McLaughlin, Re W.H. Ex Parte Tooth & Co. Ltd

[1986] FCA 210

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- PE : Killiam Henry McLaughlin

Debtor

EX P.ARTE: Tooth & Co. Ltd

Judgment Credltor

MINUTE OF ORDER

JUDGE KLKING ORDEI?: Evatt J -

PATE OF ORDP.:	30 May 1986
[.RLFP,E MADE:	Sydney

THE COURT DECLARES TWIT: It is not satisfled that the affidavit

of the debtor filed herein pursuant to s.41(7) of the Bankruptcy

Act 1966 dlscloses that the debtor has a counter-claim, set-off

or cross demand as	1s r.eferred to in paragraph 4O(l)(g) of the
.\c t .

THE COURT ORDERS THAT:

1.    The application under s .41 (7 ) be dismissed.

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1. Costs reserved.

fJote: Settlement and entry of orders is dealt with in Order 36 of

the Federal Court Rules.

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IN THE FDERFL COURT OF AUSTRALIA	)
NEW SOUTH GWES DISTRICT REGISTRY	) No. B1188 of 1986
GENERAL DIVISION
BIYYKRUF'TCY DISTRICT OF NEX4 SOUTH FIALES
AND THE AUSTRALIAN CAPITAL TERRITORY

P,E : William Henry McLaughlin

- Debtor *1

EX PARTE: Tooth & CO. Ltd ,

Judgment Creditor

Evatt CORAM J. 1986 3.0 May

PaSONS FOR JUDGMENT

The Bankruptcy Notice herein, dated 18 March 1986 addressed to

William Henry McLaughlln, (the debtor), claims that the District Court judgment obtalned on 25 October 1985 by Tooth & Co. Limlted

(the judgment creditor) against the debtor in the amount of

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$22319.39 together with interest set out remained unsatisfied.

The Bankruptcy Notlce which 1 s stated to be a 14 days notice was

served on the Debtor on 27 March 1986.

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On 10 Aprll 1986 the debtor flled an affidavit pursuant to ~. [f ,.

s.41[7) of the Bankruptcy Act (1966) (the Act) wherein he states

that he belleved that he had a counf2r-claim. set-off or cross

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demand withln th? meanlnq of s.40(l)(g) of the Act.

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The Reglstrar on 29 April 1986 gave notice to the debtor and the

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judgment creditor, Tooth and	Co. Limited, pursuant to r.10 of the	I.
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Bankruptcy Rules appointing Monday, 26 May 1986 as the time when	i :.
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the debtor was to appear before the Court	for the purpose of	!
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satisfying it that he has a counter-claim. set-off or cross I . : m t

.-,	demand as I s referred to	In paragraph 40(l)(g) of the Act.	,
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When the matter was called on on 26 May	1986 Mr Farrar. Counsel	I,.
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for the Debtor and Mr K.V. Taylor, Counsel for the Judgment p.

Creditor, appeared. After hearing Counsel the Court determlned	r 2
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that it was not satisfied the debtor had an appropriate * , I ,

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counter-claim. set-off or cross demand withln the meaning of	F.=
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paragraph 40(l)(g) of the Act and then indicated that it would

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publish full reasons for judgment. These are those reasons. i;;

' , The debtor's affldavit claims that the alleged counter-clam,

set-off or cross demand is in the form of the application for

orders or awards under s.88F of the Industrial Arbitration Act

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1940 (New South Wales) aualnst the ludgment creditor which

application was filed in the Industrial Commisslon of New South

Wales on 15 October 1985. Annexed to his affadavlt 1 s a copy of

_- the Notice of Motion and affidavit in support thereof as filed in

the Commission. That motion seeks orders or awards declaring

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-Joid the whole or part or varying the whole or part either ab

lnitlo or from some other t m e oral contracts arrangements. or

conditions and/or collateral arrangements entered into on or

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,V'%	about 17 August 1981 or on or about 15 March 1982 respectlvely-
between the debtor and the ludgrnent creditor whereby the debtor was required to perform work m any industry. Thereafter is set
out the grounds or reasons claimed to support the making of such
orders or awards. Those grounds or reasons do no more than ..
reflect the formal terms of s.88F(1 1.
The debtor's affi davit in support of that ma Ition is dated 15.
October 1985 and consists of but two paragraphs which read:

I am the applicant herein for relief under the provisions of'

Section 88F of the Industrial Arbitratlon Act 1960. from the

terms of each of two oral agreements made between myself and

the respondent on or about 17 August 1981 and 15 March 1982

respectlvely whereby I took possession respectively of the

licensed premlses known as the "Rose and Crown" Hotel

situated at Glenmore Road, Paddington in the said State and

the licensed premises known as the "Union" Hotel sltuated at

576 King Street, Newtown in the said State.

The grounds and reasons set forth in the Notice of Motion

filed m this matter are to the best of my knowledge and . .

belief true in substance and fact.

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The judgment creditor commenced it,, actlon against the debtor in

the District Court by Plaint. No. 17845 of 1983. The Court was

lnformed that this plaint was issued in approximately the middle.

of that year. The cause of action was for the recovery of monies

paid by the judgment creditor in respect of the license fees due

in respect of the two licensed premises claimed to be payable by

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the debtor to the judgment creditor pursuant to the same

contracts or arrangements made respectively in 1981 and 1983 as 1s referred to in the debtor's motlon before the NSW Industrial Commission. In addltion, the Iudgment credltor claimed monies

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due to it from the debtor in respect of rent of the said premises-.

and for the supply of certain goods.

The District Court action came on for hearing before Judge Nash

in October 1985, His Honour giving judgment therein on 25 October

1985. The overall effect of that judgment was that the ludgment creditor had satisfied the Judge that It had made out its claim ::.

l in respect of certain aspects of its total claim and a judgment was entered against the debtor in the sum of $22319.39 together

xith costs. 9 copy of His Honour's reasons for judgment were

handed up to the Court. Those reasons disclose that His Honour

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on 25 October 1986 had been made aware of the s.88F application

which had been filed by the debtor in the New South Wales

Industrial Commission only some ten days earlier. At the

conclusion of Judge Nash's reasons. the followmg appears:

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There will therefore be a verdict for the plaintiff of

$22319.39 and judgment accordingly. The exhibits may be

returned. There will also be a verdict for the plaintiff on

the cross Amand.

(Counsel for the defendant sought a stay of proceedings

pending action in another Court).

I note there is a Notice of Motion pending in the Industrial

Commission of New South Wales returnable on 29 October 1985

seeking orders that the contracts, the subject of these

tenancies. be declared void in whole or in part or that they

i	-	be varied in whole or in part either ab inltlo or some other time. I do not consider that the application in itself is sufficient grounds for granting a stay of executlon. If the
defendant and the plaintiff do not agree on the question of a
stay, of course, it is open for the defendant to make
application formally to this Court In relation thereto if he
is unable t o pay the amount of the judgment.

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This Court has been informed that no such formal applicatlon to--.-l:

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the District Court in relation to the said Judgment has been made I

by the debtor. This Court was further informed that the application before the Industrlal Commission was stood over generally when it was listed on its return date, 29 October 1985

and that no application has been made to restore it for hearing.

It is clear that the ]urisdlction under s.88F of the New South.

Wales Industrial Arbitration Act is exclusive to the New South

Wales Industrial Commisslon so that such any clalm by the debtor

against the judgment creditor under that section could not have

been ralsed by the debtor in the said District Court action.

The s.41(7) affidavit of the debtor filed herein consists of six

paragraphs, four of which are formal or merely identify the

annexed documents filed in the NSW Industrial Commission. The

remaining paragraphs, VIZ paragraphs 3 and S are set out:

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3 . I am informed and verily believe that in terms of

Section 40(l)(g) of the Bankruptcy Act, 1966, I have a counter-clam, set-off or cross demand that I could not have set up in the actlon in which the Judgment was obtalned against me.

5 . The said Appllcation Cie the Motlon under s.88F before the Commission3 arises out of the same subject matter,

namely oral contracts entered Into on or about 17th ~

August, 1981 and on or about 15th March, 1982 between

myself and the Judgment Creditor which gave rise to the .

action in the District Court of New South Wales in whlch

i the said Judqment was obtained against me.

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Mr Farrar submitted that in accordance with sub-s.(2) of s.88F-..-!,

the NSW Industrial Commission could, if the debtor was Successful

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in havinu the contracts declared void either in whole or in part,

make an order as to the payment of a sum of money equal to the

amount referred to in the Bankruptcy Notice. That Sub-Section

reads :

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88F(23 The Commission, in making an order or award pursuant

to subsection (l), may make such order as to the

payment of money in connection with any contract,

arrangement, condition or collateral arrangement

declared void, in whole or in part, or varied in

whole or in part, as may appear to the Commlssion to

be just in the circumstances of the case.

My Taylor, on the other hand, submitted that in accordance with authority the debtor's counter-claim stc must be a claim which is

measurable in an amount of money and that what the debtor was

really claiming here amounted to rectification which is not a

counter-clam referred to under s.4O(l)(gl of the Act. Further

he Submitted, that even though the debtor's counter-clam need

not be for a liquidated sum it must be capable of being quantified in terms of money, (see Re Jocumsen (1929) 1 ABC 82; James v Abrahams (1981) 34 ALR 654 I3 664) and that a s.41(7)

affidavit flled by the debtor should quantify it in some way.

(Ex parte The Debtor v National Westminister Bank (1983) 3 All

E.R. 545 @ 553). Here. it was submitted, no attempt is made by

the debtor to so quantify his alleged counter-claim etc.

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In my	view the debtor's	s.41(7) affidavit does not demonstrate-..-iy	I
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that even if the motion filed under s.88F 1s a proper clam under

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that section and if he were to succeed on his motlon before the

Commission. the Commission of necessity must make an order that

the debtor be paid a sum of money by the judgment creditor let

alone an amount equal to the figure set out in the Bankruptcy

Notice. Even on the most benevolent construction (see Eastick v'

.WZ BankaAq Group Ltd (1981) 53 FLR 91 f.3 93-4) of the paragraphs.

of the debtors s.41(7) affidavit or upon such a construction of

the motion and affidavit I n support filed in the Industrial

Commission, I am not satisfied that the claim before the

Commisslon must be capable of being quantified in terms of money as that expression is used in the authorities. B fortiori. I am

not satisfied that the s.41(7 ) affidavit of the debtor has

attempted in any way to quantify It.

Further Mr Taylor submitted that the undisputed facts in this -

matter are such that it is clear that the debtor has been gullty

of delay in prosecuting any counter-claim etc he may have had

under s.88F of the N.S.W. Act against the judgment creditor. I

agree. The District Court action was commenced against the

debtor in mid-1983. Yet he did nothing to prosecute his alleged

counter-claim etc until the very hearlng of the District Court

action in October 1985. No explanation is given by the debtor in .

! his affidavlt for such delay. Nor Indeed was any such

explanatlon offered at the hearlng of the present application.

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3.

In all circumstances, I am - n o t satisfied that the debtor's

affidavit filed pursuant to s.41(7) of the Act discloses that he

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has a counter-clalm etc equal to or exceedinu the amount of the ,. -

sum payable under the Iudgment debt as 1 s referred to in

paragraph 40(l)(g) of the Act. Further I am of the n e w that the

debtor's delay in prosecuting any s.88F claim he may have is such

that the Court should refuse hls present appllcatlon.

I certify that this and the &?den

preceding pages are a true copy of the

Reasons f o r Judqment herein of his

Honour Mr Justice Evatt

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