Koutavas v Kassem
[2013] FCCA 1166
•27 August 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KOUTAVAS v KASSEM & ANOR | [2013] FCCA 1166 |
| Catchwords: BANKRUPTCY – Application to set aside Bankruptcy Notice – order for costs made in Federal Court – Certificate of Taxation issued – whether it is a final judgment or order. |
| Legislation: Federal Court Rules 2011, rr.40.12, 40.20, 40.32. |
| Cases cited: Abigroup Ltd v Abigano (1992) 39 FCR 74 Australian Energy Ltd v Lennard Oil NL (No. 2) [1988] 2 QdR 230 Cameron v Cole (1944) 68 CLR 571 at 590 Commonwealth Bank of Australia v Muirhead (unreported, Federal Court of Australia, Cooper, Kiefel and Finn JJ, 11 August 1997) Yates Property Corporation Pty Ltd v John Boland [1998] FCA 1605 |
| Applicant: | KANELLA KOUTAVAS |
| Respondents: | OZEM AZZAM KASSEM & BRUNO SECATORE AS JOINT LIQUIDATORS OF PAN PACIFIC AGE CARE SERVICES |
| File Number: | SYG 1116 of 2013 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 22 July 2013 |
| Date of Last Submission: | 22 July 2013 |
| Delivered at: | Sydney |
| Delivered on: | 27 August 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Svehla |
| Solicitors for the Applicant: | Hicksons Lawyers |
| Counsel for the Respondent: | Mr Condon |
| Solicitors for the Respondent: | Sage Solicitors |
ORDERS
The application filed 22 May 2013 is dismissed.
The applicant pay the respondent’s costs as agreed or as assessed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1116 of 2013
| KANELLA KOUTAVAS |
Applicant
And
| OZEM AZZAM KASSEM & BRUNO SECATORE AS JOINT LIQUIDATORS OF PAN PACIFIC AGE CARE SERVICES |
Respondents
REASONS FOR JUDGMENT
Introduction and background
On 6 April 2011 Yates J in the Federal Court made the following orders (in so far as they are relevant to the present proceedings):
Subject to any further order, the Applicant’s costs of this application be treated as part of their costs in the cause as plaintiffs against the second respondent (as third defendant) in the Supreme Court Proceedings.
At paragraph 34 of his Honour’s reasons for judgment he says: “Mrs Koutavas should pay the Applicant’s costs”.
By way of an Application filed 22 May 2013, Kanella Koutavas, the applicant in these proceedings, and the person referred to in order 4 above, asks the court to set aside Bankruptcy Notice BN 158772 issued 5 April 2013. The said Bankruptcy Notice, issued at the request of the Respondents in these proceedings, claim a debt of $25,400 said to be owing by the Applicant as a result of the orders made by Yates J and pursuant to a Certificate of Taxation dated 5 February 2013.
Competing Contentions
The applicant contends that the Bankruptcy Notice is defective as it is not supported by a final judgment or order. In this regard s.40(1)(g) of the Bankruptcy Act 1966 states that a debtor commits an act of bankruptcy:
…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.
Also relevant in this regard is s.40(3)(b), (d) and (e):
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;
(d) a person who is for the time being entitled to enforce a final judgment or final order for the payment of money shall be deemed to be a creditor who has obtained a final judgment or final order;
(e) a judgment or order for the payment of money made by the Court in the exercise of jurisdiction conferred on it by this Act shall be deemed to be a judgment or order the execution of which has not been stayed notwithstanding that it may not be enforceable at law by execution; and
The respondent contends that the certificate of taxation is an order made by a superior court of record. As a result of rules 40.20 and 40.32 Federal Court Rules 2011, the certificate of taxation has the force and effect of an order of the Federal Court and is thus binding on the applicant until set aside, even if made in excess of jurisdiction: Cameron v Cole (1944) 68 CLR 571 at 590 (per Rich J).
Rules 40.20 and 40.32 of the Federal Court Rules state:
Rule 40.20 Estimate of costs
(1) Before a bill is taxed, a taxing officer is to make an estimate of the approximate total for which, if the bill were taxed, the certificate of taxation would be likely to issue.
(2) The estimate in subrule (1) is to be made in the absence of the parties and without making any determination on the individual items in the bill.
(3) The taxing officer will give notice, in writing, to each party interested in the bill, of the estimate made under subrule (1) (the notice of estimate ).
(4) Unless a party interested in the bill objects to the estimate in accordance with rule 40.21, the amount of the estimate is the amount for which the certificate of taxation will be issued.
…
Rule 40.32 Certificate of taxation
(1) A taxing officer is to issue a sealed certificate of taxation, in accordance with Form 132, that must be served, within 14 days after the date it is issued, by the party who filed the bill, on the party responsible for payment of the costs.
(2) A certificate of taxation has the force and effect of an order of the Court.
(3) The costs certified in the certificate of taxation accrue interest, calculated in accordance with rule 39.06 from the date the certificate of taxation is served.
Applicant’s case
The applicant’s case, shortly stated, is that the order of Yates J was not an order within Federal Court Rules r.40.12 which states:
If an order is made in favour of a party for payment of the party's costs, the costs must be taxed in accordance with this Part, unless the amount of costs is agreed between the parties to the order.
This is because the said order is not “made in favour of” the respondent for the payment of costs. It follows, therefore, that the taxation jurisdiction of the Federal Court has not been enlivened, and there is no “certificate of taxation”. Thus the necessary relationship of creditor and debtor does not arise from the order. The applicant contends that the order is not a final order or judgment within s.40(1)(g) of the Act. This is because it is expressed “subject to any further order…”. It is also dependant on costs being awarded in the Supreme Court proceedings involving the parties, and others. The applicant contends that what is missing is a judgment or order that creates a debt payable to the creditor named in the Bankruptcy Notice. Thus the notice is invalid: Abigroup Ltd v Abigano (1992) 39 FCR 74.
Respondent’s case
The respondent’s case, shortly stated, is that it does not matter what the order of Yates J means, it was the basis of an exercise of jurisdiction by the Federal Court that resulted in an order which was enforceable as such under the Federal Court Rules. By this the court infers the respondent to contend, firstly, that the order of Yates J is a final order for s.40(1)(g) purposes but, secondly, even if it were not, the certificate of taxation is an order for the purposes of the Federal Court Rules identified above and as it has not been set aside it is binding on the applicant.
Discussion
The order of Yates J is a final order. That is apparent from paragraph 34 of his Honour’s reasons. The Full Court of the Federal Court of Australia in Commonwealth Bank of Australia v Muirhead (unreported, Federal Court of Australia, Cooper, Kiefel and Finn J, 11 August 1997) upheld the decision of Drummond J at first instance where his Honour said that in accordance with the ordinary rules of construction when considering a judgment, resort may be had to the reasons for judgment (which do not however form part of the judgment itself) to resolve any ambiguity. The principle appears to have been expressed by the Full Court of the Queensland Supreme Court in Australian Energy Ltd v Lennard Oil NL (No. 2) [1988] 2 QdR 230 that, in interpreting an order framed in unambiguous language, regard still be had to the reasons given by the Court for making the order because they form part of a context in which the order was made. In Yates Property Corporation Pty Ltd v John Boland [1998] FCA 1605 (30 November 1998) Drummond J said: “The case for referring to the reasons for an order where there is any suggestion that the order may be expressed on unclear terms is a fortiori”. His Honour clearly intended the order for costs against the applicant in the present case to be a final order. He intended that, for that purpose, the appellant become the debtor of the respondent. The Certificate of Taxation quantified that liability.
Even if the court is wrong in its finding that the order of Yates J was a final order, the effect of the Federal Court Rules set out above makes the Certificate of Taxation a final order of the Federal Court. If, as the applicant contends, the taxation was in excess of jurisdiction, the appropriate remedy is to set it aside. As the Certificate of Taxation creates an order deemed to be an order of the Federal Court, a superior court, it is voidable and not void: Cameron v Cole (1944) 68 CLR 571 at 590 per Rich J.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Associate:
Date: 27 August 2013
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