Re Latona, Raymond

[1982] FCA 334

62 I N THE FEDERAL COURT 'OF 'A'USTRALIA

GENERAL D I V I S I O N

BANKRUPTCY D 1 STRICT 'OF 'THE 'STRTE

OF NEW SOUTH WALES AND THE

AUSTRALIAN 'CAPITAL TTERRITORY

RE :  RAYMOND EATONR AND 'MARY CATONA

A p p l i c a n t s

EX PARTE:  WATTAFJA 'CON,STRUCTMNS 'PTY. LIMITED

Respondent

- REASONS FOR 'JUDGMENT

EX TEM-PORE

LOCKHART J. '24 .JUNE ~ 1 9 8 2

+ T h i s i s a matter t h a t a r i s e s u n d e r s u b - s . 4 1 ( 7 ) o f t h e B a n k r u p t c y

Act 1 9 6 6 ( " t h e Act"). On 23 November 1981 Wattawa Construct ions Pty. Limited

( " t h e r e s p o h d e n t " ) s i g n e d j u d g m e n t b y d e f a u l t i n t h e D i s t r i c t C o u r t o f N e w South

Wales againEt Raymond Richard Latona and Mary E l i z a b e t h L a t o n a who a re husband

~ On 13 Janua ry 1982 a b a n k r u p t c y n o t i c e was i s s u e d a t t h e r e q u e s t o f t k

r e s p o n d e n t d i r e c t e d t o t h e a p p l i c a n t s r e q u i r i n g t h e p a y m e n t of t h e sum of $11,212,

be ing the amount then sa id to be due under the judgment toge ther wi th in te res t ,

The n o t i c e was se rved i n J anua ry 1981 . The re i s some dispute a s to

whether i t was served, a s t h e male a p p l i c a n t claims, on Monday 25 January 1982 o r ,

a s Mr.	Butcher	t h e managing d i r e c t o r of	t h e	r e s p o n d e n t c l a i m s , o n	2 3	Janua ry 1982 ,
I t	i s	common	g r o u n d t h a t n o t h i n g t u r n s o n t h i s v a r i a n c e f o r t h e	purposes	of	t h i s

a p p l i c a t i o n a s t h e r e l e v a n t a f f i d a v i t s of t h e a p p l i c a n t s were f i l e d w i t h i n t h e

r e q u i s i t e time.

On 2 F e b r u a r y 1 9 8 2 t w o a f f i d a v i t s were f i l e d i n t h e N e w South Wales

R e g i s t r y of t h i s C o u r t , one by t h e m a l e a p p l i c a n t , t h e o t h e r by t h e f e m a l e

a p p l i c a n t . I n h i s a f f i d a v i t t h e male a p p l i c a n t s a y s t h a t he has a coun te r - c l a im

. . . / 2

agains t the respondent f lowing f rom the a l leged removal by Mr. B u t c h e r who

i s s a i d t o h a v e a c t e d a s t h e a g e n t or s e r v a n t of the respondent f rom the male

a p p l i c a n t ' s p r e m i s e s o f a motor boat , two outboard motors and a tilt t r a i l e r .

H e s a i d i n h i s a f f i d a v i t t h a t t h e e q u i p m e n t had a v a l u e i n e x c e s s o f

$ 2 5 , 0 0 0 . 0 0 , a n d h e s a i d o r a l l y t o d a y t h a t i t h a s a v a l u e i n e x c e s s o f $ 2 0 , 0 0 0 .

H e c l a i m s t h a t t h e a m o u n t s a i d to be owing by him to t h e r e s p o n d e n t

is n o t correct because he paid $ 2 , 0 0 0 t o it, so tha t wha teve r e l se he may owe

t h e respondent it should be reduced by $2 ,000 .00 .

I n p a r a g r a p h 4 of h i s a f f i d a v i t t h e m a l e a p p l i c a n t p r o p o u n d s a n o t h e r

c r o s s - c l a i m n a m e l y , o n e a r i s i n g o u t o f c e r t a i n b u i l d i n g work which he said

was dorxe f o r him by the r e sponden t and was d e f e c t i v e , H e says he i s o b t a i n i n g

e x p e r t a s s e s s m e n t s o n t h e r e p a i r s t h a t a r e n e e d e d a n d i t a p p e a r s a t t h i s s t a g e

t h a t t h e y ' a r e i n e x c e s s of $5 ,000 .00 .

!

In pa rag raphs 5 , 6 and 7 he a s s e r t s t h a t t h e r e s p o n d e n t p u r c h a s e d

from him 6 canoe , an outboard and a se t of canoe paddles , having a purchase .

p r i c e o f $ 5 4 0 . 0 0 , $ 2 5 0 . 0 0 and $30.00 r e s p e c t i v e l y .

I n p a r a g r a p h 8 h e s a y s t h a t he i n s t ' r u c t e d h i s f o r m e r s o l i c i t o r

t o f i l e n b t i c e of grounds of defence and cross -c la im when h e r e c e i v e d t h e

s t a t emen t o f c l a im f rom the r e sponden t , b u t h i s f o r m e r s o l i c i t o r n e g l e c t e d

t o c a r r y ou t h i s i n s t r u c t i o n s .

H e s a y s i n p a r a g r a p h 9 t h a t he has been in ill h e a l t h or some time k

and has been in hosp i t a l , and it was o n l y r e c e n t l y t h a t h e became a w a r e t h a t

judgment had been entered against him. H e s a y s it is h i s i n t e n t i o n t o a p p l y

f o r o r d e r s s e t t i n g a s i d e t h e j u d g m e n t .

The f e m a l e a p p l i c a n t s i m p l y r e f e r s t o he r husband ' s a f f idav i t and

s a y s t h a t s h e a g r e e s w i t h its c o n t e n t s .

I n a d d i t i o n t o t h e e v i d e n c e c o n t a i n e d i n those two a f f i d a v i t s , o r a l

ev idence was g iven today by the ma le app l i can t . The re is a l so a n a f f i d a v i t

of Mr. Roy Thomas Butcher , who h a s n o t been cross-examined, in which h e s a y s t h a

he admi t s r emov ing the boat t o g e t h e r w i t h o n e 115 horsepower motor and a tilt

t r a i l e r , b u t he denies removing a 1 5 horsepower motor. He d o e s n o t a d m i t t h a t

h e d i d t h i s a s a s e r v a n t or agen t o f t he r e sponden t and he d e n i e s t h a t t h e

v a l u e o f t h e b o a t a n d i t s e x t r a s i s $ 2 5 , 0 0 0 b u t s a y s t h a t t h e v a l u e i s $ 6 , 0 0 0

to $ 6 , 5 0 0 . 0 0 .

Mr. B u t c h e r f u r t h e r s a y s t h a t , a s t o t h e claim in pa rag raph 3 of

t h e m a l e a p p l i c a n t ' s a f f i d a v i t t h a t $ 1 , 4 0 0 was p a i d o f f t h e o r i g i n a l d e b t o f

$12 ,354 , l eav ing a ba l ance o f $ 1 0 , 9 5 4 which is the amount for which judgment

was s igned . H e d e n i e s t h a t t h e r e s p o n d e n t h a s c a r r i e d o u t o t h e r b u i l d i n g w o r k

f o r t h e . a p p l i c a n t s . H e s a y s t h a t t r a d i n g a s V i n e y a r d C o n s t r u c t i o n s he h a s

c a r r i e d o u t o t h e r b u i l d i n g w o r k f o r t h e a p p l i c a n t s b u t d e n i e s t h a t a n y of t h a t

w o r k was c a r r i e d o u t i n a de fec t ive manner .

I n r e l a t i o n t o the c l a im p ropounded by t h e m a l e a p p l i c a n t i n

p a r a g r a p h s 5, 6 and 7 o f h i s a f f i d a v i t , h e d e n i e s t h a t t h e r e s p o n d e n t p u r c h a s e d

a n y o f t h o s e items from him.

C o u n s e l f o r t h e r e s p o n d e n t a r g u e d t h a t t h e two a f f i d a v i t s of t h e

a p p l i c a n t s , a l t h o u g h f i l e d i n time, d o n o t a n s w e r t h e d e s c r i p t i o n r e q u i r e d by

sub-s . 4 1 ( 7 ) and pa ra . 4 0 (1) ( g ) of t h e A c t , n a m e l y , a f f i d a v i t s t o t h e e f f e c t

t h a t t h e y h a v e a c o u n t e r - c l a i m , s e t - o f f or cross demand which could not be set

up i n t h e ac t ion i n wh ich t he j udgmen t was o b t a i n e d . H e r e l i e s o n t h e f a c t

t h a t i f o n e looks o n l y a s I d o f o r t h e p u r p o s e s of t h i s a r g u m e n t , t o t h o s e

two a f f i d a v i t s a l o n e , t h e r e i s n o ev idence a s to when t h e cross demands arose

o r c o u l d h a v e a r i s e n so t h a t t h e y c o u l d a l l have been set up i n t h e Dis t r ic t

C o u r t p roceed ings wh ich cu lmina ted in the judgmen t o f 23 November 1981.

I t would n o t n e c e s s a r i l y f o l l o w t h a t t h e a f f i d a v i t s a r e n o t

a f f i d a v i t s o f t h e r e q u i s i t e s t a t u t o r y d e s c r i p t i o n . T h a t d e p e n d s upon

p a r a g r a p h s 8 and 9 o f t h e male a p p l i c a n t ' s a f f i d a v i t w h e r e h e r e f e r s to t h e

. . * / 4

problems of h i s f o r m e r so l ic i tor , and a l so to h i s own ill h e a l t h , a n d h i s

i n t e n t i o n to a p p l y f o r t h e s e t t i n g a s i d e o f t h e j u d g m e n t ,

The words " that he could not have set up i n t h e a c t i o n or proceeding

in which the judgment or o r d e r was o b t a i n e d " i n p a r a . 4 0 (1) (g) have been held

to mean, "which he could not, by law, set up i n t h e a c t i o n " - see 'Re 'Jocumsen,

( 1 9 2 9 ) 1 A.B.C. 8 2 ; ' I n R e A Debtor, 1914 3 K.B. 726 per Avory J. ( a t p. 730)

and R e S tokv i s (1934) 7 A.B.C. 5 3 , e s p e c i a l l y p e r L u k i n J. ( a t p . 5 7 ) w h e r e h i s

Honour	s a i d	:-
''1 t a k e a c o u n t e r c l a i m , s e t o f f , or cross demand
which could not be se t up a s one whicn, f rom point
of time, or from i t s n a t u r e , or from absence of empowering
p r o v i s i o n s , or f r o m p o s i t i v e i n h i b i t i o n so to do , could

* , n o t be set u p i n t h e p a r t i c u l a r c a s e i n w h i c h j u d g m e n t

was ob ta ined , Here, from t h e p o i n t o f v i e w o f time,

from i t s nature , and from the empowering provis ions of

t h e A c t and ru les , t h e c o u n t e r claim might have been

s e t up i f S t o k v i s had wished, or chosen, to do so. Mere

f a i l u r e t o t a k e a d v a n t a g e o f t h e o p p o r t u n i t y c a n h a r d l y

be s a id t o be i n a b i l i t y . ' "

T h o s e a u t h o r i t i e s a n d t h a t p a r t i c u l a r p a s s a g e were fol lowed and

a p p l i e d by me	i n R e Brink:	ex	parte	Commercial	Banking	'Co. of 'Sydney	Limited
( 1 9 8 0 )	30 A . L . R .	433	( a t p.	437) .	I	a d h e r e to thdse	v iews .

Accord ing ly , t he ma t t e r s deposed t o by t h e m a l e a p p l i c a n t i n

p a r a g r a p h s 8 and 9 of h i s a f f i d a v i t a r e , i n my v i e w , i r r e l e v a n t c o n s i d e r a t i o n s

f o r t h e p u r p o s e o f d e t e r m i n i n g w h e t h e r t h e a f f i d a v i t s a r e o f t h e requis i te

c h a r a c t e r .

Even i f t h e y were r e l e v a n t c o n s i d e r a t i o n s , i n my view t h e y would n o t

e s t a b l i s h t h a t , b e c a u s e o f t h e p r o b l e m s o f t h e m a l e a p p l i c a n t ' s f o r m e r solicitor ,

h i s h e a l t h a n d h i s i n t e n t i o n t o seek to se t a s i d e t h e j u d g m e n t , t h e a p p l i c a n t s

could be s a i d t o have t he requis i te c r o s s demand which they could no t have se t up

i n t h e i n i t i a l Dis t r ic t C o u r t proceeding. The mat ters deposed to , i n my view,

f a l l f a r s h o r t o f t h a t .

. . . / 5

I t f o l l o w s t h a t , so f a r a s t h e m a l e a p p l i c a n t i s conce rned , t he

a f f i d a v i t s o f h i m s e l f a n d h i s w i f e do n o t a n s w e r t h e requis i te d e s c r i p t i o n

r e q u i r e d by t h e s e c t i o n s to which I h a v e r e f e r r e d .

So f a r a s t h e f e m a l e a p p l i c a n t i s concerned, what I have sa id

a p p l i e s e q u a l l y t o h e r , i f o n e proceeds on an assumption - which I d o p u r e l y

f o r t h e p u r p o s e s o f t h i s q u e s t i o n	-	t h a t w h a t t h e m a l e a p p l i c a n t s a i d
r e l a t e s a l s o	t o	t h e f e m a l e a p p l i c a n t .

However, i n t r u t h t h e e v i d e n c e o f t h e m a l e a p p l i c a n t , b o t h i n h i s

a f f i d a v i t a n d v i v a v o c e t h i s m o r n i n g , i s i n r e l a t i o n t o c r o s s - c l a i m s or cross

demands which he propounds against t h e respondent or a g a i n s t Mr. B u t c h e r .

There is no mention of t h e role o f t h e f e m a l e a p p l i c a n t i n t h e s e m a t t e r s .

I t may be, of course, t h a t t h e a p p l i c a n t s i n f a c t c a r r i e d o n b u s i n e s s i n

p a r t n e r s h i p t o g e t h e r b u t t h e e v i d e n c e d o e s n o t e n a b l e me t o d r a w t h i s

conc l u S i o n ,

A c c o r d i n g l y , t h e r e is n o t h i n g i n t h e two a f f i d a v i t s which leads

me t o c o n c l u d e t h a t t h e a f f i d a v i t s i n r e l a t i o n t o t h e female appl icant answer

t h e requis i te s t a t u t o r y d e s c r i p t i o n .

However, even i f t h e a f f i d a v i t s were of the requis i te k ind -%and it

became n e c e s s a r y to examine the evidence t o d e t e r m i n e i f t h e C o u r t i s s a t i s f i e d

t h a t t h e a p p l i c a n t s h a v e t h e r e q u i s i t e c o u n t e r - c l a i m , s e t - o f f or cross demand,

it would be necessary for me t o c o n s i d e r t h e a f f i d a v i t s of t h e a p p l i c a n t s

t o g e t h e r w i t h	Mr.	B u t c h e r ’ s a f f i d a v i t a n d t h e o r a l e v i d e n c e	of	t h e m a l e
a p p l i c a n t .

A s these m a t t e r s have been v e n t i l a t e d t h i s morning, I w i l l p roceed

t o d o t h a t .

T h e f i r s t p o i n t I should make, however, is t h a t t h i s C o u r t i s

n o t s i t t i n g t o determine whether or n o t i n t r u t h t h e a p p l i c a n t s h a v e a proper o!

v a l i d cross demand a g a i n s t t h e respondent or Mr. Bu tche r or anyone e lse .

N o t h i n g t h a t is s a i d by t h e C o u r t t o d a y i n a n y way i n h i b i t s t h e a p p l i c a n t s from

s u i n g t h e r e s p o n d e n t or Mr. Bu tche r i n a court of a p p r o p r i a t e j u r i s d i c t i o n

t o pu r sue wha teve r c l a ims they th ink they may have, A l l t h a t I am d e a l i n g w i t h

a t t h e moment i s t h e e v i d e n c e I have before me to de t e rmine whe the r or n o t a

p r i m a f a c i e c a s e h a s b e e n e s t a b l i s h e d by t h e a p p l i c a n t s a g a i n s t t h e r e s p o n d e n t .

I n e e d n o t r e f e r t o t h e n e c e s s a r y tes ts a s t h e y a r e f u l l y s e t o u t i n

my judgment in R e B r i n k a n d t h e c a s e s c i t e d t h e r e i n .

A s t o t h e c l a i m a s s e r t e d i n p a r a g r a p h 2 of t h e m a l e a p p l i c a n t ' s

a f f i d a v i t n a m e l y , t h e r e m o v a l of t h e motor b o a t , two motors and the t ilt t r a i l e r ,

t h e m a l e a p p l i c a n t h a s s w o r n t h a t t h i s was a l l done in October 1981. A s I s a i d ,

judgment- was s i g n e d a g a i n s t t h e a p p l i c a n t s o n 23 November 1931.

I n my v i e w , i f t h e r e i s a cross demand i n r e l a t i o n t o t h i s matter,

i t i s one which could have been s e t up i n t h e D i s t r i c t Cour t p roceedings brought

by the r e sponden t .

F u r t h e r , a l t h o u g h I am only de te rmining whether a p r i m a f a c i e c a s e

h a s b e e n e s t a b l i s h e d i n t h e r e q u i s i t e s e n s e , it seems t o me, on t h e e v i d e n c e ,

t h a t t h e r e m o v a l o f t h e b o a t a n d a t l e a s t o n e o f , t h e motors a n d t h e t r a i l e r

was by Mr. Bu tche r pe r sona l ly and no t by t h e r e s p o n d e n t .

Accordingly, I am n o t sa t i s f ied a s t o t h e a p p l i c a n t s ' c l a i m i n

r e l a t i o n	to	t h e s e	items.
A s to	t h e cross demand men t ioned in pa rag raph 3 of the ma le

a p p l i c a n t ' s a f f i d a v i t - t h a t is t h e payment of $ 2 , 0 0 0 t o t h e r e s p o n d e n t - it

i s p l a i n	from	t h e evidence	that whatever moneys	were	pa id by	the ma le app l i can t
t o	t h e	respondent	were	p a i d b e f o r e J u n e	of	1 9 8 1 a n d n o t h i n g h a s b e e n p a i d s i n c e .

I t seems t o m e a l s o p l a i n from Mr. B u t c h e r ' s a f f i d a v i t - and he

has not been cross-examined - t h a t c r ed i t was g i v e n for $ 1 , 4 0 0 . 0 0 before judgment

was s i g n e d ; so t h a t on no view of t h e m a t t e r c a n t he re be any subs t ance i n

the c l a im men t ioned in pa rag raph 3 , a l though	I	a p p r o a c h t h e m a t t e r o n l y o n	a
. .	. / 7

p r i m a f a c i e b a s i s . On a n y v i e w t h a t c l a i m seems t o me t o be doomed to

f a i l u r e .

A s t h e c l a i m m e n t i o n e d i n p a r a g r a p h 4 of t h e m a l e a p p l i c a n t * ’ s

a f f i d a v i t - namely , de fec t ive work i n r e l a t i o n t o b u i l d i n g w o r k c a r r i e d o u t

by the respondent which he s a y s w i l l n e e d r e p a i r s i n e x c e s s o f $ 5 , 0 0 0 . 0 0 -

it is p l a i n f r o m t h e e v i d e n c e t h a t t h i s c l a i m was a v a i l a b l e , i f a v a i l a b l e

a t a l l , t o t h e a p p l i c a n t s , or t h e m a l e a p p l i c a n t , wel l before t h e s i g n i n g

of	judgment	on	23 November	1981.	I n d e e d ,	t h e	m a l e	a p p l i c a n t ’ s	own	evidence
i s t h a t he	knew o f	t h e	r e l e v a n t d e f e c t s	a b o u t	3	years	ago.	Hence,	a s to	t h a t

c l a i m too, I am n o t s a t i s f i e d t h a t t h e cross demand, i f t h e r e i s one , cou ld

not have been se t up i n t h e i n i t i a l Dis t r ic t Cour t p roceed ings .

I e m p h a s i s e a g a i n t h a t I am not pass ing judgment on whether the

a p p l i c a n t s i n f a c t h a v e a n e n f o r c e a b l e c r o s s - c l a i m or cross demand a g a i n s t

t h e respondent o r anyone else. I am s i m p l y d e a l i n g w i t h t h e m a t t e r o n t h e

p r i n c i p l e s	I	m e n t i o n e d e a r l i e r ,
However, it i s n o t a t a l l c l e a r t o me whether the c la im propounded

i n p a r a g r a p h 4 is a g a i n s t Mr. Butcher or t h e r e s p o n d e n t . The male a p p l i c a n t

s a i d i n e v i d e n c e t h a t h e d e a l t , t h r o u g h o u t t h e w h o l e of h i s d e a l i n g s , w i t h

Mr. Butcher who u s e d to be a f r i e n d o f h i s . I t seems to me t h a t he meant

I

Mr. Butcher i n w h a t e v e r c a p a c i t y h e d e a l t w i t h h i m , w h e t h e r i n h i s own

r i g h t o r on behalf of the respondent . However , I am l e f t i n t h e p o s i t i o n o f

n o t knowing whether whatever c la im he may have under paragraph 4 is a g a i n s t

Mr. Butcher or the r e sponden t . I j u s t d o n o t b o w o n e way or t h e o t h e r . T h a t

i s ano the r r eason why t h i s a s p e c t of t h e claim f a i l s .

A s t o t h e claims i n p a r a g r a p h s 5, 6 , and 7 of t h e m a l e a p p l i c a n t ’ s

a f f i d a v i t , t h a t i s f o r t h e p u r c h a s e o f t h e c a n o e , o u t b o a r d motor and canoe

p a d d l e s . it seems p l a i n enough from t h e e v i d e n c e t h a t t h e s e p u r c h a s e s , i f made

by anybody, were made by Mr. Butcher b u t I make no f ind ing , even on a prima

. . . / B

f a c i e b a s i s , t h a t h e d i d so.

So I do n o t know i f t h e r e was a purchase by t h e respondent ,

Mr.	B u t c h e r or anybody else.	I am	n o t	p r e p a r e d	t o	a c c e p t	t h e m e r e	a s s e r t i o n
of	p u r c h a s e made	i n p a r a g r a p h s	5,	6	and	7	of	t h e a f f i d a v i t w i t h c o r r o b o r a t i o n .

I n a d d i t i o n , so f a r a s t h o s e c l a i m s are conce rned , t he pu rchases

were a l l made i n 1 9 8 0 so t h a t a g a i n t h e s e claims could have been ra ised

i n t h e Dis t r ic t C o u r t p r o c e e d i n g s , I need no t s ay any th ing fu r the r abou t wha t is

p u t i n p a r a g r a p h s 8 and 9 o f t h e a p p l i c a t i o n of t h e a p p l i c a n t . I have a l r eady

d e a l t w i t h t h a t .

Accord ingly I am n o t s a t i s f i e d t h a t t h e a p p l i c a n t s h a v e a c o u n t e r -

c l a i m , s e t Q f f or a c r o s s demand tha t cou ld no t have been set up i n t h e a c t i o n

or proceeding in which the judgment was o b t a i n e d o n 2 3 November 1981 . That

l e a v e s t h e q u e s t i o n o f costs.

I o r d e r t h e a p p l i c a n t s tso p a y t h e costs of the r e sponden t i nc lud ing

r e s e r v e d costs.