Ferris v Queensland Building and Construction Commission
[2015] FCCA 176
•30 January 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FERRIS v QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION | [2015] FCCA 176 |
| Catchwords: BANKRUTPCY – Bankruptcy notice – whether bankruptcy notice attached final judgment or order – whether final decision of QCAT a final judgment or order – whether there was a fatal defect in bankruptcy notice – no defect in notice – notice not defective. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.41, 306 Bankruptcy Regulations 1996 (Cth) Queensland Civil and Administrative Tribunal Act 2009 (Qld), s.131 Uniform Civil Procedure Rules 1999 (Qld), rr.658, 661, 793, 978 |
| Medical Board of Australia v Judge Horneman-Wren & Leggett [2013] QSC 339 Owen v Menzies [2013] 2 Qd R 327 |
| Applicant: | PAUL FERRIS |
| Respondent: | QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION |
| File Number: | BRG 846 of 2014 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 24 November 2014 |
| Date of Last Submission: | 24 November 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 30 January 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr Fisher |
| Solicitors for the Applicant: | Romans & Romans Lawyers |
| Counsel for the Respondent: | Mr Looney QC |
| Solicitors for the Respondent: | Rostron Carlyle |
ORDERS
The costs reserved by order of Registrar Lynch on 25 September, 2014 be costs in the cause;
The application filed on 22 September, 2014 be dismissed;
The applicant pay the respondent’s costs of and incidental to the application to be taxed and paid in accordance with the Federal Circuit Court (Bankruptcy) Rules 2006.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 846 of 2014
| PAUL FERRIS |
Applicant
And
| QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION |
Respondent
REASONS FOR JUDGMENT
By his application filed on 22 September, 2014, the applicant seeks an order that the bankruptcy notice bearing number BN 173964 issued on 21 August, 2014 against him be set aside. Further, he seeks an order for his costs of the application against the respondent.
The respondent, the issuer of the bankruptcy notice, opposes the application. In the event that its opposition to the application is successful, the respondent seeks an order for costs of the application against the applicant.
These reasons for judgment deal with two matters. The first is the application to set aside the bankruptcy notice and any consequential costs orders. The second is a question of costs concerning the adjournment of this application on the day the application came before a registrar on 25 September, 2014. Those costs were reserved.
In broad terms, the applicant applies for the setting aside of the bankruptcy notice on three grounds. First, he claims that the bankruptcy notice has not been properly served upon him. Secondly, he claims that the bankruptcy notice is irregular and the irregularity is not capable of remedy. Thirdly, he argues that the respondent does not have a final judgment or a final order against the applicant for the purposes of ss.40(1)(g) and 41 of the Bankruptcy Act1966. The second and third grounds are related.
Background
On 19 September, 2013 the Queensland Civil and Administrative Tribunal made a decision that certain costs to be paid to the Queensland Building Services Authority by the applicant should be fixed by the Tribunal in the amount of $47,998.05. The Tribunal decided that those costs should be paid no later than Friday, 1 November, 2013. On 30 January, 2014 the Principal Registrar of the Tribunal issued a certified true copy of that decision.
On 28 March, 2014 the Tribunal made a further decision that the applicant pay certain costs of the Queensland Building and Construction Commission (the successor to the Queensland Building Services Authority: see Queensland Building and Construction Commission Act 1991, Schedule 1 Part 9) fixed at $65,240.36 by 21 April, 2014. On 28 May, 2014 the Principal Registrar of the Tribunal issued a certified true copy of that decision and a further certified true copy of the September, 2013 decision.
There is no dispute that the respondent is entitled to the benefit of both of the final decisions. The amounts due under each decision have not been paid.
On 26 June, 2014, the respondent delivered a letter to the registry of the Magistrates Court of Queensland at Brisbane enclosing:
a)a copy of each final decision that the principal registrar of the Tribunal had certified to be a true copy;
b)two affidavits, one in respect of each decision, setting out the amount not paid under the relevant decision;
c)a “Form 58 Draft Judgment” in respect of each QCAT decision;
d)a Notice of Appointment of Solicitor.
The documents were enclosed “for filing” and the letter requested that “the Decisions be registered in the Brisbane Magistrates Court pursuant to section 131(2) of the Queensland Civil and Administrative Tribunal Act 2009”.
On 26 July, 2014 an Administrative Officer from the Civil Registry, Magistrates Court of Queensland at Brisbane sent two letters to the respondent’s solicitors. There was one letter in respect of each QCAT decision. The letters were in most respects identical. The differences between them were a consequence of the different QCAT decisions to which each related. Relevantly, the letters both provided:
The Queensland Civil and Administrative Tribunal Decision has now been registered in the Brisbane Magistrates Court.
…
The Queensland Courts Service has implemented a Statewide policy in which a Form 58 – Judgment document will no longer be issued.
It is a requirement when lodging a QCAT Decision for Registration with a Queensland Magistrates Court, that a Form 1 (attached), certified copy of the QCAT Decision (by Registrar of QCAT) and Affidavit of Debt is filed.
After the filing of the QCAT Decision a free duplicate copy of the registered decision (including the form 1) in accordance with Rule 662(1) of the Uniform Civil Procedure Rules 1999 will be provided.
(emphasis in the original)
The date of the filing of the QCAT decisions and accompanying affidavits is not clear, but there is no doubt that they were filed. The applicant does not contend to the contrary.
In respect of each QCAT decision, the registry returned to the respondent’s solicitors a document (a Form 1 from the Uniform Civil Procedure Rules 1999 (Qld)) stamped “CERTIFIED DUPLICATE” and entitled “QCAT Default Decision Registration” to which was attached a photocopy of the certified true copy of the QCAT final decision. The Form 1 bore neither the seal of the Magistrates Court nor any signature. Each QCAT final decision bore the signature of the QCAT member making the decision, the seal of QCAT over that signature, a “CERTIFIED TRUE COPY” stamp which included the QCAT seal again together with a signature and handwritten date over the printed words “PRINCIPAL REGISTRAR”.
On 21 August, 2014 the respondent caused the bankruptcy notice the subject of these proceedings to be issued against the applicant in respect of the total of the amounts specified in the QCAT decisions - $113,238.41 plus interest. A copy of each of the “QCAT Default Decision Registration” documents, with their respective QCAT decisions, was attached to the bankruptcy notice.
On 1 September, 2014 the solicitors for the respondent sent a letter enclosing the bankruptcy notice to the applicant by prepaid ordinary post addressed to 3 Phoenix Street, Rochedale, QLD, 4123.
Further, on or about 4 September, 2014 the applicant was handed the bankruptcy notice by his son who lives at 3 Phoenix Street Rochedale, Queensland.
The documents attached to the bankruptcy notice
The applicant contends that the documents attached to the bankruptcy notice are not final judgments or final orders for the purpose of ss.40(1)(g) and 41(1)(a) of the Bankruptcy Act. Indeed, he argues that they are not “orders” or “judgments” at all. He argues that the respondent was not entitled to apply for the issue of bankruptcy notice on the strength of those documents and that he has no present entitlement to the issue of a bankruptcy notice on the strength of those documents. His argument focuses upon the “Form 1” document attached to each of the QCAT decisions. He argues that neither Form 1, either by itself or with the accompanying QCAT decision, is a judgment or order issued by the Magistrates Court pursuant to the Uniform Civil Procedure Rules 1999 (Qld) because those documents do not meet the requirements of UCPR 661 or UCPR 978.
However, the applicant does not contend that the decisions of QCAT at issue here are not:
a)monetary decisions for the purposes of s.131(1) of the QCAT Act; or
b)final decisions for the purpose of ss.131(1), 131(2) and 131(4) of the QCAT Act.
The applicant relies upon Ferris v Bilic [2014] FCCA 781 at [11], where Burnett J said:
[11] Relevantly, for these purposes s.41 requires a final order. An inchoate right requiring some further administrative action is not of itself sufficient. The administrative process serves to authenticate what has occurred before it; in this instance, the compliance with s.31(2). Implicit in the form of final order relied upon by the creditor is, in my view, an acknowledgement of the process I have just referred to. For instance, the final order itself is a document which has a court heading. It bears a court file reference and a court seal and is authenticated in the manner required by r.661 UCPR….
Accordingly, the applicant argues that the documents attached to the bankruptcy notice in this case are not final judgments for the purposes of s.40(1)(g) or 41 of the Bankruptcy Act.
In Ferris v Bilic the court was dealing with an attempt to found a bankruptcy notice upon a judgment given following an adjudication certificate issued under the Building and Construction Industry Payments Act2004 (Qld). The certificate had been filed in the registry of the Magistrates Court of Queensland with an accompanying affidavit. A document had been prepared by the party filing the certificate that recorded the terms of the judgment and some other matters. That document, with the adjudication certificate attached to it had been issued from the Magistrates Court. The document had a court heading. It bore a court file reference and a court seal and “was authenticated in the manner required by r.661 UCPR” (see Ferris v Bilic at [11]). Despite that, it seems that the document was not signed by the registrar as required by UCPR 978. After setting out the matters contained in the adjudication certificate, his Honour continued:
12. … If the filing of an affidavit in court with the adjudication certificate alone was sufficient to constitute a final order, one wonders why the creditor in this instance went to the trouble of preparing a form and detailing matters that I have earlier noted, which were included in the form. Respectfully, it appears that the satisfaction of s.31(2) elevates the status of an adjudication certificate to that of a judgment, but until some evidence of that matter is produced it cannot be enforced in accordance with Chapter 19, or, indeed, pursuant to the Bankruptcy Act 1966 (Cth). That is, until there is an authentication in satisfaction of the statutory requirements.
13. Of course, that authentication occurs in accordance with r.978 UCPR, when the court issues a document that not only bears the court seal but is also signed by an appropriate officer of the court. As I have observed, this is not a trifling matter. In this instance, the purported final order has not been authenticated in a manner required by the UCPR. It follows that it is not a final order. The requirements of s.41 are mandatory…
The applicant submits that the two documents attached to the bankruptcy notice are not judgments or orders of the Magistrates Court of Queensland, but rather constitute an administrative process that has not been authenticated, as required by rule 661 or by rule 978 of the Uniform Civil Procedure Rules1999 (Qld). If that is so, the bankruptcy notice issued in this case does not attach a final judgment or final order, and so the requirements of ss.41(1)(a) and 40(1)(g) of the Act have not been met and the bankruptcy notice should be set aside.
Although the argument before me focussed upon the documents that were attached to the bankruptcy notice and in particular the “Form1” documents attached to each QCAT decision, it is worthwhile I think to reflect upon ss.41(1), 41(3), 40(1)(g) and 40(3) of the Bankruptcy Act.
Both s.41(1) and 41(3) set out the circumstances in which a person might apply for the issue of a bankruptcy notice. Both subsections refer to “a final judgment or final order” as required by s.40(1)(g) of the Act. Relevantly, the Bankruptcy Act provides:
40 Acts of bankruptcy
(1) A debtor commits an act of bankruptcy in each of the following cases:
…
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i) where the notice was served in Australia—within the time specified in the notice; or
(ii) where the notice was served elsewhere—within the time fixed for the purpose by the order giving leave to effect the service;
comply with the requirements of the notice or satisfy the Court that he or she has a counter‑claim, set‑off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter‑claim, set‑off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
…
(3) For the purposes of paragraph (1)(g):
…
(b) a judgment or order that is enforceable as, or in the same manner as, a final judgment obtained in an action shall be deemed to be a final judgment so obtained and the proceedings in which, or in consequence of which, the judgment or order was obtained shall be deemed to be the action in which it was obtained;
…
41 Bankruptcy notices
(1) An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor:
(a) a final judgment or final order that:
(i) is of the kind described in paragraph 40(1)(g); and
(ii) is for an amount of at least $5,000; or
…
(2) The notice must be in accordance with the form prescribed by the regulations.
(3) A bankruptcy notice shall not be issued in relation to a debtor:
(a) except on the application of a creditor who has obtained against the debtor a final judgment or final order within the meaning of paragraph 40(1)(g) or a person who, by virtue of paragraph 40(3)(d), is to be deemed to be such a creditor;
…
The prescribed form of bankruptcy notice requires the final judgment or order relied upon for the issue of the notice to be attached to the bankruptcy notice.
Section 40(1)(g) does not define what is meant by the terms final order or final judgment. It is clear, however, that the terms final order or final judgment refer to a judgment or an order of a judicial body. Wilson FM in ANZ Banking Group Limited v Menso [2006] 205 FLR 169 summarised the position as follows:
Technically, a judgment is a decision which concludes an action, whereas an order is any other judicial determination; 20 Halsbury's Laws of Australia paragraph [325-9000] citing Australian Securities Commission v Macleod(1994) 54 FCR 309 at 311-12. The word ”order” is used to describe all forms of judicial decision. A judgment or order is final, as opposed to interlocutory, if it finally disposes of the rights of the parties: 20 Halsbury's Laws of Australia paragraph [325-9010] citing Licul v Corney (1976) 180 CLR 213 at 225; Hall v Nominal Defendant (1966) 117 CLR 423 and Bienstein v Bienstein (2003) 195 ALR 225. The question as to whether an order is final is determined by reference to the nature of the order rather than the nature of the application as a result of which the order was pronounced: Attorney-General v Great Eastern Railway Co(1879) 11 Ch D 449. An interlocutory application may result in a final order.
As to the requirement that the judgment or order be one of a judicial body, the parties seemed to have proceeded on the basis that the final decision of QCAT was not a judicial decision. I make that assumption because part of the argument in this case focussed upon s.131 of the Queensland Civil and Administrative Tribunal Act2009 (Qld) and what was said to be the effect of that section. Section 131 permits enforcement of a final decision of QCAT that is a monetary decision by permitting the filing in the registry of a court of competent jurisdiction a certified true copy of the decision sought to be enforced. Section 131 is in the following terms:
131 Monetary decisions
(1) This section applies to a final decision of the tribunal in a proceeding if it is a monetary decision.
(2) A person may enforce the final decision by filing in the registry of a court of competent jurisdiction—
(a) a copy of the decision that the principal registrar has certified to be a true copy; and
(b) the person’s affidavit about the amount not paid under the decision.
(3) No charge may be made for filing a copy of a decision or an affidavit under this section.
(4) On filing the documents mentioned in subsection (2) in the registry of a court, the final decision is taken to be an order of the court in which it is filed and may be enforced accordingly.
The focus in this case on s.131 of the Act has been apt to distract from the more important question, namely whether a final decision of QCAT is, of itself, a final judgment or final order for the purposes of ss.40(1)(g) and 41 of the Bankruptcy Act. In my view they are either a final judgment or final order for the purposes of ss.40(1)(g) and 41 of the Bankruptcy Act. I do not need to decide which.
The Queensland Civil and Administrative Tribunal is, despite its name, a court: s.164(1) of the QCAT Act. In Owen v Menzies [2013] 2 Qd R 327 the Court of Appeal held that QCAT is a State court capable of exercising federal power for the purposes of Chapter III of The Constitution. De Jersey CJ, with whom Muir JA agreed, noted the following characteristics of QCAT that led him to that conclusion:
a)QCAT is a “court of record” (s.164(1) of the QCAT Act);
b)QCAT decides controversies between parties by making binding and authoritative decisions;
c)QCAT has an implied obligation to make decisions according to the parties’ rights and obligations; and
d)QCAT must act independently (s.162 of the QCAT Act).
President McMurdo reached the same conclusion and referred to QCAT as an “inferior court of summary jurisdiction”. None of the members of the Court considered the fact that QCAT could not enforce its own decisions meant that it was not a court.
In Medical Board of Australia v Judge Horneman-Wren & Leggett [2013] QSC 339, Dalton J recognised the judicial nature of QCAT and the orders made by its members. In that case, her Honour was asked to determine an application pursuant to s.26(1)(b) of the Judicial Review Act1991(Qld) to extend time in which to bring a proceeding for a statutory order for review. The purpose of the proposed proceedings was to challenge a decision of a member of QCAT refusing the applicant for the extension of time leave to add a new ground to a complaint that it was prosecuting against the respondent Leggett in QCAT. Her Honour dismissed the application on two bases, one of which was that: “It is clear that the decision of the Deputy President [of QCAT] which it is sought to challenge is of a judicial character.” (at [10]).
Section 131 of the QCAT Act is designed to facilitate enforcement of QCAT decisions in the Queensland courts. It provides the link between a monetary decision of QCAT and access to the enforcement processes provided in the UCPR. But registration of the QCAT decision in a state court does not detract from the character possessed by these decisions of QCAT as final and binding judicial decisions determinative of the issues covered by them. Upon registration in a state court, the QCAT decision will be taken to be an order of the court in which it is filed and may be enforced accordingly. That however, must be seen in the context of s.131 of the QCAT Act and its plain intention to facilitate enforcement of the QCAT decision using the UCPR. Deeming the QCAT decision to be an order of the court in which it was registered is necessary to enable the judgment creditor to engage the enforcement provisions of the UCPR. Those provisions (found in UCPR Chapter 19) apply to the enforcement of money orders, a phrase defined in schedule 1 to the Civil Proceedings Act2011(Qld) as follows:
money order means an order of the court, or part of an order of the court, for the payment of money, including an amount for damages, whether or not the amount is or includes an amount for interest or costs.
The UCPR do not apply to QCAT. QCAT has its own rules: Queensland Civil and Administrative Tribunal Rules 2009. Thus, without the deeming provision in s.131(4) of the QCAT Act, a party seeking to enforce an order of QCAT could not have recourse to UCPR Chapter 19. But s.131(4) takes care of that problem.
Moreover, even though a decision of QCAT that has been registered pursuant to s.131 and is therefore taken to be an order of the court in which it is filed, it does not lose its character as a final order or judgment of a judicial nature made by QCAT.
Ferris v Bilic (above) is not particularly helpful. There is a significant difference between s.131 of the QCAT Act and s.31 of the Building and Construction Industry Payments Act2004 (Qld). Section 31 of the BICP Act is in the following terms:
31 Filing of adjudication certificate as judgment debt
(1) An adjudication certificate may be filed as a judgment for a debt, and may be enforced, in a court of competent jurisdiction.
(2) An adjudication certificate can not be filed under this section unless it is accompanied by an affidavit by the claimant stating that the whole or a part of the adjudicated amount has not been paid at the time the certificate is filed.
The adjudication certificate may be filed as a judgment. The requirements for the filing of a judgment in a Queensland court which is capable of enforcement of judgments or orders are set out in UCPR 661(2). UCPR 661(2) requires the party filing the judgment to draw up an order that embodies the terms of the judgment. It must be signed by the registrar. To file the adjudication certificate as a judgment, it must be accompanied by an affidavit in accordance with s.31(2) of the BICP Act.
As Ferris v Bilic makes clear, the process issued by a court asked to receive an adjudication certificate under s.31 (1) of the BICP Act, is a judgment of that court. The adjudication certificate is not taken to be or deemed to be a judgment, it merely forms the basis for the judgment subsequently issued by the court in which it is filed. According to Ferris v Bilic (above), if that judgment is to found a bankruptcy notice it must be issued in accordance with by UCPR 661 (signed by the registrar) and UCPR 978(1) (signed and sealed with the seal of the issuing court).
In the present case, the final decision of QCAT is taken to be a judgment of the court in which it is filed. But the court in which it is filed is not required to issue anything before the QCAT decision may be enforced accordingly.
In my view, the QCAT decisions in this case, are not orders of a court to which UCPR 661 applies. Whilst they might be filed in a court of competent jurisdiction for the purposes of enforcement, they may not be filed as a judgment. All that was required was delivery to the registry in one of the ways specified in UCPR 967, together with the other documents required by s.131(2) of the QCAT Act.
In my view, the bankruptcy notice is valid. It has attached to it, a copy of the final judgments or orders upon which it is based. To the extent that the post-judgment interest schedule refers to the numbers assigned to each final decision by the registrar of the Magistrates Court, I think that nothing turns upon that. Those references are not apt to mislead the applicant because the relevant QCAT decisions are attached to bankruptcy notice.
To the extent that it might be suggested that the QCAT decisions are not judgments or orders the execution of which has not been stayed for the purposes of s.40(1)(g) of the Bankruptcy Act, the filing of the QCAT decisions in the Magistrates Court has removed any impediment to their immediate enforcement.
Service
The applicant contends that there has been improper service of the bankruptcy notice on him such that this Court should set aside the bankruptcy notice. Despite the submissions of the applicant that “it is clear law that if there is an allegation of defective service, the Court must decide if the service was valid before the matter can proceed: Conrad & Anor v The Owners of Strata Plan No.2795 [2011] FMCA 389 at [27] per Lloyd-Jones FM”, that is not the law. It is, however, common sense given that one of the first enquiries to be made on the hearing of a creditor’s petition based upon an act of bankruptcy constituted by non-compliance with a bankruptcy notice is whether the bankruptcy notice has been served upon the debtor. In Conrad & Anor v The Owners of Strata Plan No.2795 Lloyd-Jones FM was dealing with a creditor’s petition that alleged an act of bankruptcy based upon non-compliance with a bankruptcy notice. The first issue considered by his Honour was whether a bankruptcy notice had been served upon the debtor.
Regulation 16.01 of the Bankruptcy Regulations1996 provides:
16.01 Service of documents
(1) Unless the contrary intention appears, where a document is required or permitted by the Act or these Regulations to be given or sent to, or served on, a person (other than a person mentioned in regulation 16.02), the document may be:
(a) sent by post, or by a courier service, to the person at his or her last‑known address; or
(b) left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility; or
(c) left, in an envelope or similar packaging marked with the person’s name, at the last‑known address of the person; or
(d) personally delivered to the person; or
(e) sent by facsimile transmission or another mode of electronic transmission:
(i) to a facility maintained by the person for receipt of electronically transmitted documents; or
(ii) in such a manner (for example, by electronic mail) that the document should, in the ordinary course of events, be received by the person.
Here, the evidence demonstrates that:
a)on 1 September, 2014 the respondent’s solicitors sent the bankruptcy notice with a letter addressed to the applicant to 3 Phoenix Street, Rochedale;
b)the letter was received by the applicant when his son Ben gave it to him on or about 4 September, 2014.
The applicant contends that notwithstanding that he has received the bankruptcy notice, he has not been properly served with it because:
a)there is no evidence that 3 Phoenix Street, Rochedale was the last known address of the respondent;
b)the giving of the bankruptcy notice to him by his son was not good service for the purposes of the act or the Regulations.
Although there are cases which deal with the setting aside of a bankruptcy notice on the grounds of defective service and it is clear the court has a discretion to grant such relief, I do not propose to set this bankruptcy notice aside for that reason. The bankruptcy notice is still capable of service upon the applicant because the time for service of it has not yet expired. The appropriate time to determine whether the notice has been properly served is upon the hearing of a creditor’s petition when the court must decide if the applicant has committed an act of bankruptcy by not complying with a bankruptcy notice that has been validly served upon him.
Nonetheless, it is clear enough, that the handing of the bankruptcy notice by the applicant’s son to him was not good service of the notice upon the applicant. So much appears from Re Tadeuz Stec; Ex parte: Scragg [1997] FCA 462.
As to whether posting the bankruptcy notice to 3 Phoenix Street, Rochedale was good service, that determination will depend upon the creditor establishing that the address of Phoenix Street, Rochedale was the last known address of the applicant for the purposes of the Regulations. As the applicant points out, presently there is no evidence before the court that the address was the applicant’s last known address as far as the respondent was concerned. What the evidence might demonstrate at the hearing of any creditor’s petition is speculation.
What is clear, however, is that the bankruptcy notice has come to the attention of the applicant.
Reserved costs
The applicant seeks costs relating to an adjournment of these proceedings on 25 September, 2014. He seeks costs having regard to the following, largely uncontroversial facts:
a)on or about 4 September, 2014 the applicant was given the bankruptcy notice in this matter by his son;
b)on 22 September, 2014 the applicant filed this application together with two affidavits, one deposed by the applicant and the other deposed by Harrison Ferris. The application was listed for hearing on 25 September, 2014;
c)on 22 September, 2014 at 4.24pm, the applicant's solicitors sent to the respondent's solicitors by facsimile the application and the 2 supporting affidavits;
d)on 23 September, 2014 at 3.15pm, the applicant's solicitor served the respondent with the application and 2 supporting affidavits by delivering them to the office of the respondent’s solicitors, noted as its address for service in the bankruptcy notice;
e)on 23 September, 2014 at 3.30pm the applicant's solicitors sent a facsimile to the respondent's solicitors which, relevantly:
i)recognised that the notice given by the applicant to the respondent for the hearing of the application was inadequate;
ii)proposed that the parties consent to a 2 week adjournment of the hearing of the application;
iii)advised that if matter remained listed for hearing on Thursday, 25 September 2014, they held instructions to appear at the hearing to seek an adjournment; and
iv)requesting that if the respondent did not agree to the adjournment, it provide written notice of that “by no later than 10.00am on Wednesday, 24 September 2014”;
f)on 24 September, 2014 at 8.09am, the respondent's solicitors sent an open letter to the solicitors for the applicant saying, relevantly, that:
i)the respondent was relying on the efficacy of the bankruptcy notice, the judgments attached to it and it contended that service of the bankruptcy notice was effected properly;
ii)the respondent would consent to dismissal of the application with no order as to costs.
The letter said nothing about the applicant’s suggestion of an adjournment.
g)on 24 September, 2014 at 4.40pm, in a telephone call between the solicitor acting for the applicant and the solicitor acting for the respondent, relevantly:
i)the respondent’s solicitor sought confirmation that the applicant would be seeking an adjournment of the application the following day;
ii)the applicant’s solicitor advised that the applicant intended to proceed with the application;
iii)the respondent’s solicitor advised that the respondent was willing to consent to an adjournment on the basis that costs be reserved and pointed out that the respondent had not been provided with sufficient notice of the application;
iv)the applicant, however, did not agree;
h)at a time which is not clear, the applicant retained Counsel to argue the substantive merits of the application when it became clear on 24 September 2014 that the parties had not reached agreement on the terms of a possible adjournment of the application;
i)on 24 September, 2014 at 4.58pm, the respondent's solicitors received a facsimile from the applicant's solicitors serving 4 further affidavits filed earlier that day by the applicant;
j)on 24 September, 2014 at 5.23pm, the respondent's solicitors received an email from the applicant's solicitors confirming that the applicant would not agree to the adjournment of the application with costs being reserved;
k)on 24 September, 2014 at 5:30 pm the respondent served a Notice of Appearance and an affidavit;
l)on 25 September 2014, at Court:
i)the applicant sought to proceed with the hearing of the application;
ii)the respondent sought and was granted an adjournment of the hearing of the application;
iii)the applicant sought its costs thrown away by the adjournment; and
iv)the court directed that the parties serve short submissions as to the costs of the adjournment by 13 October, 2014;
m)on 2 October, 2014, the applicant filed an affidavit setting out for the first time his grounds in support of the application.
The applicant argues that by their letter of 24 September, 2014 the respondent’s solicitors invited the applicant to do one of two things, namely:
a)capitulate, leaving the bankruptcy notice on foot; or
b)continue with his Application which the respondent contended was bound to fail.
The applicant argues that “Either way, the Applicant was disadvantaged.” However, I do not understand that submission. Whilst the letter has the effect contended for by the applicant, it is difficult to see the disadvantage for the applicant. Having filed the application, presumably the applicant was ready to proceed. That the respondent offered to accept a dismissal of the proceedings without costs penalty, or alternatively would have the application dealt with in court is hardly disadvantageous to the applicant in the sense suggested by him. At the time the respondent’s solicitors sent the letter of 24 September, 2014 the respondent had not filed nor served any material and presumably therefore the applicant was entitled to think that the application would proceed on the basis of his material alone.
As the applicant points out, the letter of 24 September, 2014 does not suggest that the respondent would have any difficulties with meeting the application on its first return date. That is to say, the respondent does not suggest an adjournment. But it did not have to. That is so because the applicant’s solicitor’s letter of 23 September provided:
With regards to this hearing date, we are of the opinion that it fails to provide your client with sufficient time to file any of the documents required by rule 2.06 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth). Further, it does not provide us with a sufficient period of time in which to obtain our client’s instructions with regards to any grounds of opposition and affidavits which your client may rely on at the hearing.
In such circumstances, we are instructed to write to you to propose that the parties consent to adjourning the hearing for two (2) weeks. In circumstances where your client is agreeable to the proposed adjournment, we hold instructions to prepare a consent order to be filed in the Court prior to the hearing. Where the matter remains listed for hearing, we hold instructions to appear at the hearing to seek the adjournment.
Alternatively, where your client does not agree to the proposed adjournment, we ask that you provide your written notice in relation to the same by no later than 10.00am on Wednesday, 24 September, 2014.
By reason of the applicant’s own correspondence, and the response to it, the applicant was entitled to assume that his suggestion of an adjournment was accepted by the respondent. The respondent did not suggest that it opposed the adjournment proposed by the applicant.
The respondent sought an adjournment of the application in part on the basis that the applicant had delivered the evening before the hearing, four further affidavits in support of the application. It was reasonable that the respondent might have an adjournment to consider that material and respond to it if it thought fit to do so.
As matters turned out, the respondent and the applicant each filed further material in support of their positions. In that respect, the respondent argues that the applicant was never in a position to proceed with his application on 25 September, 2014. Contrary to rules 3.02(1)(b)(i) and 3.02(3) of the Federal Circuit Court (Bankruptcy) Rules2006 the applicant had not filed or served an affidavit setting out the grounds of the application. I think that contention is correct. The applicant’s affidavit filed on 2 October, 2014 cured that difficulty.
The adjournment was appropriate because the applicant did not provide the respondent with adequate notice of the hearing or the material to be relied on in that:
a)the application and 2 of the affidavits in support were provided less than 3 clear business days prior to the hearing;
b)contrary to the applicant’s solicitors’ correspondence the previous day, at 4.40pm on the day before the hearing the applicant advised the respondent that it would not be seeking an adjournment of the hearing but rather would be seeking that the application be heard the following day;
c)following that, at 4.58pm on the day before the hearing, the applicant served on the respondent a further 4 affidavits on which he intended to rely at the hearing; and
d)Having unilaterally changed his mind in relation to seeking an adjournment of the hearing, the applicant then refused the respondent's proposal that the hearing be adjourned by consent on the basis that costs be reserved.
I accept the respondent’s submissions that the refusal by the applicant was not reasonable in all the circumstances.
However, the adjournment worked to the benefit of both parties. Both were able to better prepare for the substantive application.
In those circumstances, the costs of the adjournment should be costs in the cause. Having regard to the disposition of the substantive application, the respondent will, accordingly, have those costs as part of its costs of the proceedings.
Conclusion
The costs reserved by the registrar on 24 September, 2014 should be costs in the cause.
The application to set aside the bankruptcy notice must be dismissed with costs.
I make the orders set out at the commencement of these reasons.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 30 January, 2015.
Deputy Associate:
Date: 30 January 2015
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