Willoughby v Clayton Utz - [2008] FMCA 627

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WILLOUGHBY v CLAYTON UTZ

[2008] FMCA 627

BANKRUPTCY – Application to set aside bankruptcy notice – counterclaim set-off or cross demand – what constitutes.

BANKRUPTCY – Application to set aside bankruptcy notice – sufficiency of evidence.

Bankruptcy Act 1966, ss.40, 41, 58, 116, 178, 306
Federal Magistrates Court (Bankruptcy) Rules 2006, r.2.01, 3.02

Jackson v Goldsmith (1950) 81 CLR 446
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Bhagat v Global Custodians Ltd [2002] FCAFC 223
James v Hill [2005] FCA 981
Crimmins v Glenview Home Units Pty Ltd [1999] FCA 515
Re Brink; ex parte Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433
Eastick v Australia and New Zealand Banking Group Ltd (1981) 53 FLR 91
Adams v Lambert (2006) 228 CLR 409
Harding v Lithgow Corporation (1937) 57 CLR 186
re Vicini; ex parte E A Sealey & Co (1982) 64 FLR 323
Jensen v Queensland Law Society Incorporated [2004] FCA 1630
Re Deen; ex parte Deen v Muller (1995) 58 FCR 441
Re Ling; ex parte Ling v Commonwealth of Australia (1995) 58 FCR 129
Re Gould; ex parte Skinner (1983) 72 FLR
Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346
Hawkins v Clayton (1988) 164 CLR 539
Bryant v Commonwealth Bank of Australia (1996) 70 ALJR 306

Applicant:

BERYL FRANCES WILLOUGHBY

Respondent:

CLAYTON UTZ

File Number:

BRG 951 of 2007

Applicant:

MICHAEL STEPHEN WILLOUGHBY

Respondent:

CLAYTON UTZ

File Number:

BRG 999 of 2007

Applicant:

JOHN FRANCIS WILLOUGHBY

Respondent:

CLAYTON UTZ

File Number:

BRG 1000 of 2007

Judgment of:

Wilson FM

Hearing date:

12 March 2008

Date of Last Submission:

12 March 2008

Delivered at:

Brisbane

Delivered on:

15 May 2008

REPRESENTATION

Counsel for the Applicant:

Mr Coulsen

Solicitors for the Applicant:

Sajen Legal

Counsel for the Respondent:

Ms Wheatley

Solicitors for the Respondent:

Freehills

ORDERS

That the application to set aside the bankruptcy notice in each matter is dismissed
That each applicant pay the respondent’s costs of and incidental to the application to be taxed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 951 of 2007

BERYL FRANCES WILLOUGHBY

Applicant

And

CLAYTON UTZ

Respondent

BRG 999 of 2007

MICHAEL STEPHEN WILLOUGHBY

Applicant

And

CLAYTON UTZ

Respondent

BRG 1000 of 2007

JOHN FRANCIS WILLOUGHBY

Applicant

And

CLAYTON UTZ

Respondent

REASONS FOR JUDGMENT

Three applications to set aside bankruptcy notices served on each of the applicants were heard together. They raise a common issue. It is whether a cause of action in the applicants against the respondent can and does amount to a counterclaim set-off or cross demand that could not have been set up in proceedings in which the respondent’s judgment was obtained. What makes these applications unusual is that the respondent’s judgment is an order for costs obtained on its application to have the applicants’ proceedings against it dismissed as a nullity. That application succeeded because the applicants did not have standing to bring the action, at the time…

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.

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Details

Case: [2008] FMCA 627
Decision Date: 15 May 2008

CaseChat Overview and Summary

In the Federal Court of Australia, the matter of Willoughby v Clayton Utz was heard, where the applicants sought to set aside bankruptcy notices issued against them. The applicants were in dispute with the respondent over certain debts and counterclaimed for set-off or cross-demand against the amounts claimed by the respondent. The legal issues before the Court involved the interpretation of the terms of the set-off or cross-demand, and whether the applicants had provided sufficient evidence to support their application to set aside the bankruptcy notices. The Court examined the relevant statutory provisions and the common law principles that govern set-off or cross-demand in the context of bankruptcy proceedings. The Court found that the applicants had not satisfied the necessary burden of proof to support their application and dismissed the application to set aside the bankruptcy notices. The Court ordered that the applicants pay the respondent’s costs of and incidental to the application.

Orders

Orders of the court

That the application to set aside the bankruptcy notice in each matter is dismissed

That each applicant pay the respondent’s costs of and incidental to the application to be taxed.

Background

Background to the litigation

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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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