Act

1. The Assessment Act provides for the administrative assessment of financial support that a parent must provide for his or her child or children.

2. The process of assessment begins when a parent or carer of a child applies to the Child Support Registrar (Registrar) for an “administrative assessment” of “child support”.[12] When the application is received, the Registrar must decide whether the application has been properly made. If the Registrar decides it has been properly made, the Registrar must accept the application. If the Registrar is not so satisfied, the Registrar may refuse to accept the application.[13]

   [12] Sections 23-27 of the Assessment Act

   [13] Section 30, Assessment Act

3. If the Registrar has accepted an application for an administrative assessment made by a parent of the child,[14] and neither parent is a resident of a reciprocating jurisdiction, the Registrar must “as quickly as possible . . . assess both parents in respect of the costs of the child under Part 5 . . . and assess under Part 5 the annual rate of child support payable by a parent for the child for the days of the child support period that starts . . . on the day on which the application is made”.[15]

   [14] That is, under s.25 of the Assessment Act

   [15] Section 31, Assessment Act

4. The amount of child support for which a parent may be assessed is calculated by first determining a rate, and by then applying that rate to the costs of raising a child. The costs of raising a child at various age ranges are specified in “The Costs of the Children Table”, being a table based on the table contained in Schedule 1 to the Assessment Act that is published by the Secretary every year. The rates are determined by the application of formulas specified in the Act. These differ according to a number of factors, such as whether there is a non-parent carer, or if a parent is not a resident of Australia, or if at least one parent is liable to child support for another child.

5. The end result of the assessment is the calculation by the Registrar of an annual and daily amount of child support for which a parent is liable to pay during a “child support period”.[16] The annual and daily amount must be set out in a notice of assessment that the Registrar must issue and provide to the “liable parent” and to the “carer entitled to child support”.[17] The expression “liable parent” is defined to mean “a parent by whom child support is payable for the child under the administrative assessment”.[18] And “carer entitled to child support” is defined to mean “a parent, or non-parent carer, of the child who, under the administrative assessment, is entitled to be paid child support in relation to the child”.[19]

   [16] Section 69, Assessment Act

   [17] Section 76, Assessment Act

   [18] Section 5, Assessment Act

   [19] Section 5, Assessment Act

6. In addition to providing for the method of assessing child support, the Assessment Act also provides for the creation of liabilities for the payment of child support that is assessed by the Registrar, and their enforcement by action. First, there is s.77 of the Assessment Act, which provides as follows:

   (1)    This section applies if the Registrar:

   (a)assesses the annual rate of child support payable for a child or children in a child support case, for a day in a child support period, by a liable parent to a carer entitled to child support; and

   (b)converts the annual rate into a daily rate and specifies both rates in a notice of assessment given under section 76 in relation to the assessment.

   (2)Child support is payable for the child or children by the liable parent to the carer entitled to child support for each day in the child support period.

   (3)The amount of child support payable for the child or children for the day by the liable parent to the carer entitled to child support is the amount of the daily rate specified in the notice of assessment.

1. Second, there is s.78 which specifies when an amount of child support payable by a liable parent is due and payable in any calendar month; and that is on the seventh day of the following calendar month or the thirtieth day after the liable parent is given a notice of assessment under s.76 of the Act, whichever is later.

2. Third, there is s.79 of the Assessment Act which provides:

   An amount of child support due and payable by a liable parent to a carer entitled to child support is a debt due and payable by the liable parent to the carer, and may be sued for and recovered in:

   (a)a court having jurisdiction for the recovery of debts up to the amount of the child support; or

   (b)a court having jurisdiction under this Act.

3. An alternative to suing for a debt created by s.79 of the Assessment Act is for the carer entitled to child support to apply to the Registrar under s.25(2) of the Registration and Collection Act to register with the Child Support Register the liable parent’s liability to pay child support. Such liability is included in the definition of “registered maintenance liability”. The entry of a registered maintenance liability in the Child Support Register must contain the particulars specified by s.26 of the Registration and Collection Act. These include the amounts payable by the liable parent. The effect of registration is specified by s.30(1) of the Registration and Collection Act:

   If a registrable maintenance liability is registered under this Act, amounts payable under the child support assessment . . . under which the liability arises are debts due to the Commonwealth by the payer in accordance with the particulars of the liability entered in the Child Support Register.

4. Subsection 30(3) provides:

   If a registrable maintenance liability is registered under this Act, the payee of the liability is not entitled to, and may not enforce payment of, amounts payable under the liability other than by instituting a proceeding under section 113A to recover a debt due in relation to the liability.

5. Section 113A permits the payee of a registrable maintenance liability to sue for the recovery of the debt if the payee gives the Registrar fourteen days’ notice.

6. The effect of the Assessment Act and the Registration and Collection Act was lucidly summarised by Gleeson CJ in Luton v Lessels:[20]

   It may be observed that, although the legislation is enacted in furtherance of a clearly defined public policy, it creates a distinctly personal liability. The natural and moral obligation of a parent to support a child becomes, by force of the legislation, a legal obligation reflected in a debt, calculated in accordance with the Assessment Act, owing by a parent to a carer of the child. . . .

   The principal objects of the Registration and Collection Act are to ensure that children receive from their parents the financial support that the parents are liable to provide, and that periodic amounts payable by parents towards the maintenance of their children are paid on a regular and timely basis (s 3). Those objects are achieved by a system of registration and enforcement. The scheme is available to a carer who wishes to take advantage of it. Some carers may not. They can rely on private enforcement if they wish. If a liability has arisen under a child support assessment, it may be registered under the Registration and Collection Act (s 17). The effect of registration is that the carer is no longer entitled to enforce payment of the liability and, instead, there is a debt owing by the liable parent to the Commonwealth (s 30). The carer entitled to child support becomes entitled to payment of an amount equivalent to that collected by the Commonwealth from the liable parent or on account of that parent's liability (s 76). The debt owed by the liable parent to the Commonwealth must be paid in the manner prescribed by the Act, and may be collected from certain debtors of the parent. Amounts collected are paid into, and disbursed to carers out of, the Consolidated Revenue Fund. The Commonwealth does not benefit financially.

   [20] (2002) 210 CLR 333 at 340-341 ([6], [7])

7. From this brief discussion it will be seen that the Assessment Act and the Registration and Collection Act:

   a)provide for the creation of distinct liability on the part of a parent to pay to a carer of a child specific amounts for child support;

   b)where a parent applies for the administrative assessment of child support, the liability to pay child support to the carer is the amount specified in an assessment that the Registrar issues under s.76 of the Assessment Act;

   c)the amount of child support as assessed by the Registrar, and as specified in the assessment issued under s.76, is a debt that becomes due and payable the seventh day of the following month or thirty days after the parent liable to make the payment receives notice of the assessment, whichever occurs later;

   d)the carer entitled to the payment may recover the debt referred to in (c) after it becomes due by action in a court of competent jurisdiction, and may do so unconditionally if the parent’s liability to pay the debt has not been registered under s.25(2) of the Registration and Collection Act, or after giving the Registrar 14 days’ notice if the liability has been registered under the Registration and Collection Act.

8. It follows that a right to recover a debt under s.79 of the Assessment Act is at the very least a cross demand within the meaning of s.40(1)(g) of the Act. Thus, if the amount of the debt is greater than the amount of the judgment debt on which a bankruptcy notice is based, the debtor may rely on that debt to set aside the bankruptcy notice.

Does Ms M have a cross demand?

1. In my opinion, however, at the time I heard her application to set aside the bankruptcy notice, Ms M did not have any claim against Mr R for the payment of money based on either the Assessment Act or the Registration and Collection Act.

2. The only claim for the payment of money that arises under those Acts is the debt created by s.79 of the Assessment Act. Such debt, however, can only arise after an application for an administrative assessment is made under the Assessment Act, and the Registrar issues an assessment under s.76 of the Assessment Act that specifies the amount of the child support the Registrar has assessed. As at the day I heard Ms M’s application to set aside the bankruptcy notice, no such assessment had been issued. In fact, there is no application before the Registrar for any administrative assessment because the Registrar did not accept the application for assessment Ms M made on 5 December 2013.

3. That Ms M has applied for a declaration under s.106A of the Assessment Act does not affect this conclusion. If she succeeds in obtaining a declaration, all that will occur is that the Registrar will be required to reconsider the application Ms M made on 5 December 2013 on the basis that Mr R is a parent of the child.

Should the time for complying with the bankruptcy notice be extended?

1. In the alternative to setting aside the bankruptcy notice, Ms M seeks an order that the time for compliance with the bankruptcy notice be extended until such time as the Court determines her application for a declaration under s.106A of the Assessment Act.

2. The Court has power to extend the time for complying with a bankruptcy notice only in the circumstances provided for in s.41(6A) of the Act. Under that subsection, the Court may extend the time for complying with a bankruptcy notice only if such an application has been made “before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice” and either “proceedings have to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor”, or an application has been made to the Court to set aside the bankruptcy notice.

3. Ms M has applied to set aside the bankruptcy notice before the expiration of the time fixed for compliance with the requirements of the bankruptcy notice that has been served on her. There is no proceeding on foot, however, for the setting aside of the judgment debt in respect of which the bankruptcy notice was issued. And although Ms M is seeking to set aside the bankruptcy notice, the ground on which she seeks to set it aside is one which I have concluded does not entitle her to an order setting aside the bankruptcy notice. Accordingly, the Court does not have power under s.41(6A) of the Act or otherwise to extend the time for compliance with the bankruptcy notice served on Ms M until such time as this Court determines her application for a declaration under s.106A of the Assessment Act.

Conclusion and disposition

1. In my opinion, Ms M does not have any counter-claim, set-off or cross demand against Mr R based on the Assessment Act or the Registration and Collection Act. That is so because:

   a)for Ms M to have a counter-claim, set-off or cross demand, she has to demonstrate that as at the day of the hearing of her application to set aside the bankruptcy notice she had a prima facie claim for the payment of money to her by Mr R;

   b)the only right to claim money that is conferred by the Assessment Act or the Registration and Collection Act is a debt, and a debt under those Acts can accrue only after the Registrar issues an assessment under s.76 of the Assessment Act which specifies the amount of the debt; and

   c)the Registrar has not issued any assessment under s.76 of the Assessment Act which specifies that Mr R owes any debt to Ms M.

2. Nor does Ms M have any grounds for the Court exercising the power conferred by s.41(6A) of the Act to extend the time for compliance with the bankruptcy notice that has been served on her.

3. I therefore propose to dismiss the application to set aside the bankruptcy notice and the interlocutory application to extend the time for compliance with the bankruptcy notice, and order that Ms M pay Mr R’s costs.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate: 

Date: 23 May 2014