Case: In re Judd, Ex parte Pike (1924) 24 SR (NSW) 537
Outcome: followed
The objective of the legislature in providing for a bankruptcy notice to be set aside where a judgment debtor has a " counter-claim, set-off or cross demand " is " to prevent a judgment creditor from pursuing bankruptcy proceedings when, as between himself and the judgment debtor, the balance of account is in favour of the judgment debtor ": In re Judd, Ex parte Pike (1924) 24 SR (NSW) 537 at 540 per Maughan AJ. See also: Van Leeuwen v Bank of Western Australia Ltd [2001] FCA 1826 at [14] per French J. 23 In In re Judd, Ex parte Pike, supra, Maughan AJ observed that the word " counter-claim " most probably refers to " those claims which might be the subject of a counter-claim in equity "; the term " set-off " was said to refer to " those claims which might be the subject of a set-off at common law ". And the term " cross demand " was said to be " not a technical term and must ... refer to claims other than those which would be comprised in the two expressions 'counter-claim' and 'set-off' ": (1924) 24 SR (NSW) 537 at 539. An " unrestricted meaning ", it was said, was to be given to the word " cross demand " (at 540). The meaning of each of these terms was also explored in In re A Bankruptcy Notice [1934] 1 Ch 431. Declaratory relief sought in the Chancery Division as to an entitlement to a charge on the proceeds of property was held not to be a " counter-claim, set-off or cross demand ". Lord Hanworth MR there observed that " set-off " was " a word well known and established in its meaning " (at 437). Of the term " cross demand " it was observed (at 438): I turn, therefore, to what to my mind is the wider word, "cross-demand." If a cross-demand is only to be interpreted as meaning something which could have been introduced into the action by way of counterclaim, it adds nothing to the word "counterclaim." "Cross-demand" seems to me to be a word introduced in order to give a wider ambit to the meaning of these claims, something that would not be described, certainly, as a set-off, something that could not have been brought in the action, something that still lies outside a counterclaim, but is of a nature which can be specified and which is of such a nature that it equals or exceeds the amount of the judgment debt. I do not desire to say what "cross-demand" may include, but it is not difficult to say that it does not include a claim of such uncertain nature as appears in these Chancery proceedings. That claim does not appear to be one which it would be proper to describe as a cross-demand; it is a claim of right which may inure ultimately for the benefit of the judgment debtor. Therefore, it appears that there is no sufficient ground for setting aside this bankruptcy notice; the bankruptcy notice stands good and must be complied with. Romer and Maugham LJJ delivered separate judgments but agreed with Lord Hanworth MR. 24 A claim for unliquidated damages for breach of contract can fall within the term " cross demand " ( Re Griffin, Ex parte Soutar (1890) 1 BC (NSW) 29) ; as can a claim for unliquidated damages for a tort ( In re Judd, Ex parte Pike , supra at 539 40). A claim for relief under the Industrial Relations Act 1996 (NSW), being a claim that the creditor pay the debtor any money that may be found owing under an arrangement as varied by the Industrial Relations Commission may also be a cross-claim or counter-demand: Re Zakrzewski; Zakrzewski v Rodgers [2000] FCA 1187 at [33] [34], [2000] FCA 1187 ; 178 ALR 694 at 704 5 per Madgwick J. A " cross demand " need not have any connection with the cause of action out of which the judgment debt arose: cf In re a Debtor [1914] 3 KB 726. A judgment debtor is thus able to " buy up a claim against the judgment creditor in order to have a 'cross demand' ": In re Judd; Ex parte Pike (1924) 24 SR (NSW) 537 at 540 per Maughan AJ.