FEDERAL CIRCUIT COURT OF AUSTRALIA
| QUEK v PRO TRADER PTY LTD | [2018] FCCA 1521 |
| Catchwords: PRACTICE AND PROCEDURE – Requirement for affidavit setting out full details of counter-claim, set-off or cross demand and amount by which the counter-claim, set-off or cross demand exceeds the judgment debt – whether failure to set out details a formal defect or irregularity which might be excused. WORDS AND PHRASES – “counter-claim, set-off or cross demand”. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.40, 41 Fair Work Act 2009 (Cth), ss.323, 544 |
Continue reading Quek v Pro Trader Pty Ltd
Sign in free to access the full text
Details
- AGLC
- Quek v Pro Trader Pty Ltd [2018] FCCA 1521
- Case
- [2018] FCCA 1521
- Decision Date
CaseChat Overview and Summary
In the Supreme Court of Western Australia, Judge Antoni Lucev considered an application by the Applicant, Ms Quek, to set aside a bankruptcy notice issued by the Respondent, Pro Trader Pty Ltd. The dispute arose from an outstanding costs order made in favour of Pro Trader, which Ms Quek sought to set aside by asserting a counter-claim, set-off, or cross-demand against Pro Trader. Ms Quek alleged that Pro Trader owed her substantial sums for outstanding wages and long service leave entitlements, and further, for monies due under an alleged agreement for the buy-out of her shares.
The central legal issues before the Court were whether Ms Quek possessed a counter-claim, set-off, or cross-demand that equalled or exceeded the judgment debt owed to Pro Trader, and crucially, whether such claims could have been raised in earlier proceedings. Specifically, the Court had to determine if the claims Ms Quek sought to advance were the same as those previously made in a creditor's statutory demand that had been withdrawn, and if the failure to adequately detail these claims in her supporting affidavit constituted a formal defect or irregularity that could be excused.
Judge Lucev reasoned that for a bankruptcy notice to be set aside on the grounds of a counter-claim, set-off, or cross-demand, the applicant must demonstrate that the claim equals or exceeds the debt specified in the notice. Furthermore, the Court considered the principle that such claims should ideally have been raised in the original proceedings that led to the judgment debt. In this instance, the Court found that the claims for wages and long service leave were substantially the same as those previously advanced in a withdrawn statutory demand. The alleged share buy-out agreement was also disputed, with evidence suggesting no final agreement was reached. The Court concluded that the affidavit supporting the application to set aside the bankruptcy notice lacked the necessary detail to establish a valid counter-claim, set-off, or cross-demand that could defeat the bankruptcy notice.
Consequently, the Court ordered that the application to set aside the bankruptcy notice be dismissed.
The central legal issues before the Court were whether Ms Quek possessed a counter-claim, set-off, or cross-demand that equalled or exceeded the judgment debt owed to Pro Trader, and crucially, whether such claims could have been raised in earlier proceedings. Specifically, the Court had to determine if the claims Ms Quek sought to advance were the same as those previously made in a creditor's statutory demand that had been withdrawn, and if the failure to adequately detail these claims in her supporting affidavit constituted a formal defect or irregularity that could be excused.
Judge Lucev reasoned that for a bankruptcy notice to be set aside on the grounds of a counter-claim, set-off, or cross-demand, the applicant must demonstrate that the claim equals or exceeds the debt specified in the notice. Furthermore, the Court considered the principle that such claims should ideally have been raised in the original proceedings that led to the judgment debt. In this instance, the Court found that the claims for wages and long service leave were substantially the same as those previously advanced in a withdrawn statutory demand. The alleged share buy-out agreement was also disputed, with evidence suggesting no final agreement was reached. The Court concluded that the affidavit supporting the application to set aside the bankruptcy notice lacked the necessary detail to establish a valid counter-claim, set-off, or cross-demand that could defeat the bankruptcy notice.
Consequently, the Court ordered that the application to set aside the bankruptcy notice be dismissed.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Pro Trader filed an affidavit of Frank Alexander Watkins, a director of Pro Trader, sworn on 29 March 2016 (“Mr Watkins” and Mr Watkins’ Affidavit” respectively), in which Mr Watkins relevantly deposes as follows:Background4. On 8 April 2014, the Respondent received a Creditor's Statutory Demand dated 31 March 2014 from the Applicant (“Statutory Demand”).5. On 17 April 2014, I caused the Respondent's solicitors, Wilson & Atkinson, to file and serve an Originating Process to set aside the Statutory Demand. This Originating Process was supported by an affidavit sworn by me on the same date. Annexed hereto and marked “FAW-1” is a true copy of the Respondent's Originating Process and my affidavit sworn in support dated 17 April 2014.6. On 31 July 2014, I was informed by James Marzec of the Respondent's solicitors that the Statutory Demand was being withdrawn by the Applicant.7. Later that day, the parties filed consent orders in the following terms:7.1. the Originating Process be dismissed;7.2. the Respondent's costs of the application be paid by the Applicant, to be taxed if not agreed.8. On 4 August 2014, the parties' consent orders were made by Master Sanderson. Annexed hereto and marked “FAW-2” is a true copy of the Orders of Master Sanderson made on 4 August 2014.9. On 23 February 2015, the Respondent's costs were taxed by Registrar Boyle of the Supreme Court and allowed in the sum of $7,321.42. Annexed hereto and marked “FAW-3” is a true copy of the Certificate of Taxation dated 23 February 2015, extracted on 12 November 2015.10. On 12 March 2015, I caused James Marzec of the Respondent's solicitors to write to Tim Galic of the Applicant's solicitors regarding payment of the Respondent's costs. Annexed hereto and marked “FAW-4” is a true copy of James Marzec's e-mail to Tim Galic dated 12 March 2015.11. On 25 March 2015, Mr Marzec advised me that he had received an e-mail from Mr Galic. Annexed hereto and marked “FAW-5” is a true copy of Mr Galic's e-mail to Mr Marzec dated 25 March 2015.12. On 20 April 2015, no progress having been made, I caused Mr Marzec to send another email to Mr Galic. Annexed hereto and marked “FAW-6” is a true copy of Mr Marzec's email to Mr Galic dated 20 April 2015.13. ...14. In November 2015, I instructed the Respondent's solicitors to prepare and issue a Bankruptcy Notice in respect of the Respondent's costs for COR 75 of 2014, which were still outstanding.15. I am instructed by the Respondent's solicitors that Bankruptcy Notice 186638 was served on the Applicant on 9 December 2015.16. On 11 December 2015, Mr Marzec advised me that he had received an e-mail from Mr Galic. Annexed hereto and marked “FAW-7” is a true copy of Mr Galic's e-mail to Mr Marzec dated 11 December 2015.17. On 14 December 2015, I instructed Mr Marzec to send an e-mail to Mr Galic. Annexed hereto and marked “FAW-8” is a true copy of Mr Marzec's e-mail to Mr Galic dated 14 December 2015.Applicant's affidavit18. I have read the Applicant's affidavit sworn on 14 December 2015.19. The Applicant claims at paragraph 3 of her affidavit that the Respondent is indebted to her in the amount of $45,664.78 for:19.1. outstanding wages totalling $30,243.10; and19.2. unpaid long service leave entitlements totalling $15,421.68.20. I am familiar with these figures, as these appear to me to be the same amounts claimed by the Applicant in her Statutory Demand dated 31 March 2014.21. Specifically, I believe that Annexure “JQ-2” of the Applicant's affidavit sworn on 14 December 2015 - said to be “a spreadsheet showing how the amounts [of her counterclaim, set off or cross-demand] have been calculated” - is identical to Annexure “JG-1” to her affidavit sworn on 31 March 2014 in support of her Statutory Demand.22. The Applicant appears to make a further claim in paragraph 6 of her affidavit about her entitlement to monies pursuant to an agreement “on or about 22/23 May 2013”, whereby:22.1. the Applicant agreed to resign from her directorship of the Respondent; and22.2. in return for the Applicant's resignation, I agreed to promise on behalf of the Respondent to buy out her shares in the Respondent for the amount of $150,000, to be shared between the Applicant and David Harte, a former employee of the Respondent.23. I deny that an agreement was ever reached as stated by the Applicant, or at all.24. Between 23 and 24 May 2013, discussions were held regarding the Applicant's and Mr Harte's transition out of the business of the Respondent. A Deed of Settlement and Release was drafted to advance these discussions. However, due to a breakdown in negotiations between the parties, and the Applicant's notice of resignation to me on or around 27 May 2013, an agreement was never reached. I caused these matters to be documented in a letter sent by my solicitors to Ms Quek on 31 May 2013. Annexed hereto and marked “FAW-9 is a true copy of Wilson & Atkinson's letter to the Applicant dated 31 May 2013.25. I have reviewed the records of the Respondent and can confirm that from May 2013 to present, the Respondent has not received any originating process from the Applicant in respect of the allegations raised in her affidavit sworn on 14 December 2015, other than those made in her (withdrawn) Statutory Demand dated 31 March 2014.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.