Re Dossel, Bruce Frederick & Anor v Ex Parte Stonemaster Quarries Pty Ltd & Anor [1995] FCA 945

IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND No. QN1573 of 1995 RE: BRUCE FREDERICK DOSSEL and MARION MARGOT ELMA DOSSEL (Judgment Debtors) EX PARTE: STONEMASTER QUARRIES PTY LTD ACN 010 282 514 Respondent AND: BRUCE FREDERICK DOSSEL and MARION MARGOT ELMA DOSSEL (Applicants)

JUDGE MAKING ORDER:Cooper J WHERE MADE: Brisbane DATE OF ORDER: 17 November 1995

MINUTES OF ORDER THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicants pay the respondent's costs of and incidental to the application to be taxed if not agreed. Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND No. QN1573 of 1995 RE: BRUCE FREDERICK DOSSEL and MARION MARGOT ELMA DOSSEL (Judgment Debtors) EX PARTE: STONEMASTER QUARRIES PTY LTD ACN 010 282 514 Respondent AND: BRUCE FREDERICK DOSSEL and MARION MARGOT ELMA DOSSEL (Applicants) CORAM: Cooper J PLACE: Brisbane DATE: 17 November 1995

REASONS FOR JUDGMENT The court has before it an application by Mr and Mrs Dossel ("the judgment debtors") which seeks :- (a) to set aside a bankruptcy notice issued on the application of Stonemaster Quarries Pty Ltd ("Stonemaster"); (b) to set aside the Magistrates Court judgments on which the bankruptcy notice is founded; and (c) a declaration that the judgment debtors have a counterclaim, set-off or cross-demand of the kind referred to in s.41(7) of the Bankruptcy Act 1966 (Cth) ("the Act"). It should be immediately noted that the judgment which the judgment debtors seek to have set aside was a summary judgment obtained in the Magistrates Court at Beenleigh. It is not a judgment which can be set aside by this court. There is a difference between setting aside a judgment and acting upon the judgment for the purposes of the bankruptcy jurisdiction. The question of acting on the judgment for the purposes of the bankruptcy jurisdiction does not arise today. The only question which arises is whether or not, within the terms of s.41(7) of the Act, the judgment debtors had a counterclaim, set-off or cross-demand at the time that the judgment arose which they were unable to set up at that time. The material which has been filed and supplemented on the hearing includes affidavit material placed before the Magistrate on the summary judgment. The material sets out the basis of a claim on the part of Edberg Pty Ltd (now in liquidation) ("Edberg") or against Stonemaster Quarries Pty Ltd for an amount of approximately $50,000.00 - $70,000.00 in relation to defective materials of work. The claim was not advanced by Edberg at the time. Edberg was the principal debtor in relation to the supply of goods and services from Stonemaster. The claim raised in this material was available before the Magistrate and could have been litigated provided that it fell within the jurisdiction of the Magistrates Court or that the proceedings were removed to a court with jurisdiction to entertain the claim in the absence of an abandonment of the excess over the monetary jurisdiction of the Magistrates Court. That did not occur. The Magistrate gave reasons which indicate that he took the view that the claim or cross-claim of Edberg was properly to be litigated by that company and not by the judgment debtors. I am not sure that he was correct in that view. Indeed, I think there are strong reasons to believe that they may, as guarantors, have been entitled to meet a claim based on the guarantee by raising any substantive defence of cross-claim or set off available to the principal debtor. On the face of his brief reasons, part of the Magistrate's reasoning was that the claim was not for a liquidated amount or had not been formulated. However, in my view, that does not mean if the claim was otherwise available that it could not have been litigated if appropriate orders had been made either for the removal of the claim to a higher court or for the balance or excess to be abandoned. The judgment debtors also complain that arrangements had been entered into by other companies under their control and by the creditors making available securities over real property in satisfaction of companies, including the principal debtor. That may have been a matter of substantive defence, but it is not a matter amounting to a counter-claim set off or cross-demand which equals or exceeds the amount of the judgment debt as required by s.41(7) of the Act. Therefore, to the extent that relief is sought under s.41(7), it has not been shown that there was a relevant cross-claim set off or cross-demand which was not then available and which could not then have been litigated. It does not assist to point to the fact that the Magistrate wrongly refused to entertain it at the hearing. The Magistrate's judgment has not been appealed against. In my view, the appropriate remedy, if it is contended (and it is) that the Magistrate has made some demonstrable error of law, is to appeal against the judgment. It should be noted that the issues of estoppel or some compromise agreement between Stonemaster, companies under the control of the judgment debtors and the creditors generally does not arise on this application. It may nonetheless arise in relation to proceedings at a later stage, or it may be a matter to be further litigated in any appeal from the Magistrate's judgment. I do not wish to encourage anybody to take any action in this matter without getting some legal advice. I think Mr and Mrs Dossel's interests are best served by having some legal assistance and advice in relation to litigating this matter. The application today will be dismissed and I will order the applicants to pay the respondent's costs of and incidental to the application to be taxed, if not agreed. THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicants pay the respondent's costs of and incidental to the application to be taxed if not agreed. I certify that this and the preceding three (3) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper. Date: 17 November 1995 Associate