Bessemer, Lorraine Helen v Proprietors Strata Plan 6925

[1997] FCA 287

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )                 
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 7257 of 1997         
GENERAL DIVISION                 )

BETWEEN:               LORRAINE HELEN BESSEMER
  Applicant

AND:                   PROPRIETORS -
  STRATA PLAN NO 6925
  Respondent

CORAM:       TAMBERLIN J
PLACE:       SYDNEY
DATED:       25 MARCH 1997

MINUTE OF ORDERS

The Court orders that the application be dismissed with costs.

NOTE:     Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 7257 of 1997                   GENERAL DIVISION                 )

BETWEEN:          LORRAINE HELEN BESSEMER
  Applicant

AND               PROPRIETORS -
  STRATA PLAN NO 6925
  Respondent

CORAM:       TAMBERLIN J
PLACE:       SYDNEY
DATED:       25 MARCH 1997

REASONS FOR JUDGMENT

TAMBERLIN J:

In this matter Mrs Bessemer seeks to set aside orders by Registrar Hedge dismissing a creditors petition and ordering her to pay the creditor's costs. The only live issue is the question of costs.  The petition was dismissed without objection and in substance by consent. There remained, however, a live issue as to costs.  In addition to contesting the costs order made by the Registrar Mrs Bessemer also seeks an award of costs in her favour.

The petition was dismissed because over a period of several days prior to the hearing before Registrar Hedge Mrs Bessemer paid the amount claimed. 

At the hearing before Registrar Hedge, prior to dismissal of the petition, there was no contention that the debt was not owing or that the bankruptcy notice was not properly grounded because there was no valid resolution of the creditor body corporate which would enable the institution of the bankruptcy proceedings by issuance of a bankruptcy notice.

I have read the affidavits sworn by Mrs Bessemer and I have heard her written submissions. She contends that she had paid the debt at an earlier date and that, in any event, there was no basis for the claim by the creditor.

The bankruptcy notice was based on an alleged underlying debt of about $3606 arising from a judgment of the District Court Judge Phelan and also the decision of a magistrate.  These judgments have not been set aside nor have they been further appealed.  This is not a case where the bankruptcy notice was based on a default judgment. The judgment was given after a hearing before a magistrate and a District Court Judge.

In the application filed in this court on 5 March 1997 by Mrs Bessemer a number of grounds are raised. The first of them is that the Registrar did not conduct a hearing in relation to the notice of bankruptcy or the alleged creditor's petition and therefore the awarding of costs against the debtor, where no hearing of the proceedings had taken place, contravened s 31A(2) of the Bankruptcy Act 1966.

I am satisfied that in this case the Registrar did have power to award costs where the petition was dismissed without objection and in effect by consent without a hearing. I do not find that there is any substance in this first ground.

A second matter which has been raised is that there was no valid resolution of the body corporate which would enable the proprietors to initiate a bankruptcy notice against Mrs Bessemer.  This assertion is put forward by Mrs Bessemer. She bears the onus of establishing that the bankruptcy notice was initiated without authority. 

She has produced evidence to the effect that she has seen no valid resolution of the body corporate of the strata plan and it appears to have been conceded by Mr Bentley that there is no such resolution.  However, Mr Bentley does point to other ways in which the initiation or the taking out of the bankruptcy notice could have been authorised.  One of these, it is said, is by the managing agent, overturning the proceedings. However, there is no evidence presented to the effect that the managing agent in fact had such power and this submission is left in the area of speculation.

A further source of authority relied on by Mr Bentley is that under the Strata Titles Act 1973 (NSW) there are powers given to the council of the body corporate to take action in relation to the administration and operation of the premises, the subject of the strata plan.  It appears that these provisions give power, or are capable of giving power, to the council of the body corporate to commence proceedings.  There has been no evidence placed before me to the effect that the council does not have such power and the onus being on Mrs Bessemer I do not find that this ground is made out. 

In any event, as Mr Bentley has pointed out, it would have been possible for Mrs Bessemer at the hearing before Registrar Hedge, rather than consenting to or not objecting to dismissal of the petition, to have raised the question as to authority.  This was not done.  Had it been done it would have been open to Mrs Bessemer to oppose the creditors petition and, if she was successful in such an argument and had been able to adduce sufficient evidence, thereby seek payment of costs.  However, this course was not taken.

Orders as to costs, as is well settled, are matters of discretion. The Court on appeal will naturally be reluctant to override the exercise of a discretion as to costs.  In this case I am not satisfied that the discretion exercised by Registrar Hedge has miscarried nor that the determination was not open to her.

It is unfortunate that Mrs Bessemer did not pay out the claim earlier than she did.  I appreciate that she said that she gave a directive to the proprietors of the body corporate to pay the amount outstanding on or about 3 December 1995, but it has not been established that there was no dispute in relation to this amount or that Mrs Bessemer was entitled to have the money paid out of funds held by the proprietors of the strata plan. 

The case presented by Mrs Bessemer is to the effect that she has paid in effect twice: firstly by directing the payment of $3,606 in December 1995, and subsequently by electing to pay in the order of $3,600 several days before the hearing of the creditors petition.  I am not satisfied that she has paid twice in the circumstances of the case. The "direction" was in respect of funds which were in dispute.

In all the circumstances I am not satisfied that there was any error by the Registrar and therefore I propose to dismiss this application with costs. 

A further matter raised was that the proprietors of the strata plan had not filed a claim in the Civil Claims Court to recover the debt nor had they obtained a judgment on a debt as required under the Strata Titles Act s 142(5). 

In relation to this matter I have been referred to the provisions of s 142 of the Strata Titles Act. In relation to the imposition of a penalty for contravention of orders, I note that by s 142(4) the imposition of a penalty operates as a judgment under the Local Courts Civil Claims Act 1970 (NSW), against the defendant in favour of the prosecutor for the amount of the penalty. Subsection (5) provides that a penalty imposed under the section or costs referred to are not enforceable or recoverable except as provided by in subs (4).

Since the determination of the imposition of a penalty operates as a judgment I consider that if unsatisfied it can ground a bankruptcy notice under s 40(1)(g) of the Bankruptcy Act. There is no substance in this submission. 

For the above reasons then it is my view that the application to set aside the determination of Registrar Hedge should be dismissed with costs.

I certify that this and
the preceding five (5)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.

Associate:

Date:  18 April 1997  

Mrs Bessemer appeared in person

Solicitor for Respondent:             B.W. Bentley

Date of Hearing:  25 March 1997  

Date Judgment Delivered:                   25 March 1997