Re Barnard Jerome Higgins Ex Parte Bernard Jerome Higgins, Archibald Nicholson
[1984] FCA 392
•23 NOVEMBER 1984
Ex Parte: BERNARD JEROME HIGGINS and ARCHIBALD NICHOLSON
No. 571 of 1984
Bankruptcy
4 FCR 533
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Spender J.(1)
Bankruptcy - application to stay any action or execution upon warrants issued for arrest of bankrupt - prior to sequestration bankrupt found guilty of offences under Builders' Registration and Home-Owners' Protection Act (Qld) - warrants issued for default in payment of fines and costs - application of sub-s. 60(1) of Bankruptcy Act - whether fines and costs ordered to be paid within sub-s. 60(1)(b)(i) - s.82(3) of Bankruptcy Act providing penalties or fines imposed in respect of'offences against a law not provable - application refused.
Bankruptcy Act 1966 ss. 60(1), 82(3)
Builders' Registration and Home-Owners' Protection Act 1979-1983 (Qld) ss. 53, 80, 83
Justice Act 1886-1982 (Qld) ss. 157, 159, 160, 161, 174
Bankruptcy - Whether costs awarded by a court imposing a fine constitute provable debt - Bankruptcy Act 1966 (Cth), ss 60(1), 82(3).
An award by a court of costs in proceedings for a penalty or fine for an offence against a law is but a component part of the total sum which bears a punitive character, is to be characterised as a penalty and is, by reason of the provisions of s 82(3) of the Bankruptcy Act 1966 (Cth) not a provable debt.
Re Bradbury; Ex parte The King (1931) 3 ABC 204; Re Caddies; Ex parte Stapleton (1963) ALR 77; Storey v. Lane (1981) 147 CLR 549, considered.
1984, November 23. #DATE 23:11:1984
APPLICATION
Application for orders pursuant to s 60(1) of the Bankruptcy Act 1966 (Cth).
H Zillman, for the applicant.
P McMurdo, for the respondent.
Cur adv vult
Solicitors for the applicant: Trilby Misso & Co.
Solicitor for the respondent: J C Walker.
GFV
The Application be dismissed.
This is an application by Bernard Jerome Higgins for an order that the Court stay any action or execution upon any warrant against the applicant. I dismissed the application and indicated I would give reasons later.
On 10 September 1984 in Petition No. 849 of 1983 on the petition of Alcan Australia Limited, a sequestration order was made against the estate of Bernard Jerome Higgins ("Mr Higgins").
In or about March 1983, Mr Higgins was served with a complaint containing three counts alleging offences against s.53 of the Builders' Registration and Home-Owners' Protection Act 1979-1983 (Qld). Mr Archibald Nicholson, the Registrar of the Builders' Registration Board of Queensland, was the complainant in respect of those three counts.
In substance the first complaint alleged that between I April 1981 and 30 April 1981 at Moven near Charleville, Bernard Higgins, not being a registered builder, performed building work for Mr and Mrs Cooper, the value of which exceeded $3,000. The second count was that between 17 June and 26 June 1981 at Morven he, not being a registered builder, performed work for Mr and Mrs Sheppard, the value of which work exceeded $3,000. The third count alleged that between 15 July 1981 and 31 July 1981 at Morven he, not being a registered builder, performed work for one Clara Magdalene Johnson, the value of which work exceeded $3,000.
Mr Higgins communicated with the Magistrates Court at Charleville and indicated that he intended to plead guilty. His pleas of guilty in writing were not accepted and he then received a notice of hearing in respect of the three matters. He also received a letter from the solicitors for the complainant, Mr Nicholson, confirming that the matters would be heard on 11 July 1983.
In late July 1983, Mr Higgins received advices of convictions from the said Court advising him that on the first count, he had been fined $100 and ordered to pay costs of $8.22, professional costs of $274.00, $26.50 witness expenses and $200.00 travelling allowance, making a total of $608.72 and further advising him that the fine and costs were due to be paid within three months of 11 July 1983; in default a warrant of commitment would be issued for his imprisonment for one month. In respect of each of the second count and third counts, he was fined $500 and ordered to pay costs of $8.22, professional costs of $274.00, $240 mileage expenses and $26.21 witness expenses, making a total in each case of $1048.43. Those fines and costs were to be paid within three months; in default awarrant of commitment would issue for imprisonment for three months on each count.
Mr Higgins did not appeal or apply for a re-hearing in respect of any of those matters.
In reduction of those amounts, Mr Higgins made a number of small irregular payments to the Magistrates Court office at Charleville. These were credited to the reduction of the amounts ordered to be paid in respect of the first count. Subsequently Mr Higgins' health deteriorated and he required hospitalization in January 1984. He is currently on sickness benefit which is his sole source of income.
In about mid-September 1984, Mr Higgins was notified by the Bribie Island police that they held warrants for his arrest in respect of non-payment of the amounts ordered to be paid, hence this application.
The warrants themselves, or the terms of them, are not before me.
Prior to the Bankruptcy Amendment Act 1980, sub-s. 60(1) of the Bankruptcy Act 1966 was as follows:
"The Court may, at any time after the presentation of a petition, upon such conditions as it thinks fit, discharge an order made against the property or person of a debtor under any law relating to the imprisonment of fraudulent debtors and stay any action, execution or other civil legal process against the property or person of the debtor and discharge him out of custody."and, in a case where the debtor is imprisoned or otherwise held in custody in consequence of the non-payment of a provable debt or of a pecuniary penalty referred to in sub-paragraph (i) or in consequence of his refusal or failure to comply with an order referred to in sub-paragraph (ii), discharge the debtor out of custody."The High Court held in Commissioner for Motor Transport v. Train (1972) 127 CLR 396 that that sub-section did not authorize the discharge out of custody of a person held under criminal process and that prosecutions for offences against the Road Maintenance (Contribution) Act 1958-1969 (N.S.W.) did not constitute civil legal process within the meaning of the sub-section.
The Bankruptcy Amendment Act 1980 repealed sub-s. 60(1) and replaced it by the following sub-section: "(1) The Court may, at any time after the presentation of a petition, upon such terms and conditions as it thinks fit -
(a) discharge an order made, whether before or after the commencement of this sub-section, against the person or property of the debtor under any law relating to the imprisonment of fraudulent debtors and, in a case where the debtor is imprisoned or otherwise held in custody under such a law, discharge the debtor out of custody; or
(b) stay any legal process, whether civil or criminal and whether instituted before or after the commencement of this sub-section, against the person or property of the debtor -
(i) in respect of the non-payment of a provable debt or of a pecuniary penalty payable in consequence of the non-payment of a provable debt; or
(ii) in consequence of his refusal or failure to comply with an order of a court, whether made in civil or criminal proceedings, for the payment of a provable debt,
Gibbs C.J. observed in Storey v. Lane (1981) 147 CLR 549 at pp 555-556:
" . . . The legal process which may be stayed is process instituted against the person or property of the debtor in respect of the non-payment of a provable debt or of a pecuniary penalty payable in consequence of the non-payment of a provable debt, or in consequence of his refusal or failure to comply with an order of a court for the payment of a provable debt. The custody from which the debtor may be discharged is custody in which he is held in consequence of the non-payment of a provable debt or of a pecuniary penalty payable in consequence of the non-payment of a provable debt, or in consequence of his refusal or failure to comply with an order of a court for the payment of a provable debt. Stated shortly,the effect of the provision is to empower the court to relieve a debtor, against whom a petition has been presented, from process (civil or criminal) instituted against him because of his failure to pay a provable debt. The objects of the paragraph are to ensure that if a sequestration order is (or has been) made against the estate of the debtor his assets will be available for administration in the interest of his creditors generally, to prevent one creditor, who has the right to enforce payment of his debt under some other law, from exercising that right so as to gain an advantage over other creditors, and to protect the debtor from punishment because he has not paid the debt when payment might be a breach of the bankruptcy law. . . . "It is to be noted that this is a further amelioration of the position of persons unable to meet their financial obligations. The history of the bankruptcy law has been a steady mitigation of the former power a creditor had to secure the imprisonment of their debtors. The obvious intention of the amendment was to enable a court, in appropriate circumstances, to discharge out of custody a person who was in fact imprisoned because of his failure to pay a provable debt or a penalty payable in consequence of the non-payment of a provable debt or because of his non-compliance with an order to pay a provable debt.
Sub-section 82(3) of the Bankruptcy Act 1966 provides: "(3) Penalties or fines imposed by a court in respect of an offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy."
The first and bravest submission on behalf of Mr Higgins was that the fines and costs ordered to be paid by the Magistrates Court at Charleville for the respective breaches of s.53 of the Builders' Registration and Home-Owners' Protection Act 1979-1983 (Qld) were provable debts.
Indeed for this application to succeed, the amounts that were ordered to be paid by the Magistrates Court at Charleville have to be categorized either as provable debts or as pecuniary penalties payable in consequence of the non-payment of a provable debt within the meaning of s.60(1)(b)(i) of the Bankruptcy Act 1966. It is necessary to have regard to the relevant parts of some Queensland statutory provisions.
Section 53 of the Builders' Registration and HomeOwners' Protection Act 1979-1983 (Qld) provides: ". . .
(2) A person who is not a registered builder shall not - . . .
(b) perform building construction for another whether pursuant to a contract or not; . . . unless the value of the building construction does not exceed $3000 or he is exempt, pursuant to section 56 or 57, from the requirement that he be registered as a registered builder. . . . Penalty: $2000. . . . "Section 80 provides - "(1) A person who contravenes or fails to comply with a provision of this Act commits an offence against this Act.
(2) Proceedings in respect of offences against this Act shall be by way of summary proceeding under the Justices Act 1886-1979 upon the complaint of a person authorized, generally or in a particular case, by the Board in writing. . . "Section 83 provides - "Every pecuniary penalty paid by a person on account of his conviction of an offence against this Act shall be paid to the Board."
Section 157 of the Justices Act 1886-1982 (Qld) provides: "In all cases of summary convictions and orders . . . the justices making the same may, in their discretion, order by the conviction or order that the defendant shall pay to the against this Act shall be paid to the Board."
Section 159 provides - "The sum so allowed for costs shall in all cases be specified in the conviction or order or order of dismissal, or order striking out a complaint for want of jurisdiction."
Section 160 provides -
"The sum allowed for costs in a conviction or order by which a penalty or sum of money is adjudged to be paid shall be recoverable in the same manner and under the same warrants as the penalty or sum of money adjudged to be paid by the conviction or order is recoverable."No provision is made under the Builders' Registration and Home-Owners' Protection Act for imprisonment in default of payment.Section 161 provides - "When any decision adjudges or requires the payment of a penalty or compensation or sum of money or costs and when the Act by virtue of which such decision is made does not expressly provide - . . .
(b) That such person in default of payment of such penalty or compensation or sum of money or costs either immediately or within a time to be fixed by the adjudicating justices is to be imprisoned for any period not exceeding the period stated in such Act, then the adjudicating justices shall in their discretion either direct that the amount of such penalty or compensation or sum of money or costs shall be recoverable by execution against the goods and chattels of the person liable to make such payment or in the alternative direct that in default of payment of such penalty or compensation or sum of money or costs either immediately or within a time to be fixed by them such person shall be imprisoned for any period not exceeding the period stated in this Act or in the Act by virtue of which such decision is made."
Section 174 of the Justices Act provides -
"The period of imprisonment imposed by justices exercising summary jurisdiction under this Act or under any other Act, whether past or future, upon the non-payment of any penalty, compensation, or sum of money or costs, adjudged or required to be paid by a decision, . . . shall, notwithstanding any enactment to the contrary in any past Act, be such period as in the opinion of the justices will satisfy the justice of the case, but not exceeding in any case the maximum fixed by the following scale, that is to say - Where the amount of the sum the period of or sums of money adjudged or imprisonment required to be paid shall not (including costs) - exceed - . . . Exceeds $500 6 months"Section 82(3) of the Bankruptcy Act makes it quite clear that fines or penalties imposed in respect of offences are not provable debts.
Before me some attempt was made to distinguish that part of the order made by the Magistrates Court at Charleville which is described as a fine and the other items ordered to be paid which are generally described as costs.
In respect of that submission some observations may be made. First, the provisions of the Justices Act to which I have above referred make it plain that those items are but components of a total sum which has a punitive character in that non-payment of which is visited by imprisonment. They are, in my view, properly to be characterized as penalties imposed by a Court in respect of an offence.
Secondly, useful reference may be made to two Australian cases: Re Bradbury; Ex parte The King (1931) 3 A.B.C. 204 and Re Caddies; Ex parte Stapleton (1962) 19 ABC 155.
In Re Bradbury, the bankrupt before sequestration had been charged under the Game Act 1928 (Vic) with certain offences under that Act and had been convicted and fined 1,000 pounds and ordered to pay 22 pounds 14s.6d. costs. The fines and costs being unpaid at the date of the sequestration order, a proof of debt was lodged on behalf of His Majesty for 1,022 pounds 14s.6d., as a debt due to the Crown. The Official Receiver rejected the proof of debt on the ground that being a fine the debt was not a debt provable in the bankruptcy. It was held by Mr Justice Lukin that the proof of debt was rightly rejected.
In Re Caddies, supra, Caddies was convicted on 9 April 1962 in a police court on a charge of false pretences, fined 10 pounds and ordered to make restitution in the sum of 250 pounds in default of payment within 3 months to be imprisoned for 3 months. On 26 June 1962, a sequestration order was made against the estate of Caddies and on 18 September 1962, he was arrested and imprisoned for non-compliance with the order made on 9 April 1962. An application was made to the Court for a discharge of the order insofar as it required Caddies to make restitution in the sum of 250 pounds and for the consequential release of Caddies from prison. Mr Justice Gibbs (as he then was) held that the then s.63(1) of the Bankruptcy Act 1924 did not enable the Court to discharge from custody a debtor who was serving a sentence of imprisonment imposed on conviction for a crime, that it did not give power to stay a legal process of a punitive character or to discharge a bankrupt from imprisonment imposed as a punishment.
It was submitted on behalf of Caddies that the order of the police court insofar as it dealt with restitution was a "legal process against the property or person of the debtor" within sub-s. (1) of s.63 as it then stood, and that the Court therefore had the power to stay the process and discharge Caddies out of custody. The submission was that Gibbs J. should exercise his discretion in Caddies' favour on the ground that it was unjust that Caddies should be kept in prison, since once the sequestration order was made, all Caddies' property became vested in the Official Receiver, and, if he had any money, he could not have used it to make restitution to the person to whom restitution was ordered. Mr Justice Gibbs in refusing the application said at p.158: "In the present case, it is quite clear that the order of the police court was of a punitive character. The power to make the order arose when Caddies was convicted of a criminal offence. The magistrate then had a discretion under s.444 of The Criminal Code as to whether or not he should order the offender to make restitution and once he decided to make such an order he had further to consider whether in the exercise of his discretion under s.161 of The Justices Acts, he should order that the offender should be imprisoned in default of payment of the sum ordered to be paid as restitution, and if so, for what period. It seems to me that the order made by the police court was not merely legal process to procure payment, but was something in the nature of punishment. It follows that I am bound to refuse the application."
Finally, Storey v. Lane, supra, while concerned primarily with the constitutional validity of sub-s. 60(1) of the Bankruptcy Act 1966, as amended in 1980, highlights the distinction between orders in respect of the non-payment of provable debts on the one hand and an order imposing a fine and costs on the other.
In that case, Storey was convicted in the Industrial Magistrate's Court of three offences under the Industrial Conciliation and Arbitration Act 1961-1976 (Qld). The first two charges were laid under s.113 of the Act and alleged, on the first charge, paying a lesser amount of wages than that prescribed by an Award and, on the second charge, failing to pay holiday pay on the termination of the employment of a named employee in breach of the Award. The third charge was laid under s.126 of the Act and alleged a failure to keep a time and wages book or other similar record for all employees. On the first charge the applicant was fined $100 plus costs of $18 and was ordered to pay the amount of wages underpaid; in default of payment of the total amount within 28 days, to be imprisoned for six months. On the second charge the applicant was fined $100 and ordered to pay the amount of the holiday pay due and unpaid, and it was directed that in default of payment of the total amount within 28 days he should be imprisoned for six months. On the third charge the applicant was fined $30 and ordered to pay costs of $18, and it was directed that in default of payment of the total amount within 28 days, he should be imprisoned for 7 days.
The High Court in addition to declaring that sub-s. 60(1) of the Bankruptcy Act 1966, as amended by the Bankruptcy Amendment Act 1980, was a valid law of the Commonwealth, ordered that the applicant be forthwith discharged out of custody under the orders made on his conviction of the two offences under s.113 of the Industrial Conciliation and Arbitration Act 1961 (Qld), as amended, and that any legal process relating thereto and any further action on those convictions be permanently stayed. That was based on the fact that those two orders were pecuniary penalties payable in consequence of the non-payment of a provable debt. As Aickin J. said at p 563 in Storey v. Lane, supra: "We are not here concerned with any question concerning laws relating to imprisonment of fraudulent debtors referred to in s.60(1)(a),a topic discussed in Train's Case. The relevant provision is par. (b) of sub-s. (1) and the facts of the present case fall within sub-pars. (i) and (ii), the unpaid wages and holiday pay being provable debts, and the applicant is held in custody for non-payment thereof. A court exercising bankrupt jurisdiction would, on the words of the section, have power to discharge him out of custody."
So far as the order of the fine and costs made in respect of the offence constituted by the failure to keep a time and wages book, Gibbs C.J. said at p 558: ". . . It was not suggested that s.60(1)(b) had any application to the third order, which was not an order in respect of the non-payment of a provable debt, but the applicant has fully served the period of imprisonment for which he was liable under the order on the third conviction."
The position here is precisely the same as in the third charge against Storey. The orders with which I am presently concerned are not orders in respect of the non-payment of a provable debt or of a pecuniary penalty payable in consequence of the non-payment of a provable debt or in consequence of his refusal or failure to comply with an order of the Court for payment of a provable debt.
It follows that there is no power in this Court pursuant to sub-s. 60(1)(b) to stay any legal process in respect of Mr Higgins. I regretfully conclude that the application has to be dismissed.
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