Case: Vogwell v Vogwell (1939) 11 ABC 83
Outcome: cited
is not considered that any state of satisfaction could possibly be reached that Mr Harding has any counter-claim, set-off or cross demand which it is " just " to be resolved before allowing the bankruptcy proceedings to continue: Dekkan v Evans [2008] FCA 1004 at [54] per Jacobson J; Dekkan v Macquarie Leasing Pty Ltd (No 2 ) [2008] FCA 1431 per Buchanan J; Re Cox (1934) 7 ABC 98. The task to be undertaken was formulated in Guss v Johnstone [2000] HCA 26 , 171 ALR 598 by Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ as follows: [39] In Vogwell v Vogwell [(1939) 11 ABC 83] , Latham CJ said, in relation to a corresponding provision: "[T]he authorities show that the matter to which the court looks is this, &#8212; whether it is just that the claim should be determined before the bankruptcy proceedings are allowed to continue; in other words, whether it is a claim which it is proper and reasonable to litigate." [40] The state of satisfaction referred to in s 40(1)(g), and s 41(7), involves weighing up considerations as to the legal and factual merit of the claim relied upon by the debtor, and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim. It is, with respect, not even possible to be satisfied that Mr Harding has a " shadowy " claim that could be litigated: cf Re Rivett; Ex parte Edward Fay Ltd (1932) 5 ABC 182 at 188. A more modern instance of that which may fall within the statutory phrase is provided by Re Zakrzewski; Zakrzewski v Rodgers [2000] FCA 1187 , 178 ALR 694. An application had there been made for relief under s 106 of the Industrial Relations Act 1996 (NSW), that being a provision which allowed the Industrial Relations Commission of New South Wales to declare void or to vary a contract. His Honour Justice Madgwick there relevantly concluded: Measurable in money? [33] A further matter put forward by the applicant was that the debtor was unable to satisfy the Court of the existence of a counter demand or cross-claim, because the claim does not sound in money. In James v Abrahams [1981] FCA 46 ; (1981) 34 ALR 657 , at 664 Deane and Lockhart JJ endorse the view of Latham CJ in Vogwell at 85, in respect of the corresponding provision of the Bankruptcy Act 1924 , that: The words of the section are that the debtor must satisfy the court that he has a 'counter-claim ... which equals or exceeds the amount of the judgment debt'. In the first place it is accordingly clear that the counter-claim ... must be something sounding in money. [34] The creditor argues that the claim before the Commission is not one sounding in money, but is a claim akin to the rectification of a contract. However, the debtor seeks, among other things, an order that the creditor pay to the debtor any money that may be found owing under the arrangement as varied by the Commission and his claim is that the amount Network sued for in the Local Court plus interest at something like commercial rates should be found to be owing. If successful, this would amount to a direct order for money and the Commission clearly has the power to make such an award. The other remedies sought are, in a practical sense, subsidiary to that claim. Therefore, this objection to the application must fail. Reliance was sought to be placed on the observation of Latham CJ in Vogwell v Vogwell (1939) 11 ABC 83 at 85 that a Court should consider " whether it is just that the claim should be determined before the bankruptcy proceedings are allowed to continue ". Reliance cannot be placed upon those observations of the Chief Justice in isolation. The balance of the passage is as follows: The words of the section are that the debtor must satisfy the court that he has "a counter-claim, set-off or cross demand which equals or exceeds the amount of the judgment debt". In the first place it is accordingly clear that the counter-claim, set-off or cross demand must be something sounding in money. It is also obvious that the section does not apply or refer to an already established right. If there were an already established set-off, for example, the judgment debt would have been reduced pro tanto and if there had been a counter-claim or cross demand which had already been applied as against the amount of the judgment the position would have been entirely different. What the section contemplates is a claim to the enforcement of a right sounding in money. It must be a real claim ; it is insufficient that the debtor believes that he has a claim, and the authorities show that the matter to which the court looks is this, &#8212; whether it is just that the claim should be determined before the bankruptcy proceedings are allowed to continue ; in other words, whether it is a claim which it is proper and reasonable to litigate. Read in its entirety, it is clear that the Chief Justice was not propounding any proposition that a Court could set aside a bankruptcy notice simply because it considered it " just " to do so. The Application is to be dismissed. It should, perhaps, be further noted that at one stage a Schedule of Questions of Fact and/or of Mixed Law and Fact was filed on behalf of the Applicant. That Schedule was filed in support of the application as previously made for the present proceeding to be heard with a jury. Such facts as did require resolution in the present proceeding were within a limited compass and could readily be resolved by a judge sitting alone.