Latona Ex Parte Wattawa Constructions Pty Limited [1982] FCA 334

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62.

IN THE FEDERAL COURT OF AUSTRALIA

JUDGMENT No.

GENERAL DIVISION

BANKRUPTCY DISTRICT OF 'THE "STATE NO, B 199 OF 1982

C2

Feo...

JUL 1999

OF NEW SOUTH WALES AND THE

AUSTRALIAN 'CAPTTAL TERRITORY

RE: RAYMOND LATONA AND MARY LATONA Applicants EX PARTE: - WATTAWA 'CONSTRUCTIONS 'PTY, LIMITED Respondent

REASONS FOR JUDGMENT

' "EX TEMPORE

LOCKHART J, -°24 JUNE °1982

: 'This is a matter that arises under sub-s. 41 (7) of the Bankruptcy Act 1966 ("the Act"), On 23 November 1981 Wattawa Constructions Pty, Limited ("the respondent") signed judgment by default in the District Court of New South Wales against Raymond Richard Latona and Mary Elizabeth Latona who are husband and wife ("the applicants") in the sum of $10,954 plus $255 for costs.

On 18 January 1982 a bankruptcy notice was issued at the request of tt respondent directed to the applicants requiring the payment of the sum of $11,212, being the ahount then said to be due under the judgment together with interest,

The notice was served in January 1981, There is some dispute as to whether it was served, as the male applicant claims, on Monday 25 January 1982 or as Mr, Butcher the managing director of the respondent claims, on 23 January 1982 It is common ground that nothing turns on this variance for the purposes of this application as the relevant affidavits of the applicants were filed within the requisite time.

On 2 February 1982 two affidavits were filed in the New South Wales Registry of this Court, one by the male applicant, the other by the female

applicant. In his affidavit the male applicant says that he has a counter-claim

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against the respondent flowing from the alleged removal by Mr. Butcher who is said to have acted as the agent or servant of the respondent from the male applicant's premises of a motor boat, two outboard motors and a tilt trailer. He said in his affidavit that the equipment had a value in excess of $25,000.00, and he said orally today that it has a value in excess of $20,000. He claims that the amount said to be owing by him to the respondent is not correct because he paid $2,000 to it, so that whatever else he may owe the respondent it should be reduced by $2,000,00, . In paragraph 4 of his affidavit the male applicant propounds another cross-claim namely, one arising out of certain building work which he said was done for him by the respondent and was defective, He says he is obtaining expert assessments on the repairs that are needed and it appears at this stage

that they:!are in excess of $5,000.00. i

i

In paragraphs 5, 6 and 7 he asserts that the respondent purchased

from him canoe, an outboard and a set of canoe paddles, having a purchase price of $540.00, $250.00 and $30.00 respectively.

In paragraph 8 he says that he instructed his former solicitor to file notice of grounds of defence and cross-claim when he received the statement of claim from the respondent, but his former solicitor neglected to carry out his instructions.

He says in paragraph 9 that he has been in ill heal thftor some time and has been in hospital, and it was only recently that he became aware that judgment had been entered against him, He says it is his intention to apply for orders setting aside the judgment,

The female applicant simply refers to her husband's affidavit and says that she agrees with its contents,

In addition to the evidence contained in those two affidavits, oral

evidence was given today by the male applicant, There is also an affidavit

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of Mr. Roy Thomas Butcher, who has not been cross-examined, in which he says that he admits removing the boat together with one 115 horsepower motor and a tilt trailer, but he denies removing a 15 horsepower motor. He does not admit that he did this as a servant or agent of the respondent and he denies that the

value of the boat and its extras is $25,000 but says that the value is $6,000 to $6,500.00.

Mr. Butcher further says that, as to the claim in paragraph 3 of the male applicant's affidavit that $1,400 was paid off the original debt of $12,354, leaving a balance of $10,954 which is the amount for which judgment was signed. He denies that the respondent has carried out other building work for the applicants. He says that trading as Vineyard Constructions he has carried out other building work for the applicants but denies that any of that work was carried out in a defective manner.

In relation to the claim propounded by the male applicant in paragraphs 5, 6 and 7 of his affidavit, he denies that the respondent purchased any of those items from him,

Counsel for the respondent argued that the two affidavits of the applicants, although filed in time, do not answer the description required by sub-s, 41 (7) and para. 40 (1) (g) of the Act, namely, affidavits to the effect that they have a counter-claim, set-off or cross demand which could not be set up in the action in which the judgment was obtained, He relies on the fact that if one looks only as I do for the purposes of this argument, to those two affidavits alone, there is no evidence as to when the cross demands arose or could have arisen so that they could all have been set up in the District Court proceedings which culminated in the judgment of 23 November 1981,

It would not necessarily follow that the affidavits are not affidavits of the requisite statutory description, That depends upon

paragraphs 8 and 9 of the male applicant's affidavit where he refers to the

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problems of his former solicitor, and also to his own ill health, and his intention to apply for the setting aside of the judgment,

The words "that he could not have set up in the action or proceeding in which the judgment or order was obtained" in para, 40 (1) (g) have been held to mean, "which he could not, by law, set up in the action" - see Re Jocumsen, (1929) 1 A,B.C. 82; 'In Re A Debtor, 1914 3 K.B. 726 per Avory J. (at p. 730) and Re Stokvis (1934) 7 A.B.C. 53, especially per Lukin J. (at p. 57) where his Honour said:-

"I take a counter claim, set off, or cross demand

which could not be set up as one whicn, from point

of time, or from its nature, or from absence of empowering provisions, or from positive inhibition so to do, could not be set up in the particular case in which judgment was obtained, Here, from the point of view of time, from its nature, and from the empowering provisions of the Act and rules, the counter claim might have been

set up if Stokvis had wished, or chosen, to do so, Mere failure to take advantage of the opportunity can hardly be said to be inability."

Those authorities and that particular passage were followed and

applied by me in Re Brink; ex parte Commercial Banking Co, of Sydney Limited

(1980) 30 A.L.R. 433 (at p. 437). I adhere to those views,

Accordingly, the matters deposed to by the male applicant in paragraphs 8 and 9 of his affidavit are, in my view, irrelevant considerations for the purpose of determining whether the affidavits are of the requisite character,

Even if they were relevant considerations, in my view they would not establish that, because of the problems of the male applicant's former solicitor, his health and his intention to seek to set aside the judgment, the applicants could be said to have the requisite cross demand which they could not have set up in the initial District Court proceeding. The matters deposed to, in my view,

fall far short of that.

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It follows that, so far as the male applicant is concerned, the affidavits of himself and his wife do not answer the requisite description required by the sections to which I have referred,

So far as the female applicant is concerned, what I have said applies equally to her, if one proceeds on an assumption - which I do purely for the purposes of this question - that what the male applicant said relates also to the female applicant,

However, in truth the evidence of the male applicant, both in his affidavit and viva voce this morning, is in relation to cross-claims or cross demands which he propounds against the respondent or against Mr. Butcher, There is no mention of the role of the female applicant in these matters.

It may be, of course, that the applicants in fact carried on business in partnership together but the evidence does not enable me to draw this conclusion,

Accordingly, there is nothing in the two affidavits which leads me to conclude that the affidavits in relation to the female applicant answer the requisite statutory description,

However, even if the affidavits were of the requisite kind ~.and it became necessary to examine the evidence to determine if the Court is satisfied that the applicants have the requisite counter-claim, set-off or cross demand, it would be necessary for me to consider the affidavits of the applicants together with Mr. Butcher's affidavit and the oral evidence of the male applicant.

As these matters have been ventilated this morning, I will proceed to do that.

The first point I should make, however, is that this Court is

not sitting to determine whether or not in truth the applicants have a proper o

valid cross demand against the respondent or Mr, Butcher or anyone else.

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Nothing that is said by the Court today in any way inhibits the applicants from suing the respondent or Mr, Butcher in a court of appropriate jurisdiction

to pursue whatever claims they think they may have, All that I am dealing with at the moment is the evidence I have before me to determine whether or not a

prima facie case has been established by the applicants against the respondent.

I need not refer to the necessary tests as they are fully set out in my judgment in Re Brink and the cases cited therein,

As to the claim asserted in paragraph 2 of the male applicant's affidavit namely, the removal of the motor boat, two motors and the tilt trailer, the male applicant has sworn that this was all done in October 1981. As I said, judgment: was signed against the applicants on 23 November 1981,

In my view, if there is a cross demand in relation to this matter, it is one which could have been set up in the District Court proceedings brought by the respondent.

Further, although I am only determining whether a prima facie case has been established in the requisite sense, it seems to me, on the evidence, that the removal of the boat and at least one of.the motors and the trailer was by Mr, Butcher personally and not by the respondent,

Accordingly, I am not satisfied as to the applicants' claim in relation to these items,

As to the cross demand mentioned in paragraph 3 of the male applicant's affidavit - that is the payment of $2,000 to the respondent —- it is plain from the evidence that whatever moneys were paid by the male applicant to the respondent were paid before June of 1981 and nothing has been paid since,

It seems to me also plain from Mr. Butcher's affidavit - and he has not been cross-examined - that credit was given for $1,400,000 before judgment was signed; so that on no view of the matter can there be any substance in

the claim mentioned in paragraph 3, although I approach the matter only on a

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prima facie basis, On any view that claim seems to me to be doomed to failure,

As the claim mentioned in paragraph 4 of the male applicant's affidavit - namely, defective work in relation to building work carried out by the respondent which he says will need repairs in excess of $5,000.00 - it is plain from the evidence that this claim was available, if available at all, to the applicants, or the male applicant, well before the signing of judgment on 23 November 1981, Indeed, the male applicant's own evidence is that he knew of the relevant defects about 3 years ago. Hence, as to that claim too, I am not satisfied that the cross demand, if there is one, could not have been set up in the initial District Court proceedings.

I emphasise again that I am not passing judgment on whether the applicants in fact have an enforceable cross-claim or cross demand against the respondent or anyone else, I am simply dealing with the matter on the principles I mentioned earlier,

However, it is not at all clear to me whether the claim propounded in paragraph 4 is against Mr, Butcher or the respondent. The male applicant said in evidence that he dealt, throughout the whole of his dealings, with Mr. Butcher, who used to be a friend of his. It seems to me that he meant Mr. Butcher in whatever capacity he dealt with him, whether in his own right or on behalf of the respondent. However, I am left in the position of not knowing whether whatever claim he may have under paragraph 4 is against Mr. Butcher or the respondent. I just do notknow one way or the other, That is another reason why this aspect of the claim fails,

As to the claims in paragraphs 5, 6, and 7 of the male applicant's affidavit, that is for the purchase of the canoe, outboard motor and canoe

paddles, it seems plain enough from the evidence that these purchases, if made

by anybody, were made by Mr, Butcher but I make no finding, even on a prima

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facie basis, that he did so,

So I do not know if there was a purchase by the respondent,

Mr. Butcher or anybody else. I am not prepared to accept the mere assertion

of purchase made in paragraphs 5, 6 and 7 of the affidavit with corroboration, In addition, so far as those claims are concerned, the purchases

were all made in 1980 so that again these claims could have been raised

in the District Court proceedings, I need not say anything further about what is

put in paragraphs 8 and 9 of the application of the applicant. I have already

dealt with that.

Accordingly I am not satisfied that the applicants have a counter-

claim, set-off or a cross demand that could not have been set up in the action

or proceeding in which the judgment was obtained on 23 November 1981, That

leaves the question of costs,

I order the applicants to pay the costs of the respondent including

reserved costs.

| certify that this and the ° SEN.

Preceding pages ars

O)

& truco cory of the Reascns for Jucgment i )

grein of his Honour

' Assotiate

8 24 Us 22

Mr. Justice Lockhart.