Genovese v BGC Constructions Pty Ltd
[2004] FMCA 850
•9 November 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GENOVESE v BGC CONSTRUCTIONS PTY LTD | [2004] FMCA 850 |
| BANKRUPTCY – Application to set aside second Bankruptcy Notice – whether abuse of process when issued pending court’s decision on earlier application to set aside first bankruptcy notice – Application dismissed – no order as to costs – undesirability of issuing second bankruptcy notice when decision reserved on first notice. |
Genovese v Homestyle Pty Ltd [2004] FMCA 673
| Applicant: | HERCOLE PIETRO GENOVESE |
| Respondent: | BGC CONSTRUCTIONS PTY LTD |
| File No: | WZ 134 of 2004 |
| Delivered on: | 9 November 2004 |
| Delivered at: | Perth |
| Hearing Date: | 9 November 2004 |
| Judgment of: | McInnis FM |
REPRESENTATION
| Applicant: | In person |
| Counsel for the Respondent: | Mr A.W. Buchan |
| Solicitors for the Respondent: | Hotchkin Hanly |
ORDERS
The application be dismissed.
There be no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
WZ 134 of 2004
| HERCOLE PIETRO GENOVESE |
Applicant
and
| BGC CONSTRUCTIONS PTY LTD |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
In this matter Hercole Pietro Genovese (the applicant) by an application filed on 1 October 2004 seeks to set aside a bankruptcy notice number 247 of 2004 which was issued on 8 September 2004 (the second notice). It is important to understand the history of this application and the dispute between the parties. The dispute between the applicant and the respondent as it was then known by its former name ‘Homestyle Pty Ltd’ was the subject of a judgment in this court delivered on 5 October 2004. That judgment was delivered after a hearing which occurred on 28 July 2004 and where written submissions had been received on 6 August 2004.
In that decision the court had dismissed an application by the applicant seeking to set aside bankruptcy notice number 91 of 2004 (the first notice) issued then by Homestyle Pty Ltd, the former name of the current respondent. There is no dispute that ‘Homestyle Pty Ltd’ changed its name to ‘BGC Constructions Pty Ltd’ on 9 July 2003. It is also evident as indicated in the judgment of the court in the previous proceedings that the basis upon which the first bankruptcy notice was issued, were proceedings in the local Magistrate’s Court where the name change of the respondent occurred, but did occur during the course of that litigation and prior to judgment.
The matter of the name change has been dealt with in my reasoning in the earlier judgment. I was not satisfied it was then appropriate, based upon the arguments advanced by the applicant to set aside the first notice for the reasons stated in that judgment.
In the application filed in this court on 1 October 2004 as I have indicated the applicant seeks to set aside what I will describe as the bankruptcy notice. It is not disputed that the second bankruptcy notice appears to have been issued on 8 September 2004 and as I understand it served on 13 September 2004, that is, it was issued and served during a period of time when the decision of this court had been reserved in relation to the first notice.
This matter was listed before me on 5 October 2004 which was the scheduled date for the delivery of my judgment, to which I have referred. On that date I adjourned the hearing of this application to 9 November 2004 and I granted leave to the applicant to file and serve an amended application. He has done that by an amended application filed 12 October 2004. He has otherwise relied upon two affidavits sworn by him. The first, an affidavit sworn 1 October 2004 and the second an affidavit sworn 11 October 2004.
In one sense the arguments raised in the amended application to set aside filed 12 October 2004 have a superficial attractiveness in the sense that what the applicant claims is that the second notice is an abuse of process. He otherwise argues that it doesn’t follow the terms of the judgment and should be struck out. It is clear to me that on a proper analysis of the two bankruptcy notices that they are in fact almost identical, save and except that what appears to have occurred is that the certified judgment now relied upon has been corrected or regularised so that the name of the plaintiff relied upon in the certified copy of judgment in support of the second bankruptcy notice is now the changed name, that is, ‘BGC Constructions Pty Ltd’.
Likewise the second notice itself reflects that change of name and refers to the creditor as ‘BGC Constructions Pty Ltd’ ACN 008 783 248, formerly known as ‘Homestyle Pty Ltd’ ACN 008 783 248. What is perfectly clear to me on a proper reading of the documentation is that there has simply been a change of name. It is important to understand a change of name of creditor is not the same as an entirely different entity with an entirely different ACN number.
I am told from the bar table and accept for the present purposes that the respondent, although issuing the second notice on 8 September 2004 at a time when this court’s decision had been reserved had done so in circumstances which may appear somewhat unusual. It nevertheless did that on the basis that it was anticipated at least that perhaps difficulties might arise with the first bankruptcy notice. Accordingly it then issued a second notice. It is very clear that the motive of the respondent was to ensure that the second notice would be perhaps free of challenge in relation to the identity of the creditor and could be pursued with perhaps a greater degree of confidence than might have been the case if a creditors petition was to be issued based upon the first notice. As it happened the first notice was not set aside. The decision of the court delivered on 5 October 2004 has not been the subject of an appeal. To that extent ironically after the issue of the second notice the decision of the court determined that the first notice should not be set aside.
I can only construe the conduct of the creditor in this case as being conduct undertaken with an abundance of caution and hence the second notice was issued. At the time when the second notice was issued there was correspondence passing between the parties, in particular it is clear that the creditor by letter dated 10 September 2004 advised the applicant debtor by enclosing the second notice that in fact the creditor had elected to proceed with the second notice and to not proceed with the first notice.
The letter provides as follows:
Enclosed is a bankruptcy notice 247 of 2004 in respect of judgment and costs obtained in Local Court plaint 18423 of 2001. Our client BGC Construction Pty Ltd, formerly known as Homestyle Pty Ltd, does not intend to proceed with bankruptcy notice 91 of 2004, the validity of which is currently being considered by the Federal Magistrates Court. Our client elects to proceed with the enclosed bankruptcy 247 of 2004. If you wish to discuss this matter further please do not hesitate to contact Andrew Buchan.
That letter generated a response and essentially the applicant debtor suggested the conduct was an abuse of process and further suggested in other correspondence that the creditor should have sought to discontinue proceedings which, as I understand it, were the subject of the first notice or at least should have, and I interpolate here, perhaps advised the court that it was no longer seeking to rely upon the first notice. The fact is that there is no law that prevents a creditor from issuing a subsequent bankruptcy notice.
In this case I accept that the second notice has been issued in an attempt to regularise the issues which were then of concern to the creditor notwithstanding that this court had reserved its judgment. It is not a practice to be encouraged and whilst I am not prepared to find it is an abuse of process it seems to me that where a court has reserved its decision in a pending application seeking to set aside one bankruptcy notice it is not desirable for a creditor to then issue, without advice to the court, a second bankruptcy notice and by correspondence indicate that it elects to rely upon the second bankruptcy notice and to no longer rely upon the first bankruptcy notice.
Whilst that may not be an abuse of process in one sense, given that the application which was the subject of a reserved decision was an application by the debtor to set aside the first bankruptcy notice it nevertheless in my view is desirable that creditors who make an election of that kind permissible by law should at the very least advise the court accordingly and perhaps the matter could then have been resolved without the need for a formal decision being delivered.
Nevertheless, the chronology of events that has occurred does not of itself preclude the creditor from issuing the second bankruptcy notice issued out of an abundance of caution and perhaps what might be described as a ‘fallback position’ should the first decision of the court be in favour of the applicant debtor to set aside the first notice.
However, the correspondence indicating that an election has been made goes beyond creating a fallback position but rather indicates that a second bankruptcy notice having been issued the creditor then elected to rely upon that notice and not the first notice which was the subject of the reserved decision. As I have made clear I am not prepared to find that that is an abuse of process or that other steps necessarily as a matter of law should have been taken by the creditor in relation to that first notice and the proceedings then the subject of a reserved decision.
Nevertheless it is my view undesirable for the creditor to conduct itself in that manner. This is a particularly difficult process for unrepresented parties and whilst I have made a decision unfavourable to the applicant debtor it is clear to me that there is at least a potential for a degree of confusion in his mind as to what may or may not be permissible by a creditor under the Bankruptcy Act in relation to issuing more than one bankruptcy notice.
I should add that in fairness to the respondent creditor once having issued a second notice it would not be proper for it to then leave in abeyance the issue of which of those bankruptcy notices it elected to proceed with in order to ultimately take further action by way of a creditor’s petition if that was thought appropriate and if necessary, having regard to the period of time allowed for in the second notice. It would in fact be an abuse of process to have two bankruptcy notices current and not elect to pursue one or other of those bankruptcy notices.
Hence as I have indicated I am not prepared to find that the process is an abuse of process and indeed the opposite would be true had an election not been made. My only concern is that where there is a pending application subject to a reserved decision it would be desirable for creditors to advise the court accordingly. In any event that did not occur. The current amended application in my view does not therefore have any basis on which this court can act in terms of setting aside the second notice as I have found there is no abuse of process.
It seems to me that what has happened on this occasion is that the identity of the creditor has been regularised, the corporate identity has changed in name only and in circumstances, particularly having regard to the reasons I delivered in the earlier judgment to which I referred I am satisfied that there is no confusion in the mind of the debtor. In fact again, somewhat ironically, what has happened is that the creditor has regularised both the judgment and the now second notice in a way which addresses concerns earlier expressed by the debtor. It would be a matter for the creditor to consider whether it wishes to then proceed with a petition and of course the debtor who is the applicant in this application may consider what other rights are available to him upon the hearing of any creditors petition if one is filed in the court.
In my view on the material before me there is no basis upon which
I should set aside the second bankruptcy notice. It follows therefore that the application of the applicant should be dismissed and I so order.
Costs
In this matter the respondent has sought costs. That application has been resisted by the applicant who seeks an order of this court that
I should revoke the earlier order of the court made in the judgment delivered on 5 October 2004 in the matter of Genovese v Homestyle Pty Ltd [2004] FMCA 673. It is not appropriate that I should revoke an earlier order for costs in my view. However, the existence of those proceedings and the fact that they were pending at the time when the second notice was issued and an election made in relation to that second notice in my view is a relevant matter to take into account.
In my view there is some force in the submission made by the applicant debtor as to the undesirability of two sets of costs in all the circumstances. The issue of costs is a matter of discretion. I am mindful of the fact that they normally follow the event. In an application to set aside the second notice which has been unsuccessful it would normally be the case that those costs would follow the event with the applicant being required to pay the respondent’s costs of and incidental to the application to set aside.
However, having regard to the undesirability of the lack of notice to the court of the issuing of a second notice and an election to rely upon that notice it seems to me that as a matter of fairness between the parties the court should make no order as to costs. Accordingly in the circumstances the order of the court will be:
(1)The application be dismissed;
(2)There be no order as to costs.
I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 9 November 2004
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