Fine Real Estate Network Pty Ltd v Howell

REASONS FOR JUDGMENT 1 In November 1999, when I was duty judge, I had occasion to deal with a matter in the bankruptcy list in which the present respondent, Mr Howell, was applying to have a bankruptcy notice set aside under sections 41(7) and 40(1)(9) of the Bankruptcy Act 1966 (Cth) ("the Act") upon the basis that he had a counter-claim, set-off or cross-demand which equalled or exceeded the amount claimed under the bankruptcy notice. 2 In support of this application Mr Howell relied upon the fact that he was owed money as a result of certain proceedings in the Supreme Court of New South Wales between himself and Fine Real Estate Network Pty Limited ("Fine Real Estate"). However these proceedings did not involve the other two judgment creditors who had, jointly with Fine Real Estate, issued the bankruptcy notice against Mr Howell. There was persuasive authority to the effect that in order for a counter-claim, set-off of cross-demand to meet the requirements of section 40(1)(9) of the Act, it must be a claim "in the same right" as the claim upon which the bankruptcy notice is based. This requirement was not met in this case, because of the lack of identity between the company against whom the counter-claim was asserted and the judgment creditors named in the bankruptcy notice. For this reason I declined to make the orders sought in Mr Howell's application.

3 Subsequently, a creditor's petition was issued on behalf of the three judgment creditors and some time later, through random allocation, the matter was allotted to myself as the docket judge. When the matter first came before me for directions, a question arose as to whether I should disqualify myself from further dealing with the matter. I expressed the view that, given the nature of the issues which had previously risen for determination, I saw no difficulty in continuing with the current matter. Subsequently, Mr Howell's solicitor filed a notice of motion seeking that I disqualify myself from the proceedings. Mr Dennis, who appeared for Mr Howell today, said that this was in order to place the matter before me for further consideration. He gave little by way of argument in support of the order sought, except to say that Mr Howell, having lost once in proceedings before me, now has a "sense of unease" as to his prospect of losing again. 4 This situation is, in a general sense, by no means unique. It has arisen on a number of occasions, in the bankruptcy jurisdiction. In Hudson v Whalan [1999] FCA 189 the Full Federal Court (Sackville, North and Hely JJ) made the following observations at para 19: "The test in Australia of whether apprehended bias is made out is 'whether fair-minded people might reasonably apprehend or suspect that the judge has prejudged or might prejudge the case': Webb v The Queen (1994) 181 CLR 41 at 47…; Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475 (FC) at 493. This principle does not mean that a Judge who has sat on one aspect of a case is precluded from dealing with other aspects, including the final hearing." 5 A little later, their Honours referred to Gascor v Ellicott(1997) 1 VR 332 at 342 where Tadgell JA, with whom Brooking JA agreed, made these observations: "Although the criterion of apprehension of partiality or prejudice is possibility, not likelihood, a reasonable apprehension is to be established to the court's satisfaction: it is a reasonable, and not a fanciful or fantastic apprehension that is to be established; and the apprehension is to be attributed to an observer who is 'fair-minded' - which means 'reasonable'. As Mason CJ and McHugh J pointed out in Webb v The Queen at 52, 'it is the court's view of the public's view, not the court's own view which is determinative.' Even so, the court is to be satisfied that the criterion is met, not that it might be." The issues which will fall to be determined when considering whether a sequestration order is to be made in this case will, it appears to me, be quite different from the issues which arose when I declined to set aside the bankruptcy notice. No issues of credibility were involved on that occasion. Indeed, Mr Howell did not give evidence. The matter was dealt with entirely on the basis of the affidavit material. Accordingly, I do not believe that a fair minded observer would have a reasonable apprehension that I had prejudged any issues which are likely to arise in relation to the making of a sequestration order. No basis has therefore been shown upon which I should disqualify myself. Accordingly, I decline to make the order sought in the notice of motion. 6 I reserve the question of costs. The matter is stood over until Monday 1 May 2000. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mathews.