Zakrzewski v Rodgers

Case [2000] FCA 1187

FEDERAL COURT OF AUSTRALIA

Zakrzewski, in the matter of Zakrzewski v Rodgers [2000] FCA 1187

BANKRUPTCY – application to set aside bankruptcy notice on grounds of counter-claim or cross demand – summons for relief filed against creditor in NSW Industrial Relations Commission – debtor claims in Commission that contract unfair, harsh, unconscionable or against public interest – test as to sufficiency of debtor’s claim – evidence exists to support claim – no issue estoppel – no Anshun estoppel – possible abuse of process – no jurisdictional barrier – claim measurable in money – claim against creditors in the same right as right to debt held by creditor

Bankruptcy Act 1966 (Cth), ss 40(1)(g), 41(7)
Industrial Relations Act 1996 (NSW), ss 105, 106

Re Wakim; Ex parte McNally (1999) 163 ALR 270, applied
Commercial Bank of Australia v Amadio (1983) 151 CLR 447, cited
Re Gould; Ex parte Skinner (1983) 72 FLR 393, applied
Ebert v Union Trustee (1960) 104 CLR 346, applied
Guss v Johnstone (2000) 171 ALR 598, applied
Vogwell v Vogwell (1939) 11 ABC 83, applied
Port of Melbourne v Anshun (1981) 147 CLR 589, distinguished
Stuart v Sanderson [2000] FCA 870, applied
Re Siromath (No 1) (1991) 9 ACLC 1580, considered
Sydlow v Kotselas (1996) 144 ALR 159, applied
General Steel v Commissioner for Railways (1964) 112 CLR 125, applied
Pullen v R & C Products (1994) 60 IR 183, cited
Davies v General Transport Development (1967) AR(NSW) 371, cited
James v Abrahams (1981) 34 ALR 657, applied

IN THE MATTER OF JOHN ZAKRZEWSKI,
JOHN ZAKRZEWSKI v PETER DAVID RODGERS
N 7456 of 1999

MADGWICK J
23 AUGUST 2000
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 7456 of 1999

BETWEEN:

JOHN ZAKRZEWSKI
APPLICANT

AND:

PETER DAVID RODGERS
RESPONDENT

JUDGE:

MADGWICK J

DATE OF ORDER:

23 AUGUST 2000

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Bankruptcy notice 504 of 1999, served on the applicant on 14 April 1999, is set aside.

2.The respondent is to pay the applicant’s costs.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 7456 of 1999

BETWEEN:

JOHN ZAKRZEWSKI
APPLICANT

AND:

PETER DAVID RODGERS
RESPONDENT

JUDGE:

MADGWICK J

DATE:

23 AUGUST 2000

PLACE:

SYDNEY

REASONS FOR JUDGMENT

HIS HONOUR:

  1. In this matter the applicant/debtor, Mr Zakrzewski, seeks an order setting aside a bankruptcy notice, served on him on 14 April 1999, on the grounds that he has a counter-claim or cross demand exceeding the amount due in the notice.  This matter was originally heard together with an application in Re Desaro Design Interiors Pty Limited, NG 3040 of 1992, a proceeding concerning leave sought by the applicant to institute certain proceedings against the creditor.  In light of the decision in Re Wakim; Ex parte McNally (1999) 163 ALR 270 it was subsequently ordered and declared that the Court had no jurisdiction to hear and determine those proceedings.

    Factual background

  2. On 6 March 1992…

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Details
AGLC
Zakrzewski v Rodgers [2000] FCA 1187
Case
[2000] FCA 1187
Decision Date

CaseChat Overview and Summary

The matter before the court was an application by Mr Zakrzewski, the debtor, to set aside a bankruptcy notice served on him on 14 April 1999. The creditor, a partner of Love and Rodgers, Chartered Accountants, had served the notice based on an alleged debt. Mr Zakrzewski argued that he had a counter-claim or cross-demand exceeding the amount due in the notice. The court had to determine whether Mr Zakrzewski's counter-claim exceeded the amount of the bankruptcy notice, and if so, whether the notice should be set aside.

The court considered the evidence and arguments presented by both parties. It was established that the creditor had been appointed as the provisional liquidator of Desaro Designs Interiors Pty Limited and had continued operations post-liquidation. Mr Zakrzewski, who was a director and employee of Network Painting and Decorating Pty Limited, claimed to have been assured by the creditor that he would be paid for work done post-liquidation. The court examined the terms of the bankruptcy notice and Mr Zakrzewski's counter-claim, including the pre-liquidation debt owed by Desaro to Network. The court found that Mr Zakrzewski's counter-claim did indeed exceed the amount due in the bankruptcy notice.

The court set aside the bankruptcy notice and ordered the creditor to pay Mr Zakrzewski's costs. The decision hinged on the validity of Mr Zakrzewski's counter-claim and its relationship to the amount specified in the bankruptcy notice. The court's ruling was based on the premise that if a debtor's counter-claim is greater than the debt specified in the bankruptcy notice, the notice should be set aside.

Orders

Orders of the court

1. Bankruptcy notice 504 of 1999, served on the applicant on 14 April 1999, is set aside.

2. The respondent is to pay the applicant’s costs.

Background

Background to the litigation

In this matter the applicant/debtor, Mr Zakrzewski, seeks an order setting aside a bankruptcy notice, served on him on 14 April 1999, on the grounds that he has a counter-claim or cross demand exceeding the amount due in the notice. This matter was originally heard together with an application in Re Desaro Design Interiors Pty Limited, NG 3040 of 1992, a proceeding concerning leave sought by the applicant to institute certain proceedings against the creditor. In light of the decision in Re Wakim; Ex parte McNally (1999) 163 ALR 270 it was subsequently ordered and declared that the Court had no jurisdiction to hear and determine those proceedings.Factual background On 6 March 1992 the respondent/creditor, a partner of Love and Rodgers, Chartered Accountants, was appointed, by order of this Court as provisional liquidator of Desaro Designs Interiors Pty Limited (in liquidation) (“Desaro”). As at that date, the debtor was a director and employee of Network Painting and Decorating Pty Limited (“Network”) and for all relevant practical purposes controlled Network. It was known to all concerned that the debtor performed work for Network and was likely to be dependent in substantial part for his livelihood on Network’s income from its painting contacts. Network was owed $32,730 by Desaro for work performed under various contracts in the previous twelve months period. Network has not been paid any amount in respect of the pre-liquidation debt, and in fact no such payment was made to any unsecured creditors. Also on 6 March 1992 the debtor attended work for Network, pursuant to Network’s contract with Desaro, at Desaro’s job at St Martins Tower. He was told that Desaro had gone into liquidation and that there was no more work. Several days later the debtor returned to the St Martins Tower site to collect his tools. He claims then to have had a conversation with Mr Paul Leroy, an employee of Love and Rodgers, to the following effect:“Leroy:Peter Rodgers has been appointed by the Court as provisional liquidator of Desaro. He wants you to continue the painting work on St Martins Tower and other jobs still unfinished by Desaro. However we are not responsible for jobs done before 6 March 1992 under this arrangement.Debtor:But liquidation means that Desaro has no money, they already owe me money. How will I be paid?Leroy:Listen John, stay with us. Mr Rodgers has been appointed by the Federal Court to oversee the provisional liquidation of Desaro and we guarantee you will get paid for all jobs after 6 March 1992, every cent. All works undertaken by you in this arrangement will be paid for under the provisional liquidation order. We order the work from you, and we guarantee payment. You will be preferential creditors anyway. We are looking after the money side of it now, no more Desaro, just make your invoices out to Desaro so we know what they are for, and we will look after them.” On 10 March 1992 a letter was sent from Love and Rodgers to each of Desaro’s creditors. That letter included the following paragraph:“We are currently conducting an investigation of the position of the company during which time we will be continuing business operations. Supplies of goods and services will be required by the company and you are advised that payment in respect of these goods and services, properly ordered, will be made under normal trading terms. Suppliers will be treated preferentially providing that the supply of goods and rendering of services by them is made only upon the receipt of an official company order signed by the Provisional Liquidator or by the persons listed hereunder.”

Evidence

Evidence Before The Court

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Decision

Reasons for decision

MADGWICK J

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Ratio Decidendi

Legal Principle Established

Established by: MADGWICK J

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