Makucha v Canon Australia Pty Ltd - [2004] FMCA 611

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MAKUCHA v CANON AUSTRALIA PTY LTD

[2004] FMCA 611

BANKRUPTCY – Bankruptcy notice – review of decision of Registrar declining to set aside notice – principles to apply where judgment has been appealed against.

Legal Profession Act 1987 (NSW), s.208M
Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(5), (7)
Federal Court Act
Federal Court Rules

Porter v OAMPS Limited [2004] FMCA 272

Applicant:

PAUL MAKUCHA

Respondent:

CANON AUSTRALIA PTY LIMITED
(ACN 005 002 951)

File No:

SZ 1966 of 2004

Delivered on:

6 September 2004

Delivered at:

Sydney

Hearing date:

6 September 2004

Judgment of:

Raphael FM

REPRESENTATION

For the Applicant:

Applicant in person

Solicitors for the Respondent:

Deacons

ORDERS

Application dismissed.
Applicant to pay the respondent’s costs to be taxed if not agreed in accordance with the Federal Court Act and Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 1966 of 2004

PAUL MAKUCHA

Applicant

And

CANON AUSTRALIA PTY LIMITED
(ACN 005 002 951)

Respondent

REASONS FOR JUDGMENT

These proceedings are a review of a decision of Registrar Hedge sitting as a Registrar of this court dismissing the applicant's motion to set aside Bankruptcy Notice No NN1225/04 made on 3 August 2004. The review of a Registrar's decision is not an appeal but is a hearing de novo. Mr Makucha has taken advantage of this fact to file with the court a number of additional documents, submissions and affidavits. I have also received an affidavit from the respondents being the affidavit of Barry Gordon Richardson dated 2 September 2004. I also have before me the affidavits previously filed including one of Mr Richardson of 3 August 2004.
On 7 August 2002 Mr Makucha commenced proceedings against Canon Australia Pty Limited and a number of other persons associated with that company seeking damages arising out of an incident which took place in the offices of Canon in Bligh Street Sydney on 24 April 2002. Those proceedings wound their way through the District Court system until on 13 June 2003 Acting District Court Judge Boyd-Boland made orders dismissing the proceedings brought by Mr Makucha with an order that he pay the defendant's costs.
Canon had their solicitors prepare a bill of costs for assessment in accordance with the scheme operating under the Legal Profession Act 1987 (NSW). This involved serving upon Mr Makucha copies of the bill and providing him with an opportunity to make representations to the assessor concerning the amount required to be paid. It appears that Mr Makucha did not take that step and eventually an assessment issued. Canon went through the proper procedures under the Legal Profession Act giving Mr Makucha notice of the assessment and again the matter was ignored.
Finally, as was their right, Canon instructed their solicitors to register a judgment in the appropriate court, in this case the Local Court of New South Wales, for the amount of the assessed costs and that was done. The total amount of the judgment registered by the Local Court was $22,611.20 being the amount of the assessed costs plus the sum of $122.00 for the registration. No steps were taken by Mr Makucha to set aside that judgment and so on 19 May 2004 a bankruptcy notice issued for that amount.
Mr Makucha sent to Canon’s solicitors a letter indicating that he wished to invoke s.41(5) of the Bankruptcy Act 1966 (Cth) claiming that there had been an overstatement in the bankruptcy notice to the extent of $192.50. This sum represented certain costs which were due to be paid by the respondent to the cost assessment to the Supreme Court of New South Wales, being the costs of the assessor. In fact, neither the judgment that was registered against Mr Makucha nor the bankruptcy notice which was based upon it contained that figure and in those circumstances I am unable to set aside the bankruptcy notice for the reasons of overstatement.
Mr Makucha today asks not that I set aside the bankruptcy notice so much as I stay it until the bill of costs which has already been assessed can be the subject of a re-assessment following on the acceptance by the Supreme Court of New South Wales of a summons under s.208M of the Legal Profession Act. This summons was only filed by Mr Makucha on 3 September 2004. It is returnable for the first time in the Supreme Court on 30 September. Mr Cruikshank who appears on behalf of Cannon argues that a proper reading of s.208M would indicate that Mr Makucha has made his application to the wrong court because s.208M(2) states:
“A party to an application relating to costs payable as a result of an order made by a court or tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor.”
Mr Cruikshank says that the relevant court or tribunal in this case is the District Court. He may be right in this. Mr Makucha is relying on certain advice received from the Supreme Court registry and it may be that he is entitled to avail himself of subs.(1) of s.208M which appears to relate to the Supreme Court. I am prepared to accept for the purposes of this decision that Mr Makucha's application to the Supreme Court is either properly in that court or can be transferred by that court to the District Court and will be given a hearing.
Mr Makucha has also supplied me with a copy of an amended ordinary statement of claim issued in the Local Court of New South Wales. He alleges that this is a cross-claim of the type referred to in ss.41(7) and 40(1)(g) of the Bankruptcy Act. The difficulty with that submission is that for a cross-claim, set-off or cross-demand to be relevant it must be one which the debtor could not have set up in the actual proceeding in which the judgment or order was obtained. Having read the amended ordinary statement of claim supplied to me by Mr Makucha I am of the view that it is in fact no more than a repeat of the claim which he originally made in the District Court of New South Wales.
This leaves me in the situation where the debtor is seeking to prolong the time for compliance with the bankruptcy notice whilst he effectively attempts to argue that the original judgment should not stand. This is a matter of the type which quite frequently comes before this court and which was considered at some length in Porter v OAMPS Limited [2004] FMCA 272 particularly between [21-24]. At [22] I said:
“With respect, this approach appears to overlook the fact that the service of a bankruptcy notice simply marks the start of a process and that the commission of an act of bankruptcy, while undoubtedly of significance to the debtor, does not affect the actual status of the debtor: Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264; Shephard v Chiquita Brands (South Pacific) Ltd [2001] FCA 1394; Re Geard; Ex parte Reid (unreported Sheppard J, 11 February 1994); Liew v JNS Technologies [1999] FCA 1428; Jenkins v National Australia Bank [1999] FCA 1758; Warner v Frost [1999] FCA 830. The Court in these cases when considering whether to grant an extension of time for compliance with a bankruptcy notice has been mindful of balancing the interests of creditors, noting the potential impact of a later act of bankruptcy in the event that the appeal is unsuccessful and proceedings continue. In Liew v JNS Technologies (supra) Kenny J referred to the comments of Heerey J in Re Nguyen; Ex parte Commissioner of Taxation (1995) 54 FCR 403 at 407:
Extension of time for compliance with the bankruptcy notice may have important adverse consequences for the judgment creditor. For example, if a sequestration order is subsequently made the commencement of the bankruptcy may be later than would otherwise have been the case, which in turn may affect rights of recovery by the trustee in relation to property.
An appropriate safeguard for debtors was seen to exist as the Court is always able to exercise its discretion and adjourn any petition for sequestration until after the appeal has been heard.”
In this case I do not believe it is appropriate to extend the time for compliance with the bankruptcy notice any further. True it is that Mr Makucha has, at last and after a considerable period of time, taken the sort of steps that he should have taken some years ago to deal with the bill of costs filed on behalf of Canon. But there is no guarantee whatsoever that the Supreme Court, or the District Court if that should be the court deciding the matter, will grant him the leave to appeal that he requests. The commission of an act of bankruptcy based upon an existing judgment that has not been complied with should not be prevented because of the possibility that some time in the future at a date unknown he may be granted leave to appeal against the cost assessment.
The fact that I have made this determination does not, of course, prevent Mr Makucha appealing to the court again at a time when a creditor's petition comes to be heard. It may well be that at that time the proceedings in respect of the bill of costs will have been so far advanced that a court may take a more sympathetic attitude to Mr Makucha's plight and will grant an adjournment of the sequestration proceedings pending the appeal for the final determination for the costs assessment procedures. However, in the meantime, matters must proceed. I dismiss the application. I order that the applicant, Mr Makucha, pay the respondent's costs to be taxed if not agreed in accordance with the Federal Court Act and Rules.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: 15 September 2004