Davis v Fletcher
[2006] FMCA 1620
•23 October 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DAVIS v FLETCHER | [2006] FMCA 1620 |
| BANKRUPTCY – Creditor’s petition – validity of bankruptcy notice – a stay under an instalment order was current at date of issue – whether instalment order benefited the debtor – interpretation of application for instalments and registrar’s order – ambiguities arising from use of NSW uniform civil procedure forms – petition dismissed. |
Bankruptcy Act 1966 (Cth), s.41(3)(b)
Civil Procedure Act 2005 (NSW), ss.17, 107, 107(2)
Uniform Civil Procedure Rules 2005 (NSW), rr.37.2(2)(a), 37.2(2)(b), 37.3
Re Johnson; Ex parte Johnson v Tonkin (1994) 53 FCR 70
Re Moss; Ex parte Tour Finance Ltd (1968) 13 FLR 101
Re Schekeloff; Ex parte Schekeloff v The Hopkins Group Pty Ltd (1989) 22 FCR 407
Repatriation Commission v Nation (1995) 57 FCR 25
Tatlers.com.au Pty Ltd v Davis [2006] NSWSC 1055
| Applicant: | DAVIS DAVIS |
| Respondent: | DEBORAH JAYNE FLETCHER |
| File Number: | SYG2165 of 2006 |
| Judgment of: | Smith FM |
| Hearing date: | 23 October 2006 |
| Delivered at: | Sydney |
| Delivered on: | 23 October 2006 |
REPRESENTATION
| Counsel for the Applicant: | Mr E Hyde |
| Solicitors for the Applicant: | Malcolm Johns & Company |
| Counsel for the Respondent: | Mr M Condon |
| Solicitors for the Respondent: | Sage Solicitors |
ORDERS
The petition is dismissed.
The applicant must pay the respondent’s costs, including reserved costs, as agreed or taxed under the Bankruptcy Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG2165 of 2006
| DAVIS DAVIS |
Applicant
And
| DEBORAH JAYNE FLETCHER |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
I have before me a creditor’s petition filed on 7 August 2006 seeking a sequestration order against the respondent. The petition is based upon a debt claimed to be owing in the amount of $55,000, being an amount unpaid under a judgment of the Supreme Court of New South Wales made on 5 May 2006 and entered on 8 May 2006. The judgment was entered against two defendants: the respondent and Tatlers.com.au Pty Ltd (“Tatlers”).
Some money was subsequently paid in reduction of the debt, but on the evidence before me there still remains an amount owing sufficient to support a sequestration order. The actual amount currently owing is not agreed between the parties, and there are also disputes as to the financial position of the respondent, and the significance of an unsuccessful statutory demand on Tatlers (see Tatlers.com.au Pty Ltd v Davis [2006] NSWSC 1055). It is not necessary for me to investigate the facts in relation to those matters.
I propose to address the second ground of opposition raised by the respondent which is:
2.At the time the Bankruptcy Notice was issued, there was an instalment order in force in the Supreme Court of New South Wales, which order operated as a stay;
Under s.41(3)(b) of the Bankruptcy Act 1966 (Cth) (“the Act”):
(3)A bankruptcy notice shall not be issued in relation to a debtor:
…
(b)if, at the time of the application for the issue of the bankruptcy notice, execution of a judgment or order to which it relates has been stayed; …
A line of authority including Re Moss; Ex parte Tour Finance Ltd (1968) 13 FLR 101 at 103, Re Schekeloff; Ex parte Schekeloff v The Hopkins Group Pty Ltd (1989) 22 FCR 407 at 411 and Re Johnson; Ex parte Johnson v Tonkin (1994) 53 FCR 70 (“Re Johnson”), establishes the proposition stated by Spender J in Re Johnson at 77:
In my opinion, it is a necessary requirement of the Act that a judgment or order founding a bankruptcy notice be one which is not stayed (within the wide meaning given to that phrase) both at the time of issue of the bankruptcy notice and at the time of its service.
This proposition is not contested by counsel for the applicant on the petition. The issue between the parties is whether the effect of an instalment order made in the Supreme Court prior to the issue of the bankruptcy notice was to stay the execution of the judgment in question insofar as it gave rise to obligations on the respondent as distinct from Tatlers. This requires a consideration of the evidence as to the nature of the instalment application made to the Supreme Court, and the effect of the instalment order.
There is no dispute that an application for an instalment order was made to the Supreme Court on 1 June 2006, that an instalment order was made on 13 June 2006, and that it was still operative at the date of the issue of the present bankruptcy notice, being 27 June 2006, and at the date of service of the notice.
The “judgment/order” of the Supreme Court which was entered on 8 May 2006 named as defendants Deborah Jayne Fletcher as first defendant and Tatlers.com.au Pty Ltd as second defendant. The plaintiffs were identified as Padkohe Pty Ltd, first plaintiff, and Davis Davis, second plaintiff. Par.1 provided:
The Court orders that:
(1)a verdict and judgment be entered for the Second Plaintiff for $75,000.00.
Other orders were also made which it is not necessary to set out. The second plaintiff was the present applicant petitioner.
Under s.107 of the Civil Procedure Act 2005 (NSW) (“the Civil Procedure Act”):
107Deferred payment and payment by instalments
(1)A court in which judgment has been entered may, subject to and in accordance with the uniform rules, make an order allowing for:
(a) payment of the judgment debt within such time as is specified in the order, or
(b) payment of the judgment debt by instalments, payable in such amounts and at such times as are specified in the order.
Note. Such an order may be varied or rescinded pursuant to section 43 (2) of the Interpretation Act 1987. The circumstances in which such an order may be varied or rescinded, and the procedure for varying or rescinding such an order, may be dealt with by the uniform rules.
(2)Subject to section 119, execution of a judgment for the payment of money is stayed while the judgment is the subject of an order in force under this section.
…
There is no contest that the present instalment order gave rise to a stay under s.107(2), which had not discharged by operation of Pt.37 r.7 of the Uniform Civil Procedure Rules 2005 (NSW) (“the Uniform Rules”) at the time of the issue of the bankruptcy notice. As I have indicated, the controversy is whether the judgment was stayed only as against Tatlers or as against both of the judgment debtors. This dispute arises due to a lack of specificity in the order as to which of the judgment debtors gained the benefit of the instalment order.
Section 107 of the Civil Procedure Act and relevant parts of the Uniform Rules are expressed in the singular, and no specific rules are made to deal with the situation where there are two defendants liable for a judgment debt. An uncertainty then arises from the approved forms for applying for an instalment order. The Uniform Rules provide:
37.2Application for instalment order by judgment debtor
(cf DCR Part 31A, rule 2; LCR Part 27, rule 2)
(1)A judgment debtor may apply to the court for an instalment order with respect to the amount owing under the judgment debt.
(2)Such an application:
(a) may be made whether or not some other instalment order is in force in relation to the judgment debt, and
(b) must be supported by an affidavit as to the judgment debtor’s financial circumstances, and
(c) must be dealt with as soon as practicable after it is made.
(3)An application under this rule:
(a) except as provided by paragraph (b), is to be dealt with by the registrar under rule 37.3, or
(b) if it is made during a hearing before the court, is to be dealt with by the court under rule 37.4.
(4)Notice of motion of an application under this rule does not have to be filed or served if the application is made during the hearing at which the judgment debtor is being examined pursuant to an order for examination.
(5)An application under this rule may be made not only to the court in which judgment was entered but also, in the case of a judgment entered in a Local Court, to any other Local Court by which an examination is being conducted as referred to in rule 38.5 (2).
37.3 Instalment order made by registrar
(1)The registrar may deal with an application for an instalment order:
(a) by making an instalment order in relation to the amount owing under the judgment debt, or
(b) by making an order refusing the application.
(2)As soon as practicable after making an instalment order under this rule, the registrar:
(a) must give notice of the order to the judgment creditor and the judgment debtor, and
(b) must also give to the judgment creditor a copy of the affidavit referred to in rule 37.2 (2) (b).
(3)Either party may file an objection to an order made under subrule (1) (a) or (b) at any time within 14 days after the order is made.
Under s.17 of the Civil Procedure Act, “approved forms” are made by the Uniform Rules Committee, and “if a form is approved in relation to a document to be used in connection with proceedings in a court, a document that is filed with or issued by the court is to be in that form”.
Two separate forms have been approved for making an instalment application under r.37(2)(a). These are forms 36 and 37, which are described respectively as “Notice of Motion to Pay by Instalment – Individual”, and “Notice of Motion to Pay by Instalments – Corporation”. There is no implication in the rules or forms that multiple defendants may not make a joint application by using only one of these forms. The converse is suggested, since each of them requires a separate page showing the “Party Details” and, in particular, as to “Parties Moving the Motion”. However, nothing in either of the forms or their instructions indicates what is to be done where those parties include an individual and a corporation.
In the present case, a single notice of motion was filed which used form 37, being “Notice of Motion to Pay by Instalments – Corporation” as is shown in its heading. However, the application at all points indicated that it has been brought by both defendants. The motion was signed by a solicitor for “Defendants”, and the “Party Details” indicated in relation to “Parties Moving the Motion”:
Parties to the motion PARTIES MOVING THE MOTION PARTIES AFFECTED BY THE MOTION DEBORAH JAYNE FLETCHER PADKOHE PTY LIMITED First Applicant First Respondent TATLERS.COM.AU PTY LTD DAVIS DAVIS Second Applicant
Second Respondent
Under the heading “Orders Sought” appeared:
The Defendants will move the court for orders that the judgment debt be paid by instalments on the following terms
Rate
$10,000
Per (wk/fnt/month)
Month
Commencing
30 June 2006
The solicitor then signed the application, describing himself as “Solicitor for First and Second Defendants”.
In my opinion, the application was unambiguously an application made by both of the defendants against whom the judgment had been entered, seeking an order which would allow the judgment debt to be paid by instalments by either or both of them. I consider that both defendants sought the benefit of a stay under s.107(2) of the Civil Procedure Act.
Counsel for the present applicant petitioner argued that this construction of the application to the Supreme Court should not be adopted, because the “affidavit details” included in the form was an affidavit by the present respondent as director of the corporate judgment debtor deposing to a financial statement about the company, and not about her own financial affairs. I accept that this interpretation of the affidavit should be accepted from its apparent form and content, and I do not need to look at extrinsic evidence to confirm the nature of her affidavit.
However, as I have indicated above, her solicitor was faced by a dilemma as to what form or forms to use, and, in my opinion, the manner in which the notice of motion was completed clearly indicated an intention to move the Court by a single notice of motion on behalf of and for the benefit of both defendants. I do not think the limited nature of the respondent’s affidavit should give rise to a different interpretation.
It is possible that the joint application for an instalment order might have been regarded as insufficiently supported by an affidavit as to the non‑corporate defendant’s personal financial circumstances, as required by r.37.2(2)(b). Such a defect in the evidentiary support might have been a matter for consideration by the Registrar, or on a subsequent application to terminate the instalment order, but such inadequacy does not alter in my opinion the nature of the application which was actually presented to the Supreme Court.
The orders made by the Registrar are evidenced only by an annotation in the “Office Use Only” box at the end of the form 37:
OFFICE USE ONLY:
Application granted /
refused.If refused, state reason:
Signature of registrar: [signature]
Date: 13 June 2006
The manner in which this box has been completed does not suggest to me that the Registrar read the application as solely being made by one of the defendants, nor that the granting of the application was confined to one of the defendants. In my opinion, it was an unequivocal granting of the application which, as I have construed it above, was made by both of the defendants.
A Supreme Court letter, which appears to be standard form, was then sent to the solicitors who lodged the application. It is addressed to “Deborah Jane Fletcher and Tatlers.com.au P/L”, thereby suggesting that the registry was aware that there were two applicants on the motion. The body of the form letter was, however, left in the singular:
APPLICATION FOR INSTALMENT ORDER (BY JUDGMENT DEBTOR)
I refer to the judgment debtor’s application to the Court for an instalment order with respect to the amount owing under the judgment debt.
Pursuant to rule 37.3 of the Uniform Civil Procedure Rules 2005, the following instalment order has been made in relation to the judgment debt.
The judgment debt is to be paid by instalments on the following terms.
Date of order: 13/06/06
Order made by: Registrar Walton
Judgment debt: $75,000.00
Instalment amount: $10,000.00
To be paid: Monthly
Commencing: 30/06/2006
Either party may file an objection to the order made at any time within 14 days after the order is made.
[signature]
For the Principal Registrar
This confirms the order which, as I have noted, was recorded on the form 37 set out above. I do not take anything from this letter which causes me to doubt my findings that the instalment order answered an application by both judgment debtors, and was an order for the benefit of both defendants.
To the extent that the evidence as to the scope of the instalment order gives rise to ambiguities, it is established that resort may be had to evidence of the surrounding circumstances (c.f. Repatriation Commission v Nation (1995) 57 FCR 25 at 33‑34). In the present situation, the significant evidence, in my opinion, is the content and apparent intent of the application which was answered by the registrar’s order.
For the above reasons I uphold the second ground of opposition to this petition, and therefore dismiss the petition.
I certify that the preceding twenty‑seven (27) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Lilian Khaw
Date: 7 November 2006
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