Goodman v Westpac Banking Corporation - [2010] FMCA 714

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GOODMAN v WESTPAC BANKING CORPORATION

[2010] FMCA 714

BANKRUPTCY – Application to set aside Registrar’s order dismissing applicant’s application to set aside a bankruptcy notice – application dismissed by Registrar for non-attendance of applicant – reasonable excuse for non-attendance – however no reasonable prospect of success on substantive application to set aside the bankruptcy notice – application to set aside Registrar’s order dismissed.

Bankruptcy Act 1966, s.41(7)
Federal Magistrates Court Rules 2001, r.16.05(2)(a)

Applicant:

MORRIS GOODMAN

Respondent:

WESTPAC BANKING CORPORATION

File Number:

MLG 956 of 2010

Judgment of:

O’Dwyer FM

Hearing date:

6 September 2010

Date of Last Submission:

6 September 2010

Delivered at:

Melbourne

Delivered on:

6 September 2010

REPRESENTATION

The Applicant:

In person

Counsel for the Respondent:

Mr Nicol

Solicitors for the Respondent:

Gadens Lawyers

ORDERS

The application for review of Registrar Luxton’s is order made on

26 July 2010 is dismissed.
The Applicant pay the Respondent’s costs in accordance with Order 62 of the Federal Court Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 956 of 2010

MORRIS GOODMAN

Applicant

And

WESTPAC BANKING CORPORATION

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

This matter comes before me today on an application filed on 26 July 2010 to set aside a decision made by Registrar Luxton on that day to dismiss a substantive application filed on 5 July 2010, in which
Mr. Goodman seeks to have a bankruptcy notice set aside. The application to set aside the bankruptcy notice was dismissed for the non-attendance of the Applicant, Mr. Goodman.
The first issue for me to determine is whether or not, under Rule 16.05(2)(a) of the Federal Magistrates Court Rules 2001 I ought to set aside the decision of Registrar Luxton. To do so, I have to consider whether or not there was a reasonable excuse on the part of the Applicant for not attending on 26 July 2010, and also, and this is a very necessary requirement for the exercise of my discretion as to whether I should set aside the Registrar’s dismissal, to determine whether there is a reasonable prospect of success, should that decision of Registrar Luxton be set aside, in respect of substantive application to set aside the bankruptcy notice.
In relation to the reasonable excuse, there is no doubt that there is a reasonable excuse for the non-attendance of Mr Goodman; he being directed to the wrong Court room where matrimonial proceedings involving parties with the same name were taking place. By the time he discovered the correct location of the Court for his proceeding, his application had been dismissed for his non-attendance.
The other requirement though is more problematic. There is a long history of litigation between the parties, which also include not only Mr. Morris Goodman and Westpac, but also a company known as Worldwide Enterprises Pty Ltd and Mr. Goodman’s wife, Ms. Greta Goodman. The company, incidentally, is the business that was, I understand, owned and run by Mr Goodman to facilitate the import of food products which were on sold to Woolworths.
By way of background, difficulties arose in respect of funding arrangements for the supply of goods. An issue arose between Mr. Goodman, his company and his wife under an irrevocable line of credit provided by Westpac which saw the supplier of these goods being paid by Westpac against the advice, I understand, of Mr Goodman; leaving Mr. Goodman, his wife and the company liable to recompense the bank. The goods were faulty and despite the request from Mr. Goodman that Westpac not honour the irrevocable line of credit in consequent of that fact, it did and thereafter looked to Mr. Goodman and his wife to recompense the bank. Thereafter, as he put it, the bank effectively helped itself to what available funds it could control, and then, as he told me from the bar table, he was forced to sell his house. The selling of his house is disputed by the Respondent. In any event, funds were raised to pay off any outstanding liability to the bank in circumstances where Mr Goodman feels aggrieved as to how it all arose, holds the bank responsible and looks to the bank for compensation.
It is to be noted that – and it was never disputed - that the money that the bank demanded the payment of was provided by Ms. Goodman in full satisfaction of the banks claim against the Goodmans.
Feeling aggrieved Mr. Goodman initiated legal proceedings in VCAT, the local Magistrates’ Court and in the Supreme Court against the Respondent seeking varied, but significant amounts of compensation. Ms Goodman, it appears withdrew from the proceedings leaving
Mr Goodman as the extant party involved. The long and the short of it all is that both in VCAT and in the Magistrates’ Court, ultimately, the extant applicants were unsuccessful.
Before the outcomes of the VCAT and Magistrates’ Court proceedings were known, however, in the proceedings on foot in the Supreme Court, where Mr. Goodman had initiated an application to have Westpac’s proceedings against him dismissed for want of prosecution, he was unsuccessful and an order for costs was made against him by his Honour Associate Justice Mukhtar in the sum of $1200 on 5 March 2010; which decision was appealed and the grounds expanded by Mr Goodman to include an order for dismissal for abuse of process (in addition to want of prosecution) before his Honour Justice Cavanaugh, who, in turn, also made an order for costs against Mr Goodman on 15 April 2010 for $3500. Those proceedings initiated by Mr. Goodman were unsuccessful and a total amount of costs of $4700 was awarded. It is those costs that form the basis upon which the bankruptcy notice was served.
Mr Goodman has applied, pursuant to s.41(7) of the Bankruptcy Act 1966 to have the bankruptcy notice set aside. That section clearly provides that in order for the bankruptcy notice to be set aside the debtor – in this case Mr Goodman – must convince the court that he has a reasonable prospect of successfully counter-claiming or setting off or making a cross-demand in relation to the moneys claimed against him. In that regard, Mr Goodman has talked of various issues of how the bank has affected his financial wellbeing, if I could put it that way, and how he sees the bank as having acted improperly from his perspective. He has also extended that criticism to people acting on behalf of the bank, inclusive of the solicitor who instructs Mr Nichol today, Mr. Hinton. He includes Mr. Nichol in his criticisms of how they have conducted matters on behalf of the bank. Further to that, I am informed that he has issued proceedings, criminal proceedings, against Mr Hinton that are yet to be determined. That all arises with a background of Mr Goodman’s understanding that judicial officers involved in his matters have been misled to varying degrees on various issues by these men which has resulted in the adverse judgments.
The material relied upon by Mr Goodman that is formally before the court does not, in my view, establish a basis for setting aside the bankruptcy notice pursuant to section 41(7), in particular, when regard is had to the fact that his basic dispute with the bank has been met by a payment by his wife. If there is a claim for compensation it is one that is to be made by the person affected by it. If payments by the wife have been improperly demanded, then it is the wife that may mount that claim. Mr. Goodman does not appear, nor has he been able to persuade me, that he has a claim against the bank that amounts to a set off, counter-claim or a cross-demand.
Mr. Goodman has informed the court that he has written to his Honour Justice Cavanaugh seeking from him, because of the now determination of his VCAT and Magistrates’ Court proceedings, a rethink and for him to amend his order made on 15 September 2010. In the normal course of events, I am satisfied that his Honour would not entertain such a process, and that the only reality for Mr Goodman if he wishes to alter the orders made would be for an appeal to the
Full Court of the Supreme Court of Victoria. When that was put to Mr Goodman, he indicated that he would do that if he had to do it.
However, there is nothing in the material before me that, even if he was to do that, indicates a reasonable prospect of success on his part, and, for that reason, I cannot give a great deal of weight to what he proposes in that regard.
I also note that the matter is listed for a hearing on 16 September 2010 in relation to the substantive application of Westpac for a sequestration order. Mr. Goodman has until then, perhaps, to initiate proceedings that would better place him when the matter comes on for hearing. The fact that a bankruptcy notice is not set aside in this process does not preclude him from arguing fully the strength of his position, again perhaps buttressed by other events that might happen between now and then, to say that a sequestration order ought not be made; not to mention that there are other grounds upon which sequestration orders ought not be made. But that is for Mr Goodman to pursue in due course.
For all those reasons, therefore, having considered the substantive application to set aside the bankruptcy notice when considering the application to review Registrar’s order for dismissal on 26 July 2010,
I am of the view that the substantive application does not have a reasonable prospect of success and that therefore, the application to set aside the order made on 26 July 2010 must be dismissed.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of O’Dwyer FM

Date: 15 September 2010