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Cao v Goldsmith

Cao v Goldsmith

Case [2015] FCCA 1700 23 June 2015

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FEDERAL CIRCUIT COURT OF AUSTRALIA

CAO v GOLDSMITH

[2015] FCCA 1700

Catchwords:
BANKRUPTCY – Application to set aside bankruptcy notice – alleged counter-claim, set-off or cross demand exceeding judgment debt – relevant considerations.

LEGAL PRACTITIONERS – Allegation of negligence – solicitor advocate – immunity from suit – work out of court concerning conduct of case.

Legislation:

Bankruptcy Act 1966, s.40
Federal Circuit Court (Bankruptcy) Rules 2006, r.3.02
Legal Profession Act 2004 (NSW), s.347

Cao v Liu [2013] NSWDC 172
Re Glew; Glew v Harrowell (2003) 198 ALR 331

Dekkan v Evans [2008] FCA 1004

Bhagat v Global Custodians Ltd [2002] FCA 223

Re Capsanis; Capsanis v Owners – Strata Plan 11727 [2000] FCA 1262

Naghten v Commonwealth Bank of Australia [1998] FCA 635
D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1
Giannarelli v Wraith (1988) 165 CLR 543
Keefe v Marks (1989) 16 NSWLR 713
White v Forster [2014] NSWSC 1767
Saif Ali v Sydney Mitchell & Co [1980] AC 198
Massih v Esber (2008) 250 ALR 648

Applicant:

PING CAO

Respondent:

BARRIE GOLDSMITH T/AS GOLDSMITH LAWYERS

File Number:

SYG 350 of 2015

Judgment of:

Judge Cameron

Hearing date:

26 May 2015

Date of Last Submission:

26 May 2015

Delivered at:

Sydney

Delivered on:

23 June 2015

REPRESENTATION

Counsel for the Applicant:

Ms Y. Guo

Solicitors for the Applicant:

Fitzpatrick Solicitors Pty Ltd

Solicitors for the Respondent:

Mr B. Goldsmith of Goldsmith Lawyers

ORDERS

The application be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT SYDNEY

SYG 350 of 2015

PING CAO

Applicant

And

BARRIE GOLDSMITH T/AS GOLDSMITH LAWYERS

Respondent

REASONS FOR JUDGMENT

Introduction

On 13 February 2015 the applicant, Mr Cao, commenced this proceeding seeking to set aside a bankruptcy notice issued on 19 January 2015. The bankruptcy notice was founded upon a judgment entered on 14 January 2015 in the Supreme Court of New South Wales in respect of professional costs owing to the respondent, Mr Goldsmith, who had acted for Mr Cao in defamation proceedings in the District Court of New South Wales against Shengrong Liu (“Ms Liu”). The underlying debt arose out of an order of the District Court in those earlier proceedings and out of a related costs assessment process.
Mr Cao’s application to set aside the bankruptcy notice has been made pursuant to s.40(1)(g) of the Bankruptcy Act 1966 (“Act”) on the basis that he has a counter-claim, set-off or cross-demand against Mr Goldsmith which exceeds the amount of the judgment debt owed by him. Relevantly, Mr Cao alleges that he has a bona fide counter-claim against Mr Goldsmith arising out of the latter’s allegedly negligent conduct of the defamation proceedings.

Legislation

Section 40(1)(g) of the Act provides:
40 Acts of bankruptcy
(1) A debtor commits an act of bankruptcy in each of the following cases:
…
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Cao v Goldsmith

Details

AGLC: Cao v Goldsmith [2015] FCCA 1700
Case: [2015] FCCA 1700
Decision Date: 23 June 2015

CaseChat Overview and Summary

In *Cao v Goldsmith*, the applicant, Mr Cao, sought to set aside a bankruptcy notice issued by the respondent, Mr Goldsmith, based on an alleged counter-claim, set-off, or cross-demand exceeding the judgment debt. The dispute arose from a prior judgment obtained by Mr Goldsmith against Mr Cao in separate proceedings.

The primary legal issue before the court was whether Mr Cao had established a sufficient counter-claim, set-off, or cross-demand to justify setting aside the bankruptcy notice. This required the court to consider the nature and substance of the alleged counter-claim, and whether it was genuinely arguable and likely to exceed the judgment debt. A secondary issue, though not central to the determination of the bankruptcy notice application, concerned allegations of negligence against Mr Goldsmith, who was also Mr Cao's solicitor advocate in the prior proceedings, and the potential application of solicitor’s immunity for work done out of court concerning the conduct of that case.

Judge Cameron found that Mr Cao had failed to demonstrate a counter-claim, set-off, or cross-demand that was likely to exceed the judgment debt. The court applied the principles governing applications to set aside bankruptcy notices, which require the alleged counter-claim to be substantial and not merely a speculative or vexatious assertion. The court noted that while solicitor’s immunity can apply to work done out of court in relation to the conduct of litigation, the focus of the present application was on the validity of the bankruptcy notice itself, which was not dependent on the resolution of the negligence claim.

Consequently, the application to set aside the bankruptcy notice was dismissed.

Orders