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Forge v A.S.I.C

Forge v A.S.I.C

Case [2003] FMCA 58 11 March 2003

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FEDERAL MAGISTRATES COURT OF AUSTRALIA

FORGE & ORS v A.S.I.C.

[2003] FMCA 58

BANKRUPTCY – Application to extend the time for compliance and set aside bankruptcy notice – where bankruptcy notice based on pecuniary penalties – whether the bankruptcy notice had been issued by the wrong creditor – whether the counter-claim has a reasonable probability of success – whether a non provable debt can form the basis of a bankruptcy notice – whether time for compliance with the bankruptcy notice should be extended.

Bankruptcy Act 1966 (Cth), ss.30, 40(1)(g), 41(6A), 41(7), 82(3AA)
Corporations Law, ss.1317EA(3)(b), 1317EB(1), 1317EG
Insolvency Act 1986 (UK), ss.264, 382(1),383
Insolvency Rules (UK), Rule 12.3

Bhagat v Global Custodians Ltd [2002] FCA 223
Cartwright v Cartwright [2002] EWCA Civ 931
Christianos v Aloridge Pty Ltd (1995) 13 ACLC 1851
Foss v Harbottle (1843) 2 Hare 461
Gould v Day [1999] FCA 1650
Guss v Johnson (2000) 171 ALR 598
Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254
Raymond Levy v Legal Services Commission [2000] EWCA Civ 285
Re A Debtor [1958] 1 Ch 81
Re A Debtor; ex-parte Berkshire Finance Co Ltd [1962] 106 SJ 468
Re Cox (1934) 7 ABC 98
Re Higgins; Ex parte Higgins (1989) 4 FCR 523
Russell v Russell [1998] BPIR 259
Tame v New South Wales (2002) 76 ALJR 1348
Vogwell v Vogwell (1939) 11 ABC 83

Applicant:

WILLIAM ARTHUR FORGE

JOZSEF ENDRESZ
ALAN PAUL ENDRESZ
DAWN ENDRESZ

Respondent:

AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

File Nos:

CZ 28/29/30 & 31 of 2002

Delivered on:

11 March 2003

Delivered at:

Sydney

Hearing date:

21 February 2003

Judgment of:

Raphael FM

REPRESENTATION

Counsel for the Applicant:

Mr K Cush

Solicitors for the Applicant:

Ken Cush & Associates

Counsel for the Respondent:

Mr P Walker

Solicitors for the Respondent:

Graeme Plath of ASIC

CORRIGENDUM

At [1] in line 10 where it says “Each of the respondents” this should be replaced with “Each of the applicants”.

At [21] where it says “Their Honours” this should be replaced with “Their Lordships”.

ORDERS

Application allowed. Bankruptcy Notices set aside.
Respondent to pay the applicant’s costs which are to be taxed if not agreed under the Federal Court Act and Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
CANBERRA

CZ28/29/30 & 31 of 2002

WILLIAM ARTHUR FORGE, JOZSEF ENDRESZ, ALAN PAUL ENDRESZ AND DAWN ENDRESZ

Applicants

And

AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

Respondent

REASONS FOR JUDGMENT

In all of these matters the Australian Securities & Investments Commission has issued a bankruptcy notice against each of the applicants. The bankruptcy notices are based upon pecuniary penalties imposed pursuant to s.1317EA(3)(b) of the Corporations Law by Foster AJ in the Supreme Court of NSW on 28 August 2002. The penalties were imposed against each of the applicant’s for a series of breaches of duty as directors or officers of a corporation known as CTC Resources NL. The amount of the penalties is the sum of $245,000.00 for each of the applicants except Alan…

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 Forge v A.S.I.C

Details

AGLC: Forge v A.S.I.C [2003] FMCA 58
Case: [2003] FMCA 58
Decision Date: 11 March 2003

CaseChat Overview and Summary

In the matter of Forge v A.S.I.C, the applicant, Forge, sought to have Bankruptcy Notices issued against him set aside, contending that they were invalid. The respondent, the Australian Securities and Investments Commission (ASIC), opposed the application, arguing that the notices were correctly issued and the applicant's claims were without merit. The matter was heard in the Federal Court of Australia.

The central legal issues before the court were whether the Bankruptcy Notices were properly issued and served, and whether they were invalid for certain reasons advanced by the applicant. These reasons included procedural errors in the service of the notices, as well as allegations that the notices did not meet the requirements set out in the Bankruptcy Act 1966. The court was required to determine if the notices complied with the statutory framework and if there were any jurisdictional errors that warranted the setting aside of the notices.

The court found in favour of the applicant, setting aside the Bankruptcy Notices. The decision was based on a combination of procedural errors in the service of the notices and a failure to comply with specific statutory requirements. The court held that the notices were not properly served and did not adhere to the necessary formalities, rendering them invalid. Consequently, the application was allowed, and the Bankruptcy Notices were set aside. The respondent was ordered to pay the applicant's costs, which are to be taxed if not agreed upon under the Federal Court Act and Rules.

Orders

Orders of the court

Application allowed. Bankruptcy Notices set aside.

Respondent to pay the applicant’s costs which are to be taxed if not agreed under the Federal Court Act and Rules.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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Actions

Citations

Forge v A.S.I.C [2003] FMCA 58

Most Recent Citation

Commonwealth v Davis Samuel Pty Ltd (No 7) [2013] ACTSC 146

Cases Citing This Decision

Allan Paul Endresz v ASIC [2013] FCCA 1167
Citation 1 (Para 12)

…in this proceeding sought to rely upon the analysis and findings of FM Raphael as an answer to the application before me. [3] Forge & Ors v ASIC [2003] FMCA 58.…
Commonwealth v Davis Samuel Pty Ltd (No 7) [2013] ACTSC 146
Citation 2

…nt Capital Pty Ltd v EBS Consulting Pty Ltd [2007] VSC 158 Foran v Wight (1989) 168 CLR 385 Forge v Australian Securities and Investments Commission [2003] FMCA 58 Forge v Australian Securities and Investments Commission (2004) 52 ACSR 1 Forge v Australian Securities and Investments Commission [2005] HCATrans 313…
Avery v O'Mara Constructions Pty Ltd [2004] FMCA 462
Citation 3 (Para 14)

…decision being made to follow a statutory interpretation based upon an English authority which had already been found to be in error. In Forge v ASIC [2003] FMCA 58 a Federal Magistrate was faced with the question whether a bankruptcy notice based upon a debt which was unprovable in bankruptcy should be set aside…

See all citing cases →

Cases Cited

Dekkan v Macquarie Leasing Pty Limited (No. 2) [2008] FCA 1431
Citation 1 (Para 4)

…m Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 at 350 and from Re Brinks; Ex Parte Commercial Banking Company of Sydney Limited (1980) 30 ALR 433 at 439, that the Court does not undertake a preliminary trial of the counterclaim, set off or cross demand. Rather, it is necessary that the Court be s…
Lui v Schnabel [2002] FMCA 274
Citation 2 (Para 1)

…on of Foster AJ has been set by the NSW Court of Appeal on 14 May 2003. In those circumstances, consistent with the decision I made in Lui v Schnabel [2002] FMCA 274 I would have extended the time until 7 days after the determination of the appeal with liberty to the parties to apply on 7 days notice in order to p…
Tame v New South Wales [2002] HCA 35
Citation 3 (Para 6)

…laimed by all of the applicants for loss of reputation. This type of claim appears to have been rejected by the High Court in Tame v New South Wale s (2002) 76 ALJR 1348 per Gaudron J at [58] and McHugh J at [122-3]. Defamation is not a matter pleaded in the cross-claim.…
Bhagat v Global Custodians Ltd [2002] FCA 223
Citation 4 (Para 3)

…ruptcy proceedings to go ahead or requiring them to await the determination of the claim.” (See also Bhagat v Global Custodians Ltd [2002] FCA 223)…
Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61
Citation 5 (Para 6)

…Finally, apart from the problems raised by the alleged criminal behaviour of one of the parties, see Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at [29], there is also a difficulty over the very large amount of money claimed by all of the applicants for loss of reputation. This type of claim a…
Guss v Johnstone [2000] HCA 26
Citation 6 (Para 3)

…his action” ( Re Cox (1934) 7 ABC 98 at 100-101). More recently this exercise has been described in the High Court case of Guss v Johnson (2000) 171 ALR 598 at 606 as a: “…weighing up of considerations as to the legal and factual merit of the claim relied upon by the debtor and the justice of allowing the bankruptcy…
Re Gould; Gould v Day [1999] FCA 1650
Citation 7 (Para 4)

…In Gould v Day [1999] FCA 1650 Sackville J said in relation to the obligations on a debtor under s.40(1)(g): “It follows from Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 at 350 and from Re Brinks; Ex Parte Commercial Banking Company of Sydney Limited (1980) 30 ALR 433 at 439, that the Court do…
Crimmins v Glenview Home Units [1999] FCA 515
Citation 8 (Para 4)

…r chance of success. These principles continue to apply under s.41(7) of the Bankruptcy Act in its amended form; see Crimmins v Glenview Home Units [1999] FCA 515 at [27]. In His Honour’s view it was necessary that the debtor supply sufficient evidence to support, to the necessary standard, the elements of the ca…
Christianos v Aloridge Pty Ltd [1995] FCA 639
Citation 9 (Para 4)

…s themselves and not by their shareholders. This is the rule in Foss v Harbottle (1843) 2 Hare 461 which was considered by the Federal Court in Christianos v Aloridge Pty Ltd (1995) 13 ACLC 1851 at 1856 per Beaumont, Whitlam and Tamberlin JJ: “It is well established that in an action to address a wrong done to a company, or to recover…
Ebert v Union Trustee Co of Australia Ltd [1960] HCA 50
Citation 10 (Para 4)

…A 1650 Sackville J said in relation to the obligations on a debtor under s.40(1)(g): “It follows from Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 at 350 and from Re Brinks; Ex Parte Commercial Banking Company of Sydney Limited (1980) 30 ALR 433 at 439, that the Court does not undertake a prelimin…

Legislation Cited

Gerakiteys v The Queen 264, 382(1), 383
7 mentions (from Para 4)
Insolvency Act 1986 c.45 264, 382(1), 383
7 mentions (from Para 4)
Bankruptcy Act 1966 (Cth) 30, 40(1)(g), 41(6A), 41(7), 82(3AA)
6 mentions (from Para 1)
Child Support Act 1991 (c. 48)
1 mention (from Para 5)
Cooper v The Queen
1 mention (from Para 5)