Aust. Volunteer Coastguard v Raymond -
[2001] FMCA 41
•29 June 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
AUST. VOLUNTEER COASTGUARD ASSOC. INC. v RAYMOND
[2001] FMCA 41
BANKRUPTCY – Creditors petition – assignment of debt – whether Bankruptcy Notice invalid – Application to join assignee as co-petitioner – Application by Deputy Commissioner of Taxation to be substituted creditor – Insufficient evidence – Matter adjourned
| Applicant: | AUSTRALIAN VOLUNTEER COASTGUARD ASSOCIATION INCORPORATED |
| Respondent: | ROBERT RAYMOND |
| File No: | BZ 126 of 2000 |
| Delivered on: | 29 June 2001 |
| Delivered at: | Parramatta |
| Hearing Date: | 15 May 2001 |
| Judgment of: | Ryan FM |
REPRESENTATION
| Solicitor Advocate for the Applicant and Mr Rigley: | Mr Johnsonn |
| Solicitors for the Applicant: | Macdonnells Solicitors, Cnr. Shields and Grafton Streets, Cairns QLD 4870 |
| Solicitor Advocate for the DCT: | Ms Elder appeared for Deputy Commissioner of Taxation, Ground Floor, Stanley Place, 235 Stanley Street, Townsville QLD 4810 |
| Solicitor Advocate for the Respondent: | Mr Jacobs |
| Solicitors for the Respondent: | Morrow & Associates, Level 1, 10 Grafton Street, Cairns QLD 4870 |
ORDERS
That the application to join the assignee of the judgment debt is adjourned for further hearing.
That the application by the Deputy Commissioner for Taxation for substitution is adjourned for hearing to the same date.
That the solicitor for the applicant have leave to approach Federal Magistrate Coker's Associate to obtain a hearing date within 14 days of the date of these orders.
FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA
BZ 126 of 2000
AUSTRALIAN VOLUNTEER COASTGUARD ASSOCIATION INCORPORATED
Applicants
And
ROBERT RAYMOND
Respondent
REASONS FOR JUDGMENT
Introduction
This is a Creditor’s Petition by the applicant seeking a sequestration order pursuant to s 43 of the Bankruptcy Act 1966 (C’th) (“the Bankruptcy Act”) against the respondent.
The Creditor’s Petition is based upon a Bankruptcy Notice issued on 12 September 2000. The Bankruptcy Notice relied upon a judgment debt obtained by the applicant COASTGUARD ASSOCIATION in the Magistrates Court at Cairns on 19 February 1996. The amount claimed in the Bankruptcy Notice was $ 15,655.88.
The Bankruptcy Notice was served on the respondent on
28 September 2000. Accordingly, the date of the act of Bankruptcy is noted as 19 October 2000.
The Creditor’s Petition was filed on 31 October 2000.
On 6 April 2001, orders dispensing with personal service of the Creditor’s Petition on the respondent were made. Those orders provided:
(1)
Personal service on the respondent of Creditor’s Petition No.
BZ 126 of 2000 and copies of the affidavits verifying the petition be dispensed with.
(2)A copy of Creditor’s Petition No. BZ 126 of 2000, copies of the affidavits verifying the petition and a sealed copy of this order be served as follows:
(a)By pre-paid ordinary post to the respondent at Unit 10, 46-50 Rotherman Street, Kangaroo Point in the State of Queensland; and
(b)By handing to and leaving with a principal of the firm of Morrow & Associates, Solicitors of 10 Grafton Street, Cairns in the State of Queensland.
(3)Service in accordance with this order shall be deemed good and sufficient service of the said documents upon the respondent.
(4)If service is effected in accordance with this order, the said document shall be deemed to be served on the respondent seven days after the date on which all steps referred to in paragraph (2) have been completed.
(5)Costs of this application be reserved.
On 6 April 2001, ELIZABETH CLOWES forwarded by ordinary pre-paid post to the respondent at Unit 10, 46-50 Rotherman Street, Kangaroo Point, Queensland the following:
a)Letter Macdonnells Solicitors to Mr Robert Raymond dated 6 April 2001;
b)Original sealed order of Registrar Ramsay dated 6 April 2001;
c)A copy of the affidavit of LUCILLE ANN JACKLEY-HIRSCH sworn 20 October 2000 verifying paragraphs (1), (2) and (3) of the petition with attached sealed copy of the Creditor’s Petition BZ 126/00 dated 20 October 2000; and
d)A copy of the affidavit of TONY GENE MADIGAN sworn 23 October 2000 verifying paragraph (4) of the petition; and
e)A copy of the Consent to Act as Trustee of PETER JOHN MORRIS dated 20 October 2000.
On 9 April 2001, in further compliance with the orders made 6 April 2001, copies of the documents identified in paragraph (6) of these reasons were handed to TRACY FANTIN, a principal of the firm Morrow & Associates. Hence service of the Creditor’s Petition was deemed, by operation of the orders, to be effected on 16 April 2001.
On 1 May 2001, the respondent entered an appearance in the proceedings. His solicitors are Morrow & Associates, the firm upon whom the order for substituted service was effected.
On 10 May 2001, the respondent filed a Notice of Intention to Oppose Petition. He relied on the following ground:
“The debt alleged to be due in Bankruptcy Notice NQ 46 of 2000 is not due to the applicant because the debt was sold by the applicant to a person or persons unknown and accordingly the respondent is not indebted to the applicant.”
That same day, the respondent filed an affidavit in support of the Notice of Opposition. He swore his affidavit on 8 May 2001. The respondent deposes to a conversation on 29 April 2001 with Lucille Jackley-Hirsch, Flotilla Commander of Marlin Marina and the deponent of the affidavit verifying the Creditor’s Petition. Ms Jackley-Hirsch told the respondent, “… I can tell you, that we the Coastguard, have sold your debt to someone and I can no longer deal with you in this matter. I can also advise you I will no longer be Commodore in a further two months. I cannot tell you who we were approached by to sell the debt under instructions from our lawyers. Why don’t you speak to our lawyers Macdonnells about an arrangement.” After further conversation, she said, “… I am sorry Mr Raymond, but this whole matter is out of my hands. Speak to our lawyers.” Mr Raymond said, “… Was the person who purchased the debt from the Coastguard a Mr Harold Cook?” She said, “… Mr Raymond, I have never met you and I cannot tell you anything more. Just speak to our lawyers.”
The matter was listed for directions before me at a circuit sitting of the Federal Magistrates Court in Cairns on 15 May 2001. The applicant sought orders:
(1)That JOHN FRANCIS RIGLEY be joined as an applicant herein;
(2)A Sequestration Order be made against the respondent debtor ROBERT RAYMOND; and
(3)The applicant creditor’s costs be taxed and paid from this date of the respondent debtor in accordance with the Bankruptcy Act.
In the event that the court determined that joining John Francis Rigley (the assignee of the judgment debt) was:
a)Necessary;
b)A substantial amendment to the petition; and/or
c)Otherwise required an adjournment,
the Deputy Commissioner of Taxation sought to be substituted as a petitioning creditor in the action.
In support of its application the applicant relied on the following:
(1)Creditor’s Petition filed 25 October 2000
(2)Affidavit of KENNETH BRIAN GORRING filed 25 October 2000;
(3)Affidavit of LUCILLE JACKLEY-HIRSCH filed 25 October 2000;
(4)Affidavit of TONY GENE MADIGAN filed 25 October 2000;
(5)Consent to Act as Trustee filed 25 October 2000;
(6)Order of Registrar Ramsay made on 6 April 2001;
(7)Affidavit of ELIZABETH CLOWES filed 19 April 2001;
(8)Affidavit of LISA WESTCOTT filed 19 April 2001;
(9)Affidavit of LUCILLE ANN JACKLEY-HIRSCH filed and sworn 15 May 2001;
(10)Affidavit of LISA WESTCOTT filed and sworn 15 May 2001.
The respondent relied on his affidavit filed 10 May 2001.
The Deputy Commissioner of Taxation relied on the affidavit of
LEA-ANN MORTON sworn 14 May 2001 and filed 15 May 2001. The affidavit was relied on in support of the Notice of Motion filed 15 May 2001 which Notice of Motion sought orders that:
(1)The Deputy Commissioner of Taxation be substituted as petitioning creditor in these proceedings;
(2)The Creditor’s Petition be adjourned to a date and time convenient to the Court;
(3)Costs be reserved;
(4)Such further or other orders as the Court shall deem fit.
The Judgment Debt
It is common ground between the applicant and the respondent that the applicant has assigned its interest in the judgment debt. The evidence of the assignment to the extent that I have it, is provided by the respondent. The respondent does not concede the nature of the assignment, leaving an issue to be determined as to whether it is a legal or an equitable assignment. Implicit in the submissions is that the assignment occurred prior to the issue of the Bankruptcy Notice.
For the assignment to be effective as a legal assignment, written notice of the assignment in accordance with section 199(1) of the Property Act (Queensland) 1974 is required. There is no evidence that written notice of the assignment of the debt has been given to the debtor. Indeed the contents of his affidavits indicate the contrary. His conversation is in the nature of an inquiry about the creditor’s petition. The flow of the conversation satisfies me that the debtor had no apparent knowledge of the assignment of the debt. His inquiry about the identity of the assignee is inconsistent with prior written notice received from the applicant assignor. I am satisfied therefore that the assignment is an equitable assignment and has not been consummated at law. Hence the debtor has a legal obligation to pay the debt to the assignor, here the applicant. G E Crane Sales Pty Limited v Commissioner of Taxation (1991) 126 CLR 177, 183-184.
I accept the submissions made by the applicant, that in proceedings of this nature the assignor, although a bare trustee of the judgment debt for the benefit of the assignee is the party in whose name the proceedings are to be taken. Section 40(1)(g) of the Bankruptcy Act gives a creditor who has obtained a final judgment or final order standing to issue a bankruptcy notice in accordance with its subsections. Referring to Re Palmer: Ex Parte Brims [1898] 1QB 419 at 424 McDonald, Henry and Meek at page 2571 conclude “The fact that a judgment creditor has equitably assigned a judgment debt does not prevent him or her from issuing a bankruptcy notice.” Nor does section 40(3)(g) of the Bankruptcy Act deprive the judgment creditor of an equitably assigned debt from the right to issue a bankruptcy notice. Whilst a creditor, other than the one who obtained the judgment, but who is entitled to enforce it, can issue a bankruptcy notice it is essential that the applicant for the issue of a bankruptcy notice is the legal entity relevantly entitled to enforce the judgment.
Hence the Respondent’s argument that the bankruptcy notice is a nullity fails. The debtor was required to pay the applicant to obtain legal discharge of his obligation. That the applicant has obligations to the assignee is a separate issue. I am satisfied that the applicant was entitled to issue the bankruptcy notice and that the act of bankruptcy is noted as 19 October 2000.
The Creditor’s Petition
The next challenge by the respondent arises because the assignee, said by the Applicant to be a Mr Rigley is not a co-petitioner to the Creditor’s Petition. “A mere trustee to a debt for an absolute beneficial owner is not entitled to petition against the debtor unless the cestui que trust, is capable of dealing with the debt, joins as a co-petitioner: ex parte Dearle; re Hastings [1884] 14QBD 184 (CA).” McDonald, Henry, Meeks at paragraph 2785.
I am satisfied that the applicant for the Creditor’s Petition must include the assignee of the judgment debt in this matter. The Applicant sought to include a Mr Rigley, said to be the assignee. No evidence was provided in support of this application or assertion. In the absence of the deed of assignment or other relevant evidence I cannot be satisfied that Mr Rigley is the assignee. Including the assignee is a matter of procedure, of form not substance. Evidence to the support the joinder of Mr Rigley should be readily available. I will give the applicant the opportunity to provide the evidence in support of the joinder. This is in the public interest as well as giving all parties to finalise this matter without incurring unnecessary additional expense.
Application by Deputy Commissioner of Taxation
The application by the Deputy Commission of Taxation (DCT) to be substituted as the creditor requires adjudication if the joinder application fails. It has not yet been determined. The DCT must give adequate notice of the application for substitution. Re a Debtor; Ex parte the Debtor v Carr [1977] 1 All ER 193. The application was filed by leave at the commencement of the directions hearing at 10:00am. The matter was heard at 2.00PM. This is my view is insufficient notice of the application and it too will be adjourned.
The debtor has now had sufficient notice of the substitution application and this aspect of the matter can be dealt with at the same time as the resumed application for joinder. If the former is successful the later will be unnecessary. It will be expedient that these are heard together. The orders I make will facilitate the completion of this matter at the next hearing.
I certify that the twenty three (23) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate:
Date:
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