Re Kleiss C.A. v Ex Parte Commonwealth Bank of Australia

[1995] FCA 270

IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION                 )      No. NN 3656 of 1994
BANKRUPTCY DISTRICT OF THE       )
STATE OF NEW SOUTH WALES             )

RE:        CHRISTOPHORUS ANTONIUS KLEISS

EX PARTE:  COMMONWEALTH BANK OF AUSTRALIA

JUDGE:    Moore J

PLACE:    Sydney

DATE:     1 May 1995

REASONS FOR JUDGMENT

A bankruptcy notice was served on 17 November 1994 on Mr Christophorus Kleiss by the Commonwealth Bank of Australia based on a judgment debt obtained in the Supreme Court of New South Wales in the sum, including interest, of $273,441.56.  Within the time specified in r10 of the Bankruptcy Rules, Mr Kleiss made an application to the effect that he had a counter-claim, set-off or cross demand and the Court has commenced to consider that matter as provided for in s40(1)(g) of the Bankruptcy Act 1966. Mr Kleiss is unrepresented and has conducted the proceedings himself. In the course of doing so he has served on the Bank notices to produce: see r154 of the Bankruptcy Rules.

At a specially fixed hearing on 3 April 1995 an application was made by the Bank to set the notices aside.  Counsel for the Bank, Mr Hodgekiss, applied to have them set aside on three grounds.  The first was that the procedure of securing the production of documents by a notice to produce was not available to a judgment debtor who was seeking to establish for the purposes of s40(1)(g) that he has a counter-claim, set-off or cross demand.  Proof of facts necessary to establish the existence of the offsetting action is to be by way of affidavit as provided for in s41(7).  The second ground was that the notices to produce were effectively an attempt to obtain discovery.  Reference was made to Commissioner for Railways v Small (1938) 38 SR(NSW) 564 at 574. The third ground was that the notices are vexatious and oppressive.

After these submissions had been made, I expressed the preliminary view that the notices were too wide in their scope and after the lunch adjournment on 3 April 1995, Mr Kleiss indicated he would amend them to narrow them and that would be done by the time the matter was next listed for further hearing.  When the matter was listed for directions on 24 April 1995, Mr Kleiss indicated he did not wish to amend the notices to produce and accordingly it has become necessary to rule on the application the Bank had made to have them set aside.

It is unnecessary to set out the terms of the notices themselves.  Their contents are known to the parties.  They are, in my opinion, cast in terms that are far too wide and are tantamount to seeking discovery of a class of documents that Mr Kleiss considers relevant to his claim.  For this reason alone they should be set aside.  However there is a more fundamental reason why they should be set aside.  It may be, as Mr Hodgekiss submitted, that a judgment debtor is limited to the affidavit filed in conformity with s41(7) and perhaps any further affidavits supplementing it, when proving the facts necessary to establish a counter-claim or cross demand.  Support for this view is found in the judgment of Hill J in Re James; Ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (1993) 123 ALR 342. However, even accepting for present purposes that a judgment debtor is not limited in this way, the documents which Mr Kleiss seeks to obtain are for the purpose of establishing a range of matters that do not, in my opinion, fairly relate to the counter-claim or cross demand he alleges exists and arguably may arise from the material before the Court.

At the hearing of 3 April 1995 claims of two types were identified by Mr Kleiss though they were explained in fairly general terms.  One is that the Bank dishonoured a series of cheques of a business Mr Kleiss was then conducting in the period July to September 1987.  The business was the publication of a newspaper.  Two relevant events of significance occurred in that year.  Firstly Mr Kleiss was a candidate in local government elections for the Bega Valley Shire and secondly a group of local businessmen were considering purchasing Mr Kleiss' business and employing him.  The sale did not proceed and Mr Kleiss failed to secure a position in the election as a direct result, he submits, of the actions of the Bank in dishonouring the cheques.  As I understand his contention, the Bank's conduct was deliberate, was for an ulterior purpose and was mala fide.  The second claim concerned the conduct of the Bank over a longer period and was to the effect that the conduct of the litigation in the Supreme Court by the Bank has, as I understand his submission, been for an ulterior purpose, namely to cause him injury.

The first claim is one that may be of substance though, as Mr Hodgekiss submitted, Mr Kleiss may have formidable difficulties in satisfying s40(1)(g) because any cause of action he may have had, may have arisen over seven years ago.  Further, as Mr Hodgekiss submitted, it may be necessary for Mr Kleiss to demonstrate for the purposes of s40(1)(g), that he could not have been able to set up the claim in the sense that it could not have been set up as a matter of law in the Supreme Court proceedings: see James, supra, at 348 per Hill J.  I do not express a concluded view on these issues as they have not yet been addressed by both parties.

I presently do not view the second claim as a tenable one.  I set aside the notices to produce dated 14 February and 27 March 1995.  I should conclude by observing that it is necessary for Mr Kleiss only to establish a prima facie case of a counter-claim, set-off or cross demand: see Re Ryan; Ex parte Ryan v Jupiter's Management Ltd (1992) 38 FCR 127. It is not necessary to establish the claim as if the matter was being litigated in its entirety.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.

Associate:

Date:1 May 1995

Litigant in Person:              Mr C.A. Kleiss

Counsel for the Respondent:      Mr C. Hodgekiss

Solicitor for the Respondent:        Abbott Tout

Date of hearing:                 3 & 24 April 1995

Date of judgment:                1 May 1995