FEDERAL COURT OF AUSTRALIA Goodman v Westpac Banking Corporation [2011] FCA 777 Citation: Goodman v Westpac Banking Corporation [2011] FCA 777 Appeal from: Westpac Banking Corporation v Goodman [2010] FMCA 993 Parties: MORRIS GOODMAN v WESTPAC BANKING CORPORATION File number: VID 51 of 2011 Judge: NORTH J Date of judgment: 1 July 2011 Date of hearing: 1 July 2011 Place: Melbourne Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 32 Counsel for the Appellant: The Appellant appeared in person Counsel for the Respondent: Mr C Nichol Solicitor for the Respondent: Gadens Lawyers IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 51 of 2011 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: MORRIS GOODMAN Appellant AND: WESTPAC BANKING CORPORATION Respondent JUDGE: NORTH J DATE OF ORDER: 1 JULY 2011 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appeal is dismissed. 2. The appellant pay the respondent's costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 51 of 2011 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: MORRIS GOODMAN Appellant AND: WESTPAC BANKING CORPORATION Respondent JUDGE: NORTH J DATE: 1 JULY 2011 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 Before the Court is an appeal by Morris Goodman, the appellant, against orders made by Turner FM on 17 December 2010. The federal magistrate made a sequestration order against the estate of Mr Goodman on the application of the respondent, Westpac Banking Corporation (the Bank). 2 The statutory provisions applicable to this appeal are ss 52(1) and (2) of the Bankruptcy Act 1966 (Cth) (the Act), which relevantly provide: (1) At the hearing of a creditor's petition, the Court shall require proof of: (a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient); (b) service of the petition; and (c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing; and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor. … (2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made; it may dismiss the petition. 3 Section 40(1)(g) of the Act relevantly provides: (1) A debtor commits an act of bankruptcy in each of the following cases: … (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: (i) where the notice was served in Australia--within the time specified in the notice; or (ii) where the notice was served elsewhere--within the time fixed for the purpose by the order giving leave to effect the service; comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained; THE DECISION OF THE FEDERAL MAGISTRATE 4 Mr Goodman was self-represented before the federal magistrate. The foundation for the creditor's petition filed by the Bank was an act of bankruptcy committed by Mr Goodman. The federal magistrate addressed the matters required by s 40(1)(g) of the Act to determine whether an act of bankruptcy had been committed. He referred to the debt constituted by two orders made by the Supreme Court of Victoria. The first order was made by Mukhtar AJ on 5 March 2010, dismissing an application by Mr Goodman for summary dismissal of the proceeding for want of prosecution. Mukhtar AJ ordered that Mr Goodman pay the costs of the application in the sum of $1,200. The second order was made by Cavanough J on 15 April 2010, on appeal from the order of Mukhtar AJ. Cavanough J ordered that Mr Goodman pay the costs of the appeal in the sum of $3,500. 5 The federal magistrate then determined that neither of the costs orders had been stayed. He further found that the bankruptcy notice had been served and Mr Goodman had not complied with the bankruptcy notice within the designated timeframe. The federal magistrate next considered whether the defence of solvency had been made out. He referred to the evidence of the assets of Mr Goodman, namely a motor car valued at $2,500, furniture owned with his wife valued at $3,000, and evidence that Mr Goodman was then earning no income. He found that the motor car and furniture were not to be included in the realisable assets available to pay creditors. Thus, the federal magistrate determined that Mr Goodman was not solvent and the creditor's petition could not be dismissed pursuant to s 52(2)(a) of the Act. 6 The federal magistrate rejected Mr Goodman's argument that the Bank brought the creditor's petition for an ulterior motive, or that it lacked bona fides. He determined that even if the Bank had an interest in Mr Goodman being made bankrupt to stifle litigation, that was not, in itself, sufficient to refuse making the sequestration order. He held that the onus of showing an ulterior motive was borne by Mr Goodman. The allegation of Mr Goodman was denied by the Bank and the federal magistrate considered that there was no proof of the alleged improper motive. 7 The federal magistrate then considered the question whether there was other sufficient cause to refuse to make the sequestration order under s 52(2)(b) of the Act. He considered whether the existence of proceedings filed in this Court against the Bank constituted such sufficient cause. Those proceedings were filed by Mr Goodman on 17 November 2010, two days after the hearing before the federal magistrate. The federal magistrate held that, in order to provide other sufficient cause, Mr Goodman needed to establish that the proceeding was genuine and that he had not reasonably been able to litigate the matter previously. 8 After the hearing of the creditor's petition, Mr Goodman wrote to the federal magistrate restating some of the arguments made at the hearing and raising others. This caused the federal magistrate to direct the Bank to respond in writing, and for the applicant to reply in writing. Presumably because the proceedings in this Court had been filed after the conclusion of the hearing of the creditor's petition, the federal magistrate made a specific direction that the submissions were to include submissions as to the merits of the proceedings filed by Mr Goodman in this Court on 17 November 2010. 9 Mr Goodman filed no material on the merits of the proceeding, but rather argued that it was sufficient that he had filed the application in the Court. The federal magistrate held that sufficient cause to refuse a sequestration order was not established by evidence that Mr Goodman had simply filed the proceeding. 10 The federal magistrate then considered whether proceedings in the Supreme Court of Victoria provided sufficient cause for refusing to make a sequestration order. The federal magistrate observed that the proceeding in the Supreme Court was an appeal of Cavanough J's decision to award costs against Mr Goodman in his failed appeal against the order of Mukhtar AJ. The federal magistrate again observed that Mr Goodman failed to provide any material on the merits of the proceeding. The federal magistrate considered the reasons for decision of Cavanough J and determined that Mr Goodman's proposed appeal against the order of Cavanough J was not likely to succeed. The Court of Appeal of the Supreme Court has since refused Mr Goodman's application for leave to appeal from that order. 11 The federal magistrate then considered Mr Goodman's argument that the bankruptcy notice was issued for less than the statutory minimum of $5,000 pursuant to s 41(1)(b)(ii) of the Act. He rejected the argument because the $5,000 limit commenced on 11 August 2010. When the bankruptcy notice was issued on 12 May 2010, the statutory minimum was $2,000. 12 Then the federal magistrate considered Mr Goodman's argument that the costs orders of Mukhtar AJ and Cavanough J were not final orders. He rejected this argument on the basis of the authorities set out in his reasons. 13 The federal magistrate then considered Mr Goodman's argument that he had offsetting claims against the Bank in VCAT and the Magistrates Court which exceeded the amount of the judgments. Previously, O'Dwyer FM had dismissed Mr Goodman's application to set aside the bankruptcy notice on that ground. The federal magistrate stated that the issue had been determined by O'Dwyer FM. He separately, and for himself, referred to the fact that the VCAT proceeding had been dismissed by Judge Misso on 11 November 2010, and the Magistrates Court proceeding had been struck out on 3 August 2010. 14 Then the federal magistrate again considered whether the litigation in this Court and the Supreme Court against the Bank was likely to succeed so as to provide a sufficient cause for not making a sequestration order under s 52(2)(b) of the Act. He held, after considering various aspects of Mr Goodman's arguments, that the material filed by Mr Goodman did not establish that the Supreme Court proceeding was likely to succeed. In relation to the proceeding in this Court, the federal magistrate again said that Mr Goodman had not filed any material on the merits of the proceeding. Rather, Mr Goodman relied on the fact of filing as evidence of the bona fides of the claim. The federal magistrate rejected the legal basis of this argument. 15 In the course of considering Mr Goodman's written submissions concerning the Supreme Court proceeding, the federal magistrate referred to an argument raised by Mr Goodman to the effect that the bankruptcy notice was invalidly issued because at the time it was issued the Bank knew that the Magistrate Court and VCAT claims were on foot. The evidence of the Bank was that it regarded those claims as hopeless. The federal magistrate held that the existence of the Magistrates Court proceedings and the VCAT claims did not establish a sufficient cause to refuse the sequestration order. THE NOTICE OF APPEAL 16 Mr Goodman filed a notice of appeal from the orders of the federal magistrate on 25 January 2011. The notice of appeal contained 18 grounds of appeal. It was supplemented by a further notice of appeal, filed on 31 January 2011, which contained a further 15 grounds. The grounds of appeal contested every step in the reasoning of the federal magistrate and raised further matters which had not been considered by the federal magistrate. THE SUBMISSIONS OF THE APPELLANT 17 Mr Goodman regarded the judgment of the federal magistrate as exhibiting numerous errors of law, and that the correction of these errors is important in the administration of the bankruptcy jurisdiction. The Court had difficulty in confining Mr Goodman's submissions. Despite the fact that the case involved a small debt and was, on any objective view, a very straightforward application, Mr Goodman viewed the case as a very major proceeding. Mr Goodman was given the opportunity to file written submissions, although limited in length, and to address the Court orally for more than a day. However, in order to confine Mr Goodman to some degree, it was necessary to limit his oral submissions and to direct him to cease filing further written submissions and sending in correspondence to the Court to supplement his oral submissions and already filed written submissions. 18 Mr Goodman devoted a huge amount of effort to examining every aspect, and almost every word, of the bankruptcy notice, the creditor's petition and the affidavits in support. He has obviously done a prodigious amount of research into the case law and legal texts. His submissions regularly extract statements out of context, or without reference to the principle being discussed, in order to support his view that the federal magistrate erred. Mr Goodman's only interest is in his own success in overturning the sequestration order. He sees any disagreement with his view as a sign of stupidity, hostility or misconduct. Consequently, his submissions at times descend into offensive allegations against public officials, opposing lawyers and judicial officers who decide issues against him. 19 It is impractical to answer all of Mr Goodman's arguments in the detail comparable to the detail with which they were made. In relation to the matters determined by the federal magistrate, the Court agrees with the federal magistrate's conclusions and with the reasoning upon which those conclusions are based. In relation to the matters not raised before the federal magistrate, but which were advanced orally on the appeal in this Court, no application for leave to raise these matters for the first time on appeal was made by Mr Goodman. Nonetheless, having regard to the fact that Mr Goodman was unrepresented, the Court will briefly deal with the more significant of them. 20 Some of Mr Goodman's arguments, such as the contention that the Bank's documents were formatted contrary to the requirements of the Federal Court Rules take Mr Goodman nowhere and need not be addressed. As to the more significant arguments, there is no merit in any of them. Those which are not directly dealt with below are nonetheless rejected. 21 On 8 October 2010, Mukhtar AJ made orders in the Supreme Court proceeding which finally disposed of the proceeding. His Honour made an order that there be no order as to costs of the proceeding. Mr Goodman argued that this order overtook and nullified the orders which were the basis of the bankruptcy notice. However, nothing in the orders of 8 October 2010 suggests that they were meant to expunge the earlier orders. Mr Goodman's argument should not be accepted. 22 Then Mr Goodman relied on s 40(1)(g) of the Act, which provides that an act of bankruptcy is committed where a debtor fails to comply with an order which has not been stayed. He contended that the orders of Mukhtar AJ and Cavanough J were deemed to have been stayed and, hence, no act of bankruptcy was committed. Mr Goodman relied on cases which established that execution is deemed to have been stayed where a judgment creditor is not in a position to issue immediate execution on the order. These are cases such as where leave to issue execution is required because a specified time has passed since the order was made. No such situation exists in this case. Mr Goodman argued that these orders could not be enforced without the Bank obtaining a writ of execution, and the necessity for that step meant that the orders were deemed to be stayed. In the present circumstances, the Bank is in a position to issue immediate execution on the orders. At the time of the application for the bankruptcy notice, execution of the orders had not been stayed. Again, the argument of Mr Goodman should not be accepted. 23 Then Mr Goodman argued that the bankruptcy notice is misleading and therefore invalid because the schedule shows the amount in the orders as $4,700 whereas it should show two separate amounts, one reflecting the order for $1,200 and the other reflecting the order for $3,500. This argument fails to take account of [2] of the bankruptcy notice which states: The creditor claims that the debt is due and payable by you. A copy of the judgments or orders relied upon by the creditor is attached. 24 Copies of both orders were attached to the bankruptcy notice. The fact that the debt was constituted by two orders was made clear by the notice. It was not misleading in this respect. Mr Goodman's argument should not be accepted. 25 Next, Mr Goodman relied upon the terms of s 41(1) of the Act, which provided: (1) An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor: (a) a final judgment or final order that: (i) is of the kind described in paragraph 40(1)(g); and (ii) is for an amount of at least $2,000; or (b) 2 or more final judgments or final orders that: (i) are of the kind described in paragraph 40(1)(g); and (ii) taken together are for an amount of at least $2,000. 26 Mr Goodman contended that because the order made by Cavanough J exceeded $2,000, s 41(1)(a) applied. He argued that this meant the bankruptcy notice could only include one of the debt amounts referred to in the orders. It was contended that s 41(1)(b) is reserved for cases where neither debt amounts to the statutory minimum. Mr Goodman argued that the bankruptcy notice was, therefore, defective. Again, this submission should not be accepted. Section 41(1)(b) is available on its express terms in the present case, because the two orders together exceeded the statutory minimum. 27 Finally, Mr Goodman argued that the federal magistrate denied him natural justice. In order to ascertain precisely how this complaint was argued, the Court required Mr Goodman to file a document which identified the relevant transcript references and provided a two line explanation of the complaint. The resulting document complained about almost every page of the transcript. The complaint primarily amounted to dissatisfaction with statements of the federal magistrate which Mr Goodman regarded as contrary to his interests. Where the federal magistrate made enquiries or proffered some preliminary view, Mr Goodman's document descended to offensive reflections on the competence of the federal magistrate. 28 Other transcript references concerned attempts by the federal magistrate to confine Mr Goodman to relevant argument or to time limits. None of these instances amount to a denial of natural justice. No reasonable observer would regard them alone or together as an indication that the federal magistrate might not bring an impartial mind to the case. Mr Goodman was so determined to place before the Federal Magistrates Court the full extent of his research and the multiplicity of his arguments, most of which were unarguable, that it was difficult to confine him within reasonable limits. The attempt by the federal magistrate to do so was no more than a judicial officer taking responsible steps to conduct proceedings in an orderly and efficient manner, whilst, at the same time, providing a fair opportunity to Mr Goodman to make his case. 29 Then Mr Goodman relied on the statement by the federal magistrate that the federal magistrate would not listen to criticism of Mr Nichol, who appeared as counsel for the Bank. This statement is not evidence of any prejudice or lack of impartiality towards Mr Goodman. It occurred at the end of a discussion concerning the unauthorised tape recording by Mr Goodman of a proceeding before Mukhtar AJ. The federal magistrate was concerned how the issue was relevant to the matters before him. That led to a response from Mr Goodman that Mr Nichol had misled the Court on a number of occasions. Counsel objected to the comment. In ruling on that objection, the federal magistrate said the he would not listen to that sort of comment in the Court. In the context of the discussion, the federal magistrate was doing no more than trying to confine Mr Goodman within the ordinary bounds of relevance and propriety. His statement related directly to the circumstance under discussion. It was not a general statement and it was an appropriate response. Further, it appears to have been accepted as such by Mr Goodman, who responded to the federal magistrate's statement by saying, "I accept this." 30 Mr Goodman applied to lead further evidence on the appeal. A number of the documents were public documents which were not contentious and were referred to by the parties in submissions in any event. Examples are the order of the Court of Appeal of the Supreme Court made on 13 December 2010 refusing Mr Goodman leave to appeal the judgment of Cavanough J, and the judgment of O'Dwyer FM of 6 September 2010. The application to adduce further evidence in respect of these documents is unnecessary. 31 The other documents, which are the subject of the application to adduce further evidence, are irrelevant to the appeal. For instance, Mr Goodman sought to rely on certain views about the irregularity of the bankruptcy notice expressed in correspondence with ITSA, or correspondence with O'Dwyer FM about his judgment. There is no basis upon which to grant Mr Goodman leave to adduce this evidence on appeal. The application is refused. 32 It follows from these reasons that the appeal is dismissed with costs. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North. Associate: Dated: 11 July 2011