Wu v Li - [2019] FCCA 1190

FEDERAL CIRCUIT COURT OF AUSTRALIA

WU v LI

[2019] FCCA 1190

Catchwords:
BANKRUPTCY – Application to set aside a bankruptcy notice – whether the applicant has a counterclaim, set off or cross-demand – whether the bankruptcy notice is misleading – whether the bankruptcy notice has been properly issued – no abuse of process where the respondent had issued the bankruptcy notice – application to set aside the bankruptcy notice is dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.27, 40

Cases cited:

Genovese v BGC Construction Pty Ltd [2005] 215 ALR 440
Stec v Orfanos [1999] FCA 457

Applicant:

TAO WU

Respondent:

YU XIN LI

File Number:

SYG 595 of 2019

Judgment of:

Judge Street

Hearing date:

7 May 2019

Date of Last Submission:

7 May 2019

Delivered at:

Sydney

Delivered on:

7 May 2019

REPRESENTATION

Counsel for the Applicant:

Mr D Thomas

Solicitors for the Applicant:

Mcinnes Wilson Lawyers

Counsel for the Respondent:

Mr A Flecknoe-Brown

Solicitors for the Respondent:

WMG Legal Pty Ltd

ORDERS

The application is dismissed.
The applicant pay the first respondent’s costs fixed in the amount of $10,000.00.

DATE OF ORDER: 7 May 2019

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 595 of 2019

TAO WU

Applicant

And

YU XIN LI

Respondent

REASONS FOR JUDGMENT

These are proceedings within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (Cth) (“the Act”) seeking to set aside a bankruptcy notice served upon the applicant on 19 September 2018 pursuant to s 40(1)(g) of the Act. The proceedings were brought in the Federal Court of Australia, on the last day to do so, to set aside the bankruptcy notice.
The grounds upon which the applicant seeks to set aside the bankruptcy notice is, first, that the applicant has a counterclaim, setoff or cross-demand, equal to or exceeding the amount of the judgment debt of a sum under the final order, being a counterclaim, setoff or cross-demand, that he or she could not have set up in the action or proceedings in which the judgment order was obtained. There is a further argument advanced that the bankruptcy notice is misleading and a further argument that because there were proceedings that were still on foot at the time that the bankruptcy notice the subject of these proceedings was issued, the Court should find that there has been an abuse of process when another Court was still determining a cost question relating to an earlier bankruptcy notice.
The proceedings, the subject of the alleged counterclaim, setoff or cross-demand, have been brought in the Supreme Court of the ACT and are presently the subject of a reserved decision in relation to the leave granted to add to the proceedings a derivative suit. Those proceedings are ones in respect of which the applicant annexed the statement of claim, taking proceedings against both the respondent and his wife. The nature of the claim advanced on its face is an alleged joint liability by the applicant and his wife. The underlying building…

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.

Continue reading Wu v Li

Details

AGLC: WU v Li [2019] FCCA 1190
Case: [2019] FCCA 1190
Decision Date: 7 May 2019

CaseChat Overview and Summary

In *Wu v Li*, the applicant sought to set aside a bankruptcy notice issued by the respondent. The core of the dispute concerned whether the applicant possessed a valid counterclaim, set-off, or cross-demand that would justify setting aside the notice. The applicant also argued that the bankruptcy notice was misleading and had not been properly issued. The matter was heard by Judge Street.

The primary legal issues before the court were whether the applicant had established a sufficient counterclaim, set-off, or cross-demand to defeat the bankruptcy notice, and whether the notice itself suffered from defects rendering it invalid or misleading. The court was also required to consider whether the issuance of the bankruptcy notice constituted an abuse of process.

Judge Street dismissed the application, finding that the applicant had failed to demonstrate the existence of a counterclaim, set-off, or cross-demand that was of a sufficient nature to satisfy the requirements for setting aside a bankruptcy notice. The court determined that the respondent's issuance of the bankruptcy notice did not amount to an abuse of process. Consequently, the application to set aside the bankruptcy notice was dismissed.

Orders