Goodman v Westpac Banking Corporation

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FEDERAL COURT OF AUSTRALIA

Goodman v Westpac Banking Corporation [2011] FCA 777

Citation: Goodman v Westpac Banking Corporation [2011] FCA 777
Appeal from: Westpac Banking Corporation v Goodman [2010] FMCA 993
Parties: MORRIS GOODMAN v WESTPAC BANKING CORPORATION
File number: VID 51 of 2011
Judge: NORTH J
Date of judgment: 1 July 2011
Date of hearing: 1 July 2011
Place: Melbourne
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 32
Counsel for the Appellant: The Appellant appeared in person
Counsel for the Respondent: Mr C Nichol
Solicitor for the Respondent: Gadens Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 51 of 2011
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN:

MORRIS GOODMAN
Appellant
AND:

WESTPAC BANKING CORPORATION
Respondent

JUDGE:

NORTH J

DATE OF ORDER:

1 JULY 2011

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The appeal is dismissed.

2.The appellant pay the respondent’s costs of the appeal.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 51 of 2011
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN:

MORRIS GOODMAN
Appellant
AND:

WESTPAC BANKING CORPORATION
Respondent

JUDGE:

NORTH J

DATE:

1 JULY 2011

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

  1. Before the Court is an appeal by Morris Goodman, the appellant, against orders made by Turner FM on 17 December 2010.  The federal magistrate made a sequestration order against the estate of Mr Goodman on the application of the respondent, Westpac Banking Corporation (the Bank). 

  2. The statutory provisions applicable to this appeal are ss 52(1) and (2) of the Bankruptcy Act 1966 (Cth) (the Act), which relevantly provide:

    (1)       At the hearing of a creditor's petition, the Court shall require proof of:

    (a)the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

    (b)       service of the petition; and

    (c)the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

    and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

    …

    (2)If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

    (a)       that he or she is able to pay his or her debts; or

    (b)that for other sufficient cause a sequestration order ought not to be made;

    it may dismiss the petition.

  3. Section 40(1)(g) of the Act relevantly provides:

    (1)A debtor commits an act of bankruptcy in each of the following cases:

    …

    (g)if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under…

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Details
Case
[2011] FCA 777
Decision Date

CaseChat Overview and Summary

Mr Goodman, appearing in person, was before the federal magistrate in relation to a petition for bankruptcy filed by the Westpac Banking Corporation. The federal magistrate was required to determine whether Mr Goodman had committed an act of bankruptcy under section 40(1)(g) of the relevant Act. The court considered the orders made by the Supreme Court of Victoria, finding that neither of the costs orders had been stayed and that Mr Goodman had not complied with the bankruptcy notice within the specified timeframe. The magistrate also found that Mr Goodman had not satisfied the solvency defence, as his realisable assets did not cover the amount owed. The court dismissed Mr Goodman’s argument that the Bank had an ulterior motive in bringing the petition, holding that the onus was on Mr Goodman to prove this claim.

The federal magistrate rejected Mr Goodman's argument that the Bank's petition was brought for an ulterior motive or that the Bank lacked bona fides. The magistrate found that the Bank's interest in Mr Goodman being made bankrupt to stifle litigation was not sufficient to refuse the sequestration order. The magistrate concluded that there was no evidence to support Mr Goodman's allegations of improper motive, and thus the petition could proceed. The court found that Mr Goodman had failed to satisfy the conditions necessary to avoid bankruptcy under the Act, and therefore the petition was valid.

ORDERS:
1. The appeal is dismissed.
2. The appellant pay the respondent’s costs of the appeal.

Orders

Orders of the court

1. The appeal is dismissed.

2. The appellant pay the respondent’s costs of the appeal.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Section 40(1)(g) of the Act relevantly provides:(1)A debtor commits an act of bankruptcy in each of the following cases:…(g)if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: (i)where the notice was served in Australia--within the time specified in the notice; or (ii)where the notice was served elsewhere--within the time fixed for the purpose by the order giving leave to effect the service; comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained; THE DECISION OF THE FEDERAL MAGISTRATE Mr Goodman was self-represented before the federal magistrate. The foundation for the creditor’s petition filed by the Bank was an act of bankruptcy committed by Mr Goodman. The federal magistrate addressed the matters required by s 40(1)(g) of the Act to determine whether an act of bankruptcy had been committed. He referred to the debt constituted by two orders made by the Supreme Court of Victoria. The first order was made by Mukhtar AJ on 5 March 2010, dismissing an application by Mr Goodman for summary dismissal of the proceeding for want of prosecution. Mukhtar AJ ordered that Mr Goodman pay the costs of the application in the sum of $1,200. The second order was made by Cavanough J on 15 April 2010, on appeal from the order of Mukhtar AJ. Cavanough J ordered that Mr Goodman pay the costs of the appeal in the sum of $3,500. The federal magistrate then determined that neither of the costs orders had been stayed. He further found that the bankruptcy notice had been served and Mr Goodman had not complied with the bankruptcy notice within the designated timeframe. The federal magistrate next considered whether the defence of solvency had been made out. He referred to the evidence of the assets of Mr Goodman, namely a motor car valued at $2,500, furniture owned with his wife valued at $3,000, and evidence that Mr Goodman was then earning no income. He found that the motor car and furniture were not to be included in the realisable assets available to pay creditors. Thus, the federal magistrate determined that Mr Goodman was not solvent and the creditor’s petition could not be dismissed pursuant to s 52(2)(a) of the Act. The federal magistrate rejected Mr Goodman’s argument that the Bank brought the creditor’s petition for an ulterior motive, or that it lacked bona fides. He determined that even if the Bank had an interest in Mr Goodman being made bankrupt to stifle litigation, that was not, in itself, sufficient to refuse making the sequestration order. He held that the onus of showing an ulterior motive was borne by Mr Goodman. The allegation of Mr Goodman was denied by the Bank and the federal magistrate considered that there was no proof of the alleged improper motive.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.