Marshall, Wayne Leslie v State of Western Australia
[1998] FCA 847
•17 JULY 1998
FEDERAL COURT OF AUSTRALIA
BANKRUPTCY - Application to stay legal process - enforcement of “fine” and costs - whether probable debt - whether penalty or fine imposed in respect of an offence.
Bankruptcy Act 1966 ss. 60(1), 82.
Occupational Safety and Health Act 1984 (W.A.)
Fines, Penalties and Infringement Notices Enforcement Act 1994 (W.A.)
Re: Lenske; Ex parte Lenske (1986) 9 FCR 532.
Glass v Tarea Management (North Shore) Pty Ltd (in liq) (1990) 95 ALR 752
Re: Bankrupt Estate of Keogh; Ex parte Keogh v Director of public Prosecutions (NSW) (1995) 133 ALR 681
Storey v Lane (1981) 147 CLR 549
Re: Higgins; Ex parte Higgins & Nicholson (1984) 4 FCR 533
WAYNE LESLIE MARSHALL V STATE OF WESTERN AUSTRALIA
WAG 7024 of 1998
R.D. FARRELL JR
PERTH
17 JULY 1998
IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WG 7024 of 1998
BETWEEN: WAYNE LESLIE MARSHALL
APPLICANTAND: STATE OF WESTERN AUSTRALIA
RESPONDENTCOURT: RD FARRELL JR DATE OF ORDER: 17 JULY 1998 WHERE MADE: PERTH
THE COURT ORDERS THAT:
The name of the respondent be amended to “State of Western Australia”.
The application be amended to:
(a) include a new paragraph 2, reading as follows:
“A declaration that proceedings to enforce the order of His Worship Mr Burton made on August 14, 1997, that the Applicant pay costs of $1988.50 be stayed.”
(b) renumber the original paragraph 2 as paragraph 3.
The application be dismissed.
The applicant pay the costs of this application
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WG 7024 of 1998
BETWEEN:
WAYNE LESLIE MARSHALL
APPLICANTAND:
STATE OF WESTERN AUSTRALIA
RESPONDENT
COURT:
RD FARRELL JR
DATE:
17 JULY 1998
PLACE:
PERTH
REASONS FOR JUDGMENT
This is an application under Paragraph 60(1)(b)(ii) of the Bankruptcy Act 1966 for a stay of enforcement proceedings. The name of the respondent was amended at the commencement of the proceedings by consent.
The applicant, Mr Marshall, was prosecuted for an offence under Section 21 of the Occupational Safety and Health Act 1984 (W.A.). The prosecution resulted in an order of the Court of Petty Sessions of Western Australia on 14 August 1997 that Mr Marshall pay a $10,000.00 fine and that he pay the costs of the prosecution amounting to $1,988.50.
Mr Marshall applied under the Fines, Penalties and Infringement Notices Enforcement Act 1994 (W.A.) for a Time to Pay order under which he could pay off the fine and costs in fortnightly instalments. The Time to Pay order was granted and was subsequently amended. It currently requires Mr Marshall to pay $30.00 per fortnight. There is no evidence before me that he has failed to make the payments required of him under the Time to Pay order. There is no evidence that proceedings have been initiated to recover the fine and costs.
After the Time to Pay order was granted, Mr Marshall declared himself bankrupt.
In this application under the Bankruptcy Act, Mr Marshall now seeks a stay of any future proceedings to enforce the Court of Petty Sessions’ order that Mr Marshall pay the $10,000 fine. He also amended the application to seek a stay of proceedings to enforce that Court’s order that Mr Marshall pay the costs of the prosecution.
The relevant terms of Paragraph 60(1)(b) of the Bankruptcy Act 1966 are as follows:
“(1)The Court may, at any time after the presentation of a petition, upon such terms and conditions as it thinks fit:
...(b)stay any legal process, whether civil or criminal and whether instituted before or after the commencement of this subsection, against the person or property of the debtor:
(i)in respect of the non-payment of a provable debt or of a pecuniary penalty payable in consequence of the non-payment of a provable debt; or
(ii)in consequence of his or her refusal or failure to comply with an order of a court, whether made in civil or criminal proceedings, for the payment of a provable debt;...”
The respondent opposes the application on two grounds. First, it contends that the application is premature, given that there has been no “refusal or failure to comply” with the Court of Petty Sessions’ order, and thus no legal proceedings have yet been instituted to enforce that order. Secondly, the respondent contends that Paragraph 60(1)(b)(ii) of the Bankruptcy Act 1966 confers no power to stay any such proceedings, because the order to pay the fine and costs is not “an order... for the payment of a provable debt”.
I will begin by considering the second contention, given that the first objection is a matter that the applicant could readily “rectify”.
“Provable debt” is defined in Subsection 5(1) of the Bankruptcy Act 1966 to mean “a debt or liability that is, under this Act, provable in bankruptcy.
Section 82 of the Act deals with debts provable in bankruptcy. While Subsection 82(1) sets out the general rule that:
“Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.”
the following specific exception is set out in Subsection 82(3):
“Subject to subsection (3A), penalties or fines imposed by a court in respect of an offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy.”
Subsection 82(3A) has no application on the facts of the present case.
Notwithstanding the plain terms of Subsection 82(3), the applicant contends that proceedings to enforce the fine would, for the purposes of Paragraph 60(1)(b)(ii) be a legal process against the applicant as a consequence of his failure to comply with an order of the court for the payment of a provable debt.
The applicant cited several authorities where orders made by courts in criminal proceedings have been held to be provable debts. However, those cases all involved orders to pay specified amounts to other parties in the nature of, for example, restitution[1], compensation under the Companies Code[2], or compensation to the victim of a crime as a condition of a bond[3], whereas the fine in the present case is characterised by the order as a “fine” and is payable to consolidated revenue[4].
[1] Re Lenske; Ex parte Lenske (1986) 9 FCR 532.
[2] Glass v Tarea Management (North Shore) Pty Ltd (in liq) (1990) 95 ALR 752; see also Tarea Management (North Shore) Pty Ltd (in liq) v Glass (1991) 99 ALR 549.
[3] Re Bankrupt Estate of Keogh; Ex parte Keogh v Director of Public Prosecutions (NSW) (1995) 133 ALR 681
[4] See Subsection 21(3) the Occupational Safety and Health Act 1984 (W.A.) and section 60 of the Sentencing Act 1995 (W.A.).
The applicant also relied upon the High Court decision in Storey v Lane[5], which primarily considered the constitutional validity of Section 60(1) of the Bankruptcy Act 1966. In that case, Mr Storey was convicted in the Queensland Industrial Magistrate’s Court of three offences under Queensland industrial relations legislation. The first two charges alleged underpayment of wages and failure to pay holiday pay. The third charge alleged failure to keep time and wages records. On conviction, Mr Storey was ordered to pay fines and costs in relation to all three offences. In relation to the first two charges he was also ordered to pay the amount of wages underpaid and the unpaid holiday pay to the relevant employees.
[5] (1981) 147 CLR 549
The High Court ordered that legal process relating to the first two offences be permanently stayed and that Mr Storey be discharged out of custody; he had been imprisoned in default of payment.
The applicant contended that the High Court’s exercise of the discretion to grant the stay in this case, where part of the amounts payable under the first two offences related to fines and costs, demonstrated that the terms of Section 60(1) should be interpreted very broadly. He urged a construction of sufficient breadth to embrace proceedings to enforce the orders of the Court of Petty Sessions in this case.
However, the stay was awarded by the High Court in that case by reference to Paragraph 60(1)(b)(i), on the basis that the legal process against Mr Storey was “in respect of the non-payment of a ... pecuniary penalty payable in consequence of the non-payment of a provable debt.” The fines imposed by the Industrial Magistrate’s Court against Mr Storey in relation to the first two charges were not held by the High Court to be provable debts. Rather, they were held to be pecuniary penalties payable in consequence of Mr Storey’s non-payment of provable debts (viz, wages and holiday pay).
The fine for the failure to keep time and wages records was not a pecuniary penalty of that type. As Gibbs CJ observed[6]:
[6] 1981) 147 CLR 549 at 558
“...It was not suggested that s 60(1)(b) had any application to the third order, which was not an order in respect of the non-payment of a provable debt, but the applicant has fully served the period of imprisonment for which he was liable under the order on the third conviction.”
Non-payment of the fine and costs for the third conviction was thus no impediment to Mr Storey’s release from custody.
I am satisfied that there is no basis upon which I can exercise a discretion under Section 60(1) of the Bankruptcy Act to stay enforcement proceedings in relation to the fine imposed upon Mr Marshall by the Court of Petty Sessions on 14 August 1997.
The applicant finally contended that the order for costs made the same day, being more in the nature of an order to compensate another party, should be regarded as a provable debt for the purposes of paragraph 60(1)(b)(ii) of the Bankruptcy Act.
The respondent cited In Re Higgins; Ex parte Higgins & Nicholson[7], a decision of Justice Spender of this Court, on this point.
[7] (1984) 4 FCR 533
Justice Spender cited provisions of the relevant legislation which are equivalent to the provisions of the Fines, Penalties and Infringement Notices Enforcement Act 1994 (W.A.) providing for recovery of costs ordered to be paid by an offender in connection with criminal proceedings.
He concluded that the costs so ordered were components of a total sum which has a punitive character, in that non-payment is visited with imprisonment. The costs were therefore properly characterised as penalties imposed by a court in respect of an offence, for the purposes of Subsection 82(3), and thus not provable debts.
Having considered In Re Higgins; Ex parte Higgins & Nicholson and the authorities cited therein, I find that there is also no basis upon which I can exercise a discretion under Section 60(1) of the Bankruptcy Act to stay enforcement proceedings in relation to the costs imposed upon Mr Marshall by the Court of Petty Sessions on 14 August 1997.
Accordingly, I will dismiss the application, and make the usual order as to costs.
I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Judicial Registrar RD Farrell
Associate:
Dated: 17 July 1998
Counsel for the Applicant: Mr D P Nolan Solicitor for the Applicant: Stark, Swann & Nolan Counsel for the Respondent: Mr D J Matthews Solicitor for the Respondent: Crown Solicitor for the State of Western Australia Date of Hearing: 16 July 1998 Date of Judgment: 17 July 1998
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