Gould, Stephen v Day, Julian [1998] FCA 116

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG8221 of 1997

BETWEEN: STEPHEN GOULD

Applicant

AND: JULIAN DAY

Respondent

JUDGE: WILCOX J

DATE: 20 FEBRUARY 1998

PLACE: SYDNEY

EXTEMPORE REASONS FOR JUDGMENT WILCOX J: This is an application by Notice of Motion to set aside a bankruptcy notice issued by Julian Day against Stephen Gould. Both parties appear in person before me today. They also appeared before me on 29 January 1998, when there was a question about certain subpoenas. On that occasion there was discussion about the current motion and I fixed it for hearing today. The bankruptcy notice seeks payment of the sum of $2,202, together with interest, this being the amount of an order for witness' expenses made against Mr Gould in favour of Mr Day by a magistrate in the St James Local Court on 8 February 1994. The magistrate had just heard an information alleging an offence by Mr Gould. Mr Day was a witness at that hearing. The application to set aside the bankruptcy notice is based on two grounds. First, Mr Gould disputes the quantum of the order made by the magistrate; he has put on a deal of evidence intended to support the view that the amount fixed for witness' expenses was excessive. Secondly, Mr Gould says he has a cross-demand or counter-claim against Mr Day exceeding the amount of the sum payable under the magistrate's order that he could not have set up in the proceeding in which that order was obtained. Dealing with the first matter, I pointed out to Mr Gould on 29 January that it was not appropriate for me to go behind the magistrate's order and consider for myself what was a proper allowance for witness' expenses. The magistrate dealt with that matter. It appears from the material before me that the quantum of witnesses' expenses was a matter of debate before the magistrate. At the end of that debate, she fixed a sum of $2,202 in respect of Mr Day. I have no basis for saying this sum was excessive. At the same time, I emphasise I have no idea whether I, myself, would have fixed that sum. I have not investigated the magistrate's computation of quantum or considered for myself the matters relating to quantum that Mr Gould put before the magistrate. The reason for this, as I explained to Mr Gould on 29 January, is that the order of the magistrate is an order of a court; while it stands, it binds him and he is obliged to comply with it. I say "while it stands" because Mr Gould attempted to challenge the order by two separate proceedings; one, an appeal to the District Court of New South Wales, the other, an application to the Supreme Court. The District Court appeal was dismissed on the basis the District Court had been deprived of jurisdiction by the filing of the application to the Supreme Court. The Supreme Court application was dismissed by Grove J. I do not have any information about the basis of his Honour's decision. But that does not matter. It is enough for me to note Mr Gould has attempted to canvass the correctness of the order, but he has been unsuccessful. It seems he has exhausted all avenues of disputing the magistrate's decision and the order still stands. He is bound by it. This ground of objection to the bankruptcy notice must fail. The second ground fares no better. Mr Gould claims against Mr Day and another person for breach of contract, negligence and theft of intellectual property. Apparently, he issued a summons (no.7322/94) in the District Court of New South Wales on 28 November 1994. He claimed $250,000 and named, as defendants, Mr Day and one Alan Manly. There was apparently some interlocutory application in 1995 at which the case was allowed to proceed to a final hearing. It came before Judge Patten for that purpose in 1997. His Honour dismissed the claim. Mr Gould is unhappy about that decision. On 2 December 1997 he filed a notice of appeal in the Court of Appeal. The appeal has yet to be heard. No material has been put before this Court concerning the claim for damages other than what I have stated. There is nothing before me concerning the merits of the case; all I know is the causes of actions relied upon and the fate of the case in the District Court. As must be apparent, under those circumstances, I cannot be satisfied, as is required by s 40(1)(g) of the Bankruptcy Act 1966, that Mr Gould has a counter-claim, set off or cross-demand against Mr Day equal to or exceeding the amount of the magistrate's order. There is, of course, no problem about Mr Gould satisfying me that any counter-claim, set off or cross-demand that might exist could not have been set up in the proceeding in which the order was obtained. That was a criminal proceeding in which it would have been impossible to litigate the damages claim. The problem Mr Gould faces is that he has not put before the Court any material that indicates the existence of a counter-claim, set off or cross-demand. The only evidence points in the opposite direction; he has made a claim and it has been dismissed. The application to set aside the bankruptcy notice must fail. I propose to give Mr Gould a further opportunity to pay the amount claimed in the bankruptcy notice and thereby avoid committing an act of bankruptcy. I will hear Mr Day on the matter but, subject to anything he might say, I am inclined to extend the period of the bankruptcy notice for a further 21 days from today. If the amount claimed in the bankruptcy notice is not paid within that time, then an act of bankruptcy will have been committed and it will be open to Mr Day, if he sees fit, to take further action by way of filing a petition for a sequestration order. [There was discussion about extension of time.] The order of the Court is this: I extend the time for complying with the bankruptcy notice until and including Friday, 13 March 1998; otherwise I dismiss the motion to set aside the bankruptcy notice. I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox .