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Rollings v Touma Family Pty Ltd [2011] FMCA 129 (25 January 2011)
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Federal Magistrates Court of Australia
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Rollings v Touma Family Pty Ltd [2011] FMCA 129 (25 January 2011)
Last Updated: 18 March 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
ROLLINGS v TOUMA FAMILY
PTY LTD
|
|
BANKRUPTCY – Application to set aside
bankruptcy notice – allegation by debtor of cross claim that could not
have been
set off in original proceeding – s.40(1)(g) –
s.41(7). |
|
Hearing date:
|
25 January 2011
|
|
Date of Last Submission:
|
25 January 2011
|
|
Delivered on:
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25 January 2011
|
REPRESENTATION
The applicant appeared
on her own behalf |
Solicitors for the Respondent: |
Marsden Law Group
|
ORDERS
(1) That the application filed 14 December 2010 be
dismissed.
(2) That the applicant pay the respondent’s costs of and incidental to the
application to be assessed on the standard
basis.
|
FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT
BRISBANE
|
BRG 1242 of
2010
Applicant
And
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
- On
30 November 2010, a bankruptcy notice, issued 15 November 2010, was served upon
the applicant debtor. The notice demanded a payment
in the sum of $29,788.77,
due following the entry of judgment, by the judgment creditor against the
debtor, in the local Court of
New South Wales at the Downing Centre, Sydney, on
1 July 2010. The debtor now seeks orders that the bankruptcy notice be set
aside.
In her affidavit filed in support of the application, the debtor contends
that the notice ought be set aside because she has a valid
set-off,
counter-claim and/or cross-demand, in respect of the creditor’s debts (see
s.41(7) Bankruptcy Act 1966 (Cth)).
- The
background facts are relatively straightforward. The debtor was, and is, a
director of a company entitled Flying Lizard Proprietary
Limited. That entity
appears to conduct a property and finance consultancy. The creditor says that in
about May 2009, it entered
into an agreement with the Flying Lizard, by which
Flying Lizard would provide consultancy services to the creditor, and arrange
for two capital valuations on properties owned by it – one being at
Gordon, and the other at Bankstown. This was for the purpose
of financing loans
on those properties. For its part, the creditor subsequently says it paid to
Flying Lizard money totalling $27,000.00
for those services. It was alleged that
there were express terms of the agreement and particularly that in consideration
of the payment
of $20,000.00, and $7,000.00 for those consultancy services, and
for valuation fees to the first defendant of that proceeding, the
valuations of
the properties would be provided for the creditor’s financier, the
Commonwealth Bank of Australia, on the following
terms:
- “First,
the valuations would be obtained from Preston Rowe and Paterson Valuers and
Consultants, and (b) that both valuations
would be made available to the
plaintiff within two weeks of the agreement.”
- Despite
the creditor having made the payments, it is alleged no valuations were
forthcoming, and the creditor therefore purported
to terminate the agreement.
The creditor commenced proceedings in the local Court to recover the money it
had paid. It claimed against
Flying Lizard Proprietary Limited for damages for
breach of contract, for contraventions of the Trade Practices Act
1974 (Cth) and the Fair Trading Act 1989 (Qld) for misleading and
deceptive conduct, and for unconscionable conduct. It also claimed for
restitution for unjust enrichment,
and also made a claim for negligent
misstatement and advice.
- Insofar
as the claims were made pursuant to the Trade Practices Act, the creditor
joined the debtor, pursuant to s.75B of the Act, on the basis that she was,
among others, a person knowingly concerned
with the breaches. The debtor, the
other director, and Flying Lizard Proprietary Limited, each defended the action.
Largely, they
put the creditor to proof on its allegations and contentions.
- The
debtor and other defendants denied any agreement whereby sums were paid for
consultancy services and valuation fees, and denied
any failure to table
valuations. The debtor contended that the creditor knew that the valuations were
being prepared externally and
alleged that the creditor, frustrated the process
by refusing to provide information requested of it. The defendants in the
proceeding,
including the debtor, generally denied any duty of care and that any
representations were made. Additionally, no cross-claim or counter-claim
was
made at that time. Following the filing of the defence, the parties entered into
negotiations, and ultimately a settlement was
reached, and an agreement was
concluded between the parties. That agreement was dated 25 February 2010. It
provided for the debtor,
and the other defendants, to pay to the creditor the
sum of $20,000.00 by three instalments. In default, the agreement provided that
the creditor would be entitled to enter judgment for its full claim.
- The
debtor and other defendants did in fact default, and the creditor subsequently
applied for summary relief to the local Court,
and a judgment for the sum of
$29,788.77, which represented the claim, together with statutory interest and
costs was entered. Now,
applications were subsequently made by the debtor to
have the original terms of settlement set aside. Presumably, they were based
upon allegations of duress, being allegations of the kind referred to in
affidavits read by the debtor in the application.
- In
any event, the applications were dismissed. The result is that the judgment
remains outstanding. The debtor and Flying Lizard have
now commenced a fresh
proceeding in the local Court claiming damages of $33,000.00 for “breach
of contract and/or in the alternative,
damages for and/or unlawful repudiation
of a contract.” From a review of the pleadings, the factual substratum in
the debtor’s
claim, as alleged, are precisely those upon which the
creditor’s original claim was based and prosecuted, and to which the
debtor, along with the other defendants, sought to defend.
- There
is nothing in this new proceeding that couldn’t have been the subject of a
counter-claim set-off, or cross-demand in the
original action, in which the
judgment was obtained. In fact, any such claim ought to have been pursued in
that action, and I expect,
ultimately, that failure would entitle the creditor
to summary dismissal of the debtor’s most recent claim (see Port of
Melbourne Authority & Anshun Pty
Ltd.[1]) The debtor
also claims that, in any event, she could not have set up this counter-claim
because of the creditor’s threats to
complain to the Australian Securities
and Investment Commission (ASIC) about the conduct of those associated with this
matter, toward
her and the other debtors.
- In
particular, she complains that the conduct constituted an abuse of the
creditor’s relative bargaining strength. The subjective
assessment of
one’s relative bargaining strength does not operate as a bar to the
prosecution of legal remedies, and I reject
her contentions in that regard.
Finally, the debtor contends that the Court has the power to look behind the
judgment, and that,
in this instance, the Court ought do so on the basis that no
proper judgment exists. While the debtor’s contention that a Court
may
look behind a judgment in applications of this nature, is strictly correct, that
does not assist the debtor in this instance.
- The
judgment here was a default judgment premised upon a provision provided for in a
terms of settlement agreement. The matter now
contended for seeks to address
issues related to the merits of the claim preceding the terms of settlement.
Rights in respect of
the merits of the claim are merged with the terms of
settlement. As they have merged, they no longer form the basis of the judgment,
and it is no longer open for the debtor, in this instance, to complain that the
judgment is not in fact a true judgment.
- It
follows, in my view, that the application is not one directed to a
counter-claim, set off or cross-demand, as is referred to in
s.40(1)(g), and
accordingly, s.41(7) provides no basis for the relief claim by the debtor, and
the application is dismissed.
- The
respondent seeks costs. In the ordinary course, costs would follow the event.
The only matters raised by the applicant on the
issue of costs pertain to the
merits of the application, and the manner in which it was conducted. There was
no objection taken,
when the matter came on before me, about the material, and
in any event, it seems, by reason of the matters that were put before,
given it
was the applicant’s application, that any additional material would have
assisted the application. The applicant has
been unsuccessful, and there is no
reason why the ordinary order as to costs ought not follow.
- I
will direct that the applicant pay the respondent’s costs of and
incidental to the application to be assessed on the standard
basis.
I certify that the preceding thirteen (13) paragraphs are
a true copy of the reasons for judgment of Burnett FM
Date: 17 March 2011
[1] [1981] HCA 45; (1981) 147 CLR
589
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