CATCHWORDS Bankruptcy Act 1966 - ss.41(7) and 40(1)(g), "affidavit as to Counterclaim, Set-Off or Cross Demand" alleging a partial set-off or cross-demand against the petitloning creditor, held not an affidavit of the kind contemplated by the sections; order of sequestration made on creditor's petition. RE: WINIFRED ANNE MADELAINE HARRIS EX PARTE: ERNEST HARDING NIEMANN SWEENEY J. 19 DECEMBER 1979 IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION No. P859 of 1979 BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA Re: Winifred Anne Madelaine HARRIS a Debtor Ex parte: Ernest Harding NIEMANN a Creditor REASONS FOR JUDGMENT C.A. Sweeney J. Iv vpecenper, 1979 The petitioning creditor issued a petition returnable on 23 October 1979 in which it was alleged: "1. The debtor was at the date of the commission of the act of bankruptcy specified in paragraph 4 of this °* petition personally present in Australia. 2. The debtor is justly and truly indebted to the creditor in the sum of $5,023.06¢ for {a) an Order obtained by the creditor in the Supreme Court of Victoria on 31/5/1979 for $4,025.08¢; (b) an Order obtained by the creditor in the Supreme Court of Victoria on 25/6/1979 for $447-98¢; and, (c) an Order obtained by the creditor in the Supreme Court of Victoria on 26/7/1979 for $550-00¢. 3. I do not, nor does any person on my behalf, hold any security over the property of the debtor, or any part of it for the payment of the amount specified in the last preceding paragraph. «2-2/ 4. The debtor, within six months before the presentation of this petition, committed the following act of bankruptcy namely that she failed on or before the 17th day of September, 1979, either to comply with the requirements of a bankruptcy notice served on her on the First day of September, 1979, or to satisfy the Court that she had a counter claim, set-off or cross demand equal to or exceeding the sum specified in paragraph (a) of the bankruptcy notice." The evidence, including an affidavit by the debtor, established that the bankruptcy notice referred to in the petition was served on the debtor on 1 September, 1979. The debtor caused to be filed in the Bankruptcy Registry an affidavit sworn 17 September 1979 and headed "Affidavit as to Counterclaim, Set-Off or Cross Demand" in the following form: "1. I am the debtor named in the Bankruptcy Notice which is annexed to this my Affidavit and marked with the letter "A". The said Bankruptcy Notice was served upon me on the evening of Saturday the lst day of September, 1979. 2. I am not andebted to the judgment creditor in the sum claimed in the Bankruptcy Notice. The amount referred to in the said Bankruptcy Notice was obtained by the creditor against me on the taxing of a bill of costs before the Taxing Master, Supreme Court on the 25th day of July, 1979. 3. The costs which are the subject matter of this action were awarded against me Pursuant to the Order of Mr. Justice King of the Supreme Court of Victoria on the 3lst day of May, 1979, on the hearing of an application brought by me and the part hearing of appeals from the Orders of Master Brett and Master Barker by the said Ernest Harding Niemann in October and November, 1978. yA The order for costs against me arose out of the application No. 9511 of 1976 in the Supreme Court of Vactoria, which concerned a company known as G. & S. Taylor Pty. Ltd., which until its dissolution was a company duly incorporated pursuant to the laws of Victoria. Ata meeting of creditors of the said company on or about the 18th day of October, 1974, it was duly resolved that the said company be voluntarily wound up in accordance with the Companies Act 1961. At the said meeting a Mr. Lewis Luckins was appointed liquidator of the said company. On the said date the company was indebted to me in respect of arrears of wages and holiday pay and I had a claim in damages against the said company for wrongful dismissal. On the 28th day of November, 1974, I served on the liquidator a statutory declaration as to the proof of the said debt and claim in accordance with the Companies Act 1961. Annexed hereto and marked with the letter "B" is a true copy of the said statutory declaration. By a notice dated the 20th day of March, 1975, the said liquidator rejected my proof of debt. The said liquidator on or about the 10th day of April, 1975, admitted my proof of debt in part as a preferential debt in the sum of $2,500. On or about the 24th day of January, 1976, the liquidator died and Mr. Ernest Harding Niemann was appointed liquidator of the said company to fill the vacancy on or about the 25th day of February, 1976. On or about the 10th day of January, 1977, I verily believe that Ernest Harding Niemann admitted my proof of debt in part as to a preferential debt of $2,500. On or about the 19th day of October, 1976 I made application to the Supreme Court of Victoria pursuant to Section 279 of the Companies Act 1961 to reverse the said rejection of the balance of the said debt and claim. 10. ll. 12. On or about the lst day of December, 1977, I and a Mr. Loewenstein of Counsel on behalf of the said Ernest Harding Niemann agreed to compromise the said application on the following terms: (a) That the said Ernest Harding Niemann would admit me to prove as a creditor in addition to the debt admitted and paid of $2,500 as follows:- (i) as an unsecured creditor for the sum of $11,042; (ii) as a preferential creditor for the sum of $1,175. (b) That the said Ernest Harding Niemann and myself would consent to an order in the terms set out in paragraph (a) hereof. On the lst day of December, 1977, the Honourable Mr. Justice Harris {in Chambers) with the consent of myself and Mr. Loewenstein on behalf of Mr. Niemann, ordered in respect of the balance of the Plaintiff's claim rejected by the Defendant over and above the sum of $2,500 admitted and paid by the Defendant, and the Defendant, Ernest Harding Niemann be directed to admit myself to prove as a creditor of the company as follows:- (a) as an unsecured creditor for the sum of $11,042; (b) as a preferential creditor for the sum of $1,175. Between the date of the said order and in or about June 1978, Ernest Harding Niemann distributed and disposed of the assets of the property of the company to its creditors. In or about September 1978, the said company was dissolved. In purported payment of my said entitlement the said Ernest Harding Niemann paid in addition to the sum of $2,500 already paid to me the sum of $1,766.90 only and has failed and/or neglected and/or refused to pay me the balance of $2,500 to which I am entitled. 02 5/ 13. 14. 15. In or about the month of August 1978 and after having instructed my solicitor to make demand upon the said Ernest Harding Niemann for the said sum of $2,500 and there being neglect and/or refusal to so pay the said sum I thereupon caused to be issued through my solicitors Writ No. 5087 of 1978. I am informed and verily believe that my solicitor was able to enter judgment against the said Ernest Harding Niemann and an application was made by the said Ernest Harding Niemann to set aside judgment and this matter came on for hearing before Master Brett on the llth October, 1978. Master Brett reserved his decision and it was agreed that the Defendant would have leave to defend and the Defendant would have to pay the costs of the application. The costs of $280.00 were awarded against the Defendant. The said Ernest Harding Niemann by his solicitors then made an application pursuant to Order 14A of the Rules of the Supreme Court to have my writ struck out for want of a cause of action. This matter came on for hearing before Master Barker who dismissed Mr. Niemann's application and made an order for costs of $250 in my favour. Mr. Niemann then lodged Notices of Appeal in respect of the orders of Master Brett and Master Barker and this matter subsequently came on for hearing before his Honour Mr. Justice King on or about the First day of May, 1979. On the hearing of these appeals I made application pursuant to Order 28 Rule 11 of the Rules of the Supreme Court or alternatively within the exercise of the inherent jurisdiction of a Court to amend its orders in the event of an error to alter the consent order before his Honour Mr. Justice Harris on the lst day of December, 1977. At the end of the hearing of this matter his Honour Mr. Justice King ruled against me and ordered that I pay the said Ernest Harding Niemann's taxed costs. The questions of the appeals from Master Brett and Master Barker did not come before the Court as his Honour Mr. Justice King had to leave on circuit. This matter is therefore part heard and the amount of $530.00 being costs awarded to me have not yet been paid by the said Ernest Harding Niemann. .2 -6/ 16. A notice of appeal has been Lodged by myself and Appeal Books have now been settled. I verily believe that this matter will be heard on the lst October, 1979, against the order of his Honour Mr. Justice King. 17. I verily believe that I have a partial set-off and counterclaim against the said Ernest Harding Niemann," By an application dated 26 September 1979 the debtor sought the following orders: "1. That the time specified in Bankruptcy Notice No. 1497 of 1979 as the time for compliance with the Notice be enlarged to the 19th day of September 1979 or alternatively, until the expiration of two clear days after the decision of the Full Court of the Supreme Court of Victoria in respect of the judgment debtor's appeal from the order the subject of the said Notice. 2. Alternatively, a declaration that the affidavit of the judgment debtor sworn the 17th day of September, 1979 was filed on the 17th day of September 1979. 3. Such further or other orders directions or relief as to the Court may seem fit." On 8 October the debtor's application was by consent adjourned until 23 October, the return day of the petition, on which day by consent the application and the petition were stood out of the list generally, liberty being reserved to either party to apply to the Registrar for re- listing on a day which would permit the giving of seven days notice to the other party. Both matters were re-listed on 8 November when Mr Beaumont of counsel appeared for the petitioning creditor and Mr Walker, solicitor, announced that he had been acting for the debtor, who was present. Mr Walker stated that the Australian Legal Aid Office had notified him that legal aid would no longer be made available, that he had advised the debtor that he had ceased to act for her and that she agreed that this was so. 222 7/ The debtor then stated that she knew nothing of the application in her name until 3 October when she was asked to withdraw it and refused "to have anything to do with it". She sought an adjournment of the hearing of the petition to enable her to prepare her case. Counsel for the petitioning creditor opposed any adjournment and an application by Mr Walker that he be excused from further attendance. The debtor gave evidence in support of her application for adjournment. Mr Walker was excused from further attendance and the petition and the debtor's application were adjourned to 22 November. On that day the petition and the debtor's application were, by consent, heard together. Mr Beaumont appeared for the petitioning creditor and the debtor appeared in person. In opening,Mr Beaumont conceded that there were two outstanding orders for costs made by Masters in inter- locutory proceedings in the Supreme Court against his client aun favour of the debtor in the amounts of $250 and $280, ain respect of which orders the appeals of the petitioning creditor had not yet been heard. Mr Beaumont submitted that the affidavits of service of the bankruptcy notice, and the debtor's own admission in her affidavit proved due service of the bankruptcy notice upon her. He then turned generally to the affidavit filed by the debtor and headed "Affidavit of Counter-Claim, Set-Off or Cross Demand" and submitted that it was not "an affidavit to the effect that" she had a counter- claim, set~off or cross demand equal to or exceeding the amount payable under the final order that she could not have set up in the action or proceeding in which the orders were obtained. He conceded that she could not have set up the claim referred to in her affidavit 1n the action but based his submission that it did not answer the statutory description given in s.41(7) and s.40(1)(y) of the Bankruptcy Act 1966 -.-8/ on the fact that it did not contain any allegation of a counter-claim, set-off or cross demand equal to or exceeding the amount payable under the final order, but only referred to a claim for a lesser amount. Miss Harris conceded this fact and the Court, applying the test laid down in Ebert v The Union Trustee Company of Australia Ltd. (1960) 104 C.L.R. 346 at p. 350, upheld Mr Beaumont''s submission. The Court then heard the debtor's application for enlargement of time for compliance with the bankruptcy notice and dismissed it on the ground that it was not made until after the expiration of that time, and accordingly could not affect the commission of the act of bankruptcy alleged (see Re Grace; ex parte Castling (1931) 3 A.B.Cc. 131). Mr Beaumont then read the affidavits verifying the matters stated in the petition, the service of the petition and the fact that the debts on which the petitioning creditor relied were still owing. By Notice dated 15 November 1979 the debtor stated that she intended to rely upon the following grounds of opposition: "(a) I do not recognise the Creditor's signature as being his usual signature. (b) I deny having committed the act of bankruptcy referred to in paragraph 4 of the Petition. (c) I deny being indebted to the creditor in the sum of $5,023.06." In an affidavit sworn on the same day, the debtor deposed as follows: "1. I strongly oppose the Petition which I firmly believe 1s being used for an improper motive. 22 O/ The evidence I shall produce to the Court in support of counter claim, set off or cross demand will be as follows: $2,500 balance of wages as per compromise reached on lst $250 costs ordered by Master (a) December 1977. (b) Barker 22/11/78 (c) $280 costs ordered by Master Brett 17/10/78 (d) 17/2/78 (e) Overcharged costs taxed on Superannuation as stated on proof of debt 18/10/74 and requested by letter dated 28/1/1977." The debtor also wished to rely upon a second affidavit steps taken by her and her then "affidavit as to counter-claim, -worn by her on the same day, dealing with the solicitor to file her set off or cross demand". The contents of this affidavit had no bearing on the petition, for the reasons earlier stated in relation to it. The debtor in the course of the presentation of her case on 22 November raised a further ground that the petition was presented for what motive and that improper motive trial". She also claimed to be she described as "an improper is to stop me from going to entitled to recover damages against the petitioning creditor, because when she entered into a compromise of a Supreme Court action on 1 December 1977, his counsel, Mr Loewenstein "failed to direct Mr Justice Harris to a material fact". It transpired that the debtor had taken proceedings in the Supreme Court seeking to have the consent Order of Mr Justice Harris rectified to make it clear that the relief granted to her in that order against the petitioning creditor for $2,500. refused to make the order which was in addition to her claim Mr Justice King she sought and her appeal to the Full Court of the Supreme Court against that refusal was dismissed with costs, after a hearing extending over three days in which both parties were legally represented. The costs -10- so awarded against the debtor had not been taxed to that date. The debtor called Mr Loewenstein as a witness and questioned him about the compromise made between them on 1 December 1977. When the hearing resumed on 23 November Mr Rees Jones, solicitor, announced that for the purposes of seeking an adjournment he appeared on behalf of the debtor. The adjournment he sought was for a period of at least fourteen days in order to make an application to the Australian Legal Aid Office on behalf of the debtor, to obtain representation for her, which would not be by him, as he would not be appearing or acting for the debtor under any circumstances. Mr Rees Jones then gave evidence that he had been consulted on the previous evening by the debtor to seek legal aid on her behalf and had ascertained next morning that the only officer in the Legal Aid Office who had knowledge of the matter was absent interstate. In cross-examination he agreed that legal aid from that office previously given to the debtor had been withdrawn because of advice given by counsel and that an adjournment of the hearing of the petition had earlier been granted on 8 November. On that day the debtor had given evidence that she was making representations to the Attorney- General and to members of Parliament that she should continue to receive legal aid. Mr Rees Jones conceded that it was possible that he did not know the full facts of the matter. The application for adjournment was opposed by Mr Beaumont who relied on the history of the petition and submitted that,on the view of the facts most favourable to the debtor, there was at all material times an amount owing by her to his client of at least $795.08. He further stated that his client was not prepared to enter into any compromise of the debt owed to him or to accept any arrangement for the payment of it by instalments. ...1l/ In the light of the history of the case, and the facts which have been outlined above, the application was refused. When Mr Loewenstein returned to the witness box, the debtor examined him on the contents of an affidavit sworn by him on 8 May 1979 and filed in the Supreme Court proceedings. In the course of that examination Mr Beaumont announced that, for the purposes of the bankruptcy proceedings, he was prepared to concede that the debtor was "entitled to take into account that Mr Niemann may owe her $2,500 and to give her a credit for that $2,500. We do not admit that we owe it, but for the purposes of these proceedings, we are prepared togive her a credit in that sum", The debtor then made it plain that she was not prepared to conduct her case on the basis of this concession, but wished to establish as a fact that she was entitled to the sum of $2,500. In answer to Mr Beaumont, Mr Loewenstein said that the contents of his two affidavits were true and correct and Mr Beaumont tendered them in evidence. The debtor then closed her case and made her final submissions. In Mr Loewenstein's affidavit of 30 April 1979, he stated: "I deny that 'the entire settlement negotiations and the agreement reached was in relation to the balance' of Miss Harris' claim 'over and above the amount of $2,500' as set out 1n paragraph 23 of the Harris affidavit." In his affidavit of 8 May 1979 he stated that after returning to the Supreme Court, having negotiated a settlement of the appeal by the debtor, in which she was described as "the first named Applicant": ...12/ - 12 - "I recall initially outlining to his Honour the terms and basis upon which the first- named Applicant's appeal had been settled and what orders were being sought. Having recently read the transcript of the proceedings before his Honour Mr Justice Harris 1n my opinion the terms of the Orders made by him were in the identical terms as I outlined them to him and to which the firstnamed Applicant consented." I accepted Mr Loewenstein's evidence, I then stated that I was satisfied with the proof of the matters stated in the petition, with the proof of service of the petition and with the fact that the debt on which the petitioning creditor relied was still owing, in the sense that, at all material times, there had been and still was an available debt within the meaning of the bankruptcy law and that I was satisfied that it was a proper case in which to make an order of sequestration. I was not satisfied that the debtor was able to pay her debts or that for other sufficient cause a sequestration order ought not to have been made. The debtor failed to establish any of the grounds of opposition on which she had relied. Accordingly an order was made for the sequestration of her estate. It was further ordered that the costs of the petitioning creditor of and incidental to the petition and of and incidental to the debtor's applications, including reserved costs, would be in accordance with the statute. J CATCEROG Bankruptcy Act 1966 ~- s3.41(7) and 40(13 Vie), "Affidavit as to Counterclaim, Set-Ori cr Cross Denand" alleging a rari i set-off cross-denaii against the petstiening crc held not an affidavit of the rind conterp by the sections; order of seme stration 7 on creditor's petition. RE: WINIFPRD ANNE MADNLAGIN TaARRIGS EX PARTE: CRNEST HARDING ii Vet SWEENLY J. 19 DECEMBLF 1979 oT dator, hated IN THE FEDERAL COUPT OF AUSTPALIA GEURRAL DIVISION No. P859 of 1979 BANKRUPTCY DISTRICT OF THE SIATE OP VICTORTA Re: Winifred Anne Madelasne HARRLS a Debtor Ex parte: LUrnest Harding NinMANN a Creditor REASONS TOP JUDGMENY r C.A. Sweeney cd. TF Becenber ~~ C979 The petitioning creditor issued a petition returnable on 23 October 1979 in which it was alleged: "1. The debtor was at the date of the commission of the act of bankruptcy specified in paragraph 4 of this * petition personally present in Australia. 2. The debtor is justly and truly indebted to the creditor in the sum of $5,023.06¢ for (a) an Order obtained by the creditor in the Supreme Court of Victoria on 31/5/1979 for $4,025.08¢; (b) an Order obtained by the creditor in the Supreme Court or Victoria on 25/6/1979 for $447-98¢; anc, (c) an Order obtained by the creditor aun the: Supreme Court of Victoria on 26/7/1979 for $55u-00¢. 3. I do not, nor does any person on my behalf, hold any security over the property of the deotor, or any part of 1t for the payment of the amount specified in the Lust preceding paragraph. orr-= The evidence, including an affidavit by the do-bvor, The debtor, within six ronths before the presentation of this petition, committed the following act ol bankruptcy namely that she fLarled on or betore the J7th duy of SeptenLer, 1979, either to conply with the requirements of a bantruptcy notice served on her cn the First day of September, 1979, or to satisfy the Court that she had a counter claiil, set-off or cross demand cyqual to or excecding the sum speciiied in paragraph (a) of the pankruptcy notice." established that the bankruptcy notice referred to in the petition was served on the debtor on 1 September, 1979. The debtor caused to be filed an the Dankrupticy Registry an affidavit sworn 17 September 1979 and heaced "Affidavit as to Counterclaim, Set-Off or Cross Denand" the following form: "1, I am the debtor numed in the Bantrruptecy Notice which 1s annexed to this my Affidavit and marked witn the lettcr "A". The said Bankruptcy Notice was served upon me on the evening of Saturday the lst day of September, 1979. I am not indebted to the judgment creditor in the sum claimed in the Bankruptcy Notice. 'The amount refcrred to in the said Bankruptcy Notice was obtained by the creditor against me on the taxing of a bill of costs beloie the Taxing Master, Supreme Court on the 25th day of July, 1979. The costs which are the subject mattur of this action were awarded ayain>t me pursuant to the Order of Mr. Justice King of the Supreme Court of Victoria on the 3lst day of May, 1979, on the hearing of an application brought by, me and the part hearing of appeals from the Orders of Master Brett and Haster Varher by the said Ernest Harding Naemann 13 October and Novembe:, 1978. eee in é The order for co-ts agains' ue arose out of the application No. 9511 of '9746 an the Supreme Court of Victoria, whicn concerned a company rnown as G. & S&S. Taylor Pty. Ltd., witzch unt1! its dissolution was a compuny daly incoclorated pursuant to the laws or Victori a meeting of creditors of the sez: on or about the 18th da, of Ocvoper, it was duly resolved that tre sai company be voluntarzly wound up 1 accordance with tue Companies 7 At the said meeting a Mr. Lcwis Luckins was appointed Llicurdator ot the said company. ut (o] (e) ore s+ Ho ra] a On the said date the company was iundchtca to me in respect of arrears of wayes and holiday pay and J had a clair in aamages against the said company tor wrongfal dismissal. On the 28th day of Novemper, 1974, I served on the liquicatcr a statutory declaration as to the proof of the said debt and claim in uccordance with the Companies Act 1961. "nnarcd hereto and marked with the letter "kh" 15 a true copy of the said statutory declaration. ' By a notice dated the 20th day of March, 1975, the said liduidator rejected my Lroolt of debt. The said liquidator ca or about the 10th day of April, 1975, admitted my proof of debt ain part as a prererentbial Gebt in the sum of $2,500. On or apoure the 24th day of January, 1976, the Liquidator died and Mr. Ernest Harding Niemann was appointed liquidator of the said company te fill the vacancy v1 or abovt the 25th aay of Tebruary, 1976. On or about the 10th day of Januar,, 1977, I verily belireve that Ernest Hardina Niemann admitted my proof of Cebt in part ary as to a preferential Gebt of $2,500. On or about the 19th day of October, 1976 I made application to the Supreme: Court of Victoria pursuant to Sectien 275 of the Companies Act 1961 to reverse the seid rejection of the bulance or the saad dent and claim. 10. li. 12. On or about the Ist day of Decemh21, 1977, I and a Mr, Loowanstein of Counsel on behalf of the said Zrnest Harding Nremann agreed to comprcmise the said application on the following terms: (a) That the said Ernest Yarding Niemann would admit mae to prove as a creditor in addition to tle debt admitted and paid of $2,500 as follows:- (i) as an unsecured creditor for the sum of $11,042; (ii) as a preferential creditor for the sum of $1,175, {b) That the said Trnest Harding Nienann and myself would consent to an order in the terms set out in paragraph (a) hereof. On the lst day of December, 1977, the Honourable Mr. Justice Harris (1n Chambers) with the consent of myself and Mr. Loewenstein on behalf of !'ly. Niemann, ordered in respect of the balance of the Plaintiff's claar reyected by the Defendant over and above the sum of $2,500 adritted and paid by the Derenuaut, and the Leferdant Ernest Harding Niemann Le directed to eamit myself to prove as a creditor of the coavwpany as follows:- (a) as an unsecured creditor for the sum of $11,042; (b) as a preferential creditor for the sum of $1,175. Between the date of the said order and in or about June 1978, Ernest Harding Niemann distributed and disposed of the assets of the property of the company to its creditors. ln or about September 1978, the said company was dissolved. In purported payment of my said entitlement the said Irnest Harding Niemann paid in addition to the sum of $2,500 already paid to me the sun of $1,766.90 only ana has failed and/or neglected and/or refused to pay me the balance of $2,500 to which I a» entitled. 13, 14. 15. In or about the month of Ausnse 1978 and after havang instructed my solicitor to make acmand upon tne said Ernest diarding Niemann for the sa.c sum of $2,500 and there being negleci and/or refusal to so pay the said sum T thereupon caused to be issucd through my solreitors Writ No. 5087 of 1978. I am anformed and verily believe thac my solicitor was able to enter judgment against the said Ernest Hardirg Wresann and an application was made bv the suzd Ernest Harding Nierian. to set as de judgment and this matter cate on for hearing before Master Brett cn the ilth October, 1978. iHaster Brett reserved his decision and 16 was agreed that the Defendant would have leave to defe.id and the Defendant would have to puy th: cosls of the application. "he costs of S200.90 were awarded against the Leftendant. The said Ernest Hardirg Wicsaann by his solicitors then made an applieatiop prrsvant to Order LjiA of the hules of the Suproms Court to have my writ struck our for 'ent of a cause of action. Tnis matter ca? on for hearing before Master Barker wie dismissed tir. Niomann's application ant made an order for costs of $250 in my favour. Mr. Niemaun then loty.d Notiees of Appeal in respect otf the orGeis ¢3 Master Brett and Master Barkor and this matter subsequenti:y came on for hoariny before his Honour Mr. Justice King on or about the First day of Nay, 1973. On che hearing of these appeals I rada ayolicattion pursuant to Order 28 Pule 11 of the Rules of the Supreme Court or alternatively within the exerere: of the inherent jurisdiction of © Court to emend its oidirs an the event of an error to alter tne consent order before his Honour Mir. Justice Narris on the ist day of becemoer, 1977. Ac the end of the hearing of this matror ris Honour Mr. Justive King ruled aygrinst me and ordered that L pay the satd Erne Harding Niemann's taxcd costs Lhe quests vc ' of the appeals from Master Brett and hucter Honour Mr. Justice Fing nad 1o Leave con Gircujt. This matter as therefore part heard and the anount of $530,600 ceing cost. awarded to me have not yet been paid b, the said Ernest Harding Nicmann. ' \ Barker did not. cons before tne Court as as I \ i To eneime 16. A notice of appeal has been lodged by wyself and fipeal Boole have now been settled. T verily beliewe that this matter will be heard on the lst Oclober, 1479, agsinst the order of his Honour lit. Justice King. 17. I verily believe that I have a partral set-off and counterclaim agains: che said krnest Harding Nicmann," By an application d.ted 26 Sextomber 1979 the debtor sought the following orfiers: "1. That the time specified in Bankruptcy Notace No. 1497 of 1979 ay the time for compliance with the hotice be enlaryed to the 19th day of Septembor 1979 or alternatively, witil the expiration of two clear days after the decision of the Full Court of tne Suprere Court of Victoria in respect of the judgnert debtor's apneal fro: the order the subject of the said Necice. 2. Alternatively, a declaration thar tre affidavit of the judgment debtor svorn the 17th day of September, 1979 vas filed on the 17th day of September 1979. 3. Such fucther or other orders directions or relief as to the Court way stom fat." On 8 October the debtor's application was by consent adjourned until 23 October, the return day of the petition, on which day by consent the application and the petition were stood out of the list gencrally, likert: being reserved to either party to apply to tho Reyistrar for re- listing on a day which would permit the giving of seven days notice to the other party. Both matters were re-listed on 8 Uoveirbe: when Mr Beaumont of counsel appearcd for the petitioniny creditor and Mr Walker, solicitor, announced that he had been ucting for the debtor, who was present. Mr Walker elated that the Australian Legal Aid Office had notified him that legal aid would no longer be made availaple, that he had advised the debtor that he had ceased to act tor her and that she agreed that this was so. The debtor then statca ther she knew nothin ot the application in her name until 3 Ccrover when she was asked to withdraw it and refeset "to aeve anyehiung vo de rth 1t". She sought an adjournment of the hearing oF che petatlior to enable her to prepare her cate. Counsel for tle petitionrag creditor orposed any adjournment and +n axplication by Mr Walker that he bo excused from furtlir attendance. Th debtor gave evidence in support of her application for adjournment. Mr Walker was exenses from further attendance and the petition ard the debtor's application were adjourned to 22 November. On that day the petition ane the debtor's applicoticn be] c ray re] Tv O te we lary ialB were, by consent, heard together. Mr Becuwno the petitioning creditor and the debto: cppeared ir person. In opening,Mr Bearmont core. ecd that there were two outstanding orders for costs mide by Masters ip aintcr- locutory proceedings in the Suprere Court ag@inst his clicne un favour of the debtor in the amounts of $250 and $280, in respect of which orders the appeals ef Lhe patiticning creditor had not yet been heard. Mr Bearmont submicted that the affidavits of service of the bankruptcy notice, and trac debtor's own admission an her aifidavit proved due service or the bankruptcy notice upon her. He ther turned generally to the affidavit filed Ly the debtcr and heased "Affidavit of Counter-Claim, Set-Off or Cross Lemand" and submitted chat it was not "an affidavit to the effect that" she had a counter - claim, set-off or cross demand equal to or cxceeding the amount payable under the final crder that she conla not have h the orders were a 1) ct = 'S te Lo] c¢ o ic)Q Cc B-c A pe] n [e) a o roo EQ BH a = 1°] obtained. He conceded that she could not have cut up the claim referred to in her afficavit in th: action bit hared his submission that it did not ansver the statutory de.cription given in s.43(7) and s.40(1) (4) of the Danka uptr 2 3/ on the fact that 1t did not conttin any allegation of a counter-claim, set-off or cross demand equal to or ene zeding the amount payable under the final order, but only re"ocired to a claim for a lesser amount. 'iss Harris conceded this fact and the Court, applying the test Jaid down in Mbert v The Union Trustee Company of Australia Ltd. (1960) lud C.L.r, 346 at p. 350, upheld Mr Beaymoat's submission. The Court then heard the debtor's application for enlargement of time for complieuce with the bankruptcy notice and dismissed it on the ground that it was not made until after the expiration of that time, and accordingly could not affect the commission of the act of bankruptcy allowed (see Re Grace; ex parte Castling (1931) 3 A.B.C. 131). Mr Beaumont then reac the affidavits vesi*ying tre matters stated in the petition, the service of the velition and the fact that the debts on which the petitioning creditor relied were still owairg. eo By Notice dated 15 Nevember 1979 the deLtor stated that she intended to rely upon the following grounds of opposition: "(a) I do not recognise the Creditor's Signature as being his usual Signature. {b) I deny having conpztted the act of bankruptcy refcrred to in paragraph 4 of the Petition. (c) I deny being indebted to the creditor in the sum of $5,023.06." In an affidavit sworn on the same day, tl.c debtor deposed as follows: "1. I strongly oppose the Petition which I farmly believe 145 being used for an improper motive. 2, The evidences T shall predace to the Court 1n support of counters claim, set ofc or cross uewand wail be as follows: {a} $2,500 balance of waces as per compromise boarned on lst December 1977. (b) $250 costs ordered by Master Barker 22/11/78 (c) $280 costs ordered by Master Brett 17/10/76 (da) Overcharged costs tannd on 17/2/78 (e) Superannuation as stated ca proof of debt 18/19/74 ona requestcd by Jetter uated 28/1/1977." The debtor also wished to 1ely upon a second affidavit worn by her on the sawe day, dealany with thao steps taken by her and her then solicitor to file her "affidavit as to countez-claim, set off or erass Genare", The contents of this affidavit had no beeriiug on the penrtize, for the reasons earlier stated in xelation to it. The debtor an the course of the presenteticn of her cause on 22 November raised a further ground that the iu petition was presented for what she described as "an irproper motive and that improper motive 15 to stop me from gaint to trial". She also claimed to be entitled to recover Jur against the petitioning creditor, because when she entered into a compromise of a Supreme Court action con 1 Deca. dor 1977, his counsel, Mr Loewenstein "failed to direct Mr Juulice Harris to a material fact". It transpireu that the @wbtor had taken proceedings in the Supreme Court scekiiy to huve the consent order of fir Justice Harris rectified to make 1t clear that the relict granted to her in that order was in addition to her claim against the petitioning creditor for $2,500. Mr Justiuce Kiang refused to make the order which she sought and her ap, 2nb to the Full Court of the Supreme Court avatnst that refusal wos dismissed with costs, after a healing extending overt three days in which both partios were legally represented. The costs ron ts r- ' . so awarded against the debtor had not becn tarred cto that The debtor called tr Loewenstein as a wilavse and questioned him about the compromise mude between toca on 1 December 1977. When the hearing resumed on 23 November Mr Recs Jones, solicitor, announced that for ths purposes of eeekine an adjournment he appeared on bohulf of the debtor. The adjournment he sought was for a period of at least fourtecn days in order to make an application to the Austrujian Legal Aid Office on behalf of the cebtor, to obtain revetscntation for her, which would not be by him, as he would acr he appearing or acting for the debtor under any cirecvmstances. Mr Rees Jones then gave evilenca that he nad bren consulted on the previous evening by tne dcenmtor ta seek Lecai. aid on her behalf and had ascertained next morning that the bee only officer in the Legal Aid Office who had knewluedge of the matter was absent interstate. In cross-eamination he ugived that legal aid from that office previously given to the debtor had been withdrawn because of advice given by counsel and that an adjournment of the hearing of the petition nad carlier been granted on 8 November. On that day the cebtor had given evidence that she was making representations to th2 Attorney- General and to members of Parliament thac she should coaciive to receive legal aid. Mr Rees Jones conceded that it was possible that he did not know the full facts of the ratter. The application for adjournincnt was opposed bv Mr Beaumont who relied on the history of the petition and submitted that,on the view of the facts most favourable te the debtor, there was at all material tistics an amourt owing by her to his client of at least $795.03. He furche,r stated that his client was not prepared to enter anto any, compromise of the debt owed to him or to accept any arrange cnt for the payment of -t ky anstalments. ..ll/ In the light of the history of the cease, ani the facts which have been outlined abuve, the a ppitcation wes refused. When Mr Loewe nsteir recurned to the vweeress wo... the debtor exaained him on Ene contents of an affidavit sworn Ly him on 8 May 1979 and filed an the Suprem Court proceedings. Tn the course of that examination Mr Beaumont announced that, for thuv purposes of th: banlrustey proceecsigs, cl t i £ co he was prepared to concede that the Gebtor was "en take into account that Ir Niemaun ray owe ber $2,5 give her a credit for that $2,500. We do cv. admit that we owe it, but for the purpeses of cthese procasdings. ve ase prepared togive her a credit in that sui", The debtor then made it plain thauc she was not prepar:d to conduct her case on tho basis cf this concussion. but wished to cstablish as a fact that she vas entitled to ihe sum of $2,500. In answer to Mr Beaument, itr Loayvenetein said that the conten-:s of his two affidavits were true and correct and Mr Beaumont tendered them in evidence. a The debtor then closea her case and rad2 her final submissions. In Mr Loewcnstein's affidavit o. 30 April 1979, he stated: "T deny that 'the entire settlement negotistions and the agreenent reached was in relation to the balance' of Miss Harris' claim 'over ami apove the omount of $2,500' as set out in paragraph 23 of the Harris affidavat." In his affidavit of 8 May L979 nz Stated thar after returning to the Supreme Court, having neyvtiated a settlement of the appeal by the debtor, in which she was described as "the farst named Ap»licant": weal f "T recall initially outlining to his Nonour the terms and basis upon which the f1rrst- named Applicant's appeal had veen setticd and what orders were being sought. Ifayind recently read the transcript of the 'proceedings before his Honour Mr Justice Harris 2m my opinion the Lerns of the Orders made by him were in the identical terms as I outlined them to him and to which the firstnamed Applicant consented." I accepted Mr Loewenstein's evidence. I then stated that I was satisficd with tne proof of the matters stated in the petition, with the procf of Service of the petition and with the fact that the debt on which the petitioning creditor relied was still owinda, in the sense that, at all material times, there had been and still was an available debt within the meaning of the bankruptcy law and that I was satisfied that it was a proper case in which to make an order of sequestration. ! was not satisfied that the debtor was able to pay her debis or that for other sufficient cause a scquestration order ought not to have been made. The debtor fa1led to cstablish any of the grounds of opposition on which she had relied. Accordingly an order was made for the senuustlation of her estate. Lt was further ordered that the costs of the petitioning creditor of and incidental to the petition and of and 1uncidental to the debtor's apj:lications, including reserved costs, would be in accordance with the statute.