COUTTS-SMITH v Titley Scientific Pty Ltd

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COUTTS-SMITH v TITLEY SCIENTIFIC PTY LTD [2012] FMCA 622

BANKRUPTCY – Application to set aside bankruptcy notice – consideration of proceedings in the District Court of Queensland – dispute regarding cross claim – whether the cross claim was a sham – whether the claim was proper and reasonable to litigate – application adjourned.

Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(7)

Glew v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331
Guss v Johnstone (2000) 171 ALR 598
James, Re; Ex parte Carter Holt Harvey Roofing (Australia) Pty Ltd (1993) 123 ALR 342
Massih v Esber (2008) 250 ALR 648
Vogwell v Vogwell (1939) 11 ABC 83

Applicant: GEOFFREY COUTTS-SMITH

Respondent: TITLEY SCIENTIFIC PTY LTD

File Number: BRG 170 of 2012

Judgment of: Burnett FM

Hearing date: 11 April 2012

Date of Last Submission: 11 April 2012

Delivered at: Brisbane

Delivered on: 20 July 2012

REPRESENTATION

Counsel for the Applicant: Dr A.J. Greinke

Solicitors for the Applicant: Morgan Conley Solicitors

Counsel for the Respondent: Mr D. McCafferty

Solicitors for the Respondent: McCullough Robertson

ORDERS

1. Application adjourned for mention to 9.30am on 1 August 2012.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRG 170 of 2012

GEOFFREY COUTTS-SMITH

Applicant

And

TITLEY SCIENTIFIC PTY LTD

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 31 January 2012 the respondent, Titley Scientific Pty Ltd (Titley), caused Bankruptcy Notice no. BN9403 issued 16 December 2011 (the Notice) to be served upon the applicant. The Notice claimed a sum of $148,706.03, that being a debt founded upon a judgment of the Supreme Court of Queensland entered 25 November 2011 on account of costs. The applicant seeks to have the notice set aside.

2. The applicant contends that the Notice ought be set aside because he has an arguable cross demand against Titley for an amount exceeding the amount claimed in the Notice, and that the cross demand was one he could not have set up in the proceeding in which the judgment was obtained: s.40(1)(g) Bankruptcy Act 1966 (Cth).

Background Facts

1. The judgment secured by Titley against the applicant was a judgment in respect of costs following the applicant’s unsuccessful defence to proceedings commenced by Titley against him in respect of an action by Titley for declarations of ownership concerning a share then being held in trust by the applicant. Ultimately, the applicant gave up his defence and delivered a duly executed share transfer and other ancillary documents to Titley, leaving costs as the only matter in issue between the parties. In July 2011, Titley and the applicant appeared before Mullins J on the return of an application concerning costs that had then been assessed at $152,519.84. Ultimately, by judgment of 25 November 2011, Mullins J ordered in favour of Titley that the costs assessed in the sum of $152,519.84 be set aside and in lieu thereof the applicant pay Titley’s costs fixed in the sum of $147,976.27. Following orders for substituted service, the application was subject to procedural directions before listing for hearing…