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[2000] FCA 1673
Federal Court of Australia
2000-11-24
Meagher JA, Mason P, Sackville J, Goldberg JJ
Original judgment source is linked above.
THE COURT: 1 The appellant Mr Stephen Gould appeals from an order for the sequestration of his estate made on 7 September 2000. The relevant act of bankruptcy was non-compliance with a bankruptcy notice founded on an order in the District Court of New South Wales for payment of $37,715.94 and interest thereon of $6,799.22. The ground of appeal principally relied on by Mr Gould is an allegation of apparent bias. 2 There is a background of extensive and acrimonious litigation between Mr Gould and the respondent petitioning creditors Mr Julian Day and Mr Alan Manly. Before us and before the learned primary judge neither side was legally represented.
Proceedings in the New South Wales Courts 3 The District Court order was for costs awarded to Mr Day and Mr Manly following the dismissal by his Honour Judge Patten on 4 November 1997 of an action brought by Mr Gould against them. Mr Gould sued in contract and negligence arising out of what was said to be a joint venture. His Honour dismissed the claim primarily on the basis that the evidence did not disclose a concluded agreement. 4 An appeal to the Court of Appeal (Priestley and Stern JJA and Fitzgerald AJA) was dismissed on 16 March 1999. 5 Mr Gould also appealed to the Court of Appeal against the assessment of the Costs Assessor. This appeal was dismissed by Master Malpass on 30 April 1999. An application for leave to appeal against the order of Master Malpass was dismissed by Meagher JA on 11 October 1999. Mr Gould sought leave to appeal against Meagher JA's order. This application was dismissed by a full bench of the Court of Appeal (Mason P, Handley and Stein JJA) on 29 November 1999.
Bankruptcy notice 6 The bankruptcy notice was served on Mr Gould on the date of issue, 23 August 1999. On 13 September 1999 Mr Gould applied to set aside the notice. On 20 September 1999 the respondents filed a petition and served it on Mr Gould.
Application before Sackville J 7 On 24 November 1999 Mr Gould's application to set aside the notice came on for hearing before Sackville J: [1999] FCA 1650. The petition (amended in the meantime) also was before the Court. After discussion with counsel who then appeared for Mr Day and Mr Manly, his Honour made without opposition an order striking out the petition. However his Honour dismissed Mr Gould's application to set aside the notice. The grounds relied on by Mr Gould were as follows: (i) The cost order should not have been made because the "true plaintiff" in the proceeding was not Mr Gould himself but a body known as Halisa International. (ii) The costs should have been reduced by reason of the conduct of Mr Day and Mr Manly in the District Court action. (iii) Mr Gould had a counter-claim, set-off or cross demand within the meaning of s 40(1)(g).
(i) The costs order was a final order and the appeal process exhausted "except for the unlikely possibility that (Mr Gould) may obtain special leave to appeal from the High Court". (ii) For the same reason there was no ground for concluding that the amount fixed by the Costs Assessor was incorrect. (iii) Mr Gould had instituted a defamation claim against Mr Manly in the Supreme Court of New South Wales based on an allegedly defamatory e-mail and another claim in the District Court against Mr Day in respect of a letter sent by him to a Member of Parliament. But there was no evidence to establish that he had a fair chance of success in those proceedings. There was in the case of both actions no evidence suggesting that the alleged imputations were false, or as to the damages which might be recovered.
Petition and grounds for opposition 8 The present petition was filed on 1 March 2000. On 13 April Mr Gould filed an affidavit which set out his grounds for opposing the petition. Relevantly the affidavit stated: "A This Affidavit is the grounds for opposing the Creditors Petition lodged jointly by Julian DAY and Alan MANLY on 01/03/2000 and served on 08/03/2000. There are sufficient grounds for a sequestration order not to be made Bankruptcy Act 52.2.(b). B The grounds can be summarised as: a DEBTOR SOLVENT The alleged debtor is solvent and meets all normal daily costs. He has considerable sums of money owed to him as the General Partner in Halisa-NSW Partnership PT 0014228. His efforts to accumulate capital have been severely hampered by the actions of Julian DAY and Alan MANLY since 1994. This is the now [sic] an action 12242/99 in the Supreme Court. b SUPREME COURT ACTION AGAINST 2ND APPLICANT CREDITOR There is an action in Supreme Court No 12242/99 against Alan MANLY for damages in excess $750,000 for loss of income and depravation [sic] of business. There is a hearing on 17/04/2000 to join Julian DAY as a defendant {A}. As the Creditors' petition was issued jointly it should be suspended pending the outcome of this action. c HIGH COURT APPEAL AGAINST COSTS CLAIMED There is a High Court Appeal pending against the Costs Claimed. The delay is receipt of signed District Court orders (see attached Affidavit referring to difficulties obtaining sealed copies of the order for the Appeal) {B}. This High Court Appeal is based on new evidence from the Orders. The new Evidence is that on 15/98/96 Justice SIDIS awarded costs to the Plaintiff for hearing before her on 03/05/96 and 15/08/96. All other costs were reserved. It is these costs that Julian DAY and Alan MANLY have issued the Creditors' Petition. It is these costs for the hearings when production was not provided that is the issue for the High Court Appeal. d DEFAMATION ACTION DISTRICT COURT 1ST APPLICANT CREDITOR There is a Defamation against Julian DAY in the District Court. An appeal against the striking out of the defamation action 6948/98 by Julian DAY is in progress in the Court of Appeal. On 08/12/99 the case was struck out because Stephen GOULD had not completed Discovery. This has now been rectified and an index of Discovery has been prepared (attached affidavit delay notice opposing Creditors Petition" {C} e NEW CONTRACTS AND PROJECTS FOR ALLEGED DEBTOR There are a number of contracts pending for new project with the OIC. These contracts are based on the success the OIC has achieved in international software competition like the Global Bangemann Challenge {D}. f Since Christmas 1999 I have been working on these new projects that is starting to attracted [sic] considerable funding interest. If I [sic] a sequestration order is made it will make it very difficult for business partners to continue to participate in the projects."
Applications before Katz J 9 On 9 May Mr Gould filed a notice of motion seeking orders that the bankruptcy notice and creditors' petition be dismissed on the grounds (i) that there were "High Court proceedings under way" to have the District Court order revoked, (ii) that Mr Gould had claims against Mr Day in the District Court for "Malicious defamation" and against Mr Manly in the Supreme Court for "loss of earnings for prolonged and malicious depravation [sic] of income" and (iii) that Mr Gould "is solvent and endeavouring to trade and in a position to pay any justified debts when they fall due". Costs and loss of income were also sought. 10 On 30 May Mr Gould filed a notice of motion seeking an order that the hearing of the petition and his motion of 9 May be postponed until after 19 June. 11 On 5 June Katz J made orders for Mr Gould to file any further evidence by 26 June, for Mr Day and Mr Manly to file any evidence in reply by 3 July and that "the matter" be fixed for hearing on 21 August with an estimated duration of one day. 12 On 18 July Mr Gould procured the issue of subpoenas directed to Mr Day and Mr Manly to produce certain documents. On 25 July they issued a notice of motion to "strike out" the subpoenas. 13 On 28 July Mr Gould filed a notice of motion seeking to vary the orders of Katz J of 5 June by (i) extending the time for filing evidence to 14 August, (ii) allowing the use of a PC with Internet access in court on the hearing date on 21 August and (iii) directing that the sequence of the hearing on 21 August should be, first, his claim for loss of income for the postponement of the hearing on 10 April, secondly, his notice of motion to have the creditors' petition dismissed and thirdly, the creditors' petition. In support of that notice of motion Mr Gould swore an affidavit on 28 July claiming that new evidence had emerged since 26 June to show why he was now back to the position in 1993 when Mr Day agreed to a joint venture to develop Electronic Committee Management and the reasons behind the "malicious and defamatory actions" of Mr Day and Mr Manly to prevent him earning an income since 1993 and why he was "in a position to generate revenue to meet any lawful claims". He also deposed that he required an Internet PC in court to demonstrate the new evidence and why he was "recognised as a world-expert in (his) field" and why he was "in a position to generate revenue to meet any legal costs claimed". 14 On 2 August Katz J varied his orders of 5 June by giving Mr Gould leave to file by 9 August evidence in relation to par 4 of Mr Day's affidavit of 4 July. (Mr Day alleged that Mr Gould, in an affidavit of 26 June, had produced a fabricated document and requested that Mr Gould be ordered to provide an original copy of the document for forensic inspection.) His Honour also directed that Mr Day's and Mr Manly's applications in relation to the subpoenas be adjourned to the hearing on 21 August. 15 On 9 August Mr Gould filed a notice of motion seeking leave to appeal against the orders of Katz J on 2 August. The Court file does not contain any formal order made by Katz J on 2 August. The Report of Listings only notes the procedural directions mentioned above. However on 9 August Mr Gould filed in support of his notice of motion for leave to appeal four separate affidavits sworn by him, one of which asserts that on 2 August Katz J ordered (i) that Mr Gould could not file new evidence (ii) that Mr Gould had to produce an original agreement for Mr Day and Mr Manly to verify (iii) that the documents subpoenaed from them were to be delivered to the Court on 21 August and (iv) that Mr Gould could not use a PC with Internet access in the courtroom. The four affidavits also contain a great deal of material concerning Mr Gould's alleged business ventures and his disputes with Mr Day and Mr Manly. 16 The notice of motion for leave to appeal was returnable for directions on Wednesday 23 August. On 15 August Mr Gould filed a notice of motion seeking that the hearing of the petition on 21 August be set aside until after the appeal was heard.
Hearings before Conti J 17 The petition came on for hearing before Conti J on Monday 21 August. In the context of discussing the application for leave to appeal the following exchange took place (in this and following passages the parts underlined are said by Mr Gould to show bias): Mr Gould: "…This bankruptcy notice was lodged nearly 12 months ago and in the last six to seven months a great deal has happened obviously for me to be able to show the Court that now I am in a position financially not only solvent but more important explain to the Court why this creditor's petition and bankruptcy notice should be dismissed." 18 His Honour: "If you're solvent, why don't you pay the District Court judgment? Why don't you pay? What's the problem? The District Court judgment has been established. You have exhausted avenues of appeal and, according to material that I have read on the file, you have no assets." 19 There followed further discussion in which Mr Gould was asserting that he had "intellectual property assets". Mr Gould spoke of amounts said to be due to him. He claimed in substance that Mr Day and Mr Manly had contacted potential purchasers of his assets and made defamatory statements about him. He asserted that he had since 1997 been conducting a business called Halisa New South Wales Partnership together with one Guy Blowberg. His Honour then said: "If I [sic] drawing the inference that you're intentionally seeking to disclose [sic] the existence of funds and assets of your own from the judgment creditors, Mr Day and Mr Manly, why would that inference not be open for me to draw? If I could put it more simply, why can't I draw the inference in the light of what you have told me about your business operation, that you are deliberately and dishonestly withholding from Mr Day and from Mr Manly the existence of assets upon which they could levy execution on their judgment?" 20 His Honour also pointed out that on the Court file was a statement of financial position signed by Mr Gould against which he had stated a nil value for each item of property and assets except interest in a partnership said to be worth $1 million. It was on the basis of that that he sought an exemption from paying Court fees. 21 His Honour then asked Mr Gould: "Is the statement that you have no money in a bank or a building society, no other investments, no money owing to you. Is that a true and frank statement to the Court?" 22 Mr Gould replied that he had plenty of money owing to him and that he had paid the filing fees for two affidavits and one notice of motion. 23 His Honour told Mr Gould that he could seek from himself leave to appeal the decision of Katz J or could apply to a Full Court but that if Mr Gould took the former option there was no appeal to the Full Court. Mr Gould indicated that he was prepared to abide by that. After referring to certain material his Honour said: "Well, I'll take that material as being before me on this present application for leave to appeal against Katz J's orders. Well, I assume, Mr Gould, correct me if I am wrong that you will be wanting to also place these affidavits before me as a basis for resisting the creditors petition depending on the outcome of your present application?" 24 Mr Gould agreed. 25 Mr Gould then gave evidence and was cross-examined by Mr Day, mainly in relation to the affairs of the alleged partnership business. At the conclusion of the cross-examination his Honour said: "Is there anything else you would like to say to me arising out of the questions that have been asked of you?" 26 Mr Gould said: "Yes your Honour I think you will see in my submission why the creditors' petition should be struck out." 27 His Honour said: "Yes. We are not dealing with the creditors' petition now, we are just dealing at the moment with what was the error that Katz J committed by declining to allow you to take your various courses of which you now complain. We'll come to the creditors' petition if necessary or if appropriate after that." 28 His Honour then said: "Mr Gould, I don't think that anything contained in these affidavits demonstrates that Katz J miscarried in the exercise of his discretion in declining to allow you to put further material on in opposition to the creditors' petition, nevertheless, as a practical matter and whilst I would formally dismiss your application for leave to appeal against his Honour's orders, I propose to take the course of allowing you to use this material and also, any questions in cross-examination for the purpose of resisting the creditors' petition. I am not persuaded that there is any reason why we can't proceed with the creditors' petition today, subject to something I want to say to you. Mr Gould, I am conscious of the fact that you are a litigant in person, just as I'm conscious of the fact that Mr Day and Mr Manly are also and that a very large amount of money has been spent and will obviously continue to be spent in this apparently interminable litigation between you. The objective facts are that you have been unable to persuade the courts thus far as to why you should not pay and satisfy the judgment, the original judgment of the District Court and although I'm conscious of the fact that you are seeking leave to appeal to the High Court, I must say that your prospects of obtaining leave to appeal to the High Court are entirely remote. In any event, the mere lodgment of an application for leave to appeal to the High Court does not create a stay. On the other hand I don't want to see you in effect, lose this business today by proceeding with the creditors' petition and on the assumption that the creditors' petition will result in your sequestration. You've obviously got, if I may say so, a significant business interest and operation and I think the time has come when you must bite the bullet and from the resources of that operation repay the judgment debt which you owe or else put yourself in the probably inevitable circumstances of bankruptcy. I want to give you an opportunity in the next seven days by standing this matter over, to put behind you and I'm making a similar observation to Mr Day and Mr Manly, put behind you this extraordinary amount of litigation which is taking up the time which could otherwise be engaged by all of you in the positive endeavours of improving your own business. I want you to come to your good senses and accept my counsel to you that enough is enough. That I want to stand these proceedings over, subject to what Mr Day and Manly have to say to me, for seven days to enable you to consider what I've said and to on or before the next occasion tender by bank cheque payment of what is owed to you under the creditors' petition. If you don't want me to give you the opportunity, then I'll proceed with the hearing of the creditors' petition. As a practical matter I've allowed you to put before me although technically in connection with an application for leave to appeal, in fact all the evidence which you apparently wish to put before Katz J or which you foreshadowed that you would put before Katz J in resisting the creditors' petition. So you haven't been prejudiced in any way, in fact you've had the advantage in effect, of getting the material before the Court notwithstanding that his Honour was not prepared to allow you further time so to do. So, you could have achieved by virtue of my having to hear whatever evidence you wish to put in support of the application for leave to appeal, the very evidence that you have wished to put before the Court in connection with your opposition to the creditors petition. So, having achieved in a practical way what you had sought to achieve in front of Katz J notwithstanding that I am unable to identify any ground for impugning his Honour's exercise for discretion, I now want to, as I say, subject to what Mr Day and Mr Manly want to say to me, to give you seven days to put all this behind you. I have heard what you have said in terms of your assets, I'm not entirely convinced that you have been frank with the Court as to the nature and extent of your assets in terms of either legal ownership or control. But I do see that you are very concerned to retain this business, you have obviously worked hard to build up this business and it will be a great pity if you allow the pursuit of litigation to destroy what is most important to you in your life. I have been in this profession now for some 40 years and I've seen people many times do what you are doing and live to regret it and I think that as much as there is hurt and I've got no doubt it's mutual hurt, much as there is enormous antagonism, a deep desire for revenge on the part of both of you, you have got to now totally reverse the path you are taking. I believe, from the snippets of evidence you have let through here, that you probably have got the means to be able to fund this indebtedness, or convince the Court that you can make a substantial effort towards so doing in the next week or so and complete the entire satisfaction of the indebtedness within a finite period and that is the course I commend to you. The other course is just going to be a disaster for yourself and your business, if I chose to make a sequestration order today. Are you prepared to accept my suggestion that this matter be stood over for seven days - and as I say, I'm not tying your hands, Mr Day and Mr Manly, at the moment - on the basis that it's an opportunity which presents to you to be able to liquidate or substantially liquidate an indebtedness that had been established in other courts and which you must now face up to? Are you prepared to accept my invitation for a week to consider your position and come back here and tender cash, or a substantial amount of cash - and by cash I mean of course a bank cheque - and face up to the fact that you are now inevitably going to have to find the money to meet those outstanding succession of judgments for basically the same sum of money plus costs, or else face the very likely prospect of sequestration of your estate and thus a very great handicap to your business? What is your response? It can't go on, Mr Gould. I'm very happy to proceed and hear all the submissions you want to make and the creditors' petition, if you would prefer to further address me, if you don't want to have the opportunity of a weeks adjournment on the basis that you will do something of a practical kind towards addressing the gravity of the situation you face." 29 Mr Gould then suggested that "mediation may be a way to go". Mr Day then said that he and Mr Day were prepared for Mr Gould to have seven days but were not prepared to mediate. The exchange then continued His Honour: "Well, that is the choices, Mr Gould. You must recognise that they are your choices." Mr Gould: "No, I believe your Honour, under 52(3). His Honour: "This is section 52 of the Bankruptcy Act?" Mr Gould: "Yes." His Honour: "That's what you'd be able to address me." Mr Gould: In fact I believe it's 21 days rather than 7 days. His Honour: "You will be able to address me on any ground upon which you would wish to oppose the making of a sequestration order pursuant to a creditor's petition. I haven't dealt with that yet. Section 52 matters would then come up for dealing but you appreciate that if I'm against you in relation to the creditor's petition then the sequestration order will be made today and I emphasise here what I'm offering to you is the opportunity to go away, perhaps get independent advice but come to your senses and deal with the fact that these are judgments of the court and are going to stay as judgments of the court. You either face that decision within the next 7 days or you may not have the opportunity to face it again." 30 Mr Gould then said that within seven days he was not likely to be able to get the money available for Messrs Day and Manly. The following exchange took place: Mr Gould: "I have already got commitments that the funds that the people working to develop projects to get certain things done within certain times, those people have to be paid. Now the revenue that is likely to come in and this depends on a whole series of meetings that we're having now or over the next two weeks, primarily to put in a funding application to Dis for two projects on 15 September. That is really going to be whether those organisations are then going to put in funds to actually get the projects up and running, whether - and this is obviously the great fragility of the situation here - I may turn round and say look fellows this is the money that is owed to me and as I'm New South Wales partnership, via the OAC, those people may be in a position to say well hold on we're not putting in funds to do that. Obviously Mr Day and Mr Manly will use that if they get wind of any of these projects being set up anywhere because they've already said to people do you realise you're paying money to the OAC to pay Mr Gould's legal fees." His Honour: "Mr Gould, can I just say this to you, that I've endeavoured to follow what you've said about these somewhat curious corporate or non-corporate vehicles. I want to be frank with you and say that I don't think that you have frankly put your financial position before the court which would have enabled me to evaluate what you've now said to me. I think that it's quite apparent to me that you're seeking to dissemble the essence of your financial position. That is why I'm saying to you you have an opportunity to do something within 7 days and it may well be that you can't come up with a substantial sum but you can show bona fides and endeavour to come up with a reasonable sum and then Mr Day and Mr Manly may well take the view that they will give you further time to bear the balance. I certainly see no virtue if I accept the entirety of what you say in terms of your present situation in seeing you financially destroyed but the paucity of the evidence that you have put on with these affidavits that have been filed, which are virtually valueless in terms of enabling me to assess what is your true worth, that paucity of evidence is such that the making of a sequestration order today is a very real possibility. I want to put all that behind me and give you a week to endeavour to come back and come up with something in the meantime of a practical nature and not just words and documents. I repeat to you would you like that opportunity or do you submit to a hearing which will take place immediately on the creditors' petition." 31 His Honour then adjourned the matter to 31 August and formerly ordered that the motion for leave to appeal against the interlocutory order of Katz J made August 2000 be dismissed and "since the evidence in support of that motion with [sic] leave to appeal will become, in reality, evidence in the creditors' petition proceedings I will not make any order for costs in relation to the dismissal of the summons for leave - or the motion for leave to appeal at least for the time being." 32 After some debate with Mr Day and Mr Manly about the confidentiality of material which Mr Gould had subpoenaed from them his Honour said: "Mr Gould is entitled to put the submissions on a fairly wide basis not just only on a financial basis as to why I should not make a sequestration order which I can look at on the next occasion. My belief now is that I shouldn't say anything which might be thought to be provocative or encourage an approach to the adjourned hearing which would see the end or the beginning of the end for litigation rather than the prolonging of it. So what I'll do is ask my associate to keep your affidavit and the material with it separately in a separate folder for the moment. I'll read it before the next occasion so we don't lose any time if we have to lose time. If I do decide that it's material I would need to give Mr Gould time to read it." 33 Mr Gould said that he did not believe he would be able to generate the amount of money in the period of time but would like to hand the Court what was "going to be the basis for my submission anyway next week". His Honour agreed to this. 34 Amongst other things the submission asserted (i) that there was a discrepancy between the determination of the Costs Assessor and the certified amount of the judgment, (ii) that of the debt some $28,000 was for fees for fifteen subpoena and discovery hearings when Mr Day and Mr Manly failed to produce documents, (iii) that Mr Gould was seeking special leave to appeal to the High Court based on new evidence, (iv) that for seven years Mr Day and Mr Manly had engaged in "long term malice" against him by, inter alia, making defamatory statements "de-railing funding applications for Government funds" to the extent that "he is only considered to be an expert in his field in the International arena", he is now recovering from the damage infected by them; although he has over $2 million intellectual property assets his liquid funds are "channelled towards developing software to build on the alliances formed over the last nine months"; that all those amount to special circumstances under s 52(2)(b), (v) that he has defamation claims against Mr Manly and Mr Day, one of which was struck out because of the incompetence of his (Mr Gould's) solicitor in relation to discovery, (vi) that he has paid all other trading costs and the Halisa New South Wales Partnership has various projects in the course of discussion. 35 On 31 August the hearing commenced with his Honour asking Mr Gould about certain documents: His Honour: "During the course of the week I received some material I think from you, Mr Gould, is that correct? Mr Gould: Yes, your Honour. His Honour: I'll hand that material back to you. If you wish to put on evidence you put it on in affidavit form and you provide a copy to the petitioners. You haven't got a right just to correspond with a Judge, the presiding Judge as you see fit. So I have not read the material and as I say if you wish to give any evidence I'll give you the opportunity to go into the witness box and give any evidence you see fit. Mr Gould: Your Honour, those affidavits were filed at the same time. His Honour: Which affidavits are you referring to? Mr Gould: That material, sir, was handed to you in court at the last meeting. His Honour: What material did you send to me during the week: Mr Gould: I didn't send any to you, your Honour. His Honour: I'm sorry then, there has been a mistake, the court has given me the material. Mr Gould: All that I filed was other affidavits that were actually sent to the other side as well. That was given to you, your Honour His Honour: I'm very pleased about that, Mr Gould. Mr Gould You said you were going to read that and that was the confidential information. His Honour: I'm pleased about that. Mr. Gould: Confidential to respondent. His Honour: I'm pleased with that because I was concerned that you were corresponding with me direct and I apologise for thinking that." 36 We were told by Mr Day that the pronoun "that" where first appearing in Mr Gould's statement "You said you were going to read …" is a reference to Mr Gould's submission and the second "that" to certain material said to be confidential to the respondents. 37 His Honour then asked "Do you wish to respond to the suggestion I made to you last week? All right. But you make an offer to pay the indebtedness. Mr Gould: I did respond, your Honour. I offered to withdraw my other legal claims against Mr Day and Mr Manly. I put that in one of the affidavits I sent to you which was --- His Honour: Did you say affidavits you sent me? Mr Gould: I filed in court, your Honour. His Honour: I've read the affidavits that you filed in court. Mr Gould: The affidavit is --- His Honour: I've read that material. Do I take it you don't wish to advance matters along the lines of the invitation I extended last week? Mr Gould: Your Honour, I think as I said last time if the Court decides that my submission to have the creditors' petition dismissed and the debtors and the bankruptcy notice struck out, if the Court says that they will not dismiss it or strike it out then I request another 21 days to pay the amount; that was part of my submission." 38 His Honour then asked Mr Day and Mr Manly whether they had filed an affidavit of continuing debt and an affidavit of searches. They said they were not aware of these requirements. They asked for a seven day adjournment. His Honour said: "I think what particularly brought this to my attention was reading Mr Gould's material where he disclosed that there's an alleged discrepancy between what was the subject of the bankruptcy notice, what is the true amount of the judgment debt, etcetera, etcetera. Now, there's no real substance in what Mr Gould is submitting because he didn't tender payment to you of the amount which he claims to be owing. The technical point that there might be a miscalculation of a thousand or two in respect of a judgment debt will not advance Mr Gould's situation in terms of resisting this petition. It's inevitable that on the basis of that petition and subject to you complying with the rules that an order for sequestration at this stage would be made. As I say the fact that there might [sic] 1000 or 2000 discrepancy in the actual calculation will take Mr Gould nowhere unless he tenders payment into court or to yourselves of the amount that he says is owing. But I think that there really is no alternative but for me to stand this matter over so it's giving you an opportunity to comply with the rules. I really do suggest that you do. In the long term it might be less expensive for you if you got legal advice as to the state of the file and the state of readiness to make the order for sequestration. As I say the court can't do it for you and this is the sort of difficulty that arises when you appear unrepresented. Now, the question is what would be a - Mr Gould has said that if I was against him on his case as to discrepancy I would be, in terms of - the discrepancy would not stand in the way of the sequestration. He said that he may consider payment within 21 days. Now, the critical question is whether I stand this matter over for seven days or whether I stand it over for 21 days to enable Mr Gould to fulfil his - when I say statement of intention I think it would be unfair to say it's an unequivocal intention he's given as a conditional statement of intention. It's really a question of how long I should stand the matter over." 39 There then followed discussion as to the formalities required. His Honour pointed out to Mr Gould that any discrepancy between the amount owed and the amount of the notice would not avail him unless he had tendered the amount said to be the correct calculation. Then Mr Gould said: "Your Honour, just as a point of interest where do I stand with the rules 41G and 41(6), 41(7) where there's a counter claim against Manly. Where do I stand with the rule 52.2(a) and 52.2.(b)? His Honour: If you have indicated what your counter claim is and I saw that material last time and I do not consider and I'll give you reasons when I give my judgment. I do not consider that they are valid counter claims within the legislation. I suggest you get legal advice on those matters. Mr Gould: 52 and 52.2(a) which is about the applicants being solvent and I have got an affidavit I would like to hand to the court. His Honour: I have read the material. Mr Gould: No, this is a new affidavit, your Honour. His Honour: Have you served a copy of Mr Day and Mr Manly? Mr Gould: Yes, I have. His Honour: This is new material about insolvency? Mr Gould: This is to show my financial position, insolvency, yes, your Honour. His Honour: Well, the material you produced to me last time was not evidence of anything according to law, so you didn't establish anything to my satisfaction on the previous occasion. I'll receive that affidavit now." 40 Mr Gould then handed up a further affidavit sworn 31 August which contained information about two projects for which funding submissions had been made and alleging further interference by Mr Day and Mr Manly. This was said by Mr Gould to be an updating of the material in his submission. 41 His Honour pointed out that if Mr Gould had any further material which he wished to put on affidavit before the adjourned date he was free to do so but that mere unsupported evidence would be "virtually valueless." 42 Mr Day submitted that there was no evidence where money was likely to come from because Mr Gould was effectively relying on a contract between Open Interchange Consortium which was himself and Halisa New South Wales Partnership, which was also himself. 43 His Honour then indicated that he would stand the matter over for seven days because the creditors had to comply with the rules and that "if Mr Gould is able to produce something more tangible within the next seven days" his Honour would "certainly be looking favourably, if it is sufficiently tangible" on standing the matter over then until after the Olympic Games. 44 Mr Gould did file an affidavit on 6 September in which he said that it was "too early to request affidavits from organisations on their financial commitments to IOC projects". The affidavit refers to some emails from organisations A, B and C, the identities of which were not revealed. He declined to identify them because of the history of Mr Day and Mr Manly "contacting organisations with whom he was negotiating business". The emails do not seem to provide anything very concrete. For example, in the first one the unidentified author says: "I have also suggested to management here to consider becoming more formally involved, perhaps with sponsorship or other involvement … Is starting to have relevance to [deleted] and I feel it would be of benefit for [deleted] to at least speak with the OIC about how he may contribute and or participate." 45 On the resumption of the hearing on 7 September Mr Day and Mr Manly handed up the formal affidavits of search and continuing debt and advised that no money had been paid. Mr Gould said that he had made an offer of $7,800 which had been rejected. Mr Gould said he had filed a notice of motion to have the hearing heard before another judge because of his Honour's apparent bias. His Honour indicated he could see no viable basis for disqualifying himself. 46 His Honour then gave judgment: [2000] FCA 1397. His Honour's judgment was as follows: "1. The ground set out in the Creditors' Petition as to non compliance with the Bankruptcy Notice which was filed in this Court on 23 August 1999 has been established, and Mr Gould, has not satisfied me that he has a counter claim set off or cross demand equal to or exceeding the amount of the judgment debt the subject of the Bankruptcy Notice, being a counter claim set off or cross demand that he could not have set up in the action in which the District Court judgment was obtained. 2. The creditors have complied with the requirement of the rules and in particular the requirements of rule 19 as to the additional affidavits to be filed by the applicants before the hearing. I have a discretion, nevertheless, as to whether I should make an order for the sequestration of Mr Gould's estate. It has been obvious to me that these proceedings have an overlay of enormous mutual distrust and animosity between the parties and it is not for me to form any view at all as to where the merits of that distrust and animosity may lie. 3. I have urged upon Mr Gould that if he has available to him the business prospects having the value in terms of intellectual property which he asserts and if that property is of the dimension which he has claimed (he has one document filed in court which has placed an amount of $1 million by way of value upon that interest, then he would in his own interests be best to put all of this bitter litigation behind him and pay out the debt, even though that will cause some obvious damage to his pride and self esteem arising out of the conflicts that have occurred. 4. Mr Gould will not, I think, in my judgment ever take advantage of the opportunity which I have extended to him previously to adjourn the proceedings in order to make such payment. I think that the matters that he continues to put to me and the way he puts them to me are such that this proceeding would go on forever if I continued to adjourn and adjourn it. 5. I propose in fairness and justice to the applicants who hold the benefit of the unsatisfied judgment of the District Court and have held the same for such a long time, despite a package of litigation that has subsequently ensued, that they are entitled to have their present petition upheld and a sequestration order made. As I say I think that the fairness and justice of the matter requires that course and that Mr Gould can still exercise the right which he has pointed out to me, namely his statutory right to apply for a stay within 21 days of the order which I will make. 6. To do so he will have to put forward much more tangible material and information than he placed before Sackville J. His Honour was also dismissive of the basis of the counter claim; that was put before him and I have been similarly dismissive. Mr Gould will need to be, within such period of 21 days, much more demonstrative of the substantive interest which he claims to hold and its value, or else it may be within that 21 day period that he will finally take the opportunity of satisfying this outstanding indebtedness and get on with his life. 7. I think that in the exercise of my discretion I must, as I have said as a matter of fairness and justice to the applicants, make an order which I hereby make for the sequestration of Mr Gould's estate. I am not prepared to stay that order on Mr Gould's application or on anything else that he has told me this morning. I will leave it to him to understand from what I have said as to the kind of application and supporting material that he will need to put forward to the Court if he wishes to obtain a stay of my order."
Conclusion on appeal 47 As we understand him, Mr Gould in his appeal complains of apprehended bias of Conti J, as distinct from actual bias. Although Mr Gould does not use the expression, his reference to the decision of the High Court in Webb v The Queen (1994) 181 CLR 41 and the general thrust of his argument identifies his complaint as a matter of what lawyers would call apprehended bias. Lest there be any misunderstanding however we would wish to make it clear that in our view any suggestion of actual bias would be totally without foundation. 48 In Australia the test of apprehended bias is firmly established by decisions of the High Court, the most recent of which is Johnson v Johnson (2000) 174 ALR 655 where Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said (at par 11) "that the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias (which, in the present case, was said to take the form of prejudgment) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide." 49 Their Honours went on to note (at par 12) that "two things need to be remembered". The observer is taken to be reasonable; and the person being observed is (in the words of McHugh JA in Vakauta v Kelly (1988) 13 NSWLR 502 at 527) "a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial." 50 In the present case Mr Gould complains of apparent prejudgment by the trial judge on the issue of solvency. He refers to the various passages from the transcript set out above. However, as Johnson reaffirms (at par 13), a judge is not "to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx". Interchange between the Bench and counsel, or the parties themselves if unrepresented, is an everyday part of the way trials are conducted in this country and essential to enable the issues in the case to be identified and dealt with fairly and efficiently. 51 In any contested hearing of a creditors' petition, the solvency of the debtor is likely to be a prime issue. Clearly this was so in the present case. Mr Gould had asserted in his grounds of opposition that he was solvent and continued to maintain that stand throughout the various hearings. It is not surprising therefore that his Honour immediately focused attention on the fact that an order of a court of competent jurisdiction, upheld on appeal, had remained outstanding for almost three years without any payment on account by Mr Gould. Moreover, there was the surprising circumstance that a debtor claiming assets worth $1 million was seeking waiver of the obligation to pay filing fees in the Federal Court. So the action his Honour took in adjourning the matter from 21 August to 31 August to give Mr Gould a final opportunity to make good his claim as to solvency (by satisfying the debt to the judgment creditors) was understandable and indeed in the interests of Mr Gould himself. Also, such adverse comments as his Honour made about Mr Gould's credibility were soundly based on the evidence, and were matters which it was proper to draw to Mr Gould's attention. 52 Section 52(2)(b) of the Bankruptcy Act 1966 (Cth) confers a discretion on the Court to refuse to make a sequestration order "for other sufficient cause", i.e. for a cause other than that the debtor is solvent, a circumstance provided for in s 52(2)(a). So the exercise of the discretion under s 52(2)(b) necessarily assumes a finding that the debtor is insolvent. But read as a whole we do not think the record of proceedings here discloses the appearance of a fixed or predetermined conclusion by his Honour that if solvency were not established a sequestration order must inevitably follow. Mr Gould's case for the exercise of the discretion was clearly advanced both in his original grounds of opposition and in his submission handed up at the end of the hearing on 21 August. His Honour dealt with the discretion in question in his judgment (par 2). As already noted, Mr Gould adverted to the issue during the course of the hearing. There is no ground for inferring that his Honour did not give proper consideration to this part of Mr Gould's case. The hard fact is that Mr Gould had really produced nothing more in the way of hard evidence in support of his claim for discretionary dismissal of the petition than he had nine months earlier before Sackville J. The defamation claims had got nowhere. The prospects of the High Court granting special leave to review the merits of an assessment of costs in the District Court must have seemed to his Honour just as unlikely as they did to Sackville J. Mr Gould's prospects of new income-producing ventures were still vague and unconvincing. 53 The hearing was adjourned on 21 August to 31 August to give Mr Gould an opportunity to pay his debts and again adjourned until 7 September because the creditors had not filed the necessary formal affidavits. These adjournments were for matters other than the s 52(2)(b) issue but the fact that these adjournments were made affords no basis for thinking that his Honour did not give proper consideration to Mr Gould's claim for discretionary relief. Mr Gould did not take us to any other material that had been before Conti J which suggests that there was any error in the exercise of the discretionary power conferred by s 52(2)(b). 54 The appeal will be dismissed. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Heerey, Moore and Goldberg.
Date of Hearing: 7 November 2000
Date of Judgment: 24 November 2000
Gould
Day