ex parte

[1979] FCA 163

Re MADDOX; Ex parte THE DEBTOR (1979) 36 FLR 392
Bankruptcy

COURT

FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
Lockhart J.(1)

CATCHWORDS

Bankruptcy - Bankruptcy notice - Administrative not judicial act - Whether issue of bankruptcy notice is a "proceeding in a court" within Family Law Act 1975 (Cth.) - Function of registrar in bankruptcy considered.

HEADNOTE

Held, that the issue of a bankruptcy notice pursuant to the Bankruptcy Act 1966 is a ministerial or administrative act and not part of a judicial process. It is therefore not an act within the meaning of the word "proceedings" as defined in s. 4(1) of the Family Law Act 1975.

Bond v. George A. Bond & Co. Ltd. (1930), 44 CLR 11, followed on this point.

Re Moss; Ex parte Tour Finance Ltd. (1968), 13 FLR 101, approved.
James v. Deputy Commissioner of Taxation (1957), 97 CLR 23; Huddart, Parker & Co. Pty. Ltd. v. Moorehead (1909), 8 CLR 330; Le Mesurier v. Connor (1929), 42 CLR 481; R. v. Kirby; Ex parte Boilermakers' Society of Australia (1956), 94 CLR 254; Attorney-General of the Commonwealth of Australia v. The Queen (1957), 95 CLR 529; R. v. Joske; Ex parte Australian Building Construction Employees and Builders' Labourers' Federation (1974), 130 CLR 87, and R. v. Joske; Ex parte Shop Distributive and Allied Employees' Association (1976), 135 CLR 194, considered.

HEARING

Sydney, 1978, November 22; 1979, March 2, 27. #DATE 27:3:1979

APPLICATION

The debtor applied to set aside a bankruptcy notice claiming the sum of $2,243.53, including interest, due to the judgment creditor under a final order in the Supreme Court of New South Wales in its Family Law Division.

A preliminary question was argued before the court, namely whether the order of the Supreme Court of New South Wales was competent to found the issue of a bankruptcy notice as the Family Law Act 1975 prohibits proceedings for enforcement of the order except under that Act. The facts are set out in the judgment.

J.H. Hastings, for the applicant debtor.

G.F.B. Conyingham, for the respondent creditor.

Cur. adv. vult.

Solicitors for the applicant debtor: E.R. Stack & Sons.

Solicitor for the respondent creditor: M.C. Knibbs.

D. LEVIN

JUDGE1

March 27.

The following judgment was delivered.

LOCKHART J. This is an application to set aside a bankruptcy notice . . . (at p393)

1. The facts are not in dispute. On 25th November, 1974, the Supreme Court of New South Wales in its Family Law Division in suit No. 4793 of 1973 pronounced a decree nisi for dissolution of the marriage of the petitioner Walter George Hodgkinson (the judgment creditor) and Diana Jean Hodgkinson and ordered the co-respondent (the judgment debtor) to pay the costs of the judgment creditor within fourteen days after service of a certificate of taxation. (at p393)

2. On 9th April, 1976, the Supreme Court of New South Wales in its Family Law Division made an order "that the co-respondent pay the costs of the husband of and incidental to this suit including the husband's costs of the application of the wife dated 28th November, 1973". (at p393)

3. On 16th July, 1976, the taxing officer of the Supreme Court of New South Wales in its Family Law Division certified that, pursuant to the orders made on 25th November, 1974, and 9th April, 1976, the costs of the petitioner as between party and party had been taxed and allowed at the sum of $1,854.73. (at p393)

4. The description of the claim of the judgment creditor in the bankruptcy notice is incorrect. Leaving aside the claim for interest, the sum of $1,854.73 is the amount of taxed costs pursuant to the two orders of the court made on 25th November, 1974, and 9th April, 1976; yet the bankruptcy notice describes the final order as being made by the court on 25th November, 1974, with no reference to the later order. The judgment debtor does not suggest that these matters invalidate the bankruptcy notice. (at p393)

5. A preliminary question was argued before me, namely whether the issue of a bankruptcy notice is within the definition of the word "proceedings" as defined in s. 4(1) of the Family Law Act 1975. . . . (at p393)

6. The Family Law Act 1975 came into operation on 5th January, 1976. (at p393)

7. Section 8(1)(a) provides: "8. (1) After the commencement of this Act - (a) proceedings by way of a matrimonial cause shall not be instituted except under this Act; . . ." (at p394)
   

8. Some of the definitions in s. 4(1) are relevant: "matrimonial cause" means (at p394)

9. "(a) proceedings between the parties to a marriage for a decree of - (i) dissolution of marriage; . . . (f) any other proceedings (including proceedings with respect to the enforcement of a decree or the service of process) in relation to concurrent, pending or completed proceedings of a kind referred to in any of paragraphs (a) to (e), including proceedings of such a kind pending at, or completed before, the commencement of this Act." (at p394)

10. "Proceedings" means "a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of or in connexion with a proceeding." (at p394)

11. "Decree" means "decree, judgment or order, and includes a decree nisi and an order dismissing an application or refusing to make a decree or order." (at p394)

12. The answer to the question whether the word "proceedings" encompasses the issue of a bankruptcy notice involves an analysis of the essential character of a bankruptcy notice and of the capacity in which the registrar in bankruptcy acts when issuing the notice. (at p394)

13. It was held by the High Court in Bond v. George A. Bond & Co. Ltd. (1930) 44 CLR 11 that the issue by the registrar in bankruptcy ("the registrar") of a bankruptcy notice under the Bankruptcy Act 1924 was entirely ministerial. See also James v. Deputy Commissioner of Taxation (1957) 97 CLR 23, at p 32 per Dixon C.J., Fullagar and Kitto JJ. (at p394)

14. In Re Moss; Ex parte Tour Finance Ltd. (1968) 13 FLR 101 Gibbs J. took the same view of a bankruptcy notice issued under the Bankruptcy Act 1966. (at p394)

15. Parliament has vested in the registrar the exercise of the power to issue a bankruptcy notice: s. 41(1)(b) of the Bankruptcy Act 1966. The office of registrar is created by the Act: s. 14. He is not an officer or functionary of the court. He is a Commonwealth officer in whom certain ministerial or administrative functions are vested. As to the distinction between judicial functions and ministerial or administrative functions, see Huddart, Parker & Co. Pty. Ltd. v. Moorehead (1909) 8 CLR 330, at pp 356-358, 377-379 ; Le Mesurier v. Connor (1929) 42 CLR 481 ; and Bond's case (1930) 44 CLR 11 . (at p394)

16. Section 12(5) of the Bankruptcy Act 1929 provided: "The Registrars and Deputy Registrars shall be controlled by the Court and shall have such duties as the Attorney-General directs or as are prescribed." (at p395)

17. Section 23 of the Bankruptcy Act 1929 provided: "The Registrar may exercise such of the powers, duties and functions of an administrative nature exercisable by the Court as the Court directs or authorizes him to exercise." (at p395)

18. In Bond's case the High Court held that so much of those sections as enabled the Supreme Court of New South Wales exercising federal jurisdiction in bankruptcy to give directions or authority to the federal registrars to perform ministerial acts and placed upon the registrars an obligation to conform to such directions and execute such authority, was valid. Rich and Dixon JJ. said: "It is not easy to get a clear appreciation of the meaning and legal effect of the indefinite expression 'controlled by the Court', but it seems to amount to no more than requiring the Registrar to comply with the Court's orders and directions. Instead of forming part of its official system and exercising the authority of an office in the Court, the Registrar is now to be a stranger to the Court and its organization. But the Registrar is, nevertheless, to be amenable to the Court's orders and directions, if it choose to give him any. The purpose of the amendment of sec. 12(5) and of sec. 23 appears to have been to put the Registrar at the disposal of the Court as a person bound by law to comply with its requirements. Such a scheme has the strange result of making the office of Registrar in Bankruptcy, an office which, in spite of its name, is not attached to a Court at all. Unlikely as otherwise it might seem that the Legislature should mean that there should be Registrars who did not belong to Courts, it must yet be remembered that sec. 12(2) of the Bankruptcy Act 1924- 1928, when it constituted the Registrars in Bankruptcy, did so not in respect of Courts, but in respect of Districts. Moreover, the amendments were evidently drawn to remove the vice found in the provisions to be amended, and it must have been plain that this could not be done if, either in substance or in form, the Registrar were given an official position in a State Court. When it appeared that it was beyond the power of the Parliament to make the Registrar an officer of State Courts exercising the authority and jurisdiction of those Courts, it seems to have been thought that it was possible at least to utilize that official for the purpose of executing such commands and exercising such authority as the Courts might lay upon or commit to him" (1930) 44 CLR, at pp 20-21 . (at p395)

19. Section 14(3) of the Bankruptcy Act 1966 provides: "A Registrar or a Deputy Registrar may exercise such of the powers and functions of an administrative nature exercisable by the Court as the Court directs or authorizes him to exercise." (at p395)

20. Its language is the same as s. 23 of the Bankruptcy Act 1929 and therefore doubtless susceptible to the same comments as were made by Rich and Dixon JJ. as to s. 23 of the Bankruptcy Act 1929 in Bond's case. There may be a question whether the decision of the High Court in Bond's case is reconcilable in all respects with its later decision in R. v. Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 affirmed by the Privy Council in Attorney-General of the Commonwealth of Australia v. The Queen (1957) 95 CLR 529 ; although the applicability of that decision in Australia today may be open to some question in view of certain subsequent decisions of the High Court including R. v. Joske; Ex parte Australian Building Construction Employees and Builders' Labourers' Federation (1974) 130 CLR 87 and R. v. Joske; Ex parte Shop Distributive and Allied Employees' Association (1976) 135 CLR 194 . (at p396)

21. However, none of the decisions of the High Court after Bond's case (1930) 44 CLR 11 say anything to deny that the act of the registrar in issuing a bankruptcy notice is purely ministerial and not of a judicial character. (at p396)

22. In Re Moss; Ex parte Tour Finance Ltd. (1968) 13 FLR 101 Gibbs J. said: "A function which in itself does not possess any of the elements normally characteristic of judicial power may, however, involve the exercise of judicial power either because the legislature has committed its exercise to a court, or because the function has invariably or consistently been regarded as one that is appropriate for discharge by the courts (see R. v. Davison (1954) 90 CLR 353, at pp 369, 382, 388 )" (1968) 13 CLR, at p 107 . (at p396)

23. His Honour held that there was nothing in the Bankruptcy Act 1966 to suggest that the act of the registrar in fixing the time for compliance with a bankruptcy notice is intended to be regarded as the act of the court. I respectfully agree with his Honour's conclusion and reasons. I would only add for my part that the same is true of the act of the registrar in issuing the bankruptcy notice itself. (at p396)

24. In my opinion the issue by the registrar of a bankruptcy notice does not answer the description of "proceedings" in the definition of that word in s. 4(1) of the Family Law Act 1975. As to this I respectfully agree with the following passages from the judgment of Gibbs J. in Moss' case: "It is true that speaking in the broadest sense, and for some purposes, it may be said that bankruptcy proceedings are commenced by the making of an application for the issue of a bankruptcy notice (cf. In re A Judgment Debtor (1939) 1 Ch 601, at p 607 ). It is, however, begging the question to say that judicial proceedings are commenced by such an application. An application for the issue of a bankruptcy notice is made for the purpose of forcing the debtor either to comply with the notice or to commit an act of bankruptcy. If a debtor has failed to comply with a bankruptcy notice and has thereby committed an act of bankruptcy, a creditor may, if certain other conditions are satisfied, present a petition for the making of a sequestration order (s. 43 of the Bankruptcy Act 1966). On the hearing of the petition it is the duty of the court to decide whether an act of bankruptcy has been committed, and if it finds that none was committed the proceedings will fail (see s. 52). In other words, the commission of an act of bankruptcy is something that must have occurred before proceedings for a sequestration order are commenced. It cannot be said that the fact that a sequestration order may follow the commission of an act of bankruptcy makes everything which led to the commission of the act of bankruptcy part of the judicial process by which a sequestration is brought about. In the case of most of the other acts of bankruptcy described in s. 40 of the Bankruptcy Act 1966 the commission of the act of bankruptcy does not involve the taking of proceedings at all. In one case, that mentioned in s. 40(1)(d), where execution has been issued under process of a court and the debtor's property has in consequence either been sold or held by the sheriff for twenty-one days or such execution has been returned unsatisfied, the act of bankruptcy results from the taking of a proceeding, which, however, is not a bankruptcy proceeding. In the case of the act of bankruptcy now in question, the application to the Registrar to issue a bankruptcy notice is a proceeding, but it is a proceeding different from and preliminary to that which leads to the making of a sequestration order. In my opinion, the judicial process by which a sequestration is brought about is commenced when the petition is presented, and the act of the Registrar in fixing the time for compliance with a bankruptcy notice can neither be regarded as a step in that judicial process nor treated as an exercise of judicial power simply because it may be followed by an exercise of judicial power" (1968) 13 FLR, at pp 105-106 . (at p397)

25. The issue of a bankruptcy notice is a power specially vested by the legislature in the registrar. He does not exercise that power as an officer or delegate of the court. The act of the registrar in issuing a bankruptcy notice is not a step in any proceeding in the court. The judicial process which leads to the making of a sequestration order is commenced with the presentation of the petition and not before. It is true that the issue of a bankruptcy notice may be followed by various instances of the exercise of judicial power. The judgment debtor, on whom the bankruptcy notice is served, may file an affidavit pursuant to s. 41(7) before the expiration of the time fixed for compliance with the bankruptcy notice to the effect that he has a counterclaim, set-off or cross demand such as is referred to in par. (g) of sub-s. (1) of s. 40 of the Bankruptcy Act 1966. The filing of that affidavit with the registrar operates per se to extend time for compliance with the requirements of the bankruptcy notice until the court has determined whether it is satisfied that the judgment debtor has such a counterclaim, set-off or cross demand. However, the act of the registrar in issuing a bankruptcy notice is not converted into part of the judicial process merely because the issue of the bankruptcy notice may be followed by an exercise of judicial power. (at p398)

26. In my opinion not only is the issue by the registrar of a bankruptcy notice not a proceeding in a court within the definition of the expression "proceedings" where appearing in s. 4(1) of the Family Law Act 1975, nor is the issue of a bankruptcy notice "an incidental proceeding in the course of or in connexion with a proceeding" where appearing in the inclusive provisions of the definition of "proceedings" in s. 4(1). It is true that the words "in connexion with" are of the widest import; but, in my opinion, the "incidental proceeding" must itself be an incidental proceeding in a court in order to fall within the statutory definition of the word "proceedings". (at p398)

27. Even if this were not so, and a proceeding could be characterized as "incidental" whether it be itself a proceeding in a court or not, it would be necessary that the incidental proceeding be "in the course of or in connexion with a proceeding". The word "proceeding" where lastly appearing in the definition of the word "proceedings" must itself be a proceeding in a court. The issue of a bankruptcy notice does not answer that description. It is not issued in the course of or in connexion with any proceeding in a court. The fact that the exercise of judicial power may follow the issue of a bankruptcy notice does not transmute a purely ministerial function into one of judicial character. (at p398)

28. For these reasons in my opinion the application fails. I order that the application be dismissed. (at p398)

ORDER

Order accordingly.