Wily v Official Receiver

In *Wily v Official Receiver*, the applicant, Mr Wily, sought to set aside a bankruptcy notice issued against him by the Official Receiver. The dispute concerned whether Mr Wily had a counter-claim, set-off or cross-demand against the Official Receiver that equalled or exceeded the amount of the judgment debt for which the bankruptcy notice was issued. The matter came before Judge Manousaridis in the Federal Court of Australia.

The primary legal issue before the Court was whether Mr Wily possessed a counter-claim, set-off, or cross-demand that was of a sufficient nature and amount to justify setting aside the bankruptcy notice. Specifically, the Court had to determine if the alleged cross-demand was genuinely arguable and substantial, rather than merely a speculative or vexatious claim.

Judge Manousaridis reasoned that for a counter-claim, set-off, or cross-demand to be a sufficient ground for setting aside a bankruptcy notice, it must be substantial and genuinely disputed. The Court found that Mr Wily's asserted cross-demand, which related to alleged breaches of duty by the Official Receiver in administering a previous company liquidation, was not sufficiently substantiated. The Court applied the principle that the alleged cross-demand must be of such a character that it would be inequitable to allow the judgment creditor to proceed with the bankruptcy notice without allowing the debtor to raise the cross-demand. As the cross-demand was found to be speculative and lacking in evidence, it did not meet the threshold required to set aside the notice.

The Court ordered that the application to set aside the bankruptcy notice be dismissed.