Acciarito v Enfield Bond Pty Ltd
[2009] FMCA 1147
•30 November 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ACCIARITO v ENFIELD BOND PTY LTD | [2009] FMCA 1147 |
| BANKRUPTCY – Application for review of decision of Registrar – bankruptcy notice served over six years after judgment – consideration of rules of Magistrates’ Court of Victoria. |
| Bankruptcy Act 1966, s.40(1)(a) Limitations Act 1958 (VIC) Supreme Court (General Civil Procedure) Rules 2005 (Vic), r.68.02 Magistrates’ Court (Civil Procedure) Rules 2009, r.27.09(6) Magistrates’ Court Act 1989, s.111 |
| Re; Ex parte Johnson v Tonkin (1994) 53 FCR 70 Reasonable Endeavours Pty Ltd v Dennehy (2001) 107 FCR 144 Scott v Charitopoulos [2008] FCA 1914 Scott v Evia Pty Ltd [2008] VSC 324 |
| Applicant: | JOHN ACCIARITO |
| Respondent: | ENFIELD BOND PTY LTD (IN LIQUIDATION) A.C.N 007 411 403 |
| File Number: | MLG 1053 of 2009 |
| Judgment of: | Burchardt FM |
| Hearing date: | 19 October 2009 |
| Date of Last Submission: | 19 October 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 30 November 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Barber |
| Solicitors for the Applicant: | Septimus Jones & Lee |
| Counsel for the Respondent: | Mr J. Kohn |
| Solicitors for the Respondent: | MSB Lawyers |
ORDERS
The application be dismissed.
The Applicant pay the Respondent’s costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1053 of 2009
| JOHN ACCIARITO |
Applicant
And
| ENFIELD BOND PTY LTD (IN LIQUIDATION) A.C.N. 007 411 403 |
Respondent
REASONS FOR JUDGMENT
This application to review a decision of the Registrar was filed on
23 September 2009. Mr Acciarito, the applicant, seeks that Bankruptcy Notice QN 198 of 2009 be set aside or, alternatively, that the Court declare that failure to comply with that notice is not an act of bankruptcy within the meaning of the Bankruptcy Act 1966.
For the reasons that follow, I think that the bankruptcy notice was valid and the application must therefore be dismissed.
Facts
The relevant facts are within a narrow compass and are not contentious.
On 15 July 2003, the Magistrates’ Court of Victoria made an order that Mr Acciarito pay the respondent in excess of $33,000 on a claim by the respondent together with interest and costs in a total of approximately $40,000.
By the date of issue of the Bankruptcy Notice, the debt had accrued with interest to over $60,000.
The Bankruptcy Notice was issued on 20 February 2009 and there is no suggestion that it was anything other than validly issued.
On 15 July 2009, the six-year limitation period under the Limitations Act 1958 (VIC) expired.
On 30 July 2009 the service of the Bankruptcy Notice was effected by the respondent upon Mr Acciarito.
It is common cause that the Magistrates’ Court of Victoria has not granted leave for an extension of time for the warrant to be issued.
It is also common cause that on 13 August 2007, the Magistrates’ Court of Victoria issued practice direction 9/2007 (exhibit PJD1 to the affidavit of Mr Dunnell, filed on 19 October 2009).
That practice direction purported to institute a practice whereby Registrars of that Court should issue warrants of enforcement in relation to judgment notwithstanding that a judgment might be more than six years old.
The Applicable Legal Principles
It seems quite clear that a judgment that is more than six years old and in respect of which leave to enforce has not been given, where such leave is required, is a judgment which has been stayed within the meaning of s.40(1)(a) of the Act. The judgments of Spender J in
Re; Ex parte Johnson v Tonkin(1994) 53 FCR 70 and Marshall J in Reasonable Endeavours Pty Ltd v Dennehy (2001) 107 FCR 144 are perfectly clear and the facts in those cases are on all fours with this matter.
It is equally clear that a bankruptcy notice is not valid or effective if the judgment on which it is based is a judgment, the execution of which has been stayed either at the time of issue or the time of service. Failure to comply with such bankruptcy notice is not an act of bankruptcy (see paragraph 13 applicant’s written submissions and the cases therein referred to).
The Question that arises in this Case
In the ultimate both parties agree, although they express the matter differently, that the question is whether the original judgment made in 2003 was capable of being enforced in the period after 15 July 2009.
The applicant submitted that leave was required to enforce an order of the Magistrates’ Court of Victoria more than six years after it took effect. It was submitted that Rule 68.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) was made applicable to the Magistrates’ Court of Victoria by Rule 27.09(6) of the Magistrates’ Court (Civil Procedure) Rules 2009.
The contrasting position contended for by the respondent was that s.111 of the Magistrates’ Court Act 1989 provided that an order for the payment of money may be enforced subject to and in accordance with the rules by a warrant to seize property. The respondent then relied upon Rule 27.02 of the Magistrates’ Court Rules. It was submitted that there was simply no provision in that rule which required leave for the issuing of a warrant where six years had elapsed since the judgment took effect. This was contrasted with the position under Rule 68 of the Supreme Court Rules.
The respondent also relied upon the force of Practice Direction 9/2007 in support of the submission that the 2003 judgment had not been stayed at the time the Bankruptcy Notice had been served.
It seems to me that Rule 27.02, which does not refer to any requirement for leave to issue after six years from judgment, is general in its nature. It is under the heading, “Part 2 – Warrants Generally.” While it seems that an order made by the Court in a civil proceeding may be enforced by either a warrant to seize property, attachment of earnings order or attachment of debts order, each of these outcomes is the subject of a further sub-part of Rule 27. In respect of warrants to seize property, that sub-part is Part 3 and inter alia Rule 27.09.
Relevantly, sub-rule 27.09(6) states:
“Subject to this Order and except where otherwise expressly provided by these Rules, the rules, practice and procedure of the Supreme Court which apply to or are adopted by the sheriff in the execution of warrants of execution apply, with such modifications as are necessary, to the execution of warrants to seize property (emphasis added).
The applicant says that that sub-rule necessarily brings Rule 68.02 of the Supreme Court Rules into play and the respondent takes the opposite position.
It is interesting to note that even Rule 27.09(6) contemplates that the sheriff may adopt practices of the Supreme Court, but the wording, “or are adopted by the sheriff”, suggests that the sheriff need not do so if he or she does not feel it appropriate.
That form of wording is consistent with the wording of Rule 1.12 of the Magistrates’ Court Rules which provides a discretion to the Court to adopt rules and practices of the Supreme Court in cases where there is some want in the Magistrates’ Court Rules themselves.
It is noteworthy that the Practice Direction 9/2007 states inter alia:
“It has been previous practice for civil registries to refuse to issue warrants of enforcement in relation to judgments made more than six years earlier in accordance with the County and Supreme Court Rules. Judgment creditors have been required to seek the leave of the Court to issue enforcement warrants in these circumstances.
The Magistrates’ Court Civil Rules Committee has met and determined that these current practices should cease. That a judgment was made more than six years prior shall no longer preclude the immediate issue of an enforcement warrant by a Registrar.
Effective immediately, Registrars are instructed to issue warrants of enforcement in relation to judgments made more than six years earlier assuming that all other normal legal requirements are satisfied.”
That practice direction was issued under the name of the Principal Registrar of the Magistrates’ Court of Victoria.
It is not entirely clear whether that direction was made as a rule of the Court by the Magistrates’ Court Civil Rules Committee
(s.16 Magistrates’ Court Act) or as a practice direction by the Chief Magistrate (s.16A of the Magistrates’ Court Act).
I prefer the view that this must be taken to be a Practice Direction issued by the Chief Magistrate through the person of the Principal Registrar. It is described in terms as a practice direction.
Pursuant to s.16A(2), such practice directions must not be inconsistent with any provision made by or under the Magistrates’ Court Act or any other Act.
The applicant faces this issue squarely, and simply submits that the Practice Direction was ultra vires.
I caused the proper officer of the Magistrates’ Court of Victoria to be notified of that submission and inquired whether the Court sought to be heard. I have been assured that the Magistrates’ Court of Victoria does not wish to be heard.
Rule 27.09 is by no means unequivocal. The application in sub-rule 6 of the rules, practice and procedure of the Supreme Court are expressly “subject to this order”. The requirements for the issue of a warrant to seize property are set out in Rules 27.09(1) and (2), which clearly do not incorporate the six-year limitation contained in Rule 68 of the Supreme Court Rules.
It might well be thought that if one were to adopt such an approach to the construction of this rule, one would be leaving Rule 27.09(6) with no work to do and I accept that there would be force in such a submission.
Against that, however, I think it is only proper to presume that the Magistrates’ Court of Victoria would not lightly adopt a practice direction which gave rise to an internal conflict in its own rules.
There is, furthermore, assistance to be found in relatively recent authority in the Federal Court. In Scott v Charitopoulos [2008] FCA 1914, Finkelstein J dealt with circumstances where there was a controversy about the extent to which an order of the Taxing Master following a taxation was a final judgment for the purposes of s.40(1)(g) of the Bankruptcy Act.
His Honour found that it was not but noted that in Scott v Evia Pty Ltd [2008] VSC 324, Hansen J of the Supreme Court had found that it was.
At [13], Finkelstein J said:
“Neither the foregoing nor my view that Scott is wrongly decided provides the answer to this case. The reason is this. In common with other common law jurisdictions, in Victoria, subordinate legislation either means what it says or, in cases of difficulty, it means what judges say it means. If a judge of the Supreme Court holds that a particular rule is to be given a particular construction, then, whether the construction be right or wrong, that holding binds those who must enforce the rules until the judgment is set aside. Put simply, the power of the taxing master and the effect of his orders depend not only upon the language of the rules, but also upon the construction which has been placed upon them by judges in the relevant jurisdiction.
What this means for the present case is this. The officers of the Supreme Court who enforce judgments will enforce any final order made by a taxing master. This will occur because that is what Scott decided. That practice must be given effect for the purposes of the Bankruptcy Act.”
It seems to me that those observations are of guidance to me in this case. Here, there can be no question in the face of the practice direction made that Registrars of the Magistrates’ Court of Victoria would have issued a warrant of enforcement in July 2009, or later, had the respondent creditor sought it.
As with Finkelstein J’s reasoning, it seems to me that I must give effect to that reality for the purposes of the Bankruptcy Act.
Conclusion
For the above reasons, it seems to me that the bankruptcy notice was validly served. The judgment made in July 2003 was still an enforceable judgment in the Magistrates’ Court of Victoria at the time that the bankruptcy notice was served. That is so whether the construction contended for by the applicant was correct or that of the respondent was. It follows that the application should be dismissed with costs.
I should make it clear, however, that if I am wrong in the conclusion expressed in the previous paragraph, and it were necessary to decide the point, I would take the view that the bankruptcy notice was valid at the time of service in any event. While as I have said Rule 29 is far from clear, I think the better view is that sub-rules (1) and (2) are not subject to sub-rule (6). Rather it is the other way round. Sub-rule (6) starts “Subject to this Order”. Accordingly, the notice was not invalidated by the expiry of the limitation period at the time of its service. Sub-rules (1) and (2) do not contain the requirement for leave referred to in Rule 68.02(a) of the Supreme Court Rules.
I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate: Ms B Evans
Date: 30 November 2009
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