QBSA v Coburn

[2001] FMCA 17

FEDERAL MAGISTRATES COURT OF AUSTRALIA

Name: Queensland Building Services Authority v Mervyn Richard Coburn

Citation No:  [2001] FMCA 17

File No:  BZ 109/00

Catchwords:  BANKRUPTCY – bankruptcy notice – whether order of Queensland Building Tribunal can found notice – whether Court should go behind the judgment – Bankruptcy Act 1966 s40(1)(g); Queensland Building Services Authority Act (1991) s91(2).

Applicant:QUEENSLAND BUILDING SERVICES AUTHORITY

Respondent:  MERVYN RICHARD COBURN

File No:BZ 109/00

Delivered on:  15 March 2001

Delivered at:  Brisbane

Hearing Date:  13 February 2001

Judgment of:  Baumann FM

REPRESENTATION:

Solicitors for the Applicant:             Mr K Hill, Solicitor of Barwicks Wisewoulds Solicitors.

No appearance by the Respondent.
ORDERS:

(1)A sequestration order be made against the estate of Mervyn Richard Coburn.

(2)The Applicant Creditor’s costs, including reserved costs, be taxed and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966.

IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BRISBANE REGISTRY

No BZ 109of 2000

QUEENSLAND BUILDING SERVICES AUTHORITY

Applicant

And

MERVYN RICHARD COBURN

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1.The applicant, Queensland Building Services Authority brings an application for a sequestration order against the estate of the respondent, Mervyn Richard Coburn.

2.The respondent has previously appeared before a Registrar of this Court and expressed an intention to contest the creditors petition filed on 17 October 2000.  He was directed by Registrar Ramsay on 15 December 2000 to file and serve a notice of intention to oppose and any affidavits he intended to rely upon by 19 January 2001.  He has failed to do so.

3.On 2 February, again before Registrar Ramsay, the respondent appeared and said he could not afford the cost of legal representation.

4.On 2 February, he sent a letter addressed to Registrar Ramsay giving his version of events.  The letter is marked exhibit 1.  The contents of the letter is not even remotely in the form of an affidavit, not is it executed under oath.  I am satisfied the respondent was aware the matter was listed before me for hearing on 15 February 2001.

ISSUE

5.The issue which arises for determination is whether the bankruptcy notice is valid, founded as it is upon an order of the Queensland Building Services Tribunal made 12 October 1998.

EVIDENCE

6.The bankruptcy notice (“the notice”) in question issued on 26 May 2000 and was served upon the respondent on 16 September 2000.

7.Paragraph 2 of the notice requires “a copy of the judgment or order relied upon by the creditor” to be attached.  The order that was attached to the notice is an order of the Queensland Building Services Tribunal made 12 October 1998 and certified as correct by the Tribunal chairperson on 26 February 1999.

8.The order provides as follows:-

1.“I find that proper grounds exist for the taking of disciplinary action against the respondent because he failed to comply with a direction to rectify building work, dated 19 December 1997 within the time allocated.

2.That the respondent engage a licensed contractor to carry out the rectification work by 4.00 pm on 9 November 1998.

3.That if the respondent fails to comply with that order that a penalty of $5000.00 be paid to the Authority by 4.00 pm on 16 November 1998.

4.That proper grounds exist for the taking of disciplinary action against the respondent because he carried out building work for which he was required to be licensed under the Queensland Building Services Authority Act 1991 (“the Act”) whilst unlicensed.

5.That, under the circumstances, the respondent shall pay a penalty of seven hundred and fifty dollars ($750.00) to the Authority by 4.00 pm on 9 November 1998.”

9.By s91(2) of the Queensland Building Services Authority Act 1991, a determination by the Tribunal, once registered in the District Court, has the same force and effect as If the determination had been originally given as a judgment of the District Court and entered on the day of registration.

10.I initially expressed some concern as to whether the Tribunal order attached could found the notice.  The Solicitor representing the applicant referred me to Stec v Orfanos (1999) FCA 457, a decision of the Full Court which found it necessary that the order that must be attached to the notice is the order which is “the source of the obligation to pay”.  In that case the Court was concerned, as one issue, which of two orders made in the Supreme Court of South Australia should have been attached.  I am satisfied in this matter that the Tribunal order is the relevant “source” of the obligation.

11.A further issue that arises in the context of the validity of the Bankruptcy notice is whether in fact the order that should have been attached to the notice was the District Court order which came into effect on 22 April 1999 as a result of the filing of the Tribunal order on that date.

12.As Drummond J in Re: Alan Harry Gibbs ex parte Paul Antony Truscott (1995) 65 FCR 80 observed:-

“Only a judgment on which a creditor is entitled to issue execution at the time of the issue of the bankruptcy notice can constitute a final judgment of the find referred to in s40(1)(g) of the Bankruptcy Act see Pepper v McNiece (1941) 64 CLR 642 at 657; Re: Pannowitz; ex parteWilson (1975) 38 FLR 184 at 187-188.”

13.As the Tribunal order had been actually filed in the District Court before the issue of the bankruptcy notice, I am satisfied, in that respect that the order was capable at the requisite time of sustaining execution and the application of all the usual civil enforcement remedies (see also Re: Alvaro; ex parte Alvaro v Commonwealth of Australia (1992) 36 FCR 148).

14.The terms of the order were in effect self-executing if the respondent failed to engage a licensed contractor to carry out rectification work by “4.00 pm on 9 November 1998”.

15.The respondent has failed to adduce any admissible evidence to support his contention in exhibit 1, that:-

“I find that the action taken against myself, to engage a licensed contractor to carry and rectify the work completed on Mr Campbell’s pathway was impractical.  I was unable to engage any contractor interested in completing the work.  During this course I contacted several contractors.  I visited the sight concerned with four of these contractors on various occasions only to be told that they did not wish to be involved.  They gave various reasons as to why they did not wish to engage in the work mostly due to the fact that they could not fault the original work completed and also did not want to be involved with the Building Services Authority even though were licensed contractors”.

16.As its highest, the letter from the respondent might be recognised as an invitation to the Court to go behind or, as it is sometimes expressed in the cases, go around the judgement (see Re: Fraser; ex parte Central Bank of London per Lord Esher MR [1892] 2 QB 633 at 636.

17.It is accepted that a court does have jurisdiction to go behind a judgment to determine whether there is a debt owed to the petitioner: Wren v Mahony (1972) 126 CLR 212;  Corney v Brien (1951) 84 CLR 343.  That is to say, in bankruptcy proceedings the existence of a judgment is only prima facie evidence of a debt, it is not conclusive evidence.

18.In Re: Longo; ex parte Longo (1995) 57 FCR 523 at 527, Cooper J succinctly summarises the law in this area when he said:-

“The existence of a judgment is prima facie evidence of a debt (Re: Re: Fraser; ex parte Central Bank of London [1892] 2 QB 633 at 636).  However, a judgment is never conclusive in bankruptcy and the court has a discretion to go behind a judgment to determine whether there is in truth and reality a debt due (Wren v Mahoney (1972) 126 CLR 212 at 224-225).  Before the court will exercise the discretion there must be established substantial reasons for questioning whether there is in truth and reality a debt owing to the creditor; the court will not inquire into the validity of a judgment debt as a matter of course (Simon v Vincent J O’Gorman Pty Ltd (1979) 41 FLR 95 at 111; Re: David; ex parte Lahood (1979) 26 ALR 306 at 307).  The requirement may more readily be met where there has been no adjudication on the merits, for example a default judgment and there exists a bona fide allegation that no real debt lies behind the judgment (Corney v Brien (1951) 84 CLR 343 at 3537-358; Petrie v Redmond [1943] QSR 71 at 76; Re: Vojnovski; ex parte Malcolm [1970] ALR 355 at 359; Olivieri v Stafford (1989) 24 FCR 413 at 422).

19.Longo’s case dealt with a consent order made by the Queensland Building Services Tribunal.  In this case I am satisfied that:-

(a)in or about 1997, Paul Campbell engaged the respondent to perform building work at 9 Guava Court, Bonogin (the property), and;

(b)on 19 December 1997, the Queensland Building Services Authority directed the respondent to have a licensed contractor rectify and compete certain specified building work at the property, and;

(c)as a result of his failure to comply with the direction, the respondent was ordered by the Queensland Building Services Tribunal on 12 October (in proceedings where the respondent appeared), that  the respondent engage a licensed contractor to carry out the rectification work by 9 November 1998;

(d)the respondent has not, as at 8 February 2000, engaged a licensed contractor to rectify the works as directed, and;

(e)the respondent has taken no action to have the Queensland Building Services Tribunal determination re-heard nor did he appeal the order.

CONCLUSION

20.I am satisfied that there is no basis for me to exercise my discretion to go behind the judgment.

21.I am satisfied that the respondent committed the act of bankruptcy alleged in the petition and I am further satisfied with the proof of the other matters set out in s52(1) of the Bankruptcy Act.

22.I order that:

(1)A sequestration order be made against the estate of Mervyn Richard Coburn.

(2)The Applicant Creditor’s costs, including reserved costs, be taxed and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966.

I certify that the preceding twenty-one (21) paragraphs are a true and correct copy of the Reasons for Judgment of Federal Magistrate Baumann

Associate:
Date: