Dennis v Tubb
[2012] FMCA 26
•10 February 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DENNIS v TUBB | [2012] FMCA 26 |
| BANKRUPTCY – Bankruptcy notice based on registered costs assessment certificate under NSW legislation – judgment inconsistent with costs order made in Federal Magistrates Court for costs to be “taxed in accordance with the Federal Court Rules” – bankruptcy notice set aside. |
| Bankruptcy Act 1966 (Cth), s.32 Federal Court Rules 2011 (Cth), r.41.10 Federal Court Rules (Cth), O.37 r.7, O.62 rr.8, 39, 45 Federal Magistrates Act 1999 (Cth), ss.79, 102(2)(f), 103(1), 103(4) Federal Magistrates Court Rules 2001 (Cth), rr.1.05(3)(b), 20.00A, 21.02, 29.08, 29.07, Sch.3 Pt.2, Sch.4 item 1 Judiciary Act 1903 (Cth), ss.79, 79(1) Legal Profession Act 2004 (NSW), Pt 3.2, Div.11, ss.353, 367, 368, 368(5), 369, 369(7) |
| Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 Dennis v Miller & Ors [2012] FMCA 25 Wilson v Alexander (2003) 135 FCR 273 |
| Applicant: | BRUCE VERNON DENNIS |
| Respondent: | KEVIN TUBB |
| File Number: | SYG1542 of 2011 |
| Judgment of: | Smith FM |
| Hearing date: | 2 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 Respondent: | Mr S Bliim |
| Solicitors for the Respondent: | Dignan & Hanrahan |
ORDERS
Bankruptcy Notice BN 4544 issued on 22 June 2011 is set aside.
The respondent must pay the applicant’s costs, including reserved costs, as agreed or taxed pursuant to the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).
The applicant must give a copy of this order to the Official Receiver within 2 working days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG1542 of 2011
| BRUCE VERNON DENNIS |
Applicant
And
| KEVIN TUBB |
Respondent
REASONS FOR JUDGMENT
This judgment explains why I am persuaded to set aside Bankruptcy Notice BN 4544, which was issued on 22 June 2011 at the request of Mr Tubb and requiring payment by Mr Dennis of the amount of $7932.45. The bankruptcy notice was based upon a judgment of the Local Court of NSW entered on 16 April 2009 in ‘case number 2009/0040788’, which itself arose upon the filing of costs assessment certificates under ss.368 and 369 of the Legal Profession Act 2004 (NSW). The costs certificates purported to quantify and make recoverable an amount of costs arising from an order of a Registrar of the Federal Magistrates Court exercising its bankruptcy jurisdiction. Time for compliance with the notice has been extended up to and including the date when I am giving judgment.
The hearing of the present matter was conducted immediately after the hearing of a related matter in which I have published Dennis v Miller & Ors [2012] FMCA 25. Mr Tubb was second respondent in that matter, and both sides were represented by the same counsel. The present matter appears to arise out of the litigation to which I made general reference in that judgment. Curiously, however, the present Local Court judgment did not include any filing fee or other addition to the two amounts certified by the costs assessor. The present bankruptcy notice does not, therefore, suffer from the same defect which I upheld in that matter.
Counsel for Mr Dennis relies upon an additional contention which, as with his contentions in the other matter, invites the Court to ‘go behind’ the Local Court judgment and find that it was entered without statutory authority under the Legal Profession Act. He submits that the whole costs assessment proceeding purportedly leading to the registration of the costs assessment certificates under Division 11 of Part 3.2 of the Legal Profession Act and the automatic entry of the two Local Court judgments was legally ineffective. This is because the party/party costs assessment and recovery procedure under the State legislation was inapplicable in relation to the costs order obtained by Mr Tubb from this Court.
The costs order in favour of Mr Tubb against Mr Dennis was made by Registrar Tesoriero in orders made and entered on 31 May 2005 in the following terms:
BY CONSENT THE COURT ORDERS THAT:
1.The Bankruptcy Notice No. NN810 of 2005 be set aside.
2.A copy of this order be provided to the Official Receiver in Sydney within 2 days.
THE COURT ORDERS THAT:
3.The Respondent pay the costs of the Applicant of and incidental to the Application as agreed or taxed in accordance with the Federal Court Rules.
As is manifest, these orders were made on a successful application under the Bankruptcy Act, seeking the setting aside of a bankruptcy notice. The source of the Registrar’s costs power was, therefore, under either or both s.79 of the Federal Magistrates Act 1999 (Cth) and s.32 of the Bankruptcy Act 1966 (Cth).
The Court’s general costs powers included a power to specify costs scales and procedures, under Federal Magistrates Court Rules 2001 (Cth), r.21.02, which provided at the relevant time:
21.02 Order for costs
(1)An application for an order for costs may be made:
(a) at any stage in a proceeding; or
(b) within 28 days after a final decree or order is made; or
(c) within any further time allowed by the Court.
(2)In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b) set the method by which the costs are to be calculated; or
(c) refer the costs for taxation under Order 62 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.
In relation to bankruptcy proceedings, r.29.08 also provided:
29.08 Costs
Unless the Court otherwise orders, a party entitled to costs in a proceeding to which the Bankruptcy Act applies is entitled to costs in accordance with the Federal Court Rules.
The Registrars exercised these costs powers in bankruptcy proceedings under delegation pursuant to ss.102(2)(f) and 103(1) and (4) of the Federal Magistrates Act 1999 (Cth), and Federal Magistrates Court Rules r.20.00A and Sch.4 item 1.
In this legislative context, the reference to “taxed in accordance with the Federal Court Rules” in the present Registrar’s costs order was plainly a reference to all the provisions of Order 62 of the former rules of the Federal Court. These rules contained a complete scheme for the taxation by a Registrar of the Federal Court of a bill of costs in accordance with a procedure requiring reference to prescribed scales of costs and prescribed discretionary and other rules. The procedure provided for an appointment for taxation, objections, reconsideration, review by a judge of a taxing officer’s certificate, and for the issue of a taxation certificate. Of particular note, are the following rules:
8Registrar to tax costs
(1)Unless the Court or a Judge in a particular case otherwise orders, bills of costs and fees which:
(a) are payable to lawyers in respect of business transacted by them in the Court or its registries; and
(b) have been directed by a judgment or order to be taxed or under these Rules are liable to be taxed without express direction;
shall be taxed allowed and certified by a taxing officer.
(2)Unless the taxing officer appoints a time for taxation under subrule 41 (1), a bill will be assessed in accordance with rule 46.
(3)In subrule (2):
bill does not include a short form bill under:
(a) rule 40A; or
(b) rule 40B; or
(c) rule 13.03 of the Bankruptcy Rules.
…
39Registrars appointed taxing officers
(1)The Registrar, Deputy Registrar, District Registrars and Deputy District Registrars are appointed taxing officers.
(1A)The Registrar or a District Registrar may authorise an officer to be the taxing officer for the purposes of taxing a short form bill filed under the following provisions:
(a) rule 40A;
(b) Division 13.2 of the Bankruptcy Rules.
(2)The taxing officers shall be assistant to each other.
(3)A taxing officer may, of his own motion, refer any question arising in a taxation for the direction of the Court.
…
45Certificate of taxation
(1)On completion of taxation, the taxing officer shall issue a sealed certificate of taxation, with sufficient number of office copies as are needed for the parties responsible for the payment of costs.
(2)The certificate of taxation must be served on the party responsible for its payment.
(3)If, after 14 days from the date of service of the certificate of taxation, the costs remain unpaid then the Registrar shall, at the request of the party in whose favour the costs are awarded draw up sign and seal an order in favour of that party for the sum shown in the certificate of taxation and enter the same.
(4)Subject to subrule (5) interest calculated in accordance with Order 35, rule 8 is payable from the date the order is pronounced.
(5)Subrule (4) shall not apply to taxations taking place on or after 4 June 1990.
(6)Every award of costs under a judgment of the Court shall carry interest calculated in accordance with Order 35 rule 8 from the date of the certificate of taxation quantifying the same.
(7)Subrule (6) shall apply to taxations taking place on or after 4 June 1990.
State legislation containing rules pertaining to court procedures are capable of being applicable to Federal Court proceedings pursuant to s.79(1) of the Judiciary Act 1903 (Cth), which provides:
79State or Territory laws to govern where applicable
(1)The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
Section 353 of the NSW Legal Profession Act allows applications for an assessment of party/party costs to the Manager, Costs Assessment of the Supreme Court of NSW. An application can be made by a person interested in “an order for the payment of an unspecified amount of costs made by a court or a tribunal”, without (so far as I can discover) any expressed limitation to courts or tribunals established under State legislation. Such an application is to be addressed upon the criterion provided in the Act of whether “disputed costs are unfair or unreasonable” (see s.367), and without any reference to prescribed court scales or rules of taxation. The scheme of the State Act then provides for a certificate of assessed costs, and for its automatic effect as an enforceable judgment when filed under ss.368(5) and 369(7).
There are situations where the general language of State legislation directed at all courts will be given effect by Federal Courts pursuant to s.79(1) of the Judiciary Act (eg. Wilson v Alexander (2003) 135 FCR 273). However, in my opinion, the Commonwealth legislation which empowered and explained the Registrar’s present order for costs to be taxed under Federal Court O.62 clearly ‘otherwise provided’ for the purposes of s.79 of the Judiciary Act, so as to prevent the scheme of costs assessment under the Legal Profession Act having any applicability (cf. Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at [65]). In my opinion, the detailed provisions of O.62, including the provisions I have extracted above, are clearly inconsistent with the State costs assessment provisions and their legislative scheme, and are exclusive of other procedures for taxing or assessing party/party costs under State legislation.
The rules of the Federal Courts adopt some State procedures for the enforcement of monetary judgments of Federal Courts (see e.g. former Federal Court Rules O.37 r.7 formerly adopted by Federal Magistrates Court Rules r.1.05(3)(b) and Sch.3 Pt.2, and current Federal Court Rules 2011 (Cth) r.41.10 and current Federal Magistrates Court Rules r.29.07). This may leave room for taking some enforcement measures in State Courts by way of registration of Federal Court monetary orders, including orders for the payment of costs when taxed and certified by a Federal Court taxing officer. It is unnecessary for me to examine that issue further.
What is clear, in my opinion, is that the Legal Profession Act scheme for the obtaining of certificates of costs assessment under ss.368 and 369, and for rendering them immediately enforceable by filing in a relevant State Court, has no application to orders of the Federal Magistrates Court providing for taxation by a taxing officer under the Federal Court rules. The present judgment entered in the Local Court was, in my opinion, based on certificates which were not authorised by the costs order made by the Registrar in 2005 or by the legislation under which the Registrar made his costs order. The judgment itself was not authorised by any applicable legislation.
Counsel for the respondent made no submissions disputing the above reasoning. Rather, as in the other matter, he submitted that I should not entertain Mr Dennis’ application to set aside the bankruptcy notice on this ground, due to his previously having pursued in the Local Court an unsuccessful application to set aside the judgment.
However, as in that matter, it is unclear to me whether the Local Court has addressed the points I have made above. As in the other matter, I am persuaded to ‘go behind’ the judgment upon which the bankruptcy notice purports to be based. I am satisfied that the judgment is not supportable on a correct appreciation of the effect of the Registrar’s costs order, and should be regarded as legally ineffective to support a bankruptcy notice.
I therefore consider it appropriate to order the setting aside of the bankruptcy notice.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Smith FM
Date: 10 February 2012
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