Gough v Myall Pty - [2001] FMCA 68

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GOUGH v MYALL PTY [2001] FMCA 68

BANKRUPTCY – Application to set aside Bankruptcy Notice – going behind judgment – application dismissed

Wren v Mahony (1972) 126 CLR 212
Corney v Brien (1951) 84 CLR 343.
Longo ex parte Longo [1995] 57 FCR 523).
Harrison v Charalambous (1999) FCA 902

Applicant:

TONY GOUGH

Respondent:

MYALL PTY

File No:

MZ 307 of 2001

Delivered on:

2 July 2001

Delivered at:

Melbourne

Hearing Date:

2 July 2001

Judgment of:

McInnis FM

REPRESENTATION

Applicant:

In Person

Counsel for the Respondent:

Ms K Knight

Solicitors for the Respondent:

Cornwall Stodart

ORDERS

That the application be dismissed; and
That the applicant pay the respondent's costs of the application.
I direct that the reasons that I have just given be transcribed and upon revision shall constitute my reasons for judgment.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE

MZ 241 of 2001

TONY GOUGH

Applicant

And

MYALL PTY

Respondent

REASONS FOR JUDGMENT

Ex tempore

This is an application by Mr Gough, the applicant, who seeks to set aside a bankruptcy notice, VN 575 of 2001, which was received by him on 18 April 2001. In his application filed with the court and dated 8 May 2001, Mr Gough applies to set aside the bankruptcy notice and has indicated to this court that he is not the person to whom the account should be directed.
In support of his application Mr Gough relies upon an affidavit sworn by him on the 8th day of May 2001 and a further affidavit sworn by him on 12 June 2001.
At the outset I should indicate that Mr Gough appeared in person, and indeed it is noted that the judgment which was the subject of the bankruptcy notice was a judgment obtained by the respondent in a Magistrates Court, and on that occasion likewise Mr Gough appeared unrepresented. It is important in cases of this kind to make due allowance for the fact that the applicant is unrepresented and to not look with perhaps the same degree of scrutiny at affidavit material which has been filed and relied upon in those circumstances.
Mr Gough essentially asserts that the court should in this case go behind the judgment which was obtained and which forms the basis of the bankruptcy notice. He asserts that at all times he was not in fact a client of the respondent and to that extent was not liable for the judgment obtained against him.
It is appropriate in a case of this kind to set out briefly the chronology, which is really not in dispute. The chronology in this matter, save and except for the issue of whether the respondent was indeed acting as solicitor for the applicant, includes the following in terms of court proceedings. On 4 April 1996 Cornwall Stodart for the respondent commenced recovery proceedings in the Magistrates Court of Victoria at Melbourne, claiming a sum of $1650 plus interest and costs. On

17 May 1996 that firm obtained a default judgment against Mr Gough. Mr Gough then applied for a rehearing, and was successful in the sense that the rehearing occurred on 12 March 1997. It is common ground that the rehearing proceeded by way of a contested hearing. It is also common ground that Mr Agardy, one of the deponents of the material before me filed on behalf of the respondent, gave evidence at that hearing and indeed was cross-examined by Mr Gough in relation to his evidence.
At the hearing the magistrate found in favour of the respondent and judgment was entered in relation to the following sums: $1650 on the claim, $281 interest and costs of $799. It appears that following that judgment, which was entered as I have described, there was no application made to appeal the judgment, either by way of review to the Supreme Court or otherwise. Mr Gough has explained to the court that approximately six weeks after the judgment he had sought and was denied legal assistance which would have perhaps enabled him to pursue some form of appeal.
It is not apparent to me on the material presently before me whether there would have been any proper basis for that appeal, but in any event Mr Gough asserts, and for the purpose of this case I am prepared to accept, that he at least turned his mind to the issue of reviewing that decision of the magistrate, which followed a rehearing with evidence and, as I have indicated included cross-examination by Mr Gough of a key witness for the respondent, namely Mr Agardy.
After the judgment had been entered, it would appear that there was some considerable delay before any recovery occurred. In fact, it was not until 12 April 1999 that Mr Gough was examined pursuant to a summons for oral examination.
In the proceedings before me the respondent has relied upon an affidavit of Peter Francis Agardy sworn 24 May 2001. Annexed to that affidavit and marked exhibit D are copies of answers given by Mr Gough to standard questions in that summons for oral examination. The relevant question which is asked of Mr Gough on that occasion is as follows, "Is the judgment debt still owing?" to which Mr Gough answered "Yes". Question 23 reads, "Do you have a proposal to pay the amount claimed by the judgment creditor?" to which Mr Gough responded, "$50 per month."
Again it is not contested that a total sum of $600 has in fact been paid by Mr Gough. He paid those amounts commencing with a payment of $100 on 28 June 1999 and payments of other various amounts from that date onwards until a last payment of $50 was made on 9 March 2000. Before me today Mr Gough has indicated that the payment of those amounts was made because it was the subject of an order and he was complying with that order. It is clear that after payment of the last amount there were no further payments made, and hence the bankruptcy notice which is the subject of the application to set aside was issued, and I note that appears to be issued on 30 March 2001.
I am urged by Mr Gough in this application to consider going behind the judgment, and in particular he has referred me to his own affidavit and correspondence from a Mr Higginbotham which, although undated, has been cross-referenced to another letter, which is dated, from Cornwall Stodart, so I interpret that the letter from Higginbotham is dated 8 September 1995. In any event, it is exhibit T1 attached to the affidavit of Mr Gough sworn 12 June 2001. I was urged by Mr Gough to take particular note of reference in that letter from Mr Higginbotham by which I should infer that Mr Gough was not the client but rather Mr Higginbotham is the client.
It is relevant in cases of this kind to certainly look at all the material, which I have done, but before proceeding to be behind a judgment it should be noted that the principles of law are clear. A court does have jurisdiction to go behind a judgment to determine whether there is a debt owing to a petitioner. That has been established in a number of authorities and it is sufficient for me for the purposes of this application to refer to two of those authorities, namely Wren v Mahony (1972) 126 CLR 212 and Corney v Brien (1951) 84 CLR 343.
Before a court, however, will exercise its discretion to go behind a judgment debt, it has been held that it must be established that there are substantial reasons for questioning whether there is in truth and reality a debt owed to the creditor (see Re Longo ex parte Longo [1995] 57 FCR 523). I also refer to the unreported decision of his Honour Finkelstein J in the Federal Court of Australia in the matter of Harrison v Charalambous (1999) FCA 902, where after reciting the authorities to which I have referred, his Honour goes on to say:
“It is well established that if judgment is obtained by fraud or collusion or there has been some miscarriage of justice, a court can inquire into whether the judgment debt is a good debt. If a judgment has been obtained without any adjudication on the merits, for example, in the case of a default judgment, a court will more readily go behind that judgment to inquire whether there is a good debt.”

In this application, had the default judgment been entered and not been the subject of an application to set aside, and had there not been a rehearing where most if not all of the issues before me today were agitated before the magistrate, then this court may have been more inclined to go behind the judgment. That is not to say that as a matter of law I am not entitled to go behind the judgment, even where there has been a hearing.
However, in the present case, on the material before me, I am not satisfied that it is appropriate to exercise my discretion to go behind the judgment. I am not satisfied that there is evidence the judgment was obtained by fraud or collusion, and on the material before me I am not satisfied that there has been established before me some miscarriage of justice. I can well understand that Mr Gough sincerely asserts and continues to assert that he was not the client and is not indebted. However, the events to a large extent confirm that the judgment, once obtained, was a judgment properly entered, and I am entitled to have regard to the fact that at least $600 of that judgment was paid by instalments commencing 28 June 1999, concluding

9 March 2000.
In all the circumstances, I am satisfied that it is appropriate in this matter to order, and I do so order,
(1)That the application be dismissed; and
(2)That the applicant pay the respondent's costs of the application.
(3)I direct that the reasons that I have just given be transcribed and upon revision shall constitute my reasons for judgment.

I certify that the preceding sixteen (16 paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 2 July 2001