Re Nocks, P.G. Ex Parte Nocks, P.G. v Norwich Union Life Insurance Society

[1992] FCA 676

JUDGMENT No. .. k2.k ..../a~

IN THE FEDERAL COURT OF AUSTlULIA	1
GENERAL DIVISION	1 NO.
BANKRUPTCY DISTRICT OF THE
STATE OF OUEENSLAND	1

RE:	PETER GEORGE NOCK	LJERAL COURT OF	AUSTRALIA
PRINCIPAL
EX PARTE:	PETER GEORGE NOCK	REQISTRY
AND :	NORWICH UNION LIFE

Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	Spender J.
DATE OF ORDER:	11 September 1992
WHERE MADE:	Brisbane
THE COURT DECLARES THAT:

The Court is not satisfied that Peter George Nock has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt, being a counter-claim, set-off or cross demand that he could not have set up in the action or proceeding in which the judgment was obtained.

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

THE COURT ORDERS THAT:

Peter George Nock pay the costs of the respondent to the application pursuant to S . 41(7), including reserved costs, to be taxed if not agreed.

IN	THE F E D E R A L COURT	OF AUSTRALIA	)
GENERAL	D I V I S I O N	)	No. ON 582 o f 1990

BANKRUPTCY DISTRICT OF THE

STATE OF QUEENSLAND

RE :	PETER GEORGE NOCY
EX PARTE:	PETER GEORGE NOCX

Applicant

A N D :  NORWICH U N I O N LIFE INSURANCE SOCIETY

Respondent

-:	Spender J .
PLACE :	Brisbane
DATE
-.	11 September 1992

REASONS FOR JUDGMENT

Th i s i s t h e hearing o f a S . 41(7) a f f i d a v i t f i l e d b y

t h e appl icant , Mr Peter George Nock, i n response t o a

bankruptcy no t i ce i ssued a t t h e request o f Norwich Union L i f e

Insurance Soc ie t y ( ' t h e S o c i e t y ' ) .

Sec t ion 41(7) o f t h e B a n k r u ~ t c v Act 1966 ( ' t h e A c t ' )

provides :

" Where, b e f o r e t h e exp i ra t ion o f t h e t ime f i x e d

f o r	compliance	w i t h	t h e	requirements	o f	a
bankruptcy	n o t i c e ,	the	debtor	has	f i l e d	w i t h
t h e	Reg i s t rar	an	a f f i d a v i t	t o	the	e f f ec t t h a t

he has such a counter-claim, s e t - o f f o r cross

demand a s i s r e f e r r e d t o i n paragraph 40(l) ( g ) ,

and the Court has n o t , b e f o r e t h e exp i ra t ion o f

t h a t t ime , determined whether i t i s s a t i s f i e d

t h a t t h e debtor has such a counter-claim, set-

o f f o r c r o s s demand, t h a t t ime sha l l be deemed

t o have been extended, immediately b e f o r e i t s

exp i ra t ion , u n t i l and inc lud ing t h e day on

which the Court de t e rmines whether i t i s SO

s a t i s f i e d . "

The reference in S. 41(7) to " such a counter-c la im,

se t -of f or c r o s s demand a s i s r e f e r r e d t o i n paragraph

4 0 ( 1 ) ( g ) " is a reference to "a coun t e r - c la im , s e t - o f f o r cross

demand equal t o o r exceed ing the amount o f the judgment

d e b t , ... ,being a coun ter -c la im, s e t - o f f o r c r o s s demand t h a t

he cou ld n o t have set up i n the a c t i o n o r proceeding i n which

the judgment was ob ta ined" : S. 40(l)(g) of the Act.

The evidentiary material in this matter is particularly sparse but it appears that Mr Nock was employed by Norwich Union Life Insurance Society as a Superannuation Development Manager on a base salary with side benefits and provision for incentive payments. On 4 March 1988 Mr Nock presented a debtor's petition. It appears that following discussions concerning the debtor's status the Society requested Mr Nock to resign and in an affidavit filed late in these proceedings Mr. Nock asserts that he was told that if	such resignation was not submitted he would be dismissed from	his employment, and on 30 March 1988 he submitted a written
notice in writing of his intention to resign, giving fourteen days' notice.
Mr Nock commenced proceedings in the Magistrates Court. The precise nature of his claim does not appear from the material but it is suggested that it was in respect of unpaid commissions. In any event, his claim was unsuccessful and on 13 March 1990 he was ordered to pay costs of $3,223.00 to the Society. Based on that judgment a bankruptcy notice was issued against Mr. Nock. In a letter of 25 June 1990 he indicates that the notice was served on him on 12 June 1990 and on 26 June, within the time for compliance with that bankruptcy notice, he filed an affidavit. The affidavit is very short and states:

" 1. I am the person on whom the Bankruptcy

Notice was served at 7pm on the 12th day of
June 1990.

2. An Application for Damages for Wrongful Dismissal No. G15 of 1990 has been lodged with the Federal Court of Australia for an amount of $1 06,385.00.

3. This is a counter claim under subsection

4 1 ( 7 ) of the Bankruptcy Act 1966 and has had a

preliminary hearing and the matter has been
adjourned. "

It appears that the proceedings in the Federal Court were commenced on 5 February 1990 and on l March 1990 at a directions hearing it was suggested that the matter might more appropriately be litigated in the District Court. It appears

Court at Brisbane seeking damages for wrongful dismissal	that a plaint was filed on 24 September 1990 in the District	totalling $61,087.00.
I have very real doubts whether the af fidavit filed by Mr Nock on 26 June 1990 satisfies the requirements of
S. 41(7). My doubt is based on whether a mere assertion that
there is a claim for a sum in excess of the amount claimed in the bankruptcy notice is sufficient compliance with the requirements of the Act. It is true that the S. 4 1 ( 7 )
affidavit has to be filed within a short time after service of the bankruptcy notice and it is not uncommon for the material in such an affidavit to be fleshed out by more expansive material later. It is unnecessary to determine that question in the circumstances of this case because, in the view I take of the matter, the claim for damages for wrongful dismissal on which Mr Nock relies is not a counter-claim, set-off or cross demand that he could not have set up in the action or proceeding in which the judgment or order was obtained.
In my view, a "counter-claim, set-off or cross demand" does not mean that it is only available to a defendant in an action or proceeding, but indicates that it is a demand available to the party against whom judgment for a money sum is given in that action or proceeding. The claim for damages for wrongful dismissal could have been brought pursuant to r.
3 4 of Part IV of the Maaistrates Court Rules in Mr Nock's
cause of action for unpaid commission.
As to the suggestion that that claim would take it out of the monetary jurisdiction of the District Court which, at the time of Mr Nock's claims in the Magistrates Court, was $20,000.00, the judgment of Lockhart J. in Re Racheha: Ex parte Antonios ( 1 9 8 0 ) 4 9 F.L.R. 4 2 3 provides the answer. The facts are not the same as in the present case. In Racheha, a creditor had commenced proceedings in the Court of Petty Sessions and the debtor alleged a set-off or counter-claim in excess of the jurisdiction of that Court. The Registrar returned the notice of set-off and counter-claim inviting the debtor to abandon any amount claimed in excess of the jurisdiction, commence a separate action in the District Court, or to object to the jurisdiction of the Court of Petty Sessions and have the action transferred to the District Court. The creditor signed judgment against the debtor in the Court of Petty Sessions prior to a notification by the debtor to the Registrar of his objection to the jurisdiction, the objection then being too late. In response to a bankruptcy notice the debtor filed an affidavit asserting he had a counter-claim, set-off or cross demand within S. 41(7) of the Bankru~tcv Act. He alleged that his counter-claim was one he could not have set up in the action in the Court of Petty Sessions as it exceeded the jurisdiction of that Court.
Lockhart J. held that as it was established that the debtor could have applied to have "the action" in the Court of Petty Sessions transferred to the District Court and he could
then have contested his counter-claim, set-off or cross demand in "the action", his affidavit failed to satisfy the
requirements of S. 40(l)(g) of the Act.
In my opinion, M r Nock's claim for wrongful dismissal could have been set up by him against the Society in the action in which the judgment on which the bankruptcy notice is based was obtained. For this reason I am not satisfied of the matters set out in 40(l)(g), and as a
consequence of the provisions of S. 41(7), the time for compliance with the bankruptcy notice is extended until today.

The debtor must pay the costs of the hearing of the

S . 41(7) affidavit, including reserved costs, those costs to

be taxed if not agreed.

I cer t i f y t h a t t h i s and t h e

preced ing five ( 5 ) pages a r e a

t r u e c o p y o f t h e r e a s o n s for

judgment	h e r e i n	o f	t h e
Honourable	M r	J u s t i c e	J . E . J .
Spender.

Date:  1 1 Sep

Counsel for t h e a p p l i c a n t Mr G . J . Robinson

i n s t r u c t e d by Mr J . R. Manners

Counsel for t h e respondent Mr K . Wi lson

i n s t r u c t e d	by	Mallesons	Stephens
Jaques