Re Alvaro, C. Ex Parte Alvaro, C. v Commonwealth of Australia

[1992] FCA 375

Re: COSIMO ALVARO
And: COMMONWEALTH OF AUSTRALIA
No. P330 of 1991
FED No. 375
Bankruptcy
(1992) 36 FCR 148

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA
O'Loughlin J.(1)

CATCHWORDS

Bankruptcy - s.40(1)(g) of the Bankruptcy Act 1966 - meaning of "final judgment" - s.21B(3) of Crimes Act 1914 - when does a certificate in respect of a reparation order become enforceable as a "final judgment".

HEARING

ADELAIDE

#DATE 2:6:1992

Counsel for the Creditor: Mr R.J.P. Chrzaszcz

Solicitors for the Creditor: Australian Government Solicitor

Counsel for the Debtor: Ms C.M. Branson

Solicitors for the Debtor: Patsouries and Associates

ORDER

THE COURT ORDERS:

1. That the Bankruptcy Notice be set aside.

2. That the petition be dismissed.

3 That the respondent pay the applicant's costs to be taxed.
Note: Settlement and entry of order is dealt with in Bankruptcy Rule 124.

JUDGE1

On 14 November 1990, Cosimo Alvaro ("the applicant") was convicted in the Supreme Court of South Australia of certain offences against the provisions of the Crimes Act 1914 (Cth). Acting under the provisions of sub-s.21B(1) of that Act, the learned sentencing Judge ordered the debtor to pay to the Commonwealth, by way of reparation, the sum of $333,333.00. Sub-section 21B(3) provides for "a regime of civil enforcement" of such orders: (see the Explanatory Memorandum referable to the Crimes Legislation Amendment Bill (No.2) 1989). The terms of that sub-section are as follows:

"(3) Where:

(a) the court orders a federal offender to make reparation to the Commonwealth, to a public authority of the Commonwealth or to any other person by way of payment of an amount of money; and

(b) the clerk, or other appropriate officer, of the court signs a certificate specifying:

(i) the amount of money to be paid by way of reparation; and

(ii) the identity of the person to whom the amount of money is to be paid; and

(iii) the identity of the person by whom the amount is to be paid; and

(c) the certificate is filed in a court (which may be the first-mentioned court) having civil jurisdiction to the extent of the amount to be paid; the certificate is enforceable in all respects as a final judgment of the court in which it is filed in favour of the Commonwealth, of that public authority or of that person."

1. A document was issued out of the Supreme Court on 14 November 1990 under the hand of the Clerk of Arraigns. It is entitled: "Crimes Act 1914 Order and Recognisance under paragraph 21B(3)".

2. The body of the document reads as follows:-
   

"I, Kevin Peter Gleeson, Clerk of Arraigns of the Supreme Court of South Australia, hereby certify that on the 14 November, 1990, the court ordered that the defendant is to pay $333,333.00 to Commonwealth by way of reparation in respect of the expenses incurred by reason of the offence for which the defendant has been sentenced."

1. It was common ground that this document is a "certificate" specifying the various matters referred to in sub-paragraph 21B(3)(b). Where the parties fell apart is with respect to the provisions of sub-paragraph 21B(3)(c). Has this certificate been filed in a Court and, if so, in which Court?

2. The Commonwealth proceeded upon the assumption that there had been due compliance with sub-paragraph 21B(3)(c). On 10 May 1991 it applied for the issue of a Bankruptcy Notice; it attached to that application a duplicate sealed copy of the abovementioned document which it described as "a final judgment that had been obtained against the debtor in the Supreme Court". A Bankruptcy Notice issued on the same day and was served on the applicant on 14 August 1991.

3. Section 40 of the Bankruptcy Act 1966 (Cth) ("the Act") identifies the various acts of Bankruptcy. Failure to comply with a Bankruptcy Notice is provided for in paragraph 40(1)(g) in these terms:
   

"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 ... a bankruptcy notice under this Act and the debtor does not-

(i) where the notice was served in Australia - within the time fixed by the Registrar by whom the notice was issued; or

(ii) ...

comply with the requirements of the notice or satisfy the Court that he 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 could not have set up in the action or proceeding in which the judgment or order was obtained."

1. As the debtor neither complied with the Bankruptcy Notice nor sought to set it aside, the Commonwealth issued a creditor's petition on 15 November 1991. In paragraph 4 of the petition it was alleged:
   

"The debtor within six months before the presentation of this petition committed the following act of bankruptcy namely that he failed to comply on or before the 28th day of August 1991 with the requirements of a bankruptcy notice duly served on the 14th day of August 1991 or to satisfy the Court that he had a counterclaim set off or cross demand equal to or exceeding the sum specified in paragraph (a) of the bankruptcy notice."

1. The service of the petition on the debtor on 30 December 1991 evoked a response from the debtor, albeit a delayed response. First, he filed on 12 February 1992 a notice of his intention to appear at the hearing of the petition. It is sufficient for these reasons to say that his main ground of opposition was that the Commonwealth had not obtained a final judgment or order against him. Then on 24 February 1992 he filed an application seeking orders (inter alia) that both the bankruptcy notice and the creditor's petition "be set aside". As the Commonwealth did not take any point about the delay in the filing by the debtor of these documents I will proceed to consider the issue that lies at the heart of the matter - has the relevant certificate been filed in a Court as contemplated by paragraph 21B(3)(c) of the Crimes Act?

2. In my opinion the answer is clearly: No. The physical presence of a copy of the certificate on the Supreme Court file and the act of its issuance cannot amount to a filing of the certificate in the Supreme Court: nor does the annexing of a copy of the certificate to the application for the issue of a Bankruptcy Notice amount to a filing of the certificate in the Federal Court.

3. The thrust of s.21B is, in my opinion, quite clear. It recognises that there will be occasions when the Court that orders reparation will not have the necessary civil jurisdiction to enforce its order; it also recognises that there will be occasions when convenience will dictate that the civil remedies should be enforced in a different Court - perhaps the debtor has moved residence to another State. Thus there is a need for the first Court to issue a certificate so that it can be filed in the second Court and thereby lay the foundation for the certificate to be enforceable "in all respects as a final judgment of the court in which it is filed...". Furthermore, the legislation makes it abundantly clear that this two-fold exercise of issuing a certificate and thereafter filing it in a Court is still to be followed even where the same Court is involved. The filing of a certificate as referred to in paragraph 21B(3)(c), is required in the Court even though it is "the first-mentioned court". The need and justification for this procedure can be tested quite easily. The certificate that was issued by the Clerk of Arraigns originated in the file that was maintained by the Supreme Court with respect to some criminal prosecution that had led to the applicant's conviction and the reparation order. The Commonwealth could not have issued out of the civil jurisdiction of the Supreme Court a Writ of Execution, a garnishee order or any other proceeding that might normally be based on a judgment of that Court because there would be no record in the Registry of the Court that established that the Commonwealth had a judgment against the debtor. That gap would only be filled by the Commonwealth obtaining the requisite certificate from the Clerk of Arraigns and filing it in the Registry. The failure to perform this step was fatal; the Commonwealth must file the requisite certificate before it is enforceable as a final judgment. Although it is not determinative of the issue, it is of some significance to note the endorsement that appears at the foot of the certificate. It reads:
   

"The above certificate when filed in a court of civil jurisdiction is enforceable as a final judgment of the court in which it is filed."

1. This leads to the conclusion that the Bankruptcy Notice was a nullity. As the Commonwealth had never obtained a final judgment or order within the terms of paragraph 40(1)(g) of the Act, it was never entitled to apply for the issue of a Bankruptcy Notice. In my opinion the Bankruptcy Notice should be set aside and the petition should be dismissed. The Commonwealth must pay the debtor's costs.