Buere v Commonwealth Bank of Australia
[2014] FCCA 164
•7 February 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BUERE v COMMONWEALTH BANK OF AUSTRALIA | [2014] FCCA 164 |
| Catchwords: BANKRUPTCY – Application seeking orders to set aside bankruptcy notice – whether issue of bankruptcy notice was for the purposes of enforcing a civil judgment – whether the operation of the Victims Support and Rehabilitation Act 1966 (NSW) prescribes a requirement for leave from the Supreme Court of New South Wales before seeking to issue a bankruptcy notice – application to set aside bankruptcy notice dismissed. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(1), 41(6A) Civil Procedures Act 2005 (NSW), s.106(1) Federal Circuit Court (Bankruptcy) Rules 2006 (Cth), r.3.03 |
| Autron Pty Ltd (ACN 007 324 110) v Benk (2011) 280 ALR 417 Re Gualtieri; Ex parte Martin & Savage Pty Ltd (1995) 58 FCR 55 Re Kassab; Ex parte Deputy Commissioner of Taxation (1994) 55 FCR 305 Sharpe v Heywood [2013] FCCA 1788 Victims Compensation Fund Corporation v GM & Ors (2004) 60 NSWLR 310 |
| Applicant: | VON RYAN BUERE |
| Respondent: | COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 |
| File Number: | SYG 1257 of 2013 |
| Judgment of: | Judge Lloyd-Jones |
| Hearing date: | 3 July 2013 |
| Delivered at: | Sydney |
| Delivered on: | 7 February 2014 |
REPRESENTATION
| Solicitor for the Applicant: | Mr D. Miralis of Nyman Gibson Stewart |
| Solicitor for the Respondent: | Ms K. Carter of Gadens |
ORDERS
The Application seeking to set aside Bankruptcy Notice No. BN 160027, issued on 10 May 2013, is dismissed.
The Applicant is to pay the Respondent’s costs of and incidental to the Application as agreed or taxed.
The time for compliance with Bankruptcy Notice No BN 160027 is extended up to and including the seventh day after the date of this order, being 14 February 2014.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1257 of 2013
| VON RYAN BUERE |
Applicant
And
| COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 |
Respondent
REASONS FOR JUDGMENT
Introduction
On 6 June 2013, the applicant, Mr Von Ryan Buere (“Buere”) filed an application in this Court seeking orders to set aside a Bankruptcy Notice (Notice No BN 160027) that had been served on him. On 10 May 2013 Bankruptcy Notice BN 160027 (the “Bankruptcy Notice”) addressed to Buere was issued by the Official Receiver at the request of the respondent in these proceedings, the Commonwealth Bank of Australia ACN 123 123 124 (“CBA”), and subsequently served on him on 20 May 2013. The debt claimed by CBA in the Bankruptcy Notice arises from a judgment made and entered against Buere on 9 November 2012 in the amount of $54,000 (the “Civil Judgment”) in the Supreme Court of New South Wales proceedings No. 2010/00005940 (the “Civil Proceedings.
On 6 June 2013, Registrar Ng made orders pursuant to s.41(6A) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”) and r.3.03 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth), on condition that the Bankruptcy Notice BN 160027 issued on 10 May 2013 was served on the applicant on 20 May 2013:
The time for compliance by the applicant with the requirements of the Bankruptcy Notice is extended up to an including 18 June 2013.
The first court date was listed for Tuesday 18 June 2013 at 11.30am. On 18 June 2013, Registrar Hannigan extended the time for compliance with the Bankruptcy Notice up to and including 25 June 2013 which was the next scheduled directions hearing. On 25 June 2013, the matter came before District Registrar Wall and he listed the matter for hearing before me on 3 July 2013 and, once again, made orders extending the time for compliance to that date. At the conclusion of the hearing on 3 July 2013, I reserved the judgment and extended the time for compliance until further orders of the Court.
At the hearing held on 3 July 2013, Mr Miralis, appearing on behalf of Buere, sought to rely on the following evidence:
a)Affidavit of Mr Von Ryan Buere, sworn on 5 June 2013;
b)Affidavit of Mr Edward Chee, sworn on 1 July 2013;
c)Affidavit of Mr Dennis Miralis, affirmed 2 July 2013.
Ms Carter, appearing on behalf of CBA, sought to rely on the following evidence:
a)Affidavit of Karina Elizabeth Carter, sworn on 17 June 2013.
Background
The background and chronology of events leading to the current proceeding, as argued by the Mr Miralis, are as follows:
a)On 1 October 2009, Buere was arrested;
b)At the time the Buere was arrested the NSW Police seized money in his home and car in the amounts of $6,000, $13,200 and $1,580. The money was the property of CBA;
c)The sum of $6,000 was handed over to CBA on 1 October 2009;
d)On 2 October 2009 Buere was charged with multiple counts of obtaining money/financial gain by deception under s.178BA(1) of the Crimes Act 1900 (NSW) against CBA;
e)As a result of the charges made against Buere, criminal proceedings were brought against him in the District Court of New South Wales (the “Criminal Proceedings”);
f)On 19 January 2010, by an amended summons, CBA commenced civil proceedings against Buere with respect to the criminal charges, seeking restitution against Buere;
g)On 23 March 2012, Buere pleaded guilty to the charges of obtaining money/financial gain by deception;
h)On 28 September 2012 an order requiring the applicant to compensate CBA was made in the District Court in the amount of $54,000;
i)Payment by Buere of the sum of $54,000 would satisfy the order for compensation (above at [h]) and also the Civil Proceedings;
j)In December 2012 an amount of $20,000 was paid to the District Court as part-payment the order for compensation;
k)On 7 February 2013 Buere commenced proceedings against the NSW Police in the Local Court making an application for the return of his property (the “Property Proceedings”);
l)On 22 April 2013 an order was made in the Local Court proceedings requiring the Police to pay the District Court registry the sums of $13,200 and $1,580, respectively. No orders were sought in respect of the sum of $6,000 because Buere and his solicitor were told an amount of $6,000 was provided to CBA on 1 October 2009;
m)On 22 May 2013 (being two days after the Bankruptcy Notice was served) a cheque in the sum of $13,220 was forwarded to the District Court as part-payment of the order for compensation;
n)On 22 May 2013 a receipt/tax invoice was issued to the applicant by the Local Court stating that the amount outstanding under the order for compensation was $20,780.
Applicant’s Allegations
From the evidence served on behalf of Buere, it is understood that Mr Buere essentially makes two allegations. These allegations are:
a)Having regard to Buere’s version of the relevant facts, the Civil Judgment claimed in the Bankruptcy Notice has been satisfied; and
b)CBA was not entitled to issue the Bankruptcy Notice because:
·By issuing the Bankruptcy Notice CBA was “enforcing” the Civil Judgment; and
·Under s.77G(3)(b) of the Victims Support and Rehabilitation Act 1966 (NSW) (the “VSR Act”) CBA required leave to “enforce” the Civil Judgment.
Respondent’s Submissions in response to Applicant’s Allegations
In response, CBA relies on the evidence and states:
a)The Civil Judgment was made and entered by consent on 9 November 2012;
b)Between 9 November 2012 and 10 May 2013 (being the date on which the Bankruptcy Notice was issued) the only amount received by CBA was $20,000;
c)The amount of $20,000 was applied to reduce the amount of the Civil Judgment, plus interest, claimed in the Bankruptcy Notice;
d)By Buere’s own evidence the amount due in respect of the order for compensation as at 22 May 2013 (being 2 days after the Bankruptcy Notice was served) was $20,780;
e)There is simply no evidence to support Buere’s allegation that:
·When Buere was arrested on 1 October 2009, the Police seized money in his home and car in the amounts of $6,000, $13,200 and $1,580;
·An amount of $6,000 was ever remitted to CBA in respect of the Civil Judgment (or the order for compensation);
·Payment by Buere to CBA of the sum of $54,000 would satisfy the order for compensation and also the civil judgment;
·On 22 April 2013 an order was made in the Property Proceedings requiring the Police to pay to the District Court registry the sums of $13,2000 and $1,580, respectively
CBA submits that all of these allegations should be rejected.
Applicant’s Submissions
Does the VSR Act apply to these proceedings?
Buere argues that the principle issue that arises for the consideration of this Court involves a question of statutory construction.
The statute under which the compensation order was made at the time of Buere’s sentencing, was the VSR Act (since repealed).
The statute provided that a sentencing court, with the power to award compensation for injury, pursuant to Part 4, Division 1 and or for economic loss pursuant to Part 4, Division 2.
The objects of the VSR Act are found at s.3 of the Act and state:
3 Objects of Act
The objects of this Act are as follows:
(a) to provide support and rehabilitation for victims of crimes of violence by giving effect to an approved counselling scheme and a statutory compensation scheme,
(b) to enable compensation paid under the statutory compensation scheme to be recovered from persons found guilty of the crimes giving rise to the award of compensation,
(c) to impose a levy on persons found guilty of crimes for the purpose of funding the statutory compensation scheme,
(d) to give effect to an alternative scheme under which a court may order the person it finds guilty of a crime to pay compensation to any victim of the crime.
The application of the VSR Act was considered by the New South Wales Court of Criminal Appeal in Connor v R [2005] NSWCCA 431 where Studdert J (McClellan CJ at Common Law and James J agreeing) necessarily construed, Part 4, Division 2 in s.77B as applying to financial loss: see [37].
In R v Wills: Application by Woolworths Ltd for a direction for compensation pursuant to s 77B of the Victims Support and Rehabilitation Act 1996 (NSW) (2013) 16 DCLR (NSW) 4, his Honour Haesler DCJ said at [9]:
Loss is not defined but given the distinction in the Act between injury and loss it must include economic loss.
This is contrary to CBA’s submission that the VSR Act is concerned only with the compensation of injuries.
Further, Buere argues that s.77C of the VSR Act permits the Court to award compensation up to the civil jurisdictional limit of the District Court. The amount of $54,000 is within the jurisdictional limit of the District Court and accordingly CBA’s argument to the contrary is wrong.
Buere submits that the VSR Act, in particular s.77G, applies to these proceedings.
The application and purpose of s.77G of the VSR Act
The direction for compensation was made by his Honour Judge Lakatos of the District Court of NSW in proceedings R v Von Buere, Case no. 2009/00220249 (Affidavit of Buere sworn 5 June 2013 at Annexure “B”) pursuant to s.77B of the VSR Act which provides:
77B Directions for compensation
(1) If a person is convicted by a court of an offence, the court may (on the conviction or at any time afterwards) on notice given to the offender direct that a specified sum be paid out of the property of the offender:
(a) to any aggrieved person, or
(b) to any aggrieved persons in such proportions as may be specified in the direction,
by way of compensation for any loss sustained through, or by reason of, the offence or, if applicable, any further offence that the court has taken into account under Division 3 of Part 3 of the Crimes (Sentencing Procedure) Act 1999 in imposing a penalty for an offence for which the offender has been convicted.
(2) A direction for compensation may be given by a court on its own initiative or on an application made to it by or on behalf of the aggrieved person.
Buere argues that s.77B of the VSR Act must be read in combination with s.77G which states:
77G Effect of directions for compensation on subsequent civil proceedings
(1) This section applies to civil proceedings commenced or maintained in respect of a loss sustained by a person in respect of whom a direction for compensation has been given on the basis of the same facts as those on which the civil proceedings are based.
(2) A direction for compensation does not affect a person’s right to commence or maintain civil proceedings, and damages in the civil proceedings must be assessed without regard to the direction.
(3) The judgment of the court in which the civil proceedings are determined:
(a) must not be entered in respect of so much of the amount of damages assessed by the court as is equivalent to the sum of the amounts that have been paid under the direction for compensation, and
(b) must not be enforced, except with the leave of the court, in respect of so much of the amount of damages assessed by the court as is equivalent to the sum of the amounts that have not been paid under the direction for compensation.
(emphasis added)
The purpose of this provision was considered in Connor v R (supra) at [40], where Studdert J stated:
40. A direction for the payment of compensation does not prevent the person who sought the direction from bringing civil proceedings. However, s 77G provides against “doubling up” in the event that there are civil proceedings…
At [45], his Honour warned against the potential misuse of this section:
45. Of course, the directions under s 77B of the Victims Act ought not become an opportunity for victims to receive double compensation. Section 77B is intended in the language used in the section to provide “compensation for any loss sustained”, and no more.
The compensation order formed part of the sentence imposed on Buere – double jeopardy provisions apply
The imposition of a compensation order on Buere was part of the sentencing exercise and was a penalty for the purposes of the Crimes (Sentencing Procedure) Act 1999.
In R v McDonald [1979] 1 NSWLR 451, the Court held that an order for compensation constitutes a sentence within the meaning of s.2 of the Criminal Appeal Act 1912 (NSW) and increased an award of compensation of $1,000 to the then statutory maximum of $4,000. The court can exercise its power under s.9 of the Criminal Appeal Act either to annul a compensation order or to vary it: Connor v R (supra) at [36].
Relevantly for these proceedings, the common law principle of double jeopardy also applies which precludes Buere from being punished twice for the same offence, including the enforcement of that judgment debt in the NSW Supreme Court, unless with the leave of the NSW Supreme Court in accordance with s.77G of the VSR Act.
By issuing the Bankruptcy Notice CBA has failed to comply with the legislative intent behind s.77G, which, seeks to preserve the principles of “double jeopardy” by not exposing a person to double punishment for the same offence: Pearce v R (1998) 194 CLR 610 per McHugh, Hayne and Callinan JJ at [9]-[10] (See also Gummow J at [68] and Kirby J at [73], [89]-[91]). At [9]-[10] their Honours stated:
9. The expression “double jeopardy” is not always used with a single meaning. Sometimes it is used to refer to the pleas in bar of autrefois acquit and autrefois convict; sometimes it is used to encompass what is said to be a wider principle that no one should be “punished again for the same matter”. Further, “double jeopardy” is an expression that is employed in relation to several different stages of the criminal justice process: prosecution, conviction and punishment.
10. If there is a single rationale for the rule or rules that are described as the rule against double jeopardy, it is that described by Black J in Green v United States:
“The underlying idea, one that is deeply ingrained in at least the Anglo-American system of jurisprudence, is that the State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing the possibility that even though innocent he may be found guilty.”…
(footnotes omitted)(emphasis added)
In addition to the above, the issuing of the Bankruptcy Notice provides CBA with two forms of compensation for the same offence. Not only does this expose Buere to being punished twice for the same offence, but also provides a potential second windfall for CBA.
The Bankruptcy Notice is invalid as it fails to comply with s.40(1)(g) of the Bankruptcy Act
Relevantly, s.40(1)(g) of the Bankruptcy Act provides that a debtor commits an act of bankruptcy where:
Acts of bankruptcy
(1) A debtor commits an act of bankruptcy in each of the following cases:
…
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
…
comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
In Re Fazzolare & Ors; Ex parte Fazzolare & Anor v Westpac Banking Corporation [1997] FCA 190, Tamberlin J considered the meaning of the final judgment:
It is settled law that a final judgment means any judgment upon which the creditors are in a position to issue execution: Abigroup Ltd v Abignano [1992] FCA 567; (1992) 39 FCR 74 at 79-81. If the leave of the Court is required to levy execution then the judgment is not a final judgment within s 40(1)(g) of the Act: Re Ide; Ex parte Ide (1886) 17 QBD 755; Re Gualtieri; Ex parte Martin & Savage Pty Ltd [1995] FCA 1381; (1995) 58 FCR 55. The judgment creditor must be in a position to be able to issue immediate execution: Re Richards; Ex parte Sommers (1947) 14 ABC 112 and Abignano (supra) at 80.
Buere submits as leave of the NSW Supreme Court is required in order to enforce the judgment debt, the Bankruptcy Notice issued to Buere cannot be executed immediately. It follows that the Bankruptcy Notice is not a final judgment and is, therefore, invalid.
Respondent’s Submissions
The Applicant has failed to comply with the Order for Compensation
CBA argues that by Buere’s own evidence:
a)Order for compensation provided that:
The offender VON BUERE, is ordered to pay the following: Compensation $54,000.00 payable to Commonwealth Bank. The total payable to the Court is due on or before 26 October 2012:
See the “Certificate of Enforcement of Directions for Compensation, Annexure “EC3” to the Affidavit of Mr Chee, affirmed 1 July 2013; and
b)Buere has not paid the amount of $54,000 to the Court in accordance with the order of compensation.
Accordingly, Buere has failed to comply with the order for compensation.
In respect of various payments alleged to have been made by Buere to CBA:
a)In respect of the alleged transfer of the sum of $6,000 to CBA, Buere’s own evidence is that:
·This amount was transferred to CBA on 1 October 2009, over 3 years before the Civil Judgment was entered; and
·Indeed, before the Civil Proceedings were even commenced.
b)Even if the amount of $6,000 was transferred to CBA on 1 October 2009, there is simply no basis, in fact or in law, for Buere to allege either that:
·The sum was paid in reduction of the Civil Judgment which was entered on 9 November 2012; or
·Even the sum was paid in reduction of the order for compensation entered in the Criminal Proceedings on 28 September 2012.
c)The alleged payment of $13,220:
·In respect of the payment of the sum of $13,220, Buere’s own evidence is that this sum was sent by cheque to the District Court registry two days after the Bankruptcy Notice was served. Accordingly, there is simply no basis on which the payment of the sum of $13,220 could have been taken into account in reduction of the Civil Judgment claimed in the Bankruptcy Notice.
d)The amounts of $13,200 and $1,580:
·In respect of the amounts of $13,200 and $1,580, not only is there no evidence to support Buere’s allegation that these amounts were subject to an order made on 22 April 2013 in the Property Proceedings, the applicant’s own evidence contradicts this. The terms of the order made in the Property Proceedings on 22 April 2013 clearly states:
That the following items be forwarded to the Sydney District Court Registry to meet in part, the compensation order made against the applicant by Lakatos DCJ on 28/2/2012 in the amount of $54,000 in case no. 2009/220249 R –v- Buere.
See the “Court Order Notice” that forms part of Annexure “EC2” to the Chee Affidavit;
e)The terms of the order made in the Property Proceedings on 22 April 2013:
·Make no reference to the amount of $13,200 or to the amount of $1,580; and
·Make no reference to a compensation order made on a different date and for a different amount to the Order for Compensation.
f)Further, by Buere’s own evidence, it is clear that the amounts of $13,200 and $1,580 have not been paid to CBA.
Legal Allegations
CBA argues that it understands Buere’s legal allegations to be:
a)By issuing the Bankruptcy Notice the Respondent was “enforcing” the judgment in the Civil Proceeding; and
b)Under s.77G(3)(b) of the VSR Act, set out above at [15], CBA required leave to ‘enforce’ the judgment entered in the Civil Proceedings.
CBA’s response to the applicant’s legal allegation is that s.77G(3)(b) has no application in this case because neither the issue of nor the service of a Bankruptcy Notice constitutes an act of “enforcement” of the Civil Judgment by CBA.
In this regard CBA submits that:
a)The Bankruptcy Notice does not constitute an enforcement process of a Court;
b)The Bankruptcy Notice is a document issued by the Official Receiver;
c)By serving the Bankruptcy Notice on Mr Buere, CBA has done no more than make a demand on Mr Buere for the payment of the Civil Judgment (being a judgment that is a final judgment and that has not been stayed) which it is entitled to do; and
d)The only consequence of failure to comply with the Bankruptcy Notice is that Buere is deemed to have committed an act of bankruptcy in accordance with s.44(1)(g) of the Bankruptcy Act.
The issue of whether the Bankruptcy Notice constitutes an enforcement process of a Court was considered in Re Gualtieri; Ex parte Martin & Savage Pty Ltd (1995) 58 FCR 55. In that case the Court was concerned with a Bankruptcy Notice which had been issued when the judgment on which it was founded may have been stayed due to an instalment order. The relevant provision of the Local Courts (Civil Claims) Rules 1988 provided:
27.3 Miscellaneous provisions
(3) Where an order under rule 1 or 2 in respect of a judgment debt has ceased to be in force through the operation of subrule (2), process for the enforcement of the judgment shall not be issued except on affidavit evidence as to how the order came to cease to be in force.
Having regard to language of the legislation Tamberlin J found that:
Given its context, as a matter of interpretation, the words “process for the enforcement of the judgment” do not, in my view, refer to a bankruptcy notice…
The issue of whether a bankruptcy notice constitutes an enforcement “process” of a court was also considered in Re Kassab; Ex parte Deputy Commissioner of Taxation (1994) 55 FCR 305. In that case Black CJ, Sweeny and Shepard JJ, considering a provision of the Income Tax Assessment Act 1936, held that:
…[A] bankruptcy notice, being a document of a registrar in bankruptcy and not of the Court, does not fall within the words of s. 214 of the Income Tax Assessment Act 1936, "any process in proceedings" against a taxpayer for recovery of income tax…
By serving the Bankruptcy Notice CBA has done no more than make a demand on Mr Buere for payment of the Civil Judgment, which it is entitled to do. CBA relies on the statement that appears on the second page of the Bankruptcy Notice, that:
[Buere is] required within 21 days after service on [Buere] of the Bankruptcy Notice, to either:
(a) pay the creditor the amount of the debt claimed; or
(b) make arrangement to the creditor’s satisfaction for settlement of the debt.
In further response to Buere’s argument as to the application of s.77G of the Bankruptcy Act CBA says, even if the Court were to find that the issue or service of the Bankruptcy Notice constituted enforcement of the Civil Judgment (which is denied), the VSR Act does not apply to the Order for Compensation made in the Criminal Proceedings.
In this regard CBA relies on ss.3, 6 and 5(1) of the VSR Act, that provide, respectively, as follows:
3 Objects of Act
The objects of this Act are as follows:
(a) to provide support and rehabilitation for victims of crimes of violence by giving effect to an approved counselling scheme and a statutory compensation scheme,
(b) to enable compensation paid under the statutory compensation scheme to be recovered from persons found guilty of the crimes giving rise to the award of compensation,
(c) to impose a levy on persons found guilty of crimes for the purpose of funding the statutory compensation scheme,
(d) to give effect to an alternative scheme under which a court may order the person it finds guilty of a crime to pay compensation to any victim of the crime.
6 Persons eligible for statutory compensation
The following persons are eligible for statutory compensation:
(a) a primary victim of an act of violence,
(b) a secondary victim of an act of violence,
(c) a family victim of an act of violence.
5 Act of violence
(1) In this Act,
“act of violence” means an act or series of related acts, whether committed by one or more persons:
(a) that has apparently occurred in the course of the commission of an offence, and
(b) that has involved violent conduct against one or more persons, and
(c) that has resulted in injury or death to one or more of those persons.
The charge laid against Buere in the Criminal Proceedings, which Mr Buere pleaded guilty to did not involve an “act [or acts] of violence”.
NSW Parliament’s Second Reading Speech of the VSR Act makes it clear the compensation orders under the VSR Act may only arise in circumstances where there is a requisite “act of violence”.
The operation of the VSR Act, having regard to the Second Reading Speech, was discussed in the New South Wales Court of Appeal’s judgment in Victims Compensation Fund Corporation v GM & Ors (2004) 60 NSWLR 310. At [36]-[38] of those reasons, her Honour McColl JA (Mason P and Ipp JA agreeing) had regard to Parliament’s Second Reading Speech and stated:
Statutory Framework
36. The 1996 Act established a statutory compensation scheme to provide “support and rehabilitation for victims of crimes of violence”: s 3(a). It repealed the Victims Compensation Act 1987 (NSW) (the "1987 Act") (s 90).
37. The 1996 Act was intended to introduce "a reformed scheme for compensating victims of violent crime": Second Reading Speech of the Attorney General, the Hon J W Shaw QC MLC, New South Wales Legislative Council, Parliamentary Debates (Hansard) 15 May 1996 at p 973. The reforms were developed in the following context: an election proposal to "overhaul ... the victims' compensation system to ensure that the genuine needs of victims are met at reasonable cost to the community", "serious concerns" raised by the Auditor-General "about the financial viability of the current compensation scheme" and recommendations for reform contained in a review prepared by Mr Cec Brahe of the 1987 Act (the “Brahe Review)”: Second Reading Speech, New South Wales Legislative Council, Parliamentary Debates (Hansard) 15 May 1996 at pp 973 - 974.
38. The Attorney General said (Second Reading Speech, New South Wales Legislative Council, Parliamentary Debates (Hansard) 15 May 1996 at p 974):
“Given that victims compensation payments are largely financed from consolidated revenue, the Government has a clear responsibility to ensure that the scheme remains financially viable and that future compensation payments do not cause an unaffordable drain on public funds. The Government is equally committed to ensuring that genuine victims seriously injured by the violent criminal conduct of offenders have ready access to a fair, equitable and efficient victims compensation scheme.
The reforms proposed by the Government ... represent a major overhaul of the scheme as it currently operates. The principal aims to be achieved by the reforms are ... to ensure that awards of compensation are directed towards those victims suffering the most serious injuries; and to address the escalating costs of the scheme such that the genuine needs of victims are met at a reasonable cost to the community. ... The Government has acted ... to tighten the definition of `act of violence' to make clear that the scheme applies only when injury results from a violent criminal act." (emphasis supplied)
In further support of CBA’s submission that the Order for Compensation does not constitute an order under the VSR Act, CBA relies on s.72(1) of the VSR Act that restricts a court’s power to give directions for compensation to amounts not exceeding $50,000. Section 72(1) states:
72 Restrictions on court’s power to give directions for compensation
(1) A direction for compensation must not be given in respect of the conviction of a person for an offence if the aggregate of the sum specified in the direction and of all sums specified in a direction for compensation previously given under this Division:
(a) on the conviction of any other person for that offence, or
(b) on the conviction of that or any other person for a related offence,
exceeds $50,000.
The Order in the Criminal Proceedings was for a sum of $54,000. Accordingly, this fact alone confirms that the VSR Act can have no application to the order for compensation made against Buere.
Consideration
The initial issue with this matter is that there are two distinct and independent proceedings which have been overlapped in submissions and argument, leading to some unnecessary confusion. The first proceedings (the “Criminal Proceedings”) were dealt with by Lakatos DCJ in Case No. 2009/2200249: R v Von Buere, with Buere pleading guilty on 23 March 2013 to charges of obtaining money/financial gain by deception. On 28 September 2012, Justice Blanch sentenced Buere to a term of imprisonment of two years, commencing on 8 October 2012 and expiring on 7 October 2014. This sentence was to be served by intensive correction. On the same date, a certificate of enforcement of directions for compensation under s.77F of the Victims Support and Rehabilitation Act 1996 (NSW) was issued. The direction issued was that “the offender, VON BUERE, is ordered to pay the following: compensation $54,000 payable to Commonwealth Bank. The total is $54,000. This amount is due on or before 28 October 2012”. I note that CBA was not party to these proceedings and there is no evidence before the Court CBA was formally notified of this certificate of enforcement.
The second set of proceedings (the “Civil Proceedings”) was commenced in the Common Law Division of the Supreme Court of NSW by CBA against Von Ryan Buere, Melvin Lopez and Jason Umutia by amended summons. The final relief sought in those proceedings was:
1. An order that the first defendant, the second defendant and the third defendant pay the plaintiff the sum of $573,730.00.
2. An order that the first defendant, the second defendant and the third defendant pay interest to the plaintiff on the sum of $573,730.00 from 1 October 2009.
3. Such further or other orders as this honourable Court considers appropriate.
4. Costs.
These proceedings were settled by a consent judgment between the CBA and Von Ryan Buere on or about 30 October 2012, in the sum of $54,000.
It is alleged on behalf of Buere that the payment by Buere to the CBA in the sum of $54,000 would satisfy the Order for Compensation and also the civil judgment. That contention is rejected by the CBA on the basis that there is simply no evidence to support that claim. The Order for Compensation was made on 28 September 2012 and the consent judgment is dated 30 October 2012. On the face of the consent judgment, there is no reference indicating that the sum of $54,000 recorded on that document would satisfy the Order for Compensation and also the civil judgment.
Annexure “E” to the Affidavit of Karen Elizabeth Carter sworn 17 June 2013 is a letter dated 4 June 2013 and addressed to Mr D. Miralis of Nyman Gibson Stewart which clearly articulates these issues as follows:
We refer to your email dated 30 May 2013.
We are instructed by our client, the Commonwealth Bank of Australia (CBA), to respond as follows:
1. As you are aware, CBA is not a party to any proceedings involving your client and the New South Wales Police. Accordingly, your allegation that the New South Wales Police are the subject of Court orders that compel them to make certain payments to CBA is no (sic) something that CBA is not able to readily verify. In these circumstances, CBA requests that you provide sealed copy of the Orders that you refer to.
2. As you are aware, CBA holds a civil judgment in the above proceedings and, for the reasons set out in some length in our letter dated 28 May 2013, we confirm that CBA is aware of no impediment to the enforcement of that judgment.
3. CBA is under no obligation to incur unnecessary costs in enforcing its judgment by dealing with a third party. If, as you allege:
(a) orders have been made in separate proceedings between your client and the New South Wales Police; and
(b) your client is bona fide in his believe (sic) that the result of such orders will be that [his] debt to CBA will be repaid,
we see no reason why your client should not take responsibility for ensuring CBA receives payment.
4. You have offered no basis for:
(a) your statement that you disagree with our understanding of the proper construction of the Victims Support and Rehabilitation Act 1996 (the Act);
(b) your allegation that the issue of Bankruptcy Notice no. 160027 constitutes an abuse of process; and
(c) your allegations that it is unreasonable for CBA not to pursue the New South Wales Police on your client’s behalf.
Accordingly, until such time as you provide an adequate explanation for such allegations we assume that there is nothing of substance that you can say to support such allegations.
5. As stated in our letter dated 28 May 2013, we confirm that:
(a) we are not aware of any basis on which Bankruptcy Notice no. BN 160027 should be withdrawn; and
(b) we are instructed that CBA does not agree to withdraw Bankruptcy Notice no. 160027.
In the event that any application is made by your client in respect of the judgment in the above proceedings and/or Bankruptcy Notice no.160027 we are instructed to rely on the correspondence that has passed between the parties to date in support of an application that CBA’s costs of such application be paid on an indemnity basis.
What the CBA seeks to achieve, which is acknowledged by Mr Miralis, is the recovery of the outstanding amounts owed to it. The only decision to which the CBA is a party is the civil proceedings judgment of the NSW Supreme Court, which is in the amount of $54,000. At the time of the issue of the Bankruptcy Notice, the CBA had received the sum of $20,000 as partial payment of the compensation order, which was forwarded to the Registry of the District Court of NSW on 21 December 2012 and subsequently advanced to CBA. The Bankruptcy Notice issued on 10 May 2013 reflects this payment and has been deducted from the judgment amount of $54,000 (Supreme Court Judgment). Subsequent to the issue of the Bankruptcy Notice, further amounts of $13,220 and $1,580 were paid to the Registry of the District Court of NSW in response to proceedings and orders made in the Downing Centre Local Court under the provisions of the Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) s.219. In the Affidavit of Ms Carter at [7]-[8] the receipt of these amounts has been acknowledged and a further adjustment was made to the figure claimed as being outstanding. This figure outstanding remains at $20,090.10, which is well above the minimum threshold that is required by the Bankruptcy Act (s.41(1)) for the commencement of bankruptcy proceedings against a debtor.
The argument advanced is that the Bankruptcy Notice cannot be properly defined as a bankruptcy notice because it has been issued in circumstances where there is not a final judgment. This argument is advanced on the basis of the operation of the VSR Act, and without a detailed summary of the provisions of that Act, the following observations about it can be made. It is a beneficial piece of legislation which has, as its primary purpose, a compensation power for a victim’s physical injuries or someone’s loss which extends to economic loss. The legislation has, as its primary objective, a quick facilitation for orders being made in court proceedings where someone is being sentenced to pay compensation to a victim and diverting that victim away from the need to be engaged in possible civil litigation to recover their losses. The object of the Act that really is relevant to these proceedings is found s.3(d), which provides as follows:
To give effect to an alternative scheme under which a court may order a person it finds guilty of a crime to pay compensation to any victim of a crime.
A “victim or aggrieved person”, which is a term that is used in the VSR Act, is not narrowly defined to simply refer to people who are the victims of violent crime, but also to people who have suffered economic loss. Section 77B confers a power where a court has the ability to award compensation to an aggrieved person for loss, as opposed to injury. Section 77E indicates that an order made by a sentencing court can be appealed under the Criminal Procedures Act 1912 (NSW). Section 77F deals with enforcement of directions for compensation. Section 77G, relatively, is a fetter on the ability of immediate recovery.
The legislation has some contrary indicators. It permits the concurrency of civil proceedings and also an order being made by a sentencing court for the payment of compensation to an aggrieved person. It also fetters the circumstances along which enforcement of civil proceedings take place, in circumstances where there is already an extant order having been made by a judge. What the legislation is seeking to do is to ensure that, while an aggrieved person receives proper compensation, the aggrieved person does not receive, in effect, double compensation and the corollary of that is that the defendant is not subject to extant compensation orders, both of which can be enforceable.
In the context of these proceedings, the Supreme Court’s orders were entered by consent within two days of the conclusion of the Criminal Proceedings for the same amount of money as the orders made by Lakatos DCJ, being for the amount of $54,000. The order made by his Honour Lakatos DCJ in the District Court is an extant order and is capable of enforcement. It operates as any other judgment of the District Court and is still on foot. The thrust of the argument being advanced by Mr Miralis is that the seeking and issue of the Bankruptcy Notice contravenes s.77G of the VSR Act because no leave was sought in the Supreme Court to enforce that debt. In addition, it is argued that it fundamentally contravenes the basic principles of criminal justice, being the provision that a person should not be vexed twice for the same offence.
The weakness in this argument is that the combined amount of the compensation order and the consent judgment total $108,000 and the pursuit of the recovery of that amount contravenes the intention of the VSR Act. However, on the material before this Court, that has not been pursued and there is no evidence that amount of recovery was the goal of CBA. The Bankruptcy Notice was sought and obtained on the basis of the orders made in the Supreme Court in the amount of $54,000. When the Bankruptcy Notice was issued an amount of $20,000 had been deducted from the judgment amount to reflect the payment made in compliance with the compensation order via the Registry of the District Court and forwarded to CBA.
The Affidavit of Ms Carter at [8] acknowledges a further receipt of $13,220 as at 5 June 2013, gained through the same mechanism as occurred with the previous payment of $20,000. With the adjustment in respect of interest, the balance of the debt as at 7 June 2013 was $23,090.10 which clearly indicates CBA is endeavouring to recover the total of $54,000, and not the amount of $108,000, as argued by Mr Miralis. On the material before the Court I am not satisfied there has been any attempt by CBA to double up the recovery of the compensation amounts and that s.77G of the VSR Act is being contravened. If I am wrong in this assessment, the issue can be ventilated again on the presentation of a creditor’s petition relying on any act of bankruptcy that arises from the failure to comply with the provisions of the Bankruptcy Notice.
Another issue in contention is whether a bankruptcy notice constitutes an enforcement process. A bankruptcy notice, in broad terms, is a document issued by the Official Receiver upon the application of a creditor who has obtained against the debtor a final judgment or order which has not been stayed. The bankruptcy notice calls on the debtor to pay or arrange for payment of the amount claimed in the notice, within the time specified and states the consequences of non-compliance with s.40(1)(g) of the Bankruptcy Act. The primary purpose of the bankruptcy notice is to convey to the debtor the amount claimed by the creditor and to give the debtor the opportunity to pay or secure that amount: Re Pugliese; Ex parte Chase Manhattan Bank Australia Ltd (1993) 44 FCR 536.
In issuing a bankruptcy notice, the Official Receiver is acting in an administrative capacity and in setting a time for compliance he or she is not exercising judicial power. In Clyne v Deputy Commissioner of Taxation (1982) 45 ALR 323 per Bowen CJ, McGregor and Fisher JJ, their Honours stated:
In Re Moss; Ex parte Tour Finance Limited (1968) 13 FLR 101, Gibbs J., as he then was, at p.106 said:-
'In issuing a bankruptcy notice, and in fixing the time for compliance with its requirements, the Registrar does not decide any controversy between parties; he does not determine any issue of fact or law or ascertain any existing rights or liabilities; and his decision (if it can be called that) cannot itself be enforced by execution or in any other way. The function which he exercises seems to me to exhibit none of those features which, generally speaking, belong to judicial power (see R. v. Davison (1954) 90 C.L.R. at pp.367-368)'.
He concluded that the fixing of time for compliance was not a step in a judicial process nor in itself an act of a judicial character and was not an act which had traditionally been regarded as necessary to be performed by a court. It was not an exercise of judicial power and the enactment was not unconstitutional. In Re Maddox; Ex Parte The Debtor (1979) 36 F.L.R. 393, Lockhart J. held that the issue of a bankruptcy notice by the bankruptcy registrar was a ministerial or administrative act and he relied on some passages from Re Moss; Ex Parte Tour Finance Limited.
In Re Kassab (supra) per Black CJ, Sweeney and Sheppard JJ at [20] their Honours stated:
20. …In Re Maddox ex parte The Debtor[1979] FCA 14; (1978) 36 FLR 392 Lockhart J held that the issue of a bankruptcy notice is a ministerial or administrative act and not part of a judicial process. It was therefore held not to be an act within the meaning of the word "proceedings" as defined in the Family Law Act 1975. His Honour pointed out that the High Court in Bond v George A Bond and Co Ltd [1930] HCA 24; (1930) 44 CLR 11 had held that the issue by the Registrar in Bankruptcy of a bankruptcy notice under the Bankruptcy Act 1924 was entirely ministerial (see per Rich and Dixon JJ at p. 22). Bond's case was cited by Dixon CJ, Fullagar and Kitto JJ in James v Deputy Commissioner of Taxation [1957] HCA 36; (1957) 97 CLR 23 at p. 32.
In CSR Ltd v Muscat & Anor [2002] FMCA 257 per Raphael FM (as he was then) at [22] his Honour stated:
22. One thing that is not a method of enforcement of a judgment debt is a bankruptcy petition. This was confirmed by Tamberlin J in Re Gualtieri; Ex parte Martin & Savage Pty Ltd [1995] FCA 1381; (1995) 130 ALR 523, where His Honour says that a bankruptcy notice cannot be described as a `process' for the enforcement of a judgment. In his judgment he relied on a statement taken from Re Kassab; Ex parte DCT (1994) 127 ALR 373 at 377-8:
"The construction so contended for could not in our opinion, extend to the service of bankruptcy notices. In Re Maddox; Ex parte the Debtor [1979] FCA 14; (1978) 24 ALR 279; 36 FLR 392 Lockhart J held that the issue of bankruptcy notice is a ministerial or administrative act and not part of the judicial process. It was therefore held not to be an act within the meaning of the word `proceedings'..."
In Sharpe v Heywood [2013] FCCA 1788 per Judge Altobelli at [13] his Honour made the following observation:
The respondent referred to a decision of Raphael FM (as he then was) in CSR Ltd v Muscat [2002] FMCA 257at paragraph 22 where his Honour said:
One thing that is not a method of enforcement of a judgment debt is a bankruptcy petition. This was confirmed by Tamberlin J in Re Gualtieri; Ex parte Martin & Savage Pty Ltd [1995] FCA 1381; (1995) 130 ALR 523, where His Honour says that a bankruptcy notice cannot be described as a `process' for the enforcement of a judgment. In his judgment he relied on a statement taken from Re Kassab; Ex parte DCT (1994) 127 ALR 373 at 377-8:
"The construction so contended for could not in our opinion, extend to the service of bankruptcy notices. In Re Maddox; Ex parte the Debtor [1979] FCA 14; (1978) 24 ALR 279; 36 FLR 392 Lockhart J held that the issue of bankruptcy notice is a ministerial or administrative act and not part of the judicial process. It was therefore held not to be an act within the meaning of the word `proceedings'..."
The substantial argument presented by Mr Miralis is that the Bankruptcy Notice is based on a judgment or order which was not final. This argument is set out at [26]-[28] above. I agree with the supplementary submissions made by Ms Carter in respect of this issue and agree with her that Mr Miralis’ submissions on this point are misconceived. Section 40(1)(g) of the Bankruptcy Act clearly states that the reference to a “final judgment or final order” means in the context of the section. Subsection (g) states:
(g) If a creditor who has obtained a judgment against a debtor has final judgment or final order, being a judgment or order the execution of which has not been stayed…
Elsewhere in this judgment the issue of a stay is examined in more detail, however, on the face of the documents before the Court, there is no evidence present that a stay has been granted or a set of circumstances exists which would bring about a stay. The judgment of his Honour Tamberlin J in Re Fazzolare & Ors (supra) is a judgment that makes clear a final judgment is a judgment seeking to take enforcement action is required to issue or levy “execution”. However, by serving a bankruptcy notice on Buere, the CBA has not issued or levied execution. These are two separate and independent procedures.
For the judgment of the Supreme Court of NSW in proceeding no. 2010/00005940 made and entered in the amount of $54,000 to be found not to be a final judgment or final order, it would have to an interlocutory judgment or an interlocutory order. There is no basis which has been advanced to establish that the judgment entered can be considered an interlocutory order, rather, the judgment entered disposed of the parties’ rights in the proceedings and the proceedings came to an end as a result of the judgment and order. In Ritchie’s Uniform Civil Procedure Service it states at page 15,717 that:
… Two different tests have been formulated in an attempt to distinguish between orders final orders and those which are interlocutory. One test emphasises the practical consequences of the orders rather than their actual legal character… The other test (which represents the position in New South Wales) looks at the nature of the application and its strict legal effect. Specifically, it looks at whether the order finally disposes of the rights of the parties to the proceedings.
In the evidence before the Court, a copy of the Bankruptcy Notice, No. BN 160027 issued 10 May 2013 to Von Ryan BUERE is annexed (Annexure “H”) to Buere’s affidavit sworn 5 June 2013 and filed the next day. Attached to the notice is the judgment/order of the Supreme Court of NSW, Common Law Division, Common Law General List, Supreme Court Sydney Registry, Case No. 2010/00005940. Under the sub-heading “Title of Proceedings” the first plaintiff is listed as “Commonwealth Bank of Australia ACN 123 123 124”, the first defendant as “Von Ryan Buere”, the second defendant as “Melvin Lopez”, the third defendant as “Jason Umutia”. Under the sub-heading “Date of Judgment/Orders” the date made or given is 9 November 2012 and the date entered is 9 November 2012. Under the terms of the judgment/order it states “Consent judgment filed 8/11/12” and the orders are:
1. Judgment entered in favour of the plaintiff against the first defendant in the amount of $54,000.
2. The plaintiff and the first defendant to pay their own costs of the proceedings.
The order bears the Supreme Court’s Seal and was entered by the Chief Clerk on 21 November 2012.
To be in the position to request the issue of a bankruptcy notice, the relevant provisions posit three requirements:
a)The judgment or orders must be final judgment or final orders;
b)Final judgment or final orders must be of the kind described in s.40(1)(g); and
c)The final judgment or final orders must be for an amount of at least $5,000.
It is necessary for a creditor to ensure that it has a “final judgment or final order” against the debtor. Unless the Official Receiver can be satisfied that one exists, a bankruptcy notice cannot be issued (s.40(1)(g) of the Bankruptcy Act). It is therefore critical to distinguish between final and interlocutory orders (see Gardiner v Gardiner (1992) 39 FCR 259). A “final judgment or final order” is a judgment or order obtained in an action which finally disposes of the matter in dispute, or one by which the rights of the plaintiff against the defendant are finally determined: see Hall v Nominal Defendant (1966) 117 CLR 423 at 430; Mogensen v Conway (1998) 90 FCR 30.
I note that in the proceedings before this Court on 10 May 2013 the Official Receiver issued the Bankruptcy Notice, Notice no. 160027 and it must be assumed that by that action the Official Receiver was satisfied that the creditor had a final judgment satisfying the requirements of s.40(1)(g). A function of the Official Receiver is the authority and power to issue bankruptcy notices and to observe the creditor’s compliance with the requirements of the Bankruptcy Act. An allegation that there has been a failure of an administrative officer of the Official Receiver to satisfy these requirements has not been made in these proceedings.
What constitutes the final judgment or final order(s) was addressed in the decision of their Honours Lander, Tracey and Yates JJ in Autron Pty Ltd (ACN 007 324 110) v Benk (2011) 280 ALR 417 at [21]-[26]. Their Honours stated:
21. The Bankruptcy Act does not define the expressions “final judgment” and “final order” as used in ss 40(1)(g) and 41(1). Historically, in bankruptcy law, a rigid distinction has been drawn between a “final judgment” and a “final order”. In context, a “final judgment” is strictly construed to mean a final judgment “obtained in an action”. Thus, in Clyne v Deputy Commissioner of Taxation (NSW) (1983) 48 ALR 545 at 547–8 Gibbs CJ (with whom the other members of the High Court agreed) said:
A final judgment within the meaning of the provisions of the Bankruptcy Act has been held to mean a judgment obtained in an action by which the question whether there was a pre-existing right of the plaintiff against the defendant is ascertained or established: Opie v Opie (1951) 84 CLR 362 at 372; [1951] ALR 793 at 796. In other words it is a judgment which finally disposes of the rights of the parties: see Licul v Corney (1976) 180 CLR 213 at 225; 8 ALR 437 at 446; 50 ALJR 439 at 444. The fact that a judgment is subject to appeal or that it may later be set aside or become inoperative does not mean that it is not final: Re Hanby; Ex parte Flemington Central Spares Pty Ltd (1967) 10 FLR 378.
22. In a technical sense, an “action” is the invocation of a court’s jurisdiction by writ and a “proceeding” is an invocation of a court’s jurisdiction by other process: Herbert Berry Associates Ltd v Inland Revenue Commissioners [1977] 1 WLR 1437 at 1446 ; [1978] 1 All ER 161 at 170. Accordingly, in Re A Bankruptcy Notice; Ex parte The Official Receiver [1895] 1 QB 609 a bankruptcy registrar refused to issue a bankruptcy notice for a debt, represented by unpaid costs ordered to be paid in proceedings successfully taken by the Official Receiver, as trustee in bankruptcy, to set aside an assignment of property. The registrar refused to issue the bankruptcy notice on the ground that an order upon motion in bankruptcy was not a final judgment in an action for the purpose of s 4(1)(g) of the Bankruptcy Act 1883 (Eng) (the 1883 Act) (which provided for the issue of bankruptcy notices). The Court of Appeal dismissed an appeal from that refusal. Lord Justice Rigby said (at 611):
No doubt this order is a final one, and it is very like a judgment. But it is certainly not a judgment in an action, and, according to the former decisions of this Court, the “final judgment” spoken of by s 1(g) must be a judgment in an action.
23. This case was one in a series of cases, of which Re Chinery; Ex parte Chinery (1884) 12 QBD 342 is usually taken as the starting point, in which this distinction was strictly observed. These cases, and the history of the distinction, are discussed in detail in Abigroup Ltd v Abignano (1992) 39 FCR 74 at 80–1 ; 112 ALR 497 at 502–3; see also the analysis Re Pannowitz; Ex parte Wilson (1975) 6 ALR 287 at 289–91 (Pannowitz) and Re Smith; Ex parte Chesson (1992) 106 ALR 359 at 362–4. In Pannowitz Riley J (at 290) described these cases as having been “laid to rest” by the enactment of the Bankruptcy and Deeds of Arrangement Act 1913 (Eng) which, by s 16, effectively abolished the distinction between a “final judgment” and a “final order” for bankruptcy purposes by providing that s 4(1)(g) of the 1883 Act should have effect as if:
… references to final orders and to sums ordered to be paid were included in the references to final judgments and judgment debts respectively wherever the same occur, and a reference to the proceedings in which the order was obtained was included in the reference to the action in which the judgment was obtained.
24. So far as Australian federal bankruptcy legislation is concerned, the rigid distinction between a “final judgment” and a “final order” is really one of historical interest only. The first federal enactment was the Bankruptcy Act 1924 (Cth). In that legislation the cause for debate about the distinction between a “final judgment” and a “final order” was eliminated at the outset because provision was made for the issue of bankruptcy notices based on a “final judgment” or “final order”. Section 52(j) of the 1924 Act (the precursor to s 40(1)(g) of the Bankruptcy Act) provided:
A debtor commits an act of bankruptcy in each of the following cases:
…
(j)
If a creditor has obtained a final judgment or final order against him for any amount, and execution thereon not having been stayed, has served on him in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act, and the debtor does not, within seven days or such time as is prescribed after service of the notice in Australia, or within the time limited in that behalf by the order giving leave to effect the service elsewhere, either comply with the requirements of the notice, or satisfy the Court that he has a counter-claim, set-off, or cross demand which equals or exceeds the amount of the judgment debt, and which he could not set up in the action or proceeding in which the judgment or order was obtained:
“Any person who is for the time being entitled to enforce a final judgment or final order for the payment of money shall be deemed a creditor who has obtained a final judgment within the meaning of this paragraph; and a final judgment or order against a married woman shall be deemed to be a final judgment or order within the meaning of this paragraph, notwithstanding the fact that no execution can issue at law on the judgment or order;”
25. In Re Black; Ex parte Jeffery (1932) 4 ABC 157 (a case concerning a bankruptcy notice issued on an unsatisfied order for costs made in a motion for a new trial in divorce proceedings) Lukin J, after referring to the historical position under English bankruptcy legislation, said (at 160):
It will be noted that s 52(j) … contemplates a final order not only in an action but also in a proceeding. A proceeding may mean something as distinct from an action or any step thereunder in which final orders are made for the payment of money. It may also mean a step in an action, in which proceeding a final order is made for the payment of money. Sec 52(j) does not of itself impose any restricted meaning on the word “proceedings” in the amendment, and there appears to be no reason for doing so.
In there referring to “the amendment” his Honour can be taken to have been referring to the amendment to the 1883 Act which incorporated the references to “final orders” and to “sums ordered to be paid” in s 4(1)(g) of that Act.
26. In the Australian context the focus of case law, for the purposes of ss 40(1)(g) and 41(1) of the Bankruptcy Act, has been the requirement for there to be “judgments” and “orders” that are “final” rather than the distinction between “judgments” and “orders” themselves. The provisions of s 40(3) of the Bankruptcy Act give, in a number of respects, an extended interpretation to “final judgment” and “final order” as used in s 40(1)(g) (and hence to the corresponding expressions used in s 41(1)) by deeming certain awards, Judgments and orders to be a “final judgment” or a “final order”. This has eliminated a number of the controversies that might otherwise have arisen in the absence of those provisions: see, in particular, s 40(3)(a), (b) and (f). Importantly, in the present appeal, the issue of “finality” itself does not arise.
In Francis v Eggleston Mitchell Lawyers Pty Ltd [2013] FCA 564 his Honour Marshall J considered the anterior question that arose in those proceedings as to whether an order made by a Master of the Supreme Court of Victoria was a final order. The order in question was made by consent and his Honour addressed this issue at [14] as follows:
14. … Further, the order was made by consent. This suggests that it was the intention of the parties to finalise the dispute between them by the payment of an amount of money in the sum there set out from the plaintiff to the defendant.
In the Uniform Civil Procedure Rules 2005 (NSW), Rule 36.11 states:
36.11 Entry of judgments and orders
(cf SCR Part 41, rule 11)
(1) Any judgment or order of the court is to be entered.
(2) Unless the court orders otherwise, a judgment or order is taken to be entered when it is recorded in the court’s computerised court record system.
(2A) If the court directs that a judgment or order be entered forthwith, the judgment or order is taken to be entered:
(a) when a document embodying the judgment or order is signed and sealed by a registrar, or
(b) when the judgment or order is recorded as referred to in subrule (2),
whichever first occurs.
(3) In this rule, a reference to a judgment or order of the court includes a reference to any judgment, order, determination, decree, adjudication or award that has been filed or registered in the court, or of which a certificate has been filed or registered in the court, as referred to in section 133 (2) of the Civil Procedure Act2005 .
(4) This rule does not limit the operation of rule 36.10.
A further requirement of s.40(1)(g) of the Bankruptcy Act is that the final judgment or final order has not been stayed. It is not in dispute and the authorities are clear that if leave of the court is needed to levy execution, then the judgment is not “final” for the purposes of s.40(1)(g) of the Bankruptcy Act; see Re Gualtieri (supra). There is nothing on the face of the Judgment/Order that is the subject of these proceedings to indicate that any form of stay was ordered, nor was any evidence led to support such a contention. In the circumstances, this submission from the applicant cannot be sustained and does not warrant further attention.
The supplementary submissions filed in court by Ms Carter on 3 July 2013 raise an issue in respect of s.106(1) of the Civil Procedures Act 2005 (NSW) which provides the manners in which a judgment of a NSW Court may be enforced. Section 106(1) provides:
106 Judgments for payment of money
(1) A judgment debt may be enforced by means of any one or more of the following:
(a) a writ for the levy of property,
(b) a garnishee order,
(c) in the case of a judgment of the Supreme Court or the District Court, a charging order.
Accordingly, it is clear that the NSW Courts do not consider the service of a bankruptcy notice as a means of enforcing a judgment which is consistent with the line of authority that has been discussed above.
An examination of the key dates reveals the following:
a)District Court of NSW Notice of Penalty Case no. 2009/00220249, R v Von Buere:
·Order made 28 September 2012;
·You must pay the following [$54,312] by 26 October 2012
b)Supreme Court of NSW consent judgment signed by the parties on 30 October 2012;
c)Nyman Gibson Stewart, Criminal Defence Lawyers’ letter addressed to the Registrar of the District Court of NSW, Criminal Registry dated 21 December 2012 enclosing cheque in the sum of $20,000 as partial of the $54,000;
d)Nyman Gibson Stewart’s letter to Gadens Lawyers advising of $20,000 partial payment ordered to District Court of NSW Registry;
e)Application to Local Court of NSW under Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) seeking recovery of $6,000, $13,2000 and $1,580;
f)Nyman Gibson Stewart’s letter to Gadens Lawyers dated 29 April 2013, orders obtained for recovery of $13,200 and $1,580 in cash to police to be paid to the District Court of NSW Registry;
g)Bankruptcy Notice BN. 160027 issued 10 May 2013 in the amount of $35,961.44 (deducting $20,000 already paid) supported by judgment/order of Supreme Court of NSW entered 9 November 2012 for $54,000;
h)Nyman Gibson Stewart’s letter to Blacktown Police dated 21 May 2013 noting orders of the Local Court of NSW of 22 April 2013 and requesting those amounts be forwarded to CBA;
i)Nyman Gibson Stewart’s letter to Gadens Lawyers dated 22 May 2013 concerning amounts to be returned by the NSW Police to the CBA; and
j)Local Court of NSW receipt/tax invoice, payment received $13,220 on 22 May 2013, noting outstanding balance of $20,780.
A review of the sequence of events and correspondence between the parties does not reveal anything other than the intention of CBA to rightly recover the nominated amount of $54,000, which was awarded to that organisation as compensation in the criminal proceedings conducted in the District Court and has been sought to be recovered by several proceedings in the Supreme Court. Part-payments made by Buere have been disclosed and acknowledged and monies recovered from the NSW Police have also been received and acknowledged. There remains an amount outstanding that has not been forthcoming, and no explanation has been proffered as to when such moneys to reduce the amount owed below the $5,000 threshold required by the Bankruptcy Act may be likely to be recovered.
It is accepted that a bankruptcy notice should be prepared carefully and that the courts require strict compliance with the Bankruptcy Act and associated Regulations. The reason for this is that there are individual persons involved, rather than corporate entities, and the bankruptcy notice sets in motion the whole process which may ultimately result in bankruptcy, which is quasi-penal: Re Walsh (1982) 47 ALR 751 at 753. While formal errors in a bankruptcy notice do not invalidate it, unless they have caused substantial injustice, substantive errors will lead to the notice being regarded as having no effect. If a bankruptcy notice is fatally defective, any bankruptcy proceedings based upon the notice, even in circumstances where the debtor has originally taken no action to contest the notice: Farthing & Alegna Pty Ltd v Boylan [2000] FMCA 8 per Raphael FM.
I am not satisfied that the grounds set out in the Application filed on 6 June 2013 or the supporting affidavit support the proposition that Bankruptcy Notice No. BN 160027 issued on 10 May 2013 and served on Buere on 20 May 2013 should be set aside. Consequently, the Application should be dismissed and the applicant ordered to pay the respondent’s to be agreed or, in the failure of any agreement, taxed. The time for compliance with the Bankruptcy Notice is to be extended up to and including the seventh day from the date that this decision is delivered.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Judge Lloyd-Jones
Associate:
Date: 7 February 2014
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