Goldberg v Morrow
[2004] FMCA 531
•17 June 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GOLDBERG v MORROW | [2004] FMCA 531 |
| BANKRUPTCY – Application to set aside bankruptcy notice – whether copy of judgment attached to bankruptcy notice served – whether any appeal against judgment debt order on foot – whether any counter claim or set off. Bankruptcy Act1966, s.41(3) Commonwealth Bank of Australia v Horvath (1999) FCA 143, 161 ALR 441 |
| Applicant: | DAVID GOLDBERG |
| Respondent: | DAVID MORROW |
| File No: | MZ 402 of 2004 |
| Delivered on: | 17 June 2004 |
| Delivered at: | Melbourne |
| Hearing Dates: | 7 & 17 June 2004 |
| Judgment of: | Phipps FM |
REPRESENTATION
| Mr D. Goldberg appeared on his own behalf |
| Counsel for the Respondent: | Mr Baker |
| Solicitors for the Respondent: | Victorian Government Solicitor |
ORDERS
The application is dismissed.
The applicant pay the respondents costs of the application.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 402 of 2004
| DAVID GOLDBERG |
Applicant
and
| DAVID MORROW |
Respondent
REASONS FOR JUDGMENT
This is an application to set aside a bankruptcy notice which was issued by the official receiver on 5 March 2004. It was served upon the applicant on 11 March 2004. The bankruptcy notice required payment of a judgment debt of $3,468.85. The judgment debt alleged is an order for costs made by Gillard J in the Supreme Court of Victoria on 24 July 2003.
In that proceeding in the Supreme Court of Victoria, the applicant, Mr David Goldberg, was the plaintiff and the respondent, Mr David Morrow, was the defendant. His Honour's order was:
1. The plaintiff's appeal from the order of Master Wheeler made 23 June 2003 is dismissed.
2. The plaintiff's statement of claim and the amended statement of claim filed 14 July 2003 are struck out.
3. The plaintiff has leave to file and serve an amended statement of claim by 7 August 2003.
4. The plaintiff pay the defendant's costs of the plaintiff's appeal filed 25 June 2003.
By an order made by Master Bruce in the Supreme Court on 9 October 2003, he ordered that the costs of the defendant be taxed and allowed in the sum of $3,822.02. The applicant, the plaintiff in the Supreme Court, applied to review that order of the taxing master. On
14 November, the taxing master treated the application as an application for a re-hearing and on that application he taxed the costs of the defendant and allowed them in the sum of $3,468.85, that being the amount which is claimed in the bankruptcy notice. There were further proceedings before the master. There was a further application to review, which was eventually dismissed on 26 February 2004.
The respondent's case, that is the creditor's case, is that attached to the bankruptcy notice as served upon the debtor was a copy of the order of Gillard J made 24 July 2003 and copies of the orders made by Master Bruce on 14 November 2003, 16 December 2003 and 26 February 2004.
The grounds relied upon in the application to set aside the bankruptcy notice are two, or possibly three. The first is that the debtor claims that a copy of the order of Gillard J made on 24 July 2003 was not attached to the bankruptcy notice. Second, he said he has an appeal pending before the Court of Appeal and also an application for special leave to appeal the High Court. The third ground of appeal may be that he has a set-off or counter-claim, that is, a claim against the creditor for the matters which were the subject matter of the proceeding in the Supreme Court of Victoria.
The debtor gave evidence himself. His evidence was that when he was served with the bankruptcy notice it did not have attached to it a copy of the order of Gillard J. He produced the document which he said he was served with. As he said in his evidence, it had been taken apart and restapled. It had been photocopied. The debtor's evidence, Mr Goldberg's evidence, was that that occurred when he filed his application to set aside the bankruptcy notice. He was told at the registry it was necessary to file a copy of the bankruptcy notice and he said at that point it was taken apart and stapled but he said that he was aware that it did not have attached to it a copy of the order of Gillard J.
The evidence on the part of the respondent creditor was that of Mr McArdle, a solicitor employed in the office of the Victorian Government Solicitor and the solicitor with the conduct of the proceedings on behalf of the creditor; not just this proceeding but, as appears from the material, many other proceedings that the debtor has had or still does have on foot. There was also evidence from the process server, Mr Nogas.
There had been a previous bankruptcy notice served on the debtor. That had been set aside by an order of Registrar Connard. It is common ground that that earlier bankruptcy notice did not have a copy of the order of Gillard J attached to it. It is clear that that was a defect which could not be remedied. It was a fatal defect. The point had been decided by Finkelstein J in Commonwealth Bank of Australia v Horvath (1999) FCA 143, 161 ALR 441 where his Honour considered a situation which was on all fours with this one. The bankruptcy notice relied upon three orders for costs in the Supreme Court of Victoria. They were taxed together and allowed in the sum of $55,864.10. The bankruptcy notice issued to the respondent in respect of the costs orders attached a copy of the order of the taxing master but not copies of the orders pursuant to which the orders were taxed. His Honour Finkelstein J looked at the requirements of the Supreme Court Rules. He said at page 443:
Where, as here, a taxing master undertakes a taxation in consequence of an order made by a judge of the court the taxing master's order is not capable of enforcement. It is not therefore a final judgment order of the Supreme Court and cannot be relied upon to found a petition.
I note in passing that it depends very much on what appears in the rules of the particular court. For instance, the rules of the South Australian Supreme Court provide that the allocator of a taxing master can be enforced in the same manner as a judgment of the court. It has been held by the Full Court of the Federal Court of Australia in Stec v Orfanos (1999) FCA 457 that in South Australia the allocator of the taxing master is the final judgment or final order for the purposes of subsection 41(3) of the Bankruptcy Act. The attachment of the allocator, that is, the taxing master's final order in South Australia, to the bankruptcy notice satisfies the requirement of attaching a copy of the order. But the Supreme Court Rules in Victoria are different and so it is necessary to attach both a copy of the order for costs and of the order of the taxing master fixing those costs.
As I have said, the evidence of Mr Goldberg is that the copy of the bankruptcy notice served upon him that is, the second one, the one I am dealing with, served upon him did not have a copy of the order of Gillard J attached to it. The evidence of both Mr McArdle and Mr Nogas, the process server, is that there was a copy of the order of Gillard J attached to the bankruptcy notice.
The evidence of Mr McArdle is that he personally prepared the bankruptcy notice and he personally put the pieces of paper together which constitute the bankruptcy notice. He personally took three copies of the bankruptcy notice to the office of the official receiver and had them issued. Three were signed and stamped in the office of the official receiver. One was kept in that office, two were returned to Mr McArdle. He then sent one of those documents to Mr Nogas, the process server and Mr McArdle was present when it was served on
11 March 2004. The debtor and Mr McArdle were in Lonsdale Street in Melbourne, outside the Supreme Court where there had been a hearing. Mr Nogas approached the debtor and served him with the documents.
There is some dispute between the process server and the debtor about what precisely was said. The process server gives evidence of going through the formal process of asking the debtor his name, handing the documents to him and asking him if he was the person referred to as the debtor in these proceedings. The debtor’s evidence is that they were simply handed to him. But in any event, there is no dispute that they were served. The dispute is whether or not there was a copy of the order of Gillard J attached to the bankruptcy notice.
When I look at the circumstances surrounding this dispute one thing stands out quite clearly. Mr McArdle, when he was preparing the documents and forwarding them to the process server, would have been acutely aware of the need to have a copy of the order of Gillard J attached to the bankruptcy notice. He had had a previous bankruptcy notice which he had prepared set aside because it had not satisfied that necessary requirement. It is improbable in the extreme that he would not have ensured that a copy of Gillard J's order was attached to the bankruptcy notice when it was issued and when it was sent to the process server.
The process server gives positive evidence that the bankruptcy notice did contain a copy of Gillard J's order. When looking at the surrounding circumstances relevant to the dispute it is highly improbable that Mr McArdle would not have taken the care that he says he did and would not have ensured that the order was attached.
I am satisfied that a copy of the order of Gillard J was attached to the bankruptcy notice which was served upon the debtor on 11 March 2004.
Otherwise, it is not alleged that there are any defects in the bankruptcy notice. None are apparent.
So far as the judgment itself is concerned, and whether or not there is still a matter in dispute because there is an appeal on foot, there has been tendered a copy of the reasons for judgment by the Supreme Court of Victoria on 30 April 2004 where the debtor was the applicant and the creditor was the respondent. The court was constituted by Phillips and Batt JJA. The state of proceedings so far as appeals in the Supreme Court and the appeals are concerned are set out in the judgment of Phillips JA. His Honour said:
This is yet another application of Mr Goldberg in proceeding number 5230 of 2003, the proceeding in which Mr Goldberg filed a writ in the trial division on 3 April 2003 alleging that the respondent had harassed, intimidated and falsely arrested and imprisoned him. There have been a considerable number of interlocutory applications in the proceeding already. On 24 July 2003 Gillard J on appeal from the master struck out the applicant's pleading and ordered costs against him. On 9 October 2003 the master struck out the applicant's amended pleading and dismissed the applicant's proceeding for want of prosecution, again ordering costs against him. On 14 October 2003 Nettle J dismissed an appeal from the master and confirmed the orders made below. On 13 November last the applicant filed a notice of appeal to this court and on 16 April Dodd‑Streeton J and I dealt with an application by him disputing the master's settling of the note of the proposed contents. The appeal to this court remains on foot and we assume is in the course of preparation by the applicant.
The present application arises out of the order for costs made by Gillard J on 24 July 2003. As already stated, by that order his Honour struck out the applicant's pleading and ordered him to pay costs. On 22 August 2003 Ormiston and Batt JJA refused the applicant leave to appeal against those orders and on 9 September the respondent filed a summons for taxation of the costs ordered in his favour on 24 July. On 9 October Master Bruce taxed the costs and allowed them in the sum of $3822.02. On 16 October Mr Goldberg filed a notice of review and Master Bruce ordered that the review be treated as a re‑hearing on 14 November, allowing Mr Goldberg until 11 November to file his notice objection. Notice of objection was filed on 11 November and on 14 November Master Bruce taxed the costs again, this time allowing them in the sum of $3468.85.
On 27 November 2003 Mr Goldberg filed notice of application to review the taxing order made on 14 November. On 16 December the matter came before Master Bruce who fixed 26 February 2004 for the hearing of objections. Apparently, as may be deduced from the “Other matters” recited in the authenticated order, the master pointed out that the application to review did not list the items objected to, the grounds were not related to the costs issue and the applicant did not state what orders were sought. Indeed the master appears to have expressed the opinion that “the application [was] an abuse of process”. Nonetheless a date was fixed for the hearing of objections. On 26 February, Master Bruce dismissed the application to review with costs. Again from the “Other matters” recited in the authenticated order it appears that Mr Goldberg's application was “dismissed for reasons set out in paragraphs 2 to 6 under “Other matters” in the order that Master Bruce 16 December 2003”.(In this quotation the typing mistake is corrected.)
On 1 March 2004, Mr Goldberg filed notice of application to review the order of Master Bruce of 26 February and on 23 March that application came before Dodds‑Streeton J in the Practice Court for hearing and determination. The application was dismissed with costs. On 29 March 2004 Mr Goldberg filed a summons seeking leave to appeal against the orders of Dodds-Streeton J and it is that summons which is now before us.
The application which was before the Court of Appeal was an application seeking leave to appeal against the order of Dodds-Streeton J. That order of her Honour dismissed an application to review a final decision of the taxing master. The Court of Appeal then pointed out that there had not been a copy of the authenticated order of Dodds-Streeton J of 23 March 2004 and there was not an affidavit complying with the rules of the court and the application was dismissed, although Phillips JA in his reasons did say, that if Mr Goldberg wished to renew the application he could do so only in conformity with the rules and procedure and he would need to renew his present application to seek an extension of time.
The evidence of Mr Goldberg, that is, the debtor, was that he had filed an application for special leave to appeal to the High Court, which I think is against that decision of the Full Court to which I have just referred. There is, as far as I can discern from that history, therefore no outstanding appeal application against the primary order, that is, the order of Gillard J made on 24 July 2003. If there is anything outstanding it is an application for leave to appeal against the decision of Dodds-Streeton J, refusing to review the decision of Master Bruce, or it may be Nettle J's order on an earlier occasion.
There is an application for special leave to appeal to the High Court, but otherwise there is no appeal process on foot. There is the possibility of another application for leave to appeal to the Court of Appeal of the Supreme Court of Victoria.
As far as I can tell there is no appeal process on foot against the costs order of Gillard J. What is more important and more significant is that no stay of execution on the costs order has been made. Toohey J pointed out in Re Briggs; Ex parte Briggs v Deputy Commissioner of Taxation (1986) 12 FCR 310 at 312:
A court hearing an application to set aside a bankruptcy notice is not hearing a petition for sequestration and the provisions of sub-s.52(2),whereby a court may dismiss a petition if satisfied that the debtor is able to pay his debts or that for other sufficient cause a sequestration order ought not be made, cannot be imported into such an application. In my view a court faced with an application to set aside a bankruptcy notice is constrained to look only at the regularity of the notice itself (including service) and otherwise at the circumstances surrounding the existence of the judgment debt and any demand which the debtor may have against the creditor for a comparable amount.
What there is, is a judgment debt; the payment of which has not been stayed. The basis for the issuing and service of the bankruptcy notice therefore exists. At best there is some possibility of an application for leave to appeal to the Court of Appeal in Victoria and there is an application for special leave to appeal before the High Court. In those circumstances, I do not see a ground for setting aside the bankruptcy notice based on the fact that there may still be the possibility of some proceedings arising out of the judgment debt itself.
The third possible ground is an allegation of a counter-claim or set-off. That can be dealt with fairly quickly. It could only arise out of the matters which have been the subject matter of the proceedings in the Supreme Court of Victoria. They have been dealt with in the Supreme Court of Victoria and the statement of claim has been struck out. In those circumstances, there is no counter-claim or set-off against the judgment debt which could not have been made in the Supreme Court proceedings.
None of the grounds of application to set aside the bankruptcy notice has been made out and therefore the application is dismissed.
Application has been made for costs. The respondent is the successful party and there is no reason why the ordinary rules as to costs should not apply. I will order that the applicant pay the respondent's costs of the application.
There has been an application for a stay on those costs made by the applicant. The sole basis put forward is that he intends to appeal. That is not a basis on its own in the circumstances of this case, for granting a stay. Once an appeal has been filed, a stay can only be granted by the Federal Court, s.29(1)(a) of the Federal Court Act 1976. There will be no stay on the order for costs.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate: Sherryn Kwong
Date: 31st August 2004
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