Powell, D.G. v Dorsett, N.A

[1990] FCA 417

Re: DERRICK GORDON POWELL and EDWINA JANE POWELL
Ex Parte: NORMAN ARTHUR DORSETT
No. B16 of 1990
FED No. 417
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA
GENERAL DIVISION
French J.(1)

CATCHWORDS

Bankruptcy - Bankruptcy notice - affidavit in reply - Deputy Registrar's refusal to fix date for hearing - whether affidavit answered required description in Act and Rules - Review of Deputy Registrar's decision.

Bankruptcy Act 1966 s.41, sub-ss (6A), (6C), sub-s.(7), sub-s.40(3)

English Bankruptcy Rules 1915

Re A Debtor (1935) 1 Ch 347

Re Brink (1980) 30 ALR 433

Re Judd Ex parte Pike (1924) 24 SR(NSW) 537

Vogwell v Vogwell (1939) 11 ABC 83

Ebert v Union Trustee Co. of Australia Limited (1960) 104 CLR 346

Re Dalco (1986) 67 ALR 605

Re Ballato (unrep Federal Court, Lee J. 23/12/88)

Re Laybutt (unrep Federal Court, 26/6/85)

Esanda Ltd v Powell and Dorsett (1986) 4 SR(WA) 22

HEARING

PERTH

#DATE 10:8:1990

Mr D.G. Powell appeared on behalf of the Debtors.

Counsel for the Respondent: Mr G. Chitty

Solicitors for the Respondent: Kay and Lafferty, as agents for

Shaddick, Owens and Richards

ORDER

The debtors' application is dismissed.

The debtors are to pay the respondent's costs of the application.

NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

On 16 January 1990, Norman Arthur Dorsett issued a bankruptcy notice to Derrick Gordon Powell and Edwina Jane Powell, husband and wife farmers in the Busselton area. The notice demanded payment, within 21 days after service, of $31,144.72 comprising a judgment of $29,130.73, awarded by Jackson D.C.J. in the District Court, interest of $1,586.14 from 22 February 1989 to 13 July 1989 and costs of $427.85. Sealed copies of the notice were served on the Powells on 7 February 1990.

1. On 19 February Mr Powell filed an affidavit sworn on behalf of himself and his wife. It was entitled "Affidavit in Support of Counterclaim and Stay of Bankruptcy Proceedings". On filing however it was endorsed by the Deputy Registrar in Bankruptcy "Affidavit not sufficient. No case raised." On 1 March the Deputy Registrar sent a letter to the Powells referring to the affidavit in the following terms:
   

"I have perused the contents of the above affidavit and consider that particulars of the nature of the alleged counter-claim, set-off or cross demand and the reasons why it could not have been set up in District court Action No. 61 of 1989 have not been sufficiently set out (see unreported decision of Lee J. in Re Ballato Ex Parte Pezzano delivered Perth, 23 December 1988). It would appear that a defence and counterclaim was filed in District Court Action No. 61 of 1989, however copies of these documents were not annexed to the above affidavit.

In my opinion the matters raised could, in law, have been set up in District Court action 61 of 1989. Therefore, in accordance with the authorities of Re Laybutt and Anor, Ex p Robinson, (unreported 26 June 1985, Beaumont J.) and Re Brink, Ex p Commercial Banking Co. of Sydney Ltd

(1980) 30 ALR 433 I reject the Affidavit as raising no case for enquiry. The Affidavit has been endorsed "Affidavit not sufficient. No case raised". Accordingly, I do not propose to fix a time and place for you to appear before the Court as provided in Rule 10 of the Bankruptcy Rules."

On 20 April 1990 Mr and Mrs Powell filed an application asking that the decision of the Deputy Registrar "be dismissed" and in lieu thereof orders be made that:

1. The Matters as raised in the Affidavit sworn by Derrick Gordon Powell on the 19th day of February 1990 could not have been set up in the District Court Action No. 61 of 1989, according to the ruling in law by Judge Jackson;

2. Derrick Gordon Powell on behalf of Derrick Gordon Powell and Edwina Jane Powell be allowed to appear before the Court as provided in Rule 10 of the Bankruptcy Rules;

3. A stay of Bankruptcy proceedings be put in place until the Appeal filed in the Supreme Court pertaining to District Court Action No. 10 of 1990 has been heard.

And alternatively in relation to the decision of Jackson D.C.J. in the District Court, declarations and orders were sought:

1. That Mr Norman Arthur Dorsett is not entitled to his judgment for the following reason: the guarantor acted to the detriment of us, the primary debtor, thus precluding Mr. N.A. Dorsett from recovering the amount of the guarantee/judgment;

2. Derrick Gordon Powell on behalf of Derrick Gordon Powell and Edwina Jane Powell be allowed to appear before the Court as provided in Rule 10 of the Bankruptcy Rules;

3. A stay of Bankruptcy Proceedings be put in place in the event Judge Jackson's decision has to be appealed/been appealed and heard.

1. And on 3 May 1990 the judgment creditor filed a petition seeking sequestration orders against the Powells. The act of bankruptcy relied upon in the petition was the Powells' failure to comply with the requirements of the bankruptcy notice or to satisfy the Court that they had a counterclaim set-off or cross demand equal to or exceeding the sum specified therein which they could not have set-up in the action in which the judgment was obtained.

2. Mr Powell on behalf of himself and his wife, sought an adjournment of his application and the petition pending the outcome of an application for leave to appeal out of time against the judgment obtained in the District Court. Argument proceeded on the merits of the application and judgment was reserved until today on the basis that the merits would be considered along with the question whether an adjournment was appropriate.
   Statutory Framework

3. Bankruptcy notices are provided for in s.41 of the Bankruptcy Act 1966 which, in the relevant parts, is as follows:
   

"41(1) A bankruptcy notice -

(a) shall be in accordance with the prescribed form; and

(b) shall be issued by the Registrar.

(2) The prescribed form of bankruptcy notice shall be such that the notice - (a) requires the debtor named in it, within a specified time (being the time referred to in sub- paragraph 40(1)(g)(i) or

(ii), whichever is appropriate) to -

(i) pay the judgment debt or sum ordered to be paid in accordance with the judgment or order; or

(ii) secure the payment of the debt or sum to the satisfaction of the Court or the creditor or his agent, if any, specified in the notice or compound the debt or sum to the satisfaction of the creditor or his agent, if any, specified in the notice; and

(b) states the consequences of non-compliance with the requirements of the notice.

.

.

.

(3) A bankruptcy notice shall not be issued in relation to a debtor - (a) except on the application of a creditor who has obtained against the debtor a final judgment or final order within the meaning of paragraph 40(1)(g) or a person who, by virtue of paragraph 40(3)(d), is to be deemed to be such a creditor. .

.

. "

(b) and (c) not relevant for present purposes.

The time for compliance with the bankruptcy notice may be extended by the Court or Registrar in the circumstances set out in sub-ss. (6A) to (6C) where proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor or an application to set aside the bankruptcy notice has been filed with the Registrar. Where the Court or Registrar is of the opinion that the proceedings to set aside the judgment or order have not been instituted bona fide or are not being prosecuted with due diligence then they shall not extend the time for compliance with the notice. Sub-section (7) provides:

"(7) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has filed with the Registrar an affidavit to the effect that he has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied."

Section 40 defines the various circumstances in which a debtor is taken to commit an act of bankruptcy and relevantly for present purposes, para.40(1)(g) provides:

"40(1) A debtor commits an act of bankruptcy in each of the following cases:- .

.

.

(g) if a creditor who has obtained against a 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 fixed by the Registrar by whom the notice was issued; 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 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 could not have set-up in the action or proceeding in which the judgment or order was obtained;"

And sub-s.40(3):

"40(3) For the purposes of paragraph 1(g) - .

.

.

(b) a judgment or order that is enforceable as, or in the same manner as, a final judgment obtained in an action shall be deemed to be a final judgment so obtained and the proceedings in which, or in consequence of which, the judgment or order was obtained shall be deemed to be the action in which was obtained."

Rule 10 establishes a mechanism for bringing before the Court the question whether a debtor has a counter-claim and set-off or cross demand of the requisite nature:

"r.10 Where a debtor on whom a bankruptcy notice has been served files an affidavit to the effect that he has a counter-claim, set-off or cross demand of a kind referred to in paragraph 40(1)(g) of the Act, the giving details of the counter-claim, set-off or cross demand, as the case requires, and the reasons why he was unable to set up the counter-claim, set-off or cross demand, the Registrar -

(a) shall fix a date, time and place at which the debtor may appear before the Court for the purpose of satisfying the Court that he has the counter-claim, set-off or cross demand referred to in the affidavit; and

(b) shall serve notice of the date, time and place so fixed on the solicitor for the debtor and the solicitor for the judgment creditor specified in the notice, respectively."

The Registrar's obligation to fix a date and serve notice only arises where there is an affidavit that answers the description in r.10, i.e. an affidavit to the effect that the debtor has a counter-claim, set-off or cross demand of a kind referred to in para.40(1)(g) and which gives details thereof and the reasons why it could not have been set up in the action in which the judgment debt was incurred. Where the affidavit does not answer that description the Registrar may decline to act under the rule. That does not mean that the Registrar makes a decision on the merits of any counter-claim, set-off or cross demand. However a judgment is necessary whether on the face of it the affidavit raises a cross-action and whether it gives the required details and reasons for inability to set it up in the action. Analogous provisions of the English Bankruptcy Rules 1915 were considered by the Court of Appeal in Re A Debtor (1935) 1 Ch 347 where Slesser L.J. (Romer L.J. agreeing) said at 352:

"It is, therefore, necessary that the affidavit in question should, on the face of it, show a counterclaim, set-off or cross demand which equals or exceeds the amount of the judgment debt, and which the debtor could not have set up in the action in which the judgment or order was obtained."

If, as was held in that case, the subject matter of the affidavit did not come within the rule at all, then there was no matter for the Registrar to consider. The origin of the endorsement used by the Registrar in the present proceedings appears from the judgment of Lord Hanworth MR in that case at 351:

"It is quite obvious that the learned Registrar did think that the affidavit was one which did not comply with r.140, and, if so, I think he ought to have said: "Affidavit not sufficient. No case raised," and not have purported to comply with one part of r.141 (similar to r.10(a) and (b)) and not with the other, the truth being that in the view that he took, r.141 had not come into play at all."

1. A similar question arose in Re Brink (1980) 30 ALR 433. In that case the Registrar had acted under r.10 to fix a date at which the debtor would appear before the Court to satisfy it as to the existence of the requisite counter-claim, set-off or cross demand. But a preliminary point was taken that the affidavit did not answer the requisite description and that there had been no deemed extension of time, under sub-s.41(7) for compliance with the bankruptcy notice. In upholding the submission, Lockhart J. discussed the range of matters contemplated by the terms "counter-claim, set-off or cross demand". His Honour held that they were to be taken as referring to a money demand whether liquidated or unliquidated and adopted the observation of Maughan A.J. in Re Judd Ex parte Pike (1924) 24 SR(NSW) 537 at 539-40, attributing to the words, a wide meaning including claims for unliquidated damages in tort and contract. His Honour noted the scarcity of authority on the content of the initial affidavit and went on at 439:
   

"In my opinion the affidavit cannot merely contain an assertion that the debtor has a counter-claim, set-off, or cross demand which he could not have set up in the action in which the judgment or order was obtained. The affidavit must show a counter-claim, set-off or cross demand which equals or exceeds the amount of the judgment debt and which the debtor could not have set up in the action in which the judgment or order was obtained."

He referred to Vogwell v Vogwell (1939) 11 ABC 83 at 85; Ebert v Union Trustee Co. of Australia Limited (1960) 104 CLR 346 at 350; Re A Debtor (1935) 1 Ch 347 at 352 and noted the limited time within which the initial affidavit is to be filed and that in many cases it would be difficult if not impossible for the debtor to present more than a mere outline of his case in the time available. His Honour then went on:

"I do not think any good purpose would be served by my attempting to express a definitive formula as to what the original affidavit must contain. That must depend in every case on the particular facts and circumstances: see Re a Debtor (1963) 1 WLR 51, per Upjohn L.J. at 56. The fact that it is within the power of the court to determine when the hearing of a matter under s.41(7) will take place, and thus the length of the extension of time to comply with the requirements of the bankruptcy notice; and the difficulty, if not impossibility in some case, of the initial affidavit being anything other than a mere outline of the debtor's case due to the temporal constraints imposed by the notice, all point to the conclusion that the courts should adopt a benevolent construction to the initial affidavit."

His Honour held that the initial affidavit did not answer the description required by s.41(7), the result being that there was no deemed extension of time to comply with the bankruptcy notice.

1. I respectfully adopt the observations in Re Brink on the proper approach to the question whether the initial affidavit falls within the description of s.41(7). See also Re Dalco (1986) 67 ALR 605 and Re Ballato (unrep Federal Court, Lee J. 23/12/88). They are equally applicable to the Registrar's decision upon the sufficiency of the initial affidavit for the purpose of deciding whether or not to fix a date for hearing under r.10. The question of the nature of the consideration arising under that rule was considered by Beaumont J. in Re Laybutt (unrep Federal Court, 26/6/85) where his Honour said:
   

"In my opinion, the Act and the rules provide for two separate inquiries where a debtor seeks to set aside a bankruptcy notice in the present circumstances. In the first instance, the debtor must in his affidavit provide material which is sufficient to satisfy the Registrar of the existence of a bona fide counter-claim or the like which could not be set up in the earlier proceedings. At this stage, the Registrar is essentially concerned to inquire into the bona fides of the debtor's claim; if it is obviously demurrable as disclosing no possible cause of action, the affidavit should be rejected by the Registrar as raising no case for enquiry (see Re A Bankruptcy Notice (1900) 16 WN(NSW) 180; In Re a Debtor; Ex parte Debtor (1935) 1 Ch 347)."

I accept however that the Registrar's determination can be challenged and in that regard the Court's authority may be found in s.14(5) of the Act:

"14(5) An order or direction made or given, or an act done, by a Registrar or a Deputy Registrar under this Act is subject to review on summary application to the Court."

Factual Background

1. The evidence and background of the present application and petition were before the Court in a somewhat fragmentary form. The early history emerges from a judgment of Jackson D.C.J. in Esanda Ltd v Powell and Dorsett (1986) 4 SR(WA) 22 referred to in an affidavit sworn by Dorsett's solicitor in these proceedings. An action, No. 4773 of 1985 in the District Court in Perth, was brought against the Powells and Dorsett by Esanda under the terms of a hire purchase agreement dated 24 February 1982 relating to a new Holland 8080 Combine Harvester. The Powells were sued as hirers and Dorsett as the machinery dealer who had evidently signed the agreement as guarantor. The agreement initially provided for 4 yearly payments of $36,924.99. The instalments were varied by agreement on 16 August 1982 to 4 annual payments due on 4 February 1983, 1984, 1985 and 1986 in sums of $28,097.04, $29,335, $29,810 and $33,345. This arrangement was further revised on 8 October 1984. Subsequently the harvester was repossessed and sold. Esanda sought summary judgment against both the Powells and Dorsett. It was awarded summary judgment against the Powells but this was set aside. The Registrar then referred the application for summary judgment against Dorsett to Jackson D.C.J. who heard argument on 19 August 1986. On 17 October 1986 his Honour made an order that Esanda have judgment against Dorsett in "a sum to be determined" following the outcome of the action between Esanda and the Powells. That action was heard by Clarke D.C.J. on 15 November 1988. His Honour published reasons for judgment on 18 November 1988 and judgment was given on 25 November 1988 in an amount of $29,130.73 including interest. At the trial Mr Powell represented himself and his wife. Dorsett did not appear. Costs were awarded against the Powells and taxed at $6,687.90. Dorsett then paid Esanda the sum of $29,130.73 pursuant to his obligations as guarantor. He did not pay the legal costs assessed against the Powells. According to his solicitor, Mr Max Owens, that was pursuant to an arrangement made with Esanda that if Dorsett were not represented at the hearing no costs would be claimed against him.

2. Subsequently Dorsett issued a writ against the Powells claiming the sum of $29,130.73. This was action No.61 of 1989 in the District Court's Bunbury Registry. The Powells filed a defence and counter-claim. The defence alleged among other things that:
   

1. Dorsett stood as guarantor under the hire purchase agreement on behalf of a company called Auto Investments Ltd pursuant to an arrangement with Esanda about which the Powells were not consulted.

2. Mr Powell had expressed concern about Dorsett's involvement at the time the agreement was signed.

3. Esanda gave assurances that Dorsett had no control over the harvester and that Auto Investments Limited was only guaranteeing the payments.

4. The Powells contended that Dorsett had a responsibility to make clear when signing the guarantee that he was signing on behalf of Auto Investments Limited. On this basis the after sale deficiency would have been payable by Auto Investments Limited and Dorsett's payment to Esanda was voluntary and not made pursuant to the guarantee.

5. Dorsett's non-appearance at the trial on 15 November 1988 meant that evidence which could have verified Mr Powell's statement as to the condition of the harvester and that he had made an agreement with a third party to dispose of it was not available. The Judge therefore only had Mr Powell's explanation of the facts.

By their counter-claim, the Powells sought from Dorsett $100,000 for slander on two bases. The first was a statement he was said to have made to their daughter that their partnership was started on their creditors' money. The second was a statement to Esanda that the Powells had "given money away" to their firm A.J.S. Pastoral Co.

1. On an application for summary judgment before Jackson D.C.J. on 13 July 1989, his Honour gave judgment in favour of Dorsett against the Powells in the sum of $31,144.72, comprising $29,130.73 plus interest of $1,586.14 and costs of $427.85. The counter-claim was struck out by consent although on the basis that this would not preclude the Powells from issuing a writ setting up the same cause of action. In discussion with the Powells, as appears from the transcript, his Honour characterised the claimed quantum of $100,000 as "hopelessly unrealistic". As to the first limb of the claim, the remark Dorsett was said to have made to Jacqueline Powell, the following exchange occurred:
   

"JACKSON D.C.J.: assuming that what he said was defamatory, and assuming it was untrue, what he said to your daughter can only give you a cause of action, can only give you a claim against him, if it lowered your reputation in your daughter's eyes, and it would only be the reputation that you have lost in the eyes of one person. So you would have to establish

(a) that he said it; (b) that it was untrue; (c) that it was defamatory; (d) that it lowered your reputation in your daughter's eyes. Now it is unlikely that you are going to get much even if you succeed. MR POWELL: It hasn't lowered my reputation in my daughter's eyes Your Honour. JACKSON D.C.J. Then you cannot succeed. If your daughter did not believe it, then you get nothing because he has not lowered your reputation. You see it is not an action for saying untruths, it is an action for ruining your reputation. That is what liable and slander is about . . . . "

1. As to the second limb of the counter-claim, His Honour allowed the possibility that what Dorsett allegedly said to Esanda could give rise to a claim. He added that it would not be much of a claim and went on:
   

"JACKSON D.C.J.: Quite frankly, if I were you, I think you would be best to let me strike it out. You think about it, and if you want to issue another writ in due course, issue another writ. At the moment it is attached on to all this other file which is a poor place to start. Frankly, in your own interests, if it was me, I would let it go, but it is not me; it is for you to say, and I do not know all your affairs. I am trying to be helpful and I am trying to save you wasting your time and your money.

MR POWELL I appreciate that, Your Honour. .

.

.

JACKSON D.C.J. Do you want to allow me to strike it out?

MR POWELL Yes Your Honour."

His Honour proceeded to strike out the counter-claim by consent. Powell asked for a stay of execution which was refused.

1. On 13 February 1990 the Powells issued a writ against Dorsett out of the District Court at Bunbury in Action No. 10 of 1990. By the statement of claim it was alleged that Dorsett conspired with his solicitor to enter into an arrangement with Esanda for financial gain to the detriment of the Powells in their litigation with that company. Dorsett had "backed" the Powells until he entered into the conspiracy and became "a hostile party". Dorsett was said to have agreed to support the Powells by being a witness at the trial of the Esanda action. However he broke the agreement by not attending at the trial. The Powells claimed the judgment sum of $31,144.72, $20,000 damages and $3,000 costs. Dorsett took out an application to have this action struck out or dismissed. On 15 March 1990 Barlow D.C.J. held that to allow the Powells to proceed with their claim would constitute an abuse of the process of the court. The action was dismissed as was a summons issued by the Powells seeking an order that Dorsett be required to attend Court to be examined as to the amount of money received by him for non-attendance as a witness in the District Court action 4773 of 1985. The decision was evidently the subject of some further proceedings in the Supreme Court but precisely what they were is not clear.

2. On 18 June 1990 the Powells issued a further writ against Dorsett out of the District Court at Bunbury in Action No. 73 of 1990. The statement of claim set up that they are trustees for the D.G. Powell Family Trust and that Dorsett is a director of Dorsett Motors of Bunbury engaged, inter alia, in the sale of farm machinery. The hire purchase agreement of 24 February 1982 with Esanda was pleaded as was the fact that the purchase price was to be paid to Dorsett. I infer from this that it is alleged the machine was available for sale through Dorsett's business and that under the finance arrangements Esanda was to purchase it from him, then sell it to the plaintiffs under the hire purchase agreement.

3. The statement of claim went on to allege that Dorsett personally guaranteed payments due to Esanda by the Powells and that they ultimately defaulted in making payment. An agreement was then pleaded between the Powells, Esanda, Dorsett and Lake Grace Engineering:
   

" . . . whereby the machine was resold in an orderly manner, thereby obtaining the price of $84,000.00. The machine was delivered to one John Devree who had agreed to purchase the machine himself for a price of $84,000.00 if same was not otherwise sold by 1st October 1985."

The statement of claim pleaded the repossession of the machine by Esanda, its resale, the judgment against Dorsett and later against the Powells and payment of the judgment sum by Dorsett to Esanda. Conspiracy was alleged in the following terms:

"10. At a time prior to the second Judgment being delivered, the defendant wrongfully and maliciously conspired and combined with agents and employees of Esanda Ltd to defraud and injure the Plaintiff by substantially prejudicing the Plaintiffs' prospect of successfully defending the action against them by Esanda.

11. The Second Judgment was entered after trial and after the hearing of evidence provided by the Plaintiffs. Prior to the hearing of the trial, the Defendant, of his own accord and through his solicitor, conspired with Esanda Ltd in the following terms: PARTICULARS OF CONSPIRACY

(a) If the Defendant gave no evidence in support of the Plaintiff's defence of the action by Esanda, then Esanda would not seek costs against the Defendant after the hearing of the first Judgment whereby the Defendant was ordered to pay the guaranteed debt to Esanda Ltd. if the Plaintiffs became liable.

(b) The legal costs to be saved by the Defendant pursuant to the conspiracy were some $6,800.00."

Overt acts were pleaded, in essence a repetition of the pleaded agreement between Dorsett and Esanda and a conspiracy between Dorsett and agents or employees of Esanda to preclude the Powells from raising certain issues at trial which could or would have provided them with a defence at law.

1. By reason of these matters it was said that the Powells had been greatly injured in their business and had lost the benefit of being able to avail themselves of a defence in a civil action against them by Esanda and had suffered loss and damages in the sum of $29,130.73. It is notable that neither in that writ nor its predecessors was there any mention of the alleged defamation raised in the counter-claim to the District Court action instituted by Dorsett.

2. On 25 June 1990 the Powells filed in the Supreme Court an originating summons No. 1919 of 1990 seeking leave to appeal out of time against the decision of Jackson D.C.J. given on 13 July 1989.
   Affidavit in Reply to the Bankruptcy Notice

3. By his affidavit filed on 19 February in answer to the bankruptcy notice, Mr Powell referred to a pre-trial conference held in February 1988 with Esanda and Dorsett in Action 4773 of 1985 and the failure of that conference to settle the claim. Two days before the trial, he said, Dorsett's daughter had telephoned to ask if he could obtain an adjournment as Dorsett would not be able to attend. He said he could not. In the event, Dorsett instructed a solicitor, Max Owens, who obtained an adjournment. Owens evidently made inquiries into the Powells' contention that a Mr de Vree of Lake Grace Engineering and Machinery would have purchased the harvester at a price substantially in excess of that ultimately obtained by Esanda. Powell's affidavit referred to correspondence from Owens indicating that de Vree did not support their account of dealings with his firm and could give no helpful information. A further letter related to another prospective witness, Lannin, apparently the principal of Lannin Motors at Lake Grace who sold the machine for Esanda. Owens advised that Lannin would be of little assistance. He would say that the machine was in a rough condition and that he had been surprised to be offered $70,000 and had advised Esanda to accept that offer.

4. According to Powell's affidavit, Owens told him two days before the trial that Dorsett would not be attending and that if he wanted Dorsett as a witness he would have to subpoena him. Powell also spoke to de Vree who said he could not remember the alleged arrangement made with Lake Grace Engineering and Machinery and made it quite clear that his evidence would not help the Powells' case. Mr Powell and his daughter attended the trial in Perth. He said that Lannin had given evidence that the machine was in a very rough condition and had done 1600 hours on the clock. Powell on the other hand had pointed out to the Judge in evidence that Lannin had advertised the machine for sale as being in excellent condition with less than 600 hours on the clock. His affidavit exhibited an advertisement from Elders Weekly of 29 July 1985 which included the following entry:
   

"New Holland 80-80 header under 600 hrs, excellent order. TERM TO SUIT . . . . $75,000"

He referred to the findings of Clarke D.C.J. and the judgment in favour of Esanda. His affidavit then went on to recount the issue by Dorsett of the writ in Action No. 61 of 1989 against the Powells and an affidavit sworn in those proceedings in which Dorsett deposed to the arrangement his solicitor had made with Esanda's solicitors that:

"If Mr. Dorsett did not appear at the trial (No. 4773 of 1985) to give evidence against Esanda, Esanda would waive his costs relating to an earlier trial that Mr Dorsett had lost. "

Dorsett's affidavit in No. 61 of 1989 was exhibited to Powell's affidavit and in the relevant paragraph said:

"My solicitor's advice to me prior to the trial was that the defence of the Defendants in the action by Esanda was extremely unlikely to succeed. My solicitor then entered into an arrangement with the solicitors for the Plaintiff, Esanda in that action. If I did not defend the claim by Esanda then Esanda would not claim costs against me after the summary judgment application heard against me on 17 October 1986. This was a sensible and practical thing to do and has cut my costs."

It appears from Mr Powell's affidavit that he has misunderstood the nature of the arrangement that Dorsett had made. It does not involve any suggestion that Dorsett would refuse to appear as a witness and, of course, he could have been subpoenaed to appear.

1. Powell went on to allege in his affidavit that Owens and Dorsett conspired against him and his wife. Alternatively he alleged that Owens had deliberately told Dorsett a falsehood as Owens had a letter from Esanda's solicitors on his file where they had stated there was a deal between Esanda, de Vree and Powell.

2. Further he contended that Lannin's advertisement proves he did not do the right thing. Owens, he said, was made aware of this and promised that if they paid his costs and subpoenaed him he would give evidence on that point. But Owens could not appear on the first day and as the case finished on the first day it was not possible to use him. After referring to the proceedings before Jackson D.C.J. and the subsequent issue of the writ in Action No. 10 of 1990 Powell concluded:
   

"25. I claim Mr Dorsett led me into financial difficulty deliberately as he did not discuss any of the above events nor allowed us any refund on the money he received. Also he could have settled for $15,000 if he did not wish to go to court.

26. Mr Owens together with Mr Dorsett have acted dishonourably and trapped us and are now deliberately trying to send us bankrupt.

27. We now ask the Federal Court (Bankruptcy District of the State of Western Australia) to grant a stay of bankruptcy proceedings until the Action No. 10 of 1990 has been brought to trial."

1. It is quite clear from the preceding analysis of the evidence that the affidavit of 19 February, whether read in isolation or in the context of the factual history set out earlier and on its most benevolent construction does not disclose any counter-claim, set-off or cross demand against Dorsett. The question whether any claim could have been set up in the proceeding in which judgment was obtained is therefore academic. No claim is disclosed. Mr Powell asks, in any event, that the application be adjourned until the disposition of his proposed appeal against the judgment. In my opinion that would be a futile exercise. I am not satisfied on the evidence before me that the Powells have any reasonable prospect of success in that regard. The application to set aside the Deputy Registrar's determination is dismissed.