Bassal v CMC Lawyers

Link copied
Case Copied 22 min read

FEDERAL CIRCUIT COURT OF AUSTRALIA

Bassal v CMC Lawyers [2021] FCCA 424

File number(s): SYG 2690 of 2018
SYG 1441 of 2019
Judgment of: JUDGE DRIVER
Date of judgment: 8 April 2021
Catchwords: BANKRUPTCY – Application to set aside bankruptcy notices – asserted cross demand – consideration of the opportunity said to have been lost by the respondent’s alleged negligence and the value of that opportunity – applications dismissed.  
Legislation:

Australian Consumer Law

Bankruptcy Act 1966 (Cth), ss 40, 41

Corporations Act 2001 (Cth), s 237

Legal Profession Act 2004 (Cth), ss 368, 373

Trade Practices Act 1974 (Cth)

Federal Circuit Court (Bankruptcy) Rules 2006 (Cth)
Cases cited:

Bakewell v Anchorage Capital Master Offshore Ltd (2019) 372 ALR 349

Bassal v Savalls (NSW) Pty Ltd [2019] NSWSC 696

Bhagat v Global Custodians Ltd [2002] FCAFC 51

Blair v The Owners-Strata Plan 71656 [2016] FCA 1522

Bryant v Commonwealth Bank of Australia (1994) 217 ALR 251

Coshott v Prentice, in the matter of Coshott (No 2) [2016] FCA 1531

Dekkan v Evans [2008] FCA 1004

Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346

Glew v Harrowell (2003) 198 ALR 331

Guss v Johnstone (2000) 171 ALR 598

Massih v Esber [2008] FCA 1452

Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 44 FLR 135

Re Cox (1934) 7 ABC 98

Re Duncan; ex parte Modlin (1916) 17 SR NSW 152

Re Foster; Ex parte Basan (1885) 2 Morr 29

Re Verma; ex parte Deputy Commissioner of Taxation (1985) 4 FCR 181

Vogwell v Vogwell (1939) 11 ABC 83
Number of paragraphs: 58
Date of hearing: 5 March 2021
Place: Sydney
Counsel for the Applicant: Mr G Babe, with Mr J Sharpe
Solicitors for the Applicant: Circle Bridge Legal
Counsel for the Respondent: Ms M Castle
Solicitors for the Respondent: O’Neill Partners Commercial Lawyers

ORDERS

SYG 2690 of 2018
BETWEEN:

TERRY BASSAL

Applicant
AND:

CMC LAWYERS ABN 51 104 727 308

Respondent
SYG 1441 of 2019
BETWEEN:

ALBERT MOUTALB BASSAL

Applicant
AND:

CMC LAWYERS ABN 51 104 727 308

Respondent

ORDER MADE BY:

JUDGE DRIVER

DATE OF ORDER:

8 APRIL 2021

THE COURT ORDERS THAT:

1.The applications, filed on 21 September 2018 and 12 June 2019, are dismissed.

REASONS FOR JUDGMENT

JUDGE DRIVER:

INTRODUCTION AND BACKGROUND

  1. These are two applications by Terry Bassal (Mr Bassal Jnr) and Albert Moutalb Bassal (Mr Bassal Snr) seeking orders that Bankruptcy Notices served upon them on 31 August 2018 and 21 May 2019 respectively be set aside under ss 40(1)(g) and 41(7) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) and rule 3.02 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth). The applicants also seek costs.

  2. The applications are opposed by the respondent, CMC Lawyers, by notices stating grounds of opposition filed on 7 November 2018 and 25 June 2019 respectively.

  3. The following statement of background facts is derived from the submissions of the parties.

  4. The Bankruptcy Notices in these matters were each issued in respect of…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Bassal v CMC Lawyers and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2021] FCCA 424
Decision Date

CaseChat Overview and Summary

This matter concerned applications by Mr Bassal Jnr and Mr Bassal Snr (the applicants) in bankruptcy proceedings before Driver J of the Supreme Court of New South Wales. The applicants sought to establish a counterclaim, set-off, or cross-demand against CMC Lawyers and their former legal advisor, Mr Antoniou, of equal or greater value than a judgment debt previously entered against them. This judgment debt arose from separate proceedings in the Supreme Court of New South Wales, where Adams J had entered judgment for the defendant with costs on 24 July 2019.

The primary legal issue before Driver J was whether the applicants had established the necessary elements of a claim for professional negligence against CMC Lawyers and Mr Antoniou, for the purposes of section 40(1)(g) of the *Bankruptcy Act 1966* (Cth). This required the court to consider the applicants' assertions of negligence, including allegations of invalid commencement of proceedings and failure to obtain relevant evidence, as well as claims relating to the assignment of causes of action and the incurring of unnecessary legal fees. The court also had to address preliminary issues such as the potential impact of Mr Antoniou's death on the claim and the applicability of limitation periods to the professional negligence action, given the statement of claim was only filed shortly before the hearing and had not yet been served.

Driver J reasoned that the applicants had had ample opportunity to substantiate their claims but had failed to do so to the court's satisfaction. The court noted the protracted procedural history of the matter and the significant delays that would ensue if further proceedings in the Supreme Court were required. Ultimately, Driver J concluded that the applicants had not satisfied the requirements of section 40(1)(g) of the *Bankruptcy Act*.

Consequently, Driver J ordered that the applicants' applications be dismissed.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The Savills Proceedings finally came on for trial in August 2018 before Adams J, who, on 24 July 2019, entered a judgment for the defendant with costs.[27][27] See Bassal v Savills (NSW) Pty Ltd [2019] NSWSC 696; a copy of her Honour’s reasons for judgment is at page 2ff of Exhibit MC-1 to the Second Capolupo Affidavit, filed and served by CMC Lawyers.THE EVIDENCE AND SUBMISSIONS At the trial I ordered that the evidence in Mr Bassal Jnr’s proceeding also be evidence in the proceeding instituted by Mr Bassal Snr. There was no dispute between the parties as to the admissibility of the evidence. I received the following affidavits, some with deletions:(a)affidavits by Mr Bassal Jnr made on 17 December 2018 (and the exhibit thereto), 17 June 2019 (and the exhibit thereto), 21 September 2018 (and the annexures thereto), 19 March 2020, 14 July 2020 and 2 March 2021 (by leave);(b)affidavits by Mr Bassal Snr made on 12 June 2019 and 23 July 2019 (and the exhibits thereto);(c)the affidavit of Jamie Lee Mounter filed on 6 May 2019; and(d)two affidavits by Mark Capolupo made on 23 July 2019 and 6 August 2019 (and the exhibit thereto). I also received documents tendered on behalf of CMC Lawyers which became Exhibit R1. The parties filed several sets of pre-hearing written submissions and made oral submissions through their counsel at the trial on 5 March 2021. CONSIDERATION This matter has had a very long and rather tortuous procedural history. It has been before the Court for approximately two and a half years. The early stage of the proceeding coincided with efforts by the applicants to set aside the judgment debt. Those efforts were not successful. The balance of the proceedings focused on efforts by the applicants to make good their assertion that they had a counterclaim, set-off or cross demand of equal or greater value than the judgment debt that could not have been set up in the proceedings leading to the judgment debt. Those efforts culminated in the final affidavit of Mr Bassal Jnr made on 2 March 2021 which I received by leave, and the statement of claim annexed to that affidavit alleging professional negligence against CMC Lawyers and their former legal advisor, Mr Antoniou. As noted above, Mr Antoniou initially acted for the applicants in a personal capacity and later joined CMC Lawyers. He died on 2 July 2017. That fact would necessitate an amendment to the statement of claim which at the moment is brought against a deceased person. Mr Antoniou is of course no longer able to give evidence in defence of the professional negligence action. There may also be an issue of the limitation period governing actions in tort such as the professional negligence action. The statement of claim was only filed on 23 February 2021 and to date has not been served. There is, of course, as yet no defence to it. Nevertheless, the parties in oral submissions at the trial put the proposition that the Court, sitting in bankruptcy, could deal with the question of whether the necessary elements of a claim exist for the purposes of s 40(1)(g) of the Bankruptcy Act. I agree and have dealt with the case on that basis.Applicants’ contentions

Decision

Reasons for decision

Further delay in the bankruptcy process while awaiting an outcome in the Supreme Court of NSW could take years, and is no longer an acceptable option. The applicants have had ample time to make good their claims and they have failed to satisfy me that they have done so or that they could do so.CONCLUSION I conclude that the applicants have failed to establish their case under s 40(1)(g) of the Bankruptcy Act. I will order that the applications be dismissed.

Ratio Decidendi

Legal Principle Established

The parties filed several sets of pre-hearing written submissions and made oral submissions through their counsel at the trial on 5 March 2021. CONSIDERATION This matter has had a very long and rather tortuous procedural history. It has been before the Court for approximately two and a half years. The early stage of the proceeding coincided with efforts by the applicants to set aside the judgment debt. Those efforts were not successful. The balance of the proceedings focused on efforts by the applicants to make good their assertion that they had a counterclaim, set-off or cross demand of equal or greater value than the judgment debt that could not have been set up in the proceedings leading to the judgment debt. Those efforts culminated in the final affidavit of Mr Bassal Jnr made on 2 March 2021 which I received by leave, and the statement of claim annexed to that affidavit alleging professional negligence against CMC Lawyers and their former legal advisor, Mr Antoniou. As noted above, Mr Antoniou initially acted for the applicants in a personal capacity and later joined CMC Lawyers. He died on 2 July 2017. That fact would necessitate an amendment to the statement of claim which at the moment is brought against a deceased person. Mr Antoniou is of course no longer able to give evidence in defence of the professional negligence action. There may also be an issue of the limitation period governing actions in tort such as the professional negligence action. The statement of claim was only filed on 23 February 2021 and to date has not been served. There is, of course, as yet no defence to it. Nevertheless, the parties in oral submissions at the trial put the proposition that the Court, sitting in bankruptcy, could deal with the question of whether the necessary elements of a claim exist for the purposes of s 40(1)(g) of the Bankruptcy Act. I agree and have dealt with the case on that basis.Applicants’ contentions The professional negligence claim agitated in the Supreme Court is, in substance, particularised at [12] of the statement of claim. Those particulars include, albeit in slightly different language, the two allegations, an invalid commencement allegation being particular (f); and a failure to obtain relevant evidence falling within particulars (j), (k), (m), and (n). In addition to those bases, further grounds of cross-demand are said to arise from the statement of claim under particulars (h) and (p), being that:(a)first, pursuant to particular (h), CMC Lawyers failed to advise the applicants in relation to the legal restrictions on which causes of action may validly be assigned to them by CFO, possibly resulting in the ability to bring a claim in tort, or any statutory claim under the former Trade Practices Act 1974 (Cth) (Trade Practices Act) or alternatively the Australian Consumer Law (Australian Consumer Law), being lost;(b)secondly, under particular (p), which itself is based on all the particulars, CMC Lawyers’ overall lack of competent action is said to have resulted in the applicants incurring significant and unnecessary further legal fees.