Fairey v Brent, In the Matter of Fairey

EX TEMPORE REASONS FOR JUDGMENT 1 This is an application which is expressed to be an application to set aside a bankruptcy notice. The affidavit in support identifies the ground as being that the applicant has a "counter-claim far exceeding the amount in the bankruptcy notice, which could not be raised in the Gosford District Court". 2 Objection has been taken to both the relevance and the form of the affidavit which has been filed in support. I have decided to admit the material simply because the applicant is unrepresented, although there is much to be said for the objections which have been taken on behalf of the respondent to this application. 3 Unfortunately, I agree with the tentative view expressed by the Registrar that the material filed in support of the application is not sufficient to make any case for setting aside the bankruptcy notice or indeed for any extension, deemed or otherwise, of time for compliance. 4 In the first place, s 41(7) of the Bankruptcy Act 1966 (Cth) ("the Act") requires that a counter-claim, set-off or cross-demand be one such as is referred to in s 40(1)(g). Such a counter-claim, set-off or cross-demand must be one which could not have been set up in the action or proceeding in which the judgment or order was obtained. That this requirement in s 40(1)(g) applies to s 41(7) has been held by the line of authority in this Court starting with Re Brink; Ex Parte Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433. 5 In the present case, the judgment upon which the bankruptcy notice is founded is a judgment of the Local Court at Gosford dated 16 April 1999. There is no reason why a cross-claim of negligence or breach of contract could not have been brought in those proceedings. It may very well be that the amount of the cross-claim would have been beyond the jurisdiction of that court and I am prepared to assume that that might have been so. However, the difficulty which the applicant faces, in my view, is that he brought such a claim against his solicitor in the Supreme Court of New South Wales, Common Law Division, plainly the right venue. That claim was dismissed on 9 October 1998 pursuant to Part 33 r 6(2) of the Supreme Court Rules for want of prosecution. 6 I further note that from the judgment of the Local Court in the present case it appears that the substance of the complaints were dealt with in evidence and indeed by the Magistrate on the defence which was filed to the plaintiff's claim. In other words, the negligence was alleged apparently in the defence and was ruled upon by the Magistrate. Thus, the applicant here is in the position where the substantive claim to which he now appeals has been dismissed in the Supreme Court for want to prosecution and at least the substratum of it was ruled against him on the merits in the Local Court. 7 Now, of course, none of that would prevent this Court, as a matter of substance, reviewing the matter if a case were made, but it certainly has not been made on the material before me. For the reasons which were spelled out by Branson J in Crimmins v Glenview Home Units [1999] FCA 515, the requirements of the Federal Court Rules are that the material and the evidence which is filed must at least satisfy the Court that there is a prima facie claim of the character advanced. In view of the history of the matter, it seems to me that that threshold has not been reached in the present case. 8 What I have held does not preclude the applicant, of course, from raising any opposition he can to any petition which is proceeded with. On the hearing of that petition, it may well be that he can raise not only questions of solvency but also, if he can get his evidence into some sort of order, he may be able to pursue the existence of the cross-claim as a reason against any sequestration. However, under the circumstances I have no alternative but to dismiss the application. The application is dismissed with costs. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.