Gomez v State Bank of NSW Ltd [2001] FCA 1059

FEDERAL COURT OF AUSTRALIA

Gomez v State Bank of NSW Ltd [2001] FCA 1059

BANKRUPTCY – whether applicant entitled to an order setting aside a bankruptcy notice on the ground that he has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt upon which the bankruptcy notice was founded – whether mortgagee exercising a power of sale recklessly or wilfully sacrificed interests of mortgagor Bankruptcy Act 1966 (Cth) s 41(7) ss 40(1)(g), 41(7) Ebert v The Union Trustee Company of Australia Ltd (1960) 104 CLR 346, considered Guss v Johnstone [2000] HCA 26 171 ALR 598, applied State Bank of NSW v Chia [2000] NSWSC 552, considered Kennedy v De Trafford [1897] AC 180, considered Hawkesbury Valley Developments Pty Ltd v Custom Credit Corporation Ltd (1995) NSW Conv R 55-731, considered Stone v Farrow Mortgage [1999] NSWCA 435, applied JOSEPH WENCESLAUS GOMEZ v STATE BANK OF NEW SOUTH WALES LIMITED N 7697 of 2000 BRANSON J SYDNEY 7 AUGUST 2001

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 7697 of 2000

BETWEEN: JOSEPH WENCESLAUS GOMEZ

APPLICANT

AND: STATE BANK OF NEW SOUTH WALES LIMITED

RESPONDENT

JUDGE: BRANSON J

DATE OF ORDER: 7 AUGUST 2001

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: The application be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 7697 of 2000

BETWEEN: JOSEPH WENCESLAUS GOMEZ

APPLICANT

AND: STATE BANK OF NEW SOUTH WALES LIMITED

RESPONDENT

JUDGE: BRANSON J

DATE: 7 AUGUST 2001

PLACE: SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION 1 The applicant ("Dr Gomez") applied to the Court on 4 August 2000 under s 41(7) of the Bankruptcy Act 1966 (Cth) ("the Act") for an order setting aside a bankruptcy notice served on him on 15 July 2000 on the ground that he has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt upon which the bankruptcy notice is founded. It is not disputed that if Dr Gomez has a counter-claim, set off or cross demand against the respondent, State Bank of New South Wales Ltd ("the Bank"), the cross-claim, set-off, or cross demand could not have been set up in the proceeding in which the judgment was obtained as it arose, if at all, out of circumstances that occurred after the date of the judgment debt (see s 40(1)(g) of the Act). 2 Dr Gomez asserts that properties held by the Bank as security for his indebtedness were sold by the Bank for sums which represented a gross undervalue of the properties. On this basis Dr Gomez contends that the Bank, as mortgagee exercising a power of sale, acted recklessly or wilfully sacrificed the interests of Dr Gomez, the mortgagor. 3 I have concluded, for the reasons set out below, that the bankruptcy notice served on Dr Gomez on 15 July 2000 should not be set aside.