Re F.E. Cocciolone - [1994] FCA 358

Bankruptcy - bankruptcy notice - applicat~on for adjournment of applicat~on seeking
orders that judgment debtors have a counterclaim, set-off or cross-demand of the land
referred to in section 40(l)(g) of the Bankruotcv Act 1966 - adjournment sought for
judgment debtors to file supplementary atfidavit - whether or not or~ginal affidavits
sufficient to enliven section 41(7) of the Act - Extent of detail requlred in ong~nal
affidavits to enliven section 41(7) - whether or not facts deposed to ~n original

affidavits estabt~sh a real and effect~ve cross-clam against the judgment creditor.
Bankruptcv Act 1966 sectlons 40(l)(g), 41(7)

Re Brink: Ex parte the Commercial Banking Com~anv of Svdnev L~mlted (1980) 44
FLR 135
Lavbutt: Ex parte Roblnson (Unreported - Beaurnont J. - 26 June, 1985)

P e r (1991) 27 FCR 515

p e James: Ex Darte Carter Holt Harver Roofing (Australia) Ptv. Ltd. (Unreported -
Hill J. - 17 November, 1993)

Ebert . v. (1960) 104 CLR 346

R e ~ o u l d (1983) 72 FLR 393 :

- B
QN 1640 of 1993

Coooer J.. Brisbane. 30 Mav. 1994

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT

OF THE STATE OF OUEENSLAND No. ON 1640 of 1993

~

Judement Debtors

JUDGE MAKING ORDER: Cooper J.

m MADE: Brisbane

DATE OF ORDER: 30 May, 1994

MINUTES OF ORDER

THE COURT ORDERS THAT:

The application be adjourned to l5 June, 1994.
The costs of today's appearance wlll be reserved.

m: Settlement and entry of orders 1s dealt with m Order 36 of the Federal Court
Rules. (See also Order 37 rule 2(3)).

THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT

OF THE STATE OF QUEENSLAND No. ON 1640 of 1993

F F

Judement Debtors

GQkL%: Cooper J.
PLACE: Brisbane
&?im 30 May, 1994

pEAsONS FOR JUDGMENT

This is an application to adjourn the determination by the Court of the
question of whether or not the judgment debtors have a counterclaim, set-off or cross-

demand of the lund referred to in section 40(l)(g) of the Bankruotcv Act 1966 ("the

Act").

The purpose of the adjournment is to enable additional matenal to be
fded to supplement the affidavits filed by the judgment debtors during the time for

compliance with the bankruptcy notice served on them by the judgment creditor. The

served by an adjournment, the o n p a l affidavits being Insufficient to enliven sectlon application is opposed by the judgment creditor on the ground that no purpose is

41(7) of the Act. The insufficiency alleged is an absence of factual material deposed to in the affidavits which establishes that the judgment debtors have a real and
effective cross-clam against the judgment creditor.

It is insufficient to enliven section 41(7) of the Act to file an affidavit

which merely asserts a right to a counterclaim, set-off or cross-demand m the requisite

amount; the question is what additlonal matenal is necessary to satlsfy the section.

In Re Brink. Ex ~ a r t e the Cornrnerc~al Bankine Comvanv of Sydney

Limited

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re F.E. Cocciolone

Details

AGLC: Re F.E. Cocciolone [1994] FCA 358
Case: [1994] FCA 358
Decision Date: 30 May 1994

CaseChat Overview and Summary

This matter concerns an application by judgment debtors to adjourn an application seeking orders that they have a counterclaim, set-off, or cross-demand against the judgment creditor under section 40(1)(g) of the Bankruptcy Act 1966. The judgment creditor opposes the application for adjournment on the ground that the original affidavits filed by the judgment debtors are insufficient to enliven section 41(7) of the Act. The central legal issue is whether the original affidavits are sufficient to establish a bona fide cross-claim against the judgment creditor.

The Court considered the requirements for an affidavit under section 41(7) of the Act, which must indicate a cause or causes of action upon which reliance is to be placed, provide an outline of their nature, and establish that the prosecution of the cause of action will result in a money sum payable by the judgment creditor to the judgment debtor that exceeds the judgment debt. The Court noted that while the initial affidavit need not satisfy a higher standard of proof, it must be sufficient to enliven section 41(7) and may require supplementation by additional material. The Court also acknowledged the temporal constraints on debtors in filing their initial affidavits and the need for a benevolent construction in determining sufficiency.

In this case, the judgment debtors' affidavits identify a potential cross-claim concerning an alleged breach of duty by the judgment creditor in exercising their power of sale as mortgagee. The affidavits outline the basis of the cross-claim, quantify the undervalue at $240,000.00, and indicate that success in the related Supreme Court action would result in a sum substantially in excess of the judgment debt being paid by the judgment creditor. The Court concluded that the affidavits demonstrate a bona fide cross-claim and the basis upon which it is being prosecuted, sufficient to enliven section 41(7) of the Act.

THE COURT ORDERS THAT:
1. The application be adjourned to 15 June, 1994.
2. The costs of today's appearance will be reserved.

Orders