Black v Robins
[2008] FMCA 19
•17 January 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BLACK v ROBINS | [2008] FMCA 19 |
| BANKRUPTCY – Application to set aside bankruptcy notice – interim application to present “fresh” evidence – judgment basis for the bankruptcy notice enforceable at the time of the issuing and service of the bankruptcy notice – that the debt the subject of costs assessment and subsequently judgment was reviewable does not make the judgment not a final judgment – application dismissed – interim application dismissed. |
| Bankruptcy Act 1966 (Cth), ss.40, 41G Legal Profession Act 1987 (NSW), ss.377(1), 208K, 208KF, 208NC, 208KC, 208J, 208L, 208M, 208KA, 208KE Bankruptcy Regulations 1996 (Cth), reg.4.02 |
| Re Walsh; Ex Parte Deputy Commissioner of Taxation (1982) 47 ALR 751 Hall Chadwick Pty Limited v Doyle [2006] NSWSC 1195 Advanced Management Consultancy Pty Ltd v Martin Conway Beech [2003] NSWSC 638 Raymond Marshall Johnstone v Joseph Guss [1998] FCA 1658 Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 Smith v The New South Wales Bar Association (1992) 176 CLR 256 ICI Chemicals& Polymers Ltd v Lubrizol Corp Inc (1999) 45 IPR 617 LED Builders Pty Ltd v Eagle Homes Pty Ltd (1999) 46 IPR 375 Londish & Ors v Gulf Pacific Pty Ltd (1993) 45 FCR 128 Emerson & Anor v Wreckair Pty Ltd (1991) 33 FCR 581 Booth v Heller Equipment Finance Ltd [2000] FCA 423 Re Scerri (1998) 82 FCR 146 Re Wilson and Official Trustee in Bankruptcy [1999] FCA 1760 Olivieri v Stafford & Ors (1989) 91 ALR 91 |
| Applicant: | RICHARD BLACK |
| Respondent: | ANDREW ARTHUR ROBINS |
| File Number: | SYG 10 of 2007 |
| Judgment of: | Nicholls FM |
| Hearing dates: | 24 May 2007, 13 June 2007 |
| Date of Last Submission: | 13 June 2007 |
| Delivered at: | Sydney |
| Delivered on: | 17 January 2008 |
REPRESENTATION
| Appearance for the Applicant: | Mr M Carr |
| Solicitors for the Applicant: | Forshaws Neill Solicitors |
| Appearance for the Respondent: | Mr M Condon |
| Solicitors for the Respondent: | Nil |
ORDERS
The application made on 2 January 2007 is dismissed.
The interim application made on 30 May 2007 is dismissed.
The applicant pay the respondent’s costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 10 of 2007
| RICHARD BLACK |
Applicant
And
| ANDREW ARTHUR ROBINS |
Respondent
REASONS FOR JUDGMENT
I have before me an application made by Mr Richard Black (“the applicant”) on 2 January 2007 seeking orders that the Amended Bankruptcy Notice No. NN 3251 of 2006 (“the amended bankruptcy notice”) dated 18 August 2006, and amended on 8 December 2006, and served on the applicant in December 2006, be set aside. Also before me is an interim application subsequently filed by the applicant seeking leave to “reopen” the case following the hearing of this matter, and to file further evidence.
Background
The matter first came before me for hearing on 24 May 2007. The proceedings arise out of a barrister-solicitor relationship that existed between the applicant Mr Richard Black (solicitor), and the respondent Mr Andrew Arthur Robins (barrister). The applicant had briefed the respondent to appear on behalf of several of his clients. When the applicant failed to pay the respondent’s professional fees, the respondent sought to recover the unpaid fees.
Grounds of the Application
The applicant states that the amended bankruptcy notice be “dismissed” as it seeks payment of an amount that was not a provable debt.
Representation
The parties were represented before the Court by Mr Carr for the applicant, and Mr M Condon of Counsel for the respondent.
The Evidence
The applicant’s evidence in the proceedings comprised:
1)The Affidavit of Richard Black sworn 2 January 2007 (“the applicant’s first affidavit”) (Objections taken to paragraphs 6 and 7 – letters annexed – and paragraph 9. Subsequently not pressed by the applicant);
2)The Affidavit of Richard Black sworn 26 February 2007 (“the applicant’s second affidavit”) (Paragraph 3 not pressed); and
3)The Affidavit of Richard Black sworn 19 March 2007 (“the applicant’s third affidavit”) (Objections taken to paragraph 7. Subsequently not pressed).
The respondent’s evidence in the proceedings comprised:
1)The affidavit of Lance William Brennan, solicitor, of Shaw McDonald Solicitors sworn 22 February 2007 (“Mr Brennan’s first affidavit”);
2)The affidavit of Christina Sujina of Shaw McDonald Solicitors sworn 27 February 2007;
3)The affidavit of Lance William Brennan, solicitor, of Shaw McDonald Solicitors sworn 23 March 2007 (“Mr Brennan’s second affidavit”); and
4)Bundle of Correspondence (Respondent’s 1 – “R1”).
The Amended Bankruptcy Notice
The schedule to the amended bankruptcy notice is as follows:
Column 1
Column 2
1. Amount of judgments or orders in Local Court Proceedings No 5257/06
$5,352.00
1. Amount of judgments or orders in Local Court Proceedings No 5258/06
$4,785.00
1. Amount of judgment or orders in Local Court Proceedings No 10360/05
$34,714.86
Plus 2. Legal costs if ordered to be paid and a specific amount was not included in the judgments or orders (see Note 1, below)
Nil
Plus 3. If claimed in this Bankruptcy Notice, interest accrued since the date of judgments or orders (see Note 2, below)
Nil
4. Sub total
$44, 853.86
$10,137.00Less 5. Payments made and/or credits allowed since date of judgments or orders
Nil$1,300.00
6. Total debt owing
$43,553.86
$10,137.00
There are three judgments in the Local Court of New South Wales in respect of which the amended bankruptcy notice was issued:
1)Local Court Proceedings No 5257 of 2006 in the amount of $5,352.00;
2)Local Court Proceedings No 5258 of 2006 in the amount of $4,785.00; and
3)Local Court Proceedings No 10360 of 2005 in the amount of $34,714.86 (“the third amount”) (“the third judgment”).
I note that the amended bankruptcy notice seeks satisfaction of a total amount of $43,553.86, the total of the amounts set out above at (1), (2) and (3), having been reduced by the credited amount of $1,300.00.
The Applicant’s Submissions
Mr Carr submitted that the applicant took issue with the third amount hand written in the amended bankruptcy notice, that is, the amount of $34,714.86.
In essence, the applicant’s case is as follows:
i)The Bankruptcy Notice was defective by reason that the judgment, a copy of which was attached to the Bankruptcy Notice pursuant to s.40(1)(g) of the Bankruptcy Act 1966 (Cth) (“the Act”), was not a “final judgment”;
ii)The third judgment is not a final judgment because by way of a supervening review the amount owing was said to be $15,000 (not the amount set out in the third judgment);
iii)The applicant refers to a relevant: “Amended Certificate as to Determination of Costs by Cost Review Panel” issued on 2 April 2007 – copy attached to the applicant’s written submissions. (Legal Profession Act 1987 (NSW) (“the LPA”), s.208K and 208KF);
iv)With reference to paragraph 2 of the applicant’s second affidavit, and annexure “A” (Letter from the Principal Registrar of the Supreme Court of New South Wales – “Notice of Assignment of Assessors as Panellists” dated 10 October 2006) that once an application for review has been referred to the relevant panel (pursuant to s.208NC of the Legal Profession Act 1987 (NSW)) the operation of the cost assessor’s earlier determination is suspended, and execution of the cost assessor’s determination is stayed;
v)At the time of issue and service of the Bankruptcy Notice such a referral had taken place and, in effect, the letter from the Supreme Court operates “effective as a stay”;
vi)For these reasons, the Bankruptcy Notice should be set aside;
vii)In essence, that a judgment that may be the subject of appeal is not a final judgment, and to treat that judgment as such constitutes an injustice;
viii)That the applicant was not properly served with the Bankruptcy Notice as the facsimile transmission to the applicant’s premises had left out the first page of the Bankruptcy Notice; and
ix)That the applicant has a claim by way of set-off against the respondent.
[In the course of oral submissions, Mr Carr withdrew the applicant’s complaints in relation to defective service by facsimile transmission and, initially, set-off.]
The applicant submits that s.208NC of the LPA creates a power to enable the review of a costs assessment. This relevantly occurred. The amended certificate issued on 2 April 2007 attests to this. Further, with reference to s.208KC and s.208KF of the LPA there was power for the amended certificate to issue.
In other words, the result of the review and the amended certificate is a more recent judgment – a “replacement judgment”. Under the LPA, the certificate can be treated as a judgment.
The applicant relies on Re Walsh; Ex Parte Deputy Commissioner of Taxation (1982) 47 ALR 751 (Re Walsh) at 753 per Lockhart J, as authority for the proposition that a judge in bankruptcy proceedings is permitted to go behind the judgment affixed to the bankruptcy notice.
Mr Carr also referred to Hall Chadwick Pty Limited v Doyle [2006] NSWSC 1195 (“Hall Chadwick”) per Rothman J. The argument initially was that pursuant to s.208J(3) of the LPA, for some purposes the assessor’s certificate is taken to be a judgment of the Court. (This with reference to the amended certificate issued on 2 April 2007.)
I subsequently understood the argument to be that s.208J creates a fiction for the purposes of enforcement of a costs assessment – that is, that it is taken to be a judgment of the Court. But that the relevance of the amended certificate to the applicant’s case is that, with reference to relevant provisions, the certificate can become the basis of a judgment. Mr Carr’s submission was that it would be manifestly unjust for this Court to enforce a bankruptcy notice which involves an amount more than twice the figure in the amended certificate which represents the relevant costs reassessed. Noting that it is “only a formality” to turn the determination into a judgment. The point emphasised was that the debt claimed as a result of the third judgment, has been reassessed to less than half.
In essence, therefore, the applicant relies on the bankruptcy notice having been issued at a time when the assessment of the debt in respect of one of the relevant judgments was under review, and that in light of the subsequent review the amount in the bankruptcy notice is an excessive amount. Further, that the judgment attached to the bankruptcy notice is not final because (with reference to relevant correspondence and despite such correspondence – see “R1”) it was possible for the respondent to “go back to the relevant court” and obtain a judgment by entering the amended certificate for costs.
The Response
Mr Condon saw the case put against the respondent as:
1)The applicant asserts “an off setting claim”.
2)The third judgment is not a final judgment.
3)The review process (as to the determination of costs) acts as a stay.
Mr Condon refuted the applicant’s complaints as follows:
1)The amended bankruptcy notice is not defective and is based on three judgment debts, each of which was fully enforceable at the time of issue and service of the amended bankruptcy notice in December 2006;
2)The Bankruptcy Notice was not defective, by reason that affixed to the Notice was a final judgment that was not suspended by reason of any application for review pursuant to the LPA, as judgment had been entered prior to any application for review; and
3)The applicant had no off-setting claim on the basis of a right to appeal from a costs assessment or determination of the review panel. In any event, the respondent does not owe the applicant any money.
Mr Condon referred the Court to:
1)Subdivision 4B (Appeals) of the LPA and in particular, ss.208L, 208M and 208NC(2), for the proposition that in light of those sections, and the relevant circumstances of the case before the Court, that the provisions of subdivision 4A of the LPA are invoked.
2)Section 208KA (Application for review of the determination) and s.208KE (Effect of review on costs assessor’s determination) for the proposition that there is a clear distinction drawn between a determination of a costs assessor, and a judgment of a court. That to the extent that the applicant’s submissions rely on a determination having been suspended, this does not in that sense affect a judgment.
That this distinction was relied upon by the Court in Advanced Management Consultancy Pty Ltd v Martin Conway Beech [2003] NSWSC 638 (“Advanced Management Consulting”). He cited this case as authority for the proposition that s.208J(3) of the LPA provides that when a Certificate of Determination given by a costs assessor is lodged with a court that certificate is taken to be a judgment of the court for the amount of unpaid costs, with the consequence that the court’s rate of interest is applicable to the amount (see [3]-[4]). The distinction between a certificate and a judgment is made clear in the language of s.208J(3) of the LPA.
Mr Condon relies upon that judgment as authority for the proposition that s.208KE refers to suspension of a determination, and not to the suspension of the judgment that was entered pursuant to the determination: (at [13]):
“I accept His Honour’s analysis of the matter and the cases to which he has referred but the question which has to be considered, in this case, is whether there is a suspension of the judgment. It can be seen that s208 KE refers to a suspension of the determination. It does not refer to a suspension of the judgment that was entered pursuant to it. The provisions of s208 KF subpara(2)(c) would also seem to support the construction that it is only the determination that is suspended. The subsection specifically considers and allows for the fact that the judgment has continued in effect with enforcement of the judgment taking place prior to the Costs Assessor’s certificate ceasing to have effect as a result of the determination of the review panel.”
In the latter case, if an application for review is made before an application has been made to a court to enter judgment pursuant to the determination, then the application for review operates to prevent an application for judgment based on the determination: (at [14]):
“There is, of course, scope for the operation of s208 KE because it could well have effect where a determination of a Costs Assessor has been issued but no application to court for judgment pursuant to that determination has been made. The suspension would prevent an application for Judgment based upon it. It seems that it is a somewhat limited suspension in s208 KE.”
Mr Condon also relied on Hall Chadwick, per Rothman J (as applied also to the circumstances of the current case), but as authority for the proposition that a costs assessment pursuant is not a judgment, but on its filing is taken as a judgment: (at [62]):
“The process of entering a judgment giving effect to the costs assessment is an unnecessary and in this case confusing alteration of the status of the costs assessment, which alteration has no effect. The costs assessment is not a judgment. On its filing it does not become a judgment. On its filing it is taken as a judgment; a fiction is created, which fiction does not bring about all of the restrictions which would otherwise apply to a judgment entered.”
Mr Condon also relied on Raymond Marshall Johnstone v Joseph Guss [1998] FCA 1658 per Kenny J as authority for the proposition that where a costs certificate is amenable to review, it is not the case that a judgment based on that costs certificate loses its effect as a final judgment (see (ii) at page 12 of 19). See also Advanced Management Consultancy in this regard.
Mr Condon submitted that the applicant’s claim (as explained by Mr Carr in submissions) that there was an overstatement as between the amount stated in the third judgment and the amount stated in the amended certificate of determination that gives rise therefore to an off-setting claim, fails “in limine”.
The submission is that the circumstances do not give rise to an off-setting claim, because such a claim cannot be based on a right of appeal. In essence there is no amount of money that can be said to be owed by the respondent to the applicant as a result of that appeal.
The Subsequent Interim Application
Following the hearing, the applicant made a further application seeking leave to “reopen” the case, and to file further evidence in the main proceedings. The parties agreed that, even in the event that the interim application were granted, and the fresh evidence were admitted, there would be no need for further argument.
The applicant complained that the day after the hearing before the Court judgment was entered for the respondent (in the relevant amount) on the amended certificate of the determination of costs. That the course of action leading up to this would have been known to the respondent prior to, and during, the hearing before this Court, and despite orders made for the filing of evidence by way of affidavit, this course of action was not mentioned in evidence.
Mr Carr submitted that the third judgment attached to the amended bankruptcy notice is therefore not a final judgment, because of the existence of a later judgment (“the fourth judgment”). The submission is that had this been revealed by the respondent, and therefore known to the applicant, the applicant would have been in a far stronger position to argue that the amended bankruptcy notice be set aside.
The applicant sought the opportunity to admit evidence in support of this complaint. This is as follows:
1)The affidavit of Richard Black sworn 26 February 2007 (with annexures); and
2)Transcript of the proceedings before the Court of 24 May 2007 (Exhibit “AE 1”).
In essence, the applicant’s complaint is that the respondent did not attach a copy of the final judgment to the amended bankruptcy notice. The applicant submitted that the amended bankruptcy notice referred only to three judgments, when in fact there was a fourth judgment, which the applicant submits was the “final judgment”. The judgment which the applicant submits is in fact the final judgment, is the judgment entered in the Local Court at Sydney (No 4410 of 2007) on 11 May 2007 (prior to the hearing before this Court) on the basis of the Certificate of Assessment of Costs (issued 2 April 2007) issued by the Review Panel. That judgment is in the amount of $15,067 (the certificate of assessment of costs amount of $15,000, plus the filing fee in the Local Court of $67). The applicant “discovered” this judgment after searching the court file on 25 May 2007, the day after the matter had been heard in this Court and judgment reserved.
The applicant submitted that he was entitled to, and in fact did, rely upon the respondent to attach the final judgment to the amended bankruptcy notice. The applicant submitted that he was entitled to rely on the respondent in this way on the basis that the respondent was under a duty to be candid with the Court, and to not mislead the Court by attaching the “incorrect” document. In later oral submissions, the applicant, through Mr Carr, withdrew this submission and acknowledged that not providing evidence of that entry of that judgment could have been an oversight. He withdrew the suggestion that there was an attempt to mislead the Court.
In relation to the application for leave to reopen his case and to present fresh evidence (evidence of the fourth judgment), the applicant submitted that the interests of justice would be better furthered by granting the applicant leave on the basis that the evidence was the difference between the applicant having to find some $15,000, instead of some $34,000 to comply with the bankruptcy notice. The applicant submitted that the material difference was the difference between the applicant committing an act of bankruptcy and the applicant complying with the bankruptcy notice. The applicant relied on Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471, Smith v The New South Wales Bar Association (1992) 176 CLR 256.
The applicant’s further submission is that the judgment attached to the amended bankruptcy notice is no longer a current judgment on the basis that it has been “superseded” by the fourth judgment, entered on 11 May 2007. The applicant submits that this fresh evidence therefore goes to a live issue in the proceedings, specifically whether the amended bankruptcy notice is defective.
The respondent opposed the re-opening of the case.
In support, and in reply, the respondent sought to rely on:
1)Letter from the respondent addressed to the applicant enclosing the respondent’s written submissions dated 17 May 2007 (Respondent’s Exhibit 1 – “RE 1”);
2)Letter from the respondent addressed to “Ms Marguerite Shehata” of the Federal Magistrates Court enclosing copies of two requested affidavits and a copy of the respondent’s written submissions (Respondent’s Exhibit 2 – “RE 2”); and
3)Letter from the respondent addressed to Mr Malcolm Carr, counsel for the applicant, refuting claims in a letter written by Mr Carr to Mr Miles Condon, Counsel for the respondent (Exhibit “RE 3”).
By way of background to the application to reopen, I note that the respondent had already tendered at the earlier hearing a bundle of correspondence, marked as Exhibit “R 1”, which comprised correspondence between the respondent and the Manager, Costs Assessment in the Supreme Court of New South Wales, Mr Michael Robinson, Costs Assessor, and Mr Gordon Salier, solicitor. This correspondence concerned the progress of a review application in costs assessment proceedings under the LPA in relation to the professional fees the respondent was said to be owed by the applicant. The correspondence concerned the issue as to whether the review should be put on hold in light of the proceedings before this Court or whether the application should be finalised by the review panel. The Review Panellists (Mr Salier and Mr Gordon) came to the conclusion that they should finalise the application, and advised both Mr Robins and Mr Black of that decision in two separate letters, each apparently dated 12 February 2007.
In response, the respondent submitted that he was under no such duty in any event to make such disclosure as submitted by the applicant. Further, the existence of the judgment had been expressly disclosed in the respondent’s written submissions of 17 May 2007 (see in particular at paragraph 18). The respondent further submitted that the interim application should be rejected on the basis that it impermissibly sought to re-agitate a point implicit, or inherent, in the applicant’s submissions at the hearing. That is, that at the hearing the applicant submitted through Mr Carr that the third judgment was not a final judgment because it could be supplemented by a “fresh” certificate and a “fresh” judgment. The submission is that simply that is what has happened. The process envisaged was the reason put forward for setting aside the bankruptcy notice. Given this, there is no basis to re-agitate the issues.
The respondent cited as authority for this proposition ICI Chemicals& Polymers Ltd v Lubrizol Corp Inc (1999) 45 IPR 617 at 619 ([6]-[7]) per Emmett J, LED Builders Pty Ltd v Eagle Homes Pty Ltd (1999) 46 IPR 375 at 382 ([33]) per Lindgren J, Londish & Ors v Gulf Pacific Pty Ltd (1993) 45 FCR 128 at 139-141, per Neaves, Burchett and Ryan JJ.
In relation to the applicant’s argument that, in the interests of justice, the fresh evidence should be admitted, Mr Condon cited the following authority in relation to attacks upon the form or content of a bankruptcy notice and whether it is permissible for a Court to go behind the judgment which is the basis for the notice: Emerson & Anor v Wreckair Pty Ltd (1991) 33 FCR 581 at 588, per Morling, Neaves and Spender JJ, Booth v Heller Equipment Finance Ltd [2000] FCA 423 at [3], per Lindgren J.
In subsequent reply, in relation to the respondent’s reliance (in part) on paragraph 18 of his written submissions on this issue, Mr Carr submitted, with reference to the date of the judgment referred to in this paragraph (April 2007) that this was not the “correct” date as to the fourth judgment. He submitted that the date of the judgment is “11 March 2007”. The submission therefore was that the reference at paragraph 18 could not have been to the document, a copy of which was annexed to the applicant’s affidavit of 30 May 2007.
Consideration
The applicant seeks that the bankruptcy notice be set aside as it was defective because the third judgment attached to the notice was not a “final judgment”.
I do not agree with this proposition, and accept the respondent’s submissions that the bankruptcy notice should not be set aside.
Any plain perusal of all of the material before the Court in this matter reveals that a great amount of heat has been generated by, and between, the parties. (I note further from the Court’s lists that this is not the only dispute currently litigated by these parties [FM Lloyd-Jones – Bankruptcy – Robins v Black – SYG 2263/2007].) In these circumstances, it is probably best to be reminded of the following basic situation.
Section 40(1)(g) of the Act requires, relevantly, a creditor to obtain a final judgment against a debtor, the execution of which has not been stayed, and to have served a bankruptcy notice on this debtor to at least establish a basis for proceeding further against the debtor.
Section 41(1) enables the issuing of a bankruptcy notice on application of a creditor who has obtained against the debtor (relevantly) one or more final judgments of the kind described in s 40(1)(g).
Section 41(2) requires that the bankruptcy notice be in accordance with the form prescribed in the Bankruptcy Regulations 1996 (Cth) (“the Regulations”). For the purpose of this section, reg.4.02 prescribes the form of bankruptcy notice as that set out in “Form 1”.
Form 1 requires that a copy of the (relevant) judgments relied on by the creditor be attached (see paragraph 2 of Form 1). Of course, a failure to attach a copy of the judgment on which the notice is based is a fundamental defect which cannot be cured. (See Re Scerri (1998) 82 FCR 146, per Beaumont J.)
On its face, the bankruptcy notice in the current case, appears to comply with these requirements.
The applicant’s complaint about the third judgment is that when viewed in light of the prospective, or possible action, or subsequent and possible events, and in the context of the application to provide further evidence to the Court, actual action and events, that the third judgment was not a final judgment, and therefore the Bankruptcy Notice was defective.
I agree with the respondent, as for example set out in his written submissions (see in particular paragraphs 2 and 20) that the relevant time for the purposes of the issue before the Court now is the time of the application for, and issuing and serving of, the Bankruptcy Notice. At that time the (relevant) amount owing, due and enforceable was $34,714.86. This is the amount stated in the third judgment of the Local Court (NSW) “Case number 10360/05”. This corresponds with the relevant amount set out in the Schedule to the Bankruptcy Notice: “Amount of judgments or orders in Local Court Proceedings No 10360/05. $34,714.86”.
The applicant says that the third judgment was not a “final judgment”. He relies on the relevant provisions of the LPA, and events subsequent to the relevant time, to argue that because the relevant costs assessment from which the judgment derived was, at first capable of being reviewed, and following the date of the judgment, was referred for review, that it was therefore not a final judgment.
I also agree with the respondent, and with regard to the respondent’s relevant submissions (and reliance of authorities) set out above, that there is a clear distinction to be drawn between a determination made by a court’s assessor and a judgment of the Court. What was said to be the subject for review in the present circumstances was not the Local Court’s judgment, but the assessment by the Court’s assessor.
The applicant’s reliance on the letter from the Supreme Court (see Annexure “A” to the applicant’s second affidavit) does not assist in this argument. The letter, dated 10 October 2006, asserts that a costs assessor’s determination is suspended once the review application is referred for review to the relevant panel. That indeed is the case, with reference to the relevant legislation.
The applicant’s second affidavit (at paragraphs 2 and 4 – paragraph 3 not pressed) links the third judgment and the relevant stated amount in that judgment with the debt of $34,714.86 (the amount stated in the judgment). The applicant refers to the judgment, and the debt, in the context of the saying (paragraph 4) that: “the enforcement of the debt of $34,714.86 was suspended when he issued the Amended Bankruptcy Notice”.
The difficulty for the applicant however is that this does not operate to “suspend” the Court’s judgment. Implicit in the applicant’s argument is the proposition that the debt and the judgment are in a sense interchangeable, and the suspension of one (the assessor’s determination from which the debt is said to arise) should be seen as a suspension of the judgment.
Nothing in the material put before the Court by the applicant supports this. The date of the third judgment is 24 October 2005. The Bankruptcy Notice was issued on 18 August 2006. It was (deemed) served on the applicant in December 2006. This judgment had not been set aside at the relevant time.
In any event, I also agree with the respondent’s reliance on relevant authorities (as set out above) that even where a costs certificate/assessment is amenable to review this does not affect the standing of the relevant judgment as a final judgment (see [25] above). A parallel that can be drawn here is that any judgment of an inferior court is, in that sense, amenable to review (naturally by a superior court). This, on its own, does not take any judgment of an inferior court out of what can be categorised as a “final judgment.”
At the relevant time (24 October 2005), the third judgment finally determined, as at that time, at least in so far as it related to the stated amount, that the respondent had an existing right in relation to this amount against the applicant.
The applicant in part, and in one sense at least, in contradiction to the implicit proposition that the assessment and the judgment were interchangeable, argued that the Court should go behind the judgment and look at the circumstances of the debt assessment and its susceptibility to, and subsequently, actuality of review. He relied on Re Walsh for the proposition that a bankruptcy court is permitted to go behind a judgment affixed to a bankruptcy notice.
In effect the applicant’s compliant that there is a “set off” against the respondent invites the Court to go behind the third judgment and determine that ultimately the applicant owes the respondent something less than the amount stated in the judgment and the bankruptcy notice.
In terms of the “set off” argument, I agree with Mr Condon that ultimately the respondent does not owe the applicant any money such that any such amount could be set off against what the applicant owes. Nor at the relevant time (issue and service of the bankruptcy notice) did any such situation exist.
In addition, in the circumstances of this case I do not see the resolution of the issue in dispute as requiring lengthy consideration of the circumstances as to when a bankruptcy court may go behind a judgment. In Re Wilson and Official Trustee in Bankruptcy [1999] FCA 1760 (“Re Wilson”), Emmett J said (in a matter involving a default judgment) at [34];
“… that there may well be good grounds for setting aside a judgment that was entered for an excessive amount.”
Noting again, that in the circumstances of this case, at the relevant time that was not the situation.
The Court went on to say at [39]:
“Further, it may be that this Court, as a Court of Bankruptcy, would go behind a judgment in order to determine whether there was in fact, anything due.”
The applicant does not assert that at the relevant time, or even now, that there is nothing due.
But ultimately, on this issue, see Re Wilson at [39]:
“Following the entry of a judgment, however, the amount due by the judgment debtor to the judgment creditor, and the amount for which execution might issue, is the sum stated in the judgment. Where a bankruptcy notice claims that amount, it cannot be said that it claims an amount that exceeds the amount in fact due. By reason of the judgment itself, the amount of the judgment is due.”
(See also the majority in Olivieri v Stafford & Ors (1989) 91 ALR 91, per Beaumont and Gummow JJ.)
That is, that in this case whatever the pre-existing obligation, and its susceptibility to re-assessment, what is before the Court now is a Bankruptcy Notice that claims an amount that is the amount stated in the attached judgments (including the third judgment) and “by reason of the judgment itself, the amount of the judgment is due”.
The applicant’s interim application does not assist either. In short, I am not persuaded that the applicant should be allowed to introduce new evidence for the simple matter that what was said to be “new”, in the context of the relevant issue before the Court, was not new. In any event, I cannot see, given what is set out above, that it can affect the outcome.
I agree with Mr Condon that paragraph 18 of the respondent’s written submissions, if not expressly, then certainly by clear inference relate to the very matter that the applicant subsequently sought to subsequently put before the Court by way of his affidavit of 30 May 2007 and in particular, annexure “A” to the affidavit (a copy of a fourth judgment).
I do not agree with Mr Carr’s disputing that what was referred to at paragraph 18 of the respondent’s submissions was not a reference to what ultimately the applicant sought to put before the Court by way of annexure “A” to his latest affidavit. Mr Carr submitted that annexure “A” shows that the (latest) fourth judgment was entered on 11 May 2007, yet the judgment referred to in the written submissions was said to have been entered on 2 April 2007.
While it may not be abundantly clear (paragraph 18 does not specifically state: “11 May 2007”), what is clear is that the reference to “$15,000” and “2 April 2007” was a reference to the review panel determination issued on “2 April 2007” in the amount of “$15,000” (see annexure to the applicant’s own written submissions of 10 May 2007), such that it can be said to lead to: “the new judgment”.
The applicant’s central argument in relation to the issue of the efficacy of the Bankruptcy Notice is not assisted by this “new evidence”. The argument that was initially put in support of the proposition that the Bankruptcy Notice should be set aside because the amount stated in the third judgment, to the extent that it derived from a particular costs assessment which was subject to review, is in light of what I have set out previously, not assisted by subsequent events, including a re-assessment of the determination, and even the existence of the judgment of 11 May 2007.
The Court was well seized of Mr Carr’s argument on behalf of the applicant at the hearing as set out above. Even if paragraph 18 did not appear in the respondent’s submissions, Mr Carr’s argument certainly centred around the possibility of the very event, which did occur, occurring. That the applicant now has evidence of the subsequent occurrence of what he argued at the hearing could occur, does not assist in strengthening his argument as put at the hearing given what I have set out above.
In all therefore, as at the relevant time, the date of the third judgment (and for that matter the first and second), the dates of the issuing and serving of the Bankruptcy Notice, the amount owing as stated in each of the three judgments was the equivalent amount stated in the Bankruptcy Notice. The amount stated in the third judgment was clearly “correctly” reflected in the Bankruptcy Notice. For the reasons set out above the judgments were final judgments, including the third judgment. The applicant’s complaints do not alter this situation. The total debt said to be owing was properly reduced by payments and credits allowed since the date of the judgements, such that no overstatement can be said to have occurred in this regard.
For the reasons above, the application to the Court to set aside the Bankruptcy Notice is dismissed.
I certify that the preceding seventy-six (76) paragraphs are a true copy of the reasons for judgment of Nicholls FM
Associate: A Douglas-Baker
Date: 17 January 2008
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