Black and Anstee and Anor

[2017] NSWDC 52

District Court

New South Wales

Medium Neutral Citation:

Black & Anstee & Anor [2017] NSWDC 52

Hearing dates:

14 February 2017

Date of orders:

14 February 2017

Decision date:

14 February 2017

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

Discharge the orders made by the Judicial Registrar on 3 February 2017 and by Assistant Registrar Fukuda-Oddie on 13 and 14 February 2017

 

Dismiss the notices of motion filed by the judgment debtor on 23 February 2016 and 3 February 2017

 

Dismiss the notice of motion filed by the judgment debtor on 13 February 2017.

 Set aside each and every subpoena that has been issued since 23 December 2016

Catchwords:

PRACTICE AND PROCEDURE – Attempts by Judgment Creditor to enforce judgment after Judgment Debtor declared bankrupt are of no effect

Legislation Cited:

Bankruptcy Act 1966 (Cth)
Civil Procedure Act 2005

Category:

Procedural and other rulings

Parties:

Richard Black (Plaintiff)
Barry Anstee (First Defendant)
Halfoak Pty Ltd (Second Defendant)

Representation:

Solicitors:
Plaintiff (Self-represented)
Defendant (Self-represented)

File Number(s):

2003/122037

Judgment

1. HIS HONOUR: On 21 December 2004, the plaintiff obtained judgment against the first defendant for $305,583.25 and an order for costs. I shall hereafter refer to the plaintiff as the judgment creditor and to the first defendant as the judgment debtor. Little happened immediately thereafter. However, on 28 July 2005, some seven months later, the judgment debtor was declared bankrupt. The act of bankruptcy found by the Federal Magistrate's Court, as it then was, occurred on 22 January 2005. The Federal Magistrate's Court appointed a trustee in bankruptcy to the judgment debtor. It is accepted today by the judgment creditor that the judgment debtor remains an undischarged bankrupt.

2. On 21 October 2010, the judgment debtor filed a notice of motion seeking interest on the judgment debt and an amended notice of motion was filed seeking an order for taxation of the judgment creditor's costs. That motion came before Judicial Registrar Smith on 5 November 2010 when he made the order sought in the first prayer of the amended notice of motion, but otherwise dismissed the motion.

3. Somehow or another, a notice of motion seeking an examination order was filed on 17 November 2010 and that led to the judgment debtor being examined at the Local Court at Moss Vale in November 2010. There was an objection taken to that procedure by the judgment debtor, but his objection was unsuccessful.

4. The matter comes before me today because, on 23 December 2016, the judgment creditor filed another notice of motion. That was returnable on 3 February 2017. The first order sought in the notice of motion was for leave pursuant to s 134(1)(d) of the Civil Procedure Act 2005, for the judgment creditor to apply for an examination order against the judgment debtor. That is the only substantive prayer in that notice of motion.

5. It came before Judicial Registrar Howard on 3 February 2017 when the substantive order was made. Some ancillary orders were then also made, pursuant to leave granted by the Judicial Registrar, on 13 February and 14 February 2017 by Assistant Registrar Fukuda-Oddie.

6. The problem with all the orders made is that they are in conflict with certain provisions of the Bankruptcy Act 1966 (Cth). Under s 58(1), the property of a bankrupt, which is not after acquired property, vests forthwith in the trustee at the time when the debtor becomes a bankrupt. Accordingly, the judgment debtor's property vested in his trustee in bankruptcy on 28 July 2005. Section 58 subsection (3) provides this:

"Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:

(a) to enforce any remedy against the person or the property of the debtor; or

(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding."

The words "the Court" are defined in s 5 of the Act to mean "a Court having jurisdiction in bankruptcy under this Act". The District Court of New South Wales is not such a Court. As I understanding it, the relevant Courts are, the Court now known as the Federal Circuit Court of Australia and the Family Court of Australia in certain circumstances.

7. Section 60 of the Bankruptcy Act is headed "Stay of Legal Proceedings". Subsection (1) gives "the Court", meaning the Court exercising bankruptcy jurisdiction power, to stay any legal process, whether civil or criminal and whether instituted before or after the commencement of s 60(1) of the Bankruptcy Act 1966 against the person or property of the debtor in respect to the non-payment of a provable debt, inter alia. Section 60(2) provides this:

"An action commenced by a person who subsequently becomes a bankrupt, is upon his or her becoming a bankrupt, stayed until the trustee makes an election, in writing, to prosecute or discontinue the action."

Despite that provision a bankrupt may continue in his/her name an action commenced before he/she became bankrupt in respect of personal injury or any action under Lord Campbell's Act. The proceedings that were commenced by the judgment creditor do not in any way concern a personal injury claim, but, in the event, that is only applicable if the proceedings were commenced by the judgment debtor, which they were not.

8. I have carefully read a large number of sections of the Bankruptcy Act and it is clear that once a person becomes a bankrupt, the only way for a person who is the bankrupt's creditor to obtain satisfaction of the debt owed by the bankrupt to the creditor is to make an application under the Bankruptcy Act and to follow the procedures provided by that Act.

9. It is clear that this Court has no power to do anything once the judgment debtor was declared a bankrupt and while he remains an undischarged bankrupt. The Judicial Registrar and the Assistant Registrar ought not to have made the orders which they did because those orders clearly infringe the provisions of s 58(3).

10. The judgment creditor objects to the fact that the judgment debtor seeks the relief that I have indicated I shall grant, by way of notice of motion filed yesterday. I intend to dismiss that motion together with the earlier motions which commenced the current applications. It is correct, in my view, that the judgment debtor personally has no locus standi, but the Court ex debito justitiae must comply with the provisions of the Federal Act governing the affairs of bankrupts and that is a clear mandate of the Constitution of the Commonwealth of Australia.

11. For those reasons, I discharge the orders made by the Judicial Registrar on 3 February 2017 and by Assistant Registrar Fukuda-Oddie on 13 and 14 February 2017. I dismiss the notices of motion filed by the judgment debtor on 23 February 2016 and 3 February 2017. I dismiss the notice of motion filed by the judgment debtor on 13 February 2017. I set aside each and every subpoena that has been issued since 23 December 2016.

**********

Decision last updated: 20 March 2017