Lion Finance Pty Ltd v Jeganathan
[2014] FCCA 1165
•19 February 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LION FINANCE PTY LTD v JEGANATHAN | [2014] FCCA 1165 |
| Catchwords: BANKRUPTCY – Bankruptcy notice – document attached to bankruptcy notice – whether the document was a certificate of the judgment giving rise to the notice – whether the document satisfied the requirements of reg.4.01 Bankruptcy Regulations 1996 (Cth) – if the bankruptcy notice was defective could it be cured by s.306 Bankruptcy Act 1966 (Cth) – bankruptcy notice upheld – sequestration order made. |
| Legislation: Bankruptcy Act 1966 (Cth) ss.41, 52, 306 |
| Adams v Lambert (2006) 228 CLR 409 Gorczynski v Perera [2008] FMCA 55 Palasty v Tomko [2008] FMCA 10 Touma v Gold Holdings Pty Ltd [2002] FMCA 233 |
| Applicant: | LION FINANCE PTY LTD |
| Respondent: | PERINBANATHAN JEGANATHAN |
| File Number: | BRG 1171 of 2013 |
| Judgment of: | Judge Burnett |
| Hearing date: | 19 February 2014 |
| Date of Last Submission: | 19 February 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 19 February 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Jones King Lawyers |
No appearance was entered for the Respondent.
ORDERS
A sequestration order be made against the estate of PERINBANATHAN JEGANATHAN.
The applicant creditor’s costs fixed in the sum of $5,929.49 be paid as first charge from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that the date of the act of bankruptcy is 12 December 2013.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 1171 of 2013
| LION FINANCE PTY LTD |
Applicant
And
| PERINBANATHAN JEGANATHAN |
Respondent
REASONS FOR JUDGMENT
(Ex Tempore)
In this application, the creditor applies for the sequestration of the estate of the respondent debtor. Except for the matter I am about to address, the application satisfies the requirements of s.52 Bankruptcy Act 1966 (Cth) (“the Act”), and in my view the applicant creditor is prima facie entitled to the sequestration order that it seeks. However, one issue arises concerning the efficacy of the bankruptcy notice itself. The official receiver issued Bankruptcy Notice BN 164909 on 5 September 2013. On its face, the form of notice appears to follow that provided for by the Bankruptcy Regulations 1996 (Cth) (“the regulations”).
However, it purports to attach an instrument which is said to be a judgment, which of itself is in questionable form. It is this matter that occasions concern which the creditor has properly brought to the court’s attention in the course of the hearing.
The applicant has identified the substantial issue for determination as being whether the document attached to the bankruptcy notice satisfies:
a)the requirements of regulation 4.01(1)(b) of the regulations in that it would be a certificate of the judgment or order sealed by the court or signed by an officer of the court; and
b)the requirement in s.41(2) of the Act that the notice comply with the prescribed form (in referring to an attached copy of the judgment).
Further, if the notice does not satisfy those requirements, the question then arises as to whether the failure is a defect which may be cured by the exercise of discretion under s.306 of the Act. Finally, if the defect is capable of being cured, ought that discretion be exercised?
As I have earlier indicated, the notice itself has attached an instrument which is headed “Magistrates Court of Western Australia (Civil Jurisdiction) Application for Default Judgment – Form 13.” It is self evidently a form of application for default judgment. However, the application is directed generally to the parties relevant to this proceeding, and in particular to the attention of a registrar. It notes that the claimant applies for judgment to be entered, in this case, against the defendant, he not having lodged a response to the claim within the prescribed time. It then particularises relevant material relied upon and put it in the affidavit of service, and further identifies the amount of the liquidated claim, costs on the claim, interest and lawyers’ costs for the application.
At its foot it is signed and dated by the solicitors for the applicant creditor. There is then a solid line across the page and a section below which is part of the form. It provides space for the insertion of a date and space for the insertion of a sum following the words “Judgment given for $.” On the next line and right-hand side justified is a provision for signing by a “Registrar.”
Section 41 of the Act relevantly provides:
“(1) An Official Receiver may issue a bankruptcy notice on the application of a creditor…
…
(2) The notice must be in accordance with the form prescribed by the regulations.”
Relevantly, regulation 4.01 governs applications for bankruptcy notices. It provides:
“(1) Subject to subregulation (2), to apply for the issue of a bankruptcy notice, a person must lodge with the Official Receiver:
(a) an application in the approved form; and
(b) 1 of the following documents in relation to the final judgment or final order specified by the person on the approved form:
(i) a copy of the sealed or certified judgment or order;
(ii) a certificate of the judgment or order sealed by the court or signed by an officer of the court;
(iii) a copy of the entry of the judgment or order certified as a true copy of that entry and sealed by the court or signed by an officer of the court.”
The issue here is whether the instrument attached to the application for the issue of the bankruptcy notice was a “certificate of the judgment … signed by an officer of the court.” If not, can non-compliance with this requirement be waived as a formal defect or irregularity?
Before determining that question, it is necessary to first determine whether or not the attachment of a certificate of the judgment signed by an officer of the court is an essential requirement of s.41. If not, no discretion will then arise under s.306.
The applicant contended that divergence of authority existed, necessitating resolution by this court. That observation is correct, but I consider it can be quickly explained. The three approaches alluded to appear in three cases, they being the decisions of Raphael FM in Gorczynski v Perera [2008] FMCA 55 and Touma v Gold Holdings Pty Ltd [2002] FMCA 233, and the decision of Nicholls FM in Palasty v Tomko [2008] FMCA 10.
In my view, Palasty v Tomko is readily distinguishable. In that case, the relevant bankruptcy notice had attached to it a copy of a judgment of the District Court of New South Wales. The attachment comprised 27 pages of a 52 page judgment. Excluding page number 1, all of the odd-numbered pages were missing from the document. In that instance the applicant contended that the document did not constitute a valid judgment or order for the purposes of the Act, and that as a result the bankruptcy notice was a nullity.
He asserted that the Act required that a bankruptcy notice must be in a form prescribed by the regulations: s.41(2), and that the relevant form, being “Form 1,” stated that there must be attached “a copy of the judgments or orders relied upon by the creditor.”[1] In that case, the applicant contended that the incomplete judgment essentially failed to satisfy the requirement of it being a copy of the judgment relied upon by the creditor.
[1] Palasty v Tomko at [6]-[7].
It was accepted by the applicant that while the document attached to the notice could be regarded as the judicial officer’s pronouncement of a case outcome, that fact alone did not satisfy compliance with any of the documents described in regulation 4.01(1)(b), which documents I have earlier detailed. A review of his Honour’s decision demonstrates that the focus for debate in that instance was on the form of the judgment before his Honour. That is, the judgment included reasons as well as the under itself.
His Honour noted, particularly at [28], the respondent’s emphasis that there is a distinction between a “judgment” and “reasons for judgment,” a matter I do not quibble with except to note one significant matter. That is that the requirement of regulation 4.01(b)(i) was for there to be a copy of a sealed or certified judgment; or (ii) a certificate of judgment sealed by the court or signed by an officer of the court.
Although the matter is not expressly addressed on the facts, it appears evident from his Honour’s remarks at [34] that what was attached to the application for the issue of the bankruptcy notice was a “certified, sealed, or certified copy of the (final) judgment.” That judgment, as I have earlier noted, included not simply the reasons but also the order. It is well accepted that reasons do not constitute the order of a court, but the fact that the reasons might include the order plainly informed his Honour’s views.
In my view, his Honour, in coming to his conclusion, correctly distinguished Touma v Gold Holdings Pty Ltd as a troubling decision. In that case, as in Gorczynski v Perera, the court found that there was no copy of the judgment attached to the bankruptcy notice.[2]
[2] At [38].
His Honour, having been satisfied that in that case the instrument attached to the application for the issue of the bankruptcy notice was indeed a judgment or order which satisfied the terms of regulation 4.01(1)(b)(ii), was able to conclude that s.41 was satisfied, and accordingly the bankruptcy notice was valid.
It is, however, worth examining the decisions in Touma v Gold Holdings Pty Ltd and Gorczynski v Perera because each provide useful illustrations of the application of regulation 4.01(i) to the respective factual circumstances and assist in distinguishing the facts of this case. In Touma v Gold Holdings Pty Ltd the question there concerned whether or not the instrument attached to the application for the issue of the notice satisfied the requirements of the regulations when it was in the form of a letter addressed to the Local Court of New South Wales.
The letter was under the hand of the Registrar. Among other things it noted that the Court had entered a verdict in favour of the defendant, with the plaintiff to pay defendant the sum $9638 for costs within 28 days. On its face it appears to have the effect of an order or judgment. However, the order was one for costs, and it is apparent by reference to his Honour’s remarks that the rules of Court dealing with the costs regime provide for a two-step process.
Section 31 of the Local Courts (Civil Claims) Act 1970 (NSW) provided:
“The entry of a judgment in the records of a court shall be the record of that judgment, and that entry or a copy thereof, certified to be true copy under the hand of the registrar, shall be received as evidence of that judgment.”
Rule 6 of the Local Court rules provided for forms of judgment:
“… Except, where otherwise provided by these Rules or required by the court, it shall not be necessary to file a form of judgment or order unless application is made for a certificate or certified copy thereof.”
Rule 7 then provided for applications for the certificate. His Honour observed that there are forms for a judgment, a request for certificate of judgment and a certificate of judgment, and it was plain that in the context of this situation the letter from the Registrar did not satisfy those matters. Accordingly, it was not a copy of a record in the sense required by the regulations. It followed that the bankruptcy notice was invalid.
In Gorczynski v Perera his Honour was considering a judgment issued in the District Court of New South Wales. In that instance the instrument which was attached to the application for the issue of the bankruptcy notice was described in these terms:
“The debts incurred by Mr Gorczynski were debts for costs pursuant to certificates of determination of costs assessment under s 369 of the Legal Profession Act 2004 (NSW). What are attached to the bankruptcy notice are a series of documents. The first is a document entitled “Registration of judgment” in Form 1 of the Uniform Civil Procedure Rules forms. It refers to the local court and a judgment of $2310.00. The document is not sealed by the court, nor signed by an officer of the court. It is an application for registration of judgment.
Next is a document entitled “Certificate of determination of costs assessment” which refers to a sum of $2310.00 being assessed as the party and party costs in certain proceedings in which Mr Gorczynski is named as the costs respondent. There is a note at the bottom of this document in the following form:
This certificate is on the filing of the certificate in the office or registry of the court having jurisdiction to order the payment of that amount of money …
The next document is an affidavit of Robert Henry Kirby filed in the Local Court deposing to the fact that he was the solicitor for the plaintiffs, that the outcome of the assessment was a determination in the sum of $2310.00 …”
His Honour noted that the applicant’s arguments in that instance were that the documents did not constitute any of the alternative forms of documentation required by the regulations, particularly regulation 4.01(i)(b). He noted that there were forms for a request of a copy of judgment or order and that the respondent was in fact seeking to elevate, in effect, those requests to the status of judgment.
He noted that it was clear that the Civil Procedure Act 2005 (NSW) required a judgment to be entered before it could be enforced. He added that it was a trite statement of law to say that a bankruptcy notice can only issue in respect of an enforceable judgment. He observed that the requirement to obtain an enforceable judgment in respect of a cost assessor’s certificate is for the certificate to be filed and that only then will the judgment be entered.
He noted that the act of filing permits the Court to enter judgment without further ado, but the actual entry is a further step. In his view it was the proof of entry of a final judgment that was required by regulation 4.01. None of the documents annexed to the bankruptcy notice were sealed by the Court or signed by an officer of the Court. They contained Court filing stamps only.
His Honour observed that creditors needed to have annexed to the bankruptcy notice one of the three documents referred to in the regulations. They did not, and accordingly the notice was invalid.[3]
[3] See his Honour’s observations at [5].
This case is distinguishable. The question here is whether or not the instrument attached satisfies the requirements of regulation 4.01(i). In this instance regulation 21 of the Magistrates Court (Civil Proceedings) Rules 2005 (WA) deals with default judgment. It provides:
“… a registrar may, in the absence of the parties, give default judgment against the defendant for a specified amount if –
(a) the claim, or the relevant part of the claim, is for a liquidated amount …”
What was attached to the bankruptcy notice was the application brought by the applicant pursuant to regulation 21. Subsequently the application appears to have been determined. The result of the application was a verdict for the applicant and it was expressed on the lower section of the form by the endorsement of a date and a quantum of judgment, and signed by the Registrar.[4]
[4] I note that the Registrar’s signature has been authenticated by affidavit material filed in the application.
Regulation 78 of the Magistrates Court (Civil Proceedings) Rules 2005 (WA) deals with “Certificate of judgment, requesting.” It provides that if a party wants a certificate of a judgment it must lodge a request for the certificate in an approved form. However, the certificate is merely an instrument of authentication. It is not the judgment itself. The judgment itself is evidenced by the endorsement on the application by the Registrar’s orders made pursuant to regulation 21. I note that that was a common practice in times before the computerisation of Court records, that is to say, most Court files carry endorsements of orders made by the Court rather than the more common practice which is now adopted of parties submitting drafts of orders for later authentication.
In any event, the fact remains that the order is the order made by the Court. When the order is pronounced, what follows, whether it be by operation of regulation 78 or its comparative rules in other Courts, is merely an authentication of orders that have been earlier made. The real issue, as I see it, is whether or not this order constitutes a certificate of the judgment. In the fourth edition of Words and Phrases Legally Defined[5] the term “certificate” is defined. Relevantly, it states:
“Australia ‘A “certificate,” in the ordinary meaning of the term, is “a writing on paper certifying to the truth of something”: see the Macquarie Dictionary, 2nd ed. In Costain International Ltd v Attorney-General (1983) 23 BLR 54, Huggins V-P, in the Hong Kong Court of Appeal, said, at 56, of what is ordinarily conveyed by the term “certificate”:
“As I understand it, a certificate is basically a document which speaks to the truth of some existing fact. Often the fact will be that a person other than the certifier has done something, but it may equally be that the certifier himself has done something or come to some opinion.”’
Joam v Minister for Immigration and Multicultural Affairs [2002] FCA 107 at [14], BC200200501, per Drummond J”
[5] Words and Phrases Legally Defined (LexisNexis, 4th ed, 2007).
It follows, accepting those observations, that the instrument attached to the bankruptcy notice is, in my view, a “certificate.” It is, by its terms, a certificate of judgment as it is purportedly signed by an officer of the Court, namely, the Registrar. Conceptually I see it as being no different to the certificate considered in Palasty v Tomko, except that in that case I apprehend that the document was a certified or sealed copy of the order.
I note that regulation 4.01(i) and (ii) express the requirements as “sealing” or “signing”, that is, those requirements are expressed disjunctively. In other words, only one or other need be satisfied. It does not appear from the rules of the West Australian Magistrates Court that the judgment wants for form. As I have noted, regulation 78 provides for the issue of a certificate of judgment, but that is merely a form of authenticating what has already passed.
The instrument attached to the application for bankruptcy notice is in fact the original judgment and it is that instrument that is relied upon. Its expression and form appears as an endorsement on the application in the place provided in the application for such. In the absence of further guidance from the rules of the West Australian Magistrates Court, its form appears regular. I note that there are no further rules in the Court’s rules that deal with the form of judgments.
It follows that I accept that the judgment satisfies the terms of regulation 4.01(i)(b)(ii) as it is a certificate of the judgment signed by an officer of the Court. It follows that I do not consider it necessary to address the issue of whether or not the power ought be exercised under s.306 as I am satisfied that the bankruptcy notice is valid.
If I am wrong and there was an irregularity in the form (which I do not accept) then I would consider it to be an appropriate case to exercise discretion under s.306 on the basis that any error would constitute a formal defect or irregularity.
It would not have occasioned any confusion in the mind of the debtor as he would have plainly been aware of the judgment and circumstances of the judgment from the form supporting the bankruptcy notice. Consistent with the principles expressed in Adams v Lambert (2006) 228 CLR 409, I would have exercised discretion in favour of the creditor in waiving any such formal defect and/or irregularity.
The application satisfies the requirements of s.52 of the Act. As such I will make a sequestration order in the usual terms.
As the respondent has been unsuccessful, I will direct that he pay the applicant the sum of $5,929.49 by way of costs.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Judge Burnett
Date:5 June 2014
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