Re Smith, Philip Mark (Judgment debtor) Ex parte Faggotter, Clive (Judgment creditor)

[1995] FCA 830

CATCHWORDS

BANKRUPTCY - whether affidavit filed by judgment debtor amounted to a counter-claim, set-off, or cross demand of the kind referred to in s40(1)(g) of Bankruptcy Act 1966 (Cth) - effect of affidavit not falling within description of s41(7).

Bankruptcy Act 1966 (Cth) s 40(1)(g) and s 41(7)

Webb v Hunter unreported decision of the Full Federal Court   delivered 10 August 1995

No SN 355 of 1995

Re:      PHILIP MARK SMITH                  Judgment Debtor

Ex Parte: CLIVE FAGGOTTER                  Judgment Creditor

Branson J
Adelaide
10 October 1995

IN THE FEDERAL COURT OF AUSTRALIA )
  )
SOUTH AUSTRALIA DISTRICT REGISTRY )
  )
GENERAL DIVISION                 )    No SN 355 of 1995
  )
BANKRUPTCY DISTRICT OF THE       )
  )
STATE OF SOUTH AUSTRALIA             )

Re:PHILIP MARK SMITH

Judgment Debtor

Ex Parte:CLIVE FAGGOTTER

Judgment Creditor

MINUTES OF ORDER

CORAM:    Branson J

PLACE:    Adelaide

DATE:     10 October 1995

THE COURT ORDERS THAT:-

1. It is declared that the time for compliance with the bankruptcy notice expired on 17 July 1995.

1. The debtor is to pay the creditor's costs of and incidental to the filing by the debtor of his affidavit of 14 July 1995. Should the debtor become bankrupt as a consequence of his failure to comply with the bankruptcy notice dated 30 May 1995 such costs to be governed by the provisions of the Bankruptcy Act 1966 (Cth).

Note:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
  )
SOUTH AUSTRALIA DISTRICT REGISTRY )
  )
GENERAL DIVISION                 )    No SN 355 of 1995
  )
BANKRUPTCY DISTRICT OF THE       )
  )
STATE OF SOUTH AUSTRALIA             )

Re:PHILIP MARK SMITH

Judgment Debtor

Ex Parte:CLIVE FAGGOTTER

Judgment Creditor

EX TEMPORE REASONS FOR JUDGMENT

CORAM:    Branson J

PLACE:    Adelaide

DATE:     10 October 1995

In this matter, before the time fixed for compliance with the requirements of the bankruptcy notice, the debtor filed an affidavit dealing with certain financial dealings between him and the judgment creditor. The Registrar treated the affidavit as one asserting a counter-claim, set-off or cross demand of the kind referred to in s40(1)(g) of the Bankruptcy Act 1966 (Cth) ("the Act") and issued a notice fixing a time for the debtor to satisfy the Court "that he has the counter-claim, set-off or cross demand referred to in the  ... affidavit."

Section 40(1)(g) provides that:-

"A debtor commits an act of bankruptcy in each of the following cases:-

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not -

(i)where the notice was served in Australia - within the time fixed by the Registrar by whom the notice was issued; or

(ii)where the notice was served elsewhere - within the time fixed for the purpose by the order giving leave to effect the service,

comply with the requirements of the notice or satisfy the Court that he has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, 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 or order was obtained;"

In my view, the affidavit filed in this matter by the debtor on 14 July 1995, even if read with the later affidavit filed on behalf of the debtor, does not amount to an affidavit to the effect that he has a counter-claim, set-off, or cross demand of the kind referred to in s40(1)(g) of the Act. Nowhere do the affidavits deal with the issue of whether or not the alleged counter-claim, set-off or cross demand was one which could have been set-up in the action in which the judgment was obtained. Moreover, on the material before the Court today, it seems plain that the alleged counter-claim, set-off or cross-claim could have been set-up in such action. I am not satisfied that the debtor has the counter-claim, set-off or cross demand of the kind referred to in s40(1)(g) of the Act.

As I have found that the affidavit filed in this case is not one which falls within the description contained in s41(7) of the Act, it follows that the time for compliance with the bankruptcy notice was not extended by the provisions of s41(7) of the Act. (See Webb v Hunter - unreported decision of the Full Federal Court delivered 10 August 1995).  An act of bankruptcy in this case was thus committed on 17 July 1995:  the period referred to in the bankruptcy notice having expired on the weekend and that being the first Monday thereafter.

I certify that this and the preceding     pages are a true copy of the Ex Tempore Reasons for Judgment of Her Honour Justice Branson.

Associate:

Dated:

Judgment Debtor appeared in person

Counsel for the Judgment Creditor     :    Mr E Aujard

Solicitors for the Judgment Creditor  :    Lempriere Abbott McLeod

Hearing Date  :    10 October 1995