Australia and New Zealand Banking Group Limited v Randles
[2014] FCCA 1254
•19 June 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED v RANDLES & ANOR | [2014] FCCA 1254 |
| Catchwords: BANKRUPTCY – Acts of bankruptcy – execution issued under process of a court – property (seizure and sale) order – whether returned unsatisfied – whether returned unexecuted. |
| Legislation: Bankruptcy Act 1966, ss.40(1)(d)(ii), 40(1)(g)(ii), 52 Civil Judgments Enforcement Act 2004 (WA), ss.59(1), 60(1), 60(2), 117, 117(1), 117(2) |
| Lewis v Lamb [2012] FMCA 392 McIntosh v Shashoua (1931) 46 CLR 494 Re Greenland, Ex Parte National Westminster Finance Australia Ltd (1989) 21 FCR 247 |
| Applicant: | AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) |
| First Respondent: | LEONIE RANDLES |
| Second Respondent: | PETER RANDLES |
| File Number: | PEG 359 of 2013 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 10 June 2014 |
| Date of Last Submission: | 10 June 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 19 June 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Vaughan SC |
| Solicitors for the Applicant: | Norton Rose Fulbright Australia |
| Counsel for the Respondents: | Mr Williams |
| Solicitors for the Respondents: | Solomon Brothers |
ORDERS
The creditor’s petition filed on 2 December, 2013 be dismissed.
In the event that by 4.00pm on 2 July, 2014 either party files and serves upon the other party written submissions seeking orders as to costs other than in the terms set out hereunder, then:
(a)the other party shall file and serve written submissions in response thereto within 14 days of service of the first party’s written submissions;
(b)the Court shall determine the matter of costs on the papers alone unless a party requests a further oral hearing in their written submissions, in which case the application shall be listed for argument on a date to be fixed;
otherwise, the order of the Court is that the applicant pay the respondent, Peter Randles, costs of and incidental to the application to be agreed and failing agreement to be taxed and paid in accordance with the Federal Circuit Court (Bankruptcy) Rules 2006.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 359 of 2013
| AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) |
Applicant
And
| LEONIE RANDLES |
First Respondent
| PETER RANDLES |
Second Respondent
REASONS FOR JUDGMENT
Leonie and Peter Randles owe the Australia and New Zealand Banking Group Ltd $4,631,929.08 being the balance of a judgment of the Supreme Court of Western Australia given against them in favour of ANZ on 25 March, 2013.
By the present application, ANZ petitions the Court for a sequestration order against their estates. The petition was not pressed against Leonie Randles and at the commencement of the hearing with ANZ’s consent I dismissed the petition in so far as it concerned her. The petition, however, is pressed against Peter Randles.
Mr Randles opposes the petition and argues that no act of bankruptcy has been committed by him sufficient to support the making of a sequestration order against his estate.
ANZ relies upon a number of affidavits to support its petition and the arguments in support of it. Just which affidavits are properly to be relied upon to prove the asserted act of bankruptcy is the subject of some dispute between the parties, but presently I think it important to record that:
a)enquiries by a private collection agency engaged by ANZ revealed that Mr Randles has no assets of any kind;
b)in a telephone conversation between an officer of the Western Australia sheriff’s Office, Mr Randles told the sheriff’s officer that he had no assets and had no fixed place of address – he was staying with friends; and
c)he has no money to pay the debt.
These facts are uncontroversial. The clear and compelling inference therefore is that Mr Randles is insolvent. However, notwithstanding that, Mr Randles as he is entitled to do, opposes the making of the sequestration order against his estate.
ANZ asserts that Mr Randles has committed an act of bankruptcy of the type provided for s.40(1)(d)(ii) of the Bankruptcy Act1966. That subsection provides:
(1) A debtor commits an act of bankruptcy in each of the following cases:
(d) if:
(ii) execution has been issued against him or her under process of a court and has been returned unsatisfied;
On 27 June 2013 a property (seizure and sale) order was issued by the Supreme Court of Western Australia on ANZ’s request. Such an order can be issued by the Supreme Court upon the request of a judgment creditor pursuant to s.59(1) of the Civil Judgments Enforcement Act2004 (WA).
To be compliant with s.60(1) of the CJE Act, a property (seizure and sale) order must:
a)be addressed to the sheriff;
b)state the name and address of the judgment debtor and the judgment creditor;
c)state the judgment debt as at the date of the orders; and
d)contain any other information that is prescribed by the Civil Judgments Enforcement Regulations 2005.
According to reg.37 of the Regulations, a property (seizure and sale) order must also include certain other information, but importantly:
“The address of each place at which the judgment creditor believes that personal property of the judgment debtor is located or may be found”.
The property (seizure and sale) order in this case complied with s.60(1) of the CJE Act. There is no contention to the contrary. It was served on the sheriff in accordance with s.60(2) of the CJE Act.
The property (seizure and sale) order named Leonie and Peter Randles as the “Judgment Debtor”. The order was addressed to the sheriff of Western Australia in the following terms:
“You are authorised and commanded by this property (seizure and sale) order to seize and sell the saleable interest in property of Leonie Randles and Peter Randles to wholly or partially satisfy the judgment debt.”
The order is stamped as filed on 3 July, 2013. The form of the property (seizure and sale) order is not prescribed by the CJE Act or the Regulations made pursuant to it. However, by reg.103 of the Regulations the power to approve forms for the purpose of the CJE Act and the Regulations is vested in the “chief executive officer” (presumably of the relevant department).
The command to the sheriff contained within the property (seizure and sale) order issued in this case mirrors s.59(1) of the CJE Act, except that the order refers to the debtors’ “saleable interest” in property rather than just “property” as referred to in s.59(1). But that difference is, I think, immaterial.
The obligations of the sheriff, once served with an enforcement order issued pursuant to the CJE Act are imposed by two legislative provisions. In no particular order of priority, the first is s.117 of the CJE Act itself. That section provides:
“117 Sheriff and bailiffs to carry out orders
(1) The sheriff, and any bailiff delegated to do so by the sheriff, must take action in accordance with an order issued under this Act and addressed to the sheriff as soon as practicable after receiving the order.
(2) The sheriff may take any reasonable action that the sheriff considers necessary or convenient for the purposes of performing the sheriff’s functions under an order issued under this Act.”
The second source of obligation upon the sheriff is s.156 of the Supreme Court Act1935 (WA). Subsection 156(1) is in the following terms:
“156 . Sheriff
(1) The sheriff shall be an officer of the Supreme Court, and shall be charged with the service and execution of all writs, applications, summonses, rules, orders, warrants, precepts, process and commands of the Court which are directed to him, and shall make such return of the same to the Court together with the manner of the execution thereof as he is thereby required, and shall take, receive, and detain all persons who are committed to his custody by the Court, and shall discharge all such persons when thereunto directed by the Court or the law.”
The words I have emphasised above are important. The property (seizure and sale) order is an order, it seems to me, for the purposes of s.156(1) of the Supreme Court Act. It is an order issued by the Court. By s.156(1) of that Act, the sheriff is bound to execute the order and to make a return to the Court as he is thereby required. The words thereby required must refer to the terms of the order that the sheriff is from time to time serving or executing. If the process that he is serving or executing does not require a return to be made to the Court, then he is not obliged to make a return.
The property (seizure and sale) order here does not on its face require the sheriff to make any return to the Court. However, the sheriff is obliged to make a return, not to the Supreme Court, but rather to the judgment creditor. Regulation 77 of the Regulations provides that a judgment creditor who has obtained an enforcement order (of which a property (seizure and sale) order is one type) may serve a notice on the sheriff requiring the sheriff to give the judgment creditor a written statement as to whether or not the order has been enforced and if so, the manner in which the order has been enforced.
As a happy circumstance, in this case the return made by the sheriff to the enforcement order was made to both the Registrar of the Supreme Court and to the judgment creditor. It is the same document addressed to each.
The above discussion is necessary to highlight that the return in question here is a return made pursuant to the CJE Act and not a return pursuant to a command of the Supreme Court contained within the enforcement order that it issued. I doubt that the drafter of s.40(1)(g)(ii) of the Bankruptcy Act considered that a return would be made to anyone other than the court issuing the execution process, but that is the position here.
The obligation on the sheriff when a return to an enforcement order is made is to give the judgment creditor a written statement as to whether or not the order has been enforced and if so, the manner in which the order has been enforced.
The return of the sheriff in this case was made using a pre-printed form entitled in part Form 27 – NOTICE OF RETURN OF ORDER OR WARRANT. It has a number of boxes that can be crossed, beside which appears pre-printed text. There is also provision for the addition of free text comments. Relevantly the form had the following boxes crossed:
§ The judgment debtor is believed to be working at … (although the box is crossed no address is detailed).
§ No seizable property has been located having regard to Regulation 35 of the Civil Judgments Enforcement Regulations 2005; and/or
§ After considering the costs of removal of property, storage, advertising, auctioneers fees etc.
§ I have no knowledge of the location of seizable property elsewhere.
As the parties point out a number of other boxes were not crossed, and so presumably did not form part of the sheriff’s return. A free form comment is provided in the return as follows:
On the 25th July 2013 the premises at 922 Eighty Road, Baldivis were attended by a Sheriff’s Officer and the debtor was no longer residing at those premises.
On 23rd October 2013 the debtor’s work address at Professionals Mandurah, Miami Village SC, Old Coast Road, Falcon was attended by a Sheriff’s Officer and no personal property of the debtors was located that was capable of seizure and sale.
The Sheriff is not aware of any personal property or real property of the debtors that is capable of seizure and sale.
The parties largely agree on the legal principles that apply. Both accept that the authorities analysed by each of them in their written submissions make it clear that there is a difference between an enforcement order being returned “unsatisfied” (as required by s.40(1)(d)(ii) of the Bankruptcy Act) and an enforcement order being returned “unexecuted”. The former is sufficient to establish the relevant act of bankruptcy, the latter is not.
In my opinion, there is some doubt that the return in the present case is a sufficient return to the property (seizure and sale) order for the purposes of the Regulations. The sheriff’s obligation pursuant to reg.77 is to provide a written statement as to whether or not the order has been enforced. The “return” does not in terms specify whether or not the order has been enforced. Perhaps, by implication, one might conclude that the order has not been enforced but the return does not say that.
Moreover, the text accompanying two of the boxes that are crossed refer to “seizable property”. The phrase “seizable property” is not defined in either the CJE Act or the Regulations. The property (seizure and sale) order directs the sheriff to seize and sell “the saleable interest in property” of the debtors. The return does not identify, in terms or otherwise, what saleable interest in property the sheriff was able to locate. No doubt, the implication of the sheriff’s return is that no saleable interest was found, but as the authorities demonstrate (McIntosh v Shashoua (1931) 46 CLR 494 at 511, Re Johnson; Ex parte Atkins (WA) Ltd (1968) 14 FLR 147, King v Commercial Bank of Australia Ltd (1921) 29 CLR 141 and Re Greenland, Ex Parte National Westminster Finance Australia Ltd (1989) 21 FCR 247) the form of the return is important. No argument, however, was directed to this issue and no point was taken by Mr Randles concerning it.
The focus of the parties’ attention was upon whether the property (seizure and sale) order was returned “unsatisfied” or merely “unexecuted”. It is impermissible to consider evidence beyond that which is contained on the face of the return under consideration. The cases on this point were carefully considered by Smith FM in Lewis v Lamb [2012] FMCA 392. There (at [23]) his Honour concluded that for the purpose of determining whether the relevant execution was returned “unsatisfied” or “unexecuted” the whole of the terms of the return could be examined, but nothing more. I do not consider that his Honour’s judgment is plainly wrong and so, I should follow it; I intend to do so. The consequence is that I have had no regard to the affidavits of Jennifer Margaret Millar filed on 25 February, 2014, Graham Andrew Lacey filed on 25 February, 2014 and Katherine Young filed on 14 March, 2014.
The only information contained upon the face of the return reveals that the sheriff went to the residential address for the debtors nominated by ANZ in the property (seizure and sale) order and found that the debtors were no longer living there. By implication, no “seizable property” was found there, although the return makes no effort to set out what the sheriff did at that address. Similarly, the sheriff went to the work address for one only of the debtors it seems (by the use of the word “debtor’s” in the return). Again, by implication, no “seizable property” was found there, although the return makes no effort to set out what the sheriff did at that address.
The statement: “The sheriff is not aware of any personal property or real property of the debtors that is capable of seizure and sale” conceals more than it reveals. It says nothing about what the sheriff has done that has led him or her to that position. His or her state of knowledge could have been arrived at by a route which could lead easily to the conclusion that the order was returned unsatisfied. Alternatively, it could lead to the conclusion that the order is returned “unexecuted”. The difficulty for the applicant is that on the face of the return, it is impossible to tell. To the extent that the return demonstrates that the sherriff has attended at particular addresses, the information on the face of the return does little to indicate what, if anything, was done at each address to attempt to enforce the warrant.
The information within the return does not permit of a conclusion that the debtors have no property that could be seized and sold, only that the sheriff is unaware of any, in circumstances where the sheriff does not reveal the basis for that state of mind.
In the circumstances, I am not satisfied on the balance of probabilities that the property (seizure and sale) order has been returned unsatisfied and that the act of bankruptcy under s.40(1)(d)(ii) relied upon by ANZ is established.
The petition must be dismissed. At first glance it seems to me that costs ought to follow the event, but I appreciate that I have not heard the parties on costs. In those circumstances I propose to make an order that will permit argument on costs, but in default of any argument, there will be an order that the applicant pay the respondent’s costs of the application.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Jarrett
Associate:
Date: 19 June 2014
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