Neatport Pty Ltd v WATSON
[2011] FMCA 465
•20 April 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| NEATPORT PTY LTD v WATSON | [2011] FMCA 465 |
| BANKRUPTCY – Bankruptcy notice – prima facie entitlement to sequestration order – judgment relied upon for issue of Bankruptcy notice dated outside permitted timeframe for operation of Bankruptcy Act – whether final judgment or final order – whether stay order operated to deny judgment final status – final order – bankruptcy notice issued in time – s.41(3) satisfied. |
| Bankruptcy Act 1966 (Cth), ss.41(3), 41(g), 52(1) Civil Procedure Queensland, Uniform Civil Procedure Rules (Lexis Nexis, subscription service) at [60.15] (update January 2011) |
| Re: Johnson; Ex parte Johnson v Tonkin (1994) 123 ALR 607; (1994) 53 FCR 70 |
| Applicant: | NEATPORT PTY LTD |
| Respondent: | MARK WATSON |
| File Number: | BRG 961 of 2010 |
| Judgment of: | Burnett FM |
| Hearing dates: | 19 and 20 April 2011 |
| Date of Last Submission: | 20 April 2011 |
| Delivered at: | Brisbane |
| Delivered on: | 20 April 2011 |
REPRESENTATION
| Solicitors for the Applicant: | Butler McDermott Lawyers |
| There was no appearance by or on behalf of the Respondent |
ORDERS
That the application filed 21 September 2010 be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 961 of 2010
| NEATPORT PTY LTD |
Applicant
And
| MARK WATSON |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
In this application an issue arises as to whether or not the judgment can be relied upon in support of a sequestration order. Briefly, the history is this. On 30 September 2003 a “judgment” was entered in favour of the creditor against the debtor in the District Court of Queensland in the sum of $94,908.
On 24 May 2010 a bankruptcy notice issued. It purported to rely upon the “judgment” entered 30 September 2003. That notice was served on 30 July 2010. The debtor failed to comply with the notice and, accordingly, an act of bankruptcy was committed on 22 August and, in due course, a creditor’s petition issued on 21 September 2010.
On 9 December 2010 an order was made for substituted service of the creditor’s petition for service by pre-paid post to the debtor and the affixing of a copy of the process to the door of an identified property. On 17 January 2011 service was effected in a substituted manner in compliance with the orders made on 9 December.
Subject to affidavits of debt and search and the issue I am about to address, the applicant is, prima facie, entitled to a sequestration order pursuant to s.52(1) of the Bankruptcy Act1966 (Cth) (The Act).
However, from the chronology it will be immediately apparent that the judgment relied upon for the issue of the bankruptcy notice is dated outside the six years permitted for operation of s.41(3) of the Act. Relevantly, s.41(3) provides as follows:
“(3) A bankruptcy notice shall not be issued in relation to a debtor:
(a) except on the application of a creditor who has obtained against the debtor a final judgment or final order within the meaning of paragraph 40(1)(g) or a person who, by virtue of paragraph 40(3)(d), is to be deemed to be such a creditor;
(b) if, at the time of the application for the issue of the bankruptcy notice, execution of a judgment or order to which it relates has been stayed; or
(c) in respect of a judgment or order for the payment of money if:
(i) a period of more than six years has elapsed since the judgment was given or the order was made; or
(ii) the operation of the judgment or order is suspended under Section 37.”
A question arises here as to whether or not the judgment dated 30 September 2003 is a final judgment or final order within the meaning provided by s.41(g) because the order was, by its terms, stayed.
The precise terms of the orders made on 30 September 2003 were as follows:
(1)The plaintiff has judgment against the first and second defendants for $94,908, together with interest calculated at nine per cent from 14 March 2003 to the date of judgment.
(2)The first and second defendants pay the plaintiff’s costs of and incidental to the proceeding, including the costs of the application for summary judgment.
(3)Enforcement of the judgment or an order for costs be stayed until determination of the defendants’ counter-claim or until further order of the court.
(4)Liberty to the parties to apply.
By a further order made on 2 May 2008 the stay order was lifted by orders in these terms:
(1)The stay of execution of the judgment of Dodds D.C. J entered on 30 September 2003 is lifted.
(2)The defendants have leave to take a new step in the proceeding pursuant to Rule 389(2) of the Uniform Civil Procedures Rules.
(3)The application filed 2 May 2008 return for directions as to how the counter-claim is to proceed is adjourned to 27 June 2008.
(4)The costs of both the plaintiff’s application and the defendants’ application today is to be paid by the defendants on a standard basis.
It is well settled that for a creditor to issue a bankruptcy notice, he must be in the position to effect execution on his judgment at the time when he issues the bankruptcy notice: see Re: Johnson; Ex parte Johnson v Tonkin (1994) 123 ALR 607 at 610.
If the stay order operated to deny the judgment its final status, then the judgment of 30 September 2003 arguably only became final on 2 May 2008, the date on which the stay was lifted. If so, it could be relied upon for the issue of the bankruptcy notice as less than six years would have elapsed since final judgment. Otherwise the judgment is stale and requires leave of the court before enforcement, which such leave was, in any event, granted on 2 May 2008.
The point is now perhaps academic but has been referred by the Registrar for determination. Accordingly, I feel it appropriate to make some observations about the judgment relied upon in support of the issue of the bankruptcy notice.
The Uniform Civil Procedure Rules 1999 (Qld) (UCPR) provide the applicable rules for judgments and orders. UCPR r.659 deals with judgments; it provides:
“Final relief granted in a proceeding started by claim is granted by giving a judgment setting out the entitlement of a party to payment of money or another form of final relief.”
At this point, it is significant to note that the initiating document noted in the instrument titled “Judgment” was stated to be an “application” filed 24 July 2003. Although, as I have observed, the instrument containing the orders is entitled “Judgment”, UCPR r.659 permits judgment only on proceedings stated by “claim”: see UCPR r.8.
Accordingly, the order of 30 September 2003 is more correctly characterised as an “order” and not a “judgment”. The significance of the characterisation is to be found in UCPR r.660 which, relevantly, provides:
“(1) An order is made by:
(a) the order being pronounced in court by the person making the order; or
(b) for a proceeding under chapter 13, part 6, the order being set out in a document, with or without reasons, and signed by the person making the order.
(2) An order takes effect as of the date on which it is made.
(3) However, the court may order that an order takes effect as of an earlier or later date.”
The authors of Civil Procedure Queensland, Uniform Civil Procedure Rules at [660.15] relevantly noted:
“The court may vary the date the order takes effect. Any order (which includes a judgment) made by the court takes effect on the date on which it is made, that is, the date that it is pronounced. However, the court may direct that the order take effect from an earlier or later date: see Rule 660(3). The application of Rule 660(3) may be of use in certain cases where it is important that an order take effect from a different date from which it is made.”
The significance of those observations are apparent on matters of enforcement. UCPR r.799 provides for the enforcement period. Relevantly, it provides:
“(1)An enforcement creditor may start enforcement proceedings without leave at any time within six years after the day the money order was made.”
Clearly, if the order of 30 September 2003 was not to take effect until a later time, as contemplated by UCPR r.660(3), then leave to enforce would not be required until after six years from that later date. This reflects the position that ensured under the former Rules of Supreme Court, as inherited from the practice in the Royal Courts of Justice, and expressed in the Supreme Court practice, the White Book, in particular at Order 45, Rule 6 and the annotations to be found there, which particularly note the effect of the Rule:
“…under which a judgment or order which specifies the time within which an act is required to be done may, by supplemental order of the Court made subsequently, fix another time for the required act to be done.”[1]
[1] See the White Book, Centenary Edition at page 768
It follows that the date of the supplemental order is the date from which enforcement is measured. In this case that is 2 May 2008. As I have already observed, there was an order made that the defendants have leave to take a new step in the proceeding, and it is open to be construed that, in the context of the present application, that, too, entitled the plaintiff similar leave, but I do not need to resolve that issue at this time.
My view is that the order made on 30 September 2003 was, in fact, not a “judgment” but an “order”. By operation of its terms, the order was not meant to take effect until a later order, which later order took effect from 2 May 2008. That order constituted the final order which picked up the original order of 30 September 2003 which, in turn, was relied upon for the issue of the bankruptcy notice. The bankruptcy notice was issued within time and, accordingly, satisfied the requirement of s.41(3) for the issue of a bankruptcy notice.
The only matters that remain outstanding in terms of the creditor’s application, then, are the affidavit of search and of debt, and I will make orders dealing with those matters following which there ought be made a sequestration order in the usual terms.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 21 June 2011
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