Re Owen R. Ex Parte Deputy Commissioner of Taxation

[1995] FCA 632

IN THE FEDERAL COURT OF AUSTRALIA     )No. QN 820 of 1995
GENERAL DIVISION                   )
BANKRUPTCY DISTRICT OF             )
THE STATE OF QUEENSLAND            )

RE:RONALD OWEN

Applicant

EX PARTE:DEPUTY COMMISSIONER OF TAXATION

Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:                Drummond J
DATE OF ORDER:  11 August, 1995
WHERE MADE:  Brisbane

THE COURT ORDERS THAT:

1. The applicant's application for an adjournment be dismissed.

1. The applicant's application to set aside bankruptcy notice QN 820 of 1995 be dismissed.

1. The applicant pay the respondent's costs of and incidental to the hearing of today's applications, with leave to the respondent to make application with respect to the payment of today's costs reserved.

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

IN THE FEDERAL COURT OF AUSTRALIA   )    No. QN 820 of 1995
GENERAL DIVISION                   )
BANKRUPTCY DISTRICT OF             )
THE STATE OF QUEENSLAND            )

RE:RONALD OWEN

Applicant

EX PARTE:DEPUTY COMMISSIONER OF TAXATION

Respondent

CORAM:    Drummond J
PLACE:    Brisbane
DATE:     11 August, 1995

REASONS FOR JUDGMENT

I have before me an application by Mr.Owen seeking to set aside a bankruptcy notice issued by the respondent Deputy Commissioner of Taxation calling on him to pay the amount of a judgment for $44,229.03 obtained by the Deputy Commissioner.  Within the time allowed by s. 41(7) the Bankruptcy Act 1966 (Cth) Mr. Owen filed an affidavit in this Court which he relies on to satisfy the requirement, if he is to defeat the notice, that he has a counter-claim, set-off or cross demand which exceeds the amount of the judgment debt which he could not have raised in the proceedings in which the judgment was given.

Mr. Owen does not wish to proceed with the hearing of his application today.  He has asked for the hearing to be
adjourned because he has proceedings before the High Court seeking the issue to the Deputy Commissioner of various prerogative orders on the same grounds on which he relies in support of his application that is before me.

Mr. Owen has, at my request, produced a letter from the Deputy Registrar of the High Court referring to his High Court proceedings.  The letter is dated 31 July, 1995 and I will make it exhibit 1.  This letter reads as follows:

"On 21 July 1995 a direction was made by Chief Justice Brennan that the Deputy Registrar refuse to issue this process without the leave of a Justice first had and obtained.

The direction was made pursuant to Order 58 Rule 4(3) of the Rules of the High Court which states as follows:

`(3)If the writ, process or commission appears to a Registrar on its face to be an abuse of the process of the Court or a frivolous or vexatious proceeding, the Registrar shall seek the direction of a Justice who may direct him to issue it or to refuse to issue it without the leave of a Justice first had and obtained by the party seeking to issue it.'

A copy of the affidavit as endorsed by Chief Justice Brennan is enclosed.

I will advise you of a hearing date in Sydney for the determination of your application for leave to issue the application for prerogative relief once a hearing date has been allocated."

Quite apart from the High Court proceedings which Mr. Owen has not yet been permitted to issue and which he will only be able to issue if he obtains the leave of a Justice of the High Court pursuant to this direction given by the Chief
Justice, there are a number of reasons why it would be pointless to grant the application for adjournment.

One of the essential requirements that must be shown before a bankruptcy notice can be defeated by a counter-claim is not merely that there is an arguable case that a counter-claim exists, but that it is a counter-claim which could not have been set up in the original proceedings.  That requirement is not satisfied where the counter-claim was not set up because of the lack of awareness by the debtor of its existence.

What has to be shown to satisfy that particular requirement is that, at law, and irrespective of whether or not the debtor was then aware of his entitlement to do so, it must not have been open to him to have raised in the action in which the judgment was given against him the matter the subject of the counter-claim, set-off or cross demand which is later sought to be relied on to defeat the bankruptcy notice based on that judgment.  It seems to me quite plain that all of the matters upon which Mr. Owen relies to attack the bankruptcy notice and which he wishes to agitate in the High Court could have been made the subject of a counter-claim in the proceedings brought by the Deputy Commissioner of Taxation in which the Deputy Commissioner obtained the judgment in question, if only Mr. Owen had been aware of the arguments on which he now relies to show that he is entitled to make certain money demands on the respondent.
         I also have regard to the fact that Mr. Owen appealed the Deputy Commissioner's judgment in respect of which the bankruptcy notice was issued.  The appeal was dismissed by the Queensland Court of Appeal.  Mr. Owen acknowledges that in seeking to overturn in this appeal the judgment which the Taxation Commissioner obtained against him, he put forward the same arguments that he relies on now in support of his application attacking the bankruptcy notice and which he will put forward in the High Court.  He says that he believes he has refined his arguments somewhat and is able to present them more convincingly now.  That cannot assist him in these proceedings.  He says that the Court of Appeal did not discuss a number of the arguments that were put by him to that Court.  That does not of itself assist Mr. Owen either.  The inference I draw from the fact that the Court of Appeal did not consider a number of the arguments, although it did give consideration to various others of his arguments, is that the Court did not consider there was sufficient substance in any of those arguments to warrant any discussion of them.

All in all, it seems to me clear that Mr. Owen cannot hope to defeat this bankruptcy notice in reliance upon the claims he now puts forward for the reason that they are claims which he could have raised in the proceedings in which the Deputy Commissioner's judgment against him was obtained, if only he had then known of those arguments.  In addition, it appears, from what took place at Mr. Owen's behest in the Court of Appeal, that it is highly unlikely that it will ultimately be found that there is any substance in any of the arguments on which he relies, a view supported by the direction given by Brennan CJ.

I therefore will not allow the adjournment.

For the reasons I have already given in refusing the adjournment, I will dismiss Mr. Owen's application seeking to set aside the bankruptcy notice issued by the Deputy Commissioner in this matter.

I certify that this and the preceding
four pages are a true copy of the
reasons for judgment herein of the
Honourable Justice Drummond.

Associate:

Date:             11 August, 1995