FEDERAL CIRCUIT COURT OF AUSTRALIA
| GOYAL v BATTAGLIA | [2020] FCCA 182 |
| Catchwords: BANKRUPTCY – PRACTICE AND PROCEDURE – Application for order that applicant be permitted to be substituted as petitioning creditor – at the time of act of bankruptcy there had been issued but not registered as a judgment a certificate of costs determining the costs the debtor had been ordered to pay the applicant – whether the amount determined in the costs certificate was a debt payable by the debtor as at the date of the act of bankruptcy – application for substitution granted. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.5(1), 44(1), 49 Legal Profession Act 2004 (NSW), ss.368, 378, 384 |
| Applicant: | RAHUL GOYAL |
| Respondent: | KAREN BATTAGLIA |
| File Number: | SYG 2141 of 2019 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 17 December 2019 |
| Date of Last Submission: | 17 January 2020 |
| Delivered at: | Sydney |
| Delivered on: | 4 February 2020 |
REPRESENTATION
| No appearance by or on behalf of the Applicant |
| Counsel for the Respondent: | Mr S C Ipp |
| Solicitors for the Respondent: | Mills Oakley Lawyers |
| Counsel for the Supporting Creditor, Peter Hillig: | Mr J T Johnson |
| Solicitors for the Supporting Creditor: | Watson Mangioni Lawyers |
ORDERS
Pursuant to s.49 of the Bankruptcy Act 1966 (Cth) Peter Hillig in his capacity as liquidator of ACN 092 745 330 Pty Limited (in Liquidation) be permitted to be substituted as petitioning creditor.
By 18 February 2020 Mr Hillig file and serve an amended creditor’s petition.
The creditor’s petition be listed for directions at a date and time to be determined.
Costs are reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2141 of 2019
| RAHUL GOYAL |
Applicant
And
| KAREN BATTAGLIA |
Respondent
REASONS FOR JUDGMENT
Introduction
By an interim application filed on 4 October 2019 Mr Hillig,…
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Details
- AGLC
- Goyal v Battaglia [2020] FCCA 182
- Case
- [2020] FCCA 182
- Decision Date
CaseChat Overview and Summary
This matter concerned an application by Mr. Goyal to be substituted as the petitioning creditor in bankruptcy proceedings against Ms. Battaglia. The dispute centred on whether a certificate of costs, issued but not yet registered as a judgment in the District Court at the time of the alleged act of bankruptcy, constituted a debt payable by Ms. Battaglia to Mr. Goyal.
The primary legal issue before the court was to determine whether the amount specified in the costs certificate qualified as a debt owed by the debtor at the time of the act of bankruptcy, for the purposes of bankruptcy proceedings. This required the court to consider the legal effect of a costs certificate issued under the relevant legislation, and whether its enforceability as a judgment altered the fundamental nature of the debt it represented.
The court reasoned that, drawing on observations from cases such as *Frumar v The Owners of Strata Plan 36957* and *Zepinic v Chateau Constructions (Australia) Ltd (No.2)*, the issuing of a costs certificate under the *Legal Profession Act* has legal effect from the time of its issue, irrespective of its subsequent registration as a judgment. These authorities indicate that such certificates derive their force from the statute and represent a debt determined by a costs assessor. The court found that the registration of the certificate as a judgment is a ministerial act that makes it enforceable but does not change the character of the debt. Therefore, the costs certificate in this case was considered to have established a debt at the time of its issue, prior to the act of bankruptcy.
The primary legal issue before the court was to determine whether the amount specified in the costs certificate qualified as a debt owed by the debtor at the time of the act of bankruptcy, for the purposes of bankruptcy proceedings. This required the court to consider the legal effect of a costs certificate issued under the relevant legislation, and whether its enforceability as a judgment altered the fundamental nature of the debt it represented.
The court reasoned that, drawing on observations from cases such as *Frumar v The Owners of Strata Plan 36957* and *Zepinic v Chateau Constructions (Australia) Ltd (No.2)*, the issuing of a costs certificate under the *Legal Profession Act* has legal effect from the time of its issue, irrespective of its subsequent registration as a judgment. These authorities indicate that such certificates derive their force from the statute and represent a debt determined by a costs assessor. The court found that the registration of the certificate as a judgment is a ministerial act that makes it enforceable but does not change the character of the debt. Therefore, the costs certificate in this case was considered to have established a debt at the time of its issue, prior to the act of bankruptcy.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
In the same case Giles JA said (emphasis added):[30]First, as Handley AJA has explained, under s 208KF(2) of the Legal Profession Act 1987 (since repealed, see now s 368(5) of the Legal Profession Act 2004) on the filing of the review panel’s certificate it was taken to be a judgment of the District Court. In truth, there was no District Court judgment. So-called judgments under s 208J(3) of the 1987 Act, which is relevantly replicated in s208KF(2), have been considered in Doyle v Hall Chadwick [2007] NSWCA 159 at [47]–[54] and cases there mentioned, with recognition of their distinct nature, and while reference to them as judgments is convenient . . . they take their force from the statute and are not judgments of the court. [30] Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172, at [8] Also relevant is Zepinic v Chateau Constructions (Australia) Ltd (No.2) where McColl JA said:[31] The entry of judgment on a filed certificate of a costs assessor or a review panel is a ministerial act, which makes the certificate enforceable as a judgment but otherwise does not alter its legal effect and does not make it a judgment of the Court . . . [31] Zepinic v Chateau Constructions (Australia) Ltd (No.2) [2013] NSWCA 227 at [76] It is not lightly to be inferred that Beazley ACJ was unaware of these observations; and I am not prepared to infer her Honour was so unaware. For that reason, it is unlikely that her Honour would have intended to make a holding inconsistent with these observations without addressing them. During the hearing before me I referred counsel to my reasons for judgment in Obrart v Grego and, in particular, to that part of my reasons that set out the passages from the judgments of Handley AJA, and Giles JA in Frumar, and McColl JA in Zepinic. I granted the parties leave to file further submissions. In submissions filed after the hearing, counsel for Ms Battaglia submitted that the finding I made in Obrart that the judgment in that case reflected a debt was distinguishable from the facts of the case before me because in Obrart the judgment was entered before the act of bankruptcy. Counsel, however, did not address the observations Handley AJA and Giles JA made in Frumar, and McColl JA made in Zepinic that I set out in Obrart. In my opinion, those observations are inconsistent with what counsel for Ms Battaglia submitted Beazley ACJ held in Wende, namely, that the issuing of a costs certificate has no legal effect until it is registered as a judgment. The passages from the judgments Handley AJA and Giles JA in Frumar, and McColl JA in Zepinic, show that their Honours were of the view that the issuing of costs certificates do have legal effect, and their legal effect is to be ascertained from the statutory provisions pursuant to which costs certificates have been issued. Thus, on the basis of the observations Handley AJA and Giles JA made in Frumar, and McColl JA made in Zepinic, the Relevant Costs Certificate did have legal effect even before it was registered as judgment with the District Court, and the legal effect it did have is to be determined by the relevant provisions of the LPULA Act I have already identified. As I concluded in Obrart, their Honours’ observations support the proposition that the issue of a costs certificate under the 2004 LP Act, assuming it has been issued lawfully, records a debt that has been created as a consequence of a determination a costs assessor had made in the exercise of a power conferred by the 2004 LP Act; and that the judgment that is entered on the basis of such costs certificates does not alter the character of that debt.[32]
Ratio Decidendi
Legal Principle Established
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