James v The Owners Strata Plan 11478
[2015] FCCA 3203
•2 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JAMES v THE OWNERS STRATA PLAN 11478 | [2015] FCCA 3203 |
| Catchwords: COSTS – Application for costs against the applicant – whether the order of the Supreme Court of New South Wales was interlocutory in nature – whether issue of bankruptcy notice was appropriate in circumstances where no final judgment existed – whether the Respondent engaged in an abuse of statutory procedure – no basis for making of costs order. |
| Legislation: Bankruptcy Act 1966, ss.27, 41 |
| Licul and Others v Corney [1976] HCA 6; (1994) 180 CLR 213 Mulhern v Official Receiver [2015] FCA 807 |
| Applicant: | JENNIFER ELIZABETH JAMES |
| Respondent: | THE OWNERS STRATA PLAN 11478 |
| File Number: | SYG 1772 of 2015 |
| Judgment of: | Judge Street |
| Hearing date: | 2 December 2015 |
| Date of Last Submission: | 2 December 2015 |
| Delivered at: | Sydney |
| Delivered on: | 2 December 2015 |
REPRESENTATION
| No appearance by or on behalf of the Applicant |
| Solicitors for the Respondent: | Mr Sperber Swaab Attorneys |
ORDERS
The application is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1772 of 2015
| JENNIFER ELIZABETH JAMES |
Applicant
And
| THE OWNERS STRATA PLAN 11478 |
Respondent
REASONS FOR JUDGMENT
This is an application within the Court’s jurisdiction under s.27 of the Bankruptcy Act 1966 (Cth) in relation to an application to set aside the bankruptcy matters. The bankruptcy notice referred to a purported “final judgment” or “final order” in the sum of $6803.73. Annexed to the bankruptcy notice was a judgment in the Supreme Court of New South Wales made and entered on 27 February 2015 that was patently an interlocutory order. Relevantly, it provided as follows:
1. The plaintiff is to pay to the first defendant the following:
(a) $9,900 in reduction of quarterly administrative fund levies and sinking fund levies which were due and payable on each of the following dates, calculated at the rate of $2,475 for each quarter:
(i) 1 January 2013
(ii) 1 April 2013
(iii) 1 July 2013 and
(iv) 1 October 2013
(b) $7,415 in reduction of quarterly administrative and sinking fund levies due on 1 July 2014, 1 October 2014 and 1 January 2015, calculated at the rate of $2,475 for each of these quarters.
2. The total amount in order 1 of $17,315 may be paid by twelve equal instalments of $1,442.91 each by the 27th of each month commencing on Friday 27 March 2015 and ending on 27 February 2016.
…
6. The Court notes that:
(i) these orders are not intended to, and do not determine, the actual amount of any levies due and payable by the plaintiff to the first defendant.
(ii) balancing the respective interests of the plaintiff and the first defendant these orders are made in the Court’s applications list, (a) to provide to the further efficient interlocutory conduct of these proceedings by both parties, and (b) to discourage further applications be either the first defendant or the plaintiff to vary Order 5 before the determination of proceedings at final hearing.
7. Liberty to apply
When the matter came before this Court on 6 November 2015, the Court raised with the parties there appeared to be a real problem with the bankruptcy notice. The respondent asserted that the final judgment or final order arose under order 2 above. The Court said that if the bankruptcy notice was set aside it would not necessarily follow that the Court would make an order in favour of the applicant. The Court said that it may be the position that if even if the applicant succeeded in having the bankruptcy notice set aside, the Court might make an order that the applicant pay the respondent’s costs. The Court said that this may arise as the obvious forum to agitate the applicant’s ability to meet the orders was the ongoing proceedings in the Supreme Court in which the orders were made. The Court pointed out that, if a costs order was made against the applicant, it was likely that the costs would be the subject of a quantified cost order which would then be a final order and enforceable under the Bankruptcy Act 1966.
It was in those circumstances that the Court adjourned the matter until today identifying that it was obviously in the interests of both parties to resolve the matter. In the interim, the applicant has paid the full amount that was demanded in the bankruptcy notice and the solicitors for the respondent have now filed submissions seeking an order for costs in their favour against the applicant on the basis that they have been substantially successful. There is no order to set aside the bankruptcy notice as the applicant has complied with the same and there is no utility in granting the said relief. Further the applicant has not appeared.
The respondent’s submissions point out that ordinarily in relation to an issue of costs, when the subject matter has been resolved, it is not appropriate or necessary for the Court to delve into the underlying merits. That submission fails to take into account what occurred before the Court on 6 November 2015. On that occasion the Court squarely flagged that the bankruptcy notice on its face was one in respect of which the annexed order that was not a final order or final judgment and invited the parties to explore a commercial compromise.
Given the terms recorded in para.6 and the liberty to apply in para.7, it is clear that order 2 on which the bankruptcy notice in the present case was issued, was not a final order within the principles identified in Licul and Others v Corney [1976] HCA 6; (1994) 180 CLR 213; see also Mulhern v Official Receiver [2015] FCA 807.
This is a matter in which there is ongoing litigation between the applicant and the respondent in the Supreme Court of New South Wales. In those circumstances, it was, in my opinion, an abuse of statutory procedure for the respondent to issue a bankruptcy notice in circumstances where it was clear that the order did not meet the requirements of being a final judgment or a final order within s.41 of the Bankruptcy Act.
Of material significance is that the respondent at the time of the issue of the bankruptcy notice, was represented by very experienced and competent legal representatives who would have been well aware of the significance of the requirement under the Bankruptcy Act for a final judgment or final order. In my opinion, it was obvious at the time of issue of the bankruptcy notice to any competent lawyer that the orders in this case did not meet the requirements of being a final judgment or final orders within s.41 of the Bankruptcy Act.
It is an abuse of the statutory procedure to issue a bankruptcy notice in circumstances where it is obvious and known that the requirements of the statute for the issue of the notice do not exist. For that reason alone, I would decline to make an order for costs in favour of the respondent.
Further, it was entirely reasonable for the applicant to file the application to set aside the bankruptcy notice in the present case. I do not regard the circumstances in which payment was made following what was said by this Court on 6 November 2015, as meaning that there was an effective surrender by the applicant. In my opinion, it was unreasonable for the respondent to seek costs in the above circumstances. The appropriate costs order, given the absence of the applicant, required by the interests of the administration of justice in this case, is that no costs order be made.
The application to set aside the bankruptcy notice is dismissed. No order is made as to costs.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Judge Street
Associate:
Date: 3 December 2015
0
2
2