Cao v Goldsmith

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.