Dekkan v Macquarie Leasing Pty Limited

REASONS FOR JUDGMENT BUCHANAN J: 1 When this application to set aside a bankruptcy notice came before me as Duty Judge on 17 September 2008, after hearing the first applicant and a representative of the respondent, I dismissed the application. What follows are my reasons for doing so. 2 On 1 May 2008 a bankruptcy notice was issued against the applicants by the respondent in the sum of $23,661.98. The bulk of the alleged debt was constituted by a default judgment in the Local Court at Burwood, New South Wales in the sum of $23,475.46. The balance of $186.52 was interest accrued since the date of judgment on 31 March 2008. 3 The applicants commenced proceedings in this Court to set aside the bankruptcy notice. They relied upon an affidavit by the first applicant filed on 5 June 2008. That affidavit described, in general terms, circumstances arising from the refinancing of two cars. It referred to medical problems suffered by the first applicant and to difficulties in repaying the loan. However, there was scant detail of the circumstances which contributed to the precise amount claimed and no reference at all to the proceedings in the Local Court. 4 On 5 June 2008 time for compliance with the bankruptcy notice was extended to 18 June 2008. On 18 June 2008 the application to set aside the bankruptcy notice was adjourned until 9 July 2008 and time for compliance was extended to that day. A direction was made that the applicants file and serve any amended application and affidavits to be relied upon by 4 July 2008. It does not appear that that direction was complied with. On 9 July 2008 a Registrar dismissed the application to set aside the bankruptcy notice. 5 On 30 July 2008 the applicants sought a review of the Registrar's decision. The reason given in support of the application for review was that the first applicant is very sick and was disabled due to a car accident on 27 May 2008. He asked for 'another chance'. Complaints were also made about the attitude of representatives of the respondent. It is not necessary for me to deal with those matters which are not directly relevant to issues for my attention except to note the first applicant's statement that 'I told them I will sue for misconduct, fraud, Macquarie and their agent'. The application for review was supported by an affidavit which repeated the claims about the attitude of representatives of the respondent and again made reference to a statement which the first applicant says he made 'that I will put claim against them and against their agent'. It is clear, however, that no claim, or the basis for any claim, had, by this time, been identified, much less found any formal expression. Neither had any amount been attributed to a 'claim'. 6 On 19 August 2008 a judge of the Court set aside the decision of the Registrar and granted leave to file an amended application. 7 On 9 September 2008 the applicants filed an amended application. This application sought that the Court dismiss the bankruptcy notice and 'deal with' a cross claim against Macquarie Leasing Pty Ltd. It suggested that damages would be sought for 'misconduct' by the respondent's agent of $70,000.00. No such 'cross claim' has ever been filed, in this Court or elsewhere. 8 In an affidavit filed at the same time as the amended application, the first applicant again made a somewhat disjointed series of statements which, taken at their highest, suggest that the respondent's agent sought a payment over and above his commission and that the respondent had refused various offers of compromise made by the applicants. Again no mention was made of the Local Court proceedings. No factual statements were made which might identify a cause of action available to the applicants against the respondent. No statement was made to the effect that any proceedings had been commenced against the respondent or would be commenced in the near future, much less what such proceedings might concern. The affidavit attached 'authorities' to seek information in connection with an application for credit addressed to the respondent which had been signed by the applicants and were dated on 28/7/2005. No other document was attached to the affidavit. 9 In an affidavit in reply Gavin Richard Francis deposed to the following matters:- · He is a solicitor employed by the Solicitor for the Respondent. · On 10 September 2007 a statement of claim was filed against the applicants at North Sydney Local Court. On 27 November 2007 the applicants filed a defence and an application to transfer the statement of claim to the Burwood Local Court. The transfer was not opposed. · On 5 February 2008 at a callover of the proceedings the respondent sought to file a notice of motion to strike out the applicants' defence. The matter was adjourned to 19 March 2008 to deal with the notice of motion. · On 13 February 2008 the respondent filed a notice of motion to strike out the defence which was served on the applicants. · On 19 March 2008 a Magistrate struck out the defence and ordered that default judgment be entered. · On 31 March 2008 default judgment was issued in favour of the respondent in the amount of $23,475.46. · Thereafter Mr Francis deposed to the history of matters in this Court, to a meeting held between the first applicant and representatives of the respondent on 7 July 2008, to a conversation which Mr Francis had with the first applicant by telephone on 9 July 2008 and to the fact that a creditors petition was filed against the applicants on 21 July 2008. Mr Francis deposed that no cross claim has been served on the respondent. 10 At the hearing of the amended application to set aside the bankruptcy notice, which was referred to me by a Registrar, Mr Dekkan appeared in person to represent his own interests and that of is wife. He sought an adjournment. He stated that he had not done the 'calculations' concerning his 'claim' of $70,000 and sought further time to do so. When asked for the underlying basis of those proposed calculations, and a general idea of the causes of action which might be relied upon, he suggested, as I understood him, that somehow the respondent's 'agent' might be responsible for the shortfall between the purchase price of a (or perhaps two) motor vehicle(s) and the value on surrender. When asked why any such line of defence had not been relied upon before the Local Court he said only that he had not been well at the time. The claim in the Local Court was made over 12 months ago. I indicated I was not prepared to give Mr Dekker more time to make his 'calculations'. 11 He also sought time to get advice from a solicitor whom he had found in the 'Yellow Pages'. I declined to adjourn the proceedings on that basis either, having regard to the fact, as discussed hereunder, that the applicants have clearly not made out the necessary tests to set aside the bankruptcy notice. 12 In Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433 Lockhart J dealt with the requirements to be satisfied where a debtor alleges that he has the requisite counter-claim, set-off or cross demand, identification of which might preclude a conclusion that the debtor had committed an act of bankruptcy (see Bankruptcy Act 1966 (Cth) ('the Act') s 40(1)(g) and s 41(7)). His Honour concluded that this Court should follow the decision of the High Court in Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346 ('Ebert'). In Ebert Dickson CJ, McTiernan and Windeyer JJ said (at 350): 'The appellant cannot satisfy the Court that a cross demand exists by showing no more than that she propounds one and states how she suggests that she can make it out.' 13 Lockhart J said (at 439): 'In my opinion the affidavit cannot merely contain an assertion that the debtor has a counter claim, set off, or cross demand which he could not have set up in the action in which the judgment or order was obtained. The affidavit must show a counter claim, set off or cross demand which equals or exceeds the amount of the judgment debt and which the debtor could not have set up in the action in which the judgment or order was obtained …' 14 The requirement in s 40(1)(g) of the Act, that the counter claim, set off or cross demand be one which could not have been set up means that it could not have been relied upon in the proceedings which led to the judgment (see per Lockhart J at 437). 15 In my view, none of the tests which the applicants here are required to satisfy have been satisfied. The material which has been filed is entirely inadequate to satisfy the Court that there is a legitimate counter claim, set off or cross demand, much less that any such alleged counter claim, set off or cross demand could not have been set up in the proceedings in the Local Court. The first applicant's quantification of his 'damages' at $70,000 is unsupported by anything but his bare statement that it is an appropriate quantification of his perceived grievance against the respondent and its agent. 16 Having regard to the matters referred to above, I dismissed the application to set aside the bankruptcy notice and made the following order: 'The application to set aside Bankruptcy Notice, concerning Bankruptcy Notice No 1431/08 dated 1 May 2008, filed on 9 September 2008 be dismissed.' I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.