Case: James v Abrahams (1981) 51 FLR 16
Outcome: followed
41(1)(a), (2) and (7) of the 1966 Act provides as follows: Bankruptcy notices (1) An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor: (a) a final judgment or final order that: (i) is of the kind described in paragraph 40(1)(g); and (ii) is for an amount of at least $2,000... ... (2) The notice must be in accordance with the form prescribed by the regulations. ... (7) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied. Section 41(7) operates as an " automatic extension of time for compliance with the bankruptcy notice until the court can determine whether it is satisfied by the debtor that the debtor has a counterclaim, set-off or cross demand of the type referred to in s. 40(1)(g) ": cf James v Abrahams (1981) 51 FLR 16 at 21 per Deane and Lockhart JJ. Section 41(1) provides that a bankruptcy notice may be issued where there is a " final judgment " of the kind described in s 40(1)(g) and, if the bankruptcy notice is to be set aside, s 41(7) requires the Court to be " satisfied that the debtor has ... a counter-claim, set-off or cross demand " of the kind set forth in s 40(1)(g). Numerous decisions of this Court have addressed the requirement that a Court must be " satisfied " that a debtor has a counter-claim, set-off or cross demand. 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.