Rafferty v Australian Competition and Consumer Commission
[2005] FMCA 1142
•12 August 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RAFFERTY v ACCC | [2005] FMCA 1142 |
| BANKRUPTCY – Application to set aside Bankruptcy Notice – whether essential requirement not complied with where certificate for costs not attached – whether costs order ‘final’ order or ‘speaking’ order. |
| Bankruptcy Act 1966, s.41(6A)(b) |
| Bendigo Bank Ltd v Williams (2000) FCA 482 Worchild v The Drink Nightclub (Qld) (Pty Ltd ACN 090 830 854 in the Matter of Worchild (2005) FCA 863 Wainrit v Westpac Banking Corporation [2004] FMCA 669 Re Luckins Ex parte Colombia Pictures Industries Inc v Tristar Pictures Inc (1996) 67 FCR 549 |
| Applicant: | CHESLEY PAUL RAFFERTY |
| Respondent: | AUSTRALIAN COMPETITION & CONSUMER COMMISSION |
| File Number: | PEG 100 of 2005 |
| Judgment of: | McInnis FM |
| Hearing date: | 3 August 2005 |
| Delivered at: | Melbourne (by video link to Perth) |
| Delivered on: | 12 August 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr M De Kerloy |
| Solicitors for the Applicant: | Mony De Kerloy |
| Counsel for the Respondent: | Mr P Fary |
| Solicitors for the Respondent: | Deacons |
ORDERS
The Application filed 19 May 2005 be dismissed.
The Respondent’s costs of and incidental to this Application be costs incidental to any Creditors Petition based on non-compliance with the Bankruptcy Notice the subject of this application.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG100 of 2005
| CHESLEY PAUL RAFFERTY |
Applicant
And
| AUSTRALIAN COMPETITION & CONSUMER COMMISSION |
Respondent
REASONS FOR JUDGMENT
This is an application by Chesley Paul Rafferty (the Applicant) filed on 19 May 2005 seeking to set aside a Bankruptcy Notice pursuant to s.41(6A)(b) of the Bankruptcy Act 1966 (the Act). The Application relies on a submission that an essential requirement of the Bankruptcy Notice has not been complied with namely that as the order relied upon by the creditor was for one for legal costs then the Bankruptcy Notice should have attached to it the appropriate certificate.
Reference is made to the Notes to the Schedule of the prescribed Bankruptcy Notice. In particular, submissions were made concerning Note 1 of the Bankruptcy Notice. To understand the submissions it is appropriate to set out the Schedule relied upon in the Bankruptcy Notice as follows:
Schedule
Column 1
Column 2
1. Amount of judgments or orders
$90,730.00
plus 2. Legal costs if ordered to be paid and a specific amount was not included in the judgments or orders (see Note 1, below)
Nil
plus 3. If claimed in this Bankruptcy Notice, interest accrued since the date of judgments or orders (see Note 2, below)
Nil
4. Subtotal
$90,730.00
Less 5. Payments made and/or credits allowed since date of judgments or orders
Nil
6. Total debt owing
$90,730.00
(NB. Amounts, where applicable, are to be inserted in column 2)
For the Information of the Creditor –
Notes to the ScheduleNote 1:Legal costs (item 2 of the Schedule)
If legal costs are being claimed in this Bankruptcy Notice, a certificate of taxed or assessed costs in support of the amount claimed must be attached to this Bankruptcy Notice.
Note 2:Interest accrued (item 3 of the Schedule)
If interest is being claimed in this Bankruptcy Notice, details of the calculation of the amount of interest claimed are to be set out in a document attached to this Bankruptcy Notice. The document must state:
(a)the provision under which the interest is being claimed; and
(b)the principal sum on which, the period for which, and the interest rate or rates at which, the interest is being claimed.
(NB: If different rates are claimed for different periods, full details must be shown).
By way of background the Bankruptcy Notice was issued by the Official Receiver for Bankruptcy District of Victoria on 13 April 2005. It attached to it an order made by the Registrar of the Court on 27 September 2005. That order provides:
“WHEREAS:
1.On 7 May 2004 the court ordered that the respondents pay the applicant’s costs to be taxed in default of agreement.
2.Pursuant to the Federal Court Rules an estimate was made of the approximate total for which if the bill were taxed, a certificate would issue. A certificate of taxation in the amount of $90,730 issued on 30 August 2004.
3.Service of the certificate of taxation was effected upon the respondents and after 14 days from the date of service the costs remain unpaid.
Pursuant to Order 62 sub-rule 45(3) of the Federal Court Rules, THE COURT HEREBY ORDERS THAT:
The respondents pay to the applicant the sum of $90,730.
DATE ENTERED: 27 September 2004”
The chronology of events and the orders relied upon in the Federal Court are important for a proper understanding of the issue now raised by the Applicant. On 2 October 2003 the Respondent commenced proceedings against Domain Names Australia Pty Ltd (Domain Names) and the Applicant seeking, inter alia, various orders and declarations for breaches of the Trade Practices Act 1974 (Cth) (the TPA). On 27 April 2004 Justice Finkelstein of the Federal Court made orders and declarations in the proceedings and then relevantly for the present purposes on 7 May 2004 ordered further that Domain Names and the Applicant pay the Respondent’s costs of the proceedings and specifically ordered that “such costs to be taxed if not agreed” (the
7 May order).
It is not in dispute that pursuant to the 7 May order the solicitors for the Respondent served a bill of costs on the solicitors for the Applicant on or about 13 July 2004. On or about 6 August 2004 the Federal Court of Australia advised the parties to the proceeding that a certificate of taxation would issue in the sum of $90,730.00 pursuant to the bill of costs. The letter relied upon Order 62 sub-rule 46(3) which provides as follows:-
“(c)Unless within 14 days of receipt of notice under paragraph (b), a party interested files and serves on each other party a notice of objection to the estimate, there shall be no taxation, and the amount of the estimate shall be deemed to be the amount for which a certificate of taxation may issue.
(d)The Registrar must be accept a notice of objection for filing unless the party filing the notice pays into the Litigants’ Fund an amount of $1,250 as security for costs of any taxation of the bill.
(e)Where a notice of objection is filed, the Registrar may direct that subrule (4) apply, or that taxation of the bill proceed.”
Once that procedure under the Rule had been invoked it followed that in the absence of objection as in the present case, that the “amount of the estimate shall be deemed to be the amount for which a certificate of taxation may issue” (See Order 62 sub-rule 46(3)(c)).
Indeed, consistent with the procedure under the relevant Rule in the Federal Court a certificate of taxation in the sum of $90,730.00 was issued on or about 30 August 2004. The certificate was served upon the solicitors for the Applicant by letter dated 1 September 2004. The certificate of taxation provides:
“I hereby certify that pursuant to Order 62 rule 46(3)(c) of the Federal Court Rules the costs of the Applicant have been taxed and allowed at $90,730.00.”
After service of the certificate of taxation and in the absence of any objection a Registrar of the Federal Court made an order on 27 September 2004 as set out earlier in this judgment. It is that order which was annexed to the Bankruptcy Notice.
The ground pursued by the Applicant in support of the Application to Set Aside the Bankruptcy Notice is that the certificate of taxation should have been attached to the Bankruptcy Notice. In my view by implication the submission relies upon a further argument that Note
1 in the Schedule to the Bankruptcy Notice has general application and is not confined to legal costs arising out of Item 2 of the Schedule. In the alternative, it is clear to me that the argument to be advanced for and on behalf of the Applicant would need to include the suggestion that in this instance the Creditor has incorrectly inserted the amount of the judgment of order in Item 1 in Column 1 rather than inserting the amount due under Item 2 in Column 1. It is argued on behalf of the Applicant that where the legislative scheme specifically and unambiguously requires particular matters to be included or stated in a Bankruptcy Notice there is no discretion on a Court to deem some requirements “non essential”. To do so would put the Court ahead of Parliament according to the submissions. Reliance was placed upon the decision of Bendigo Bank Ltd v Williams (2000) FCA 482 at [20]. The failure to attach the costs certificate in the present case it was submitted is a piece of information which the legislative scheme required to be attached (See Regulation 4.02 and Schedule 1 Forms under the Bankruptcy Regulations).
In my view the submission on behalf of the Applicant is misconceived. A proper reading of the Schedule and consideration of the procedure followed in the Federal Court pursuant to the Rules to which reference has been made clearly contemplates that an order can ultimately be made by a Registrar which although relating to costs is an order which stands alone. When one looks at the Schedule and Item 2 of the Schedule under Column 1 it is clear that that item is preceded by the word “plus”. It clearly contemplates circumstances where a judgment or order may be made and then in addition to that judgment or order legal costs may be ordered. It is only when legal costs are then further ordered, that is an amount of judgment or orders is inserted and then in addition to that an order is made for legal costs involving a specific amount not included in the judgment or orders that Item 2 should be completed.
I can see no error where the Creditor in this instance inserts the amount of $90,730.00 in Item 1 of the Schedule as this was clearly the amount of the order made on 27 September 2004 by the Registrar. It would be superfluous to then attach to the Schedule the certificate which was part of the process leading to that final order. I am satisfied that the order made by the Registrar can properly be characterised as a final order and that accordingly the amount of that order should be included in Item 1 of the Schedule. In those circumstances I am satisfied that “Note 1” in the Bankruptcy Notice does not apply and that there is no requirement to attach the certificate.
I am strengthened in that conclusion by authorities referred to by the Respondent in written submissions and in particular the decision of Dowsett J in Worchild v The Drink Nightclub (Qld) (Pty Ltd ACN 090 830 854 in the Matter of Worchild (2005) FCA 863 where His Honour states the following:-
“12 The third point is that the bankruptcy notice does not mirror the judgment. This argument appears to focus upon the distinction in the schedule to the prescribed form of bankruptcy notice between the amount of any judgment or order (which is item 1) and item 2, which relates to legal costs.
13 Item 2 and footnote 1, which is specifically referred to in item 2, contemplate the situation in which an order for costs has been followed by a certificate of taxation, without any further formal order. Such a situation arises under the practice which obtains in some other courts. However it is not relevant where, as here, the judgment creditor has the benefit of a judgment for costs in a specific amount. In those circumstances it is appropriate, as has occurred here, for the judgment creditor to include the amount of the costs in item 1 as an amount owing pursuant to a judgment or order. Item 2 and note 1 are therefore irrelevant.”
That decision of Justice Dowsett delivered on 15 June 2005 appears consistent with a decision of this Court in the matter of Wainrit v Westpac Banking Corporation [2004] FMCA 669 and in particular paragraphs 22 and 23 of the Court’s decision which I stated the following:-
“22.In my view, the insertion of the amount of $500 being costs awarded in this court in accordance with the amended order could not lead to any confusion in the mind of the Applicant and has been appropriately set out in the schedule. Whilst it may be argued that to then insert the further amount of $3349.20, being the costs as taxed by the Master in the Supreme Court following the order of a Justice of that court, could have been set out together with the amount of $500 in column 2 of the schedule, I can see no basis upon which the amount set out as it has been underneath the $500 and next to item 2 being "legal costs if ordered to be paid at a specific amount was not included in the judgment or orders (see Note 1 below)" has to be included in column 2 next to item 1. The attached orders make clear the basis upon which each order has been made and I am satisfied that orders of this kind are orders which can be regarded as two or more final judgments or final orders for the purposes of s.41(1)(b) of the Act. Taken together, they are for an amount of at least $2000 and thereby comply with that provision.
23.In my view, there is no critical defect in the bankruptcy notice in the present case as the relevant and accurate details are set out in the schedule consistent with the annexed orders.”
I accept that applying those authorities as submitted by the Respondent the Bankruptcy Notice is not defective.
The Respondent has further submitted and I accept that the order made by the Registrar on 27 September 2004 could otherwise be properly characterised as a “speaking order” made pursuant to Order 62 Rule 45(3). It is noted that in Re Luckins Ex parte Colombia Pictures Industries Inc v Tristar Pictures Inc (1996) 67 FCR 549 the Debtor had applied to set aside a Bankruptcy Notice based on what was then described as a “speaking order”. In that case Beaumont J states the following:-
“Here, there were two formal judgments, the first by which Hill J ordered the payment of costs, as it were ‘in principle’; and the second by which the Registrar, pursuant to O.62 r45(3), ordered the payment of costs in a specific sum, by quantifying the operation of Hill J’s order. The Registrar’s order was, as has been noted, one which ‘spoke’, so that there could not be scope for any misunderstanding.
…
But in the present case, the Registrar’s order was, by virtue of the provisions of O 62 r 45(3), an order in its own right; and, as Drummond J held in Re Stubberfield; Ex parte Paradise Grove Pty Ltd (1995) 134 ALR 169 at 177 was a ‘final’ order for the purposes of the Act: see also Re Gibbs; Ex parte Triscott (1995) 133 ALR 718; Re Thompson; Ex parte Thompson v Grimley Pty Ltd (1995) 135 ALR 700 at 706 per Spender J.”
Although the prescribed form of the Bankruptcy Notice was revised since the decision of Justice Beaumont in Re Luckins I am satisfied that in the present case the order of the Registrar could be properly regarded as a “final order” or what I described during the course of submissions a “stand alone order” of a type which although relating to costs, is appropriately annexed to the Bankruptcy Notice which in turn refers to the amount of that judgment next to Item 1 in the Schedule.
It follows in my view that the application should fail. I can see no defect in the Bankruptcy Notice.
It perhaps should be noted that if the submissions advanced for and on behalf of the Applicant are correct contrary to the authorities to which
I have referred and my own conclusions, then it would lead to a somewhat unusual outcome where effectively the amount claimed in the Bankruptcy Notice would simply be claimed by reference to a certificate which in all the circumstances has been overtaken by the events leading to a final order made on 27 September 2004 as contemplated by the Federal Court Rules. As a matter of fairness to the Debtor it should also be noted that in any event throughout the process contemplated by the Rules there is no dispute that the Debtor was served with the appropriate certificate which then formed the basis of what I regard as a final order made by the Registrar which has been properly referred to and attached to the Bankruptcy Notice in this instance as an amount due under Item 1 in the Schedule of $90,730.00.
The application shall be dismissed with costs.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 12 August 2005
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