Forge v Australian Securities and Investments Commission

[2013] FCCA 1170

FEDERAL CIRCUIT COURT OF AUSTRALIA

FORGE v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION [2013] FCCA 1170

Catchwords:
BANKRUPTCY – Application to set aside bankruptcy notice pursuant to s.41(7) – counter-claim relied on to enliven the subsection that relates to another party – judgment creditor that issued notice (ASIC) an instrumentality of the Commonwealth of Australia – counter-claim against the Commonwealth – applicant claimed mutuality that entitled the counter-claim against the Commonwealth to enliven the provisions of s.40(1)(g) and s.41(7) and empowered the Court to set aside the notice – long outstanding reserved judgment in ACT Supreme Court where merit of counter-claim was tested – judgment delivered, with counter-claim being dismissed – no basis, therefore, under s.41(7) to set aside the notice – application dismissed with costs.

Legislation:
Bankruptcy Act 1966, ss.40(1)(g), 41(7)
Corporations Act 2001

Commonwealth of Australia v Davis Samuel Pty Ltd and Ors (No.7) [2013] ACTSC 146

Allan Paul Endresz v ASIC [2013] FCCA 1167

Dawn May Endresz v ASIC [2013] FCCA 1169

Jozsef Endresz v ASIC [2013] FCCA 1168

Applicant: WILLIAM ARTHUR FORGE

Respondent: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

File Number: MLG 136 of 2012

Judgment of: Judge O'Dwyer

Hearing date: 24 August 2012

Date of Last Submission: 24 August 2012

Delivered at: Melbourne

Delivered on: 23 August 2013

REPRESENTATION

The Applicant: In person

Counsel for the Respondent: Mr Fary

Solicitor for the Respondent: Mr Andrew Tregear, Australian Securities & Investments Commission

ORDERS

1. The application filed on 10 February 2012, as amended, to set aside Bankruptcy Notice BN 9548 (issued on 23 November 2011) is dismissed.

2. The Applicant pay the Respondent’s costs of, and incidental to, this proceeding.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLG 136 of 2012

WILLIAM ARTHUR FORGE

Applicant

And

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Respondent

REASONS FOR JUDGMENT

Introduction

1. By an amended application, the applicant seeks to set aside a bankruptcy notice (BN 9548 issued on 23 December 2011) pursuant to s.41(7) of the Bankruptcy Act 1966 (“the Act”).

2. This application was heard in conjunction with three other applications seeking the same order in respect of bankruptcy notices served on a former business partner of the applicant and that business partner’s parents.[1]

   [1] See Allan Paul Endresz v ASIC [2013] FCCA 1167; Jozsef Endresz v ASIC [2013] FCCA 1168; and Dawn Endresz v ASIC [2013] FCCA 1169.

Background

1. A generalised background to the circumstances giving rise to the issue of the bankruptcy notice is set out in the related case of Allan Paul Endresz v ASIC[2].  Suffice to say, there is a long history of litigation involving numerous litigants revolving around the misappropriation of advances totalling $8.75 Million from the Commonwealth of Australia (“the Commonwealth”).  The bankruptcy notice is founded on an order for costs made against the applicant in respect of proceedings taken against him by the Australian Securities and Investments Commission (“ASIC”) relating to breaches by him of his duties and responsibilities as a Director under the Corporations Act 2001.

   [2] [2013] FCCA 1167.

2. The applicant was a party to proceedings by the Commonwealth in the Supreme Court of the Australian Capital Territory (“the Supreme Court proceeding”) whereby the Commonwealth sought to recover the amounts advanced.  He, along with others, counter-claimed against the Commonwealth for an aggregate claim of $4.3 Billion.

3. At the time this matter came on for hearing, judgment in the Supreme Court proceedings had not been delivered and, indeed, had remained outstanding for a period in excess of 4 years.

4. The contention of the applicant was that s.41(7) and s.40(1)(g) were enlivened because ASIC was an instrumentality of the Commonwealth and as such the counter-claim against the Commonwealth was the same in character as a counter-claim against ASIC. That contention was predicated on there being a reasonable prospect of success on the counter-claim.

5. Judgment was delivered in the Supreme Court proceeding on 1 August 2013.[3]  The applicant was wholly unsuccessful in his counter-claim.

   [3] Commonwealth of Australia v Davis Samuel Pty Ltd and Ors (No 7) [2013] ACTSC 146.

Conclusion

1. As a consequence of the dismissal of the applicant’s counter-claim, the basis for his application to set aside the bankruptcy notice pursuant to s.41(7) of the Act evaporated.

2. Accordingly, the application must be dismissed, with costs. 

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Judge O'Dwyer

Associate: 

Date:  23 August 2013