Re Eather, Rosemary; Ex Parte Eather, Rosemary v Palada, Carlos Ernesto

[1996] FCA 129

IN THE FEDERAL COURT OF AUSTRALIA     )
GENERAL DIVISION  )
   No. QN 1694 of 1995
BANKRUPTCY DISTRICT OF THE           )
STATE OF QUEENSLAND                  )

RE:ROSEMARY EATHER

EX PARTE:ROSEMARY EATHER

Applicant

AND:         CARLOS ERNESTO PALADA
  Respondent   

MINUTES OF ORDER

JUDGE MAKING ORDER:     Spender J

DATE OF ORDER:         12 February 1996

WHERE MADE:            Brisbane

THE COURT ORDERS THAT:

1. The application filed on 9 January 1996 is dismissed.

1. The applicant is to pay the respondent's costs of that application, to be taxed if not agreed.

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

IN THE FEDERAL COURT OF AUSTRALIA     )
GENERAL DIVISION  )
   No. QN 1694 of 1995  
BANKRUPTCY DISTRICT OF THE           )
STATE OF QUEENSLAND                  )

RE:ROSEMARY EATHER

EX PARTE:ROSEMARY EATHER

Applicant

AND:         CARLOS ERNESTO PALADA
  Respondent

CORAM:    Spender J
DATE:     12 February 1996
PLACE:    Brisbane

REASONS FOR JUDGMENT

This is an application filed on 9 January 1996 by which Rosemary Eather applied for a bankruptcy notice to be set aside, that being a matter which was not pursued at the hearing, and further for a declaration that Ms Eather has a counter-claim, set-off or cross demand of a kind referred to in paragraph 40(1)(g) of the Bankruptcy Act 1966. Section 40(1)(g) refers to there being an act of bankruptcy unless, within the time fixed for compliance, a person to whom a bankruptcy notice is addressed satisfies the court that that person has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt, which could not have been set up in the action or proceeding in which the judgment or the order was obtained.

Section 41(7) provides that:

"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. "

The basis of the claim by Ms Eather that she has such a cross-claim is referred to in the submissions made on her behalf.  The core submission is that she has a counter-claim for liquidated damages pursuant to a contract and for breach of the contract which is mentioned in paragraph 6 of her affidavit.  Paragraph 6 simply states:

"The Judgment Creditor, by agreement of 5 August 1994, promised that all defects in the building would be rectified..."

And there was a part of that agreement which related to the accrual of liquidated damages.  The difficulty with reliance upon that claim which is insuperable is that that agreement was the subject of litigation before the Queensland Building Tribunal.  The effect of that litigation was the conclusion that there had been accord and satisfaction of the agreement and that from that determination an application for leave to appeal to the District Court of Queensland was unsuccessfully made by Ms Eather.  It seems plain to me that the claim for liquidated damages which is the basis of the s 41(7) affidavit is not a claim which the respondent is able to pursue.
         Her affidavit refers to other matters relating to aspects of the building work performed by the judgment creditor.  The history of the litigation is extensively set out in the affidavit of Mr Carlos Palada but the effect of the acrimonious disputation between Ms Eather and Mr Palada comes down to the position that the Queensland Building Tribunal made orders on 14 November 1995 which orders mirrored a deed between the parties as to how the matters still outstanding could be resolved.

A deed of compromise was executed on 14 November 1995 between Mr Palada and the Queensland Building Services Authority to whom Ms Eather had complained and which had initially issued a direction on 10 August 1995 containing several matters which required rectification of some matters out of a much more voluminous list which Ms Eather had submitted to it.  That deed of compromise required Mr Palada to perform rectification works as specified in items 1 to 6 of the direction.  That performance however was subject to the applicant or his nominee sub-contractors being granted reasonable access by the owner between 8 am and 5 pm on weekdays and clause 5 of that deed provided that:

"That in the event the owner is unable to or refuses to continue to provide the access upon the terms referred to in paragraph 3 then the Applicant is thereupon and thereafter discharged from any further obligations pursuant to or in connection with the said Direction. "

The orders which were made on 14 November 1995 referred to the direction of 10 August 1995 and items 1 to 6 of that direction to rectify; order number 3 of 14 November 1995 by the Tribunal required:

"The applicant to attend to the rectification works required pursuant to items 1 to 6 inclusive of the direction to rectify, which rectification works must be performed to the satisfaction of the authority within 30 working days from the date upon which access is first granted to the applicant by the owner of the site for the purpose of undertaking the rectification works. "

And order 6 provides:

"In the event the owner is unable to or refuses to continue to provide the access upon the terms referred to in order number 4, commencing within 7 days, then the applicant is thereupon and thereafter discharged from any further obligations  pursuant to or in connection with the direction to rectify in respect of items 1 to 6 inclusive. "

On 29 November 1995 the solicitor for Mr Palada wrote to an officer of the Dispute Management Division of the Queensland Building Services Authority.  The letter says:

"We refer to today's telephone conversation between Ms Jane Flower of your office and our Mr Craig Doherty and confirm that our client's representative Mr Michael Mansfield has arranged for sub-contractors to attend at the abovementioned sited [sic] on Monday 4 December 1995. 

We reserve our client's rights with respect to Ms Eather's denial of access on the following occasions:- 

1.24 November 1995.  Mr Michael Mansfield was denied access when he attended on site from 8.00 am - 8.15 am.

2.30 November 1995.  The home owner has advised Mr Les Brain of the QBSA that she is unwilling to provide access to our client's representatives. "

On 7 December 1995 the solicitor again wrote to the officer of the Dispute Management Division of the Queensland Building Services Authority, which letter, in part, said:

"We have been advised by a further sub-contractor of our client, Mr Henning Poulsen, a Welder [sic], that on 6 December 1995 he attended at 40 Hakea Street, Chapel Hill and was denied access by the owner, Ms Rosemary Eather.

This refusal of access is in addition to the earlier incidents mentioned in our facsimile of 29 November 1995..."

And then sets out the earlier details.  The letter continues:

"We are further instructed that Mr Brain is fully aware of each of those incidents.

Accordingly, as the home owner has refused to continue to provide reasonable access in terms of Clause 3 of the Deed of Compromise, pursuant to Clause 5 of the Deed our client is hereupon discharged from any further obligations pursuant to or in connection with Direction to Rectify number 13430 dated 10 August 1995. "

It is said that this material does not establish that the orders of the Tribunal have been discharged on account of a refusal to grant access.  The matter has been sworn to by Mr Palada and on the evidence before me, the conclusion that I reach is that the orders of the Tribunal of 14 November 1995 have had the consequence by order 6 of those orders that any obligation by Mr Palada to rectify in terms of item 1 to 6 of the directions to rectify has been discharged.  I think it is not irrelevant in the circumstances to have
regard to the fact that an order for substituted service of the amended bankruptcy notice was made by Deputy District Registrar Allen on 22 November last and service of the bankruptcy notice was effected in terms of the order for substitution of service which he then made.

Having regard to the history of the matter and, in particular, the failure successfully to obtain leave to appeal from the orders of the Tribunal which lie behind the bankruptcy notice, I am not satisfied that Rosemary Eather has a counter-claim set-off or cross-demand as is referred to in s 40(1)(g) of the Bankruptcy Act 1966. In those circumstances, the application filed 9 January 1996 is dismissed.

The applicant is to pay the respondent's costs of that application, to be taxed, if not agreed.

I certify that this and the  preceding five (5) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.

Associate

Date: 12 February 1996

Solicitors for the applicant :        Crowley & Greenhalgh

Solicitors for the respondent :      Jones King

Date of Hearing             :        12 February 1996