Carriage v Stocklands Developers Pty Ltd, in the matter of Carriage

[2004] FCA 930

FEDERAL COURT OF AUSTRALIA

Carriage v Stocklands Developers Pty Ltd, in the matter of Carriage
[2004] FCA 930

IN THE MATTER OF ALAN RICHARD CARRIAGE
ALAN RICHARD CARRIAGE v STOCKLANDS DEVELOPERS PTY LTD

N530 of 2004

MADGWICK J
29 JUNE 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N530 of 2004

IN THE MATTER OF ALAN RICHARD CARRIAGE

BETWEEN:	ALAN RICHARD CARRIAGE APPLICANT
AND:	STOCKLANDS DEVELOPERS PTY LTD RESPONDENT

JUDGE:	MADGWICK J
DATE OF ORDER:	29 JUNE 2004
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The application to set aside the bankruptcy notice is dismissed.

2.The applicant debtor is to pay the respondent’s costs of the application including reserved costs.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N530 of 2004

IN THE MATTER OF ALAN RICHARD CARRIAGE

BETWEEN:	ALAN RICHARD CARRIAGE APPLICANT
AND:	STOCKLANDS DEVELOPERS PTY LTD RESPONDENT

JUDGE:	MADGWICK J
DATE:	29 JUNE 2004
PLACE:	SYDNEY

REASONS FOR JUDGMENT

HIS HONOUR:

1. This is an application to set aside a Bankruptcy Notice pursuant to s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (‘the Act’). That well known statutory provision implies that the Court may set aside a bankruptcy notice if a debtor satisfies 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 upon which the bankruptcy notice has been founded, if the debtor could not have set up the counter-claim set-off or cross demand in the action or proceeding in which the judgment or order was obtained.

2. In this case the Bankruptcy Notice is founded on a judgment in the sum of $5,431, obtained in the Local Court of New South Wales on 19 September 2003.  In his first affidavit of 15 April 2004 the debtor alleged that:

   ‘There are interlocutory matters [in a proceeding in the New  South Wales Land and Environment Court] where costs are reserved which amount and exceed the money claimed in the Bankruptcy Notice.’

   He also alleged that:

   ‘The bankruptcy proceedings have been instituted as an attempt to prevent the [Land and Environment] Court from making a decision in the main proceeding [between the parties in that Court].’

   Further:

   ‘The Bankruptcy Notice is intended to prevent me from obtaining costs due to me and is designed to pervert the course of justice.’

3. In a later affidavit prepared with the assistance of people who have set up an organisation known as ‘Indigenous Justice Advocacy Network’, the applicant refers to the pendency of proceedings in the Land and Environment Court aimed at restraining the creditor from ‘carrying out unauthorised work on land causing damage to Aboriginal objects and the environment’, and continues:

   ‘12.     In this proceeding, if successful I will be owed by [the creditor] costs far in excess of what is claimed in the bankruptcy notice.  I estimate these costs as being about $50,000.’ (emphasis added)

   The applicant also alleges:

   ’14.     The respondent, in collusion with the National Parks and Wildlife Service has caused untold damage and destruction to one of the most significant Aboriginal Sites on the East Coast of Australia.

   15.      I have no choice but to do all in my means to protect this site, if I am denied this right by the utilisation of bankruptcy laws by a large corporation against an elderly Aboriginal on a pension then justice will not be seen to be done or the public interest be properly served.’

4. Orally today, the applicant debtor's friend in Court, Mr Oshlak, asserts on behalf of the applicant that he had no notice of the proceedings, being a taxation of costs against the applicant (in which he was represented by a solicitor) out of which the judgment debt arose and knew nothing of it until service of the bankruptcy notice on 29 March 2004.

5. It is also asserted that the bankruptcy notice is formally defective because, the matter having arisen out of the assessment of costs, a certificate of taxed or assessed costs in support of the amount claimed was not attached to the bankruptcy notice.

6. There are thus four matters relied on by the debtor.  They are:

   1.an alleged counter-claim, set-off or demand;

   2.a claim of abuse of process;

   3.a claim of no notice of the proceedings out of which the judgment debt arose;

   4.the absence of a certificate of assessment of costs attached to the bankruptcy notice.

7. I will proceed to deal with these in turn.

   Counter-claim, set-off or cross demand

8. The position is that there has been no quantification of the costs order in favour of the applicant; nor is there any evidence that the applicant is at liberty to tax his costs in relation to what is plainly an interlocutory order of the Land and Environment Court.  Normally an interlocutory costs order is not taxed until the end of the proceedings or until a Judge has ordered that the costs may be earlier taxed.  There is no evidence of any such order.

9. It follows that there is no crystallised claim of the kind contemplated by s 40(1)(g) and there is no basis for any conclusion that the debtor has an extant counter claim, set-off or cross demand equal to or exceeding the amount of the judgment debt relied on in the bankruptcy notice. That ground must fail.

   Abuse of Process

10. The evidentiary basis for the submission is said to be the fact that the respondent has issued a bankruptcy notice for a relatively small amount of money. 

11. The amount exceeds the low minimum which is prescribed for the issue of such a notice.  Even if it were possible to infer that a purpose of the institution of the proceedings were to prevent prosecution of proceedings in the Land and Environment Court without the sanction of the Official Receiver, there is nothing per se improper in that.  It may very well be that the respondent is acting simply to protect itself economically.  There is no basis for any conclusion that the processes of the Court are being abused.  It may be that if the debtor was, as he asserts, completely taken by surprise as to the existence of the judgment debt, that might be a matter that would influence the Court against making a sequestration order against him.

12. While the judgment debt stands, however (and the applicant has had three months in which to have it set aside which he has not managed to do), the claimed surprise is of no significance to proceedings at this stage except perhaps as a possible instance of abuse of process.

13. However, I am not satisfied that there is any such abuse operating. 

    Notice of proceedings

14. There is no sworn evidence, despite the involvement of those assisting him at least since 19 May, that he, in fact, had no such notice and in any case there is no evidence to indicate that if he had no notice that that was known by, or should have been known by, the respondent.

    Absence of a certificate of assessment

15. This ground, it seems to me, is misconceived.  It is clear that the schedule prescribed in Form 1 of the Bankruptcy Notice contemplates the normal situation of a judgment obtained otherwise than for costs and in the common form of judgment for a money amount together with costs to be taxed or assessed upon that assumption.  The schedule indicates that, if legal costs are ordered without a specific amount being included in the judgment or order, where these costs have been claimed in the bankruptcy notice a certificate of taxed or assessed costs in support of the amount claimed ‘must be attached to this bankruptcy notice’.

16. The respondent does not here rely upon any such order in relation to the judgment debt.  It relies on its judgment debt alone.  The fact that the judgment debt arose out of a taxation of costs does not itself attract a requirement that a certificate of taxed or assessed costs in support of the amount of the judgment debt must be attached to the bankruptcy notice.  There is no substance in that matter. 

17. Accordingly, there is no reason to set aside the Bankruptcy Notice and the application that it be set aside fails.

18. The applicant debtor is to pay the respondent's costs of the application including reserved costs.

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

Associate:

Dated:             20 July 2004

For the Applicant:	Mr Oshlack, Indigenous Justice Advocacy Network
Counsel for the Respondent:	Mr Skinner
Solicitor for the Respondent:	Baker & McKenzie
Date of Hearing:	29 June 2004
Date of Judgment:	29 June 2004