Coshott v Shipton Lodge Cobbitty Pty Ltd - [2008] FMCA 202

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COSHOTT v SHIPTON LODGE COBBITTY PTY LTD

[2008] FMCA 202

BANKRUPTCY – Application to set aside bankruptcy notice – judgment for specified costs given in Local Court of NSW – whether judgment creditor lost its right to recover by reason of accord and satisfaction or estoppel – power of Local Court to award specified costs in matter commenced in Small Claims Division – no outstanding right to have costs assessed – application dismissed.

Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(7)
Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth)
Local Courts (Civil Claims) Act 1970 (NSW), ss.12(3), 34, 69
Local Courts (Civil Claims) Rules 1988 (NSW), Pt.3 r.9, Pt.31A r.3(2)(c), Pt.31A r.12(8)
Legal Profession Act 1987 (NSW), s.202(1)
Uncollected Goods Act 1995 (NSW)

Commonwealth Bank of Australia v McDonald [1999] FCA 984
Coshott & Anor v Shipton Lodge Cobbitty Pty Ltd [2006] NSWCA 316
Coshott v Shipton Lodge Cobbitty Pty Limited [2006] NSWSC 556
Wren v Mahony (1972) 126 CLR 212

Applicant:

ROBERT GILBERT COSHOTT

Respondent:

SHIPTON LODGE COBBITTY PTY LTD

File Number:

SYG 3992 of 2007

Judgment of:

Smith FM

Hearing date:

15 February 2008

Delivered at:

Sydney

Delivered on:

15 February 2008

REPRESENTATION

Counsel for the Applicant:

Applicant in person

Counsel for the Respondent:

Mr S Lewis

Solicitors for the Respondent:

Slater & Gordon Lawyers

ORDERS

The application is dismissed.
The applicant must pay the respondent’s costs, including reserved costs, as agreed or taxed under the Federal Magistrates Court (Bankruptcy) Rules 2006.
The respondent must provide a copy of this order to the Official Receiver within 4 days.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 3992 of 2007

ROBERT GILBERT COSHOTT

Applicant

And

SHIPTON LODGE COBBITTY PTY LTD

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

This is an application to set aside Bankruptcy Notice NN4818 of 2007, which was issued at the request of Shipton Lodge Cobbitty Pty Ltd (“Shipton Lodge”) on 29 November 2007. It demanded that Mr Coshott pay the sum of $47,490.95, being the amount of a judgment entered against him in the Local Court of NSW on 25 May 2004 and accrued interest. To understand Mr Coshott’s arguments, it is necessary to summarise a history of litigation between these parties which gave rise to this judgment, and also to an earlier judgment in the same court.
Mr Coshott was respondent to an action in the Local Court of New South Wales by Shipton Lodge, which was commenced in 2000. It claimed an amount of $9,888.15 in damages, interests and costs arising from an alleged agreement under which Mr Coshott was provided with agistment for two horses, “Silver Palm” and “Dual Treasures”.
The action was extensively defended by Mr Coshott over a number of years, but his defences ultimately failed. The horses remained in the care of Shipton Lodge during the course of the proceedings, and its claim for outstanding agistment fees increased. At the start of the hearing on 3 April 2003, the learned magistrate at Campbelltown Local Court granted leave…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] FMCA 202
Decision Date: 15 February 2008

CaseChat Overview and Summary

In the case of Shipton Lodge Cobbitty Pty Ltd v Coshott, the primary dispute involved a judgment debt owed by Mr Coshott to Shipton Lodge, which had been enforced through a bankruptcy notice and subsequently a bankruptcy petition. Mr Coshott contested the enforcement of these proceedings, arguing various grounds for invalidity, including the absence of an assessment of the judgment debt under the Legal Profession Act. The case was heard in the Federal Court of Australia, where it was determined whether Mr Coshott's objections to the bankruptcy notice and petition were justified.

The legal issues before the court involved the enforcement of judgment debts and the procedural requirements that must be satisfied before a creditor can petition for a debtor's bankruptcy. Central to the case was the question of whether the creditor was required to obtain an assessment of the judgment debt under the Legal Profession Act before issuing a bankruptcy notice. The court also needed to consider whether Mr Coshott's proposals to pay the debt immediately were sufficient to prevent the enforcement of the bankruptcy notice and petition.

The court concluded that the creditor, Shipton Lodge, was not obligated to seek an assessment of the judgment debt under the Legal Profession Act before issuing a bankruptcy notice. This decision was based on the court's interpretation of the relevant statutory provisions and case law, which established that such an assessment is not a prerequisite for the issuance of a bankruptcy notice. Furthermore, the court found that Mr Coshott's proposals to pay the debt did not constitute a satisfactory resolution of the debt, as they did not address the creditor's entitlement to enforce the judgment debt through the statutory process. Consequently, the court dismissed Mr Coshott's application challenging the bankruptcy notice and petition.

ORDERS:
1. The application is dismissed.
2. The applicant must pay the respondent’s costs, including reserved costs, as agreed or taxed under the

Orders

Orders of the court

The application is dismissed.

The applicant must pay the respondent’s costs, including reserved costs, as agreed or taxed under the

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Mr Coshott’s cross‑claim also failed. Its hearing was held on 4 August 2003, and was continued on later days. On 20 April 2004, the learned Magistrate entered a verdict for Shipton Lodge on the cross‑claim, and also gave it costs, which he specified in an order made on 25 May 2004 in the sum of $35,862.92. I shall refer to this judgment as “the second Local Court judgment”. Mr Coshott sought to challenge both of these judgments, and also another order of the Local Court, which allowed Shipton Lodge to sell “Silver Palm” under the Uncollected Goods Act 1995 (NSW). His various appeals were addressed by Johnson J in one judgment delivered on 8 June 2006 (see Coshott v Shipton Lodge Cobbitty Pty Limited [2006] NSWSC 556). All three challenges were dismissed. An appeal by Mr Coshott to the Court of Appeal was also dismissed (see Coshott & Anor v Shipton Lodge Cobbitty Pty Ltd [2006] NSWCA 316). Shipton Lodge then attempted to extract payment of the two Local Court judgments from Mr Coshott. It first obtained the issue of bankruptcy notice NN2695 of 2007 on 3 July 2007, which relied only upon the first judgment debt of $77,829.64. There was then correspondence about that notice between the parties, including an email sent by Mr Coshott on 2 August 2007 to Shipton Lodge’s solicitors. This referred to both of the Local Court judgments, and to the fact that neither was the subject of assessment under the Legal Profession Act. It suggested that this fact allowed him to challenge the enforcement of the costs judgments. The email concluded: I hope the matter can be resolved by agreement between the parties. I look forward to your advices regarding your client’s instructions. However, I conclude that no agreement was reached at that time. Instead, Shipton Lodge proceeded to serve a bankruptcy petition, which was filed on 22 August 2007 in proceeding SYG2593 of 2007 in this Court. The petition asserted: 1.The respondent debtor owes the applicant creditor the amount of $77,829.64 being a judgment of the Local Court of New South Wales in proceedings number 995 of 2000 entered on 7 June 2007. That debt relied upon the same judgment which had been attached to the bankruptcy notice, and which certified the orders made on 26 August 2003 in the first Local Court judgment. It is clear that neither the bankruptcy notice issued on 3 July 2007, nor the petition in proceedings SYG2593 of 2007, made any claim in relation to the debt owing to Shipton Lodge under the second Local Court judgment. Following service of the petition, Mr Coshott sent an email dated 20 September 2007 to the solicitors for Shipton Lodge which stated: This is an open proposal. I note that my earlier offers have been rejected and your client insisted on filing a petition. My proposals since filing the petition have also been rejected or ignored. I can deliver to you immediately a bank cheque in the full amount claimed in the Bankruptcy Notice. Upon delivery, your client would consent to orders setting aside the Bankruptcy Notice on the basis that it was invalid and dismissing the petition on the basis that there has been no act of bankruptcy, with no order as to costs. On a without admission basis I would, upon dismissal of the petition, hand over a further cheque for $1,000.00. If this proposal is not accepted, I shall file a Notice of Opposition opposing the petition on the grounds of solvency, invalid Bankruptcy Notice, etc. This will be supported by an affidavit showing solvency, admissions of solvency by your client, and detailing the offers/proposals made, including this proposal, as further evidence of solvency. I shall be inviting the court to go behind the “judgment”.

Ratio Decidendi

Legal Principle Established

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