Re Muirhead, George Arthur Robert & Anor Ex Parte Commonwealth Bank of Australia [1996] FCA 936

IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) No. QN 829 of 1995 BANKRUPTCY DISTRICT OF THE ) STATE OF QUEENSLAND ) RE: GEORGE ARTHUR ROBERT MUIRHEAD and STEPHANIE SUSAN MUIRHEAD EX PARTE: COMMONWEALTH BANK OF AUSTRALIA MINUTES OF ORDER JUDGE MAKING ORDER: Spender J DATE OF ORDER: 14 October 1996 WHERE MADE: Brisbane THE COURT ORDERS THAT: 1. The application filed 19 September 1995 is dismissed; and 2. The applicants on the application filed 19 September 1995 are to pay the respondent's costs on the application, including reserved costs, 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 ) No. QN 829 of 1995 BANKRUPTCY DISTRICT OF THE ) STATE OF QUEENSLAND ) RE: GEORGE ARTHUR ROBERT MUIRHEAD and STEPHANIE SUSAN MUIRHEAD EX PARTE: COMMONWEALTH BANK OF AUSTRALIA CORAM: Spender J DATE: 14 October 1996 PLACE: Brisbane REASONS FOR JUDGMENT This application raises orthodox questions concerning the provisions of s 41(7) of the Bankruptcy Act 1966 ("the Act") but which questions fall for determination in what seems to me to be against a quite unorthodox background. On 19 September 1995, George Arthur Robert Muirhead and Stephanie Susan Muirhead ("the Muirheads") made application for orders: " 1. That the Bankruptcy Notice herein be set aside; 2. A declaration that the Court is satisfied that the Applicants have a counter-claim, set-off or cross demand within the meaning of section 40(1)(g) of the Bankruptcy Act. " The order sought in paragraph 1 of that application appears, from what is said by Mr Myers of counsel for the applicants, to be based on, effectively, what is sought to be relied upon under the second order sought. It is therefore sufficient, for present purposes, to consider whether the Court is satisfied that the applicants have a counter-claim, set-off or cross demand within the meaning of s 40(1)(g) of the Act. Section 41(7) of the Act provides: " Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has filed with the Registrar an affidavit to the effect that he 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. " The reference to "a counter-claim, set-off or cross demand" as is referred to in s 40(1)(g) of the Act is a reference to "a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he could not have set up in the action or proceeding in which the judgment or order was obtained." The questions on the present application include questions of whether, firstly, the Muirheads have a counter-claim, set-off or cross demand against the Commonwealth Bank of Australia ("the CBA"). Secondly, whether the decision of the Court of Appeal dismissing an appeal from a judgment of Thomas J in the Supreme Court of Queensland giving summary judgment for the bank against the Muirheads in the sum of $1,722,984.49 is a final judgment. Thirdly, whether the counter-claim, set-off or cross demand propounded by the Muirheads could have been set up in the action in which Thomas J gave the judgment the subject of the bankruptcy notice. Finally, and as it turns out, most importantly, whether before the expiration of the time fixed for compliance with the requirements of the bankruptcy notice, the debtor had filed with the Registrar an affidavit to the effect that they had such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g) of the Act. On 5 June 1995, Thomas J ordered, in response to an application by the CBA for summary judgment against the Muirheads: " The Plaintiff do recover against the Defendants in the sum of ONE MILLION, SEVEN HUNDRED AND TWENTY-TWO THOUSAND, NINE HUNDRED AND EIGHTY-FOUR DOLLARS AND FORTY-NINE CENTS ($1,722,984.49) with costs of the action to be taxed. " This judgment, as I say, was in response to the application by the CBA for summary judgment in the sum I have mentioned for money lent. That claim was for the balance due under crediting proceeds of a receiver's sale for the Muirheads' properties. I use the words "receiver's sale" because that is how it was characterised by Thomas J in his reasons given on 5 June 1995. In those reasons, his Honour said: