Case: Massih v Esber [2008] FCA 1452
Outcome: cited
recently, in Re Glew; Glew v Harrowell [2003] FCA 373 , 198 ALR 331 , His Honour Justice Lindgren reviewed the authorities and observed: [9] There are authorities suggesting that Glew and Tresidder must satisfy me of the following interrelated and sometimes overlapping matters: that they have a " prima facie case ", even if they do not adduce evidence which would be admissible on a final hearing making out that case ... that they have "a fair chance of success" or are "fairly entitled to litigate" the claim; ... and that they are advancing a "genuine" or "bona fide" claim ... It may be that the first and second formulations are intended to cover the same ground. In Brink [ Re Brink; Ex parte Commercial Banking Co of Sydney Ltd [1980] FCA 78 ; (1980) 44 FLR 135, 30 ALR 433] Lockhart J treated (at ALR 438 9; FLR 141) the reference to a " prima facie case " ... as a reference to "a fair chance of success". ... [11] Plainly, in order to "satisfy" the Court for the purposes of par 40(1)(g), the debtor is not required to prove, as on a final hearing, the asserted entitlement to recover from the creditor. Accordingly, evidence tendered on an application to set aside is to be tested for admissibility, not as if the proceeding were one in which the debtor's claim was being finally determined, but by reference to the question whether the Court should be satisfied that the debtor has a claim deserving to be finally determined. Reference may also be made to Massih v Esber [2008] FCA 1452 at [16] [19]. But, whatever the meaning to be given to the term, it has to date been held that an action " must be something sounding in money ": Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 44 FLR 135 at 138 per Lockhart J. See also: Re Jocumsen (1929) 1 ABC 82 at 85 per Henchman J. An application seeking declaratory relief as to an entitlement to a charge on the proceeds of property has thus been said not to be a " counter-claim, set-off or cross demand ": In re A Bankruptcy Notice [1934] 1 Ch 431. See also: Massih v Esber [2008] FCA 1452 at [22] [24]. The requirement imposed by s 40(1)(g) that the " counter-claim, set-off or cross demand " be one which " could not have [been] set up in the action or proceeding in which the judgment or order was obtained " is a requirement which refers to the ability to set up the claim, set-off or demand as a matter of law. A mere failure to take advantage of an opportunity to do so does not fall within s 40(1)(g): Re Vicini; Ex parte E A Sealey &amp; Co (1982) 64 FLR 323. Fisher J there usefully summarised as follows some of the relevant authorities (at 326): The relevant words of the Act were considered by Lockhart J in Re Brink; Ex parte The Commercial Banking Company of Sydney Ltd. (1980) 44 F.L.R. 135, at p. 139, when he said: "The words 'that he could not have set up in the action or proceeding in which the judgment or order was obtained' mean 'which he could not by law set up in the action': see Re Jocumsen (1929) 1 A.B.C. 82 , at p. 85; Re A Debtor [1914] 3 K.B. 726 , at p. 730 per Avory J.; Re Stockvis (1934) 7 A.B.C 53 , at p. 57, especially per Lukin J. where his Honour said: 'I take as a counterclaim, set off or cross demand which could not be set up as one which, 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 .... Mere failure to take advantage of the opportunity can hardly be said to be inability.'" In Re A Debtor the circumstances were that, at the time of judgment, the debtor was not the assignee of a debt, which debt he in answer to the bankruptcy notice relied upon as constituting a counterclaim which he could not have set up in the proceedings. Thus at the time of judgment he could not have as a matter of law set up the counterclaim. It was nothing to the point that he might have earlier taken an assignment. At p. 730 Avory J said: "I think that upon the true interpretation of the section a debtor is entitled to set up in answer to a bankruptcy notice a counter-claim which rebus sic stantibus he could not in law have set up in the action in which the judgment was obtained, even though he could, if he had chosen, have taken steps which would have rendered the counter-claim available to him in the action. "I think it means a counter-claim which as things then stood the debtor could not set up in the action." Whether a claim " could not have [been] set up " is to be determined " by reference to legal considerations " and not " by reference to practicalities ": Re Ling; Ex parte Ling v Commonwealth [1995] FCA 1410 ; (1995) 58 FCR 129 at 132. See also: Smart v Esanda Finance Corp Ltd [2000] FCA 235 at [17] per Lee, Goldberg and Kenny JJ; Tzovaras v Nufeno Pty Ltd [2003] FCA 1152 at [34] [35] per Jacobson J; and Massih v Esber [2008] FCA 1452 at [28] [29].