Dennis v Miller & Ors

[2012] FMCA 25

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DENNIS v MILLER & ORS [2012] FMCA 25

BANKRUPTCY – Bankruptcy notice based on registered costs assessment under NSW legislation – inclusion of filing fee in judgment debt – whether authorised by legislation – inclusion of costs of costs assessment – whether costs only recoverable by Manager – costs order and assessment in favour of joint parties – whether recoverable by only some of joint parties – bankruptcy notice set aside.

Bankruptcy Act 1966 (Cth), ss.41(1)(b), 41(5)
Civil Procedure Act 2005 (NSW), ss.95, 98(2), 101
Civil Procedure Regulation 2005 (NSW), cl.7, Sch.1 Pt.5 item 3
Legal Profession Act 2004 (NSW), ss.368, 368(1), 368(5), 368(6), 369, 369(5), 369(7), 369(8), 369(9)
Legal Profession Act 1987 (NSW), s.208J
Uniform Civil Procedure Rules 2005 (NSW), rr.6.20, 7.12, 7.21, 36.10(2), 42.31(4)

Australian Workers’ Union v Bowen (1946) 72 CLR 575
Corney v Brien (1951) 84 CLR 343
Croker v Commissioner of Taxation (2005) 145 FCR 150, [2005] FCA 127
Fodare Pty Ltd v Shearn [2011] NSWSC 479
Kalantzis & Anor v Wideline Pty Ltd [2011] FMCA 587
Lord & Anor v Rankine & Ors [2010] FMCA 668
Olivieri v Stafford (1989) 24 FCR 413, [1989] FCA 486
Rankine v Lord (2011) 121 ALD 258, [2011] FCA 478
Re Bowen; Ex parte Australian Workers’ Union (1945) 13 ABC 275
Rookharp Pty Limited v Webb & Anor [2011] FMCA 801
Scook v Sims Construction Pty Ltd (2004) 3 ABC(NS) 43, [2004] FCAFC 306
Wren v Mahony (1972) 126 CLR 212

Applicant: BRUCE VERNON DENNIS

First Respondent:

DORIS EMILY MILLER

AKA DORIS EMILY SHEARN

Second Respondent: KEVIN TUBB

Third Respondent: KATHLEEN ANNE HIRTZELL

File Number: SYG1541 of 2011

Judgment of: Smith FM

Hearing date: 2 December 2011

Date of Last Submission: 5 December 2011

Delivered at: Sydney

Delivered on: 10 February 2012

REPRESENTATION

Counsel for the Applicant: Mr J T Johnson

Solicitors for the Applicant: DC Legal Pty Ltd

Counsel for the Respondents: Mr S Bliim

Solicitors for the Respondents: Dignan & Hanrahan

ORDERS

1. Bankruptcy Notice BN 4541 issued on 22 June 2011 is set aside. 

2. The respondents must pay the applicant’s costs, including reserved costs, as agreed or taxed pursuant to the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth). 

3. The applicant must give a copy of this order to the Official Receiver within 2 working days. 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG1541 of 2011

BRUCE VERNON DENNIS

Applicant

And

DORIS EMILY MILLER

AKA DORIS EMILY SHEARN

First Respondent

KEVIN TUBB

Second Respondent

KATHLEEN ANNE HIRTZELL

Third Respondent

REASONS FOR JUDGMENT

1. This judgment explains why I am persuaded to set aside Bankruptcy Notice BN 4541, which was issued on 22 June 2011 at the request of the respondents and requiring payment by Mr Dennis of the amount of $14,374.13.  Time for compliance with the notice has been extended up to and including the date when I am giving judgment. 

2. Ms Miller, Mr Tubb, Ms Hirtzell, and a company, Fodare Pty Ltd, obtained Mr Dennis’ services as their solicitor in litigation, which itself gave rise to further litigation with Mr Dennis concerning payment of his very substantial legal fees.  I shall refer to them collectively as “the four clients”, and to the first three of them as “the respondents”.  The background is complex, and can be found in the judgment of Barrett J in Fodare Pty Ltd v Shearn [2011] NSWSC 479. Mr Dennis was ultimately successful in obtaining a default judgment for $194,346.44 against Fodare Pty Ltd, but not against the respondents. Rather, he incurred several lesser adverse costs orders in the course of the proceedings in that Court. The present proceedings concern two costs orders made by the District Court in favour of all four clients on 13 May 2005 and 16 December 2005.

3. It is common ground that the two costs orders gave rise to two sets of certificates issued under ss.368 and 369 of the Legal Profession Act 2004 (NSW), and to two judgments entered in the Local Court. The two costs proceedings were:

   i)In assessment No.3801 of 2008, a party/party costs assessment certificate was issued under s.368(1) in the sum of $5,389, together with a certificate under s.369(5) as to the costs of that costs assessment, in the sum of $331. Initially, both certificates issued on 18 June 2008 showed only one costs applicant, being Fodare Pty Ltd. However, two amended certificates were issued on 9 July 2009, which added the other three clients as the designated costs applicants.

   The costs assessment costs certificate contains two notes: 

   Note 1           The amount of $331.00 includes the sum of $100.00 being the fee paid for the application (Section 369 of the Act). 

   Note 2           The amount of $331.00 includes the costs of the Costs Assessor in the sum of $231.00 paid by the *Costs Applicant/Costs Respondent to the Manager Costs Assessment to obtain the release of the Certificate of Determination of Costs and this Certificate (Section 369(8) of the Act). 

   *(Delete above as appropriate). 

   A judgment of the Local Court at Campbelltown was made and entered on 10 May 2011 in ‘case number 2011/00152094’, upon the filing of the two amended costs certificates.  It shows the plaintiffs and judgment creditors as the present respondents, without including Fodare Pty Ltd.  I shall refer to this as “the first judgment debt”.  

   The judgment requires payment of ‘the sum of $5798’, which is the total of the two certified amounts plus an additional amount of $78.  Although there is no direct evidence as to the derivation of the extra amount of $78, I would infer that this was probably a filing fee or other charge or expense incurred by the respondents in relation to their filing of the two costs assessment certificates in the Local Court, which the Local Court Registry has allowed to be included in the amount of the judgment debt entered against Mr Dennis. 

   ii)In assessment No.3803 of 2008, a party/party costs assessment certificate was issued under s.368(1) in the sum of $7,953, together with a certificate under s.369(5) as to the costs of that costs assessment, in the sum of $369.50. The latter certificate contains notes to the same effect as I have extracted above in the first costs proceeding. Both of these certificates showed, when issued on 18 June 2008, the names of all of the four clients as the ‘costs applicant’.

   A judgment of the Local Court is shown as being made on 10 May 2011 and entered on 11 May 2011 in ‘case number 2011/00152280’, upon the filing of the two costs certificates.  It shows the plaintiffs and judgment creditors as only the present respondents, without including Fodare Pty Ltd.  I shall refer to this as “the second judgment debt”. 

   As did the first judgment, it included an additional amount of $78, when arriving at a total judgment debt of $8400.50. 

4. The absence of reference to Fodare Pty Ltd from the applications to the Local Court for registration of the four costs certificates, and from the judgment creditors, is explained by its having been placed in liquidation by the Supreme Court on 6 March 2007.  The respondents’ solicitor, Mr Hanrahan, requested its liquidator to consent to being joined as an applicant for registration of the costs certificates, but received no response.  He accordingly, applied for the two judgments only on behalf of the other three beneficiaries of the underlying costs orders and the costs assessment certificates.  He asserts, but this would appear to be a matter of controversy with Mr Dennis, that: 

   13.When taking instructions to act for the Respondents in the proceedings in the District Court, the agreement for the payment of legal costs was with Doris Miller, Kevin Tubb and Kathleen Hirtzell.  There was no agreement with Fodare for the payment of legal costs. 

   14.It was my understanding that the order for costs made by the District Court in favour of the Respondents was made jointly and severally and as Fodare has no obligation to pay legal costs, the Judgment obtained against the Applicant was in favour of each of the other three Respondents. 

5. The present bankruptcy notice was issued on 22 June 2011, and shows only the present three respondents as the ‘creditors’. It attaches and relies upon the two judgments which I have described above, claiming their combined total amounts plus interest calculated on both of them under s.101 of the Civil Procedure Act 2005 (NSW).

6. Mr Dennis does not challenge the validity of the bankruptcy notice upon the basis that it demands payment of two judgment debts (which is now permitted by s.41(1)(b) of the Bankruptcy Act 1966 (Cth)), nor that these judgment debts were ‘final judgments or final orders’ upon which a bankruptcy notice could be based, nor that interest on them has been incorrectly calculated, nor that the amount demanded was outstanding at the date of issue and service. In short, he does not challenge the prima facie validity of the bankruptcy notice. 

7. However, he contends that the bankruptcy notice should be set aside because both of the Local Court judgments were entered in favour of the respondents in amounts exceeding the amounts which were authorised by the Legal Profession Act, or because they were in a form which was not authorised by that Act.  The bankruptcy notice therefore claimed an amount exceeding the ‘true indebtedness’ of Mr Dennis under the District Court costs orders, as quantified by the costs assessment certificates.  In particular, as I understood counsel’s submissions, the Local Court judgments were invalid in the amounts and terms in which they were entered because either: 

   i)Each of the two judgments erroneously included a certified amount of the costs for the costs assessment, and these amounts were not recoverable in a judgment in favour of the present respondents entered under s.369(7) of the Legal Profession Act. Counsel submitted that such costs are, by implication of s.369(8) and (9) recoverable only in a judgment entered in the name of ‘the Manager, Costs Assessment’, and not by, or in the name of, the successful applicants for the principal costs assessment determination.

   ii)Each of the two judgments erroneously included an additional amount not found in the certificates, which was apparently a Local Court filing fee or other charge of $78, and which was not authorised to be included in a judgment entered upon the filing of certificates under ss.368 and 369 of the Legal Profession Act.

   iii)Each of the two judgments was entered on applications for registration, and for the purported benefit of, only three of the four clients who had been given the benefit of the District Court costs orders and the costs assessment certificates.  Since the benefits of the costs orders and assessments were jointly held rights, rather than joint and several rights, the certified amounts were unrecoverable except under a judgment obtained in the name of all four clients, including Fodare Pty Ltd. 

8. Counsel for Mr Dennis submitted that, if s.41(5) of the Bankruptcy Act applied in relation to his contentions, so that the bankruptcy notice was “not invalidated by reason only that the sum specified in the notice as to the amount due to the creditor exceeds the amount in fact due”, then notice of his contentions had been sufficiently given by way of his written submissions filed before the hearing and before the time for compliance with the notice expired. 

9. Counsel for the respondents did not take any point under s.41(5), and I am not satisfied that he could have done so. It appears to me that this provision concerns an objection to the amount stated in the bankruptcy notice, where the objection asserts that the notice overstates the true amount outstanding under the judgment relied upon in the bankruptcy notice. Where the argued overstatement arises because of a contention going to the validity of the judgment itself, or because of a contention inviting the Court to ‘go behind’ the judgment debt so as to discover an amount ‘in truth and reality’ owing to the creditor, then s.41(5) would not seem to be relevant. I would not understand Hely J in Croker v Commissioner of Taxation (2005) 145 FCR 150, [2005] FCA 127 to have decided otherwise, although in that case his Honour did consider, and reject, a contention in relation to s.41(5). In any event, in the absence of any submissions to the contrary, I am not satisfied that Mr Dennis is precluded from raising any of the above three contentions by reason of s.41(5).

10. The principal submission of counsel for the respondents was that Mr Dennis is estopped from raising the above three contentions, or that it is “not appropriate for this Court to review” the validity of the judgment debts, because Mr Dennis unsuccessfully applied to the Local Court to set aside the two judgments and did not appeal from its dismissal of his application.  However, counsel for the respondents did not take me to any evidence showing what arguments were presented to the Local Court, nor as to that Court’s reasons for refusing to set its judgments aside. 

11. In my opinion, his submission that this Court in its bankruptcy jurisdiction does not have power to question the legal effectiveness of the Local Court judgments, or that there is an estoppel between the parties which prevents it going behind the judgments so as to investigate whether they were authorised under the Legal Profession Act, is misconceived and contrary to well established authority.  However, his arguments also may be seen as contending that the Court should not exercise its undoubted discretion to ‘go behind’ the judgments and then to decline to allow them to be relied upon in bankruptcy proceedings (cf. Olivieri v Stafford (1989) 24 FCR 413, [1989] FCA 486, and Kalantzis & Anor v Wideline Pty Ltd [2011] FMCA 587).

12. I have considered the points made by counsel for the respondents, and decided that Mr Dennis’ points of contended invalidity of the judgment come clearly within the principles permitting the Bankruptcy Court to ‘go behind’ a judgment debt, to decide whether ‘in truth’ a liability relied upon in a bankruptcy notice arose in law and fact (see Corney v Brien (1951) 84 CLR 343, and Wren v Mahony (1972) 126 CLR 212). Taking into account the shortness of the legal points argued by Mr Dennis and the authority supporting the second contention, I have concluded that it is appropriate to examine the three contentions in proceedings seeking the setting aside of the bankruptcy notice, and to do so now rather than leaving the points undecided until the presentation of a creditor’s petition.

13. The three contentions turn on the effect of ss.368 and 369 of the Legal Profession Act. Their relevant provisions are:

    368Certificate as to determination 

    (1)On making a determination of costs referred to in Subdivision 2 or 3 of this Division, a costs assessor is to issue a certificate that sets out the determination. 

    (2)A costs assessor may issue more than one certificate in relation to an application for costs assessment.  Such certificates may be issued at the same time or at different stages of the assessment process. 

    (3)However, any such certificate may not set out the costs of the costs assessment within the meaning of section 369.

    Note. Section 369 makes provision for the recovery of the costs of costs assessments relating to costs to which either section 317 (Effect of failure to disclose) or 364 (Assessment of costs—costs ordered by court or tribunal) applies. The section requires a costs assessor to issue a separate certificate setting out the costs of such costs assessments. That section also makes provision for the effect of such a certificate.

    (4)In the case of an amount of costs that has been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction. 

    (5)In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed. 

    (5A)The costs assessor must forward the certificate or a copy of the certificate to: 

    (a)     the Manager, Costs Assessment, and

    (b)     each party to the assessment, unless subsection (6) applies. 

    (6)If the costs of the costs assessor are payable by a party to the assessment as referred to in section 369, the costs assessor must:

    (a)     forward a copy of the certificate to the Manager, Costs Assessment only, and

    (b)     advise the parties that the certificate has been so forwarded and will be available to the parties on payment of the costs of the costs assessor. 

    (7)Subsection (6) does not apply: 

    (a)     in respect of a certificate issued before the completion of the assessment process under subsection (2), or

    (b)     in such circumstances as may be prescribed by the regulations. 

    369Costs of costs assessment 

    (1)This section applies to the costs of a costs assessment in relation to: 

    (a)     costs to which section 317 (Effect of failure to disclose) applies, and

    (b)     costs to which section 364 (Assessment of costs—costs ordered by court or tribunal) applies, and

    (c)     costs that on assessment are reduced by 15% or more. 

    (2)A costs assessor is, subject to this section, to determine the costs of a costs assessment to which this section applies. 

    (2A)Subject to any order of or the rules of the relevant court or tribunal, the costs assessor may determine by whom and to what extent the costs of an assessment referred to in section 364 (Assessment of costs—costs ordered by court or tribunal) are payable and include the determination in the certificate issued under this section in relation to the assessment. 

    (3)The costs of a costs assessment to which this section applies are payable: 

    (a)     for a costs assessment in relation to costs to which section 317 (Effect of failure to disclose) applies—by the law practice that provided the legal services concerned, or

    (b)     for a costs assessment in relation to costs to which section 364 (Assessment of costs—costs ordered by court or tribunal) applies—by such persons, and to such extent, as may be determined by the costs assessor, or

    (c)     for a costs assessment in relation to costs that on assessment are reduced by 15% or more—by the law practice that provided the legal services concerned or, if the costs assessor so determines, by such persons, and to such extent, as may be determined by the costs assessor. 

    (4)The costs assessor may refer to the Supreme Court any special circumstances relating to a costs assessment and the Court may make any order it thinks fit concerning the costs of the costs assessment. 

    (5)On making a determination, a costs assessor may issue and forward to each party and the Manager, Costs Assessment a certificate that sets out the costs of the costs assessment. 

    (6)If the application for a costs assessment has been dealt with by more than one costs assessor, a certificate issued can set out the costs of any other costs assessor. 

    (7)The certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs. 

    (8)The costs of the costs assessor are to be paid to the Manager, Costs Assessment. 

    (9)The Manager, Costs Assessment may take action to recover the costs of a costs assessor or Manager, Costs Assessment. 

    (10)In this section: 

    costs of the costs assessment includes the costs incurred by the costs assessor or the Manager, Costs Assessment in the course of a costs assessment under this Division, and also includes the costs related to the remuneration of the costs assessor. 

1. I do not accept Mr Dennis’ first contention. As counsel for the respondents pointed out, ss.369(8) and (9) need to be understood in the context of the preceding provisions. These include s.368(6), which authorises the Manager to withhold a certificate from the benefiting party until either that party or the party principally liable for costs has paid the costs of the costs assessor as certified under s.369. In this context, although s.369(9) also authorises the Manager to “take action to recover” those costs, this does not, in my opinion, implicitly preclude the party identified in the costs certificates as entitled to the certified costs of the assessment, from filing a certificate under s.369(7) and from thereby seeking to gain reimbursement of costs it has paid to the Manager. In my opinion, a sensible construction of these provisions supports the judgments obtained by the respondents in the present case, in so far as they included the amounts payable under the s.369 certificates. Mr Dennis’ counsel cited no authority in support of the contrary construction.

2. I note that it was not contended for Mr Dennis that the respondents had not, in fact, paid the assessment costs to the Manager so as to procure the issuance of the s.368 certificates. Nor was it contended that it was not open to the Local Court to issue one judgment combining amounts due in relation to one costs assessment under certificates once they were filed under ss.368(5) and 369(7), and I note that this is permitted by the Uniform Civil Procedure Rules 2005 (NSW), r.36.10(2).

3. Mr Dennis’ second contention has the support of authority.  In Croker v Commissioner of Taxation (2005) 145 FCR 150, [2005] FCA 127, Hely J considered a judgment issued by the Local Court following the filing of a costs assessment certificate under s.208J of the Legal Profession Act 1987 (NSW). The judgment included a filing fee of $63. His Honour set aside a bankruptcy notice based on this judgment, on the ground that the inclusion of an amount beyond the amount certified was not authorised by the legislation. He said:

   14When a certificate is filed with the Local Court, the Local Court does not adjudicate upon anything. The records of the Local Court either correctly reflect the operation of s 208J(3) of the LPA in the circumstances of the case or they do not. If they do not, then the issue of a “certificate of judgment” which incorrectly reflects the operation of s 208J(3) is devoid of any legal effect.

   15Mr Melrose conceded that Mr Croker had given notice to the Commissioner in accordance with the provisions of s 41(5) of the Bankruptcy Act 1966 (Cth), but submitted that the bankruptcy notice should not be set aside because it was not likely to mislead, as Mr Croker was aware of the error. However, in Walsh v Deputy Commissioner of Taxation (Cth) (1984) 156 CLR 337 Gibbs CJ (with whom the other members of the Court agreed) said (at 339):

   There is no doubt that a bankruptcy notice will be invalid if the sum specified in the notice as the amount due to the creditor exceeds the amount for which the creditor is entitled to issue execution, provided that the debtor gives timely notice under s 41(5) of the Bankruptcy Act 1966 (Cth), as amended, that he disputes the validity of the notice on that ground.

4. In Lord & Anor v Rankine & Ors [2010] FMCA 668 at [13] Raphael FM applied Croker to a judgment issued on a certificate filed under s.368(5) of the current legislation.  His Honour said that there was “no material difference” in the 2004 Act, and that “there is in my view still no power to add the amount of the fee”.  His Honour’s judgment was upheld in this respect by Marshall J (see Rankine v Lord (2011) 121 ALD 258, [2011] FCA 478 at [38]).

5. Counsel for the respondents was unable to cite any contrary authority, nor refer me to any legislation which authorises the entry of a judgment in the Local Court upon the filing of certificates under ss.368(5) and 369(7), so that it includes the addition of a court fee or other cost incurred by the creditor under that procedure. I note that this is expressly precluded in relation to assessments filed in the Supreme Court by UCPR r.42.31(4), and do not consider that the absence of an equivalent rule in relation to the Local Court implies the converse. Rather that rule tends to confirm an implication of ss.368(5) and 369(7) themselves, that the judgment which is authorised to be automatically entered is a judgment for the certified amounts and no other amounts. I also note that s.98(2) of the Civil Procedure Act provides:

   (2)Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. 

6. I accept that the legislative provisions explained by Raphael FM in Lord & Anor v Rankine & Ors [2010] FMCA 668 at [10]‑[12], provide for the charging of a filing fee upon the filing of a certificate of a costs assessment. However, cl.7 of the Civil Procedure Regulation 2005 (NSW), provides that the fee imposed by Sch.1 Pt.5 item 3 for registration of the certificates was payable “by the person at whose request the relevant document is filed”.  As was Raphael FM, I am unable to locate any rule or statutory provision which allowed this or any other charge or expense relating to the filing of a certificate to be charged to the person who becomes a judgment debtor upon that event, absent any court order to this effect.  There is no evidence suggesting that a separate proceeding seeking such an order was ever commenced in the Local Court. 

7. In my opinion, I am bound by the previous line of authority which supports Mr Dennis’ second contention, and therefore shall order that the present bankruptcy notice should be set aside. 

8. It is therefore not strictly necessary for me to address Mr Dennis’ third contention.  However, it also appears to be based on good authority. 

9. Counsel for Mr Dennis supported this contention by reference to the judgment of Latham CJ in Australian Workers’ Union v Bowen (1946) 72 CLR 575. Neither counsel took me to any more recent authority on whether a costs order and assessment in favour of joint parties to litigation gives rise to joint and several rights of recovery of the costs when assessed.

10. In Bowen, a bankruptcy notice and creditor’s petition were issued in the names of all the persons who were named in a costs order and taxation certificate as the successful defendants to an equity suit in the Supreme Court of NSW, notwithstanding that two of them did not consent to their being so named in the bankruptcy processes.  Clyne J held that the bankruptcy notice was invalid because the costs order “on its proper construction gave to these defendants a joint right to these costs and not a joint and several right” (see Re Bowen; Ex parte Australian Workers’ Union (1945) 13 ABC 275 at 278). On appeal, Latham CJ said at 583:

    Only one writ of execution can be issued for the one judgment debt to which joint judgment creditors are entitled, and a bankruptcy notice in the case of such creditors can be effective only when issued by or on behalf of all the judgment creditors. 

    Latham CJ then found that the bankruptcy notice was invalid, and the petition irregular, because they were signed by a solicitor without the authority of two of the named defendants in the equity suit in whose favour the costs order was made.  Rich J at 584 agreed with the reasoning of Clyne J.  Starke J, dissenting, at 587 thought that only the petition was defective, and that its defects could be cured.  Dixon J at 590 said: 

    The right to enforce the judgment was vested in those persons jointly, and not severally, and, therefore, it was necessary that [the bankruptcy notice] should be obtained in the names of all of them by a person authorised either in fact or law so to obtain it.  As the authority of Miller and of Dalton [the non‑consenting defendants] was not given in fact and the appropriate steps were not taken to secure an authority in law, or rather equity, for the use of their names, the bankruptcy notice could not stand. 

    Williams J at 593 also thought that the bankruptcy notice was invalid, because no application had been made to the Supreme Court in Equity for leave to issue execution on the costs judgment on the motion of only some of the defendants. 

11. The continuing authority of Bowen for the proposition that a bankruptcy notice is invalid if it is brought in the name of only some of the joint creditors named in a judgment for quantified costs was recently explained by Barnes FM in Rookharp Pty Limited v Webb & Anor [2011] FMCA 801, which was brought to my attention by counsel for Mr Dennis after the hearing. I would respectfully accept her analysis, and agree that it has support in recent Federal Court judgments, in particular, Scook v Sims Construction Pty Ltd (2004) 3 ABC(NS) 43, [2004] FCAFC 306 at [22].

12. It is not obvious that ss.368 and 369 of the Legal Profession Act and the relevant procedural rules in relation to the entering and enforcement of party/party costs certificates in 2010 have the same effect as was found by the High Court in 1945 in relation to orders for taxed costs in NSW Supreme Court equity proceedings at that time. However, modern rules of Court still usually require the joinder to a proceeding of “all persons jointly entitled to the same relief” either as plaintiffs or, if they are unwilling to join, as defendants (cf. Uniform Civil Procedure Rules 2005 (NSW) rr.6.20 and 7.12). Reflecting the contrast referred to in the judgments in Re Bowen, court procedures still take a different approach to joint liabilities, allowing them to be recovered against any of the persons liable, without insisting upon joinder of all persons jointly liable (cf Civil Procedure Act 2005 (NSW) s.95, and UCPR r.7.21).

13. I am unaware of any current legislation which would allow the benefit of a costs order and assessment certificate in favour of more than one party to litigation to be characterised as conferring rights which are joint and several.  In the absence of such a provision, it appears to me that NSW court rules would still require the obtaining of leave from a relevant court to allow fewer than all of the joint litigants to take steps to execute on a court order conferring a joint but not several benefit. 

14. My own limited researches have found no relaxation of this principle in relation to costs certificates or the entry of judgment upon the filing of costs certificates under the Legal Profession Act, and I can find no such implication in ss.368 and 369 themselves. It appears to me that these sections imply, to the contrary, that all persons having the benefit of a costs order must join in an application for an assessment, and that all those persons must then be named in the assessment certificates and be identified as joint judgment creditors when the certificates are filed and entered as a judgment. Such a construction would be consistent with the dicta in Bowen. 

15. This construction would have the consequence that the present two judgments attached to the bankruptcy notice were entered by the Local Court without authority, since they created judgment debts in favour of only some of the joint creditors under the costs order and assessment.  The bankruptcy notice was therefore not based upon judgments validly entered under ss.368(5) and 369(7), and should be set aside. 

16. I therefore conclude that Mr Dennis’ third contention should also be upheld.  

17. For all the above reasons, I shall set aside the bankruptcy notice. 

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Smith FM

Date:  10 February 2012