Orix Australia Corp Limited v Stephens and Wagensveld

[2005] FMCA 567

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ORIX AUSTRALIA CORP LIMITED v STEPHENS & WAGENSVELD [2005] FMCA 567

BANKRUPTCY – Creditors petition – whether leave to enforce the judgment against the respondents individually required.

Federal Magistrates Act1999
Bankruptcy Act 1966
Uniform Civil Procedure Rules 1999 (Qld)

Re Johnson, Ex Parte Johnson v Tonkin (1994) 123 LAR 607 at 611 and 613
Penning v Steel Tube Supplies Pty Ltd (1988) 80 ALR 689
Abigroup Ltd v Abignano (1992) 39 FCR 74 at 79
In the Marriage of Cawood (2000) 27 Fam LR 403 at 409

Reasonable Endevours Pty Ltd (formerly Asiaciti (Australia) Pty Ltd) v Dennehy (2001) 812 ALR 195

Ex Parte Ide. In re Ide. (1886) 17 QBD 755

Applicant: ORIX AUSTRALIA CORPORATION LIMITED

Respondent: JULIE STEPHENS

File No: BRG 483 of 2004

Applicant: ORIX AUSTRALIA CORPORATION LIMITED

Respondent: JOHN WAGENSVELD

File No: BRG 484 of 2004

Delivered on: 3 May 2005

Delivered at: Brisbane

Hearing date: By written submission

Judgment of: Jarrett FM

REPRESENTATION

Solicitors for the Applicant: Bain Gasteen

No appearance for the Respondents

ORDERS IN BRG 483 of 2004

1. The creditor’s petition presented on 30 August, 2004 be dismissed.

ORDERS IN BRG 484 of 2004

1. The creditor’s petition presented on 30 August, 2004 be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 483 of 2004

ORIX AUSTRALIA CORPORATION LIMITED

Applicant

And

JULIE STEPHENS

Respondent

BRG 484 of 2004

ORIX AUSTRALIA CORPORATION LIMITED

Applicant

And

JOHN WAGENSVELD

Respondent

REASONS FOR JUDGMENT

1. These are creditor’s petitions referred to me for hearing pursuant to section 104(4) of the Federal Magistrates Act1999.  The petitions arise from the same circumstances and the issues that present for determination are common to the two petitions.  It is convenient to deal with them together. 

2. On 31 October 2003 the Magistrates Court of Queensland at Beenleigh ordered that “JW & JA Wagensveld Transport (ABN 22 054 654 382)” pay to the petitioning creditor $51,284.60 inclusive of interest and costs.

3. On 12 July 2004 the petitioning creditor caused bankruptcy notices to issue against the respondents.  One notice was issued to each and only one respondent was named in each notice.  A copy of the judgment was attached to the notice as required by the Bankruptcy Act 1966 (“the Act”).  The bankruptcy notices were properly served on 18 July 2004.

4. On 30 August 2004 the petitioning creditor issued a creditor’s petition against each respondent.  The act of bankruptcy alleged in each petition is the failure by the respondent named in the petition to comply with the bankruptcy notice.

5. The creditor’s petitions came before a Deputy Registrar of this Court for hearing.  The respondents did not appear.  Because the judgment is against “JW & JA Wagensveld Transport (ABN 22 054 654 382)” but separate bankruptcy notices and creditor’s petitions have issued against the respondents individually, the Deputy Registrar declined to deal with the matter and referred the creditor’s petitions to a Federal Magistrate for determination.

6. The petitioning creditor has delivered written submissions in support of the petitions.  No further oral hearing was requested by the petitioning creditor.  The respondents have taken no part in the proceedings.

The judgment

1. The Uniform Civil Procedure Rules 1999 (Qld) govern proceedings in the Magistrates Court of Queensland. Under those rules proceeding may be commenced against a partnership using the partnership name. The relevant rules provide:

   82 Meaning of partnership proceeding

   A partnership proceeding is a proceeding started by or against a partnership in the partnership name and includes a proceeding between a partnership and 1 or more of its partners.

   83 Proceeding in partnership name

   (1) Two or more partners may start a proceeding in the partnership name.

   (2) A proceeding against persons alleged to be partners may be brought against the alleged partnership in the partnership name.

   (3) The partnership name used in a partnership proceeding must be the name of the partnership when the cause of action arose.

   (4) For a partnership registered under the Partnership (Limited Liability) Act 1988, the name of the partnership when the cause of action arose is the name in which the partnership was registered when the cause of action arose.

   (5) Unless the court orders otherwise, a partnership proceeding must continue in the partnership name and not in the name of the individual partners.

   84 Disclosure of partners’ names

   (1) At any stage of a partnership proceeding, a party may by written notice require the partnership to give the names and places of residence of the persons who were partners in the partnership when the cause of action arose.

   (2) The notice must state a time of not less than 2 business days after service of the notice for compliance with the notice.

   (3) If the partnership does not give the information as required by this rule, the court may make an order it considers appropriate, including the following—

   (a) an order staying the proceeding until the information is supplied;

   (b) an order striking out a pleading or affidavit.

   …

   88 Enforcement against individual partner

   (1) On application by a person seeking to enforce an order against partners in the partnership name, the court may give leave for the order to be enforced against a person who is liable to satisfy the judgment.

   (2) The application must be served on the person against whom the order is sought to be enforced.

   (3) Despite chapter 4, the person may be served outside Australia without leave.

   (4) If, on the hearing of the application, the person denies liability, the court may decide liability summarily or give directions about how liability is to be decided.

2. In the present case, the proceedings were commenced against the defendant “JW & JA Wagensveld Transport (ABN 22 054 654 382)".  The petitioning creditor has filed an affidavit attaching the results of a search of the publicly accessible information concerning the Australian Business Number 22 054 654 382.  The search discloses that the entity entitled to use the number is described as a “Family Partnership”.  The persons carrying on the business are Julie Stephens and John Wagensveld.  There is also evidence that when each respondent was served with the bankruptcy notice they acknowledged that they were the person referred to in the bankruptcy notice being served.

3. I find that the present respondents carried on business at the relevant time under the business name “JW & JA Wagensveld Transport (ABN 22 054 654 382)".  I find that the respondents carried on business in partnership with each other.

The bankruptcy notices

1. Section 41 of the Act governs the issue of bankruptcy notices. Relevantly, it provides:

   41 Bankruptcy notices

   (1) An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor:

   (a) a final judgment or final order that:

   (i) is of the kind described in paragraph 40(1)(g); and

   (ii) is for an amount of at least $2,000; or

   …

2. Section 40(1)(g) is relevant. It is in the following terms:

   40 Acts of bankruptcy

   (1) A debtor commits an act of bankruptcy in each of the following cases:

   …

   (g) 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;

3. The phrase “the execution of which has not been stayed” in s.40(1)(g) has a settled meaning. The judgment creditor must be in a position to issue execution on the judgment at both the time when the bankruptcy notice is issued and when it is served: Re Johnson, Ex Parte Johnson v Tonkin (1994) 123 LAR 607 at 611 and 613.  At the time when the bankruptcy notice is issued and when it is served the judgment creditor must have taken all steps necessary to reap the fruits of the judgment:  Penning v Steel Tube Supplies Pty Ltd (1988) 80 ALR 689; Abigroup Ltd v Abignano (1992) 39 FCR 74 at 79; In the Marriage of Cawood (2000) 27 Fam LR 403 at 409 and Reasonable Endevours Pty Ltd (formerly Asiaciti (Australia) Pty Ltd) v Dennehy (2001) 812 ALR 195. If a judgment creditor is not in such a position, the judgment is not one “the execution of which has not been stayed” within the meaning of that phrase as used in s.40(1)(g) of the Act.

4. In Re Johnson, Spender J set aside a bankruptcy notice based upon a final judgment of the Supreme Court of Queensland.  At the time the bankruptcy notice was served more than six years had elapsed since the judgment had been given.  The judgment creditor did not have leave of the Supreme Court to issue execution upon the judgment as the Rules of the Supreme Court required.  Even though there was no order staying execution of the judgment, the judgment creditor was not in a position to issue execution upon it.

5. In Cawood Sackville J set aside a bankruptcy notice that purported to rely upon orders made in the Family Court of Australia.  The wife secured declarations that the husband was liable to pay her certain sums.  She issued a bankruptcy notice when the husband did not pay.  She did not obtain an enforcement order as she was then required to do by O33 r.3(9) of the Family Law Rules.  The notice was set aside because the wife was not in a position to issue execution upon the declaratory orders.  She needed further orders of the Family Court before she could do so.

6. In Reasonable Endevours Marshall J dismissed a creditor’s petition founded upon a debtor’s failure to comply with a bankruptcy notice that relied upon a final judgment of the Supreme Court of Victoria.  Before a warrant of seizure and sale could be issued upon the judgment, leave of the Supreme Court was required.  No such leave was obtained and the judgment creditor had not, therefore, taken all steps necessary to reap the fruits of the judgment.

7. Reference should also be made to Ex Parte Ide. In re Ide. (1886)
   17 QBD 755 because its facts are perhaps most closely aligned to those of the matters presently before me. In that case, the creditor obtained a final judgment in an action against a firm, “Ide & Co”. Execution could immediately issue against the property of the firm. The creditor, however, issued a bankruptcy notice entitled in the names of the partners “trading as Ide & Co.”. The bankruptcy notice was not answered. A petition was issued entitled “In re Leon M. Ide and Edward Godfrey Ide, trading as Ide & Co.”. By the rules of court leave was necessary before execution could issue against the partners individually. No such leave had been obtained. A receiving order against the estate of the one partner served with the petition was made in the first instance. The Court of Appeal, however, allowed the appeal and dismissed the petition. In doing so, Lord Esher, M.R. said at 759:

   It is true that in the present case execution on the judgment has not been stayed, but the words seem to me necessarily to imply that the judgment must be one upon which execution could go immediately, unless it was stayed.  But here execution cannot go immediately whether it is stayed or not; it cannot go without leave of the Court.  I think, therefore, that this is not a final judgment such as is described in sub-s.1(g) on which a bankruptcy notice could issue.

   Bowen L.J. said this at 760:

   We must look carefully at the words to see if there is not an implication to be found in them, and it seems to me that, from the collocation of the words” final judgment” and “execution thereon having not been stayed,” a necessary implication arise of this character viz., that the creditor must not merely have obtained a final judgment but must be in a position to issue immediate execution upon it.

Conclusion

1. Leave to enforce the judgment against the respondents individually is required: UCPR 88(1).  There is no evidence that leave has been given.  The petitioning creditor is not in a position to issue execution on the judgment against either respondent.  The petitions must be dismissed.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Associate:  S Haysom

Date:  4 May 2005